CIO Insight: Importance of Cloud in IT Strategies/Plans Growing

Saugatuck Technology recently reached out to a dozen large-enterprise CIOs and CTOs (all from companies with greater than $1 Billion in annualized revenue), seeking their input and insight concerning the impact that the Cloud is having on their company’s evolving enterprise IT strategies and plans.

In a Strategic Perspective published last Friday, we focused on the first three of six questions asked in the interviews – including the importance of Cloud in IT planning/strategy, what are their key 2012 Cloud priorities, and what have been the key drivers.

Here we highlight the first of those three questions, with some of our key takeaways from the research, and select quotes from the interviews. As Figure 1 below illustrates, the average response to the question of how important Cloud is to their IT investment plans in 2012 reached a 3.7 (on a scale of 1-Not Important to 5-Extremely Important), with two-thirds of the CIOs ranking Cloud “Very Important” or “Extremely Important.” Only one of the twelve CIOs indicated that they had no Cloud “investment plans” in 2012. This is up sharply from 2010, when the CIOs and CTOs cited that their average response would have been a 2.2, or just above a “Somewhat Important” ranking.

Figure 1: Cloud’s Evolving Strategic Importance for CIOs / CTOs

Source: Saugatuck Technology, Jan. 2012, n=12 large enterprise CIO / CTO deep dive interviews

What is clear is that most large enterprise IT leaders are now well beyond the learning phase, which is probably the best way to describe where most large enterprises were two years ago. Roughly a quarter of the CIOs / CTOs we interviewed are now aggressively moving toward the Cloud, in all of its forms. These IT leaders are now developing and adopting a 3-5 year strategy to deploy a fully enabled Cloud application / infrastructure environment, including plans to rip and replace a significant amount of their current data center footprint.

The vast majority, however, are taking a more pragmatic approach, leveraging the Cloud for new business requirements as they arise – but largely leaving the existing footprint in place. Here’s what some of the CIOs and CTOs had to say:

• It seems inevitable that a good chunk of IT solutions will be Cloud-based in the future.  Getting in front of the curve is important. (CIO, LifeScience)
• Our end users are demanding it – and the flexibility and speed that the Cloud provides. Further, more and more of our solution providers are now ONLY providing Cloud solutions. So this is becoming less about an IT decision, and more about a market shift and growing end-user demand. (CIO, Media/Ent)
• We believe that all of our business applications should be delivered as cloud solutions.  We are in the process of giving up our physical assets (data center) and moving existing applications to a cloud hosting provider and making plans to get rid of all of our traditional applications. (VP IT Plan, BusSvcs)
• Our entire IT strategy is focused on developing a Next Generation IS function through the adoption of a Business Function as a Service (BFaaS) architecture. This puts business function providers such as Workday, Concur, SalesForce and others front and center. It also is driving cloud-based exploration and adoption of previously in-house infrastructure services and functions such as integration, BI/Analytics, Authentication, Master Data Management, etc. (Sr.Dir, BioTech)
• We operate two data centers with many apps having large databases at the core. We are not jumping whole-hog into the Cloud. Instead, we are nibbling at the edges, getting familiar through testing and investments in small, non-critical apps. (CIO, MktSvcs)
• Our environment demands such high levels of security that public cloud is out of the question; but we are investigating private cloud. (CIO, FinSvcs)
• The cloud is not in our 2012 investment plans. (CIO, Trans)

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