No 'On' Switch for Cloud: One-Third of Companies Report Implementation Headaches

Organizations are getting more comfortable with the security of their data and applications in the cloud. Now, the major issues are higher-than-expected implementation costs, as well as challenges integrating cloud applications into their environments.

These are the findings of a survey of 674 business and IT executives from KPMG, which finds more than half of the organizations already working in the cloud. The survey is the result of a partnership with Forbes Insights, the research arm of Forbes Media.

One-third of respondents said the costs of moving to the cloud were higher than expected, and a similar number noted significant implementation challenges. Another 31 percent indicate that the process of integrating existing IT architecture with new cloud services was creating challenges.

KPMG's Steven Salmon points out that as with any technology -- and despite what vendors try to pitch -- there's no such thing as a cloud in a box:

"Cloud is not simply a ‘buy, bolt on and go’ solution. Rather it requires organizations to fundamentally transform the way they procure, manage and use their IT applications and services which, in turn, drives up the cost and complexity of implementation. In the context of the hype, confusion and simplistic vendor models, we come across organizations that have assumed that cloud could be implemented within their existing business and IT architecture without recognizing the significant transformation that must occur before cloud benefits can be fully gained."

The KPMG survey finds that organizations increasingly recognize that moving to cloud "is not simply a case of flipping a switch," Salmon continues. "Business process redesign, IT management capabilities, systems integration, infrastructure and configurations are all part of the transition process and each require investment to get it done right."

Thirty percent also are concerned about data security. In the 2011 survey, security ranked as the top challenge facing executives, in this year’s survey, security-related challenges such as data loss and intellectual property theft ranked below other issues such as integration challenges and implementation costs. More than one-quarter of the companies surveyed have found that security-related challenges can be extensive. Another 30 percent also say that they are increasingly concerned about the loss of control that may come from moving data and processes into the cloud.

Nevertheless, 70 percent report positive results from their cloud implementations, agreeing or strongly agreeing that the cloud is already delivering efficiencies and cost savings. Other long-term benefits sought include more efficient overall processes, flexible operating models, and faster speed to market. More than 20 percent seek to use cloud resources to support new market entry and improve business processes.

The survey also tracked the key areas of business operations moving to the cloud. Human resources tops the list as the application area most often being run in the cloud. A new survey finds 57 percent of organizations have deployed HR applications to the cloud, with an additional 30 percent to soon follow.

Human resources is a ripe area for cloud, with 87 percent of respondents either adopting or planning to soon adopt cloud-based services in this area, KPMG finds. Applications such as payroll and benefits information are being delivered from partners via Software-as-a-service interfaces. There are also opportunities to deliver training programs via cloud-based services.

Another 86 percent already have or are integrating cloud-based services into their IT departments. A  similar number have moved their email and collaboration services to a cloud-based platform.  A majority of enterprises also have sales, marketing and customer service functions running in the cloud.

Salmon also had some interesting predictions for the future of IT management: "While some observers suggest that cloud will diminish the role of the CIO, particularly as IT decision-making and budgeting move further into the business, we see the CIOs role as becoming ever-more critical as the business’ service integration broker on a commercial level, a process level and a technical level."