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Public Cloud Benchmark Webinar July 2014

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Practice Manager and Principal Analyst Allan Krans and Analyst Jillian Mirandi shared their perspectives on trends in the cloud market and provide webinar attendees strategic projections around vendor …

Practice Manager and Principal Analyst Allan Krans and Analyst Jillian Mirandi shared their perspectives on trends in the cloud market and provide webinar attendees strategic projections around vendor and customer activity throughout 2014. They then fielded questions from the audience.

Questions for discussion will included:

• What industries are leading cloud vendors going after?
• How are cloud vendors customizing portfolios to attract industry-specific customers?
• What geographies will drive the next wave of cloud growth?
• How are cloud vendors expanding their portfolios?

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  • This slide depicts a snapshot of the public cloud market in CY1Q14.
    The x axis represents absolute dollar growth over the year-ago quarter
    The y axis represents yty percentage growth
    The size of the bubble represents the volume of public cloud revenue in the quarter.

    Over the past two years, the public cloud market has begun to mature. The outcomes of this maturity has been that market makers SFDC and AWS continue their momentum, both generating over $1B in public cloud services in the quarter. The nature of the maturing market is driving more than just the next wave of large IT companies
    -it is driving portfolio expansion
    – In the IaaS world, AWS and Google have increased the pace of product launches including BI & analytics, management tools and added security features.
    On the SaaS size, applications side, pureplays like SFDC are expanding their portfolio through improved application integration and industry-specific focus, and vendors such as WDAY are expanding applications to cross sell and enter more LOBs
    -it is driving operational maturity – we’re seeing more formalize go to market strategies with a focus on direct sales for the pure plays and rolling out cloud to the channel for more traditional vendors. We are also seeing massive amounts of money being spent on cloud enabling data centers from vendors like AWS, IBM, ServiceNow (who unlike most SaaS companies who leverage colocation, has built all of its own data centers), and Google.
    -Last but not least, the maturing North American market is driving vendors to expand their addressable market across Europe, APAC – China most recently which we will further discuss – and in some cases, Latin America.

    At this point in the public cloud game – there are winners, buy there arent quit losers yet. The future IaaS market will be made up by a few vendors when it shakes out – AWS, Google, MSFT Azure, IBM, potentially HP as the largest, followed by a few specialized players and regional players. The SaaS and PaaS market will be much broader given the huge number of business applications and development platforms. It is safe to say that today SFDC is the CRM winner, WDAY is the HCM leader and ServiceNow is the ITSM leader…. but there are many more smaller markets to be won. The next major workload that we expect to gain traction in the public cloud market is ERP. Companies like SAP, MSFT and Oracle are well positioned to migrate their customers to a cloud-based ERP solution, but to date these vendors are in early days as there are many challenges faced when migrating customers to a cloud based ERP.

    Now, I know I keep saying the market is maturing and that there are winners – but it is still early enough that large investments can quickly push vendors into large public cloud companies. A year ago, Google and IBM were not public cloud leaders in terms of revenue, but R&D efforts, acquisitions and market messaging over the past year are now paying off and these vendors are real enterprise threats. Microsoft was early to the public cloud market with O365 and Azure, but has been slipping …. We expect new CEO Satya Nadella’s efforts around reshaping Microsoft and an improving Azure portfolio will bump MST cloud growth back up in coming quarters.
  • Now that we’ve taken a look at what the market looks like from a revenue standpoint, I want to talk about three high level trends across the SaaS, PaaS and IaaS markets that will shape the market over the next year.

    SaaS
    Public cloud application vendors are investing in line-of-business (LOB) solutions, such as marketing automation, to create more robust customer engagement platforms. As SaaS vendors mature, they pivot from single-tool expertise to integrating various tools to create solutions that serve a broader market and drive customer expansion.

    PaaS
    Public cloud vendors focus on improving the developer ecosystem from a technological and business model perspective. Vendors are investing in simplifying user interfaces (UIs), software development kits (SDKs), mobile and APIs and app stores. Leading PaaS vendors Google and Salesforce.com are also investing to develop ecosystems around wearables — the next generation of end-point devices.

    IaaS
    Global IaaS vendors AWS, IBM and Microsoft are expanding in China to grow revenue and compete with popular China-based cloud vendors such as Aliyun. While regional players will remain important, global players’ data center buildouts and local partnerships will push them ahead in the global IaaS market and expand addressable markets, especially in more data-sensitive regions like China and Germany.

  • Transcript

    • 1. TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C. TBR’s Cloud Business QuarterlySM Public Cloud Research Highlights and Outlook Technology Business Research Quarterly Webinar Series July 23, 2014
    • 2. TBR 2 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. Cloud Business Quarterly Research Highlights and Outlook: Webinar Presenters Jillian Mirandi Senior Analyst, Cloud Email: jillian.mirandi@tbri.com Twitter: @JillianNotes Allan Krans Practice Manager, Cloud Email: allan.krans@tbri.com Twitter: @AllanKrans
    • 3. TBR 3 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. Cloud Market Overview
    • 4. TBR 4 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. Public Cloud 26% Managed Private Cloud 45% Vendors from across the IT landscape are focused on cloud to achieve growth in the current stagnant traditional IT environment CLBQ 1Q14 Research Highlights IT Market Year-to-YearGrowth 0% GDP Software 3% 2% 1% Devices Data center Services 3% Telecom-10% TIS 3% Cloud Professional Services 41% Cloud Components 180% 0.6%
    • 5. TBR 5 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. Public Cloud Market The public cloud market will reach $110B in 2018, driven by high volumes of SaaS revenue followed by increasing IaaS revenue CLBQ 1Q14 Research Highlights 2018 public cloud opportunity will be $110 billion
    • 6. TBR 6 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. The Pendulum of the Cloud Market Cloud is shifting from a technology- to an outcome-driven environment, changing the market landscape for Amazon Web Services and others Public Cloud Adoption Shadow IT purchasing Fragmented management Private Cloud Adoption IT-driven purchasing Traditional management Early Hybrid Adoption IT and line-of-business (LOB) purchasing Modern management Technology-focused Adoption Outcome-based Adoption CLBQ 1Q14 Research Highlights
    • 7. TBR 7 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. Public Cloud Market Segments
    • 8. TBR 8 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. NOTE: SPHERE SIZE REFLECTS VOLUME OF REVENUE. Public Cloud % Revenue Growth vs. Public Cloud $ Revenue Growth Google and IBM are reshaping the market and quickly moving into leadership positions as they monetize increased public cloud investments CLBQ 1Q14 Research Highlights Leaders Contenders Note: Vendors included on graph have realized an estimated $150 million in trailing 12-month public cloud revenues (from 1Q13 through 1Q14).
    • 9. TBR 9 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. SaaS: Portfolio expansion and integration drive evolution from product to solutions vendors. PaaS: The vendor that wins the developers will win the cloud platform market. IaaS: New global vendors expand into China where opportunity outweighs risks. Public Cloud Market Summary Public cloud leaders will invest in portfolio expansion, developer ecosystems and global presence to grow in a maturing market CLBQ 1Q14 Research Highlights
    • 10. TBR 10 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. Public Cloud SaaS Revenue Growth vs. Corporate Revenue Growth Traditional vendors such as Microsoft engage in co-opetition to provide customers options while protecting their install bases CLBQ 1Q14 Research Highlights Leaders
    • 11. TBR 11 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. Marketing Automation HR ERP Salesforce.com Exact Target, Radian6, BuddyMedia Rypple “Customer Engagement Platform” Microsoft MarketingPilot Oracle Responsys, Eloqua, BlueKai, Involver, Vitrue Taleo, Fieldglass, SelectMinds “Customer Experience Solutions” SAP SeeWhy, Hybris SuccessFactors Ariba IBM Silverpop Kenexa “IBM Experience One” CLBQ 1Q14 Research Highlights SaaS vendors leverage acquisitions to provide LOB executives a comprehensive suite of applications and improve overall stickiness Public Cloud SaaS: Cloud Solutions
    • 12. TBR 12 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. SaaS: Portfolio expansion and integration drive evolution from product to solutions vendors. PaaS: The vendor that wins the developers will win the cloud platform market. IaaS: New Global vendors expand into China where opportunity outweighs risks. Public Cloud Market Summary Public cloud leaders will invest in portfolio expansion, developer ecosystems and global presence to grow in a maturing market CLBQ 1Q14 Research Highlights
    • 13. TBR 13 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. CLBQ 1Q14 Research Highlights While leaders come from diverse backgrounds, it is clear that the developer ecosystem is at the forefront of cloud investments Public Cloud PaaS % Revenue Growth vs. Public Cloud PaaS $ Revenue Growth PaaS leaders are investing in new use cases for developers.
    • 14. TBR 14 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. CLBQ 1Q14 Research Highlights Salesforce.com and Google will sustain developer engagement by creating use cases for application development around wearables Public Cloud PaaS: Developer Ecosystems around New Endpoints SOURCE: COFAMEDIA.COM SOURCE: SALESFORCE.COM Salesforce.com supports many wearable brands SOURCE: GOOGLE.COM
    • 15. TBR 15 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. SaaS: Portfolio expansion and integration drive evolution from product to solutions vendors. PaaS: The vendor that wins the developers will win the cloud platform market. IaaS: New Global vendors expand into China where opportunity outweighs risks. Public Cloud Market Summary Public cloud leaders will invest in portfolio expansion, developer ecosystems and global presence to grow in a maturing market CLBQ 1Q14 Research Highlights
    • 16. TBR 16 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. AWS’ IaaS market leadership, built on basic IaaS, is forcing competitors to invest in more sophisticated portfolios to differentiate CLBQ 1Q14 Research Highlights Public Cloud IaaS % Revenue Growth vs. Public Cloud IaaS $ Revenue Growth AWS IBM 25 other vendors
    • 17. TBR 17 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. Questions?
    • 18. TBR 18 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. Cloud Business Quarterly Research Highlights and Outlook: Webinar Contact Information James McIlroy Vice President of Sales Email: mcilroy@tbri.com Telephone: 603.929.1166 Twitter: @TBRinc SlideShare: www.slideshare.net/TBR_Market_Insight YouTube: www.youtube.com/user/TBRIChannel LinkedIn: www.linkedin.com/company/technology-business-research Jillian Mirandi Senior Analyst, Cloud Email: jillian.mirandi@tbri.com Twitter: @JillianNotes Telephone: 603.758.1854 Allan Krans Practice Manager, Cloud Email: allan.krans@tbri.com Twitter: @AllanKrans Telephone: 603.758.1819
    • 19. TBR 19 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. TBR Cloud Research Overview The TBR Cloud Program consists of specific vendor, comparative vendor and customer analysis supported by modeling and primary research Reports analyzing vendors’ cloud businesses cover all relevant segments and track performance across cloud-driven metrics including operating expenses, operating profit, headcount breakouts and geographic breakouts. TBR’s benchmarks provide analysis through qualitative and metric-based comparisons of key vendors in a market segment. Cloud data models are included with the benchmarks, and this TBR research and analysis is built from the ground up based on 15-plus years of vendor-centric financial models. TBR cloud customer reports provide primary-research-based insights into purchasing behavior, vendor adoption, satisfaction and demand across multiple cloud offerings and professional services segments.
    • 20. TBR 20 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. TBR Cloud Research Overview Continual portfolio expansion elevates TBR’s and clients’ knowledge about what ‘cloud’ really means to vendors and customers Accenture CSC Rackspace AWS Dell ServiceNow Atos Fujitsu TCS Cognizant IBM Verizon Capgemini Microsoft Deloitte Oracle Google SAP HP Wipro Infosys Salesforce.com Workday Public Cloud Benchmark Managed Private & Professional Services Cloud Benchmark Cloud Components Benchmark Hybrid Cloud Customer Report Private Cloud Customer Report Cloud Professional Services Customer Report Topical Cloud Reports: 2014 reports include Orchestration, and LOB vs. IT
    • 21. TBR 21 TBR Quarterly Webinar Series | 7.23.14 | www.tbri.com | ©2014 Technology Business Research Inc. Syndicated Research Coverage Cloud Vendor Reports (Cloud Business Quarterly) Benchmarks (Benchmark XLS data is also available) • Accenture Cloud* • Amazon Web Services* • Atos Cloud* • Capgemini Cloud* • Cognizant Cloud* • CSC Cloud* • Dell Cloud* • Deloitte Cloud* • Fujitsu Cloud* • Google Cloud* • HP Cloud* • IBM Cloud* • Infosys Cloud* • Microsoft Cloud* • Oracle Cloud* • Rackspace* • Salesforce.com • SAP Cloud* • ServiceNow* • TCS Cloud* • Verizon Cloud* • Wipro Cloud* • Workday Public Cloud Benchmark The public cloud program compares and analyzes the strategies, results and drivers of 50 key vendors in the public cloud segment across Software as a Service, Platform as a Service and Infrastructure as a Service. Managed Private & Professional Services Cloud Benchmark* The managed private cloud and professional services program compares and analyzes the strategies, results and drivers of 29 key vendors in the managed private cloud and professional services market across Business Process as a Service, Software as a Service, Platform as a Service, Infrastructure as a Service, cloud consulting, cloud SI and cloud ADM. Cloud Components Benchmark* The cloud components program compares and analyzes the strategies, results and drivers of 12 key vendors that sell the building blocks of software and hardware used to construct public and private clouds. Note: There are also three semiannual cloud adoption studies and cloud topic reports (Cloud Security is available now and Cloud Orchestration is upcoming). TBR Cloud Practice Syndicated Coverage *Semiannual Report
    • 22. About Us Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, telecom and enterprise network vendors, and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in formats that are tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis. TBR has been empowering corporate decision makers since 1996. To learn how our analysts can address your unique business needs, please visit our website or contact us today. Contact Us 1.603.929.1166 info@tbri.com www.tbri.com 11 Merrill Drive Hampton, NH 03842 USA This report is based on information made available to the public by the vendor and other public sources. No representation is made that this information is accurate or complete. Technology Business Research will not be held liable or responsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is not and should not be construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value, purchase, sale or retention of securities. This report is copyright-protected and supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce.