Frost & Sullivan: Greater demand for cloud services to be driven by need to reduce IT spending in weaker economic outlook for Australia in 2014

 ~ Very strong local growth in both Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS)

SYDNEY, Sept. 10, 2013  /PRNewswire/ -- In the past year, Australia has seen a strong take-up of cloud offerings adopted across an increasingly wide range of industries. This trend was prevalent across small to large organisations, but especially amongst small-and-medium enterprises (SMEs), with the adoption of Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) being particularly strong.

These findings were from Frost & Sullivan's latest report, State of Cloud Computing in Australia Report 2013 which also indicated that public cloud offering has seen very strong growth in the last 12 months. Many organisations had initially used public cloud offerings for test and development type activities, but are now migrating a wider range of production workloads / core business systems to the cloud, including ERP, CRM and web services. Also many Australian organisations currently using private clouds are gradually transitioning to hybrid clouds, which offer some characteristics present in public clouds.

Whilst there are still concerns about data location and data sovereignty, these concerns are starting to decline. Data hosting capabilities are no longer highlighted by IT decision makers as the top criteria when selecting a cloud provider. This indicates that more IT decision makers are seeing the benefits of a true public cloud offering and, whilst data sovereignty might be a concern in some industries, overall its importance is reducing significantly.

The weak economic outlook in the Australian market, which is likely to continue throughout 2014, will drive a greater focus on reducing IT spending. With many organisations currently undergoing restructuring and with layoffs being announced in many sectors in Australia, there will be pressure for organisations to rethink their IT strategies. Moving to a cloud delivery model will also mean that fewer IT staff will be needed in the future for some of the tasks that were previously handled internally.

Frost & Sullivan's survey of IT decision makers in Australia shows that an increasing number of organisations are adopting the cloud model to benefit from the greater flexibility and lower costs in accessing the IT resources that the cloud model offers:

• Over 60% of organisations in Australia that are currently using cloud-based solutions plan to increase their cloud budget over the next 12 months, whilst only 2% plan to decrease their budgets. This indicates that the cloud market continues to be in a strong growth phase.
• 31% of organisations in Australia are likely to consider enlisting a cloud broker in the next 12 months to facilitate their usage of the system. The primary benefit of the cloud broker will be to offer a single point of contact for all the different cloud vendors.
• 24% of organisations that currently do not access storage via the cloud are likely to do so in the next 12 months. Public cloud storage offerings such as Google Drive and DropBox in particular are becoming very popular amongst smaller organisations.

Audrey William, Head of Research, ICT Practice, Frost & Sullivan ANZ says, "The greater overall business agility and flexibility that results from adopting cloud computing, as well as the reduction in an organisation's computing and resource stresses, are as the top drivers for adopting cloud based solutions by Australian organisations". More CIOs are seeing the benefits of public cloud adoption and are making investments to move more workloads to the public cloud. Storage, office productivity applications and CRM are rated by IT managers as the main workloads that will move to the cloud in the next 12 months.

However, over half of all Australian organisations (60%) feel that cloud-based solutions have not fully met their expectations. One of the major concerns in organisations that have transitioned to cloud based solutions is the risk of a service outage resulting in disruption to normal day to day operations. Some organisations in Australia have experienced such outages leading to loss of productivity and additional costs.

Phil Harpur, Senior Research Manager, Australia & New Zealand, Frost & Sullivan mentioned that the increasing awareness of cloud has seen an increasing number of companies ask the question, 'What can I do with cloud services?', rather than 'What do cloud services prevent me from doing?' This is opening up a broad range of opportunities for companies to develop their business models to cope with the rapidly changing IT environment. Cloud is progressively seen as more than just a way of reducing IT costs. IT decision makers are gradually becoming more aware of the other benefits that the cloud offers such as agility and flexibility.

Awareness of the benefits of the cloud model has been partly driven by the increased local presence of the established global cloud providers such as Rackspace. This is benefiting all cloud providers which include system integrators, telcos and the pure play SaaS, PaaS or IaaS or vendors. The rise of cloud computing is also driving strong demand for data centre capacity. It has attracted investments from most major data centre service providers such as Equinix and Global Switch, which have expanded their local presence in the Australia market.

Frost & Sullivan's report, State of Cloud Computing in Australia Report 2013, forms a part of the Frost & Sullivan Enterprise Communications Research program. All research services included in this subscription provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants. For media queries and more information please send an e-mail with your contact details to Donna Jeremiah, Corporate Communications, at djeremiah@frost.com.

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SOURCE Frost & Sullivan