NZ companies and cloud solutions

Frost & Sullivan: 40% of New Zealand companies spend 10% of IT budget on
cloud solutions; 57% intend to increase cloud based budgets

Ability to lower overall IT costs is the leading driver for adoption
of cloud computing; security the top criteria for selecting a cloud vendor

Auckland, 26 November 2012 – Interest in cloud computing has grown
substantially over the past couple of years. Enterprises in New Zealand are
constantly evaluating adoption of cloud computing to improve business
agility, increase standardisation of IT infrastructure and lower cost of
delivering IT services.

Frost & Sullivan’s research, State of Cloud Computing New Zealand 2012
reports that of the organisations in New Zealand that currently use cloud
computing services, 40% spend more than 10% of their total IT budget on
cloud solutions or services, while 20% spend more than 20% of their total
IT budget. Larger organisations generally spend significantly more on cloud
computing services than smaller ones.

Phil Harpur, Senior Research Manager, Australia & New Zealand ICT Practice,
Frost & Sullivan says that 57% of organisations in New Zealand that are
currently using cloud solutions plan to increase their cloud-based
solutions budget significantly over the next 12 months, reflecting a market
very much in a growth phase.

Security was cited as the most important criteria when selecting a cloud
vendor, followed by trust, reliable services and support, hosting
capabilities in NZ, company reputation, value added services, price and
ROI. “Vendors must also have sufficient SLAs, a good product roadmap, offer
sufficient product scalability and demonstrate strong channel partner
capabilities” Harpur added.

Compared to Australia, where 70% of organisations plan to increase their
spending on cloud services, New Zealand’s tempered growth is largely due to
data sovereignty and latency issues. “Local providers guarantee data
remains in New Zealand but are more expensive than multinationals hosting
data offshore, thus the value proposition is not as strong” Harpur
explained.

Benefits of moving to the cloud

The ability to lower overall IT costs is the leading driver for the
adoption of cloud computing. Andre Clarke, Country Manager, New Zealand,
Frost & Sullivan says “Moving to the cloud enables organsiations to reduce
CAPEX, and provides a great deal of flexibility and agility allowing
organisations to add scalable computing resources very quickly and at
relatively low cost. This in turn greatly reduces some of the risk
associated with developing new products which in the medium to long term
will help stimulate market innovation.”

It also allows organisations to free up key resources previously dedicated
to more traditional IT services and focus on other aspects of operations
while providing flexibility to meet business demand via
real-time /on-demand computing.

Cloud deployments of most New Zealand organisations are fully deployed
rather than in pilot phase. HRM and Unified Communications are the slowest
applications to move out of pilot phase, whereas storage & computing
solutions have the highest rate of full deployment.

“Key challenges include integrating “shadow IT” cloud purchases into a
corporate framework, ensuring effective SLAs and security measures are in
place, and managing the increased level of complexity that comes with
combining multiple clouds with on-premise resources” Clarke mentions.

Potential for share of pie in the cloud

Software as a Service (SaaS) is the most commonly used delivery model in
the cloud offering several benefits over on-premise software such as lower
upfront costs, standardisation and ease of upgrade, ubiquitous access and
seamless integration with in-house infrastructure. Adoption rates of SaaS
applications are positively correlated with the size of the organisation.
Larger organisations are more likely to be using software applications
accessed via the cloud, especially for office productivity applications,
CRM, HRM and ERP.

Data sovereignty is a prominent issue in New Zealand, particularly in the
public sector, where the government’s cloud strategy mandates that in
certain scenarios data remain in New Zealand; thus limiting the number of
potential suppliers. Those with NZ data centres are advantaged, while
others have and will forge partnerships to meet this requirement.

E-mail and storage & computing resources (ie.IaaS) are commonly accessed
via the cloud with 53% of New Zealand organisations accessing e-mail via
the cloud, and 44% accessing storage & computing resources via the cloud.
Office productivity applications, web security and e-mail security are also
commonly accessed via the cloud.

Frost & Sullivan's State of Cloud Computing New Zealand 2012 report forms
part of the Frost & Sullivan New Zealand Enterprise Communications program.
All research services included in this subscription provide detailed market
opportunities and industry trends evaluated following extensive interviews
with market participants. Interviews with the press are available. If you
are interested in more information on this study, please send an e-mail
with your contact details to Donna Jeremiah, Corporate Communications, at
djeremiah@frost.com.

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