Danish Cloud Maturity Survey 2018

Transcription

1 Danish Cloud Maturity Survey 2018 Current and planned adoption of cloud services Danish Cloud Maturity Survey

2 Early days for cloud adoption with concerns for security and expertise, and complexity of migrating the legacy applications Cloud maturity and current usage of cloud-based services are still relatively low Cloud maturity is still relatively low in Denmark with larger organizations lagging behind medium sized organizations. The Technology, Media and Telecommunication (TMT) sector is reported to have the highest cloud maturity. This can be attributed to the impact of technology disruption in the TMT sector and emergent adoption of Internet of things (IoT) and Big Data in the sector. The Power and Utilities (P&U) sector, and the Consumer Products and Retail (CPR) sector have low cloud maturity and seem to struggle with the digital transformation needed to meet the changing market dynamics toward online retailing. That sector also reports of less number of approved cloud services and dominate seeing security as a concern. Digital Transformation is driving cloud adoption The most important business driver of cloud adoption in Danish organizations is digital transformation. However, most of the cloud services still seem to be used for internal IT initiatives and pilots of new digital services, as indicated by the limited interest in moving to the cloud to drive revenue growth. This is predictable in Public Sector but this is not restricted to this sector alone. Even the P&U, CPR and Automotive and Transportation (A&T) sectors rank revenue growth low as a cloud driver. Security concerns and lack of cloud expertise along with legacy applications are holding back cloud adoption Security concerns are reported as a top challenge while improved IT security is reported as a mid-ranked benefit of cloud adoption. Some sectors, such as TMT, are represented in both categories. Lack of expertise is broadly reported across all sectors and organizational size, whereas legacy applications is a clear concern in global organizations and in the Governmental and Public Sector. Plans for increasing the use of cloud-based applications exist, but will be delayed till the adoption of cloud-based infrastructure takes off The largest Danish organizations are planning to significantly increase the usage of cloud-based applications in the coming years, with the A&T and TMT sectors giving the highest rank. However, the adoption of cloud-based infrastructure services is expected to lag behind due to the complexity of migrating legacy applications to the cloud and lack of expertise. Developing cloud strategies and executing on cloud road maps have priority over tackling the security and migration issues There is a high focus on building new cloud-native digital applications to support digital transformation, developing cloud strategies and executing on cloud road maps in the coming years, with indications of TMT sector as the front-runner with the P&U sector trailing behind. But with reported lack of expertise and the effort required for overcoming the issues related to legacy migration, it will take time until the cloud adoption really takes off.

3 Contents 01 Cloud maturity 02 Drivers and challenges 03 Current usage 04 Future plans 05 Security 06 About the survey

4 01 Cloud maturity

5 Consumer Products & Retail Government & Public Sector Health & Life Sciences Power & Utilities Technology, Media & Telecommunications (Tmt) Automotive & Transportation Cloud maturity is still relatively low Average cloud maturity based on geographical footprint Average of cloud maturity level of respondents on a scale from 1 to 5, where 5 is the highest Average cloud maturity of the Danish respondents is between 2 and 3, which is supported by EY s experiences in Denmark. Organizations with a broader geographical footprint (EU/Nordics or global) have slightly higher cloud maturity than those with a Danish footprint, indicating that the organizations with a local focus is less likely to employ cloud solutions. 0 Denmark EU/Nordics Global Average cloud maturity based on sector Average of cloud maturity level of respondents on a scale from 1 to 5, where 5 is the highest The TMT and Health and Life Science, HLS, sectors have the highest cloud maturity due to high adoption of the applications based on Software as a Service (Saas) sanctioned by the organization's IT department. This can be attributed to the impact of technology disruption in the TMT sector and the emergent adoption of Internet of things (IoT) and Big Data in the sectors. 1 0 Danish Cloud Maturity Survey

6 02 Drivers and challenges

7 Digital Transformation is driving cloud adoption but the security concerns and lack of cloud expertise is holding back the organizations Key business drivers for moving to the cloud Percentage of respondents reporting the driver Drive digital transformation Reduce time-to-market with new digital solutions Improve business scalability Develop new products and services Drive business innovation Reduce costs 73% 65% 62% 5 50% 46% There are many strong business drivers for moving to the cloud, the most important ones being digital transformation and reduced time-to-market with new solutions. The improved business scalability is also a key driver for moving to the cloud in the Danish market. There is, however, less interest in moving to the cloud to drive revenue growth or reduce costs. This indicates that the use of cloud services could be focused at internal IT and pilots of new digital services. Drive revenue growth 27% Benefits of using cloud services Percentage of respondents reporting the benefit Greater scalability Shorter IT infrastructure deployment time Business continuity Higher availability Shorter time-to-market with new digital solutions Improved IT security Improved IT operational efficiency Cost savings Move from CapEx to OpEx Reduced IT operational risk Larger geographic reach Increased developer productivity Higher performance Other 50% 50% 46% 42% 38% 35% 31% 27% 23% 23% 19% 12% 77% Greater scalability and shorter IT infrastructure deployment time are reported as the most significant benefits of using cloud services. Cost savings as a benefit of adopting cloud services is reported as less important than operational benefits such as business continuity, availability and IT operational efficiency for now. This indicates that flexibility, agility and operational stability are viewed as more important benefits than cost reduction. About 38% of respondents reported improved IT security as a benefit of using cloud, while security concerns have been reported as a top challenge related to cloud services adoption. Danish Cloud Maturity Survey

8 Digital Transformation is driving cloud adoption but the security concerns and lack of cloud expertise is holding back the organizations (Contd.) Challenges related to using cloud services Percentage of respondents reporting the challenge Security concerns Lack of cloud expertise 5 5 Compliance and/or regulations Complexity in migrating legacy applications 50% 50% Complexity of managing cloud costs 46% Complexity of managing multiple cloud services 35% Vendor lock-in 27% Move from CapEx to OpEx Current identity management solutions and processes 12% 15% Do not use cloud Other Security concerns and lack of cloud expertise are reported as the most significant challenges related to using cloud services, closely followed by compliance with regulations, legacy application migration and the complexity of managing cloud costs. This is supported by EY s experience from other projects that shows that organizations do not have the full expertise to manage cloud security. Many organizations have currently identified privacy and regulation compliance with General Data Protection Regulation (GDPR) as a challenge to securely manage data across different platforms and identify the geographical origin of the cloud host. Danish Cloud Maturity Survey

9

10 03 Current usage

11 Current usage of cloud-based services is still low, with Microsoft as the dominant service provider Share of cloud-based IT applications Percentage of respondents within each range 12% 3% 3% 52% All respondents report to have cloud-based IT applications. However, the responses show that the Danish cloud maturity is relatively low. About 52% of the respondents report to use cloud services for only 1% 19% of their IT applications whereas 30% use cloud services for 20% 39% of IT application. 30% In the 1% 19% group, the CPR and A&T sectors are slightly dominant. 1% 19% 20% 39% 40% 59% 60% 79% 80% 100% Share of cloud-based IT applications Percentage of responses within each range split based on the respondent's geographical footprint Denmark 50% 1 29% 7% Respondents with EU/Nordics footprint are reported to have a lower share of IT applications in the cloud compared to those with a global or Danish footprint. EU/Nordics 75% 25% Global 36% 55% 9% 1-19% 20-39% 40-59% 60-79% % Danish Cloud Maturity Survey

12 Current usage of cloud-based services is still low, with Microsoft as the dominant service provider (Contd.) Use of SaaS-based IT applications Percentage of respondents using the application Microsoft Office % Adobe Creative Cloud 62% Microsoft Power BI 5 ServiceNow Microsoft Dynamics 365 GitHub Dropbox JiRA 27% 27% 27% 27% 23% Slack SAP Sucessfactors Salesforce.com DocuSign Zendesk Google G Suite Box 15% 15% 15% 15% 12% 12% 12% New Relic 8% Workday SAP Ariba Other Microsoft Office 365 is the most used cloud-based IT application in the Danish market followed by Adobe Creative Cloud. The responses also show that Microsoft has a strong overall position, with Office 365, Power BI and Dynamics 365 among the top five cloud-based IT applications used. In addition, IT development and operations process tools, such as JIRA and GitHub, are used in almost every fourth large Danish organization. Slack is also on the top list of usage, indicating that SaaS adoption can happen very quickly even at large Danish organizations. Danish Cloud Maturity Survey

13 Current usage of cloud-based services is still low, with Microsoft as the dominant service provider (Contd.) Share of cloud-based IT infrastructure Percentage of responses within each range 21% 3% 3% 3% 6% 6 Security concerns, lack of expertise and migration complexity are reported as barriers for moving to the cloud, and almost all of the respondents have below 6 of their IT infrastructure in the cloud. On average, the responses show less use of cloud-based IT infrastructure compared to cloud-based IT applications, indicating that the adoption to cloud services is happening more rapidly in the applications layer. 1% 19% 20% 39% 40% 59% 60% 79% 80% 100% Do not use cloud Share of cloud-based IT infrastructure Percentage of responses within each range split based on the respondent's geographical footprint Denmark 58% 1 1 7% 7% Organizations with a global footprint tend to have a larger share of cloud-based IT infrastructure than those with Danish or EU/Nordic footprint. EU/Nordics 87% 13% Global 55% 36% 9% 1-19% 20-39% 40-59% 60-79% % Do not use cloud Danish Cloud Maturity Survey

14 Current usage of cloud-based services is still low, with Microsoft as the dominant service provider (Contd.) Number of IaaS or PaaS providers used Percentage of respondents within each category 16% 5% 5% A majority of the respondents use more than one Infrastructure as a Service (IaaS) or Platform as a Service (PaaS) provider, and 15% reports to use three or more providers, indicating that a multi-cloud strategy is popular in the Danish market for the organizations that use it. 42% 32% Use no IaaS or PaaS provider Use one IaaS or PaaS provider Use two IaaS or PaaS providers Use three IaaS or PaaS providers Use four or more IaaS or PaaS providers IaaS or PaaS provider used Percentage of respondents using the provider Microsoft Azure Amazon Web Services (AWS) Google Cloud Platform Do not use IaaS/PaaS 31% 15% 12% 85% Microsoft Azure is, by far, the most popular IaaS or PaaS provider among the respondents. The responses indicate that Amazon Web Services, AWS, has a significantly smaller market share in the Danish market when compared to its marketleading position worldwide. However, it should be noted that AWS market share probably are bigger as many people are not aware of the role services from Amazon plays regarding shadow IT. SAP Cloud Platform Force.com Alibaba Cloud 8% Google is emerging as the third most popular provider and has a slightly higher market share in Denmark compared to their global position. The responses indicate that the other providers have a limited market share, and that the market is dominated by the three large global providers mentioned above. Danish Cloud Maturity Survey

15 Current usage of cloud-based services is still low, with Microsoft as the dominant service provider (Contd.) Cloud workloads used Percentage of respondents using the workload Apps 52% Databases 35% Storage Disaster recovery (backup) 30% 30% Data analytics 26% Do not use Iaas/PaaS 22% Push notifications High performance computing 17% 17% Front end solutions Desktop Container services 13% 13% 13% Machine Learning Internet of Things (IoT) 9% 9% Integration services Applications are the most used cloud workload. Databases and storage are emerging as a popular cloud workload something that can be attributed to the high cost and complexity of hosting databases and storage on premise. The limited use of cloud container as a service (CaaS) in the Danish market can be attributed to the complexity of migrating legacy applications, which is a major barrier for cloud adoption. Emerging trends such as machine learning, cloud-based IoT services and high-performance computing are still in its infancy in the Danish market. Danish Cloud Maturity Survey

16 Current usage of cloud-based services is still low, with Microsoft as the dominant service provider (Contd.) Number of unsanctioned cloud services for respondents with 1 9 approved cloud services Percentage of responses within each range 18% 46% 36% Organizations with only 1 9 approved cloud services report having many unsanctioned cloud services. This trend is also observed in the organizations with approved cloud services. This indicates that IT departments trail behind the business side's adoption of cloud services and are still trying to catch up with the demand for the services among their user community. The Governmental and Public Sector reports the highest number of approved services with the CPR sector lagging behind Danish Cloud Maturity Survey

17

18 04 Future plans

19 Developing cloud strategies and executing on cloud road maps are major priorities going forward Top cloud initiatives planned for 2018 Percentage of respondents reporting the initiative Build new cloud native digital applications Execute on our cloud roadmap Develop a cloud strategy Implement improved security in our digital development lifecycle Implement increased automation in our digital development lifecycle Migrate legacy systems to the cloud Implement cloud management/monitoring None Run a tender process towards managed cloud IaaS/PaaS service providers Run a tender process towards IaaS/PaaS technology providers Other 13% 9% 9% 39% 39% 35% 30% 26% 26% 22% The responses show a high focus on building new cloud-native digital applications. This is supported by the finding that the most important business driver for moving to the cloud is digital transformation, and that shorter time to market with new digital solutions is reported as one of the major benefits of using cloudbased services. By reports, TMT is clearly taking lead with the P&U sector lagging behind. About 35% of the respondents are planning to develop a cloud strategy in 2018, whereas 39% are planning to execute on their cloud road map, implying an emerging cloud maturity in the Danish market. Despite security concerns being reported as the top challenge, addressing the concerns going forward does not seem to be a high priority, with only 30% reporting planned initiatives to address these. Top four cloud initiatives planned for 2018 based on geographical footprint Percentage of respondents reporting the initiative split based on the respondent's geographical footprint 13% Build new cloud native digital applications 33% 67% 0% Execute on our cloud roadmap 56% 67% Develop a cloud strategy 33% 33% 38% Implement improved security in our digital development lifecycle 25% 33% 33% Denmark Europe/Nordics Global Organizations with a Danish footprint have overall less initiatives planned for 2018, compared to those with an EU/Nordics or global footprint. They tend to have more focus on developing a cloud strategy than executing on their road map or developing new cloud-based digital applications. Danish Cloud Maturity Survey

20 Plans for increasing the use of cloud-based applications exist, but will be delayed till the adoption of cloud-based infrastructure takes off Share of IT applications estimated to be cloud-based in the following years Percentage of responses within each range 1 year 3 years 5 years 13% 17% 57% 39% 26% 26% 27% 26% 13% 17% 23% 0% 1% 19% 20% 39% 40% 59% 60% 79% 80% 99% 100% Share of IT applications that are cloud-based is expected to increase significantly in the coming five years. Within three years, more than 80% of all respondents estimate having at least 20% of their IT applications in the cloud. This indicates that the largest Danish organizations are planning to significantly increase the use of cloud-based applications. Share of IT infrastructure estimated to be cloud-based in the following years Percentage of responses within each range 1 year 3 years 5 years 61% 27% 9% 56% 22% 9% 22% 26% 26% 13% 9% 0% 1% 19% 20% 39% 40% 59% 60% 79% 80% 99% 100% About 65% of the respondents estimate to have less than 20% of their IT infrastructure in the cloud in But within five years, only of the respondents estimate to have less than 20% of their IT infrastructure in the cloud. Within five years, 22% of the respondents estimate having above 80% of their IT infrastructure in the cloud, and 9% of the respondents estimate that this percentage will reach 100% within the same time frame. This indicates that it will take time until the adoption of cloud-based infrastructure takes off. Danish Cloud Maturity Survey

21 05 Security

22 With security concerns being the top challenge for cloud adoption, cybersecurity initiatives is a key focus area Established security initiatives Percentage of respondents with established security initiative against each threat Data breaches Denial-of-Service (DoS) Insufficient identity, credential and access management Data loss System vulnerabilities Account hijacking Malicious insiders Advanced persistent threats (APTs) Insecure interfaces and application programming interfaces (APIs) Abuse and nefarious use of cloud services 39% 35% 22% 57% 57% 65% 91% 83% 83% 83% More than 80% of the respondents have established security initiatives in basic areas such as data breaches, data loss, denial of service, DoS, and identity, credential and assess management the areas where vulnerabilities are used for Common Attacks. Reports are quite similar for all sectors in general, with the P&U sector lagging slightly behind. DoS initiatives are reported as a focus area for the Governmental and Public Sector and Advanced Persistent Threats (APIs) for TMT. Adoption of cloud solutions and emerging technologies opens for potential sophistic Advanced and Emerging Attacks that must be addressed to support the cloud service security features. Shared Technology vulnerabilities 17% Danish Cloud Maturity Survey

23 06 About the survey

24 About the survey The results are based on an anonymous online survey where approximately 220 IT responsible (such as Chief Information Officers and Heads of IT) of large private and Governmental and Public Sector organizations in Denmark were invited to respond in March Geographical footprint Percentage of respondents Organization size Percentage of respondents 22% 16% 25% 46% 32% 59% Denmark Global Europe/Nordics <1,000 employees 1,000 10,000 employees >10,000 employees Sector Percentage of respondents 1 11% Automotive and transportation 15 11% Consumer products and retail Government and public sector Health and life sciences Insurance Oil and gas 0% 0% 11% 3% 35% Power and utilities Technology, media and telecommunications Other Danish Cloud Maturity Survey

25 Key contacts Claus Andersen Partner Advisory Risk Tel: Jesper Kirk Executive Director Advisory Technology Consulting Tel: EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com EYGM Limited. All Rights Reserved. ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice. ey.com Danish Cloud Maturity Survey