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.
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.
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 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.
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.