The Cloud Hits a Cold Front

In spite of the benefits touted by proponents of cloud computing, potential users, including small businesses, aren't convinced the cloud lives up to its hype.

Of more than 1,000 small businesses polled in June by Newtek Business Services, The Small Business Authority, nearly half (48 percent) said they do not believe the cloud will reduce their IT costs, according to a press release. According to a separate release from InformationWeek Analytics, 37 percent of 360 business technology decision-makers have no plans to use public cloud storage. Another 38 percent are still assessing how to proceed.

This could be a blow for the many companies — including Apple, Dell, and Microsoft — that are touting the cloud as a high-tech, low-cost data storage and management solution. In particular, the cloud is being marketed to small businesses as a cost-saving option to in-house IT departments. This week's surveys conclude vendors are failing on two fronts: They aren't educating potential users about the benefits of the cloud, and security concerns aren't being adequately addressed.

“The cloud storage vendors have some major hurdles to leap,” said Lorna Garey, content director of InformationWeek Analytics, in the press release. “Companies are very protective of their data — and rightly so. They need more storage space and services, but they're not going to move their critical business and customer information to a public cloud until they're absolutely sure it's safe and accessible.”

Additional findings from InformationWeek include:

  • Only 15% of survey respondents say they currently use public storage services, and only 10% expect to explore adoption within the next two years.
  • Security concerns (73%) top the list of reasons companies steer clear of public cloud storage; privacy concerns (54%) rank second, followed by regulatory/legal constraints (36%).
  • 59% of survey respondents cite email as the application most responsible for data storage growth; 53% point to retention policies as a factor.
  • Backup, at 76%, is the storage function moved most to the public cloud, followed by disaster recovery/business continuity (70%), file archiving (68%) and email archiving (65%); primary data storage is next, at 34%.
  • The ability to move data between cloud and on-premises storage is the most important feature (rated 4.4 out of 5) for companies evaluating or using a cloud storage service, followed closely by on-demand access, data encryption and ability to establish/enforce retention policy (all 4.3).
  • 76% say they're concerned about storage expenses, yet nearly half don't know how much storage costs, and 8% do not manage their storage resources.
  • HP (30%) leads in current or planned use of cloud storage, followed by EMC (26%), Amazon S3 (25%) and IBM (21%)

Is this lukewarm response to the cloud a failure of marketing? I don't think so. Based on the data above, I'd say potential users are better educated than ever. Companies that have built their reputations on data security, such as CitiBank, have been hacked. (See: Hackers Jeopardize High-Tech Reputation.) Game systems — a seemingly innocent pastime — have been targeted by malicious users.

The cloud may be as secure as, or even more secure than, in-house or private IT alternatives, but until vendors can convince users of that, cloud computing is getting a chilly reception.

17 comments on “The Cloud Hits a Cold Front

  1. prabhakar_deosthali
    June 29, 2011

    I am still of the opinion that the Cloud is going to win the confidence of small and medium enterprises. It just requires more convincing by the vendors and showing the prospective customers the Total cost of Ownship advantages in the longer term perspective. The data privacy and security aspect has to be firmly tackled anyway.

  2. Cloud Security Guy
    June 29, 2011

    More bad news for the cloud – another recent ScienceLogic survey found that 70 percent of IT specialists still don’t have confidence in the cloud. Another 14 percent of respondents said they had no plans to go ahead with cloud computing in the near future.


    At the, we take a look at the various issues surrounding cloud computing and help prepare candidates for the CCSK Cloud Security Certification. Read more about ScienceLogic’s findings and other cloud security issues and solutions on our blog:

  3. Taimoor Zubar
    June 29, 2011

    When it comes to new IT ventures, a lot of companies tend to be followers rather than trend-setters. They will not risk venturing into something unless other organizations have had success with it. I think the same goes for cloud computing. Despite realizing the benefits, a lot of companies are putting cloud computing off to avoid the risk. Once a few major organizations go upfront with it, I think we shall see the trend setting in with companies rapidly moving to the cloud.

  4. Ms. Daisy
    June 29, 2011

    Cloud Security Guy:

    Do you think the issue is “IT specialists still don’t have confidence in the cloud” or the fear of the specialists loosing their jobs, hence the lack lustre buy-in into the new cloud tchnology? This seems to resemble the robot take over of the auto worker's spot in the car factories. 

  5. Anna Young
    June 29, 2011

    You may be right Ms Daisy. IT specialists may have no confidence in cloud for the fear of loosing their jobs.

    In addition organisations are not buying into cloud yet for the very fear of the risks of information security and user' privacy.

    I think trend setter is what is required, once this happens, it'll not be a surprise if other businesses follow suit.




  6. Houngbo_Hospice
    June 29, 2011

    “I think trend setter is what is required, once this happens, it'll not be a surprise if other businesses follow suit.”

    There won't be any major trend setter until some key issues are resolved. Beside security concerns, companies are afraid they might lose control of their data. Banks, financial institutions and manufacturers are likely to keep their data in-house, at least for now.

  7. Daniel
    June 30, 2011

    Cloud is cost effective only for short term run. If we need some extra resources for a short duration, in such cases cloud is cost effective when compare with the expenses incurred for procuring such resources. In such cases we are paying only for pay as you go basis, which is on usage basis. Otherwise, if we are going to use it for a long, we have to pay for the entire duration and it may be at par with the investment cost for procuring such resources.

     So in contrast Cloud is beneficial only for usage of high end computing resources for a short duration.

  8. Wale Bakare
    June 30, 2011

    I think cloud with time will become a hit dependent on issues such as education/awareness, security as well as its long time effect.  At the early stage of the innovation cloud providers should expend more energy on educating cloud adopters. More so security model approach distinct to ordinary firewall or existing internet security for me may affirm people's confidence towards its adoption.

  9. Himanshugupta
    June 30, 2011

    the main reason to move to cloud computing for an organization is to cut cost both short and long term. I have not read any report and analysis which support this idea, maybe i was not so interested to search for this. Has anyone read such report and send us the link? Also as far the secrity go, i believe that pooling the resources at one place and protecting it can be more efficient. As the saying go, leave the things to experts. I donot think that if hackers can hack bank/government account then they cannot hack small organizations.

    June 30, 2011

    I read your article with interest and seeing the stats made me think of something I had not considered previously to any great extent.  I wonder if there is an insidious concern that cloud providers will start cranking up their prices once (and if) everyone moves to a cloud based solution. Or do you believe free market forces will ensure cloud costs remain as competitive as local solutions?

  11. Ms. Daisy
    June 30, 2011


    I also believe the trend setting will not take off if these IT specialists are lukewarm in helping to share the information on how the Cloud would benefit the small business owners.


    July 1, 2011

    I just saw an EETimes article quoting IDC:

    Worldwide revenue for cloud computing servers is projected to grow to $9.4 billion in 2015″

    Compound annual growth is projected at 20+% from now through 2015 which is healthy growth and difficult to ignore.  I can only imagine that the reservations people have will soon be addressed for most but not all applications.

  13. t.alex
    July 1, 2011

    People are even moe cautious after the recent chains of hacking. However I believe cloud will surely be more popular once it is reliably secure. With the introduction of chromebook from Google, cloud is the only storage of the notebook.

  14. mfbertozzi
    July 4, 2011

    Well, I think you are right t.alex.
    Google's feature is nice, but at the end clould's services, in my opinion, are still in a poor basket. In addition to storage or computational saving, what is really available?
    On the other hand, it seems Service-Level-Agreement is becoming a critical concern to finalize and several platform provided via “cloud architecture” to monitor “cloud services” received from other providers, are launching a new business segment in the market.

  15. t.alex
    July 9, 2011

    Perhaps another avantage is sharing and syncing like what Apple is doing with iCloud.

  16. hwong
    August 19, 2011

    @mfbertozz – Cloud computing is also good for testing purposes. Many corporations today have to invest in servers, configuration managment tools etc for their large scale testing jobs. The cloud for testing environment is in fact one of the hottest piece because it will be much faster and easier to access. You don't  have to get an administrator to setup for each person and configure for another environment or versions of the applications. Test Cloud environment is much quicker.

  17. mfbertozzi
    August 20, 2011

    Well hwong, in effect you are mentioning a good point; it is very actual, considering current financial crisis abroad in the globe. Cloud, potentially, brings opex & capex savings. Major concern could be oriented on when cloud services will reach a good stability and when portofolio's services will be in condition to fit huge part of IT applications needed by corporations. For now, if you take a look at major cloud providers, most services from them is strictly oriented to storage; it's important but, imo, is not enough for corporations.

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