Majority of Companies Expect the Cloud to Drive Revenues During Second Wave of Adoption

By Laura Stotler, TMCnet Contributing Editor  |  August 27, 2015

The cloud is riding its second wave of adoption, and organizations are beginning to understand its true scope and promise. At least according to a new study sponsored by Cisco (News - Alert), which shows new adoption is being fueled by companies using the cloud as a platform for innovation and growth as well as cost savings and efficiencies.

The new IDC (News - Alert) study “Don’t Get Left Behind: The Business Benefits of Achieving Greater Cloud Adoption” shows that 53 percent of companies believe the cloud will drive increased revenues over the next two years. On the flip side, only 1 percent of those organizations have an optimized cloud strategy in place and 32 percent lack any sort of cloud strategy.

That may very well change as the second wave of cloud adoption comes to fruition and organizations begin to better understand the benefits of mature cloud adoption. The U.S. is leading the pack when it comes to the number of organizations with managed or optimized cloud strategies, with 34 percent of organizations involved in mature cloud adoption. Japan has the least for now, at only 9 percent.

According to IDC, there are five levels of cloud maturity that organizations are beginning to realize. They are identified as ad hoc, opportunistic, repeatable, managed and optimized, with companies adopting an optimized strategy realizing revenue growth, a reduction of IT costs, a boost in the ability to meet SLAs and a whole host of other benefits.

"Numerous IDC studies have shown that organizations with advanced cloud adoption have better business outcomes, including stronger business performance, better top-line revenue, improved strategic IT allocation, greater flexibility, reduced costs, and increased service performance, and these gains compound as cloud use grows,” said Robert Mahowald, VP of SaaS (News - Alert) & Cloud SW, IDC. “But most organizations are not very far along the adoption journey, and need to focus on the skills, methodologies, and best practices required to get themselves to the next level.”

IDC also found that those organizations queried are gaining an average of $1.6 million of additional revenue per application deployed on private or public clouds. Cost reductions are averaging around $1.2 million per cloud-based application, translating to major savings.

The manufacturing sector is leading the way in cloud adoption at about 33 percent, followed by IT, finance and healthcare. The lowest levels of adoption were in the government and education sectors as well as professional services and retail/wholesale.

Edited by Dominick Sorrentino