New Independent Consulting Study Shows Value of Cloud Services Remains Elusive for Many Enterprises

HERNDON, VA – October 2, 2013 – Although cloud-based services are now widely utilized by the vast majority of enterprises, a new study by Forrester Consulting has found that many organizations are not realizing the full potential value of these services because their networks are not prepared to support the increased bandwidth demands and complexity of multiple cloud-based services.

The September 2013 commissioned study, “Building for the Future: What the New World of Cloud IT Means for the Network” which was conducted by Forrester Consulting on behalf of XO Communications and Juniper Networks, examined current cloud technology adoption trends, application usage types in the cloud, satisfaction levels with expected benefits, and the impacts cloud services are having on the enterprise network. The study surveyed more than 150 IT decision makers at companies with more than 500 employees across several industries.

Key Findings of the Study:

1. Cloud Services Adoption Is Widespread and Business-Critical Apps Are Moving to the Cloud
The study confirms the trend that enterprises are moving to the cloud with a majority of businesses having embraced at least one cloud service.  Moreover, after testing the waters with simple tasks, IT and business organizations are now shifting advanced, business-critical applications and services from internal data centers to cloud platforms. Specifically, the study found that:

• More than 75% of enterprises are using or plan to use some type of cloud-based service;
• 50% more respondents plan on moving revenue-generating B2B e-commerce sites to cloud environments this year compared to last year;
• Software, storage, and disaster-recovery-as-a service represent the top three cloud-based services; and
• More than 50% of IT decision makers said their organization will be using four or more cloud platforms.

2. The True Value of Cloud Services Remains Elusive
While many enterprises are reporting cost savings by moving to cloud platforms, the reality is that very few enterprises have seen values outside of cost savings.  A major finding of the study contradicts one of the largest expectations IT professionals have when adopting cloud services: that the cloud provides them with a fast, easy set of IT resources.  According to the study, only 20% of IT decision makers said they were very satisfied with this benefit.  This is because many aspects of the infrastructure and operations supporting these services are not found in the cloud but in the network, which many enterprises have not refreshed for the new world of Cloud IT.

The findings in the study also reveal some interesting contradictions.  Although 88% of IT decision makers believe cloud-based services will have an impact on the network, less than half of them said their organization had upgraded their network in the last three years.

In fact, the study shows that most organizations have given a higher priority to implementing cloud-based services and other IT initiatives over refreshing or upgrading the network.  According to the study, IT decision makers have placed a higher priority on five other IT initiatives (server upgrades, pursuing cloud services, storage refresh, PC refresh, and upgrading security environments) over the upgrading their network.

3. A Scalable, Agile and High Performance Network is Necessary for the New World of Cloud IT
In order to improve the value of their cloud services and accommodate the impact of cloud services on the network, the majority of IT organizations have had to upgrade their company’s networks.  Specifically, the study found that:

• 78% of enterprises had to upgrade one or more aspects of the network
• 47% of enterprises had to upgrade network bandwidth
• 46% had to invest in new security services

Organizations expanding or implementing cloud services have taken these lessons to heart.  IT decision makers said that upgrading the network is now their top priority for a comprehensive strategy to support public cloud and other cloud-based services offerings.

“What is clear in the study is that enterprise networks have reached a tipping point with respect to being able to support more business-critical services that reside in the cloud,” said Don MacNeil, chief marketing officer at XO Communications.  “In order to realize the full benefits of cloud-based services, companies will have to examine their networks for readiness, align it with their business and IT strategy, and start to design new network infrastructures to enable a scalable, high-performing, cost-effective and secure cloud services environment.”

The full study is available for download by clicking here www.xo.com/iwan.

In addition, XO Communications will be hosting a live webinar on October 9, 2013 at 2:00 EDT featuring guest speaker, Forrester Research, Inc. principal analyst Andre Kindness, who will review the key findings of the study.  To register for the webinar, go to http://bit.ly/185i8Mv.

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