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Study Says Economics Not A Driving Factor in Cloud Computing Adoption

Paul Miller, who pens Cloud of Data, had an interesting perspective during a chat this week

Our own research on this subject found that efficiency, not reduction of costs, was the primary driver for public cloud computing adoption imageand that despite budgetary constraints 71% of organizations would see an increase in fund allocation for the purposes of public and private cloud computing initiatives. But a reduction in capital expenses still ranked high with 68% of respondents citing a reduction in capital expenses as a driver toward public cloud computing and 63% citing the same as a driver for private cloud computing.



It seems so, doesn’t it? If organizations are interested in cloud computing as a means to reduce capital expenses then why would we be seeing an increase in spending on cloud computing initiatives, especially private cloud computing which almost certainly requires capital expenditures to achieve? After all, there’s virtualization software, improvements in infrastructure, and management systems that need to be in place for the successful implementation of a private cloud computing environment.

Perhaps the budget increases are coming at the expense of other areas in IT. Let us consider the aforementioned study on server failure:

blockquote In round numbers, the scheduled replacement of some three million servers worldwide, or about 3 percent of all servers, has been delayed, Peter Sondergaard, Gartner's global head of research, said today at the research firm's Symposium/ITxpo 2009 conference here. He added that the number of delayed replacements should reach 10 percent of all servers by 2010.

Certainly one way to reduce capital expenses is to not purchase new servers. But the servers that will begin to fail certainly have applications deployed on them that are if not critical at least important to the business, otherwise they would not have hardware dedicated to them. So where are those applications going? Virtual machines, most likely. Consolidated onto newer, more reliable hardware capable of supporting many applications contained within virtual machines. Virtualization is a primary enabler of consolidation efforts, which in turn reflects in IT budgets as reductions in capital expenditures.

Shifting the budget that would normally be allocated to acquire new hardware to virtualization and cloud computing initiatives, both public and private, would certainly explain an increase in funds available for cloud computing. This would also explain why external economic factors do not appear to be, according to Avanade’s study, a driving factor in cloud computing adoption.


It’s still important to remember that Avanade’s study doesn’t indicate that reducing costs isn’t a driver for cloud computing, it just says that external economics aren’t really playing a role in decision-making at this time. In fact within the study is this little nugget indicating cost savings are, in fact, an important factor in cloud computing adoption:

blockquote Companies are under equal pressure to innovate and save money and, many are turning to new technology as a way to do this. The vast majority of respondents (85 percent) report that their company’s rate of new technology adoption is either increasing or staying the same (83 percent in the United States).

But if we assume that organizations are shifting allocation of funds rather than asking for bigger budgets, then it is possible that economic constraints have little effect on adoption of cloud computing. If cloud computing initiatives required funding without reducing other existing budgets then it would be more likely that adoption rates would be slower than what is shown in both Avanade and F5 research and more folks in the Avanade research might have indicated that economics were in fact impacting their adoption plans.


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More Stories By Lori MacVittie

Lori MacVittie is responsible for education and evangelism of application services available across F5’s entire product suite. Her role includes authorship of technical materials and participation in a number of community-based forums and industry standards organizations, among other efforts. MacVittie has extensive programming experience as an application architect, as well as network and systems development and administration expertise. Prior to joining F5, MacVittie was an award-winning Senior Technology Editor at Network Computing Magazine, where she conducted product research and evaluation focused on integration with application and network architectures, and authored articles on a variety of topics aimed at IT professionals. Her most recent area of focus included SOA-related products and architectures. She holds a B.S. in Information and Computing Science from the University of Wisconsin at Green Bay, and an M.S. in Computer Science from Nova Southeastern University.