Making Cloud Computing Pay

Relying on cloud computing strategies to free up dollars and time that can quickly be re-invested in product and service innovation emerged as the highest priority for respondents in a recent Rackspace survey.

While cost reductions were significant, the greatest contributions were seen in investments in innovation (48%), new product & service development (45%), and boosting sale efforts (38%).

Rackspace recently commissioned a study with market research firm Vanson Bourne, who surveyed 1,300 organizations in the UK and the U.S., including 1,000 Small & Medium Enterprises (SME) and 300 enterprises with 1,000 employees or more. The methodology included coverage of Financial Services, Retail, IT/Technology, Manufacturing, Business and Professional Services, Media, Logistics, and Mobile Telecommunications sectors, with a further small representative group from other sectors. Rackspace also partners often with the Manchester Business School to complete qualitative research, which they also did on this project. You can find an executive summary of the study here, Cloud Computing Research. In February, Joe McKendrick’s post titled Cloud Computing Boosts Next Generation of Startups, Survey Shows covered the findings from this survey from a start-up standpoint.

Key take-aways from the research include the following:

  • In March, Rackspace made a subset of the results available in Microsoft Excel format, titled the Vanson Bourne Cloud Barometer Data – IT Skills. Thank you Rachel Romoff and the Rackspace team for responding so quickly to my request for links to the data set and insights into how the study was completed.
  • 62% of respondents state that cloud computing is enabling their organizations to invest more money back into their businesses. Cloud computing improved profits by an average increase of 22% according to the study. Marketing benefits most
    significantly from cloud computing investment, as is shown in the table below. I’ve asked for clarification from Vanson Bourne with regard to sales being rolled up into the marketing figure and will update this post when I get a response.

Making Cloud Computing Pay image Figure 1 Cloud Savings Final3Making Cloud Computing Pay

  • Average cost reduction is 23% due to cloud computing savings on infrastructure, based on the combined results of UK and US-based respondent analysis.
  • 62% of firms have invested funds saved due to cloud computing efficiencies back into their businesses, increasing total investment by an average of 23%. The following table from the study shows the prioritization of investments being made based on funds saved from cloud computing:

Making Cloud Computing Pay image Figure 2 Cloud Savings Final1Making Cloud Computing Pay

  • 56% of organizations are using open source technology as part of their cloud strategies and 86% say that using open source cloud technology boosts their business’ ability to innovate.
  • 68% say their organizations are increasing their use of open source cloud computing technology due to the lower cost of ownership (58%) and the greater stability and robustness of it as a platform (45%).
  • Manufacturers are saving $774,000 (£506K) per using cloud providers according to the study. Presented below is a table from the Vanson Bourne study comparing industries.

Making Cloud Computing Pay image Figure 3 Cloud Savings Final1Making Cloud Computing Pay

Bottom line: Using the cost and time savings from cloud computing to free up up resources for product innovation is giving these companies a long-term competitive advantage in the market.

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