Without question, cloud has already made a profound impact on both business and everyday life – from music to enterprise operations.  As a result of a perfect synthesis of recent technology and social connectivity trends, businesses across industries and sizes have begun to harness cloud to drive business innovation.

However, according to a recent IBM Institute for Business Value study, few organizations are currently actively taking advantage of cloud capabilities.  While cloud is widely accepted as a “technology game-changer with the potential to transform internal operations, customer relationships, and industry value chains,” the majority of companies are not adopting cloud-enabled business models.

What is Cloud?

There are a ton of definitions for cloud.  Wikipedia defines cloud computing as “the delivery of computing and storage capacity as a service to a heterogeneous community of end-recipients.”  IBM provides the definition: Cloud computing is a pay-per-use consumption and delivery model that enables real-time delivery of configurable computing resources (for example, networks, servers, storage, applications, services).  For more great explanations of cloud, check out Cloud Computing Terms to Know and Cloud Computing Myths…BUSTED.

Cloud Adoption

Businesses are increasingly recognizing cloud as an important technology and adopting cloud strategies in effort to reduce the complexity and cost associated with traditional IT approaches.  Of the 527 business and technology executives that IBM surveyed in this study, almost three-fourths indicated their companies had piloted, adopted or substantially implemented cloud in their organizations – and 90 percent expect to have done so in three years.  While only 13 percent have substantially implemented cloud, this number is expected to grow to 41 percent in three years.

Cloud also seems to have a greater presence in IT departments.  Nearly half of the respondents in a recent CIO Economic Impact survey indicated they evaluate cloud options first – over traditional IT approaches – before making any new IT investments.

And while a higher percentage of large organizations (those with revenues above US$20 billion) are adopting cloud solutions, smaller organizations have jumped on the bandwagon as well.  IBM found that 67 percent of small companies (those with revenues less than $1B) and 76 percent of medium companies (revenues between $1 and 20B) have adopted cloud at some level.

Businesses’ Cloud Objectives

Businesses are utilizing cloud capabilities to both enhance internal efficiencies, as well as improve business capabilities.  According to the IBM study:

• The number-one objective for adopting cloud is an external capability – that of increased collaboration with external partners.
• Only one of the top seven objectives cited focused on internal efficiencies, with 57 percent looking to cloud to drive competitive and cost advantages through vertical integration.

The Future of Cloud

Cloud is making its mark and it is not going anywhere.  By 2020, the global cloud computing market is forecast to grow 22 percent annually to US $241 billion.  However, this growth will only occur if organizations continue to recognize and embrace cloud as not only an IT solution, but a technology with immense business potential across all functions.  Businesses today do not fully understand the power of cloud to help drive business innovations:

• Only 38 percent cite cloud as a leading priority for the entire company, while 62 percent cite cloud as a leading priority for their IT organizations.
• Only 16 percent of survey respondents currently utilize cloud for sweeping innovation, such as entering new lines of business or industries, reshaping an existing industry or transitioning into a new role in their industry value chain.

Although today’s number of businesses using cloud to create and deliver business value is low, 35 percent of respondents plan to rely on cloud for business model innovation within the next three years.