December 2, 2009 – Forrester Research Inc.’s survey of IT executives and technology decision-makers found concerns about security to be the primary reason firms are slow to adopt the pay-per-use hosting model of virtual servers.

If you break down the cloud in to three arenas – software as a service, platform as a service and infrastructure as a service (IaaS), the area lacking in growth and investment is IaaS, says Frank Gillett, vice president and principle analyst for Forrester.

Despite interest in the technology, the percentage of organizations participating in the pay-per-use model is virtually the same as 2008, increasing only 1 percent to 4 percent of respondents participating or expanding use this year, according to the reports (“The State of Emerging Enterprise Hardware: 2009 to 2010” and “The State of Emerging SMB Hardware: 2009 to 2010”).

While the survey indicated an increase in curiosity about the technology in 2009, 49 percent of respondents from enterprises and 51 percent from small and midsized businesses cited security and privacy concerns as the top reasons for not making use of it.

Apprehension about organizational control over data is a primary deterrent to taking sensitive information into the cloud, according to Gillett who compares the desire to work in-house to control over a vehicle. “We often feel safer when we’re driving our own vehicles. Statically speaking, airlines are safer, but it’s that loss of control that results in anxiety. And, it’s not a trivial shift in mentality,” he said. “The interesting thing is that a lot of these companies that have concerns about outsourcing IT have no problem outsourcing other sensitive information from payroll to places like ADP.”

It’s important to keep two things in mind when assessing adoption from an IT operations perspective however, says Gillett.

“This technology is in its infancy and specific to use cases," he said. “And, we think there is greater interest from people who are looking to bypass or go around IT. This audience is only part of the total market and may be more cautious than other parts of the business.”

For this and other reasons, Gillett cautions users from taking an overly optimistic view of cloud adoption. “We’re in a hype bubble about cloud right now,” he said. “From an enterprise point of view, it’s not a generally applicable technology like server virtualization, which is really going to slow it down.”

This year was the first year that more than half of enterprises reported use of server virtualization, according to Forrester. X86 server virtualization has reached most firms with 72 percent of enterprise respondents using or planning to upgrade it and 50 percent of SMBs.

“At the heart of the cloud is server virtualization,” said Gillett. “How are they going to get comfortable with taking it outside the company? It will take quite a while – years – to adjust to that and gain significant adoption.”

For additional information on Forrester’s survey read its reports on emerging enterprise and SMB hardware from 2009 to 2010.

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