Tax Structures May Change as a Result of Cloud Adoption, Says KPMG

A majority of business and IT executives worldwide believe that tax structures may change as a result of migrating to cloud, finds a survey by KPMG International.

 

When asked how significant the role of tax was to making decisions to migrate to cloud, nearly 75 percent of respondents globally view the role of tax as either very significant or significant.

 

Business and IT leaders across the globe are finding cloud adoption to be more complicated than many had originally anticipated, according to KPMG's  "The Cloud Takes Shape" study.

 

Nearly 33 percent of all executives surveyed say that cloud implementation costs have been higher than they expected, and a similar percentage say that integrating cloud services with their existing IT infrastructure has been particularly difficult.

 

Business process design key to the implementation challenge
As the market for cloud matures, enterprises are now starting to come to terms with the hard practicalities of cloud enablement, according to the report's authors.

 

There is evidence that organisations are placing greater focus on getting the business process redesign right, facilitating appropriate change processes and making business model improvements.

 

"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 organisations hope to achieve the full potential of their cloud investments," says Rick Wright, Global Cloud Enablement Program Leader and a Principal with KPMG in the US.

 

"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."

 

Reaping the transformational value from cloud
Despite these emerging complexities, executives still believe that the benefits of cloud adoption far outweigh any growing pains they experience through implementation, the survey shows. In part, this is because organisations are shifting their focus away from pure cost reduction objectives to instead focus on achieving the transformational benefits of cloud.

 

"As cloud begins to become more mainstream within the business environment, we are seeing organizations move from the 'when and why' of the cloud adoption process to instead focus on the 'how'," said KPMG's Wright.

 

While cost reduction is still the primary reason for cloud adoption according to nearly half of respondents, 28 percent said that the speed at which they are able to migrate to cloud is important, as is cloud's ability to enable faster entry into new markets (27 percent) and business process transformation (22 percent).

 

"Gaining real cost savings from the cloud is about more than simply moving from fixed costs to operating costs; the greatest cost savings – and, more importantly, the transformational business benefits – will come from the longer-term outcomes such as more efficient processes, more flexible operating models," commented Steven Salmon, Principal Advisor with KPMG in the UK. 

 

Salmon also adds that as cloud moves further up the ranking as a strategic tool of the business, "we will begin to see the CIOs role becoming ever more critical as the business integration broker on commercial, process and technical levels."

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