How are UK companies investing in cloud computing in 2014?

Cloud SaaS

by Duncan MacRae| 26 June 2014

Investment in private and hybrid cloud is expected to drive the cloud computing market in the UK.

The adoption of cloud computing solutions has been relatively slow amongst UK enterprises, primarily due to concerns relating to security, data protection, and a lack of regulation. However, driven by advantages such as a reduced cost of ownership, increased scalability, and ease of management, the adoption of such services in the UK is expected to increase.

This is evident from a Q4 2013 Kable market research report, which presented the findings from a survey of 162 UK enterprises regarding their Information & Communications Technology (ICT) investment trends. The survey investigated how UK enterprises currently allocate their ICT budgets across the core areas of enterprise ICT spend, namely hardware, software, IT services, communications and consulting.

The survey found 77% of respondents are planning to invest in this area in the next two years. Of the various cloud computing solutions, software as a service has the highest penetration rate as 54% of respondents are currently using this service in their organisations in order to reduce the license and management costs of various applications and to achieve an improved level of scalability and flexibility. Furthermore, the fact that 50% of enterprises plan to deploy this service in the coming twenty-four months shows that there will be decent demand for SaaS amongst UK enterprises.

With penetration rates of 49% and 46%, platform as a service (PaaS) and infrastructure as a service (IaaS) are experiencing a decent uptake in the UK enterprise market as enterprises look to reduce their capital and management costs relating to various IT infrastructure and platforms, as well as aiming to improve their productivity, profitability, and time to market. Both these solutions are expected to witness an upward momentum in the next two years, as 51% and 52% of respondents are planning to invest in these domains through to the end of 2015.

Meanwhile, private cloud and hybrid cloud are witnessing the lowest adoption rates with 44% and 39% of respondents respectively operating with these solutions in place. However, with 54% of respondents looking to spend on both of these solutions in the specified period, there is an increased demand for private and hybrid cloud services amongst UK enterprises. Kable therefore believes that IT vendors with a strong cloud proposition and related case studies are expected to be in a good position to reap certain benefits. Analysing the survey data by sector shows that while UK government institutions are keen to invest in hybrid cloud (with 56% of respondents planning investment here in the next two years), UK manufacturers are more inclined to spend on PaaS with 76% of respondents looking to invest in this area through to the end of 2015.

Cloud computing is still at a nascent stage of adoption in the UK enterprise market and is dominated by the big IT vendors, including the likes of Microsoft, Google, IBM, and Amazon. With a strong brand image and universal adoption, plus a range of cloud based products such as Windows Server with Hyper-V, Office 365, System Center, and Windows Azure, Microsoft is leading the pack in terms of customer perception, as 43% of respondents choose it as one of the leader in this domain. Furthermore, Microsoft has invested to strengthen its brand image in the UK cloud market with its participation as the sponsor of the inaugural UK Cloud Awards held in January 2014.

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