KPMG: UK businesses failing to adopt cloud services

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More than two thirds are spending ten per cent or less of their IT budget on them, with the top reason for apprehension centring around data location, security and privacy risks 

Research by KPMG has found that 71 per cent of UK companies are spending just 10 per cent or less of their IT budget on cloud services.

The eighth annual ‘Service Provider and Performance Satisfaction’ study of nearly 2,100 contracts covering deals worth £7.8 billion indicated UK firms are failing to adopt Cloud services. It includes analysis of current corporate IT spend in the UK be examining more than 330 UK-based contracts.

Asked why they are reluctant about employing these services, the top three reasons cited by UK respondents centred around data location, security and privacy risks (26 per cent), concerns over regulation and compliance (16 per cent) and doubts around the ease with which these services can integrate with legacy IT systems (15 per cent).

UK businesses were also asked about their IT outsourcing plans for the next two to three years, but just 43 per cent said they plan to increase spending, compared to 77 per cent this time last year.

KPMG said that despite the UK economy continuing to improve, companies are still nervous when it comes to committing to long-term investments.

It added that when the survey was first undertaken eight years ago, respondents focused on cost savings as their reason to outsource IT, but this year’s survey shows the search for quality improvement (20 per cent), access to skills (16 per cent) and reducing the time it takes to ‘get things to market’ (six per cent) are driving the rationale behind these decisions.

KPMG shared services and outsourcing advisory team director Jason Sahota (pictured) said: “Despite widespread acceptance that Cloud services offer access to the latest technologies, and make IT more accessible, adoption remains relatively sluggish.  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.

“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.”

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