the business value of cloud maturity

Pub

licThe business value of cloud maturityCloud Maturity Index 2016

September 2016

© Tieto Corporation2

Methodology• Survey and interviews with IT decision makers in Norway and Sweden conducted by the research firm Radar on

behalf of Tieto.

• The study includes 200 organizations with 250 or more employees including public sector

• Cloud maturity is determined by a number of key indicators, subjective assessments and self-assessments under six main areas, weighed differently as below.

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50%

30%

20%

30%

30%

40%

© Tieto Corporation

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About Cloud Maturity Index

The result of the 2015 study was published in the report Benefits of Cloud Maturity.

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Created by the Radar Group in 2014 on behalf of Tieto

A model to establish an organizations operational and strategic Cloud maturity

The model is based on some 30 key performance indicators, assumptions and self-assessed indices

Strategic and operational maturity is assessed in three categories. The categories are weighted according to importance and impact (see next slide)

Quantitative studies undertaken 2015 and 2016

The result of the 2016 study was published in the report A new way to embrace Cloud.


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Conclusions

Cloud Mature Organizations show business benefits in terms of cost management and efficiency

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Cloud usage is increasing in both Sweden and Norway

Cloud Services penetrate a larger part of the business operation

The way Cloud Services are perceived by the customers are gradually changing

Strategic and operational Cloud Maturity is higher 2016 than in 2015, in both Norway and SwedenThe gap between the least mature and the most mature organizations is increasing

Cloud Mature Organizations achieves substantially better business outcomes from Cloud Services

Diversification of forms of production and delivery is rapidly growing

Organizations with a more hybrid IT portfolio show higher positive business outcomes.


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Cloud usage in Sweden and Norway

Sweden Norway

60%46%

77%64%

Organizations using Cloud services:

2015 2016

SaaS PaaS IaaS

23%

32%

24%

Cloud spend, growth 2015/2016:


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Cloud usage in Sweden and NorwayCustomers are using Cloud Services for more diverse applications that penetrate a larger part of the business operation

The Cloud is leveraged for more complex components in the production of IT than before

Growth is also partly explained by industry restructuring on the supply side.

Cloud Services constitutes 4.9% of Swedish IT Spend and 4.2%

of Norwegian IT Spend

Market penetration has increased dramatically in the past two years

and is predicted to continue

Cloud spend is predicted to increase by 22% in Sweden and 24% in Norway in 2016


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Drivers for Cloud usage

2015

2016

27%

12%

13%

10%

60%

78%

Perceived best form of produc-tion for a short time-to-de-

ployment:In-house Outsourcing Cloud

2015

2016

39%

28%

24%

25%

37%

47%

Perceived best form of production to support innovation:

In-house Outsourcing Cloud


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Benefits of being Cloud mature

Cloud mature organizations have 34% lower cost forIT operations.

Cloud mature organizations have at least twice theIT budget for innovation.

Cloud mature organizations have a

higher contribution to business development.

34%


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Cloud Mature Organizations achieve substantially better business outcomes from Cloud than peers

4.0

4.7

4.04.3

4.0

4.7

3.7

2.5 2.7 2.8 2.7 2.6 2.42.8

Currently used Cloud services impact on IT strategic priorities (indexed 1-5):

Cloud mature organizations Non mature organizations

No impact

High impact


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Benefits of being Cloud matureCloud Mature Organizations show

advantages in terms of cost management and efficiency

Cloud Mature Organizations have a higher capacity to support business IT demand

Cloud Mature Organizations show better outcomes in the execution of Cloud Services

Cloud Mature Organizations are better equipped to

deliver IT to the core business allowing the

business to stay competitive.


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Cloud maturity 2016: Country differences

2 4 6 8 100

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10Cloud mature

[9,1-8,1]

Norway[4,3-3,7]

Sweden[5,7-4,2]

Average Cloud maturity 2016:

Strategic

Oper-ational

Strategic Operational Strategic OperationalSweden Norway

3.7

5.2

3.03.84.2

5.7

3.74.3

Cloud maturity 2015-2016, by country:2015 2016


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Cloud maturity 2016 by IndustrySt

rate

gic

Oper

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Oper

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Public sector Manufacturing Retail Professional services Finance

3.04.1

2.94.2

3.5

5.2

3.2

4.94.3

5.8

3.7

5.1

3.4

5.13.8

5.4

3.8

5.44.7

5.9

Average Cloud maturity in Sweden and Norway, by industry:

2015 2016


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Stages of Cloud maturity

%1518%

%4951%

%2421%

%1210%

Immature• There is no cloud strategy at all.• Low competence and slim capabilities in dealing with any cloud services• No to very little use of cloud services

Basic• Cloud usage is on single services not integrated with the other IT services and functions provided• Driver for investments is commonly cost reduction.• The services tend to be simple and standalone

• There is a cloud strategy and most of the procured cloud services are in line with it.• Most likely more than one service and delivery model implemented• On average multiple SaaS services are being used.

• Cloud services are clearly defined and an analysis of existing IT functions in a cloud setting has been performed.

• Procurement is fully in line with strategy.• Key drivers are development, change and innovation.

Proficient

Mature


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A new way to embrace Cloud services

Increased IT security

Less business risc

Higher quality

Positive effects on innovation

Cost efficiency

Easy to purchase and implement

Short time-to-deployment

Increased flexibility

2.5

2.4

2.8

3.2

3.4

3.5

3.3

3.8

3.0

3.0

3.1

3.4

3.4

3.6

3.7

3.8

Drivers for using Cloud services 2016 (indexed 1-5):

2016 2015

Source: Radar/Tieto Cloud Maturity Research 2015, 2016 n: ~200 IT decision makers in Finland (2015), Sweden and Norway


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Cloud top priorities 2016

Integrate purchasing of Cloud into existing sourcing process

Increase integration of Cloud into other parts of the IT Portfolio

Integrate Cloud Services into current IT Strategy

Qualify Cloud Services according to IT Security criteria

Develop in-house expertise on Cloud Services

40%

53%

56%

39%

54%

56%

29%

13%

40%

18%

18%

18%

21%

28%

Cloud top priorities 2016:High priority Priority Not a priority


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Hybrid Cloud is the new black

2015 2016

14%

23%

Share of organizations that useSaaS, PaaS and IaaS:

2015 2016

1.1

1.5

Average number of distribution models used:

• Diversification of services has increased (organizations using both SaaS, PaaS, and IaaS). • Average number of employed distribution models increasing, from 1.1 to 1.5 (~30%).


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Hybrid Cloud is the new black

Infrastructure

Applications

55%

51%

32%

31%

13%

18%

Average IT portfolio 2016, by component and form of production:In-house Outsourcing Cloud


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Hybrid Cloud is the new black1

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Diversification of forms of production and delivery is rapidly growing

Cloud and Outsourcing services are expanding their market share

Organizations that show higher positive business outcomes than peers use a more diversified IT portfolio and are more prone to employ hybrid delivery models

Growing Cloud Maturity means that they also realize the benefits of different types of Cloud Services’

The Industrialization of IT increases diversification.

© Tieto Corporation19

• Every potential buyer of enterprise Cloud Services should define their preferred form of delivery (supporting long-term business goals), based on industry standard NIST terms & definitions.

• A long-term plan for the utilization of Cloud Services is necessary for successful operational outcomes as well as achieving strategic goals. A Cloud Strategy should be based on the individual circumstances of each organization while at the same time allowing for standard methodology and industry best practice.

• The IT portfolio should be qualified according to good sourcing practices and Cloud Services should be treated equally to any other form of IT production and delivery.

Define cloud services

Secure expert resources

Establish a cloud strategy

Qualify existing IT services

• The IT Portfolio will evolve over time but make sure Cloud Services are included in the planned transformation, and commit the necessary resources and skills to make sure there is a controlled process of transformation into the Cloud.

Recommendations

Commit resources and plan transformation

• A large part of the organizations in our survey reported a severe shortage of in-house expertise. To successfully carry out a transformation to Cloud Maturity, decision-makers need to secure and leverage the right people with the right skills.


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Tieto Cloud Maturity Research

Download the study:http://pages.tieto.com/LP-GL-XX-CloudMaturityIndex2016_LP.DownloadPage.html

http://pages.tieto.com/SIAM-Maturity.html




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