Cloud Budgets on the Rise, but Study Finds Many Managers Don't Know How Much

By | Aug 17, 2012

Midsize IT professionals are finding their cloud budgets on the rise as managers green-light more spending and CEOs get more comfortable with having some or all of a company's data stored off-site. A new Australian study has found that over half of the country's tech companies spend more than 10 percent of their total IT budget on the cloud, but recent data from research firm IDC indicates that chief financial officers (CFOs) and other non-IT cloud proponents don't know how much they spend on cloud technology or what technology goals their company has identified in the long term. In short, budgets are up, but knowledge may be lagging behind.

Spend a Little, Spend a Lot

An August 14th, 2012, article at ARN discusses a study from research firm Frost and Sullivan, which found that 70 percent of Australian businesses that are using cloud computing hope to significantly boost their budgets over next 12 months. The firm also found that 53 percent of companies are spending over one-tenth of their total IT dollars on cloud computing, and 31 percent are spending over 20 percent of their total budgets.

Industry analyst Mayank Kapoor says that most Australian organizations are now in a full cloud deployment phase rather than simply piloting software-as-a-service (SaaS) or infrastructure-as-a-service (IaaS) solutions and says that these deployments free up "key resources previously dedicated to other IT services." Private clouds in the country far outnumber public and hybrid options, but all three models are seeing strong growth as the market matures.

This is good news for midsize IT admins. Solid cloud options mean bigger budgets and more room for expansion as local services aren't as heavily used. What is not so great about this is that chief financial officers and managers aren't always aware of how these budgets are being spent, or how best to lead a company forward.

Knowing is Half the Battle

An industry report by IDC Government Insights, discussed in a recent Nextgov article, found that despite the fact that 90 percent of 400 IT business managers surveyed knew cloud computing would have an impact on their company's future, 34 percent of these executives didn't know the exact amount of their IT department's budget for cloud spending and 23 percent were unsure of their company's long-term technology planning. This, in turn, could cause "hesitancy when investigating cloud services," said IDC. And while the majority of chief information officers (CIOs) and chief technology officers (CTOs) had a solid grasp of cloud strategy, less than 40 percent of CFOs could say the same—a concerning number, as many CFOs are responsible for driving cloud adoption as a way to lower capital expenditure costs.

Midsize IT admins can do only so much with the cloud budget they are given or communicate cloud strategy to executives; often, this task lies with a CFO, especially when a new deployment is under scrutiny. Without consensus on where a business is headed with their mission-critical apps or SaaS solutions, a bigger budget may simply be wasted money—and IT professionals may be on the hook when a solution doesn't deliver the return on investment a CEO expects. More money is always a good thing for IT admins, but in the evolving cloud marketplace perhaps more important is getting an entire IT department on-board to make best use of increasingly liberal budget offerings.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. Like us on Facebook. Follow us on Twitter.

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