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Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
Cloud Computing V1
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Cloud Computing V1

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First version of investment thesis on cloud computing market - next update will include investment opportunities

First version of investment thesis on cloud computing market - next update will include investment opportunities

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  • 1. Cloud Computing: Sector Overview and Potential InvestmentOpportunitiesAuthor: Casey SimmonsApril 21, 2011
  • 2. Agenda• Conclusions• Cloud Computing Market Overview  Market Opportunity  Investment Thesis  Product Footprint/Price Point/Web-marketing tactics  Startups Benefit from Scalable Infrastructure: Salesforce & Amazon  Corporate IT Outsourcing More  Virtualization 2
  • 3. Conclusions• Keys to Successful SAAS Offering • Narrow footprint, attractive price point, sold through inside salesforce, then grow into large enterprise sales• Infrastructure (“Internal”) Software • Storage requirements continue to rise dramatically • Server/Virtualization creates highly scalable infrastructure • High BTE due to necessary scale for IAAS • Relationship starts in smaller department functions • Eventually centralized purchaser, fewer number of customers, larger customer footprint• User-facing (“External”) Applications • Large scale • Most apps today are new version of legacy application • Need ease of use, configurability, low maintenance 3
  • 4. Agenda• Conclusions• Cloud Computing Market Overview  Market Opportunity  Investment Thesis  Product Footprint/Price Point/Web-marketing tactics  Startups Benefit from Scalable Infrastructure: Salesforce & Amazon  Corporate IT Outsourcing More  Virtualization 4
  • 5. Cloud Market Opportunity ~ $109 Billion 5Source: BofA Merrill Lynch Research
  • 6. Agenda• Conclusions• Cloud Computing Market Overview  Market Opportunity  Investment Thesis  Product Footprint/Price Point/Web-marketing tactics  Startups Benefit from Scalable Infrastructure: Salesforce & Amazon  Corporate IT Outsourcing More  Virtualization 6
  • 7. Investment Thesis Product Footprint/Price Point/Web-marketing tactics Startups Benefit from Scalable Infrastructure: Salesforce & Amazon Corporate IT Outsourcing More Virtualization 7
  • 8. Investment Thesis Product Footprint/Price Point/Web-marketing tactics Startups Benefit from Scalable Infrastructure: Salesforce & Amazon Corporate IT Outsourcing More Virtualization 8
  • 9. Consumer Foreshadows Enterprise What drives your internet behavior? What drives your smartphone decision? • Applications • Carrier • Price • Ease of Use • Functionality 9Source: Goldman Sachs Research Estimates, Synovate 2007
  • 10. Winning SAAS Business Characteristics • Target Large Enterprises • Smaller version HP Openview or IBM Tivoli • Converting customers to spokespersons • Product Design Process • Controlled process to build to produce but uncontrolled to sell/market • Build pool of ready users • Keep testing quickly and frequently • Manage global functionality • Consistent Product Releases 10Source: Goldman Sachs Research Estimates, Synovate 2007
  • 11. Investment Thesis Product Footprint/Price Point/Web-marketing tactics Startups Benefit from Scalable Infrastructure: Salesforce & Amazon Corporate IT Outsourcing More Virtualization 11
  • 12. Cloud Landscape 12Source: BofA Merrill Lynch Research
  • 13. Developer Ecosystems of Choice IT Web Social Networking Infrastructure Suite Application/Device Force.com Partnerships: Pay Only for No upfront Google & expense or long- Agnostic Facebook Consumption EC2 term contract Service Cloud SimpleDB AppExchange S3 Chatter SQS VisualForce Reliable & Scalability Content Create business Secure Without Capex Management app on-demand 13Source: BofA Merrill Lynch Research
  • 14. Investment Thesis Product Footprint/Price Point/Web-marketing tactics Startups Benefit from Scalable Infrastructure: Salesforce & Amazon Corporate IT Outsourcing More Virtualization 14
  • 15. Areas of Existing SAAS Investment • B2B/Inter-company applications: E2Open, Quadrem, Agentrics, SPS Commerce, Management Dynamics • System Integration: Astadia, Bluewolf, Appirio • Website Analytics: Omniture (Adobe) • CRM: Salesforce, Eloqua, Right90  Right90: Increased revenue 240% in 2008 (1)  Eloqua: Increased revenue 75% in 2008 (1) • ERP: Netsuite, Workday  Client/Server: Infor, Consona, Epicor, and Activant • Demand Analytics: DemandTec • Talent Management: Ultimate Software, SilkRoad, Authoria, Kenexa 15(1) Source: Deutsche Bank Research
  • 16. Investment Thesis Product Footprint/Price Point/Web-marketing tactics Startups Benefit from Scalable Infrastructure: Salesforce & Amazon Corporate IT Outsourcing More Virtualization 16
  • 17. Client Server with Virtualization vs. Multi-Tenancy Shifts Customization at Metadata layer to reduce application management and infrastructure costs while enabling architecture scaling 17Source: Deutsche Bank Research
  • 18. Next Steps to Find Investment Opportunities Evaluate major enterprise applications  Large Installed Base  High maintenance expenses  Find/Build SAAS team that knows legacy space 18
  • 19. Appendix 19

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