Cloud complexity: the need for resilience

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A report from The Economist Intelligence Unit
Cloud complexity:
The need for resilience

© The Economist Intelligence Unit Limited 20161
Cloud complexity: The need for resilience
Preface 2
Introduction 3
Resilience and the cloud 5
The building blocks of cloud resilience 8
Conclusion: mindsets and partnerships for resilience 12
Appendix: survey results 13
Contents
1
2
3

Cloud computing has helped reduce costs
and boost productivity at many organisations,
but its broader use brings both benefits and
risks. These risks extend well beyond security
breaches into a lack of oversight of complex,
often fragmented systems that, if not
managed well, limits an organisation’s ability
to capture new opportunities and to adapt
and respond to new technology or regulatory
controls.
How should Chief Information Officers
leverage the cloud’s potential? How can they
fortify their company’s continuity and agility in
the cloud? What key challenges must be
overcome to succeed on this journey? Like all
big changes, a successful shift to cloud
computing requires a shift in both mindsets
and strategies, processes and partnerships
across and outside a company.
This report by the Economist Intelligence Unit
(EIU) on behalf of Sungard Availability Services
explores these and other critical questions as
companies expand their cloud use.
The findings and views in this report do not
necessarily represent the views of the sponsor.
The author is Peter Moustakerski; Carolyn
Whelan edited the report. We would like to
thank all the executives who participated on
the record and anonymously.
Interviewees
l Kristin Darby, chief information officer,
Cancer Treatment Centers of America
l Dom Guinard, co-founder and CTO,
EVRYTHNG
l Tanuja Randery, president UK & Ireland,
Schneider Electric
l Harsh Sinha, vice president, Engineering,
TransferWise
Preface
In March of 2016, the EIU, for a research programme sponsored by Sungard Availability Services, polled
304 executives evenly dispersed across France, the United Kingdom and the United States on their
organisational resilience and technology adoption. Respondents hail from a number of industries,
including IT and technology (15%), financial services (13%), professional services (8%), manufacturing
(7%) and 15 other sectors (collectively 57%). Those polled hold the titles of chief information officer
(50%), senior vice president (12%), vice president (15%) or head of IT (23%). The companies they
represent earn between $50m and $500m (45%), or more than $500m (55%) in annual revenue.
Who took the survey?

Organisations today operate in an
increasingly interconnected and information-
rich world. Innovations like big data and
dynamic pricing create unprecedented
opportunity for businesses to launch novel
products and services, conquer new markets
and better engage customers. But the same
developments bring new risks and
challenges—from security breaches and
service interruption to managing fragmented
IT systems, vast data troves and the dizzying
speed of change.
Cloud computing is perhaps the most
prominent example of recent disruptive
technologies that are reshaping corporate
strategies and IT capabilities. Cloud use is now
almost universal among organisations—and
only expected to grow. In the EIU survey, 78% of
executives agree that their use of cloud
computing will increase in the next three years
(see Figure 1); nearly two-thirds (65%) say that
more than half of their organisations’ systems
are now cloud-based versus the just 6% who say
that one-quarter or less of their systems are in the
cloud. “Companies are no longer considering
whether to migrate to the cloud, but rather
what … and how best to migrate,” notes Tanuja
Randery, president, UK & Ireland at French
electronics conglomerate Schneider Electric.
The move to the cloud is a logical one.
Cloud solutions help organisations add new IT
capabilities and applications at lightning
speed, often at a lower lifetime cost. But the
cloud can introduce more external players
and potential breakage points that demand
responses to both innovation and regulation
at a faster pace than many IT organisations
can meet.
Introduction
Source: Economist Intelligence Unit, 2016.
Strongly
agree
Somewhat
agree
Neither agree
nor disagree
Somewhat
disagree
Strongly
disagree
France
United Kingdom
United States
All respondents
Figure 1. To what extent do you agree with the following statement:
“Our use of cloud computing will increase in the next three years”?
(% respondents)
40 39 20 2
34 38 21 4 3
45 38 14 4
39 38 18 3 1

Against this backdrop of change and
uncertainty, “organisational resilience” is
emerging as a critical lever of a successful
cloud expansion. BSI, the business standards
company, defines resilience in its newly
published BS 65000 standard as the ability to
both quickly bounce back from a major
disruption and to “anticipate, prepare for,
respond and adapt to events—both sudden
shocks and gradual change” to survive and
prosper.
In fact, as Lyndon Bird, technical director at
BSI points out in a recent Continuity Central
article, the field of Business Continuity
Management is reorienting its focus to
organisational resilience. Business continuity
strives to prepare an organisation for effective
responses to sudden, major disruptions with
minimal business impact. The business
continuity agenda has also traditionally
resided within the risk and compliance
function which has struggled to gain broader
buy-in from other functions—primarily because
it has been considered by other functions
across the broader organisation as “not their
problem”.
Organisational resilience, by contrast,
alters the management posture from a
reactive one to proactively anticipating and
preparing for future disruption—and not just
sudden cataclysmic ones, but also gradual
strategic shifts. This more complex and
difficult goal is intricately linked to an
organisation’s overall business strategy and
requires broader mobilisation of corporate
capabilities across an organisation—from
human resources managers to department
heads to those who oversee supply chains.
They will need to organise everything ranging
from business processes to internal controls to
capture value and mitigate the risk inherent
in cloud opportunities. Thus, the resilience
agenda is reaching the highest levels of an
organisation.

The same shift in executive focus is taking
place within cloud computing. As executives’
experience and comfort level with the cloud
grow, they are refocusing their attention
beyond continuity onto the strategically
important objective of resilience.
This trend is clearly shown in the EIU survey.
Nearly three-quarters (72%) of survey
respondents say the importance of
organisational resilience will increase over the
next three years (see Figure 2), a sentiment
expressed even more strongly in the US (78%).
Notably, the more advanced a company is
in its adoption of cloud technology, the
stronger its focus on resilience appears to be.
Respondents in the EIU survey who believe
their organisation is ahead of its competitors in
cloud adoption are nearly three times as likely
as the rest to also say they are ahead in their
organisational resilience to technology risk.
Indeed, according to respondents in the EIU
survey, companies that are ahead of the
competition in cloud adoption also tend to
outperform their competitors in profitability
and innovation. (See Figure 3).
On the other hand, the focus on resilience
does not look to be linked to a company’s
cloud exposure. Survey respondents with just
1-24% of their IT assets in the cloud were just as
likely to say that resilience will grow in
importance as those who say that 75-99% of
their IT systems are in the cloud (68% vs 70%).
To be sure, this is not a shift away from
business continuity, which, like cloud
computing, also focuses on the availability
and security of IT assets—even more so in the
Resilience and the cloud
1
Strongly
agree
Somewhat
agree
Neither agree
nor disagree
Somewhat
disagree
Strongly
disagree
France
United Kingdom
United States
All respondents
Figure 2. To what extent do you agree with the following statement:
“The importance of organisational resilience will increase over the next three years”?
(% respondents)
22 45 27 7
24 49 21 7
32 46 16 5 2
26 46 21 6 1

age of the cloud. Security risks still top the list
of cloud computing challenges identified by
respondents in the EIU survey (see Figure 4),
and are the most frequently named barrier to
further technology adoption.
The most commonly cited risks are security
breaches and leaks of confidential
information (53% say they are extremely or
moderately concerned about this risk),
disruptions caused by cyber-attacks (52%)
and potential failure to deliver product or
services (46%). Two recent examples of
high-profile security failure cases: breaches of
federal workers’ personnel files at the US
government’s Office of Personnel
Management and patient record breaches at
CareFirst Networks.
“Both cloud providers and enterprises are
getting smarter about security,” observes Ms
Randery of Schneider Electric. Indeed, no
executive interviewed by the EIU for this report
could recall any recent major disruption or
incident pertaining to data security or service
availability within their cloud systems. This
reflects, perhaps, a growing view that data,
systems and processes may be more secure
with a large cloud provider than within a firm’s
own walls.
Ahead of competitors in cloud adoption
On par or behind competitors in cloud adoption
Ahead of competitors in responsiveness to market demands
Ahead of competitors in rate of innovation
Ahead of competitors in corporate profitability
Ahead of competitors in organisational resilience
Figure 3. In your opinion, how does your company compare to its closest competitors in
the following areas?
(% respondents)
77
29
74
26
71
26
68
25
Private cloud
Public cloud
Hybrid cloud
Cost of maintenance
Loss of control
Regulatory constraints
Lack of standardisation
Lack of flexibility
Lack of processes
Access to information by outsiders
Security risks
Don’t know
Figure 4. What are the top two challenges of your cloud computing approach?
(% respondents)
30
21
25
23
16
23
23
24
27
20
22
12
23
34
10
21
19
20
20
31
27
35
31
48
2
1
3

“It is much easier today to provide 100%
uptime, so the cloud is actually a better
place for security,” seconds Dom Guinard,
co-founder and CTO of technology
company EVRYTHNG. He notes that cloud
providers such as Amazon and Microsoft
have invested heavily to address the security
and stability challenges of their cloud
environments, so companies are better off
offloading these risks and responsibilities to
large-scale providers. “On-premise is more
risky,” Mr Guinard cautions.
As the use of the cloud expands, executives
are taking a more holistic and sophisticated
approach, embedding the narrower goal of
business continuity within the broader, more
challenging and strategically relevant
objective of organisational resilience. Ms
Randery sums it up elegantly: “Resilience … is
not just about uptime and security; it is
increasingly about agility, speed,
multiplication and being more innovative.”

As organisations shift their focus from
continuity to resilience, they will need to
master the five key capabilities that follow.
Although some of these building blocks are
rooted in business continuity, they will need to
be reshaped and reprioritised inside and
outside a company to adapt to the new
opportunities and risks that the cloud brings.
1. Specialised and regulatory requirements.
Migrating to one company-wide cloud
solution with broad functionalities and an
impact on all corporate functions is often
difficult or impractical. A cloud system for a
particular functional area (such as research &
development), for discrete events (like games
or conventions) or for a specific geography
may be wiser—with tailored services and
safeguards to better meet data sovereignty,
security or latency needs. This is also easier for
organisational change management
because cloud capabilities address core
demands.
To meet more stringent demands for
oversight and control, Ms Randery predicts
that specialised but adaptable solutions that
serve particular functions or geographies will
grow. “Specialised is easier to outsource,” she
notes. “It facilitates a greater level of
migration and creates greater organisational
resilience.”
But the push towards specialisation
demands different approaches based on, for
example, specific risks or regulations.
In retail, for instance, the regulatory focus is
on maintaining the privacy and confidentiality
of customer data and compliance with the
Payment Card Industry Data Security
Standards (PCI DSS) to protect credit
cardholder information.
PCI DSS compliance is also critical for
financial services, as is adherence to the US
Gramm-Leach-Bliley Act, which requires
financial institutions to establish standards for
protecting the security and confidentiality of
their customers’ non-public personal
information.
In healthcare, the US federal Health
Insurance Portability and Accountability Act
(HIPAA) requires healthcare organisations to
maintain the confidentiality of electronic
health information that can be linked to an
individual patient (also known as electronic
protected health information, or ePHl). As
Kristin Darby, chief information officer at
Cancer Treatment Centers of America
(CTCA), notes, HIPAA/ePHI compliance in the
cloud is a particular challenge.
“Many specialised application vendors are
simply forcing their existing desktop versions
onto a cloud platform, without having
ensured the integrity and interoperability of
data, functionalities and workflows,” Ms Darby
notes. The main barrier to greater cloud
2 The building blocks of cloud
resilience

adoption among healthcare companies
today is the “shortage of cloud providers who
can meet the industry’s unique requirements
around compliance and availability and can
provide single tenancy at an affordable cost”,
she adds.
2. Systems integration and governance.
Today’s cloud ecosystem is a mix of cloud
types, multiple cloud providers, many cloud
instances and specialised systems and
applications native to individual departments.
“We are concerned about application sprawl
and loss of organisational resilience due to the
ease of use and implementation of cloud-
based solutions, especially when done without
enterprise awareness,” cautions Ms Darby.
The “sprawl” Ms Darby references, if
unchecked, will pose a significant resilience
risk to organisations and has pushed CTCA to
add more process controls to contain this
growth. As Ms Randery of Schneider Electric
points out, “Data fragmentation is good from
a risk perspective, but who’s watching all
that? When you have multiple cloud
providers, how do they talk to each other?”
More-advanced cloud users are already
recognising, and many are addressing, the
importance of oversight, connections and
accountability. Respondents who say their
organisations are ahead of competitors in
organisational resilience are more likely to
prioritise their efforts to strengthen internal
processes and integrate new and legacy
systems (see Figure 5).
3. Data and process re-engineering. Among
the greatest challenges companies face after
moving assets to the cloud is connecting
existing data sets, business processes and
workflows to the newly adopted technology.
First, executives must ensure that the data
and systems they are moving are clean,
organised and ready for migration. “How do
you outsource a mess? What … if you don’t
fully understand your own existing data and
legacy systems?” Ms Randery of Schneider
Electric asks.
More important, for greater resilience,
proper alignment and flexing of the day-to-
day workflow and business processes are
critical to capture and monetise the
efficiencies, productivity and increased
resilience cloud computing promises. As Harsh
Ahead of competitors in organisational resilience
On par or behind competitors in organisational resilience
Figure 5. Where will your organisation prioritise its efforts to ensure organisational
resilience over the next three years?
(% respondents)
Enhancing cloud computing
Adopting new technologies
Strengthening systems against cyber attacks
Strengthening internal processes
Providing redundant and backup infrastructure
Integrating new and legacy systems
Monitoring internal staff behaviour
Increasing the organisation’s reliance on
third-party technology providers
50
44
43
39
39
41
41
38
34
41
38
30
30
36
25
28

Private cloud
Public cloud
Hybrid cloud
Cost savings
Maintaining control
Regulatory compliance
Standardisation
Flexibility
Improved processes
Access to information by employees
Enhanced security
Don’t know
Figure 6. What are the top two benefits of your cloud computing approach?
(% respondents)
27
29
28
28
24
19
17
18
14
15
22
16
27
28
43
29
40
26
15
13
22
41
26
28
1
0
1
Sinha, vice president, Engineering of money
transfer company TransferWise, points out,
“Companies need to re-architect to move to
the cloud.” Often the heavy lifting required
may prompt a company to keep legacy
systems in house—or, sometimes, to shut them
down altogether.
Indeed, lack of processes is a top
challenge to cloud adoption for one-fifth of
respondents in the EIU survey. To shore up
resilience after cloud expansion, companies
will need to work closely with partners to
ensure that everyday processes seamlessly
connect with the new cloud interface. Done
well, the payoff is clear. Between 26% and 40%
(see Figure 6) of EIU survey respondents say
improved processes are a top benefit of their
cloud use, perhaps attributable to the greater
access, speed, agility and collaboration the
cloud enables.
4. Ongoing service and maintenance. As with
any new IT platform or service, moving to the
cloud is not a one-and-done deal. Keeping
systems updated, running and bug-free, and
responding to user queries, feedback and
service needs are perhaps more important
than the initial migration. “You have to make
sure you have enough people doing the right
things: patching systems, overseeing the
physical security of IT assets, linking your
organisation with that of the cloud provider,”
says Mr Guinard of EVRYTHING.
This upkeep and customer service can be a
significant challenge. But addressing this early
can pay dividends. “Cloud can be a little bit
impersonal,” remarks Ms Randery of Schneider
Electric. “On-the-ground support for users is
very important.” Ensuring the right level of
service and support both in-house and
through a cloud provider for both
implementing cloud solutions and shoring up
organisational resilience is critical.
5. People and skill sets realignment.
Successful adoption of any technology
ultimately hinges on the human element. The
right mix of skills, a smooth transition to new
technology and a prompt embrace of a more
agile and evolving process and culture by
stakeholders will help companies reap the
expected value from new cloud
implementations.
“Technology is easier,” cautions Mr Sinha of

TransferWise. “The bigger resilience challenge
is organisational. Companies need to retool
their people for cloud computing. It requires
significant change management.” But the
extent of the challenge very much depends
on an organisation’s culture.
“You need different people,” seconds Mr
Guinard of EVRYTHING. System administrator
skills were most valued before; now
developers who manifest agility and speed
are in demand. Unfortunately but
understandably, these skills are also valued by
start-ups and are costly. Longer term, to build
resilient cloud-based capabilities, companies
will need to better understand the human
needs of those who are implementing and
maintaining their cloud-based strategy.

The rapid march into cloud computing has
increased and will continue to increase the
complexity and speed of change of IT
ecosystems. In this often fragmented and
always fluid environment, a different
mindset— shifting focus from continuity to
resilience—is needed to capture the
efficiency, agility and economic gains
promised by the cloud; anticipating or
responding to negative disruptions will also be
required.
IT executives must rethink strategies,
re-engineer operating models, retool talent
and reinvent governance and decision-
making. To do so, they will need to engage
more stakeholders across an organisation.
They will need to forge partnerships to better
anticipate and address risks, to avoid
disruption and to adapt to dynamic market,
technology and regulatory environments.
Conclusion: mindsets and
partnerships for resilience3

Appendix:
survey
results
Percentages may not
add to 100% owing
to rounding or the
ability of respondents
to choose multiple
responses.
Security concerns
Affordability of technology
Government regulations
Lack of technology standards, such as a lack of consensus on which cloud solutions to use across agencies and departments
Lack of budget
Organisational culture, such as inertia to change
Insufficient technology skills among staff
Poor appreciation by senior management of the benefits of technology
Poor technology infrastructure
Low priority of migration to technology-based service delivery
Siloed organisations and budgets
In your opinion, what will be the greatest barriers to broader technology adoption in your organisation over
the next three years?
Please select the top three.
(% respondents)
50
34
31
27
26
25
25
23
20
20
19
All (100%)
Most (75% - 99%)
Over half (50% - 74%)
Some (25% - 49%)
Few (1% - 24%)
What portion of your organisation’s systems are cloud-based (public and private) today?
Select one.
(% respondents)
4
18
43
29
6

Software as a service (SaaS)
Infrastructure as a service (IaaS)
Platform as a service (PaaS)
Business Process as a Service (BPaaS)
Which type(s) of cloud computing services does your organisation currently use?
Please select all that apply.
(% respondents)
67
53
47
40
Private cloud computing
Public cloud computing
Hybrid cloud computing
We don’t foresee using cloud computing in the next three years
Over the next three years, what will be your primary approach to cloud computing?
Please select one.
(% respondents)
43
22
33
1
Enhanced security
Flexibility
Improved processes
Cost savings
Maintaining control
Standardisation
Access to information by employees
Regulatory compliance
Don’t know
What are the top two benefits of your primary approach to cloud computing?
Please select two.
(% respondents)
33
33
30
28
24
17
17
16
1

Security risks
Cost of maintenance
Regulatory constraints
Access to information by outsiders
Loss of control
Lack of flexibility
Lack of processes
Lack of standardisation
Don’t know
What are the top two challenges of your primary approach to cloud computing?
Please select two.
(% respondents)
39
26
25
25
22
21
20
18
2
Much
stronger
Somewhat
stronger
Neither
stronger nor
weaker
Somewhat
weaker
Much
weaker
Don't know
Corporate profitability
Cloud computing adoption
Organisational resilience to technology risk
Rate of innovation
Responsiveness to market demands
In your opinion, how does your company compare to its closest competitors in the
following areas?
Rate on a scale of 1 to 5, where 1=Much stronger and 5=Much weaker.
(% respondents)
17 28 29 16 8 2
13 31 29 16 10 1
13 30 27 21 9 1
16 30 26 20 6 2
13 37 24 16 10 1
CIO
Head of IT
CEO
COO
Chief Digital Officer
Other C-suite executive
Risk management executive
In your organisation, who is involved in identifying business continuity risks?
Select all that apply.
(% respondents)
37
57
19
16
17
8
25

CIO Head of IT CEO COO Chief Other Risk
Digital C-suite management
Officer executive executive
Ultimate responsibility for technology risk
Who should bear this responsibility
In your opinion, who within your organisation is ultimately responsible for managing
technology risk? Who do you believe should be responsible?
Please select one in each column.
(% respondents)
23 36 11 6 6 4 15
26 28 9 7 11 5 14
1. Major risk 2. High risk 3. Medium
risk
4. Low risk 5. No risk Don't know
Legacy systems
Cloud computing
Big data and analytics
The Internet of Things
Mobile devices
Bring your own device (BYOD)
Social networking
Which of the following uses of technology, in your opinion, pose the biggest risk to your
organisation’s business continuity over the next three years?
Please rate on a scale of 1 to 5, where 1=Major risk and 5= No risk.
(% respondents)
6 20 34 26 13 3
10 24 31 22 13 1
8 24 29 25 13
7 19 31 29 13 2
9 25 31 23 11 1
14 20 33 20 9 4
11 23 29 25 11 2
1. Extremely
concerned
2. Moderately
concerned
3. Somewhat
concerned
4. Slightly
concerned
5. Not at all
concerned
Failure to deliver products or services due to technology disruption
Security breaches of confidential or “leaked” information
Disruption caused by a cyber attack
Disruption caused by an employee
Disruption caused by a vendor, contractor or other external employee with access to technology at your organisation
Reliance on third-party technology providers
How concerned are you about the following risks to your company’s reputation over
the next three years?
Rate on a scale of 1 to 5, where 1=Extremely concerned and 5=Not at all concerned.
(% respondents)
11 35 27 22 5
21 32 25 19 3
19 33 28 16 4
10 32 28 23 7
12 34 29 21 6
10 29 35 19 7

Enhancing cloud computing
Adopting new technologies
Strengthening systems against cyber attacks
Strengthening internal processes
Providing redundant and backup infrastructure
Integrating new and legacy systems
Monitoring internal staff behaviour
Increasing the organisation’s reliance on third-party technology providers
Don’t know
Where will your organisation prioritise its efforts to ensure organisational resilience over the next three years?
Please select three.
(% respondents)
46
41
40
39
38
33
33
27
1
Strongly
agree
Somewhat
agree
Neither agree
nor disagree
Somewhat
disagree
Strongly
disagree
Our company has a written cloud computing policy
Our use of cloud computing will increase in the next three years
Security concerns will limit the full potential of cloud computing at our organisation in the next three years
Our organisation has clearly defined roles and responsibilities for organisational resilience
The importance of organisational resilience will increase over the next three years
Over the next three years our company will likely face a reputational risk event due to technology failure or compromise
Please rate your level of agreement with the following statements:
Please select one in each row.
(% respondents)
24 44 25 6 2
40 38 18 3 1
16 42 25 15 2
32 39 20 9
26 46 21 6 1
12 40 26 18 4

IT
What is your main functional role?
Select one.
(% respondents)
100
France
United Kingdom
United States
In which country are you personally located?
(% respondents)
33
34
33
Chief Information Officer
Senior Vice President
Vice President
Head of IT
Which of the following best describes your title?
(% respondents)
50
12
15
23
$50m to $100m
$100m to $250m
$250m to $500m
$500m to $1bn
$1bn to $5bn
$5bn to $10bn
$10bn or more
What are your organisation’s global annual
revenues in US dollars?
(% respondents)
9
16
19
35
15
4
2
What is your primary industry?
(% respondents)
IT and technology
Financial services
Professional services
Manufacturing
Automotive
Consumer goods
Retailing
Construction and real estate
Telecoms
Energy and natural resources
Healthcare, pharmaceuticals and biotechnology
Logistics and distribution
Education
Entertainment, media and publishing
Chemicals
Transportation, travel and tourism
Government/Public sector
Agriculture and agribusiness
Aerospace and defence
15
13
8
7
6
6
5
5
5
5
5
4
3
3
3
3
3
2
1

Whilst every effort has been taken to verify the
accuracy of this information, neither The Economist
Intelligence Unit Ltd. nor the sponsor of this report can
accept any responsibility or liability for reliance by
any person on this report or any of the information,
opinions or conclusions set out in the report.
Cover:Shutterstock

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