Saudi Arabian organizations cautiously explore cloud computing to improve operational efficiency and reduce costs, IDC research shows

"Organizations across the kingdom have traditionally preferred to manage their IT operations internally," says Hamza Naqshbandi, senior research analyst for IT services with IDC Saudi Arabia. "However, there has been growing interest in outsourcing models, with organizations increasingly using hosting and managed services. This growing adoption of outsourcing services is seen as a first step toward moving to a cloud-based model, as companies become more comfortable with the concept of remote services delivery."

Although Saudi end-user organizations have been relatively slow to adopt cloud, the general consensus within the IT community in the kingdom is that cloud computing is not just hype. "The fact that cloud is making significant inroads globally and has captured the imagination of both the technology industry and the business community is likely to resonate well with CIOs in the kingdom," adds Naqshbandi. IDC's survey among technology users shows that the majority of Saudi organizations are still evaluating the benefits and relevance of various cloud models, and heavy uptake can be expected in the next two to four years. "This gives providers time to build up their cloud portfolios and invest in customer education to position themselves for the upcoming boom," says Naqshbandi.

In general, organizations in the kingdom are more interested in private cloud. This is understandable given the corporate culture prevalent among organizations in Gulf Cooperation Council (GCC) countries and the security fears associated with public cloud. While virtualization is considered to be a key component of private cloud, IDC has observed that only a handful of Saudi organizations with a virtualized infrastructure have progressed to a full-fledged private cloud environment.

IDC has noted that, although concerns related to security, control, and usability continue to constrain widespread cloud adoption, organizations in the kingdom have started to understand the benefits associated with cloud services, such as cost savings, faster implementation, and greater reliability. "After having reaped the benefits of virtualization in terms of cost savings, cloud is the next logical progression, and organizations are gradually being tempted by cost optimization features such as metering and chargeback, which can add visibility and facilitate greater control of IT costs," explains Naqshbandi.

Although opinions about cloud services are generally positive, actual adoption is not likely to significantly increase until the level and scope of services mature and providers are able to address customer concerns around data security, service-level agreements, and liability.

IDC expects total spending on cloud delivery in Saudi Arabia to increase 34.86% year on year in 2012. In the long term, IDC projects spending to expand at a compound annual growth rate of 49.7% between 2012 and 2016.