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EY Norwegian Cloud Maturity Survey 2018 1
EY Norwegian Cloud Maturity Survey 2018Current and planned adoption of cloud services
EY Norwegian Cloud Maturity Survey 20182
It is still early days for cloud adoption in Norway, and the complexity of migrating the legacy applications is still holding the adoption backCloud maturity and current usage of cloud-based services are still relatively lowCloud maturity is still relatively low in Norway. The technology, media and telecommunications (TMT) and transportation sectors have the highest cloud maturity. This can be attributed to the impact of technology disruption in the Technology, media & telecommunications sector and emergent adoption of Internet of things (IoT) and Big Data in the transportation sector. The consumer products and retail sector has low cloud maturity and seems to struggle with the digital transformation needed to meet the changing market dynamics toward online retailing.
Digital transformation is driving cloud adoptionThe most important business driver for cloud adoption 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.
Legacy applications are holding the adoption backComplexity in migrating legacy applications are a significant barrier for large-scale adoption of cloud services. Hence there seems to be a lack of cloud proficiency in the Norwegian market to overcome these challenges.
Plans for increasing the use of cloud-based applications exist, but will be delayed till the adoption of cloud-based infrastructure takes offThe largest Norwegian organizations are planning to significantly increase the usage of cloud-based applications in the coming years. However, the adoption of cloud-based infrastructure services is expected to lag behind. This can be attributed to the complexity of migrating legacy applications to the cloud.
Developing cloud strategies and executing on cloud road maps have priority over tackling the migration issuesThere 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 year; whereas, there is only a minor focus on overcoming the issues related to legacy migration. It will, therefore, take time until the cloud adoption really takes off.
EY Norwegian Cloud Maturity Survey 2018 3
Contents01
02
03
04
05
Cloud maturity
Drivers and challenges
Current usage
Future plans
About the survey
01Cloud maturity
EY Norwegian Cloud Maturity Survey 2018 5
Cloud maturity is still relatively low
Average cloud maturity based on geographical footprintAverage cloud maturity level of respondents on a scale from 1 to 5, where 5 is the highest
Average cloud maturity based on sectorAverage cloud maturity level of respondents on a scale from 1 to 5, where 5 is the highest
Average cloud maturity of the respondents is between 2 and 3, which is supported by previous EY experiences from cloud projects in Norway.
Organizations with EU/Global footprint have lower average cloud maturity than the organizations with a Norwegian or Nordic footprint.
The Technology, media & telecommunications and Transportation sectors have the highest cloud maturity. This can be attributed to the impact of technology disruption of their core business in the Technology, media & telecommunications sector.
The relative low cloud maturity in the Consumer Products and Retail sector indicates that the digital transformation to meet the changing market dynamics toward online retailing is challenging.
Norway
5
3
4
2
1Nordics EU/Global
Construction Consumer products & retail
Technology, media & tele- communication (TMT)
TransportationIndustrial Products
Government & public sector
Oil & GasFinancial services
5
3
4
2
1
EY Norwegian Cloud Maturity Survey 20186
02Drivers andchallenges
EY Norwegian Cloud Maturity Survey 2018 7
Digital transformation is driving cloud adoption, but the complexity in migrating legacy applications is holding organizations back
Key business drivers for moving to the cloudPercentage of respondents reporting the driver
Benefits of using cloud servicesPercentage of respondents reporting the benefit
There are many business drivers for moving to the cloud, the most important ones being digital transformation and cost reduction. This indicates that shorter time to market is a significant driver for adopting cloud services in the Norwegian market. There is, however, less interest in moving to the cloud to drive revenue growth. This indicates that most of the cloud services are used for internal IT and pilots of new digital services.
Greater scalability is reported as the most significant benefit of using cloud services. Cost savings and improved IT operational efficiency are reported as less important than scalability and time to market. This indicates that flexibility and agility are viewed as more important benefits than cost reduction and efficiency improvement. Larger geographic reach is the least-reported benefit of using cloud services, indicating that cloud services are not much used to expand the geographical footprint for Norwegian organizations.
Drive digital transformation 70%
68%
59%
59%
57%
49%
19%
Reduce time-to-market with new digital solutions
Drive business innovation
Reduce costs
Improve business scalability
Develop new products and services
Drive revenue growth
Greater scalability
Reduced IT operational risk
Shorter IT infrastructure deployment time
Improved IT security
Larger geographic reach
73%
54%
54%
51%
46%
43%
38%
35%
35%
32%
30%
22%
5%
Improved IT operational efficiency
Move from CapEx to OpEx
Increased developer productivity
Shorter time-to-market with new digital solutions
Business continuity
Cost savings
Higher availability
Higher performance
EY Norwegian Cloud Maturity Survey 20188
Challenges related to using cloud servicesPercentage of respondents reporting the challenge
The complexity in migrating legacy applications is reported as the most significant challenge related to using cloud services. This is supported by EY’s experience from previous cloud projects at large Norwegian organizations. Security concerns and compliance and/or regulations are still perceived as major challenges for moving to the cloud, and the responses indicate a lack of cloud expertise in the Norwegian market.
Complexity in migrating legacy applications 70%
Lack of cloud expertise 43%
Security concerns 51%
Complexity of managing cloud costs 35%
Vendor lock-in 57%
Complexity of managing multiple cloud services 38%
Compliance and/or regulations 46%
Current identity management solutions and processes 30%
Move from CapEx to OpEx 11%
EY Norwegian Cloud Maturity Survey 2018 9
EY Norwegian Cloud Maturity Survey 201810
03Current usage
EY Norwegian Cloud Maturity Survey 2018 11
Current usage of cloud-based services is still low, with Microsoft as the dominant service provider
Share of cloud-based IT applicationsPercentage of responses within each range
Share of cloud-based IT applicationsPercentage of responses within each range split on the respondent’s geographical footprint
All respondents have cloud-based IT applications. However, the responses show that the Norwegian cloud maturity is relatively low. The survey results show that 60% of the respondents use cloud services for only 1%–19% of their IT applications.
Respondents with EU/Global footprint are reported to have a lower share of IT applications in the cloud compared to those with a Nordic or Norwegian footprint. This indicates a slower migration pace toward cloud for larger organizations. EY’s experience shows that this is related to the vast number of legacy applications in large organizations and the complexity related to migrating these to the cloud.
1–19% 20–39% 40–59%
1–19% 20–39% 40–59%
Norway
Nordics
EU/Global
60%29%
11%
0% 100%
60%
50%
69%
27%
40%
23%
13%
10%
8%
EY Norwegian Cloud Maturity Survey 201812
Use of SaaS-based IT applicationsPercentage of respondents using the application
Microsoft Office 365 is the most used cloud-based IT application in the Norwegian market. The responses also show that Microsoft has a strong overall position, with Office 365, Power BI and Dynamics 365 among the top six cloud-based IT applications used. In addition, IT development and operations process tools such as JIRA, GitHub and Confluence are widely used. Slack is high on the list of usage, indicating that SaaS adoption can happen very quickly even at large Norwegian organizations.
Microsoft Office 365 76%
Microsoft Power BI 32%
ServiceNow 22%
Dropbox 19%
Google G Suite 11%
Box 5%
GitHub 35%
Confluence 32%
Slack 19%
SAP Sucessfactors 11%
New Relic 5%
Oracle Sales Cloud 3%
JiRA 38%
Microsoft Dynamics 365 32%
Adobe Creative Cloud 22%
DocuSign 14%
Salesforce.com 5%
Zendesk 3%
EY Norwegian Cloud Maturity Survey 2018 13
Share of cloud-based IT infrastructurePercentage of responses within each range
Migration complexity is a major barrier for moving to the cloud, and almost all of the respondents have below 40% 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 migration to cloud services is happening more rapidly in the applications layer.
Share of cloud-based IT infrastructurePercentage of responses within each range split on the respondent’s geographical footprint
All respondents with Norwegian only geographical footprint use cloud-based IT infrastructure, whereas over 20% of the respondents with an EU/Global footprint do not. This confirms the finding that the use of cloud-based services is most prevalent for smaller organizations, and that the migration complexity is a major barrier for the adoption of cloud-based services.
18%
10%
66%
3%
3%
Do not use cloud 1–19% 20–39% 40–59% 60–79%
Do not use cloud 1–19% 20–39% 40–59% 60–79%
80%
10%
23% 46% 23% 8%
70% 20%
0%
Norway
Nordics
EU/Global
100%
13% 7%
EY Norwegian Cloud Maturity Survey 201814
IaaS or PaaS providers 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 Norwegian market compared to its market-leading position worldwide.
Google is emerging as the third most popular provider and has a significantly higher market share in Norway 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
A majority of the respondents use more than one IaaS or PaaS provider, and 20% use more than three providers, indicating that a multi-cloud strategy is popular in the Norwegian market.
Use no laaS/Paas provider Use one laas/PaaS provider Use two laaS/PaaS providersUse three laas/PaaS providers Use four or more laas/Paas providers
33%
17%
3%
30%
17%
76%Microsoft Azure
Amazon Web Services (AWS)
Google Cloud Platform
IBM Bluemix/Cloud
SAP Cloud Platform
Heroku
41%
22%
8%
5%
3%
EY Norwegian Cloud Maturity Survey 2018 15
Cloud workloads usedPercentage of respondents using the workload
Apps and data analytics are the most used cloud workloads. Databases are emerging as a popular cloud workload — something that can be attributed to the high cost and complexity of hosting databases on premise.
There is limited use of cloud container services in the Norwegian market, again confirming that the complexity of migrating legacy applications is a major barrier for cloud adoption.
The responses also indicate that the use of cloud-based IoT services is still in its infancy in the Norwegian market.
28%
39%
44%
22%
22%
19%
17%
17%
14%
11%
11%
8%
8%
Databases
Data analytics
Apps
Storage
Integration services
Desktop
Machine Learning
Front end solutions
Disaster recovery (backup)
High performance computing
Container services
Push notifications
Internet of Things (IoT)
EY Norwegian Cloud Maturity Survey 201816
Unsanctioned cloud servicesPercentage of responses within each range
Organizations with only 1–9 approved cloud services have many unsanctioned cloud services as seen in the graph to the left. This relation between unsanctioned and approved cloud services is similar for 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 cloud services among their user community.
Do not have unsanctioned cloud services 1–9 10–29 30–50
48%
39%
4%9%
EY Norwegian Cloud Maturity Survey 2018 17
EY Norwegian Cloud Maturity Survey 201818
04Future plans
EY Norwegian Cloud Maturity Survey 2018 19
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.
Over 40% of the respondents are planning to develop a cloud strategy in 2018, implying an emerging cloud maturity in the Norwegian market.
Addressing the security concerns does not seem to be a high priority, with only approximately 30% reporting planned initiatives to address these, whereas over 50% are reporting this as a major challenge related to using cloud services.
3%17%
19%25%25%
31%36%36%
44%47%
NoneRun a tender process toward managed cloud laaS/PaaS services providers
Run a tender process towards laaS/PaaS technology providersMigrate legacy systems to the cloud
Implement cloud management/monitoringImplement improved security in our digital development life cycle
Execute on our cloud road mapImplement increased automation in our digital development life cycle
Develop a cloud strategyBuild new cloud-native digital applications
Top four cloud initiatives planned for 2018 based on geographical footprintPercentage of respondents reporting the initiatives split on the respondent’s geographical footprint
Organizations with a Norwegian or Nordic footprint have overall more initiatives planned for 2018, compared to those with an EU/Global footprint. They also have more focus on executing on their cloud road map. For organizations with an EU/Global footprint, initiatives related to building new cloud-native digital applications are more popular.
Norway Nordics EU/Global
19%15%
33%
27%23%
29%
23%31%
14%
31%31%
24%
Build new cloud-native digital applications
Develop a cloud strategy
Implement increased automation in our digital development life
cycle
Execute on our cloud road map
Developing cloud strategies and executing on cloud road maps are major priorities going forward
EY Norwegian Cloud Maturity Survey 2018 21
Share of IT applications estimated to be cloud-based in the following yearsPercentage of responses within each range
Share of IT infrastructure 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, all respondents estimate having some of their IT applications in the cloud, and 6% of the respondents estimate that 100% of their IT applications will be cloud-based within five years.
More than 80% of the respondents estimate having below 20% of their IT infrastructure in the cloud within 2018. Within five years, only 20% of the respondents estimate having above 80% of their IT infrastructure in the cloud. In addition, none 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.
0% 1–19% 20–39% 40–59% 60–79% 80–99% 100%
53%
11%
17% 44% 19%
53% 25%
0%
1 Year
3 Years
5 Years
100%
33% 8%6%
11%
11% 6%3%
75%
19%
31% 31% 17%
50% 19%
0%
1 Year
3 Years
5 Years
100%
8%8%
11%
18%3%
0% 1–19% 20–39% 40–59% 60–79% 80–99% 100%
9% 3%
8%
Plans for increasing the use of cloud-based applications exist, but will be delayed till the adoption of cloud-based infrastructure takes off
EY Norwegian Cloud Maturity Survey 201822
05About the survey
EY Norwegian Cloud Maturity Survey 2018 23
About the survey
Geographical footprintPercentage of respondents
SectorPercentage of respondents
Organization sizePercentage of respondents
The results are based on an online survey distributed to chief information officers (CIOs) of the 126 largest private and public sector organizations in Norway. The responses were collected in November 2017.
Industrial products Oil and gas
Technology, media & telecommunications Transportation
Financial services Government and public sector
Construction Consumer products and retail
>10,000 employees
1,000–10,000 employees
<1,000 employees
21%
63%
16%
35%
26%
39%
EU/GlobalNorway Nordics
10%
16%
9%9%
9%
21%
14%12%
EY Norwegian Cloud Maturity Survey 201824
Key contacts
Christian MjaanesPartnerTechnology [email protected]: +47 951 50 088
Sophus SlaattaDirector, Cloud ComputingTechnology [email protected]: +47 408 56 699
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© 2018 EYGM Limited.All Rights Reserved.
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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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