The „as-a-Service Phenomenon: TheMarket is Changing, Are You?Texas Technology SummitStanton Jones, Analyst, Emerging Techn...
Let’s Start with an Example of Thinking with a “Services” MindsetThe need: a programmable image gallery. The images: table...
What Is A Service?          “A type of economic activity that is intangible, is not               stored and does not resu...
The Three Economic Sectors           Primary                           ► Raw Materials: including agriculture, forestry an...
Growth of the Services SectorFor the last 100 years, there has been a substantial shift from the primary andsecondary sect...
Growth of the US Services SectorSince 1980 there has been a downward trend in manufacturing employment, whileemployment in...
Why Should I Care?Because enterprise IT is beginning to undergo a transformation that looks very similar tothe growth of t...
Why Should I Care? (part II)And because this massive shift towards services is creating (and destroying) opportunitiesfor ...
The “as-a-Service” MarketCopyright © 2012 Information Services Group, Inc. All Rights Reserved      9
Characteristics of the “as-a-Service” ModelWhile there is no “standard” definition of the as-a-Service model, some keychar...
What’s Driving This Trend?There are several key trends that have converged to create the “perfect storm” foras-a-Service v...
Providers are Investing Heavily in the “as-a-Service” ModelIt’s almost impossible to find a vendor that is not offering, o...
…But Caution is AdvisedAs the hype machine around “as-a-Service” has unfortunately outpaced reality inmany instances.     ...
Challenges for Service Providers (Traditional and Emerging)As-a-Service Providers face different challenges, based on thei...
Challenges for BuyersTechnology buyers also face challenges – primarily centered around legacyexpectations colliding with ...
What’s It All Mean?Even with current challenges, ‘as-a-Service’ models are simply too compelling to notconsider. Look for ...
www.isg-one.com
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The ‘as-a-Service' Phenomenon: The Market is Changing, Are You?

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The ‘as-a-Service' Phenomenon: The Market is Changing, Are You?

  1. 1. The „as-a-Service Phenomenon: TheMarket is Changing, Are You?Texas Technology SummitStanton Jones, Analyst, Emerging TechnologyApril 2012 Copyright © 2012 Information Services Group, Inc. All Rights Reserved. No part of this document may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval devices or systems, without prior written permission from ISG, Inc.
  2. 2. Let’s Start with an Example of Thinking with a “Services” MindsetThe need: a programmable image gallery. The images: tables, chairs and sofas indifferent colors. Option #1: Build It Option #2: Consume It ► Make a decision between traditional hosting ► Go to Flickr. and cloud infrastructure. ► Upload your images. ► Define a database table with columns for furniture type and color. ► Tag the black tables with black and table, the green chairs with green and chair, and so on. ► Create the interface you’ll use to populate that table with images. ► Find a free jQuery plugin to display results. ► Build an app that queries the table and serves up sets of images. “The quality of *service* you can provide to the ecosystem is a function of your ability to create, and usefully name, collections of web resources.”Source: Jon Udell, What’s In a Name? In the Cloud, a Data Service! http://www.wired.com/cloudline/2012/03/data-service/Copyright © 2012 Information Services Group, Inc. All Rights Reserved 2
  3. 3. What Is A Service? “A type of economic activity that is intangible, is not stored and does not result in ownership.”Source: Investorwords.com http://www.investorwords.com/6664/service.htmlCopyright © 2012 Information Services Group, Inc. All Rights Reserved 3
  4. 4. The Three Economic Sectors Primary ► Raw Materials: including agriculture, forestry and fishing, mining, and Sector extraction of oil and gas. Secondary ► Industry : takes output from Primary Sector and manufactures finished Sector goods. Tertiary ► Services: activities where people offer their knowledge and time to Sector improve productivity, performance, potential, and sustainability.Copyright © 2012 Information Services Group, Inc. All Rights Reserved 4
  5. 5. Growth of the Services SectorFor the last 100 years, there has been a substantial shift from the primary andsecondary sectors to the tertiary sector in industrialized countries. The changing structure of employment during economic developmentSource: The World Bank, Growth of the Services Sector www.worldbank.org/depweb/beyond/beyondco/beg_09.pdfCopyright © 2012 Information Services Group, Inc. All Rights Reserved 5
  6. 6. Growth of the US Services SectorSince 1980 there has been a downward trend in manufacturing employment, whileemployment in service-producing industries continued to grow at an even faster pace. U.S. Labor Force by Sector Tertiary Sector Primary & Secondary SectorsSource: http://dionhinchcliffe.com/2011/06/29/on-web-strategy, Population Bulletin, U.S. Labor Force Trends, Vol. 6, No. 2Copyright © 2012 Information Services Group, Inc. All Rights Reserved 6
  7. 7. Why Should I Care?Because enterprise IT is beginning to undergo a transformation that looks very similar tothe growth of the broader services sector… Trends in the broader US economy Raw Materials Manufacturing Services Sector Sector Sector Buying IT “raw “Manufacturing” Creating & materials” custom renting infrastructures & apps services Trends in Enterprise ITCopyright © 2012 Information Services Group, Inc. All Rights Reserved 7
  8. 8. Why Should I Care? (part II)And because this massive shift towards services is creating (and destroying) opportunitiesfor both providers and consumers of IT Services… Buying IT “raw “Manufacturing” Creating & materials” custom renting infrastructures & apps services Trends in Enterprise IT Disrupting… • Platforms • Skills • Suppliers • Standards • RelationshipsCopyright © 2012 Information Services Group, Inc. All Rights Reserved 8
  9. 9. The “as-a-Service” MarketCopyright © 2012 Information Services Group, Inc. All Rights Reserved 9
  10. 10. Characteristics of the “as-a-Service” ModelWhile there is no “standard” definition of the as-a-Service model, some keycharacteristics do tend to stand out…► Subscription-based, transparent pricing► Standardized services► Features are updated often► Typically built with a multi-tenant, web-based architecture► Open, web-based APIs► Active, engaged community supported by Web 2.0 technologies “This is not just about putting up a pay wall and charging a subscription fee … The ‘S’ in aaS is not an afterthought or tacked on, it is the entire ecosystem attached to the content.” -- Mika Salmi (2009)Copyright © 2012 Information Services Group, Inc. All Rights Reserved 10
  11. 11. What’s Driving This Trend?There are several key trends that have converged to create the “perfect storm” foras-a-Service vendors… • Virtualization • Massively-scaled infrastructure Technology • Always-on mobile connectivity innovation Corporate Frustration cost with reduction traditional IT • • Capital preservation Do more with less as-a- • • Projects take too long Inability to upgrade • Risk aversion Service • New breed of providers sell to BUsCopyright © 2012 Information Services Group, Inc. All Rights Reserved 11
  12. 12. Providers are Investing Heavily in the “as-a-Service” ModelIt’s almost impossible to find a vendor that is not offering, or transforming, a keyoffering into the “as-a-Service” model. Traditional IT Services Firms (Global & MN) Mid-Market and Telecom Firms Pure-Play Cloud Providers & Open Source Software and Hardware CompaniesNote: logos representative samples only; many providers sell software, hardware and servicesCopyright © 2012 Information Services Group, Inc. All Rights Reserved 12
  13. 13. …But Caution is AdvisedAs the hype machine around “as-a-Service” has unfortunately outpaced reality inmany instances. ‘as-a-Service’ Marketing Position Buyers should check to see if… Only pay for what you use Annual, up-front payment required Turn the service off whenever you want Multi-year commitment required Cheaper Everyday workloads are actually cheaper Faster to implement Inability to customize is a deal breaker Easier to support The right (new) skills exist internally Easy to integrate Standard, web-based APIs exist Highly secure Security is different than risk Reduce dependency on infrastructure team Apps are architected for failure Very flexible Standard terms & SLAs are acceptable No longer need to buy hardware If performance is acceptable Many others…Note: some of these questions are applicable to specific delivery models (SaaS, PaaS or IaaS)Copyright © 2012 Information Services Group, Inc. All Rights Reserved 13
  14. 14. Challenges for Service Providers (Traditional and Emerging)As-a-Service Providers face different challenges, based on their market position andorganizational maturity. Competition amongst Enterprise pursuit and support delivery teams expectations Cannibalization Technical Technology Lack of brand of existing inertia and lack solves a niche services of skills recognition problem Lag Difficult to continue behind so double-digit acquire growth Traditional Providers Emerging ProvidersCopyright © 2012 Information Services Group, Inc. All Rights Reserved 14
  15. 15. Challenges for BuyersTechnology buyers also face challenges – primarily centered around legacyexpectations colliding with new, standardized, off-premises solutions. Technology & vendor inertia Legacy Don’t know policies & how much compliance they use frameworks today Reluctance to buy; difficulty integrating (technology & process)Copyright © 2012 Information Services Group, Inc. All Rights Reserved 15
  16. 16. What’s It All Mean?Even with current challenges, ‘as-a-Service’ models are simply too compelling to notconsider. Look for these models to rapidly increase their share of the IT ServiceDelivery Model. It’s already happening at the mid-market level; enterprises are next. ‘as-a-Service’ models In-House as-a- IT Service simply become another way to deliver IT services, dependent on workload, security and Managed other requirements. Service (outsourced)Copyright © 2012 Information Services Group, Inc. All Rights Reserved 16
  17. 17. www.isg-one.com
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