Five Key Themes in Enterprise Cloud Computing Migration
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Five Key Themes in Enterprise Cloud Computing Migration

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The Five Key Themes in Enterprise Cloud Computing Migration Report discusses the changing Cloud market from a broad perspective and provides probably the first segmentation of what we call the Early ...

The Five Key Themes in Enterprise Cloud Computing Migration Report discusses the changing Cloud market from a broad perspective and provides probably the first segmentation of what we call the Early Cloud Era. It introduces the three segments, Pioneers, Planners, and Stragglers and looks at the market through this lens.

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Five Key Themes in Enterprise Cloud Computing Migration Five Key Themes in Enterprise Cloud Computing Migration Presentation Transcript

  • Five  Key  Themes  in  Enterprise  Cloud  Computing  Migration    A  Research  Report,    May  2011   Copyright © 2011 WaveLength Market Analytics LLC and Winn Technology Group, Inc. All Rights Reserved. 1
  • So  what  is  a  key  theme  anyway?   2  
  • A  key  theme  is  a  recurring  perception  or  observation,  reflecting  major  vulnerabilities,  strengths,  or  opportunities.    These  obviously  differ  by  tech  segment  and  company,  but  those  with  broad  application  are  highlighted  here.     3  
  • Five  key  themes  in  enterprise  cloud  computing  migration   1 We’re  now  in  the  Early  Cloud  Era,  moving  from  a  client-­‐server  environment  to  a  cloud   computing  architecture.   Enterprise  cloud  computing  will  be  bigger  and  grow  faster  than  most  think  –  6  converging  2 trends  together  create  substantial  enterprise  economies  that  only  increase  with  cloud   computing.    3 Winners  will  be  determined  by  their  ability  to  differentiate  service  offerings,  which  will  include   function/app  +  ecosystem  +  user  experience  +  pricing.   4 Cloud  computing  growth  will  drive  network  and  data  center  equipment  spending  in  carrier   and  enterprise  segments  for  medium-­‐term  equipment  transitions.    5 Understanding  enterprise  buying  behaviors  in  the  Early  Cloud  Era  paramount  to  tapping   market  opportunities.   4  
  • Key  theme  #1   We’re  now  in  the  Early  Using  industry  history  as  a  guide,   Cloud  Era,  moving  from  a  enormous  technology  shifts  change  the   client-­‐server  environment  market  dynamics  between  entrenched   to  a  cloud  computing  competitors  and  challengers  creating  new   architecture.  winners  and  losers.    •  Cloud  computing  current  penetration  into   enterprise  market  is  surprisingly  high,  but  its   percentage  of  IT  is  very  low,  so  it’s  much     too  early  to  pick  winners.  •  Singular  inevitability:  business  models  will   change  for  nearly  all  technology  and   telecommunications  segments.     5  
  • Key  theme  #2   Enterprise  cloud  Industry-­‐leading  enterprises  need   computing  will  be  bigger,  experience  in  Cloud.  To  avoid  being  left   faster  than  most  think  –  6   converging  trends  (cost  behind,  these  Cloud  Pioneers  dabble  with   and  app  speed  deployment  non-­‐mission  critical  apps.       efficiencies,  SANs,   virtualization,  IT  •  Apps  will  quickly  evolve  to  mission  critical   outsourcing,  data  center   ones  as  cloud  computing  empowers  new   upgrades  and  mobility)   and  truly  transformative  ways,  particularly   together  create  substantial   those  enabling  mobility.   enterprise  economies  that   only  increase  with  cloud  •  Cloud  computing  is  a  mile  wide  and  an  inch   computing.   deep,  but  rapidly  growing  as  our  survey   results  more  than  20%  of  IT  will  be  in  the   Cloud  by  2015.   6  
  • Key  theme  #3   Amazon’s  AWS  and  With  proven  growth  and  monetization   Salesforce.com  currently  models,  AWS  and  Salesforce.com  will  be   lead  the  market,  but  with  challenged.    With  an  increasing  number  of   many  vendors  competing  vendors  competing  for  the  customer,  long-­‐ for  the  customer,  term  winners  will  be  determined  by   differentiated  service  differentiated  service  offerings  will  include:   offerings  that  include  •  The  ecosystem  of  partners  offering  a  complete   function  +  user   solution,   experience  +  ecosystem+  •  User  experience  aspects  that  seek  to  address   pricing  will  determine  the   current  user  concerns,  such  as  management   winners.   tools,  network  performance,  Interoperability  with   multiple  clouds/internal  clouds,  legacy  application   support,  service  levels,  and  SLAs,    •  Pricing  and  costs  because  it’s  a  business  where   scale  and  economics  are  everything.   7  
  • Key  theme  #4   Cloud  computing  growth  Cloud  means  new  performance  demands   will  drive  network  and  on  the  WAN  and  the  data  center  requiring   data  center  equipment   spending  in  carrier  and  new  efficiencies  in  1)  new  equipment  to   enterprise  segments  for  power  it  and  2)  software  to  manage  it.   medium-­‐term  equipment  •  Cloud  =  new  enterprise  WAN  performance   transitions.   demands  =  new  service  provider  demand.  •  Initial  surge  will  be  accommodated  via   capacity  upgrades;  but  ultimately  to   compete,  service  providers  must  make   fundamental  network  architecture  changes   to  rapidly  deploy  new  services  and  to   guarantee  performance  and  service  levels.       8  
  • Key  theme  #5   Understanding  enterprise  The  fight  for  the  enterprise  customer  is   buying  behaviors  in  the  already  underway,  but  vendors  that  will   Early  Cloud  Era  thrive  will…   paramount  to  tapping  •  Target  business  management,  as  well  as  IT,   market  opportunities.  •  Identify  and  nurture  your  best  partners,  as   many  vendors  and  integrators,  and  service   providers  are  involved  in  the  sale  and   solutions,  •  Learn  how  best  to  support  the  leading  role   that  applications  play,  •  Step  up  to  the  challenge  and  excel  at  making   and  managing  substantial  and  mutually   beneficial  partnerships,  particularly  as  the   market  changes.   9  
  • Five  key  themes  in  enterprise  cloud  computing:    key  theme  #1  1 We’re  now  in  the  Early  Cloud  Era,  moving  from  a  client-­‐server  environment  to  a  cloud   computing  architecture.     Enterprise  cloud  computing  will  be  bigger  and  grow  faster  than  most  think  –  6  converging  2 trends  together  create  substantial  enterprise  economies  that  only  increase  with  cloud   computing.    3 Winners  will  be  determined  by  their  ability  to  differentiate  service  offerings,  which  will   include  function/app  +  ecosystem  +  user  experience  +  pricing.   4 Cloud  computing  growth  will  drive  network  and  data  center  equipment  spending  in  carrier   and  enterprise  segments  for  medium-­‐term  equipment  transitions.    5 Understanding  enterprise  buying  behaviors  in  the  Early  Cloud  Era  paramount  to  tapping   market  opportunities.   10  
  • Key  theme  #1   We’re  now  in  the  Early  Using  industry  history  as  a  guide,   Cloud  Era,  moving  from  a  enormous  technology  shifts  change  the   client-­‐server  environment  market  dynamics  between  entrenched   to  a  cloud  computing  competitors  and  challengers  creating  new   architecture.  winners  and  losers.    •  Cloud  computing  current  penetration  into   enterprise  market  is  surprisingly  high,  but  its   percentage  of  IT  is  very  low,  so  it’s  much     too  early  to  pick  winners.  •  Singular  inevitability:  business  models  will   change  for  nearly  all  technology  and   telecommunications  segments.     11  
  • The  computing  evolution  continues  1960s                                  1970s                                  1980s                                  1990s                                2000s                                  2010s   12  
  • 58%  are  doing  “something”  in  the   Cloud   More  enterprises  are  Cloud  Pioneers:       doing  or  thinking  about  Using  Cloud  Computing   the  Cloud  than  those  that   are  not.   33.2%   42.1%   8%   Cloud  Stragglers:   No  Plans     16.8%  Cloud  Pioneers:    In  Trial   Cloud  Planners:   Planning  for  Cloud   S: For each of the following types of cloud deployment, we’d like to know if it’s currently in production, in trial, is planned 13   in 24 months? N=127
  • According  to  the  2008  US  Business  Census,  there  are  18,469  “non-­‐public”  organizations  with  500  or  more  employees.  So,  this  means  7,591  are  using  or  testing  a  cloud  solution,  3,103  are  planning,  and  7,775  have  no  plans       14  
  • However,  the  exact  percentage  of  IT  that  is  cloud  is  unknown,  but  certainly  very  low.   15  
  • “Cloud  computing  is  only  in  its  infancy.    Today  the  best  data  we  have  seen  suggests  that  well  over  90%  of  computing  capacity  is  run  in-­‐house  by  the  same  organizations  that  consume  it.”    Lanham  Napier,  Rackspace  Hosting  CEO    Feb.  10.  2011,  Q4  2010  Earnings  Conference  Call     16  
  • Just  who  are  Cloud  Pioneers  anyway?   Cloud  Pioneers   52.6%   Cloud  Planners   31.3%  Cloud  Stragglers   28.8%   Medium  (101-­‐999  employees)   Large  (1000  employees  +)  Q: For each of the following types of cloud deployment, we’d like to know if it’s currently in production, in trial, is 17  planned in 24 months? N=127
  • Cloud  Pioneers  are  larger  organizations,  commercial  as  opposed  to  government,  with  global  networks,  more  remote  and  mobile  workers,  and  already  using  a  cloud  solution,  as  opposed  to  just  testing.   18  
  • What  types  of  clouds  do  Cloud  Pioneers  use?  Will  that  change  in  the  near  future?     19  
  • Besides  SaaS,  Pioneers  mostly  use  private  clouds  and  PaaS   Clouds  in  use/piloted   SaaS   78.2%   PaaS   54.8%  Hosted  Private  Cloud   32.2%   IaaS   25.7%  Internal  Private  Cloud   21%   Public  Cloud   11%   Hybrid  Cloud   9%  Q: For each of the following types of cloud deployment, we’d like to know if it’s currently in production, in trial, is 20  planned in 24 months? N=127
  • In  the  next  24  months,  Pioneers  and  Planners  will  aim  for  internal  private,  public,  and  hybrid  clouds     Additional  clouds  planned  by   Cloud  planned  by  all  segments  in  the   Cloud  Pioneers     next  24  months  Hosted  Private  Cloud   11.7%   Internal  Private  Cloud   46.9%   Hybrid  Cloud   10.5%   Public  Cloud   36.3%  Internal  Private  Cloud   10.5%   Hybrid  Cloud   36.3%   IaaS   7.9%   IaaS   33.1%   PaaS   7.9%   PaaS   29.4%   Public  Cloud   5.1%   Hosted  Private  Cloud   23.1%  Q: For each of the following types of cloud deployment, we’d like to know if it’s currently in production, in trial, isplanned in 24 months? N=127 21   21  
  • Hybrid  and  public  clouds  are  high  on  the  list,  suggesting  quick  market  development  reminiscent  of  the  VOIP  market  rise.     22  
  • “We  added  just  over  9,000  net  servers  in  2010.  Which  means  that  even  though  we  are  the  leading  hosting  and  Cloud  computing  specialists,  we  captured  only  one  tenth  of  a  percent  of  the  total  addressable  market  in  2010.  All  these  data  points  arrive  at  the  same  conclusion.  That  the  hosting  and  Cloud  computing  market  is  still  in  its  very  early  stages.”  Lanham  Napier,  Rackspace  Hosting  CEO    Feb.  10.  2011,    Q4  2010  Earnings  Conference  Call   23  
  • Five  key  themes  in  enterprise  cloud  computing:    Key  theme  #2  1 We’re  now  in  the  Early  Cloud  Era,  moving  from  a  client-­‐server  environment  to  a  cloud   computing  architecture.   Enterprise  cloud  computing  will  be  bigger  and  grow  faster  than  most  think  –  6  converging  2 trends  together  create  substantial  enterprise  economies  that  only  increase  with  cloud   computing.    3 Winners  will  be  determined  by  their  ability  to  differentiate  service  offerings,  which  will   include  function/app  +  ecosystem  +  user  experience  +  pricing.   4 Cloud  computing  growth  will  drive  network  and  data  center  equipment  spending  in  carrier   and  enterprise  segments  for  medium-­‐term  equipment  transitions.    5 Understanding  enterprise  buying  behaviors  in  the  Early  Cloud  Era  paramount  to  tapping   market  opportunities.   24  
  • Key  theme  #2   Enterprise  cloud  computing  Industry-­‐leading  enterprises  need   will  be  bigger,  faster  than   most  think  –  6  converging  experience  in  Cloud.  To  avoid  being  left   trends  (cost  and  app  speed  behind,  these  Cloud  Pioneers  dabble  with   deployment  efficiencies,   SANs,  virtualization,  IT  non-­‐mission  critical  apps.       outsourcing,  data  center   upgrades  and  mobility)  •  Apps  will  quickly  evolve  to  mission  critical   together  create  substantial   ones  as  cloud  computing  empowers  new   enterprise  economies  that   only  increase  with  cloud   and  truly  transformative  ways,  particularly   computing.   those  enabling  mobility.  •  Cloud  computing  is  a  mile  wide  and  an  inch   deep,  but  rapidly  growing  as  our  survey   results  more  than  20%  of  IT  will  be  in  the   Cloud  by  2015.   25  
  • It’s  already  a  large  market  already  scratching  the  surface  of  an  enormous  one   26  
  • So  what  is  motivating  cloud  adoption?   27  
  • Cost  cutting,  speedy  app  deployment,  mobility  drive  cloud   71%   Motivators  to  transition  to  cloud   63%   52%   52%   47%   42%   38.7%   17.1%   18.8%   15.2%   9.1%   8.6%   Reduce   More  rapid    Increase  mobility   More  nimble  IT   Change  Software   Reduce  operational  costs   application   organization   licensing   management   deployment   overhead   Cloud  Pioneers  &  Planners   Stragglers  Q: Using a scale from 1 to 6where 1 is not at all important and 6 is extremely important, please rate the following as 28  motivators in your transition to cloud computing? N=127 % who say motivator is 5 or 6.
  • According  to  Cisco,  2014  enterprise  mobile  traffic  will  be  27x  greater  than  2009   …and  enterprise  mobility  has  barely  begun.   29  
  • The  ability  for  seamless  growth  without  CapEx  is  a  winner   61.5%   It’s  important  to  have  the  ability  to   handle  application  usage  spikes  and   78.6%   seamless  growth  without  heavy  capital   investment     58.3%   Cloud  Stragglers   Cloud  Planners   Cloud  Pioneers  Q: On a 1 to 6 scale, how much do you agree with the following statements… ? N=127 30  
  • Economies  gained  by  IT  outsourcing  also  drive  cloud   IT  outsourced  functions   39.7%   35.4%   34.4%   33.3%   31.6%   28.8%   25%   21.3%   21.9%   22.8%   21.9%   18.8%   15.6%   13.9%   13.9%   Disaster  Recovery   Perimeter  Security   Network   Data  back-­‐ups   Storage   Management   Pioneers   Planners   Stragglers  Q. Yes or no, do you outsource any of the following functions… ? (n=126) 31  
  • With  their  higher  levels  of  nearly  every  type  of  IT  outsourcing,  Cloud  Pioneers  clearly  demonstrate  link  between  higher  levels  of  IT  outsourcing  and  cloud.   32  
  • Pioneers  have  higher  percentage  of  IT  that  is  outsourced    %  of  IT  managed  by  outsourced  3rd  parties   Pioneers   Planners  Stragglers   0%   10%   20%   30%   40%   50%   60%   70%   80%   90%   100%   Greater  than  31%   11-­‐30%   1-­‐10%   None  Q: Regarding your IT infrastructure, approximately what percentage is outsourced to a 3rd parties for 33  management… ? (n=126)
  • Pioneers  also  have  higher  levels  of  data  center  outsourcing   Data  center  strategy   Pioneers   Planners  Stragglers   0%   10%   20%   30%   40%   50%   60%   70%   80%   90%   100%   Internally  hosted  and  managed   Some  or  all  data  center  outsourcing   No  data  center  Q: Which best describes your data center operations… ? (n=126) 34  
  • And  Pioneers  consistently  outsource   apps  more  often      How  are  the  following  apps  managed?       Pioneers   Planners   Stragglers      Do  you  outsource  management  of…      Portals   28.3%   6.5%   2.2%      Email   25.8%   6.5%   6.4%      Collaboration   25%   12.9%   4.5%      Customer  Relationship  Management  (CRM)   19.4%   13.8%   0%      Communications   17.2%   19.4%   5%      Tier  1  Storage   15.3%   6.9%   4.9%      Desktop  Apps  (excluding  email)   14.5%   6.9%   2.1%      Business  Intelligence   11.7%   3.4%   0%      Supply  Chain/ERP   6.6%   6.9%   2.3%      Accounting/Finance   6.5%   10.3%   0%   Q: We want to know how your apps are managed. Do you outsource management of… ? N=127 35  
  • Expect  even  more  outsourcing  in  coming  years   32.4%   Our  organization  will  increase   21.4%   outsourcing  in  the  next  24  months   16%   Cloud  Pioneers   Cloud  Planners   Cloud  Stragglers  Q: On a 1 to 6 scale, how much do you agree with the following statements… ? N=127 36  
  • Other  converging  technology  trends  also  drive  cloud.   37  
  • Pioneers  and  Planners  use  more  networked  storage   Storage  in  use   87%   89.5%   70.3%   71.2%   52.9%   41.7%   SANs   NAS   Cloud  Pioneers   Cloud  Planners   Cloud  Stragglers  Q: Do you store app data using local storage, a storage area network, network attached storage or a hybrid… ? 38  N=127
  • Pioneers  and  Planners  also  use  more  virtualized  servers  and  storage   %  using  virtualization   72.7%   68.4%   62.3%   58.1%   52.6%   46.3%   Virtualize  Servers   Virtualize  Storage   Pioneers   Planners   Stragglers  Q: Regarding servers, approximately what percentage is virtualized… ? N=127 39  
  • With  higher  levels  of  server  virtualization   %  of  servers  that  are  virtualized   Pioneers   Planners  Stragglers   .0%   10.0%   20.0%   30.0%   40.0%   50.0%   60.0%   70.0%   80.0%   90.0%   100.0%   Low  (Less  than  10%)   Mid  (11-­‐40%)   High  (41-­‐70%)   Very  High  (71%+)  Q: Regarding servers, approximately what percentage is virtualized… ? N=127 40  
  • And  high  levels  of  storage  virtualization   %  of  storage  that  is  virtualized   Pioneers   Planners  Stragglers   .0%   10.0%   20.0%   30.0%   40.0%   50.0%   60.0%   70.0%   Low  (Less  than  10%)   Mid  (11-­‐40%)   High  (51%+)  Q: Regarding storage, approximately what percentage is virtualized… ? N=127 41  
  • So  with  the  rise  of  public  clouds  and  greater  levels  of  virtualization,  to  mitigate  those  risks  associated  with  resource  virtualization  in  a  shared  Cloud,  expect  Pioneers  and  Planners  to  demand  the  ability  to  segment  some  virtual  network  components  by  Cloud  tenant.     42  
  • Pioneers  and  Planners,  seeking  to  remain  leaders  in  their  own  industries,  are  testing  the  Cloud  waters,  but  with  what  apps?   43  
  • Apps  that  are  not  mission  critical  apps  making  the  Cloud  move   Email   11%   19%   CRM   4%   14%   Portals   2%   20%   HR   2%   6%   Collaboration   10%   12%  Back-­‐up  storage/disaster  recovery   8%   11%   Business  intelligence   14%   Supply  Chain/ERP   9%   9%   Tier  1  storage   8%   11%   Communications   8%   12%   Accounting/Finance   2%   9%   Desktop  apps   6%   4%   0%   10%   20%   30%   40%   50%   60%   70%   In  Production   In  Trial   In  Planning  Process  Q. Again for apps, is a cloud computing architecture in production, in trial, planned, or not planned? N=78 44  
  • However,  this  is  due  to  change  as  greater  numbers  are  planning  for  supply  chain,  Tier  1  storage  than  those  that  actually  use  them  today.      Note  expected  levels  of  unified  communications  in  the  Cloud,  likely  driven  by  the  need  to  better  serve  remote  and  mobile  workers,  nearly  27.4%  either  use,  pilot,  or  plan  to  use  it.       45  
  • Not  all  applications  will  quickly  go  to  the  Cloud  quickly,  some  may  never  be  moved,  but  the  types  of  applications  that  will  be  moved  to  the  Cloud  are  relatively  consistent  among  both  Pioneers  and  Planners.     46  
  • However…  app  development  speed  is  not  really  faster  than  client-­‐server,  at  least  not  yet   We  were  able  to  develop  our  cloud  applications  much  more   quickly  than  our  client  server  applications   Strongly  Agree/Agree   34%   Neither   48.9%  Strongly  Disagree/Disagree   17%  Q: On a 1 to 6 scale, how much do you agree with the following statements… ? Base = Pioneers (N=58) 47  
  • …Nor  did  it  yield  those  cost  savings…    Our  expectations  for  ROI  were  completely  met  with  our  cloud  solution   Strongly  Agree/Agree   29.2%   Neither   52.1%  Strongly  Disagree/Disagree   18.8%  Q: On a 1 to 6 scale, how much do you agree with the following statements… ? Base = Pioneers (N=58) 48  
  • Nonetheless,  Pioneers  still  say  they’re  mostly  satisfied   We  are  completely  satisfied  with  our  cloud  solution     Strongly  Agree/Agree   47.9%   Neither   41.7%  Strongly  Disagree/Disagree   10.4%  Q: On a 1 to 6 scale, how much do you agree with the following statements… ? Base = Pioneers (N=58) 49  
  • …and  plan  to  use  cloud  for  a  both  new  and  legacy  apps   Cloud  usage  in  the  next  24  months  to...   38%   35%   25%   21%   20%   21%   15%   15%   6%   5%   Develop  a  new   Implement  a  new   Migrate  a  legacy   At  least  2   All  approaches   custom  application   packaged  application   application   approaches   using  in-­‐house   developers   Cloud  Pioneers   Cloud  Planners  Q: Does or will your organization in the next 24 months, use cloud architecture to… ? N=127 50  
  • Suggesting  that  enterprises  will  adopt  cloud  faster  than  previous  new  technology  paradigms.   51  
  • In  just  three  years,  Pioneers  and  Planners  expect  about  30%  of  IT  to  be  in  the  Cloud   %  of  IT  outsourced  to  Cloud  provider  by...   32.3%   30.5%   20.4%   15.8%   11.2%   2.8%   2012   2015   Cloud  Pioneers   Cloud  Planners   Cloud  Stragglers  Q: What percentage of your IT will be outsourced to a cloud provider by 2012? 2015? N=127 52  
  • Five  key  themes  in  enterprise  cloud  computing:    key  theme  #3  1 We’re  now  in  the  Early  Cloud  Era,  moving  from  a  client-­‐server  environment  to  a  cloud   computing  architecture.   Enterprise  cloud  computing  will  be  bigger  and  grow  faster  than  most  think  –  6  converging  2 trends  together  create  substantial  enterprise  economies  that  only  increase  with  cloud   computing.    3 Winners  will  be  determined  by  their  ability  to  differentiate  service  offerings,  which  will   include  function/app  +  ecosystem  +  user  experience  +  pricing.   4 Cloud  computing  growth  will  drive  network  and  data  center  equipment  spending  in  carrier   and  enterprise  segments  for  medium-­‐term  equipment  transitions.    5 Understanding  enterprise  buying  behaviors  in  the  Early  Cloud  Era  paramount  to  tapping   market  opportunities.   53  
  • Key  theme  #3   Amazon’s  AWS  and  With  proven  growth  and  monetization   Salesforce.com  currently  models,  AWS  and  Salesforce.com  will  be   lead  the  market,  but  with  challenged.    With  an  increasing  number  of   many  vendors  competing  vendors  competing  for  the  customer,  long-­‐ for  the  customer,  term  winners  will  be  determined  by   differentiated  service  differentiated  service  offerings  will  include:   offerings  that  include  •  The  ecosystem  of  partners  offering  a  complete   function  +  user   solution,   experience  +  ecosystem+  •  User  experience  aspects  that  seek  to  address   pricing  will  determine  the   current  user  concerns,  such  as  management   winners.   tools,  network  performance,  Interoperability  with   multiple  clouds/internal  clouds,  legacy  application   support,  service  levels,  and  SLAs,    •  Pricing  and  costs  because  it’s  a  business  where   scale  and  economics  are  everything.   54  
  • Salesforce.com  is  first  billion  dollar  Cloud  company  in  2010   55  
  • “Other”,  where  AWS  resides,  approaches  $1  billion  in  2010     Amazons  "Other"  revenue  segment  in  millions  of  $    $341      $231      $240      $203      $188      $163      $140      $120     Q1  2009   Q2  2009   Q3  2009   Q4  2009   Q1  2010   Q2  2010   Q3  2010   Q4  2010   56  
  • “In  terms  of  AWS,  were  extremely  pleased  with  how  AWS  is  going.  Its  growing  at  a  very  fast  rate.  …But  we  did  see  actually  an  acceleration  of  growth  in  AWS  from  Q3  to  Q4.  So  built  into  that  number,  it  actually  accelerated.”    Thomas  Szkutak,  Amazon  CFO  in  Q4  2010  Earnings  Call   57  
  • Accelerating  demand  brings  entrants  both  established  -­‐-­‐  think  HP  or  IBM  with  service  enablement  for  service  providers  or  Cisco-­‐EMC  joint  venture,  Acadia  -­‐-­‐  and  start-­‐ups  aplenty,  sparking  new  waves  of  acquisitions  (think  Verizon  purchase  of  Terremark  or  Time  Warner  Cable  purchase  of  NaviSite).       58  
  • So  many  tech  segments  compete  for  the  customer   Infrastructure Software as a Service Communications as a Service Platform as a Service as a Service Cloud Services-enabling Products & Services Consulting & Professional Services for Cloud Cloud  Vendors   Managed   Telecom   Software   Hardware   Services/IT   Systems   Service   Vendors   Vendors   Outsourcing   Integrators   Providers   Providers  = Business model re-alignment and sales channel challenges for entire industry 59  
  • Albeit  different  depending  on  the  tech  segment,  all  are  fighting  for  differentiation  -­‐  itself  rooted  in  understanding  what  limits  cloud  adoption.   60  
  • As  for  security  concerns,  reduced  control  &  data  breaches  are  tops  for  all  segments   Concerns  limiting  cloud  adoption   4.79   4.75   4.95   4.6   4.65   4.1   4.15   4.06   3.89   4.03   4.34   4.03   4.09   4.11   4.01   3.8   3.3   3.33   Reduced  control/ Data  in  transit   Stored  data   Compliance   Denial  of  service   App  access   visibility   access  breaches   access  breaches   requirements   attacks   breaches   Pioneers   Planners   Stragglers  Q: Using a scale from 1 to 6 where 1 is not at all important and 6 is extremely important, please rate the following assecurity concerns that limit adoption to cloud computing? N=127 (Score represents an average rating where the max is 6) 61  
  • Overall,  Pioneers  are  concerned  less  about  security  than  Planners  and  far  less  concerned  than  Stragglers.    So,  securing  cloud  apps  is  likely  a  real  barrier  for  both  the  mainstream  enterprise,  and  for  mission-­‐critical  app  migration  to  The  Cloud.     62  
  • To  mitigate  security  risks,  enterprises  need  visibility  and  control  into  their  traffic’s  network  paths,  as  well  as  the  networks  and  network  resources  used  on  backup.    The  ability  to  restrict  certain  traffic  from  being  transported  beyond  borders  or  to  certain  networks  is    also  useful.  Encryption  that  can  be  dynamically  applied  on  a  per-­‐user,  per  application,  per  location  or  network  path  for  data  rest  and/or  in  transit  is  also  key.      
  • Therefore,  completely  standards-­‐based  security  compliance  will  be  an  essential  component  of  any  cloud  solution.      
  • Non-­‐security  cloud  concerns  differ   significantly  by  group   Cloud  Stragglers Cloud  Planners Cloud  Pioneers    Extent  following  concerns  limit      cloud  adoption? Average Rank Average Rank Average Rank Network  delays 4.13 6 4.14 8 5.75 1 Initial  start-­‐up  costs  too  high 5.16 2 3.98 10 5.27 2 Lack  of  trusted  3rd  party  relationships 5.64 1 4.09 9 5.14 3 Lack  of  reporting/management  tools 4.11 7 4.63 5 5.02 4 Reduced  control/visibility 4.80 4 4.26 7 4.58 5 Network  downtime 3.95 9 5.16 3 4.23 6  No  vendor  neutral  APIs 4.40 5 5.05 4 4.23 7 Technology  not  yet  proven 4.98 3 4.26 6 4.10 8 Lack  of  audit/remediation/reporting 4.11 8 5.77 1 4.08 9 Poor  interoperability  b/t  cloud  venders  &   3.93 10 5.28 2 3.96 10 internal  IT Q: Using a scale from 1 to 6where 1 is not at all important and 6 is extremely important, please rate the following as 65   concerns that limit adoption to cloud computing? N=127
  • Let’s  look  at  the  top  five  concerns  for  each  group,  as  each  one  gives  us  different  clues  to  how  the  market  will  develop.   66  
  • Pioneers’  concerns  driven  by  cloud  experience  show  how  their  cloud  solution  could  work  better   Pioneers’  concerns  with  cloud   Network  delays   5.75   Initial  start-­‐up  costs  too  high   5.27  Lack  of  trusted  3rd  party  relationships   5.14   Lack  of  reporting/management  tools   5.02   Reduced  control/visibility   4.58  Q: Using a scale from 1 to 6where 1 is not at all important and 6 is extremely important, please rate the following as 67  concerns that limit adoption to cloud computing? N=58 (Score represents an average rating where the max is 6)
  • Based  on  REAL  cloud  experience,  network  performance  is  clearly  Pioneers’  biggest  concern  that  limits  cloud  adoption.    This  is  significant.    Mission-­‐critical  applications  won’t  move  full-­‐scale  into  the  Cloud  until  carrier  networks  offer  scalable  end-­‐to-­‐end  application  performance.     68  
  • From  a  network  perspective,  the  Cloud’s  impact  has  significant  impact  on  network  management,  operational  support  systems,  business  support  systems,  and  security.    So  successful  Cloud  services  require  network  operator  infrastructure  that  is  capable  of  highly-­‐scalable  and  intelligent  IP-­‐aware  transport.  
  • In  addition,  infrastructure  must  be  able  to  process  significant  amounts  of  traffic  and  potentially  also  session  data;  the  ability  to  gain  some  understanding  of  traffic  type  without  necessitating  intrusion  at  the  packet  header  will  also  be  of  value.      
  • Stragglers  concerns  driven  by  lack  of  qualified  help,  cost,  and  perceptions  that  cloud  is  not  proven     Stragglers’  concerns  with  cloud  Lack  of  trusted  3rd  party  relationships   5.64   Initial  start-­‐up  costs  too  high   5.16   Technology  not  yet  proven   4.98   Reduced  control/visibility   4.8    No  vendor  neutral  APIs   4.4  Q: Using a scale from 1 to 6where 1 is not at all important and 6 is extremely important, please rate the following as 71  concerns that limit adoption to cloud computing? N=53 (Score represents an average rating where the max is 6)
  • Since  Stragglers  view  the  Cloud  as  unproven,  they  are  a  long  way  from  it.  Nonetheless,  they  do  show  the  importance  of  educated  channel  partners  –  also  a  requirement  of  a  more  mainstream  market.   72  
  • Planners,  in  solutions  design  mode,  want  billing,  management,  and  interoperability   Planners’  concerns  with  cloud   Lack  of  audit/remediation/reporting   5.77  Poor  interoperability  b/t  cloud  venders  &  internal  IT   5.28   Network  downtime   5.16    No  vendor  neutral  APIs   5.05   Lack  of  reporting/management  tools   4.63  Q: Using a scale from 1 to 6where 1 is not at all important and 6 is extremely important, please rate the following as 73  concerns that limit adoption to cloud computing? N=32 (Score represents an average rating where the max is 6)
  • Planners  point  to  how  vendors  can  differentiate  as  the  market  develops  from  Early  Could  to  the  Middle  Cloud  Era.    Vendors  must  address  issues  such  as  data  portability  between  apps,  vendor  neutral  APIs,  interoperability  of  clouds,  measurable  SLAs,  and  remediation  that  is  truly  usage-­‐based.   74  
  • Ultimately,  enterprise  IT  wants  cost  savings  and  outsource  responsibility  for  tactical  implementation  of  the  IT  strategy  and  do  so  without  losing  control  of  strategy  and  the  day-­‐to-­‐day  management  decisions.   75  
  • Management  tools  with  extremely  granular  and  flexible  reporting  are  key,  as  the  enterprise  will  need  to  control  Cloud  services  on  an  aggregate  and  on  a  per  application,  per  enterprise  location/site,  per  service,  per  user,  and  per  user  class  basis.  This  helps  IT  and  network  resources  understand  what  is  being  used,  when,  and  by  whom.     76  
  • SLAs  equal  to  network  SLAs  will  be  important  to  developing  cloud  market   42.9%  We  won’t  migrate  any  applications  to  public   42.9%   clouds  without  99.999%  availability  SLAs   64%   Cloud  Pioneers   Cloud  Planners   Cloud  Stragglers  Q: On a 1 to 6 scale, how much do you agree with the following statements… ? N=127 77  
  • Cloud  and  network  service  providers  will  need  to  prove  availability  over  time  and  at  peak  periods,  so  SLAs  demonstrating  that  availability  will  be  critical.    Operators  will  be  expected  to  seamlessly  integrate  charge-­‐back  mechanisms  and  present  enterprise  customers  with  a  single  invoice  integrating  true  pay-­‐per-­‐usage  for  all  services.    
  • User  experience  improvements  to  enable   hybrid  clouds  critical  to  develop  market   We  are  here   Middle  Cloud   • Pricing   • Packaging   Differentiators   • Concurrent  transparency   &  transformational   • New  features/functions,   • Early  Cloud    plus   while  undefined  at  this   Early  Cloud   • Scalability  &  performance   • Management    and   point,  most  certainly  be   required   Differentiators   remediation  tools   • Interoperability   • Real  Service  Level   Beyond  Middle   Agreements  (SLAs)     Cloud  Current  offerings  very  similar;  no  sustainable  differentiation   More  Enduring    Differentiation   79  
  • Five  key  themes  in  enterprise  cloud  computing:  key  theme  #4  1 We’re  now  in  the  Early  Cloud  Era,  moving  from  a  client-­‐server  environment  to  a  cloud   computing  architecture.   Enterprise  cloud  computing  will  be  bigger  and  grow  faster  than  most  think  –  6  converging  2 trends  together  create  substantial  enterprise  economies  that  only  increase  with  cloud   computing.    3 Winners  will  be  determined  by  their  ability  to  differentiate  service  offerings,  which  will   include  function/app  +  ecosystem  +  user  experience  +  pricing.  4 Cloud  computing  growth  will  drive  network  and  data  center  equipment  spending  in  carrier   and  enterprise  segments  for  medium-­‐term  equipment  transitions.    5 Understanding  enterprise  buying  behaviors  in  the  Early  Cloud  Era  paramount  to  tapping   market  opportunities.   80  
  • Key  theme  #4   Cloud  computing  growth  Cloud  means  new  performance  demands   will  drive  network  and  on  the  WAN  and  the  data  center  requiring   data  center  equipment   spending  in  carrier  and  new  efficiencies  in  1)  new  equipment  to   enterprise  segments  for  power  it  and  2)  software  to  manage  it.   medium-­‐term  equipment  •  Cloud  =  new  enterprise  WAN  performance   transitions.   demands  =  new  service  provider  demand.  •  Initial  surge  will  be  accommodated  via   capacity  upgrades;  but  ultimately  to   compete,  service  providers  must  make   fundamental  network  architecture  changes   to  rapidly  deploy  new  services  and  to   guarantee  performance  and  service  levels.       81  
  • What  are  the  opportunities  for  hardware  vendors?       82  
  • Let’s  first  take  a  quick  look  at  data  center  projects.     83  
  • Most  Pioneers  and  Planners  finished,  or  are  working  toward  data  center  consolidation   Data  center  consolidation   18.9%   16.1%   11.9%   Cloud  Pioneers   Cloud  Planners   Cloud  Stragglers   Completed/In  Process   Planned  within  24-­‐months  Q: For each of the following we’d like to know if it’s currently in production, in trial, being planned in the next 84  24 months, no plans at this time or don’t know … ? N=127
  • Most  have  or  are  working  toward  expanding  data  center  capacity   Data  center  expansion   43.3%   32.4%   33.3%   23%   20.6%   19%   Pioneers   Planners   Stragglers   Completed/In  Process   Planned  within  24-­‐months  Q: For each of the following we’d like to know if it’s currently in production, in trial, being planned in the next 24 85  months, no plans at this time or don’t know … ? N=127
  • While  optimizing  data  center  energy   Data  center  power  /  energy  optimization   50.7%   46.7%   23.2%   22.6%   24.2%   16.7%   Cloud  Pioneers   Cloud  Planners   Cloud  Stragglers   Completed/In  Process   Planned  within  24-­‐months  Q: For each of the following we’d like to know if it’s currently in production, in trial, being planned in the next 24 86  months, no plans at this time or don’t know … ? N=127
  • And  increasing  switching  capacity  to  handle  the  growing  load   10G  switching   47.8%   32%   28%   18.8%   17.2%   12.1%   Cloud  Pioneers   Cloud  Planners   Cloud  Stragglers   Completed/In  Process   Planned  within  24-­‐months  Q: For each of the following we’d like to know if it’s currently in production, in trial, being planned in the next 24 87  months, no plans at this time or don’t know … ? N=127
  • They  also  improve  manageability  with  management  tools   Integrated  management  tools   59.1%   58.1%   38.3%   15.2%   16.7%   3.2%   Cloud  Pioneers   Cloud  Planners   Cloud  Stragglers   Completed/In  Process   Planned  within  24-­‐months  Q: For each of the following we’d like to know if it’s currently in production, in trial, being planned in the next 88  24 months, no plans at this time or don’t know … ? N=127
  • And  performance/efficiencies  with  automation  tools   Automation  tools   58.6%   44.8%   31.7%   26.9%   20%   3.4%   Cloud  Pioneers   Cloud  Planners   Cloud  Stragglers   Completed/In  Process   Planned  within  24-­‐months  Q: For each of the following we’d like to know if it’s currently in production, in trial, being planned in the next 89  24 months, no plans at this time or don’t know … ? N=127
  • Let’s  take  a  look  at  technology  strategies  and  projects  enterprises  pursue  prior,  during,  and  after  cloud  deployment.     90  
  • Before  cloud  deployment,  security  is  upgraded  and  SANs  are  used   Before  Cloud  deployment   Upgrade  perimeter  security   25.9%   39.3%   Implement  encryption   18.2%   42.1%   Migrate  storage  to  SAN   10.9%   37%   Increase  WAN  bandwidth  for  faster  speeds   17.2%   25.9%   Increase  LAN  bandwidth  to  desktop   14.5%   28.6%   Increase  servers  that  are  virtualized   14.3%   17.9%   Add  WAN  optimization   16.1%   14.8%   Implement    NAS   9.8%   10.7%   Cloud  Planners   Migrate  to  tierless  storage   3.9%   Cloud  Pioneers   7.4%  Q: For each of the following were they necessary before cloud computing, during initial deployment, follow-on work, 91  future plans, or no plans? N=78
  • Makes  good  sense  and  explains  why  Pioneers  are  not  as  concerned  about  security.     92  
  • Pioneers  also  migrate  to  storage  area  networks  and  increase  WAN  and  LAN  bandwidth.       93  
  • Other  Pioneers  improve  WAN  performance  during  deployment     Part  of  initial  deployment   Increase  WAN  bandwidth  for  faster  speeds   10.3%   18.5%   Increase  servers  that  are  virtualized   17.9%   10.7%   Add  WAN  optimization   5.4%   22.2%   Migrate  storage  to  SAN   12.7%   11.1%   Implement    NAS   11.8%   7.1%   Implement  encryption   18.2%   Increase  LAN  bandwidth  to  desktop   5.5%   7.1%   Upgrade  perimeter  security   9.3%   Cloud  Planners   Migrate  to  tierless  storage   3.9%   Cloud  Pioneers  Q: For each of the following were they necessary before cloud computing, during initial deployment, follow-on work, future plans, 94  or no plans? N=78
  • Still  others  plan  to  increase  WAN  bandwidth  afterwards   Post-­‐Cloud  deployment  projects   Increase  WAN  bandwidth  for  faster  connection   56.9%   speeds   33.3%   Increase  servers  that  are  virtualized   30.3%   42.9%   Migrate  storage  to  SAN   41.8%   29.6%   Implement    NAS   33.3%   35.7%   Upgrade  perimeter  security   24.1%   21.4%   Add  WAN  optimization   21.4%   14.8%   Migrate  to  tierless  storage   11.7%   22.2%   Increase  LAN  bandwidth  to  desktop   21.8%   10.7%   Cloud  Planners   Implement  encryption   18.2%   Cloud  Pioneers   10.5%  Q: For each of the following were they necessary before cloud computing, during initial deployment, follow-on work,future plans, or no plans? N=78 95  
  • But  remember,  Pioneers  are  still  most  concerned  about  network  delays.   96  
  • And  facing  rapidly  growing  traffic  demands  that  will  be  3x  greater  in  2014  than  2009   97   97  
  • How  can  the  WAN  or  the  carrier  network  provide  the  required  performance?    Service  providers  will  ultimately  be  judged  on  a  Quality  of  Experience  that  is  based  on  end-­‐to-­‐end  performance  of  network,  infrastructure,  application,  and  management  tools.   98  
  • Initially,  network  service  providers  will  increase  capacity,  but  eventually,  they  will  have  to  fundamentally  re-­‐architect  the  network.    Same  with  storage,  it  needs  a  new  architecture  purpose-­‐built  for  the  Cloud,  combining  storage,  network,  content,  and  context  intelligence.     99  
  • Network  service  providers  must  offer  differentiated  network  performance  and  availability  service  levels  to  suit  differing  application  needs;  it  allows  transport  network  monetization  required  for  successful  operations  and  prevents  over-­‐the-­‐top  application  providers  from  being  “under-­‐fed”  from  a  performance  perspective.  So  policy  management  will  be  key.       100  
  • The  impetus  on  the  network  provider  will  be  two-­‐fold;  they  must  ensure  a  high  Quality  of  Experience  of  the  Cloud  service  while  significantly  lowering  transaction  processing  and  billing  costs.    Remember  that  Cloud  will  be  a  business  of  shaving  pennies,  so  efficient  resource  management  of  network  and  data  resources  is  critical.        
  • Carrier  equipment  needs  to  support  these  imperatives.    A  dynamic  control  plane  will  be  a  vital  to  maximizing  cloud  resources;  it  must  also  have  access  into  the  data  plane  and  integrate  multiple  layers  in  the  solution.    Compression  and  caching,  especially  for  wireless,  will  also  be  essential  to  efficient  content  delivery  with  optimal    caching  locations  determined  by  the  frequency  with  which  content  is  accessed.    
  • Five  key  themes  in  enterprise  cloud  computing:    key  theme  #5  1 We’re  now  in  the  Early  Cloud  Era,  moving  from  a  client-­‐server  environment  to  a  cloud   computing  architecture.   Enterprise  cloud  computing  will  be  bigger  and  grow  faster  than  most  think  –  6  converging  2 trends  together  create  substantial  enterprise  economies  that  only  increase  with  cloud   computing.    3 Winners  will  be  determined  by  their  ability  to  differentiate  service  offerings,  which  will   include  function/app  +  ecosystem  +  user  experience  +  pricing.   4 Cloud  computing  growth  will  drive  network  and  data  center  equipment  spending  in  carrier   and  enterprise  segments  for  medium-­‐term  equipment  transitions.    5 Understanding  enterprise  buying  behaviors  in  the  Early  Cloud  Era  paramount  to  tapping   market  opportunities.   103  
  • Key  theme  #5   Understanding  enterprise  The  fight  for  the  enterprise  customer  is   buying  behaviors  in  the  already  underway,  but  vendors  that  will   Early  Cloud  Era  thrive  will…   paramount  to  tapping  •  Target  business  management,  as  well  as  IT,   market  opportunities.  •  Identify  and  nurture  your  best  partners,  as   many  vendors  and  integrators,  and  service   providers  are  involved  in  the  sale  and   solutions,  •  Learn  how  best  to  support  the  leading  role   that  applications  play,  •  Step  up  to  the  challenge  and  excel  at  making   and  managing  substantial  and  mutually   beneficial  partnerships,  particularly  as  the   market  changes.   104  
  • Who  is  involved  in  the  buying  decision?       105  
  • Top  management  is  very  involved   47.2%   Top  business  management  is  very  involved   with  purchasing  decisions  regarding  cloud   35.7%   computing   30.4%   Cloud  Pioneers   Cloud  Planners   Cloud  Stragglers  Q: On a 1 to 6 scale, how much do you agree with the following statements… ? N=127 106  
  • Vendors  need  a  more  “top  down”  sales  approach.    Any  time  a  strategic  advantage  is  involved,  as  well  as  significant  cost  reduction,  there’s  opportunity  to  sell  at  the  executive  level.  Those  looking  to  become  the  trusted  third  party  would  be  well-­‐served  by  focusing  here,  as  well.       107  
  • Executives  need  simple,  high  level,  targeted  marketing  and  sales  materials.  Follow  IBM’s  lead  in  teaching  executives  to  understand  and  prepare  for  sales  discussions.       108  
  • Enterprises  do  not  and  will  not  go  it  alone   35.1%   We  are  more  likely  to  use  a  consultant  to  help   create  our  cloud  strategy  than  work  with   14.3%   cloud  service  provider  partners   48.1%   Cloud  Pioneers   Cloud  Planners  Q: On a 1 to 6 scale, how much do you agree with the following statements… ? N=127 109  
  • Many  involved  partners  within  the    ecosystem  of  vendors   Involved  partners     48%   50%   45%   45%   45%   40%   33%   35%   28%   29%   29%   30%   30%   21%   Software   Consultants   Systems   VARs   Hardware   Non-­‐Telco   Telco  Service   vendors   Integrators   vendors   Service   Providers   Providers   Cloud  Pioneers   Cloud  Planners  Q: For each of the following types of participants in cloud implementation, on a scale of 1 to 6 where 1 means 110  “not at all involved” and 6 is very Involved,” what’s the involvement level of… ? N=78
  • What  trusted  third  parties  do  what?  What  are  the  roles  of  differing  ecosystem  members?       111  
  • Pioneers  mostly  involve  software  and  integrators  for  crafting  strategy   Highly  involved  partners:  create  cloud  strategy   Software   32.1%   77.8%   Systems  Integrators   31.6%   22.2%   Consultants   30.4%   30%   Hardware   29.4%   71.4%   Telco   25%   50%   Non-­‐Telco  Service  Providers   17.6%   33.3%   VARs   12.5%   33.3%   Cloud  Pioneers   Cloud  Planners  Q: For each of the following types of participants in cloud implementation, on a scale of 1 to 6 where 1 means 112  “not at all involved” and 6 is very Involved,” what’s the involvement level of… ? N=78
  • Planners  involve  nearly  everyone,  but  they’re  planning.       113  
  • Software  and  VARs  most  involved  in  developing  solution   Highly  involved  partners:  develop  cloud  application   Software   34.6%   37.5%   VARs   33.3%   40%   Non-­‐Telco  Service  Providers   25%   16.7%   Consultants   22.7%   22.2%   Systems  Integrators   21.1%   12.5%   Hardware   18.8%   16.7%   Telco   18.2%   20%   Cloud  Pioneers   Cloud  Planners  Q: For each of the following types of participants in cloud implementation, on a scale of 1 to 6 where 1 means 114  “not at all involved” and 6 is very Involved,” what’s the involvement level of… ? N=78
  • Integrators  and  non-­‐telco  service  providers  most  involved  in  cloud  app  migration   Highly  involved  partners:  migrate  cloud  application   Systems  Integrators   42.1%   25%   Non-­‐Telco  Service   40%   Providers   50%   Consultants   27.3%   22.2%   Software   26.9%   50%   Telco   25%   40%   Hardware   20%   16.7%   VARs   13.3%   12.5%   Cloud  Pioneers   Cloud  Planners  Q: For each of the following types of participants in cloud implementation, on a scale of 1 to 6 where 1 means 115  “not at all involved” and 6 is very Involved,” what’s the involvement level of… ? N=78
  • Consultants  and  hardware  partners  most  involved  in  management   Cloud  Pioneers  cloud  app  management  partners   Consultants   31.8%   Hardware   26.7%   VARs   20.0%   Non-­‐Telco  Service   20.0%   Providers   Software   19.2%   Telco   18.2%   Systems  Integrators   16.7%  Q: For each of the following types of participants in cloud implementation, on a scale of 1 to 6 where 1 means 116  “not at all involved” and 6 is very Involved,” what’s the involvement level of… ? N=78
  • Offering  successful,  comprehensive  Cloud  solutions  will  require  skill  diversity,  meaning  a  strong  ecosystem  offering  complementary,  best  of  breed  strengths.  Partnerships  must  be  significant  and  meaningful,  and  the  ability  to  manage  them  must  become  a  core  competency.       117  
  • Enterprises  may  say  they  want  an  overall  integrator  for  an  entire  solution,  but  we  think  they  will  be  as  unlikely  to  implement  a  single-­‐vendor,  end-­‐to-­‐end  Cloud  solution  as  they  have  been  to  implement  single-­‐vendor,  end-­‐to-­‐end  network  solutions.       118  
  • Software  &  integrator  most  important  partners   Most  important  partner   Software  vendor  partners   28.8%   8.7%   Systems  integrator  partners   16.9%   47.8%   Non-­‐telco  service  providers   16.9%   8.7%   Consultants   15.3%   8.7%   Hardware  vendor  partners   8.5%   17.4%   Value-­‐added  resellers   8.5%   8.7%   Telco  service  providers   5.1%   .0%   Cloud  Pioneers   Cloud  Planners  Q: For each of the following types of participants in cloud implementation, on a scale of 1 to 6 where 1 means 119  “not at all involved” and 6 is very Involved,” what’s the involvement level of… ? N=78
  • Software  vendors  have  a  solid  market  position  because  the  Cloud  is  really  about  the  app.  Integrators  need  to  reinforce  their  position  by  saying  that  the  Cloud  is  really  distributed  IT  resource  placement  and  management,  requiring  a  very  strong  yet  equal  understanding  of  computing,  applications,  security,  and  the  underlying  network.           120  
  • It  will  be  challenging  for  network  service  operators  to  establish  the  credibility  for  their  own  infrastructure  or  software-­‐as-­‐a-­‐service  offerings.  They  need  to  concentrate  on  services  closer  to  their  core  competency  or  extensions  of  current  services.  Obvious  ones  are  storage,  which  is  similar  to  web  hosting,  or  Cloud-­‐based  unified  communications  and  apps  supporting  or  enhancing  mobile  communications.         121  
  • What  is  important  in  the  buying  decision?       122  
  • Professional  services  key  to  purchase  decision   Critical  capabilities  in  selecting  most  important  partner   60%   60%   55%   48%   45%   42%   39%   36%   31%   30%   19%   19%   19%   13%   11%   14%   14%   10%   10%   9%   10%   6%   %   %   Professional   Business  process   Performance   SLAs   Creation  of   Training   services   re-­‐engineering   management  &   vertical   monitoring   applications   Cloud  Pioneers-­‐  First  Mention   Cloud  Pioneers-­‐  Overall   Cloud  Planners-­‐  First  Mention   Cloud  Planners-­‐Overall  Q:    In  selecting  your  most  important  partner,  which  2  capabilities  were  most  critical…  ?    N=78   123  
  • The  market  demands  qualified  professional  services,  measureable  SLAs  and  business  process  re-­‐engineering  also  needed,  while  performance  management  &  monitoring  lag  …but  probably  won’t  for  long,  as  management  offers  genuine  differentiation.       124  
  • Professional  services  will  become  increasingly  important  as  the  market  moves  toward  the  Middle  Cloud  Era.    Expect  enterprises  to  look  for  demonstrable  professional  services  experience  in,  including  substantive  investment  in  best  practices,  knowledge  management,  resource  allocation,  and  tool  development.       125  
  • The  network:  a  cloud  service’s  most  evaluated  infrastructure  component   Most  evaluated  infrastructure  component   33.3%  33.3%   28%   21.2%   20%   22%   20%   18%   18.2%   18%   15.2%   12.1%  13.3%   13.3%   14%   Storage   Servers   Network   Management  tools   Virtualization   infrastructure   software   Cloud  Stragglers   Cloud  Planners   Cloud  Pioneers  Q. Starting with a 1, please ran the following according to how much evaluate a cloud provider’s 126  underlying infrastructure? N=78
  • Since  the  network  will  likely  get  the  most  scrutiny,  even  as  larger  share  of  equipment  sales  shifts  to  service  providers,  equipment  vendors  will  still  need  powerful  brands.     127  
  • Willingness  for  long  contracts  still  low   We  would  sign  a  multi-­‐year  contract  with   our  cloud  services  provider   Strongly  Agree/Agree   29.2%   Neither   35.4%   Strongly  Disagree/Disagree   35.4%  Q: On a 1 to 6 scale, how much do you agree with the following statements… ? Base = Pioneers (N=58) 128  
  • But  expect  this  to  change  in  the  next  few  years.    In  the  Early  Cloud  Era,  there’s  likely  relatively  little  loyalty  to  those  third  parties  that  help  with  cloud  strategy,  planning,  or  deployment  –  so  there’s  still  much  opportunity.  This  is  likely  short-­‐term  as  better-­‐defined  Cloud  service  offerings  appear  along  with  a  maturing  market.   129  
  • What  do  these  key  themes  mean  to  your  business?         WaveLength  Market  Analytics  LLC    (www.wlanalytics.com)   Winn  Technology  Group,  Inc.    (winntech.net)       with  contributions  from     Telecom  Strategy  Partners  LLC  (telecomstrategypartners.com)   Channel  Navigator  LLC  (channelnav.com)    Copyright © 2011 WaveLength Market Analytics LLC and Winn Technology Group, Inc. All Rights Reserved.
  • Appendix:  Goals  and  Methods  •  Goal:  Understand  broad  enterprise  migration-­‐to-­‐the  Cloud  trends   and  the  channel  to  customer  •  Random  sample  drawn  from  Winn  Enterprise/mid  Market  DB  that   included  high-­‐level  IT  decision-­‐makers  (Senior  Managers,  Directors,   and  VPs)  •  Primary  research  data  collection  methodology  collected  by  Winn  Q3/ Q4  2010  by  using  a  telephone  survey,  supplemented  by  e-­‐survey,   landing  page  provided  to  provide  respondents  the  ability  to  answer   via  Web,  and  incentives  to  increase  response  rates  •  Sample  size  =  127;    weighted  to  present  distribution  of  US  companies   greater  than  500  employees  •  Screener  to  define  respondent  as  Cloud  Pioneer  or  Planner:     Organizations  using  only  SaaS  not  included;  they  had  to  use  another   cloud  service  model  and  must  actually  have  IT  staff  working  on  it