IT Leaders Look To the Cloud to Grow into a New Era of AI-driven Capabilities

After cooling in 2023, study finds cloud adoption is seeing a resurgence fueled by AI—but being met with security and performance concerns and cultural resistance

Foundry, the media, data, and martech division of IDG, released today its annual Cloud Computing Study. In its 11th year, the study measures cloud computing trends among technology decision-makers, including investment levels, business drivers, and challenges.

This year, the study found a return to accelerating cloud migration rates (63%) after dropping in 2023 to 57%, with 63% of respondents also anticipating increased cloud spending. When asked what’s driving cloud acceleration and increased investment, IT leaders cited improvements to security, governance, and scalability as well as faster adoption of new technology including AI/ML capabilities.

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Still, IT decision-makers (ITDMs) expressed concerns related to several areas of adoption, and cited stall factors ranging from cost and performance to security and skill shortages, signaling that cloud vendors will need to assuage a range of resistance factors over the next 12 months in addition to delivering on increased access to AI services.

“Cloud computing continues to surge forward, with AI as a central driver of growth,” said Doug Dineley, Executive Editor, InfoWorld. “Yet, overcoming hurdles such as cost constraints and security concerns remains critical. For cloud vendors, the path to success lies in addressing these challenges head-on and offering solutions that are not only innovative but also tailored to the unique needs of each industry.”

Eager to enable their organizations with AI, ITDMs make way for cloud

Over the next 12 months, cloud computing is expected to account for 29% of the organization’s overall IT budget, or $95 million. As both adoption and investment levels increase, cloud computing is trending unsurprisingly towards AI. Regarding cloud-based investments, AI/ML platforms were cited as the top service (64%) ITDMs anticipated their organizations to spend on this year.  When asked what capabilities cloud investments would allow organizations to grow into this year, AI/Machine Learning took the top spot at 30%, with BI analytics, big data analytics, and software-as-a-service all tying for second at just 18%.

Cloud buyers say they’re primarily looking to use AI in the cloud to support the following areas: data analytics (53%), generative AI (52%), machine learning (44%), and predictive analytics (41%). Half also say they’re using hosted public AI models for business data analysis or other purposes.

Notably, however, when asked what business objectives were driving cloud investments, accelerating adoption of new technology like AI/ML came in third at 29%. Topping the list were improvements to security and/or governance (34%) and bolstering scalability (33%).

Regarding what sorts of cloud-based services will be taking the lion’s share of allocated budget, AI/ML PaaS offerings (64%) and SaaS business applications offerings (63%) claimed the top two spots, with BI/analytics tools coming in third at 46%. Companies in the high-tech space were more likely to earmark dollars for AI and machine learning PaaS investments (71%) while healthcare companies stood apart from other industries with their heightened investment in SaaS business applications (80%) and analytics and BI PaaS (59%).

Despite enthusiasm, ITDMs face  adoption barriers—some perceived, some practical

While cloud adoption is on the rise, momentum challenges persist. In fact, 90% of ITDMs agreed there was at least one hurdle in the way of cloud adoption as they executed roadmaps this year.

By far the top stall factor cited by nearly half of ITDMs (48%) was budget or cost restraints, despite budgets remaining healthy. Moreover, 60% of ITDMs say their organization has resorted to creating roles dedicated to managing cloud costs.

Other top stall factors include concerns around security/compliance (35%), integration or migration challenges (34%) and internal skill gaps (30%). Specifically, when asked about security and compliance-related obstacles, 65% of ITDMs expressed concerns about protecting sensitive data in the cloud. This worry is even higher among high-tech companies (73%) and healthcare players (71%). With regards to compliance, 57% questioned whether cloud providers could ensure adherence to regulations pertaining to specific governments or industries.

Performance and reliability factors raised concerns as well. 61% of respondents said that ensuring high availability and fault tolerance stalled adoption, and 57% cited network latency impacting application performance as a factor, among other performance-related barriers.

Finally, ITDMs continue to face obstacles from within the organization when it comes to deploying cloud. Their top internal barriers involved resistance to changing traditional roles and processes (57%), concerns surrounding loss of infrastructure control (55%) and job displacement (43%), general cultural resistance (52%), and lack of trust in providers (48%).

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Cloud vendors must build trust to combat cultural resistance, with the help of tailored offerings

Even as ITDMs look to ramp up cloud adoption over the next 12 months and start reaping the benefits of new AI technology, they continue to experience a range of barriers to adoption. Many of these barriers were also cited as top reasons for reverting apps and workloads from the cloud back to on-premise locations, which 37% of ITDMs confirmed their organization had done.

While concerns over cost, security, data protection, compliance, and performance require legitimate attention from cloud vendors, data from the study also suggests that vendors have work to do in combatting perceived or cultural barriers, including building trust, awareness, and use case fitness.

Notably, 74% of respondents agreed that being presented cloud offerings designed specifically for their industry was very important or critical. Further, ITDMs said that solutions tailored to their industry boosted cloud benefits in areas from security and governance, performance and scalability, improved processes/workflows, and even improved cost efficiency. As cloud vendors prepare to meet the demands of an AI-fueled resurgence, differentiating themselves in a crowded field will rely as much on their capabilities as it will on their ability to demonstrate tailored solutions to ITDMs’ range of barriers.

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