Small businesses and large enterprises are more likely to buy into the cloud than medium-sized firms.

Businesses embracing cloud software: IDC

Cloud-based software offerings overcame recent high profile data breaches to grow 27 per cent in the Canadian market, according to an IDC Canada study.

Revenues from cloud software, or software as a service (SaaS), reached $482 million in 2011. Leading the way for most-used cloud products were Salesforce.com, Microsoft Corp., Cisco, Adobe Inc., and IBM Corp. Salesforce.com was the leading cloud software vendor with more than $50 million in revenue last year.

Big software vendors are now heavily invested in the cloud, says Nigel Wallis, research director at IDC Canada. Even Microsoft Office, the software giant’s prized productivity suite, has moved online with Office 365.

A graph of the biggest perceived risks of software as a service. (Source: IDC)

“You’re moving one of the crown jewels to the cloud,” he says. “It opens up a level of credibility where people might have held back before.”

At the same time, economic volatility has more businesses looking for a way they can quickly spin up production when they have to – and likewise, shut it down when it’s time to cut expenses. The growth in cloud software can be attributed to adoption by both very small businesses and very large enterprises alike. Medium-sized businesses tend to be shying away from the cloud so far, IDC says.

There’s a lot of talk about businesses being wary of the cloud due to data privacy fears, says Neil McEvoy, the founder and CEO of the Cloud Best Practices Network. The theory being that businesses just aren’t comfortable letting data out from their own servers and residing on the Internet.

“These stats clearly show the reality of just how aggressively it is actually being taken up,” he says. “No surprise to me, as always, it’s simply about the right IT solution to meet needs as they arise.”

Security is still the greatest perceived risk of cloud computing by businesses, the IDC study shows. Nearly 60 per cent of cloud users considered it the biggest concern, with difficulty integrating into in-house IT systems following that.

Other research has shown that 2012 has seen more data breaches than previous years. Often breaches are related to users with weak passwords, used across multiple services. Some high profile data breaches seen this year include: 1.5 million users of Global Payments Inc. having credit card numbers exposed in March; more than 6 million LinkedIn passwords posted by hackers; and Dropbox users receiving spam from phishers posing as Dropbox in July.

Still, the momentum will be enough to propel cloud software growth to be 15 per cent of the software market by 2016, IDC predicts. That will be a total revenue of $1.39 billion, at a rapid pace of 30 per cent year-over-year growth. In some software markets, like collaboration and customer relations management (CRM), cloud-based revenue has already surpassed 50 per cent or higher.

The greatest perceived benefit of cloud computing is the speed of deployment, Wallis says. “In general it’s much faster to get up and running with cloud computing than it is to use traditional on-premises software,” he says.

While on-premises software is still going to be a part of the picture, cloud software will quickly become a normal part of the business software scene, Wallis says. “In a few years, we’ll take it for granted.”

McEvoy also anticipates “a massive adoption curve” for cloud software. It will be driven by new types of cloud software that serve as an integration layer for big verticals like healthcare, he says. Tapping into social media for user information will help drive this growth.

Brian JacksonBrian Jackson is the Editor at ITBusiness.ca. E-mail him at bjackson@itbusiness.ca, follow him on Twitter, connect on , read his blog, and check out the IT Business Facebook Page.
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