A new survey from KPMG International finds companies are reporting higher-than-expected costs, as well as challenges with implementation, operations and governance in moving to the cloud.

The recently survey, “The Cloud Takes Shape,” polled more than 650 business and IT leaders across 16 major global markets and found that about one-third of respondents said the costs of moving to the cloud were higher than expected, while a similar number noted significant implementation challenges.

More specifically, the report highlighted certain aspects of cloud implementation that can significantly impair or enable an organization’s ability to reap its rewards.  These include:

• Security -- Cloud adoption should improve, rather than weaken, security concerns. Nevertheless, more than one-quarter of the companies surveyed have found that security-related challenges can be extensive and are a prime example of where business executives and IT need to work together to create a cloud security strategy.
• Regulation -- In many cases, companies said that while regulation is not hindering cloud implementation, they are working proactively to address future legal and regulatory requirements.
• Tax -- Organizations are approaching the tax structure of cloud deployment strategically and are even finding a cloud environment can make a significant difference to the company’s tax position and bottom line.

Although companies are finding cloud to prove more than an IT cost reduction tool in the long run, a more strategic approach needs to be developed at the outset to realize the proper benefits, especially as organizations move more of their core and sensitive data and processes to the cloud, according to the survey.

Rick Wright, KPMG partner and Global Cloud Enablement Program leader, said it appears some companies are only focused on the technology aspects of cloud to the detriment of their core business goals.

“One of the most important lessons uncovered by this research is that business process redesign needs to be done in tandem with cloud adoption, if organizations hope to achieve the full potential of their cloud investments,” said Wright. “Simply put, executives have found that simultaneous process redesign is central to addressing the complexities that often arise in the implementation and operational phases of cloud adoption.”

Wright also noted that over the long term, the cloud can include more efficient overall processes, flexible operating models, and faster speed to market.

“Considering a strategic approach is necessary to focus on core business goals while moving portions of the organization into a cloud environment, organizations should also look to leverage the opportunities for business transformation and change management that can occur as a result of a move into the cloud,” added Wright.