Exploring thE FuturE oF Cloud Computing:

riding thE nExt WavE oF tEChnology-drivEn transFormation

World Economic Forum In partnership with Accenture 2010

About this report

This World Economic Forum report was developed by the Forums IT Industry Partnership in collaboration with Accenture and with the input from a group of experts and Future of Cloud Computing Steering Board members.

Contributors From the World Economic Forum

Joanna Gordon Associate Director, Head of IT Industry Chiemi Hayashi Associate Director, Scenario Planning Team, Strategic Insight Group

About the World Economic Forum

The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. Incorporated as a foundation in 1971 and based in Geneva, Switzerland, the World Economic Forum is impartial and not-for-profit; it is tied to no political, partisan or national interests. (www.weforum.org)

From Accenture
Dan Elron Managing Partner, Technology Strategy Lin Huang Manager, Corporate Growth & Strategy Renee Neill Senior Manager, Corporate Growth & Strategy This publication synthesizes the ideas and contributions of many individuals through survey, workshops, interviews, group calls and research. The Future of Cloud Computing project team thanks all for so generously sharing their time, energy and insights. Without their dedication, guidance and support, we would not been able to successfully develop this report.

About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with more than 181,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$ 21.58 billion for the fiscal year ended Aug. 31, 2009. Its home page is www.accenture.com.

About the IT Industry Partnership

The IT Industry Partnership (IP) programme of the World Economic Forum provides chief executives and senior executives of the worlds leading IT companies with the opportunity to engage with peers to define and address critical industry issues throughout the year. Identifying, developing and acting upon these specific industry issues is fundamental to the Forums commitment to deliver sustainable social development founded upon economic progress.

The views expressed in this publication do not necessarily reflect those of the World Economic Forum, Accenture, the Future of Cloud Computing Steering Board members or the Industry Partner companies. World Economic Forum 91-93 route de la Capite CH-1223 Cologny/Geneva Switzerland Tel.: 41 (0)22 869 1212 Fax: 41 (0)22 786 2744 E-mail: contact@weforum.org www.weforum.org 2010 World Economic Forum 2010 Accenture All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system.

About the Future of Cloud Computing Steering Board

Guidance was provided by an actively involved Steering Board of Experts which included: Marc Benioff, Chairman and Chief Executive Officer, Salesforce.com Craig Mundie, Chief Research and Strategy Officer, Microsoft Corporation Paul Sagan, President and Chief Executive Officer, Akamai Technologies JP Rangaswami, Managing Director, Innovation and Strategy, BT Nelson Mattos, Vice President, Engineering, EMEA, Google Ajei Gopal, Executive Vice-President, CA Products and Technology Group, CA

Contents
Executive Summary Research Findings
The impact of cloud computing Beyond cost reduction to structural change Roadblocks: Whats holding cloud computing back? Potential action items and areas for further study 1 3 3 5 9 13 16

Conclusions Annex
Cloud computing session scribing, World Economic Forum Annual Meeting 2010, Davos, Switzerland

17 19 19 19 20

About the Research

Project background Definition of cloud computing

References

Executive Summary
Cloud computing is seen by many as the next wave of information technology for individuals, companies and governments. The abundant supply of information technology capabilities at a low cost offers many enticing opportunities. In addition to reducing operational costs, cloud technologies have become the basis for radical business innovation and new business models, and for significant improvements in the effectiveness of anyone using information technology which, these days, increasingly means most of the world. Like any new technology advancement, cloud computing also creates disruptive possibilities and potential risks. The fact that cloud computing involves the aggregation of computing power, and more importantly, information, has become a source of increasing concern. Users, providers and government policy-makers are asking many questions about the current use and future evolutionary path of cloud computing. These include: What are cloud computings most important current and potential future benefits for industry, governments, and society? What might derail cloud computings progress? And are the overall benefits worth the risks? The World Economic Forum and Accenture recently completed the first part of a two-year research initiative through surveys, focus group discussions and global workshops to address these questions (Figure 1.1 & 1.2). The project was mandated in 2009 by the IT Governors at the World Economic Forum meeting. The objectives of the project were to develop a set of collaborative actions and identify policy and industry recommendations that could steer the healthy development of cloud computing. The research findings provide some surprising and useful insights into what current and potential users see as the most important benefits of cloud technologies; which industries, societal, and other stakeholder groups might most benefit from cloud computing; why governments are adopting cloud services at a higher than expected rate; and what users, providers, and policy-makers fear may disrupt the adoption of cloud services and thus potentially diminish their value.

Figure 1.1. Project Approach - Global Workshops

Nov. 17, 2009 Brussels, Belgium Jan. 27-31, 2010 Davos, Switzerland Sep. 10-12, 2009 Dalian, China

Sep. 7, 2009 Tokyo, Japan

Jul. 20-21, 2009 California, US

Nov. 812, 2009 New Delhi, India

Dec 14, 2009 Cross-government Call

The experts who participated in the research generally believe that business, government organizations, and countries have seen only the tip of the iceberg with regard to the benefits that cloud computing will deliver in the next ten years. They predict that companies of all sizes and government institutions in both established and emerging economies will achieve new levels of productivity and innovation. They believe the cloud industry will be a key source of new jobs. And they see cloud computing helping nations make great gains through addressing major healthcare, education, and other societal issues. This optimism, however, is tempered by a realistic perspective on the significant barriers to the widespread adoption of cloud services. The challenges include keeping consumer, business, and government data and systems secure; maintaining the privacy of people and organizations; avoiding being locked into one cloud provider; and creating the right regulatory balance between customer protection and business efficiency.

This report explores the potential benefits and barriers in more detail. It also highlights actions that the IT industry and governments should consider. These include educating customers about the benefits of cloud, creating standards and policies that enable easy switching among cloud providers, and providing clear information about where data is actually stored. Additionally, given the role of information technology and the structural changes that may be generated by cloud technologies, the report also highlights the potential to look at lessons from other more mature infrastructure industries, such as banking and transportation, to help shape our approaches towards cloud technologies.

Figure 1.2. Project Approach - Global Survey

Survey period: August - November 2009 Respondents by Organization Type Other Government/ Regulatory Cloud providers Respondents by Geography Middle East 2% 1% Africa North America Europe

14%

11% 46% 13%

Academia

22% 52% 16%

Asia

24%

Companies that use cloud services

Research Findings
The impact of cloud computing
The concept of cloud computing has spread rapidly through the information technology industry. The ability of organizations to tap into computer applications and other software via the cloud and thus free themselves from building and managing their own technology infrastructure seems potentially irresistible. And in fact, some companies providing cloud services have been growing at doubledigit rates despite the recent economic downturn. Already numerous organizations can point to significant benefits from cloud computing, according to the 2009 research programme conducted by Accenture and the World Economic Forum (see "About the Research", Page 19). Part of that research included a global survey of professionals from companies supplying and using cloud services, government institutions, universities, and other organizations. As expected, survey participants said a major benefit of cloud computing is reducing IT costsa large and often increasing expense in every company but especially informationintensive organizations such as financial services and media. Other benefits often cited were greater IT flexibility and more efficient business processes. However, the experts we convened as part of our research believe such benefits are just scratching the surface of clouds potential (Figure 2). Our study found that cloud computing has the potential to benefit organizations, whole industries, and even entire economies by: Dramatically accelerating the way companies create new products and services, in part through enabling product development professionals around the world to collaborate more effectively and access more powerful and economical computer resources Increasing the ability of organizations to mine their data for important trend information, such as customers changing needs and competitors moves in the marketplace Leveling the playing field between large and small companies by giving companies of all sizes access to information technology that previously was affordable for only the largest of companies Helping emerging economies leapfrog to higher levels of technological development by providing more immediate and affordable access to nextgeneration applications, tools, and infrastructure

Figure 2. Examples of Benefits of Cloud

Long-term Bene ts

Accelerate Innovation Better Services for Citizens

Transform R&D and Science Contribute to GDP Growth Create New Jobs / Businesses Improve Govt Effectiveness Empower Individuals Improve Competitiveness Transform Education Promote Sustainability Level Playing Field Provide Leapfrogging Opportunities

Lower Cost of Failure

Immediate Bene ts

Increase IT Flexibility
Improve IT / Business Process Ef ciency

Drive Productivity Gains Enhance Collaboration Facilitate Business Agility Reduce IT Costs

Cloud

Enhance User Experience

Workshop Highlights Brussels, Belgium, 17 November, 2009 Participants found the most important barriers to cloud adoption in Europe were privacy concerns, jurisdiction complexity, data protection and trustworthiness of data Building trust between and within the public and private sectors is essential for healthy development of cloud computing Some suggestions made by the workshop participants: - Improve transparency and provide clarification, e.g. government to prepare guidelines for existing legislation and data exchange; industry to provide clarity on how meta data is structured - Work on harmonization and clarity of privacy and data processing regulations - Increase investment in R&D on security- and privacy-enhancing technologies - Educate citizens on the implications, benefits and risks of cloud computing

In fact, our research found that organizations using or planning to use cloud computing technologies do not view cost reduction as the most important potential benefit. While they are, indeed, lowering costs by accessing lessexpensive computer resources over the Internet, corporate and government executives say the biggest advantage of cloud computing is better support for creating new products and services, and innovation in general (Figure 3). As to the magnitude of expected impact of cloud computing, our research suggests that many believe

that cloud technologies could have a more substantial impact than mobile technologies in a number of areas, including allowing emerging economies to leapfrog in economic development, creating new businesses and jobs, and improving educational systems (Figure 4). The question then becomes this: Why is cloud computing expected to have such a dramatic impact? And in what sectors of the economy is it expected to have the greatest impact?

Figure 3. Which benefit is the most important for current and potential cloud users?
Enable new services/products Collaboration/Information sharing Reduce Costs Help you focus on core businesses Mitigate business risk 57% 50% % of Users Who Rated 4 or 5 (1 = not important, 5 = very important) 71% 86%

Figure 4. Where will the impact of cloud technologies match or exceed that of mobile technologies?

Improve education systems Create new businesses/jobs

80% 75% 70% % of Respondents Who Rated Exceed or Match

71% Provide emerging countries leapfrogging opportunities

Source: Cloud Computing Survey 2009, World Economic Forum and Accenture

Source: Cloud Computing Survey 2009, World Economic Forum and Accenture

Beyond cost reduction to structural change

Clearly, cloud computing is already having a profound impact on the IT and telecommunications industries. As an example, this research participants said they expect technology start-ups to continue to proliferate as cloud computing enables them to avoid the substantial costs of selling and distributing software around the world. In fact, the venture capitalists we interviewed as part of this study were reluctant to fund any IT startup that did not plan to operate from the cloud. However, this research found that cloud computing is expected to have a substantial impact on a broad swath of industries outside of IT and telecom. The survey respondents believe that beyond the IT and telecom industries, cloud computing will have the greatest impact on media, government, education and health care (Figure 5).

"We no longer fund The pharmaceutical industry offers some good examples companies based on of the power of using PowerPoint proposals. computing in the cloud. We fund them based Recently, scientists at a drug on live, working company used Amazons solutions hosted in cloud services to dramatically the cloud." shrink the time to analyse Venture Capitalist, 2009 data and determine how to treat diseases. They cut the time to analyse a large data set from 140 days (on a desktop computer) to six days (in the cloud).1 Another example comes from the manufacturing sector, where cloud computing is viewed as a superior tool to link factory information systems to those of suppliers, distributors and customers, resulting in fewer supply chain disruptions (Figure 6). And media companies imagine cloud computing opening up vast new distribution channels new outlets for movies, newspapers, magazines, music and other forms of information and entertainment that can be digitized and delivered through the cloud.

Figure 5. Which industries are most likely to be impacted by cloud computing?

Media Government Education Healthcare Manufacturing Agricuture IT Telecom 10% 4% 13% 44% 40% 33% 24%

54% 24% 26% 32% 40% 23% 78% 54% 0% 10% 20% 30% 40% 50% 60%

26% 20% 24% 21%

11%

14% 28% 70% 80% 10% 90%

1%

100%

% of Respondents Who Answered 5, 4, or 3 5-High 4-Medium High 3-Moderate

Source: Cloud Computing Survey 2009, World Economic Forum and Accenture

Cloud computing enables higher level of innovation and discoveries by dismantling data silos and providing greater capabilities in data mining and data analytics.

Our experts also told us that another set of major benefits for companies and government institutions is the ability to aggregate previously disparate databases, pore through massive amounts of information, and identify patterns. That kind of computation-for-hire is already transforming the way emergency room doctors Participant, Cloud work. A company called the Computing Session, Schumacher Group that manages World Economic Forum emergency rooms in more than Annual Meeting 2010, 20 states in the US provides Davos information on emergency room performance through the cloud.2 The ability to aggregate and analyze data from multiple sources leads a number of experts to believe that cloud computing will soon generate breakthroughs in fields as diverse as weather forecasting, agriculture, and threat prediction.

Beyond its impact on various discrete industries and sectors, cloud computing is also expected to have a potentially significant impact on the pace of economic development in emerging economies. Institutions in Western economies take for granted data centre offerings that have long existed, including their ability to own their computer rooms, install complex systems, and access other services that make a company proficient at IT. But as cloud services develop, emerging economies can gain access to world-class IT infrastructure for the first time without having to build it all on their soil. Assuming they can install sufficient communications infrastructure (admittedly, a big assumption in some parts of the world), developing countries could leapfrog a technological generation and rapidly become more efficient, much the same way they skipped the landline phase of telephony and moved directly to mobile communications. Indeed, some new cloud-based services, such as providing advice to rural doctors, are set up to require only mobile connectivity.

Figure 6. Potential Use of Cloud Computing in Different Industries

Highly interactive/ collaborative learning Rapid prototyping & collaborative design Improved manufacturing processes

Access to global resources

Education/ Research

Manufacturing

Healthcare

Supply chain coordination

Low cost simulation

Massive and exible computing power for drug discovery

Platform for health and insurance services

Real-time health monitoring/ alert distribution

Source: Cloud Computing Survey 2009, World Economic Forum and Accenture

Cloud computing could create between 300,000 and 1.5 million new jobs in five years in Europe alone.

Many of the experts in our study were quick to point out broader macroeconomic benefits. Some European economists see cloud computing promoting the growth of thousands of Professor Federico Etro, new small and medium-sized University of Milan, 2009 companies through making IT support much more accessible. One European economist and professor, Federico Etro, estimates that new and existing companies using cloud services could create between 300,000 and 1.5 million new jobs in Europe in the next five years. If so, that could reduce Europes unemployment rate from 0.3% to 0.6% and boost GDP growth by 0.1 - 0.3%.3 Governments everywhere are also anxious to leverage the cloud to make public information accessible to citizens at a low cost. Examples include providing information about land ownership and allowing companies to generate customized applications using that data. In the UK, for example, cloud-based applications are used to inform governments about the need to repair potholes.4

This kind of analysis has led Thanks to cloud high-ranking government computing, public officials to highlight the need services will have for their countries or regions to the chance to be embrace cloud computing. A provided anywhere, Singapore government official, anytime and anyhow for example, described cloud and to anybody. computing as a major source Viviane Reding, of economic development. 5 EU Commissioner for The US governments chief Information Society and information officer, Vivek Kundra, Media, 2009 said cloud computing allows us to create a government that is more transparent so that government is not practiced behind closed doors, but in the public square. 6 But despite such enthusiasm in high places across industry and government, many organizations are hesitant to embrace cloud computing. Our survey and discussions with executives around the world shed light on why.

Examples of Government Embracing/Investing in Cloud European Commission Japan

Cloud computing facilitates public procurement among different member states administrations and enables small & medium enterprises to gain access to public services A nation-wide "Kasumigaseki Cloud" is being developed to enable various ministries to collaborate At the local level, the "Jichitai Cloud" is being built to provide interoperability among local governments

Singapore

Cloud Computing is viewed as a major source of economic development

Source: Cross-government call on cloud computing, The World Economic Forum, December 2009

Workshop Highlights Dalian, People's Republic of China, September 10-12, 2009 Meeting attendees believed cloud computing will greatly impact innovation, bringing about new business models and new software applications. It will help bridge the digital divide, especially in emerging economies Participants expressed concerns about data security (e.g. theft, misuse or accidental leakage of data), interoperability, governance issues over taxation, data ownership, and privacy Participants suggested the IT industry collaborate to develop common standards or guidelines for data sharing and usage, and better demonstrate the cost/value of cloud and how it will evolve

Roadblocks: Whats holding cloud computing back?

According to this research, the barriers to adopting cloud computing vary both by region of the world (North America, Europe and Asia Pacific) and by stakeholder group (users, government, and IT vendors) (Figure 7).

records in public clouds increases the risk that unauthorized parties gain access to sensitive data.

The fundamental cloud security challenges include the lack of a global identity and inability to remove compromised machines.
Participant, Cloud Computing Session, World Economic Forum Annual Meeting, Davos, 2010

In North America, the biggest barriers to adoption today are data security, privacy issues, and compliance. In Europe, privacy and security are cited as significant issues as well. But unlike their North American counterparts, they fear vendor lock-in even more. For their part, Asia-Pacific organizations are held back most frequently by compliance issues, followed by privacy and governance matters.

The financial losses to retailers, banks and others from hacking have been well-publicized although most of these are examples of intrusion in non-cloud computers Participant, Cloud and by putting such data in the Session, Tokyo, Japan, cloud, the risks can increase 2009 measurably. A participant from the session in Davos warned that the lack of a global identity system and an inability to remove compromised machines make it challenging to solve Internet and cloud security issues. Additionally, some of our experts told us that another major impediment is the lack of good mechanisms for certifying the lineage of data ensuring that the data received by the user is in fact the same data that was put in the cloud originally. Unless clear policies are created, adopted, and enforced at each site in which data is stored, the risks can be substantial. The world has gradually become aware of the risks of using the Internet; these concerns are quickly amplified when coupling the Internet with cloud technologies.

The word cloud computing is too nebulous for the customers to understand clouds true benefits and potential.

This research found that the key concerns of IT vendors, government, and current and potential purchasers of cloud services also differed, sometimes greatly. For customers of cloud computing, the biggest concerns were security and data privacy (Figure 8, p.10). Putting private

Figure 7. Impediments to broader cloud computing adoption by region

Security

Privacy

Governance

Fear of vendor lock-in

Compliance

Enterprise/User inertia

Business Continuity

Loss of IT Control/Ownership

Uncertainty around ROI

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% of Respondents Who Rated Very Serious Asia Paci c Source: Cloud Computing Survey 2009, World Economic Forum and Accenture Europe North America

Workshop Highlights New Delhi, India, 8-12 November, 2009 The most significant benefits of cloud seen in India are scalability and lower upfront investment Emerging markets have their own unique enablers and barriers to cloud computing - Lack of connectivity is a major issue while privacy is not a real concern - Mobile access will be a key enabler to address the network access issue Some suggestions made by the meeting participants: - For the industry: better understand governments needs and educate them about the benefits of cloud (e.g. using cloud to connect with their voters, solving problems in education and health services); develop cloud products/services tailored to emerging markets - For governments: provide better network infrastructure and make clear rules on privacy, data ownership, and liability

In addition to security and privacy concerns, cloud computing users were also very concerned about vendor lock-in proprietary architectures or unique application/data models that might make it difficult to switch vendors and move into or out of a cloud vendor.

The fact that governments and regulators both (and even more intensely) cite this as a major concern is worth noting (Figure 9). Such concerns may not dissipate until standards are in place. We have seen several large cloud providers already making commitments to letting customers exit their cloud much easier.

Figure 8. What are users major concerns when buying cloud services?
Security issues Data privacy/ con dentiality Compliance issues Fear of vendor lock-in Governance issues Loss of IT control/ ownership Business continuity issues 0% 20% 40% 60% 80% % of Users Who Answered Very Concerned Source: Cloud Computing Survey 2009, World Economic Forum and Accenture

Figure 9. What are governments actually worried about?

Information security issues Ability to meet national security requirements Governance issues Compliance issues Fear of vendor lock-in Data privacy/con dentiality Business continuity issues 0% 20% 40% 60% 80% 100%

% of Government/ Regulatory Respondents Who are "very Concerned" Source: Cloud Computing Survey 2009, World Economic Forum and Accenture

10

Rules are Byzantine and not fit for the Internet, so it is hardly surprising there are problems in governance.

Although they stand to profit most immediately from cloud computing, providers of cloud services have their own set of worries (Figure 10). Based on our survey data as well our A major cloud provider, meetings, their concerns 2009 can be grouped into three categories: data governance, outdated laws, and users lack of understanding of cloud computing. Under data governance, survey participants most commonly cited the burden of privacy requirements as a very serious issue. Additionally, limitations to letting users data cross country or continental borders were another big cloud provider concern. The more regulations against cross-border data transfers, the more data centres a cloud vendor must build (and, consequently, the less economical the service becomes for the provider). Issues about data ownership were also found to be significant. As one participant from the session in Davos said: There is very blurry definition of ownership. Does [ownership mean]

right to access? Right to download? Or right to own?

Perhaps not surprisingly, the nascent cloud industry views government regulations as complex and inconsistent. There is little agreement on what kinds of regulations are necessary in general EU regulator, 2009 or especially across borders. For example, one EU regulator didnt believe that regulations on data privacy need to be updated for cloud computing a very different viewpoint from that of the industry.

In Europe, the regulatory frameworks such as data privacy are designed to be technology neutral. It is not necessary to regulate specifically for cloud computing."

The last group of significant concerns for cloud providers revolves around customer confusion. Our research participants time and again decried the lack of customer understanding of exactly what cloud means. In a focus group discussion, 46% of cloud providers said they believed a lack of understanding of cloud computing by customers is a very serious concern (Figure 11).

Figure 10. What are providers major concerns when deploying cloud services?

Figure 11. How serious is the issue of lack of understanding of cloud computing?

Burden of privacy requirements Data location restrictions require extra data centers Dif cult to meet diverse security requirements Cannibalization of existing products/services Disruption of existing relationships and ecosystems

63% 56% 50% 50% 44% % of Providers Who Answered Very Concerned

18% Not Serious 46% Very Serious

36% Somewhat Serious

% of Providers Source: Cloud Computing Survey 2009, World Economic Forum and Accenture

Source: Cloud Computing Survey 2009, World Economic Forum and Accenture

11

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Potential Action Items and Areas for Further Study

Our Phase One research has shown interesting, and in some cases surprising, findings about the expected benefits and barriers to the development and adoption of cloud computing. What are the implications for industry members and policy-makers which have an interest in achieving the optimal level of benefits for all stakeholders? As part of our surveys and workshops, we asked users, providers, academics, and public policymakers for their preliminary recommendations on smoothing and accelerating the path of development and adoption of cloud computing. When asked, cloud users and academic experts frequently pointed to the following suggested actions (Figure 12): Provide visibility on where data is located, providers performance, and ways to facilitate the management of software applications Make well-defined commitments on service levels (i.e. effective service-level agreements, or SLAs)

Make it easy to switch providers, perhaps by establishing standards in metrics for determining the importing and exporting of data service quality, interfaces to cloud services, and minimum service requirements (in that order of importance). In fact, about half of the customers of cloud services that we surveyed wanted standards for import and export of cloud data within a year The needs and desires of customers have obvious implications for the providers of cloud services. Based on what we learned from customers in our research, one area of possible action for the industry is to do much more to educate customers businesses and governments about the advantages of getting information services from the cloud rather than from their own computers. To reduce customer confusion, the IT industry might start to work together to clearly articulate the potential bottomline benefits to corporations and government institutions. Creating a commonly accepted taxonomy of cloud services might also go a long way towards explaining an often fuzzy concept. Collecting and publishing case studies on companies that have increased innovation, grown revenue, reduced product development cycle times and achieved other quantifiable benefits beyond cost reduction may help accelerate adoption.

Figure 12. Potential initiatives for cloud providers to accelerate the adoption of cloud

Provide visibility into data location, performance and management of applications

Provide well-de ned service-level commitments

Offer more functionality and new cloud-based applications Offer legacy system support and/or migration services/tools

Make it easy to switch between providers

Lower the price

Offer client credentials

Support business case development 0% 10% 20% 30% 40% 50% 60%

Ranked as top 3 most signi cant potential initiatives User Source: Cloud Computing Survey 2009, World Economic Forum and Accenture Academia & Other

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Additionally, cloud providers could potentially reduce fears about security, privacy and vendor lock-in by offering concrete approaches to these issues, and providing more case examples of companies using cloud services successfully. Moreover, cloud vendors could discuss the advances they have achieved in these areas. To reduce anxieties over vendor lock-in, research participants suggested that the IT industry should make it easy for users to move data in and out of the systems of different cloud providers. Supplying standard data import/export tools and interfaces would ease the fear of being held captive to a provider. In addition, cloud providers might allow more transparency about their operations behind the cloud, including where they store and process their data (i.e. in what countries) and what service levels they will guarantee. Given that cloud computing puts the computerized records and software applications of many organizations in fewer locations, customers and government rightly worry about what can happen if those facilities are attacked or fail. To ensure continuity of service when one providers cloud services go down, the IT industry might consider creating industry-wide mutual aid agreements that enable other providers to quickly come to the rescue, as suggested by a participant at the session in Davos.

Government, too, has an important role to play if it wants cloud computing to spur economic growth (Figure 13). Policy-makers, regulators and other government officials might consider providing better public access to national data economic, agricultural, census, meteorological, and others. Opening up their treasure trove of data will spur the development of cloud services that can harvest that data, helping their countries address societal issues such as health and environmental sustainability. Creating effective regulations for cloud computing will be critical. At the session in Davos, it was suggested that policy-makers can draw numerous lessons and safeguards from regulatory efforts in other more mature infrastructure industries such as banking and transportation. Finally, our research participants recommended the IT industry and government increase collaboration to make all this happen. Business and government should continue investing in new methods for improving security, making cloud services interoperable, certifying cloud providers, and managing the systemic risk that comes with putting the worlds data and technology in fewer locations. They should work jointly to improve network

Figure 13. Potential initiatives for governments to accelerate the adoption of cloud

Collaborate with other governments and reduce the complexity of compliance requirements

Establish cloud security standards

Provide free access to broadband Internet

Subsidize cloud infrastructure buildout

Offer an accessible national cloud

Certify cloud service providers

Establish and enforce minimum requirements on uptime, recover time, etc 0% 20% 40% 60% 80% 100%

Ranked as top 3 most signi cant potential initiatives User Source: Cloud Computing Survey 2009, World Economic Forum and Accenture Provider Academia

14

infrastructure, especially by extending the reach of broadband Internet networks. If they dont, potential customers will rightfully complain about the length of time it takes to get information from the cloud. Similar efforts need to be applied to Internet security, including the ability to quickly isolate sources of threats. Different approaches are needed to accelerate cloud usage in emerging markets. Major investments need to be made in telecommunications infrastructure to provide access to major cloud data centers. As suggested in one of our focus groups, initiatives such as creating an International Government Cloud incubator that would allow governments around the world to share data and applications might be valuable. The above survey and findings from our focus groups and Forum member meetings will serve as a strong basis for our next phase of work: identifying more specific action items for both industry members and public policy-makers to help mitigate the uncertainties and accelerate the benefits of cloud computing.

Examples of Potential Actions IT Industry

Educate customers about the benefits of cloud by making available case studies and reduce customer confusion by creating a common cloud services taxonomy Make it easy for users to move data into, out of, and between cloud service providers (e.g. create standard data import/export tools/interfaces) Increase focus on SLAs and provide transparency on where data is stored and processed Create industry-wide mutual aid agreements to ensure continuity of service in the event of a providers failure

Government

Adopt lessons and safeguards from regulatory efforts in other more mature infrastructure industries such as banking and transportation Provide better public access to national data (e.g. economic, census, agricultural, meteorological, etc.)

Industry-Government Collaboration

Invest in new technologies that would enable improved security, increased interoperability between cloud services, and better management of systemic risks Improve network infrastructure and extend the reach and accessibility of broadband Internet Sponsor initiatives that would allow governments around the world to share data and applications

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Conclusions
Cloud computing has tremendous potential to benefit businesses, industries, and entire economies, but substantial challenges stand in the way. Our study has taken the first step: defining potential actions for industry and governments to consider in order to accelerate cloud adoption and generate benefits for all stakeholders individuals, businesses, governments, and society as a whole.

10X
"Cloud Computing may multiply the benefits of the Internet by a factor of 10... but we may also face 10 times the challenges"
Participant, Cloud Workshop, California, USA, 2009

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Annex

Source: Cloud Computing session scribing by the WorkSpace, World Economic Forum Annual Meeting, 2010, Davos, Switzerland

17

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About the Research

Project background
This report is part of the World Economic Forums research study Exploring the Future of Cloud Computing. It was mandated in 2009 by the IT Governors at the World Economic Forum Annual Meeting in Davos, Switzerland. Two objectives for the research were defined: Develop a set of collaborative actions that could steer the healthy development of both public and private cloud computing environments Develop a set of industry and public policy recommendations that could help mitigate the uncertainties and accelerate the benefits of cloud computing The project was divided into two phases. The first phase focused on convening a wide range of relevant stakeholders (IT industry, corporate buyers of IT, government regulators, investors, academics, journalists and others) through workshops, surveys and interviews to generate their views on the potential impacts of cloud computing on business, society, and the global economy. A key research tool was an extensive survey that Accenture designed and developed on cloud computing. Collecting a wide range of highly informed views enabled us to identify the key drivers, enablers, and barriers in cloud computing. Based on the findings of this report, Phase Two (expected to be completed in 2011) will focus on developing actionable strategic options and policy recommendations.

Definition of Cloud Computing

There are probably as many definitions of cloud computing as there are opinions about its future. To date, there is no definition that is agreed upon in most quarters. The definition we used in this project came from the University of California at Berkeley: Cloud computing refers to both the applications delivered as services over the Internet and the hardware and systems software in the data centers that provide those services.3

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References
1

Cloud Computing Brings Cost of Protein Research Down to Earth, American Chemical Society, May 2009 Case Study: Cast Iron Integration and Google Gadgets help Schumacher Group expose critical Emergency Room information, Google, 2009. Prof. Federico Etro, The Economic Impact of Cloud Computing on Business Creation, Employment and Output in Europe, Review of Business and Economics, June 2009, Vol. 54, 2, pp. 179-208. Capital Ambition Project Initiation Document, www.londoncouncils.gov.uk Cross-government call on cloud computing, The World Economic Forum, December 2009 Cloud Computing What is its potential value for your company?, February 2009, http://www.cio.com/ documents/whitepapers/WP3CloudComPotentialValue. pdf. Kundra said this in an interview when he was chief technology officer for the District of Columbia. Above the Clouds: A Berkeley View of Cloud Computing, February 10, 2009, authored by 11 members of UC Berkeleys division of Electrical Engineering and Computer Sciences.

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The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. Incorporated as a foundation in 1971, and based in Geneva, Switzerland, the World Economic Forum is impartial and not-for-profit; it is tied to no political, partisan or national interests. (www.weforum.org)