Security and privacy concerns are the top cause of disappointingly low levels of investment in cloud services by UK organizations, according to a new KPMG study.
The consulting giant studied over 2000 contracts worth £7.8bn globally, 330 of which were in the UK, to compile its eighth annual Service Provider and Performance Satisfaction report.
It revealed that, contrary to popular assumptions, cloud services aren’t particularly popular among UK firms.
In fact, 71% of UK organizations quizzed in the report spend just 10% or less of their IT budget on cloud services.
Data location, security and privacy risks were cited by the largest number of C-level respondents (26%) as their main reason for eschewing the cloud.
This was followed by regulation and compliance concerns (16%) and question marks over how easily cloud services can integrate with legacy IT (15%).
Only 44% said they will increase spending on IT outsourcing over the next two or three years, as opposed to 77% in the previous report.
For those who are keen on farming out IT services to third party providers, quality improvement (20%), access to skills (16%), and a need to reduce time to market (6%) are driving investments, KPMG said.
India (51%), Poland (8%) and South Africa (8%) are the top destinations for IT outsourcing, according to the report.
Despite relatively low levels of investment in the cloud, those that are seem pretty happy with the service they are receiving.
Some 77% of UK respondents said they are satisfied with their cloud provider.
“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,” explained Jason Sahota, director in KPMG’s shared services and outsourcing advisory team .
“Of course, investors and stakeholders will welcome caution on the part of the buyers, but they also want to see innovation, meaning that UK plc will need to find the right balance to remain competitive.”