Industries Lagging Behind in Cloud Adoption

By John T. BradshawPublished On: February 13, 2014

While cloud adoption is standard in many industries today, there are still some sectors lagging behind. Typically, these reasons revolve around compliance, regulations, and governance.

However, FOCUS is seeing potential opportunities on the horizon for companies and investors prepared to seize upon cloud opportunities in the financial services, utilities, and healthcare industries.

“Cloud adoption is rapidly creating a new ecosystem within the cloutechnology market. As the companies offering these services and solutions grow along with the market, it will create significant M&A opportunities in the years ahead,” commented Manan Shah, Partner and Information Technology Team Co-Leader, at FOCUS.

Financial Services

With the exception of the insurance sector, the financial services industry is lagging in cloud adoption due to the myriad of regulatory and compliance issues they face.
However, there are signs of future growth for cloud computing in the financial services industry. One cloud computing success story in this industry is John Hancock Financial Services in Boston, MA, which contracted with the cloud computing practice of CSC to move business systems to the cloud, with a resulting $2.2 million dollar savings in computing costs, including software and capacity.

Those seeking an investment opportunity in the financial services sector such as a mid tier insurance broker would be well served by initiating a move to cloud computing to economize on IT infrastructure and related staffing costs to maximize their investment and related margins.

Utilities

The utilities industry still runs a lot of legacy systems and is highly resistant to change since any changes must pass through the bureaucracy of state and local utility boards.

However, there are some signs of cloud adoption in the utilities industry around smart metering and Smart Grids. Smart Grid News cites an IDC Energy Insights survey in a November 12, 2012 blog post entitled “Cloud computing: The right fit for your utility” that found some interesting adoption facts that investors need to be aware of:

52 percent of respondents said their budgets for cloud services grew in 2012,
Almost 36 percent said they were evaluating cloud technology, and 23 percent said they were planning on implementation within the next year,
Almost 43 percent cited security as the primary roadblock to adoption, a response consistent with earlier survey results, and •
Private cloud is more desirable than public cloud.

Healthcare

Healthcare cloud adoption is made difficult by a highly regulated industry that includes Health Insurance Portability and Accountability Act (HIPAA) and other certifications. However, cloud computing is starting to gain a foothold in some healthcare sectors and already shows a positive financial upside for investors.

Mobile health applications and the cloud are gaining popularity in rural areas where medical doctors (especially specialists) are in short supply. The powerful combination of a smartphone and the cloud helps patients track vital information that once required a doctor’s office visit.

Another area of potential cloud computing growth in healthcare is electronic medical records. Recent federal healthcare mandates mean that all medical health records will have to be available in the cloud by 2014.

Newer healthcare practices might be best served by going straight to the cloud to increase their profit and investment margins.

The estimated growth in cloud computing for the healthcare industry should result in a $5.4 billion market by 2017 according to the research firm MarketsandMarkets. The report also cites a 20.5 percent annual growth in cloud adoption from year to year.

Final Thoughts

Even as these highly regulated industries are lagging in cloud adoption, each is showing early signs of cloud computing adoption that should cause investors and cloud computing vendors to take notice and accommodate these markets in their future planning.

John T. Bradshaw has over 40 years experience in sales, marketing, manufacturing, finance and systems engineering with corporations specializing in technology-driven business products and services. Mr. Bradshaw has been a successful entrepreneur of his own startup companies as well as a senior executive in both large and small organizations. Prior to joining FOCUS as an Investment Banker in 2004 specializing in M&A and Capital Raises for the lower middle market ($10M to $300M valuation), Mr. Bradshaw was the founder and former President and Chief Executive Officer of CareCall, Inc., a customer service outsourcing company that was sold to Array Services in 2003. Mr. Bradshaw founded CareCall in 1993 and grew the company from inception to over $17 million in sales with 500 Full Time Equivalent employees. utilizing four locations based in the Midwest. Prior to founding CareCall, Mr. Bradshaw was Senior Vice President of Marketing and Sales and Managing Director of International Operations for Online Computer Systems, a division of Reed Elsevier. Mr. Bradshaw spent over 13 years at Xerox and Filenet (now part of IBM) in manufacturing in various executive position in Materials Management and Operations producing sophisticated technology products such as Disk Drives, Printing Systems, and Electronic components Mr. Bradshaw has a B.B.A., with honors, specializing in Computer Science, Math and Statistics from the University of Texas, and an M.B.A. in Finance from the Harvard Business School. Mr. Bradshaw carries all major securities licenses required for Investment Banking.