6 Steps Needed For Real Cloud Transformation

A Mature Cloud Perspective

KPMG, the business consulting behemoth, issued an in-depth study on cloud adoption, cautioning that the gains made during the first moves to a cloud model may be short-lived unless companies truly align their business processes to a cloud model.

"As organizations gain more experience in the cloud and start to shift more and more core business functions onto cloud platforms, we are seeing a growing recognition that cloud adoption is significantly more complex than originally anticipated, particularly in terms of data management, system integration and the management of multiple cloud providers," KPMG said in the study.

For the report, titled "The Cloud Takes Shape, Global Cloud Survey: The Implementation Challenge," KPMG interviewed more than 650 senior business executives in 16 countries.

Read on to see what KPMG found.

1. Cost Reduction A Given, But Transformation Critical

Cost savings through cloud adoption are now considered the model's baseline benefit. The next two key objectives identified by executives -- speed to adoption and business process transformation-- are looming as the next key gains from cloud adoption.

"Two of the top three objectives identified by business executives were opportunities for cloud to enhance new market entry and drive business process transformation, both of which are key enablers of greater business effectiveness," the KPMG report said.

2. Next Steps: Implementation And Integration

Enterprises are recognizing the need to implement big changes to make a serious move to the cloud. They see that the transformation of their business and IT architecture requires expertise, as does the complexity of integrating multiple cloud provider platforms and traditional systems. As a result, KPMG said the role of the CIO will grow to address this complexity.

"So 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 CIO's role as becoming ever-more critical as the business' service integration broker on a commercial level, a process level and a technical level," Steven Salmon, KPMG principal adviser in the U.K., wrote in the report.

3. Confidence Grows In Cloud Security

Executives ranked cloud security as the third most pressing issue, behind implementation and integration challenges, showing they are gaining confidence in the security of their cloud services.

But the issue remains. "Before organizations move one piece of data into the cloud, they must ensure that they have thought carefully about creating a cloud security strategy that takes into account the broad array of service providers that the organization may engage," Greg Bell, principal at KPMG in the U.S., wrote in the study.

4. On Deck: Cloud Business Applications

In the next 18 months, business apps such as HR, sales and marketing, and customer care, as well as IT management and email, most likely will be adopted, the survey said.

That established vendors such as Salesforce.com, Microsoft and Google are selling these apps no doubt makes the prospect of adoption appealing to businesses.

5. Regulatory Dark Clouds On The Horizon

While only 18 percent of respondents said regulatory concerns were impacting cloud adoption in their business, and only retailers and restaurants as an industry showed a high percentage of concern, the issue will take on importance as new rules begin to be enforced, KPMG said. "Global organizations would be well advised to ensure they understand their providers' global compliance road maps early on in the engagement process, regardless of whether they are adopting public, hybrid or private cloud solutions," Shahed Latif, principal at KPMG in the U.S., wrote in the report.

6. Tax Time For The Cloud

Three-quarters of the respondents showed awareness that taxes figure in their move to the cloud. However, KPMG said there continues to be a sizable disconnect between a business' awareness of tax issues and its willingness to include the tax department in the cloud planning process.

"The reality is that getting strategic tax advice from the internal tax department should be a critical step in the cloud planning process. There are significant tax implications in how cloud service agreements are contracted and structured that must be considered and managed," Steven Fortier, KPMG principal in the U.S., and Deborah Green, a KPMG tax partner in the U.K., wrote in the report.