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Research Highlights and Outlook Focus on Cloud Professional Services

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  • 1. TBR’s Cloud Professional ServicesSM Webinar Managed Private & Professional Services Cloud Benchmark: Research Highlights and Outlook Focus on Cloud Professional Services Nov. 7, 2013
  • 2. Cloud Business Research Highlights and Outlook: Webinar Presenter Ramunas Svarcas Senior Analyst and Engagement Manager, Professional Services Practice ramunas.svarcas@tbri.com @rjsTBR 2 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 3. TBR Cloud Research Overview TBR Cloud Program — Portfolio Product Descriptions Cloud Business Reports Vendor Reports: 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. Benchmarks: Cloud Benchmarks Cloud Customer Research Tracks 3 TBR’s benchmark reports provide analysis through qualitative and metricbased comparisons of key vendors in a market segment. Cloud data models are included with the benchmarks; this TBR research and analysis is built from the ground up based on 15-plus years of vendor-centric financial models. Customer and Competitor Reports: 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. TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 4. TBR Cloud Research Overview TBR Cloud Program — Portfolio Product Overview OUR FOCUS TODAY Cloud Business Reports Cloud Benchmarks Cloud Customer Research Tracks 4 Accenture Amazon Atos Capgemini Cognizant CSC Dell Deloitte Fujitsu Google HP IBM Infosys Microsoft Public Cloud Benchmark Oracle Rackspace Salesforce SAP ServiceNow Verizon Tata Managed Private Cloud and Professional Services Benchmark Wipro Workday *Plans in place for additional vendors Cloud Components Benchmark Topical Cloud Reports: 2013 reports include Cloud Security and Orchestration Private Cloud Customer and Competitor Report Hybrid Cloud Customer and Competitor Report Cloud Prof. Services Customer and Competitor Report TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 5. Professional Services Cloud Taxonomy Cloud Business Quarterly: Cloud Benchmark Definitions SOURCE: TBR 5 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 6. Managed Private Cloud Taxonomy Cloud Business Quarterly: Cloud Benchmark Definitions SOURCE: TBR 6 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 7. CLBQ Research Highlights and Outlook Cloud Professional Services 7 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 8. TBR Position While overall IT services revenue growth is lackluster, TBR estimates total cloud-related revenue doubled over the last 2 years Cloud Professional Services Market Discussion What is happening in the cloud professional services market? What segment of cloud professional services is providing the most revenues for services vendors? What are vendors doing to meet demand and partake in revenue growth? 8 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 9. TBR Position The complexity of cloud computing services necessitates assistance from IT services vendors Cloud Professional Services Market Discussion What is Happening? Two Steps forward: Managed Private Cloud and Professional Services grow As IT service vendors add managed private cloud services to portfolios, cloud professional services continues to grow at double-digit rates. The result: an $18 billion market for cloud professional services at the end of 2013 and a forecast to nearly double by 2018 to $30 billion. Largest subsegment? Consulting and systems integration currently dominate the cloud professional services revenue in size, while application development is dominating growth as need for enabling workload to function in the cloud environment expands. Meeting demand? One step back: Investing for a future that is already upon us Industry-specific, vertical-focused solutions that address immediate needs regarding cloud computing are requiring professional services vendors to expand their portfolios with cloud-savvy personnel and unique IP developed through partnerships to diversify portfolios. 9 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 10. Cloud Market Sizing and Forecast Managed private and professional services revenues are expected to double again in the next 5 years Managed Private and Professional Services Cloud Market uble st D o Almo led Doub 10 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 11. Segment Growth Despite overtaking professional services revenue growth, managed services expansion of offerings begets consulting opportunities Managed Private and Professional Services Cloud Benchmark Vendor Performance As managed private cloud services grew at 45%, cloud-related professional services grew at 30% in 1Q13 and will continue to expand as more managed services offerings are created, necessitating a thorough understanding of capabilities and risks by clients to solve IT-related challenges. 11 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 12. Segment Growth Early days of advisory services led to the success in managed services, which continues to foster need for consulting and system integration Managed Private and Professional Services Cloud Benchmark Vendor Performance Consulting-led growth Managed Services-led growth While professional services took a back seat to managed services in total cloud revenues, the continued creation of new solutions will require guidance, advice and assistance with implementation from professional services vendors. 12 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 13. Cloud Professional Services: Growth Leaders Industry-specific solutions help services firms rapidly expand cloud professional services revenues while total services growth stagnates Cloud Professional Services Growth For vendors, cloud-related revenue growth is outpacing total services growth, with cloud professional services expanding anywhere from five to six times faster than their total services. 13 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 14. TBR Position With clients at different stages in their cloud journey, cloud professional services continues to see demand growth Cloud Professional Services Market Discussion What is Happening? Two Steps forward: Managed Private Cloud and Professional Services grow As IT service vendors add managed private cloud services to portfolios, cloud professional services continues to grow at double digit rates . The result: an $18 billion market for cloud professional services at the end of 2013 and a forecast to nearly double by 2018 to $30 billion. Largest subsegment? Consulting and systems integration currently dominate the cloud professional services revenue in size, while application development is dominating growth as need for enabling workload to function in the cloud environment expands. Meeting demand? One step back: Investing for a future that is already upon us Industry-specific, vertical-focused solutions that address immediate needs regarding cloud computing are requiring professional services vendors to expand their portfolios with cloud-savvy personnel and unique IP developed through partnerships to diversify portfolios. 14 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 15. Professional Services Segment Growth While cloud managed services revenue leads revenue growth, cloud professional services continue to enjoy 30% growth Managed Private and Professional Services Cloud Market Segments CLOUD REVENUES BY SEGMENT AMONG VENDORS COVERED IN MANAGED PRIVATE AND PROFESSIONAL SERVICES CLOUD MARKET BENCHMARK $5,000 $4,500 Total 1Q13 YTY Growth: 37.6% $4,000 $3,500 $3,024 $3,000 $2,500 ) s o l M $ i ( u n v e R $2,000 $1,500 $1,000 $2,619 $2,032 $172 $402 $457 $2,204 $185 $437 $488 $2,367 $193 $452 $519 $226 $213 $491 $597 $540 $1,001 $1,094 $1,204 $1,374 1Q11 $500 $4,161 2Q11 3Q11 4Q11 $614 $3,882 $3,193 $244 $633 $666 $3,376 $285 $256 $735 $656 $777 $307 $772 $787 $4,374 $324 $818 $818 $699 1Q13 Growth YTY: Professional Consulting: 29.3% Services ADM: 35.7% SI: 28.2% Managed Services: 44.6% $1,587 $1,650 $1,765 1Q12 2Q12 3Q12 $2,084 $2,296 $2,415 4Q12 1Q13 2Q13E $0 SOURCE: TBR ESTIMATES Recognizing the limitations and security issues with public cloud offerings, customers engage vendors for consulting, implementation and new applications to accommodate the move to private cloud environments. 15 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 16. Cloud Consulting Services: Growth Leaders All vendors are reassessing their consulting capabilities for the cloud market, with leaders expanding human capital resources Cloud Consulting Revenue Growth versus Total Cloud Revenue Growth Leaders Laggards Laggards, lacking sufficient consulting staff to meet demand, leverage channel partners and continue to focus on hardware and software revenues. 16 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 17. Cloud Systems Integration Services: Growth Leaders A focus on private cloud environments enables cloud SI leaders to continue to expand revenues above the average cloud growth of 27% Cloud SI Revenue Growth versus Total Cloud Revenue Growth Leaders Enterprise customers are holding back investment in infrastructure improvements while searching for clarity on cloud capabilities. Clients who are making changes are working with vendors that focus on building private and hybrid cloud environments. The resulting average growth for cloud system integration for the 29 vendors examined is 27% — below overall growth for all cloud private and professional services. 17 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 18. Cloud ADM Services: Growth Leaders Leaders in cloud application development are vendors with strong historical participation in traditional applications development Cloud ADM Revenue Growth versus Total Cloud Revenue Growth Leaders Laggards Laggards are predominately application vendors with horizontal products already geared for the cloud environment that now must be customized for specific industries, or firms not historically known for their applications development prowess. Wipro, the one exception, chose to focus on consulting for private cloud migration with limited success. TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc. 18
  • 19. TBR Position To accommodate demand for cloud professional services, vendors need to expand and re-engineer their portfolios with cloud-specific offerings Cloud Professional Services Market Discussion What is Happening? Two Steps forward: Managed Private Cloud and Professional Services grow As IT service vendors add managed private cloud services to portfolios, cloud professional services continues to grow at double digit rates . The result: an $18 billion market for cloud professional services at the end of 2013 and a forecast to nearly double by 2018 to $30 billion. Largest subsegment? Consulting and system integration currently dominate the cloud professional services revenue in size, while application development is dominating growth as need for enabling workload to function in the cloud environment expands. Meeting demand? One step back: Investing for a future that is already upon us Industry-specific, vertical-focused solutions that address immediate needs regarding cloud computing are requiring professional services vendors to expand their portfolios with cloud-savvy personnel and unique IP developed through partnerships to diversify portfolios. 19 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 20. Cloud Headcount Growth Headcount growth is outpacing revenue growth as vendors continue to staff to meet expanding demand for cloud solutions Total Cloud Revenue and Headcount Growth 140% 120% 116.0% 101.0% 95.1% 100% 93.5% 80% h w o G t n c r e P T Y 60% 40% 40.7% 43.5% 42.9% 39.7% 36.3% 30.1% 20% 0% 1Q12 2Q12 Total Cloud Revenue Growth YTY (19 Vendors) 3Q12 4Q12 1Q13 Total Cloud Headcount Growth YTY (19 Vendors) SOURCE: TBR ESTIMATES AND COMPANY DATA NOTE: DATA AVAILABLE FOR ONLY 19 OF THE 29 VENDORS IN THE TBR MANAGED PRIVATE AND PROFESSIONAL SERVICES CLOUD BENCHMARK, WHICH ACCOUNTED FOR 70% OF THE TOTAL CLOUD REVENUES IN 1Q13 . Headcount growth and total cloud revenue growth curves are converging as vendors succeed in addressing growing cloud computing and accompanying cloud professional services demand. Firms are hiring cloud experts, retraining sales organizations to sell cloud and expanding delivery staffs with cloud-savvy personnel. 20 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 21. Alliance Activity Transitioning business models challenge vendors — requiring vendors to form and strengthen alliances and develop intellectual property • Hardware- and softwareagnostic system integrators and cash-rich vendors leverage alliances to expand addressable market and evaluate potential acquisition candidates. • Challenged, cash-strapped vendors or conservative investors focus on building alliances to augment cloud portfolio offerings and fill solution gaps through newly developed intellectual property. Partnering SOURCE: TBR AND COMPANY DATA Note: Not all alliances have been identified for all vendors. 21 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 22. TBR Position The complexity of cloud computing services necessitates assistance from IT services vendors Cloud Professional Services Market Discussion What is Happening? Two Steps forward: Managed Private Cloud and Professional Services grow As IT service vendors add managed private cloud services to portfolios, cloud professional services continues to grow at double digit rates . The result: an $18 billion market for cloud professional services at the end of 2013 and a forecast to nearly double by 2018 to $30 billion. Largest subsegment? Consulting and systems integration currently dominate the cloud professional services revenue in size, while application development is dominating growth as need for enabling workload to function in the cloud environment expands. Meeting demand? One step back: Investing for a future that is already upon us Industry-specific, vertical-focused solutions that address immediate needs regarding cloud computing are requiring professional services vendors to expand their portfolios with cloud-savvy personnel and unique IP developed through partnerships to diversify portfolios. 22 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 23. Questions? 23 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 24. TBR Cloud Research Overview TBR Cloud Program — Upcoming Cloud Webinars Cloud Program Webinar Focus Tract Cloud Benchmarks Cloud Components Benchmark Webinar Date TBD Public Cloud Benchmark January 2014 Private Cloud Nov. 14, 2013 Cloud Customer Cloud Professional Services Research Hybrid Cloud 24 December 2013 January 2013 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 25. Cloud Business Quarterly Research Highlights and Outlook: Webinar Presenters For additional information, please contact: Ramunas Svarcas Senior Analyst and Engagement Manager, Professional Services Practice ramunas.svarcas@tbri.com @rjsTBR Twitter: @TBRinc SlideShare: www.slideshare.net/TBR_Market_Insight YouTube: www.youtube.com/user/TBRIChannel LinkedIn: http://www.linkedin.com/company/technology-business-research 25 TBR Quarterly Webinar Series | 11.07.13 | www.tbri.com | ©2013 Technology Business Research Inc.
  • 26. About Us Contact 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. 1.603.929.1166 info@tbri.com www.tbri.com 11 Merrill Drive Hampton, NH 03842 USA 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. 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.