danish cloud maturity survey 2018 - ernst & young · 2018-05-08 · danish cloud maturity...

Danish Cloud Maturity Survey 2018 | 1

Danish Cloud Maturity Survey 2018Current and planned adoption of cloud services

Early days for cloud adoption with concerns for security and expertise, and complexity of migrating the legacy applications

Cloud maturity and current usage of cloud-based services are still relatively low

Cloud maturity is still relatively low in Denmark with larger organizations lagging behind medium sized organizations. The Technology, Media and Telecommunication (TMT) sector is reported to have the highest cloud maturity. This can be attributed to the impact of technology disruption in the TMT sector and emergent adoption of Internet of things (IoT) and Big Data in the sector. The Power and Utilities (P&U) sector, and the Consumer Products and Retail (CPR) sector have low cloud maturity and seem to struggle with the digital transformation needed to meet the changing market dynamics toward online retailing. That sector also reports of less number of approved cloud services and dominate seeing security as a concern.

Digital Transformation is driving cloud adoption

The most important business driver of cloud adoption in Danish organizations is digital transformation. However, most of the cloud services still seem to be used for internal IT initiatives and pilots of new digital services, as indicated by the limited interest in moving to the cloud to drive revenue growth. This is predictable in Public Sector but this is not restricted to this sector alone. Even the P&U, CPR and Automotive and Transportation (A&T) sectors rank revenue growth low as a cloud driver.

Security concerns and lack of cloud expertise along with legacy applications are holding back cloud adoption

Security concerns are reported as a top challenge while improved IT security is reported as a mid-ranked benefit of cloud adoption. Some

sectors, such as TMT, are represented in both categories. Lack of expertise is broadly reported across all sectors and organizational size, whereas legacy applications is a clear concern in global organizations and in the Governmental and Public Sector.

Plans for increasing the use of cloud-based applications exist, but will be delayed till the adoption of cloud-based infrastructure takes off

The largest Danish organizations are planning to significantly increase the usage of cloud-based applications in the coming years, with the A&T and TMT sectors giving the highest rank. However, the adoption of cloud-based infrastructure services is expected to lag behind due to the complexity of migrating legacy applications to the cloud and lack of expertise.

Developing cloud strategies and executing on cloud road maps have priority over tackling the security and migration issues

There is a high focus on building new cloud-native digital applications to support digital transformation, developing cloud strategies and executing on cloud road maps in the coming years, with indications of TMT sector as the front-runner with the P&U sector trailing behind. But with reported lack of expertise and the effort required for overcoming the issues related to legacy migration, it will take time until the cloud adoption really takes off.

Contents

01 Cloud maturity

02 Drivers and challenges

03 Current usage

04 Future plans

05 Security

06 About the survey

01Cloud maturity


Cloud maturity is still relatively low

Average cloud maturity based on geographical footprintAverage of cloud maturity level of respondents on a scale from 1 to 5, where 5 is the highest

Average cloud maturity of the Danish respondents is between 2 and 3, which is supported by EY’s experiences in Denmark.

Organizations with a broader geographical footprint (EU/Nordics or global) have slightly higher cloud maturity than those with a Danish footprint, indicating that the organizations with a local focus is less likely to employ cloud solutions.

Average cloud maturity based on sectorAverage of cloud maturity level of respondents on a scale from 1 to 5, where 5 is the highest

0

1

2

3

4

5

Denmark EU/Nordics Global

The TMT and Health and Life Science, HLS, sectors have the highest cloud maturity due to high adoption of the applications based on Software as a Service (Saas) sanctioned by the organization's IT department. This can be attributed to the impact of technology disruption in the TMT sector and the emergent adoption of Internet of things (IoT) and Big Data in the sectors.

0

1

2

3

4

5

Co

nsu

me

r P

rod

uct

s &

Ret

ail

Go

vern

me

nt

& P

ub

lic S

ecto

r

Hea

lth

& L

ife

Sci

en

ces

Po

wer

& U

tilit

ies

Tech

no

logy

, Med

ia &

Tele

com

mu

nic

atio

ns

(Tm

t)

Au

tom

oti

ve &

Tran

spo

rtat

ion

02Drivers and challenges


27%

46%

50%

54%

62%

65%

73%

Drive revenue growth

Reduce costs

Drive business innovation

Develop new products and services

Improve business scalability

Reduce time-to-market with new digitalsolutions

Drive digital transformation

Digital Transformation is driving cloud adoption but the security concerns and lack of cloud expertise is holding back the organizations

Key business drivers for moving to the cloudPercentage of respondents reporting the driver

There are many strong business drivers for moving to the cloud, the most important ones being digital transformation and reduced time-to-market with new solutions. The improved business scalability is also a key driver for moving to the cloud in the Danish market.

There is, however, less interest in moving to the cloud to drive revenue growth or reduce costs.

This indicates that the use of cloud services could be focused at internal IT and pilots of new digital services.

Benefits of using cloud servicesPercentage of respondents reporting the benefit

Greater scalability and shorter IT infrastructure deployment time are reported as the most significant benefits of using cloud services. Cost savings as a benefit of adopting cloud services is reported as less important than operational benefits such as business continuity, availability and IT operational efficiency for now. This indicates that flexibility, agility and operational stability are viewed as more important benefits than cost reduction.

About 38% of respondents reported improved IT security as a benefit of using cloud, while security concerns have been reported as a top challenge related to cloud services adoption.

4%

12%

19%

23%

23%

27%

31%

35%

38%

42%

46%

50%

50%

77%

Other

Higher performance

Increased developer productivity

Larger geographic reach

Reduced IT operational risk

Move from CapEx to OpEx

Cost savings

Improved IT operational efficiency

Improved IT security

Shorter time-to-market with new digital solutions

Higher availability

Business continuity

Shorter IT infrastructure deployment time

Greater scalability


Digital Transformation is driving cloud adoption but the security concerns and lack of cloud expertise is holding back the organizations (Contd.)

Challenges related to using cloud servicesPercentage of respondents reporting the challenge

Security concerns and lack of cloud expertise are reported as the most significant challenges related to using cloud services, closely followed by compliance with regulations, legacy application migration and the complexity of managing cloud costs.

This is supported by EY’s experience from other projects that shows that organizations do not have the full expertise to manage cloud security. Many organizations have currently identified privacy and regulation compliance with General Data Protection Regulation (GDPR) as a challenge to securely manage data across different platforms and identify the geographical origin of the cloud host.

4%

4%

12%

15%

27%

35%

46%

50%

50%

54%

54%

Other

Do not use cloud

Current identity management solutions and processes

Move from CapEx to OpEx

Vendor lock-in

Complexity of managing multiple cloud services

Complexity of managing cloud costs

Complexity in migrating legacy applications

Compliance and/or regulations

Lack of cloud expertise

Security concerns

03Current usage


Current usage of cloud-based services is still low, with Microsoft as the dominant service provider

Share of cloud-based IT applicationsPercentage of respondents within each range

All respondents report to have cloud-based IT applications. However, the responses show that the Danish cloud maturity is relatively low.

About 52% of the respondents report to use cloud services for only 1%–19% of their IT applications whereas 30% use cloud services for 20%–39% of IT application.

In the 1%–19% group, the CPR and A&T sectors are slightly dominant.

Share of cloud-based IT applicationsPercentage of responses within each range split based on the respondent's geographical footprint

Respondents with EU/Nordics footprint are reported to have a lower share of IT applications in the cloud compared to those with a global or Danish footprint.

52%

30%

12%

3% 3%

1%–19% 20%–39% 40%–59% 60%–79% 80%–100%

36%

75%

50%

55%

25%

14% 29% 7%

9%Global

EU/Nordics

Denmark

1-19% 20-39% 40-59% 60-79% 80-100%


Current usage of cloud-based services is still low, with Microsoft as the dominant service provider (Contd.)

Use of SaaS-based IT applicationsPercentage of respondents using the application

Microsoft Office 365 is the most used cloud-based IT application in the Danish market followed by Adobe Creative Cloud. The responses also show that Microsoft has a strong overall position, with Office 365, Power BI and Dynamics 365 among the top five cloud-based IT applications used.

In addition, IT development and operations process tools, such as JIRA and GitHub, are used in almost every fourth large Danish organization. Slack is also on the top list of usage, indicating that SaaS adoption can happen very quickly even at large Danish organizations.

4%

4%

4%

8%

12%

12%

12%

15%

15%

15%

15%

23%

27%

27%

27%

27%

54%

62%

88%

Other

SAP Ariba

Workday

New Relic

Box

Google G Suite

Zendesk

DocuSign

Salesforce.com

SAP Sucessfactors

Slack

JiRA

Dropbox

GitHub

Microsoft Dynamics 365

ServiceNow

Microsoft Power BI

Adobe Creative Cloud

Microsoft Office 365



Share of cloud-based IT infrastructurePercentage of responses within each range

Security concerns, lack of expertise and migration complexity are reported as barriers for moving to the cloud, and almost all of the respondents have below 64% of their IT infrastructure in the cloud.

On average, the responses show less use of cloud-based IT infrastructure compared to cloud-based IT applications, indicating that the adoption to cloud services is happening more rapidly in the applications layer.

Share of cloud-based IT infrastructurePercentage of responses within each range split based on the respondent's geographical footprint

Organizations with a global footprint tend to have a larger share of cloud-based IT infrastructure than those with Danish or EU/Nordic footprint.

64%

21%

6%

3%3%

3%

1%–19% 20%–39% 40%–59%

60%–79% 80%–100% Do not use cloud

55%

87%

58%

36%

13%

14% 14% 7%

9%

7%

Global

EU/Nordics

Denmark

1-19% 20-39% 40-59%

60-79% 80-100% Do not use cloud



A majority of the respondents use more than one Infrastructure as a Service (IaaS) or Platform as a Service (PaaS) provider, and 15% reports to use three or more providers, indicating that a multi-cloud strategy is popular in the Danish market for the organizations that use it.

IaaS or PaaS provider usedPercentage of respondents using the provider

Microsoft Azure is, by far, the most popular IaaS or PaaS provider among the respondents. The responses indicate that Amazon Web Services, AWS, has a significantly smaller market share in the Danish market when compared to its market-leading position worldwide. However, it should be noted that AWS market share probably are bigger as many people are not aware of the role services from Amazon plays regarding shadow IT.

Google is emerging as the third most popular provider and has a slightly higher market share in Denmark compared to their global position.

The responses indicate that the other providers have a limited market share, and that the market is dominated by the three large global providers mentioned above.

Number of IaaS or PaaS providers usedPercentage of respondents within each category

5%

42%

32%

16%

5%

Use no IaaS or PaaS provider

Use one IaaS or PaaS provider

Use two IaaS or PaaS providers

Use three IaaS or PaaS providers

Use four or more IaaS or PaaS providers

4%

4%

8%

12%

15%

31%

85%

Alibaba Cloud

Force.com

SAP Cloud Platform

Do not use IaaS/PaaS

Google Cloud Platform

Amazon Web Services (AWS)

Microsoft Azure



Applications are the most used cloud workload. Databases and storage are emerging as a popular cloud workload — something that can be attributed to the high cost and complexity of hosting databases and storage on premise.

The limited use of cloud container as a service (CaaS) in the Danish market can be attributed to the complexity of migrating legacy applications, which is a major barrier for cloud adoption.

Emerging trends such as machine learning, cloud-based IoT services and high-performance computing are still in its infancy in the Danish market.

Cloud workloads usedPercentage of respondents using the workload

4%

9%

9%

13%

13%

13%

17%

17%

22%

26%

30%

30%

35%

52%

Integration services

Internet of Things (IoT)

Machine Learning

Container services

Desktop

Front end solutions

High performance computing

Push notifications

Do not use Iaas/PaaS

Data analytics

Disaster recovery (backup)

Storage

Databases

Apps



Number of unsanctioned cloud services for respondents with 1–9 approved cloud servicesPercentage of responses within each range

36%

46%

18%

1-9 10-29 30-50

Organizations with only 1–9 approved cloud services report having many unsanctioned cloud services. This trend is also observed in the organizations with 10–19 approved cloud services. This indicates that IT departments trail behind the business side's adoption of cloud services and are still trying to catch up with the demand for the services among their user community. The Governmental and Public Sector reports the highest number of approved services with the CPR sector lagging behind.

04Future plans


Developing cloud strategies and executing on cloud road maps are major priorities going forward

Top cloud initiatives planned for 2018Percentage of respondents reporting the initiative

The responses show a high focus on building new cloud-native digital applications. This is supported by the finding that the most important business driver for moving to the cloud is digital transformation, and that shorter time to market with new digital solutions is reported as one of the major benefits of using cloud-based services. By reports, TMT is clearly taking lead with the P&U sector lagging behind.

About 35% of the respondents are planning to develop a cloud strategy in 2018, whereas 39% are planning to execute on their cloud road map, implying an emerging cloud maturity in the Danish market.

Despite security concerns being reported as the top challenge, addressing the concerns going forward does not seem to be a high priority, with only 30% reporting planned initiatives to address these.

Top four cloud initiatives planned for 2018 based on geographical footprintPercentage of respondents reporting the initiative split based on the respondent's geographical footprint

Organizations with a Danish footprint have overall less initiatives planned for 2018, compared to those with an EU/Nordics or global footprint.

They tend to have more focus on developing a cloud strategy than executing on their road map or developing new cloud-based digital applications.

4%

9%

9%

13%

22%

26%

26%

30%

35%

39%

39%

Other

Run a tender process towards IaaS/PaaStechnology providers

Run a tender process towards managedcloud IaaS/PaaS service providers

None

Implement cloudmanagement/monitoring

Migrate legacy systems to the cloud

Implement increased automation in ourdigital development lifecycle

Implement improved security in ourdigital development lifecycle

Develop a cloud strategy

Execute on our cloud roadmap

Build new cloud native digital applications

33%

33%

56%

67%

33%

33%

67%

33%

25%

38%

0%

13%

Implement improved security in our digital development lifecycle

Develop a cloud strategy

Execute on our cloud roadmap

Build new cloud native digital applications

Denmark Europe/Nordics Global


Plans for increasing the use of cloud-based applications exist, but will be delayed till the adoption of cloud-based infrastructure takes off

Share of IT applications estimated to be cloud-based in the following yearsPercentage of responses within each range

Share of IT applications that are cloud-based is expected to increase significantly in the coming five years.

Within three years, more than 80% of all respondents estimate having at least 20% of their IT applications in the cloud.

This indicates that the largest Danish organizations are planning to significantly increase the use of cloud-based applications.

Share of IT infrastructure estimated to be cloud-based in the following yearsPercentage of responses within each range

4%

13%

57%

17%

39%

26%

26%

27%

13%

26%

17%

23% 4%

4%

4%

5 years

3 years

1 year

0% 1%–19% 20%–39% 40%–59% 60%–79% 80%–99% 100%

4%

4%

9%

61%

22%

56%

27%

26%

22%

4%

26%

9%

13% 9%

4%

4%

5 years

3 years

1 year

0% 1%–19% 20%–39% 40%–59% 60%–79% 80%–99% 100%

About 65% of the respondents estimate to have less than 20% of their IT infrastructure in the cloud in 2018. But within five years, only 4% of the respondents estimate to have less than 20% of their IT infrastructure in the cloud.

Within five years, 22% of the respondents estimate having above 80% of their IT infrastructure in the cloud, and 9% of the respondents estimate that this percentage will reach 100% within the same time frame.

This indicates that it will take time until the adoption of cloud-based infrastructure takes off.

05Security


With security concerns being the top challenge for cloud adoption, cybersecurity initiatives is a key focus area

Established security initiativesPercentage of respondents with established security initiative against each threat

More than 80% of the respondents have established security initiatives in basic areas such as data breaches, data loss, denial of service, DoS, and identity, credential and assess management — the areas where vulnerabilities are used for Common Attacks. Reports are quite similar for all sectors in general, with the P&U sector lagging slightly behind. DoS initiatives are reported as a focus area for the Governmental and Public Sector and Advanced Persistent Threats (APIs) for TMT. Adoption of cloud solutions and emerging technologies opens for potential sophistic Advanced and Emerging Attacks that must be addressed to support the cloud service security features.

17%

22%

35%

39%

57%

57%

65%

83%

83%

83%

91%

Shared Technology vulnerabilities

Abuse and nefarious use of cloudservices

Insecure interfaces and applicationprogramming interfaces (APIs)

Advanced persistent threats (APTs)

Malicious insiders

Account hijacking

System vulnerabilities

Data loss

Insufficient identity, credential andaccess management

Denial-of-Service (DoS)

Data breaches

06About the survey


About the survey

The results are based on an anonymous online survey where approximately 220 IT responsible (such as Chief Information Officers and Heads of IT) of large private and Governmental and Public Sector organizations in Denmark were invited to respond in March 2018.

Geographical footprintPercentage of respondents

Organization sizePercentage of respondents

46%

32%

22%

Denmark Global Europe/Nordics

25%

59%

16%

<1,000 employees 1,000–10,000 employees>10,000 employees

SectorPercentage of respondents

11%

11%

35%

3%

0%

0%

11%

15

14%Automotive and transportation

Consumer products and retail

Government and public sector

Health and life sciences

Insurance

Oil and gas

Power and utilities

Technology, media and telecommunications

Other


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ED None

This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice.

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Key contacts

Claus Andersen

PartnerAdvisory — [email protected]: +45 25 29 37 70

Jesper Kirk

Executive DirectorAdvisory —Technology [email protected]: +45 25 29 56 34

danish cloud maturity survey 2018 - ernst & young · 2018-05-08 · danish cloud maturity...

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