KPMG: UK businesses reluctant to stick head in cloud

09 March 2015

Despite the clear advantages of Cloud services, UK businesses show reluctance ‘sticking their head in the cloud’, research by KPMG shows, with 71% of these companies spending 10% or less on the cloud. According to the research, one of the main reasons for this is the security issue, which, according to KPMG, may be disproportionate as cloud technology is as safe as other outsourcing solutions.

Professional services firm KPMG recently released its 8th annual ‘IT Outsourcing Service Provider Performance & Satisfaction Study’, which covered almost 2,100 contracts held by over 450 clients of outsourcing service providers. By examining more than 330 UK-based contracts, the firm was able to come to a detailed analysis of the current corporate IT spend in the UK.

KPMG - IT Outsourcing Service Provider Performance & Satisfaction Study

The underutilised cloud
In this analysis, the consulting firm, among others, focussed on the use of cloud technologies*, which according to the researchers, present a wide range of cost saving opportunities. The research, however, shows that these opportunities are not met as UK businesses are reluctant to use cloud services. Almost three-quarters of UK businesses (71%) are spending a meagre 10% or less of their IT budget on cloud services. This number is even lower than the global average, with 60% of companies spending 10% or less and 71% spending a fifth (20%) or less.

The top three reasons for the hesitation to use cloud services cited by the UK respondents included  data location, security and privacy risks, cited by just over a quarter (26%), concerns over regulation and compliance, named by 16%, and cynicism about integrating cloud services with legacy IT (15%).

Commenting on the UK analysis, Jason Sahota, Director in KPMG’s Shared Services and Outsourcing Advisory, says: “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.”

Jason Sahota, KPMG

Looking forward, Sahota adds: “Of course, investors and stakeholders will welcome caution on the part of the buyers, but they also want to see innovation, meaning that UK will need to find the right balance to remain competitive.”

* In the report, when using the term Cloud technologies KPMG refers to Software as a Service (SaaS), Infrastructure as a Service (IaaS) and Platform as a Service (PaaS).