UK firms clouded by the cloud

UK bosses have their heads firmly stuck in the clouds when it comes to the advantages of cloud computing, with the vast majority spending only 10% – or less – of their tech budgets, triggering a warning that British business could lose its competitive advantage.
A global study of almost 2,100 contracts covering deals worth £7.8bn, carried out by KPMG, suggests that many organisations are continuing to rely on ‘tried and tested’ outsourcing models and the survey shows that favoured destinations for IT support services remain India (51%), Poland and South Africa (both on 8%).
The 8th annual ‘Service Provider and Performance Satisfaction’ study includes detailed analysis of current corporate tech spend in Britain, by examining more than 330 UK-based contracts.
Asked why they are reticent about employing cloud services, the top three reasons cited by UK C-suite respondents centred around data location, security and privacy risks (26%), concerns over regulation and compliance (16%) and cynicism around the ease with which cloud services can integrate with legacy IT systems (15%).
Jason Sahota, a director in KPMG’s Shared Services & Outsourcing Advisory team, said: “Despite widespread acceptance that cloud services offer access to the latest technologies, and make IT more accessible, adoption remains relatively sluggish.
“While concern about the security risks surrounding new technology is understandable, it may also be disproportionate, as cloud options are just as safe as other outsourcing solutions. Of course, investors and stakeholders will welcome caution on the part of the buyers, but they also want to see innovation, meaning that UK plc will need to find the right balance to remain competitive.”
The survey goes on to reveal that, despite the economy picking up, some companies across the UK are still nervous when it comes to committing to long-term investments. Asked about their outsourcing plans for the next two to three years, just 43% said they plan to increase spending. This figure contrasts with 77%, this time last year.
However, where budget has been set aside for outsourcing, it is clear that organisational thinking is maturing. When the survey was first undertaken, respondents focused primarily on cost savings as their reason to outsource – but this year’s survey shows that the search for quality improvement (20%), access to skills (16%) and a desire to reduce the time it takes to ‘get things to market’ (6%) are driving the rationale behind IT outsourcing decisions.
Sahota concluded: “As IT forms an inseparable part of the wider business strategy in many organisations, technology decisions are now rarely left to the CIO alone. It means that, with the potential for conflict over the choices being made, organisations should dedicate a greater level of investment towards governance than they may have in the past. If they fail to do so as they move towards more complex delivery models, poor governance can impact their ability to provide quality services, increasing risks around cost, service quality and delivery.”