The Arrival of

Cloud Computing
in Canada
How and Why Canadian Enterprises
are Exploring Cloud Computing

Lee Black, Jack Mandelbaum, Indira Grover, Yousuf Marvi

Management Insight Technologies

 
 
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 Table of Contents
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Executive summary 3
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Cloud Computing in Canada 4
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Methodology 12
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About Management Insight 13

2 
Executive Summary
Optimizing infrastructure, reducing costs and delivering IT faster than ever before, is a fact of
life for IT professionals.

In the last few years, some significant cost savings have been realized through server
virtualization and consolidation. However, as organizations look to further reduce costs,
opportunities have arisen to utilize pools of technology components that are device and
location independent – or “cloud computing.”

The extent to which Canadian IT professionals are embracing cloud computing is relatively
unknown, as is the connection between virtualization and cloud adoption. To examine this
topic, a study was conducted asking Canadian IT professionals about their virtualization
efforts and their public and private cloud initiatives. The study finds that:

Virtualization is becoming pervasive amid Canadian enterprises. Every Canadian

survey respondent indicated some level of virtualization occurring within their organization,
with the most advanced enterprises having an average of 68% of their servers virtualized. In
general, Canadian enterprises project that the percentage of their mission critical apps
running on either virtualized or private cloud infrastructure will increase from 38% to 45%
over the next two years.

Mixed environments will be the norm for at least the next two years. Even as the move
away from non-virtualized environments continues, predictions from IT respondents indicate
that in two years time, mission critical apps will be spread almost equally across
non-virtualized, virtualized and cloud infrastructure -- putting pressure on IT to concurrently
manage multiple environments.

Canadians are moving to cloud computing with caution and thought. While enterprises
with mature virtualized environments are twice as likely to have a policy of using cloud
computing as much as possible, the vast majority of Canadian IT professionals are either
cloud cautious or will only move applications to the cloud when it makes sense.

Collaboration services lead current cloud usage. There is at least one cloud service in
use in 88% of mega-enterprises (10,000+ employees) and 92% of medium-sized enterprises
(1000-4999 employees) in Canada. On average, Canadian enterprises have seven
applications currently deployed in the public cloud. Collaboration software services such as
web conferencing and email are the most commonly utilized cloud services today, followed
by desktop and infrastructure services. Infrastructure and platform-as-a-service lead in
terms of consideration for the future, with decision makers more than implementers
considering platform as-a-service.

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Public or private clouds? The jury is still out on mission-critical apps. In two years, IT
respondents believe that the majority of applications will be virtualized, but less than one-third
will run on any form of cloud. Of those moved onto cloud platforms, more will be on private
clouds. IT professionals would most like to move database and collaboration applications to
the public cloud. However, decision makers are significantly more likely to put industry
specific and enterprise applications on the list, while implementers feel more strongly about
migrating collaboration apps.

Cloudy expectations, motivations and risks abound. Under increasing pressure to use
technology to deliver results more quickly while keeping costs down, IT execs are turning to
cloud initiatives to increase productivity, save money and make their costs more predictable.
Their concerns are centered on measurement and control as they worry about security
problems, delivering poor service, and losing control (especially over costs). IT implementers
see the possibilities and risks of cloud in a more personal way as they see how cloud
computing can keep their skills current; allow them to work with the latest technology; and
make them more efficient. At the same time, they are concerned about the cloud leading to
job loss, losing of control, or being blamed if anything goes wrong.

Cloud Computing in Canada

This paper will present data collected from IT professionals in Fall 2010. The data is
comprised of 434 IT Professionals working within large enterprises (1000+ employees) in the
US, Canada and Europe. This paper will focus its analysis on Canadian IT professionals, while
drawing upon some US and European data for comparison. Primarily, the paper will discuss:

• Virtualization levels and influences

• Corporate policy toward public and private clouds
• Cloud usage in Canada
• The forces supporting and inhibiting cloud initiatives

In the end, this paper will show that with a little help from virtualization, large enterprises in
Canada have firmly set their compass towards a cloud future. Already the public cloud has
developed some roots in large enterprises, while the private cloud is also becoming ingrained
in corporate psyche. However, the transition to the cloud will be gradual, and not eliminate the
use of traditional or non-virtualized infrastructure over the next two years. This mix of
environments – public cloud, private cloud and traditional IT infrastructures - will require
enterprises to steer their integration tools and management philosophies towards end-user
services that span not only virtualized and non-virtualized infrastructures, but hosted
environments as well.

4 
Canadian Enterprises Embrace Virtualization
As in the US and the EU, virtualization is a norm among Canadian enterprises. Every survey
respondent indicated some level of virtualization is occurring within their organization. The
majority of these enterprises (51%) indicated a “managed” stage of virtualization -- meaning
they have management servers deployed and are able to manage their environment for high
availability.

Figure A

At each stage of virtualization, the percentage of servers virtualized increases. Those at the
most basic stage (unmanaged deployment of basic server virtualization) indicated that over a
quarter of their x86 servers are virtualized. As organizations achieve full disaster recovery
via virtualization and more advanced automation they become more cloud-like and report
more than two-thirds of their servers being virtual hosts.

5 
Mixed Environments Develop
Enterprises will continue to lean towards a more virtualized landscape and move more
mission-critical applications off non-virtualized infrastructure and onto either virtualized or
cloud platforms. On average, Canadian enterprises are running 38% of their mission-critical
applications on non-virtualized infrastructure today. In two years time, they predict that
number to drop by 11%. Much of this will go to private clouds (5%). Virtualized
infrastructure will absorb 2%, with another 2% moving to public clouds.

Figure B

It’s all about virtualization right now as Canadian enterprises do not expect to embrace cloud
platforms in any overwhelming way for at least the next two years. The move will be more
incremental but not stop simply with virtualization. IT respondents indicate that in two years,
mission critical apps will be spread almost equally among non-virtualized, virtualized and
cloud infrastructure, putting pressure on IT to manage multiple environments concurrently.
Their interest in just simply “virtualizing” is being paralleled by a desire to do more than just
virtualization, and is manifesting in both private and public cloud initiatives -- making mixed
environments the norm for at least the next two years as large enterprises in Canada continue
their move off non-virtualized environments.

Canadians Approach the Cloud with Caution

and Thought
Over the next two years organizations will continue to evaluate whether or not to virtualize
their applications. It is precisely this evaluation that also creates openings to discuss an
application’s suitability for the cloud. For Canadian enterprises this evaluation tends to be
approached with caution and thought.

6 
Figure C

While enterprises with mature virtualized environments are twice as likely to have a policy of
using cloud computing as much as possible, the majority of enterprises approach the cloud
either with caution or only when it makes sense. Over 40% of Canadian enterprises, whether
substantially virtualized or not, are cautious or resistant to using public clouds. In contrast,
company policies towards private clouds are more optimistic, with 55% indicating they would
move workloads to a private cloud when possible or when it makes sense to do so. Over the
next couple of years, the decision to move applications to the cloud will be met with thoughtful
and cautious review.

Collaboration Leads Current Cloud Activities

On average, Canadian enterprises have about seven applications currently deployed to the
public cloud. Collaboration services (web conferencing, email, etc.) are the most commonly
utilized cloud services in Canada today. The usage of desktop and infrastructure services
are also popular in Canada, with these efforts outpacing those in both Europe and the US. In
fact, 88% of mega-enterprises in Canada are currently using at least one cloud service.
Medium-sized enterprises are slightly more active with 92% stating that they are currently
using at least one cloud service.

7 
Figure D

However, decision makers and implementers tend to have slightly differing perceptions of their
cloud activities. Implementers tended to report fewer applications currently in use in the
cloud than decision makers. Across all categories, 54% of decision makers identified 7 or
more services in use, compared to just 45% of implementers, suggesting a subtle gap exists
between how decision makers and implementers view the depth of their organization’s public
cloud activities.

The gap that lies between decision makers and implementers can be further seen in the
applications they would like to move to the public cloud. IT Decision makers are significantly
more likely than implementers to also put industry specific and enterprise applications on the
list of applications destine for the cloud.

Figure E

In contrast, implementers are significantly more likely than decision makers to list
collaboration as the leading application they would like moved into the public cloud. Deciding
which efforts are ripe for the public cloud is taking on some political undertones among
Canadian IT professionals.

8 
Canadian IT Professionals Agree on the
Direction, but Differ on Their Ability to Deliver
In general, IT professionals tend to agree on the broader state of their IT departments.
Technology is more important than five years ago; turnarounds times are more critical than
they used to be; and they are under pressure to meet tighter deadlines.

Figure F

However when it comes to service delivery, the opinions of decision makers and implementers
begin to diverge. Decision makers tend to trumpet the general effectiveness of their IT
departments, but implementers downplay these abilities. Implementers are less likely than
decision makers to believe in their ability to provide quality service, to quickly provision
resources, and to be cost effective. In an environment where IT faces increasing
expectations around cost and delivery, a gap has formed between what decisions makers
think they are capable of delivering and what implementers believe they are actually able to
do.

9 
Productivity and Skills Encourage Cloud Investment
Productivity, cost savings and skills development get IT professionals interested in the cloud.
IT executives would invest in the cloud for productivity gains, predictable costs and to a lesser
extent better service. IT staff would invest to keep their skills current, be more efficient, and
work with the latest technology. While productivity, efficiency and the latest technology make
the cloud attractive to decision makers, implementers are more eager to keep their skill sets
current. Overall, IT professionals see the cloud as an investment that will lead to the skills
and efficiencies that ultimately improve the economics of IT.

Figure G

The Cloud Also Comes With Some Uncertainty

While IT professionals see benefits in cloud services, the skepticism that can accompany
change and new technology also appears to be influencing their cloud investments.
Executives are concerned about security and service. IT staff fear losing control, being
blamed or being laid off. As a result, personal and corporate risks are likely to keep cloud
developments somewhat in check as a platform to support business needs.

Figure H

10 
Cost Confounds Cloud Adoption
Cost is seen as both a primary driver and a primary barrier to cloud adoption. Removing “cost”
from the equation, presents a public cloud mostly driven by resource efficiencies, flexibility and
servicing global users. Deterrents to the public cloud include security, compliance and
general availability.

Figure I

Cost and security also confound private cloud adoption. Flexibility and the use of existing
infrastructure are positive influences, but the threat of complexity and slow technology
adoption are deterrents. Overall, the cloud is still a moving target as the economics and
security evolve. The fact that cost alone is both a driver and a deterrent, suggests that the
true impact and relevance of “cost savings” remains unresolved.

11 
Summary:
Canadian Enterprises Explore Cloud Computing
This study finds large enterprises in Canada actively virtualizing their environments and that
these efforts are in parallel to the exploration of cloud services. As organizations manage
their virtualization voyage, they also undertake a sort of application triage that evaluates each
application environment on a triad of platforms: virtualized, non-virtualized or cloud. All three
of which will be in use for at least the next two years.

Already, IT professionals are placing collaboration applications into the public cloud and
infrastructure and platform-as-a-service lead in terms of consideration for future cloud
initiatives. They are exploring the cloud promise of efficiency, flexibility and scalability, but
continue to wrestle with the realities of cost and security. The enigma of cost savings,
combined with the risks of security, control and compliance can be real show-stoppers to
entering the cloud. However, these concerns ultimately will form more of a hurdle than a
barrier as IT professionals are already advancing their cloud computing skills and knowledge,
and the market is actively creating the solutions that give IT decision makers the measurement
and control systems they need to feel confident in the success of their cloud initiatives.

With well defined processes, the right tools and adequate staff training, IT organizations can
also be equipped to address the concerns of IT implementers who fear that cloud initiatives
may lead to job loss, loss of control, and blame if anything goes wrong.

In the end, translating virtualization efforts into cloud computing is very real, if not simple, for IT
professionals. And as IT professionals continue to search for efficiencies and mature in their
approach to virtualization, their experiences are making them ready for – and more confident
in – cloud computing platforms.

Methodology
This study was executed as a web-based study. The sample was collected in Fall 2010 and
is comprised of 434 IT professionals across three regions – US (184), Canada (89) and
Europe (161). Respondents working for companies that produce cloud computing software
were excluded from this study. Qualified respondents had to be sufficiently knowledgeable
about their company’s IT environments. The screener and sample frame were developed to
target a fairly even representation of IT decision makers and IT implementers and of the three
company sizes within each region. The sample was then weighted to achieve a ratio of 60%
IT decision makers and 40% IT implementers, and 36% Medium, 29% Large and 35% Mega
Enterprises within each region. To assure market-based representation of each region, the
sample was also weighted based on total IT spend by country per data from the IDC Black
Book.

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About Management Insight
Technologies
Established in 1993, Management Insight is a full-service market research consulting firm
dedcated to helping technology companies find answers and insights that lead to superior
business performance.

Using advanced and reliable models for research, Management Insight designs and executes
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Management Insight Technologies has completed significant studies for industry leaders such
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well as many technology start-ups.

Copyright © 2011 Management Insight Technologies. ALL RIGHTS RESERVED. Any republication or modification of
materials or information contained within this report is strictly prohibited without the prior written consent Management
Insight or its Sponsor. All data opinions and projections are based on Management Insight’s analysis of the data at
the time of publication and subject to change.

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