This document summarizes the key findings of a survey on cloud adoption trends: - Cloud adoption is growing significantly, with over 60% of businesses using public cloud, 71% using private cloud, and 55% using hybrid cloud. Adoption of all cloud models is expected to continue growing in the next 18 months. - Businesses are moving more workloads to the cloud, with the average expected to increase from 29% currently to 54% in the next two years. Cloud budgets are also increasing as a percentage of IT budgets. - Over half of businesses now consider cloud essential to their business. Successful cloud adopters rely heavily on third-party experts for developing and implementing cloud strategies. - Line of business decision

1. More Enterprises See Cloud as a Strategic
Business Enabler, New Survey Reveals

2. Frost & Sullivan
2 Frost.com
In the early days of the cloud, resource-constrained IT managers considered the new model
for its potential to fix their most pressing data center headaches. The cloud offered quick,
easy, and budget-friendly access to unlimited compute and storage capacity.
But as the cloud model matures and adoption grows, cloud decisions are moving beyond
the data center and up the corporate ladder, even reaching the C-suite. As revealed in a
new Frost & Sullivan survey sponsored by HP, more businesses consider the cloud as an
important tool in achieving business goals.
This brief summarizes key trends in cloud adoption and perceptions,based on the findings of
a recent survey of IT decision-makers worldwide.
Cloud Adoption ReachestheTipping Point
The past two years have seen
tremendous growth in cloud adoption,
as businesses became more familiar
with the model and providers tweaked
their service offerings to be more
attractive to enterprises. The cloud
has not only reached more businesses,
but has penetrated deeper into those
businesses,as businesses rely on cloud
delivery for a higher proportion of
their workloads.
The survey results show growth across multiple deployment models:
• Public Cloud – The low-cost shared model that
introduced the “cloud” concept to the market
continues to grow, with approximately 60% of
businesses worldwide using or actively planning their
implementation.
• Private Cloud – This dedicated infrastructure
model can be deployed either on-premises or in a
cloud provider’s center. Combined, the two types of
deployments represent the highest adoption rate for
cloud infrastructure services, according to the survey,
with 71% of businesses using or implementing private
clouds.
• Hybrid Cloud – The most versatile and fastest- growing cloud deployment model,
a hybrid cloud combines various cloud environments, allowing businesses to manage
them as a common pool of resources. Also, 55% of businesses are using or in the
process of implementing a hybrid cloud, with another 15% planning to adopt one in the
next 12-18 months.
Planning to implement in
the next 12-18 months
Actively implementing
Currently use
Public Cloud
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Private Cloud Hybrid Cloud
All cloud deployment models are growing, with hybrid expected to
gain the most users in the next 18 months.
2016
2014
Cloud Budget as %
of IT Budget
% of Workloads
in the Cloud
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
The % of budget and workloads devoted to cloud
will nearly double in the next 2 years

3. More Enterprises See Cloud as a Strategic Business Enabler, New Survey Reveals
3Frost.com
• Community Cloud – This nascent deployment model provides shared cloud services
for a specific “community of interest,” usually members of an industry or supply chain or
geography. Community cloud services provide compliance, performance, and/or security
parameters required or desired by the community members. Community cloud services
have been adopted by 27% of businesses, with the highest level of adoption in the APJ
region and, specifically, China.
Growth in cloud adoption is not just
related to number of adopters, but
also an increase in how businesses
use the cloud. As the cloud matures
and businesses become more
comfortable with the model, they
are moving more workloads into
the cloud. Today, IT decision-makers
report they place an average of 29%
of their workloads in the cloud, which they expect to increase to 54% in the next two
years.Furthermore, the workloads are likely to be mission-critical or more sensitive than in
the past, including finance and accounting systems, customer relationship management, and
proprietary or custom applications.
Commensurate with the increase in usage, budgets for cloud-based solutions are increasing.
Today, the average budget for cloud projects (which includes hardware, software, and
professional services for “build-your-own” private cloud, as well as operational costs for
third-party cloud subscriptions) is about 29% of the total IT budget. By 2016, the average is
expected to nearly double to 52% of the IT budget.
Not surprisingly, cloud usage is increasing in status along with volume. Nearly half of today’s
cloud-using enterprises consider the model essential to their business.These businesses are
also most likely to use the cloud to support other transformational technologies, such as
mobility, social media, and data analytics.
Perceptions of Cloud Benefits Evolve as Businesses Become
More Cloud-Savvy
Total
Solution
Low
Engagement
Cost-and
Security-Driven
29%
35%
36%
Businesses’ cloud ‘maturity’ is reflected in how
they perceive and use the cloud
However, not all cloud adopters—even
those who consider the cloud essential—
perceive or use the cloud the same way.As
cloud adoption expands, distinct profiles
emerge of types of cloud users. In general,
the classifications reflect the cloud
“journeys” of companies, with movement
from segment to segment expected as
businesses become more familiar and
comfortable with the cloud model.
3Frost.com
We use cloud, but it is
not an important part
of our business
Cloud in now an essential
part of our business52%48%
As the cloud model matures, more than half
of businesses consider it essential

4. Frost & Sullivan
4 Frost.com
More than a third
of cloud users value
benefits associated with
cost- and risk-reduction
• Expected lower costs
• Predictably manage IT
costs and resources
• Improves information
security
• Improves disaster
recovery and business
continuity capability
Cloud-savvy businesses
cite benefits associated
with flexibility and
responsiveness
• Provides more
flexibility to get into
new business
• Enables businesses to
more quickly respond
to competition
• Aligns IT
responsiveness with
business agility needs
• Faster application
deployment by IT
• Increases speed to
market
• Increases speed of IT
deployment for new
services
• Ability to respond to
surges in business or
data
For most businesses, the initial foray into the cloud is for the next application, often in
response to specific line-of-business requests. This “low-engagement” segment recognizes
some of the benefits of the cloud, but does not consider it a strategic initiative.Worldwide,
29% of businesses are in the “low-engagement” phase.
In the next stage along the cloud adoption path,IT departments turn to the cloud to address
pressing IT challenges, primarily associated with cost and security issues.As IT budgets are
constrained, as compliance regulations and security threats multiply, as constituent demands
increase,IT leaders seek out the new model as a means to do more without adding resources.
About 35% of businesses fall into the“cost- and security-driven” segment.For this group,the
benefits they derive from the cloud include budget-friendly,pay-per-use pricing,data security,
and availability.
The most cloud-savvy businesses, comprising 36% of worldwide enterprises, consider cloud
a “total solution” that has value beyond the IT department into the business as a whole.
These businesses are also most likely to use the cloud to support other transformational
technologies, such as mobility, social media, and data analytics.While such leaders recognize
the tactical value of cloud in cost and risk reduction, they are more likely to talk about cloud
benefits in expansive terms that are aligned with business goals. They look to the cloud
model to provide the flexibility, agility, and market responsiveness that their businesses need
to thrive in a hyper-competitive global economy.
Cloud Challenges are Real, but do Not Inhibit Adoption
Cloud users are very aware that no technology solution is without challenges and tradeoffs.
Thus, even as cloud users increase their usage, they remain wary of challenges, particularly
in two areas: implementation and business risk.
Implementation concerns stem largely from businesses’ lack of on-staff expertise in the
still-evolving cloud model.Although the cloud is often depicted as simple, inexpensive and
low-barrier, few businesses are willing to plunge into the cloud without appropriate due-
diligence.With the broad choice of deployment options (on-prem or hosted, self-managed
or provider-managed, virtualized or bare metal, public, private or hybrid), IT technicians
are challenged to select the right option for any given workload. Furthermore, when each
service provider’s cloud products and services are defined and supported differently,
businesses are concerned about selecting the right partner without being “locked in” to the
decision.Businesses also understand that leveraging the cloud will require changes to current
processes and even organizational staffing, which adds to the implementation burden.
Concerns about business risk reflect users’ recognition of the looming importance of
security and compliance to the business, as well as some ambivalence regarding the cloud
model’s ability to address the issues. As noted earlier, the list of top-cited cloud benefits
includes“improve business security.”A far cry from the early days of cloud,when the concept
of shared infrastructure was in itself considered a reason to stay away from the model,
businesses now recognize that a reputable cloud service provider may offer protections
(including physical security in the cloud center and access to redundant power and network
facilities) that would be cost-prohibitive in a private center.

5. More Enterprises See Cloud as a Strategic Business Enabler, New Survey Reveals
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Lack of cloud expertise
drives implementation
concerns
• Uncertainty over
which cloud approach
to take
• Finding the right
partner to work with
on cloud strategy
• Need to transform our
current IT staff
• Too difficult to deploy
and manage
• Lack of predictable
ROI for the cloud
• Concerns about
vendor lock-in
• Getting top
management buy-in
Cloud adopters are
acutely aware of
business risks
• Information security
concerns
• Issues with data
sovereignty
• Concerns with
performance and
reliability
• Compliance or
governance concern
Nonetheless, businesses understand that to customers and all legal jurisdictions, the
company (not the cloud service provider) retains ultimate responsibility for safeguarding
data and meeting regulatory mandates. In addition, the company’s business suffers if
applications are unavailable to users or perform poorly. Therefore, businesses treat
potential risks in the cloud with the same respect they treat potential risks in their own
data centers.
While cloud users voice concerns over specific aspects of the cloud,the concerns have not
inhibited adoption significantly. Just 5-7% of businesses report having abandoned a cloud
implementation project.The stated reasons primarily involve security or cost; underlying
reasons likely can be traced to poor expectation-setting on the part of the vendor and/or
insufficient due-diligence on the part of the enterprise.
While the concerns do not inhibit adoption for most businesses,they do offer a clue to the
gaps they may see in their current cloud services, as well as what they may be looking for
in choosing a cloud service provider. To assuage concerns about business risk, enterprises
may select providers who offer optional security services or certified-compliant data
centers. To address their implementation concerns, businesses may seek out a provider
that offers managed or professional services.
Successful Cloud Adopters Rely onThird-Party Experts
We are likely to use a
third-party expert
We have used a
third-party expert
Develop cloud
computing strategy
Implement cloud
computing strategy
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Cloud-reliant businesses overwhelmingly
turn to third-party experts
In fact, the implementation concerns
are well-placed, which is why successful
cloud adopters point to the value of
relying on expert consultants to assist
them in navigating cloud and other
technology trends. Among businesses
that classify the cloud as “essential” to
their business, fully 94% consider it
“very” or “extremely important” to
leverage external technology partners
for advice and guidance.
The respondents back their perceptions with action. Nearly 70% said they relied on a third-
party expert for assistance in developing and implementing their cloud strategies, with
another quarter planning to do so. Fewer than 5% say they developed or implemented their
cloud strategies completely on their own.
The heavy reliance on outside expertise is in part a reflection of the newness and complexity
of the cloud model and the lack of in-house technical resources who are experienced in
cloud implementations. But it also reflects enterprises’ recognition of the cloud model as
more than just another infrastructure option.The cloud represents a new way of delivering
IT resources and services to the business. In fact, IT as a Service or ITaaS is becoming
more prevalent, as IT leaders re-think their organizations, business processes and—most
importantly—relationships with their line-of-business (LoB) colleagues.

6. Frost & Sullivan
6 Frost.com
Line of Business Decision-Makers IncreaseTheir Influence
40%
47%
13%
I approve strategy and
budgets for our IT department
I interact with our IT
department frequently
I am an important internal
stakeholder for our
IT department
Surveyed LoB decision-makers wield their influence
over IT in multiple ways
In the new cloud-enabled business
world, non-technical employees are
increasingly making their own
technology decisions, with or without
IT support. Emboldened by their active
use of technology in their personal lives
as well as business trends such as Bring
Your Own Device, LoB employees
increasingly are selecting and paying for
the applications and hardware they
need to do their jobs.
The shift means that IT is no longer the gatekeeper for business technology.If IT is unresponsive
to business needs, business units now have the option to sidestep the department and engage
with service providers on their own. To forestall an LoB technology-buying frenzy (and
potential financial and security costs to the business), many IT departments are seeking to
reinvent themselves as a partner to LoB leaders—inviting collaboration,and offering assistance
and guidance to the technology selection process,while protecting the businesses’ security and
compliance interests.
The new relationship will take time to develop. As revealed by the survey, LoB decision-
makers have less confidence in IT’s ability to help the organization take advantage of new
technologies; 73% of IT respondents said their organization’s IT resources and infrastructure
are “extremely” or “very well prepared” to leverage technology trends, compared with just
57% of LoB influencers.The gap in confidence should be a concern to IT leaders, since it is
likely to drive technology decisions away from IT’s purview.
A major indicator of increasing LoB
influence over technology decisions
is the shift in budget source. In most
businesses, the department that
“owns” the budget has authority
to determine how the budget is
spent. Today, in the vast majority of
businesses, the cloud budget is wholly
or mostly under the auspices of IT,
with 76% of IT decision-makers and
66% of LoB decision-makers saying all
or most cloud spend comes from the
IT budget in their companies. Perhaps not surprisingly, LoB survey respondents are more
likely to ascribe higher proportions of spend to non-IT budgets than IT respondents.This
difference in viewpoint may reflect the narrower purview of LoB respondents,who may only
be aware of and influence the specific workloads used in their own department. However, it
Not at all well prepared
Not very well prepared
Somewhat well prepared
Very well prepared
Extremely well prepared
IT LoB
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
LoB are more pessimistic about the organization’s preparedness
to leverage technology trends than IT

7. More Enterprises See Cloud as a Strategic Business Enabler, New Survey Reveals
7Frost.com
also likely reflects some degree of “shadow IT,” in which LoB decision-makers use their own
budget to subscribe to cloud services without IT knowledge.
In the next two years, IT’s grip over the cloud budget will continue to loosen, as both
more IT and LoB respondents expect the percentages to creep toward non-IT budgets.
The number of respondents (both IT
and LoB) who expect IT to retain all
or most of the cloud budget drops by
12%. Furthermore, 6% of IT and 10%
of LoB respondents expect all or most
cloud spend to come from non-IT
budgets in 2016 (versus 5% and 7%,
respectively, in 2014).
However, the shift of influence from IT
to LoB decision-makers impacts more
than choosing or paying for point solutions. It can mean the difference between a total
portfolio approach to cloud decisions versus local optimization. LoB leaders are measured
primarily on how effectively they manage their own organizations, with criteria including
budget,revenue,and productivity.As such,they are charged by the business to deliver optimal
results for their own organization. In contrast, IT leaders have traditionally been charged
with procuring and managing technology that best serves the entire business.
The difference in purview is evident in
how LoB and IT decision-makers think
of the cloud purchase decision. The
same percentage (29%) of LoB and IT
respondents can be considered “low
engagement,” likely to make quick,
perhaps impulsive,decisions in placing
applications in the cloud. However,
as the level of engagement increases,
LoB and IT decision-makers diverge
in their motivations. In the survey, 41% of IT decision-makers look for a “total solution”
that addresses broad business benefits such as agility and responsiveness, with 30% driven
by more tactical cost and security benefits. For LoB decision-makers, the percentages are
reversed: 41% are motivated to solve their own department’s cost and security issues with
cloud services, and just 30% are driven by a broader view toward overall business benefits.
Thus, the continuing shift of control toward LoB can potentially create cloud solutions that
meet individual departmental needs but are sub-optimized across the entire organization.
This eventuality underscores the need for a company-wide cloud roadmap that both LoB
and IT leaders support.
All of our cloud spend comes
from IT budget
More of cloud spend come from
IT than non-IT budget
About the same amount comes
from IT and non-IT budgets
More of cloud spend comes from
non-IT than IT budget
2014 2016 2014
IT LoB
2016
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
By 2016, IT’s Control of the Cloud Budget Will
Loosen in Many Companies
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Total Solution
Cost- and Security-Driven
Low Engagement
IT LoB
IT decision-makers are more likely to take a “total
solution”approach to cloud decisions than LoB

8. Frost & Sullivan
8 Frost.com
Cloud Adoption Patterns are More Similarthan Dissimilar
Worldwide
The cloud is helping make the world smaller,so it should be no surprise that businesses across
world regions demonstrate similar perceptions and adoption patterns. Where significant
geographical differences occur, they tend to reflect the economic growth, regulatory
environment, and business cultures of the regions or nations.
In terms of overall adoption, businesses in China are significantly more likely to utilize cloud
than the global average (79% in China, versus 60% globally). At the same time, Chinese
businesses are significantly more likely to consider the cloud “essential to their business”
than other businesses. The enthusiastic embrace of the cloud reflects the rapid growth of the
nation’s economy and strong government support for the technology,as well as high levels of
investment by global cloud service and technology vendors. Developers of new, large-scale
office parks in China are including local cloud services alongside power and network utilities
as a means to entice tenants.This is contributing to high levels of community cloud adoption,
with 30% of Chinese respondents reporting they currently use a community cloud and
another 36% saying they have an active project and budget for community cloud adoption.
39%
21%
21%
19%
US: 60%
27%
40%
13%
20%
Mexico: 67%
29%
25%
39%
7%
Brazil: 54%
38%
30%
15%
17%
UK: 68%
24%
40%
15%
21%
France: 64%
35%
30%
20%
15%
Germany: 65%
25%
40%
23%
12%
Italy: 65%
19%
38%
24%
19%
Spain: 57%
29%
27%13%
31%
Japan: 56%
63%
16%
13%
8%
China: 79%
25%
28%20%
27%
Australia: 53%
With 79% of businesses, cloud adoption in China significantly exceeds
the global average of 60%

9. More Enterprises See Cloud as a Strategic Business Enabler, New Survey Reveals
9Frost.com
In terms of preferred deployment
models, respondents from the EMEA
region were significantly more likely to
use private cloud than other regions.
This preference for a more secure,
non-shared model likely reflects the
stringent data privacy laws enacted
by the EU and individual nations. Asia
Pacific respondents were most likely to
use public cloud services, with China
showing the highest adoption levels
worldwide, at 64%.Within the Americas region, current US usage is significantly higher than
Brazil and Mexico across all three deployment models; however, Brazil is particularly well
poised for growth, with 40% of businesses currently planning a cloud project. Hybrid cloud
usage was fairly uniform worldwide, at around 30%, reflecting the immaturity of that model.
The Last Word
The cloud is rapidly becoming the IT model of choice among businesses worldwide.According
to the Frost & Sullivan Global Survey conducted on behalf of HP, more enterprises in more
countries are using more cloud services for more applications, and spending more of their
IT budget to do so. Among the findings of the study:
• More than half of businesses are using cloud services,with the secure private cloud model
the most popular worldwide.However,the flexible hybrid cloud,which enables businesses
to choose the right deployment model for each workload, will see the greatest growth in
the next two years.
• Businesses tend to move along a cloud usage pathway, with greater time and familiarity
contributing to greater reliance on the model. Their initial forays tend to be low-
engagement, using cloud for discrete, ad hoc workloads; about a third of all businesses
fall into this category. Next, comprising the largest group of businesses at 35%, are
those who value the cloud as a way to address tactical data center challenges, such
as cost and risk reduction. Finally, as businesses become more comfortable with the
model, they recognize the strategic potential of the cloud.These businesses consider the
cloud a “total solution” that supports achievement of business objectives.While not all
businesses move along this continuum, we expect to see increasing numbers who shift
toward the “total solution” approach.
• When the cloud is recognized as an essential part of the business, companies are most
likely to turn to outside experts for guidance in developing and implementing an optimal
cloud strategy.We expect to see these numbers increase as businesses realize the ease
of cloud entry is not a substitute for thoughtful planning, and more providers offer
professional and managed services.
Currently use Hybrid Cloud
Currently use Public Cloud
Currently use Private Cloud
EMEA Americas APJ
54% 47% 48%
33%
30%
27%
34%
32%
45%
Asia Pacific respondents report highest use of
public cloud, EMEA leads in private cloud

10. Frost & Sullivan
10 Frost.com
• Line of Business executives are wielding increased influence over—and funding for—cloud
decisions. This new role is causing IT departments to re-invent themselves as service
providers to the business, rather than asset managers.
In the hypercompetitive global economy, in which rapid technology enhancements
continually change the way business is conducted, the cloud provides a way to reduce
costs and introduce efficiencies, while establishing a framework to leverage future growth.
For respondents to the 2014 Global Cloud Survey, the cloud is becoming a critical part of
the fabric of their business.
Lynda Stadtmueller
Vice President –Cloud Computing
Stratecast | Frost & Sullivan
lstadtmueller@stratecast.com

11. More Enterprises See Cloud as a Strategic Business Enabler, New Survey Reveals
11Frost.com
Frost & Sullivan Global Cloud Survey Methodology and
Demographics/Firmographics
During May and June 2014, Frost & Sullivan conducted a Web-based survey of 1,852 senior
executives responsible for purchasing IT products and services with a line of sight to their
respective organization’s cloud strategies. Of respondents, 51% held IT roles; 49% held non-
IT (Line of Business) roles. Surveyed countries were US, Mexico, Brazil (Americas region),
UK, Germany, France, Italy, Spain (EMEA region), China, Japan, and Australia (APJ region).
JobTitle/Position–IT
CIO or CTO
Senior
Management
Data Center
Manager
Enterprise
Architect
Solutions
Architect
Security
Officer
27%
22%
27%
7% 8% 8%
Size of the Company-Number of Employees
14%
250 to 499 500 to 999 1,000 to
9,999
10,000 to
24,999
25,000 to
49,999
50,000 to
more
19%
24% 25%
36% 37%
13%
7%
5% 4%
8% 8%

12. Frost & Sullivan
12 Frost.com
JobTitle/Position–non-IT
C-level
(e.g., CEO,
COO, CFO)
Other senior
management
Middle
management
19%
40% 42%
Top Industry Sectors
Manufacturing
Computer software, programming, consultancy
Industrial technology
Consumer products retail or wholesale
Finance, banking or accounting
Energy
Education
Construction
Government
Telecommunications
16%
9%
6%
6%
6%
5%
5%
5%
4%
4%
About Stratecast
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evolving and hyper-competitive Information and Communications Technology markets.
Leveraging a mix of action-oriented subscription research and customized consulting
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years of real-world experience in an industry where customers are collaborators; today’s
partners are tomorrow’s competitors; and agility and innovation are essential elements for
success. Contact your Stratecast Account Executive to engage our experience to assist you
in attaining your growth objectives.

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