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Why do so many Canadian businesses fear cloud computing?

Despite improving flexibility, cost cutting, Microsoft study finds Canadian executives are largely uninformed about what cloud computing is.

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Many Canadian executives are confused about what cloud computing is, and are worried it's not a safe way to store important company information, even as the technology promises competitive benefits for flexibility and cost cutting, Microsoft Canada Co. says.

According to a new study for Microsoft Canada conducted by market research firm Northstar, only 10 per cent of the 476 Canadian executives polled said they were familiar with cloud computing, and of that sliver, only 45 per cent could correctly define cloud computing.

In essence, cloud computing is "a general term for anything that involves delivering hosted services over the Internet," Microsoft said. From posting content to the Internet to storing data to search services for websites, there are constant updates being made to the cloud-based services businesses can use to reach customers and build businesses.

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"We have a long way to go in helping Canadian C-Suite fully understand what the cloud is, what it does and the difference it can make in efficiency, profitability and success of their organizations," said Janet Kennedy, president of Microsoft Canada.

Microsoft says that many businesses could save money by running programs in the cloud and they can make starting a technology business cheaper, since many services are pay-as-you-go.

In fact, many people are already using cloud-based services, even if they don't know it, and many company chief information officers have more cloud services in their IT departments than they realize. Microsoft said that almost every business already uses one cloud-based service, whether it's e-mail, a collaboration system or data storage.

"They've got their toes in the water, we need to convince them to fully take the plunge," Ms. Kennedy said. "It's a challenge of awareness."

But many Canadian businesses, especially small and medium sized enterprises, are fearful of the cloud. The study found that 45 per cent of respondents think storing their company's information in the cloud would be unsafe.

Businesses have been bombarded with cautionary tales of data security breaches at companies such as Target, Home Depot and JPMorgan, and that's contributing to a climate of uncertainty and trepidation around privacy.

But Microsoft says that although cybersecurity is a real threat, there is a lot of unfounded fear in the market over the risks of cloud computing.

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"I would compare it to, do you feel safer putting your money in a bank versus under your mattress?" says Ms. Kennedy.

Companies need to partner with businesses that are taking security risks seriously, says Ms. Kennedy. She said only two or three players in the industry are investing as heavily in cloud computing and security as Microsoft, which has spent $15-billion in the last few years building up its data centres, and plans to invest more in the coming years.

Microsoft has increasingly focused on growing its cloud computing business in the last few years. Redmond, Wa.-based parent company Microsoft Corp. said revenues from commercial cloud services were up 128 per cent from the same time last year in its first quarter earnings on Oct. 23. "And 80 per cent the Fortune 500 are now on the Microsoft Cloud," said Satya Nadella, Microsoft Corp.'s chief executive, on an analyst call.

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About the Author
Financial Services Reporter

Jacqueline Nelson is a financial services reporter at the Report on Business. Prior to that she was a staff writer at Canadian Business magazine, covering news and writing features on a wide variety of subjects. More

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