$258 Million a Year: The Cost to Enterprises Which Lack

SAN ANTONIO, TX --(Marketwired - September 21, 2017) -

• Big businesses losing $258 million -- or 5 percent of global revenue -- annually due to lack of cloud expertise
• 65 percent of IT pros believe they could be bringing greater innovation to their organization with the right cloud insight

Large enterprises across the world are losing out on $258,188,279 ¹ a year due to a lack of cloud expertise, according to a new report commissioned by Rackspace® in collaboration with LSE academics. The study also found that the cloud skills gap is stifling creativity, with two thirds (65 percent) of IT pros saying they could bring greater innovation to their organization with the right cloud insight*.

Nearly three quarters (71 percent) of IT decision makers report that their organizations have lost revenue due to a lack of cloud expertise. Beyond innovation and growth, four in ten (42 percent) IT decision makers believe a lack of skills is causing a lag in their organization's ability to deploy cloud platforms. The majority (71 percent) also believe they need to invest more in their workforce to meet the developmental challenges of cloud computing.

John Engates, chief technology officer at Rackspace, said: "While the rise of Artificial Intelligence and automation may cause some to think that human insight is less important, our report shows that this is not the case. With technology and the cloud now underpinning business transformation, the growing technology skills gap means organizations must have a strategy to access the expertise needed. Those that don't will struggle to be competitive and innovative."

The Cost of Cloud Expertise report looks at the wider implications of the cloud skills gap and provides a route for businesses to tackle the realities of modern IT and the resulting skills gap. Consisting of research amongst 950 IT decision makers and 950 IT pros -- as well as in-depth conversations with IT leaders -- in large enterprises around the world, the study uncovers current and future trends in cloud expertise.

The realities of modern IT

IT decision makers are seeing the benefits of moving all or part of their IT estate to the cloud. Around half (48 percent) of respondents say their organization has already seen a positive return on investment (ROI) on using the cloud, with a further 39 percent expecting the cloud to deliver positive ROI in the future.

Despite the benefits, both IT pros and IT decision makers appear frustrated at not being able to use the cloud to its full potential:

• Almost half (44 percent) of IT pros are spending more time than they expected managing daily cloud operations
• Around half (49 percent) of IT decision makers acknowledge that a lack of expertise is holding their business back
• The majority (84 percent) of IT pros said that deeper cloud expertise within their organization would help it increase the cloud's ROI

Most in-demand cloud skills

Nearly half of IT decision makers (46 percent) find it hard to recruit the right talent to help manage their organization's clouds. Migration project management (36 percent), cloud security (35 percent) and native cloud app development (34 percent) are the skills IT decision makers find hardest to recruit. The top barriers to recruitment were:

1. Industry competition (33 percent)
2. The inability to offer a competitive salary (30 percent)
3. The inability to offer sufficient training to prospective recruits (25 percent)

Looking at what IT pros seek in a new role may provide some pointers to businesses in the competition for workers. While salary and benefits are the top priority (71 percent), having the opportunity to progress in the company (49 percent) and training and learning opportunities (35 percent) were also highly rated, showing that businesses must think broader than pay rates to secure top talent.

However, with more than two thirds (69 percent) of IT decision makers looking to increase their organization's cloud usage in the next five years, and more than half (56 percent) saying that retaining talent is a concern, the challenges associated with recruitment are likely to increase. This will only be heightened with the majority of IT decision makers (80 percent) saying that it takes "a number of weeks or more" to train new hires, and nearly a third (32 percent) stating that "months" of training and on-boarding are required.

Will Venters, assistant professor of information systems at LSE, said: "Put simply, cloud technology is a victim of its own success. As the technology has become ubiquitous among large organizations -- and helped them to wrestle back control of sprawling physical IT estates -- it has also opened up a huge number of development and innovation opportunities. However, to fully realize these opportunities, organizations need to not only have the right expertise in place now, but also have a cloud skills development strategy to ensure they are constantly evolving their IT workforce and training procedures in parallel with the constantly evolving demands of cloud. Failure to do so will severely impede the future aspirations of businesses in an increasingly competitive digital market."

Navigating the cloud expertise challenge

As part of the report, Rackspace and the LSE academics have provided advice on how organizations can navigate cloud expertise skills gaps in their business:

Splitting the IT function into separate streams -- Conceptually dividing IT functions into two parts will allow businesses to focus on the dual priorities of business-focused digital innovation and operations focused innovation -- both essential to helping an organization accelerate in a technologically led market.

Developing a cloud skills strategy -- Every enterprise IT executive should adopt a Cloud Skills Strategy, which will map current skills in the organization, map future innovation trajectories and changes (both within the business and in cloud), and match these with realistic market analysis of the available talent pool.

Full assessment of the cloud ecosystem -- Organizations should adopt an ecosystem approach to the provision of basic cloud services (for example pooling risk by relying on providers). As a result, the dual challenge of both constantly improving and significantly innovating can be greatly improved by relying on a balanced pool of skills and competencies both within and beyond the organizational boundary.

Mariano Mamertino, EMEA economist at global job site Indeed, commented: "Finding, attracting and retaining tech talent is critical to business survival, and yet it is increasingly competitive for companies to find the technical talent they need as demand surges for such skillsets. Our data shows there is a global mismatch between the cloud roles advertised versus those being searched by IT professionals, which could accelerate the growth of a cloud skills gap. As this new report spotlights, there is both a financial and innovation gap to be plugged here for businesses globally."

For additional analysis and insights, please read the full 2017 Cost of Cloud Expertise Report: http://go.rackspace.com/costofexpertise .

* This is based on those using public, private and hybrid cloud

About the research: This research report was conducted by Rackspace in collaboration with LSE academics and sponsorship from Intel.

With the support of the independent research house Vanson Bourne, we conducted 1,900 interviews with respondents from the UK, U.S., Germany, Benelux, Switzerland, Mexico, Singapore, Australia and Hong Kong between the months April-May 2017. The respondent pool comprised of 950 IT decision makers and 950 IT pros from organizations that used the cloud. All respondent organizations had more than 1,000 employees from both the public and private sectors.

A breakdown of the exact demographics is below:

US = 300 IT decision makers and 300 IT pros

UK = 250 IT decision makers and 250 IT pros

Germany = 100 IT decision makers and 100 IT pros

Benelux = 50 IT decision makers and 50 IT pros

Switzerland = 50 IT decision makers and 50 IT pros

Mexico = 50 IT decision makers and 50 IT pros

Singapore = 50 IT decision makers and 50 IT pros

Australia = 50 IT decision makers and 50 IT pros

Hong Kong = 50 IT decision makers and 50 IT pros

In addition to the survey, a team of LSE academics conducted extensive research into the current debate within academia, and the trade press, on cloud computing, process automation, and digital skills. They also, during June-July 2017, conducted a series of interviews with eight global enterprises within the target demographic for the project. A further 10 interviews were conducted by a consulting company. Enterprises were given the option of anonymity to allow more candid responses.

About Rackspace : Rackspace, the leading multi-cloud managed services company, helps businesses tap the power of cloud computing without the complexity and cost of managing it all on their own. Rackspace engineers deliver specialized expertise, easy-to-use tools, and Fanatical Support® for leading technologies including AWS, Google, Microsoft, OpenStack, Oracle, SAP and VMware. The company serves customers in 150 countries, including more than half of the FORTUNE 100. Rackspace was named a leader in the 2017 Gartner Magic Quadrant for Public Cloud Infrastructure Managed Service Providers, Worldwide and has been honored by Fortune, Forbes, and others as one of the best companies to work for. Learn more at www.rackspace.com .

About Intel: Intel knows the Future of the Cloud because they are building it. The Intel® Xeon® Scalable platform offers the next generation foundation for cloud services that can support your data-intense, latency sensitive workloads with hardware-enabled security. Intel Xeon Scalable processors offer businesses 1.65x higher system-level performance over prior generation, and for growing workloads like Artificial Intelligence, 2.2x performance over prior generation. From emerging new opportunities in AI and virtual reality to next-level media and transaction workload demands, running your cloud on Intel architecture provides the speed and responsive services you need on a trusted, agile platform.

¹ Calculation: (Average global revenue of respondent organizations ÷ 100) X Average percentage of global annual revenue lost due to a lack of cloud expertise Calculation in numbers: (5,254,875,750 ÷ 100) x 4.91330891330891 = $258,188,279

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