Cloud r eview egr 2012-4-o-0774

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Cloud r eview egr 2012-4-o-0774

  1. 1. EGR-2012-4-O-0774Enterprise Cloud Quarterly ReviewQ3 2012October 2012Contents of this editionCloud market up closeDeals that ruled the cloudCloud offeringsPartnership, alliances, and M&AEverest Group featured article
  2. 2. Enterprise Cloud Quarterly Review Q3 2012What’s insideNewer cloud offerings continue to overwhelm the For more information on this reportmarket. Buyers are apprehensive of so many please contact the analysts:platforms, applications, and technologies. Chirajeet Sengupta, Practice Director chirajeet.sengupta@everestgrp.comPublic cloud providers, such as Amazon Web Abhishek Singh, Senior AnalystServices (AWS), are providing further cost reduction abhishek.singh@everestgrp.commechanisms to buyers by allowing them to sell Soumit Banerjee, Senior Analystexcess reserved capacity to other AWS customers. soumit.banerjee@everestgrp.comThis positions AWS as a provider genuinelyInterested in reducing buyers’ costs. Yugal Joshi, Senior Analyst yugal.joshi@everestgrp.comGlobal technology service providers, such as CSC, S. Sivaram, AnalystHP, IBM, Sungard, T-Systems, and Fujitsu, signed sivaram.s@everestgrp.commultiple cloud engagements in Q3 2012. In cloudofferings, telecom providers, such as Telstra, Colt, and BT, expanded their portfolio.Many providers, such as IBM, EMC, Fujitsu, Infosys, Rackspace, and VMware, investedin datacenters, delivery locations, marketing, and IP creation for cloud services.Enterprise application providers, such as Oracle, SAP, and Microsoft, and ITmanagement providers, such as BMC and CA, continued to create newer cloudofferings. Most of these offerings focus on the North American and European market.New age providers, such as NetSuite, Navisite, and Joyent, signed large number ofclients. – The Cloud Vista Team Proprietary & Confidential. © 2012, Everest Global, Inc. 2
  3. 3. Enterprise Cloud Market Up CloseCloud market events analysis From the frontline 100% = 155 Accenture recognized as Key hiring Cloud Partner of the Year by M&A (4%) Microsoft Investments 1% 7%  Recognition for helping the Partnerships/ 14% 41% Offerings U.S. clients in deploying alliances hybrid, on-premise, public, and private cloud solutions 33%  This depicts Accenture’s Deals breadth of services across Microsoft cloud offeringsQ3 2012: Top Market Developments Xerox-ACS acquires WDS MNC IT providers launched the maximum number of offerings  WDS, a provider of technical (~40%). Public cloud, telecom, and hosting providers contributed support to telecom providers, over 30% of the entire offerings in the enterprise cloud market leverages a cloud platform SaaS vendors constituted ~50% of the deals in this quarter. GlobalMine Telecom and hosting providers too had a deal share of over 10%  The cloud platform was a key driver of this acquisition that Too many offerings are confusing the buyers. They believe will assist Xerox to globallyVerdict a lot of “cloud-washing”, coupled with aggressive sales increase its support footprint pitch, is making cloud adoption decisions further complicated. However, novel offerings also depict AWS launches market place increasing demand and newer opportunities for providers.  Will allow buyers to sell theirFrequency of occurrence of cloud layer in market updates EC2 reserved instances to other AWS customers 57%  This gives customers flexibility to further reduce their costs by selling 32% overbooked instances “” Analyst corner 9% 7% Cloud market continues to BPaaS SaaS PaaS IaaS evolve with significant newer offerings. Enterprise buyers areVerdict Infrastructure services continue to dominate the cloud realizing the gains and are even ecosystem. Software-as-a-Service (SaaS), the mainstay of willing to experiment with cloud buyers and providers, is not witnessing any significant reduction in demand. different kinds of cloud service providers. Proprietary & Confidential. © 2012, Everest Global, Inc. 3
  4. 4. Deals that Ruled the Cloud Cloud deals split by geography and industry 100% = 51 N = 48 Technology and electronics 23% South America Professional services 10% APAC 2% Media & entertainment 10% 12% Retail & CPG 10% BFSI 8% Manufacturing 8% 27% Transportation & travel 8% 59% Europe Public sector 6% Energy & utilities 6% North America Healthcare and lifescience 4% Telecommunications 2% Natural resources 2%Savvis to provide cloud-based infrastructure to Posadas Updates from providers  Savvis will offer its symphony dedicated private cloud,Terms hosting, storage, and security services through its Dallas CSC to help Alstom transform its datacenter global datacenters  CSC will leverage its BizCloud  Posada leveraged Burstorm as a provider for cloud implementation strategy and storage services to reduce costs and enhance servicesVerdict Major driver for this adoption was a requirement for flexible and  Services to be delivered from scalable infrastructure. Though consumption-based pricing was client’s and CSC’s datacenters also attractive, Posada was more focused on agility and reliability. Joyent platform helps TelefonicaDreamWorks Animation to leverage HP cloud services launch cloud services  Cloud service to focus on instant  Client to integrate HP’s cloud services with Panzura’s cloud servers for Internet applications inTerms storage platform. It will help to provide a consistent global Spain low-cost storage platform  Joyent platform is the basis of  DreamWorks was already using HP’s IBRIX storage. It these offerings. It will provide an created a massively-scalable storage accessed in a public ability to create and consume cloud model virtual servers, RAM, and storageVerdict This is a technology decision and does not appear to include on-demand in a pay-per-use significant services from providers. However, this also indicates model client’s willingness to integrate cloud providers. “” Analyst corner Analyst cornerFujitsu builds private cloud for BANDAI NAMCO  Buyer looking for moving mission critical systems, such as Cloud infrastructure and SaaSTerms SAP, to the cloud. Fujitsu to develop a shared platform constituted ~80% of the deals. along with client’s IT for SAP and operating systems Moreover, even cloud enablers  The platform will provide consistent application services witnessed good traction contributing across group companies ~15% of the deals. Enterprise This highly-complex mission-critical cloud platform will not only buyers are still engaging with theVerdict optimize operations but also enhance collaboration across group existing, traditional providers, they companies. This shows the real potential of cloud model to create are open to experimenting with new truly global infrastructure for business applications. age players. Proprietary & Confidential. © 2012, Everest Global, Inc. 4
  5. 5. Cloud Offerings Update Cloud offerings split by provider type Cloud offerings split by target industry 100% = 64 N = 59 Offshore IT Multi-industry 80% Hosting Telecommunications 5% Public cloud8% 2% 8% Electronics and hi-tech 3% Telecom 8% 39% MNC IT Technology 2% 8%OEM/hardware Public sector 2% 28% BFSI 2% ISV Others 7%British Telecom launches cloud-based datacenters in Latin America Buyer focus – cloud offerings  The two services, BT Cloud Compute and BT PrivateOffering Compute, to be offered from four datacenters in Argentina, 100% = 62 Brazil, Colombia, and Mexico  These are typical IaaS offerings allowing the clients to End-user Enterprise consume pay-per-use on demand infrastructure assets SMB 5% A generic IaaS offering that provides raw compute and 16%Verdict consolidation service. There is a very limited element of IT 47% services that are required to create a working environment. 32%Infosys creates Cloud Ecosystem Hub Multi-segment  Infosys partnered with 30 cloud and technology providers.Offering The hub will assist enterprises in comparing services of cloud providers across 20 parameters  It will help in rapid adoption of hybrid services. Its brokerage “” Analyst corner feature allows visibility across the entire cloud ecosystem for an enterprise Most cloud offerings are industry Buyers require a solution that provides insights into enterprise- agnostic and indicate early level ofVerdict wide cloud adoption through a single console. With almost all the cloud adoption. known cloud infrastructure providers supporting Infosys hub, it can significantly assist the clients in cloud adoption. High number (~40%) of offeringsType of cloud offerings introduced Partner focus in cloud offerings were not delivered in a cloud model and acted as enablers. This 100% = 59 100% = 64 indicates the value of solutions that Services assist the clients cloud adoption. 8% 5% Application With In cloud applications offerings, 33% partner were for managing the IT Infra- 37% department and only 3% were forstructure office users. Cloud providers 58% 92% Without focused on creating offerings partner without leveraging partner network. Proprietary & Confidential. © 2012, Everest Global, Inc. 5
  6. 6. Partnerships, Alliances, and M&A Drivers and type of partnerships/alliances Size of partners 100% = 21 100% = 21 100% = 21 Access to Different markets Industry industry Others Access peer- 10% Telecom 14% 10%to assets similar 14% 5% Local IT 5% 14% 48% OEM/ 10% 57% ISV 52% Industry Access to 28% hardware 10% 24% peer- IP Create smaller new IP MNC IT Industry peer-larger Key partnerships, alliances, and M&A Partnerships/alliances and M&A1 TCS partners with Savvis for cloud-enabled BaNCS solution Colt acquires ThinkGrid  TCS BaNCS suite for banking industry will be available in a cloud-  ThinkGrid offers a cloud-based based model in North America, hosted on Savvis’ infrastructure platform for channels  As financial institutions seek more managed services, yet controlled  Its turnkey management platform cloud-based engagements, this solution will assist them in this will allow channel partners to journey leverage the Colt platform to offerVerdict Indicates growing appetite of offshore-centric technology service cloud services providers. Enables TCS to serve mid-market and small banks without concerns of data leaving the boundaries of the country. CA and Logicalis extend partnership for cloud2 T-Systems and VMware partner for vCloud datacenter services  Will allow the existing clients of VMware vCloud to move their  Logicalis, a long time customer workloads to T-Systems cloud infrastructure and partner of CA, will allow  The global service will be delivered through T-System datacenters in clients to buy CA’s Automation Europe. It will also provide consulting, integration, and other related Suite through its cloud toolbox services for vCloud adoption offering  The partner will provideVerdict This further demonstrated the growing adoption of hybrid cloud consulting, integration, and model. Buyers that are already familiar with VMware environment will find a similar ecosystem in T-Systems datacenters, and therefore, customization services for clients can move their workloads. “” Analyst corner3 Rackspace to acquire Mailgun for cloud email integration  Mailgun is a startup that provides APIs to developers to integrate cloud-based email services in websites and applications Over 50% of partnership and  A small acquisition that helps Rackspace further enhance its open- alliances were done by ISVs and cloud philosophy and helps buyers in integrating their cloud services MNC IT providers. Even telecom This acquisition is not a game changer but a good-to-have offering. and offshore IT players entered intoVerdict Buyers are asking for email integration in their applications and multiple partnerships and alliances websites. Some of the developers in Mailgun were lead developers signifying their willingness to for Google’s Gmail project. expand their cloud service portfolio. Proprietary & Confidential. © 2012, Everest Global, Inc. 6
  7. 7. Everest Group Featured Article How are Buyers Evaluating Cloud Service ProvidersDifferent service providers approach cloud in their own unique way. On one end of the spectrum were new-ageservice providers, such as Amazon Web Services (AWS), these providers pushed ahead with their public cloudconcept. On the other end, some traditional service providers simply brushed aside the hysteria associated withcloud. In that vein, quotes such as the following ensured that cloud got media coverage even outside the technologyspace, inciting (ironically) even wider interest on this topic.When Larry Ellison explained that Oracle’s cloud strategy is focused internally on developing cloud solutions (anddeviating from its usual acquisition strategy), the debate came full circle, demonstrating that service providers haveindeed moved beyond rhetoric on cloud. Cloud-based strategies (go-to-market, solutions, pricing models, IP, etc.)are in place and buyers are increasingly engaging service providers on cloud. For example, as per serviceproviders’ responses to a recent Everest Group survey, cloud-based services now constitute 5 to 15 percent of thescope of infrastructure deals being signed.As a result, the time is now ripe to shift the discussion from cloud providers to cloud services buyers. As enterprisescontemplate moving a larger share of their IT spend to the cloud, their efforts invariably focus on the following twoconsiderations:a) Evaluating the opportunity cost (total cost of ownership or TCO) of cloud adoptionb) Evaluating the cloud capabilities of service providersWhile TCO evaluation models are still maturing and are currently situation dependent, provider capabilities andstandards have matured enough for buyers to benefit from research data. IT buyers’ incremental approach to cloudadoption has led service providers to reinforce their legacies, and develop and/or acquire cloud solutions aroundthem. Most of the cloud deals we have analyzed were existing service agreements, wherein a cloud servicecomponent was introduced either as a value-add from the service provider or as per a specific request from thebuyer.Based on our interactions with a wide range of buyers, it is clear that cloud will increasingly constitute a majorportion of large enterprise deals in the next five years. The following illustration summarizes those discussions:Everest Group has embarked on an initiative to help buyers answer the above questions in order to assist them inachieving their overall sourcing goals. Common questions of buyers What are the relevant criteria to How to shortlist cloud service Once shortlisted, how to be used for evaluating a cloud providers that satisfy the engage with cloud service service provider? selection criteria? provider? Criteria Shortlist Engage  Key criteria fall under 5 broad  Typically 3 types of cloud  Typically cloud engagement categories we term as TIPSS service provider suffice models tend to be different  TIPSS stand for Technology, – Existing relationships  Buyers may have to tweak Integration, Pricing, Security, – New enterprise class sourcing strategies and reskill and Services providers some professionals – New-age cloud providers Proprietary & Confidential. © 2012, Everest Global, Inc. 7
  8. 8. About Everest GroupEverest Group is an advisor to business leaders on the next generation of global services with a worldwidereputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- andmiddle-office business services. With a fact-based approach driving outcomes, Everest Group counselsorganizations with complex challenges related to the use and delivery of global services in their pursuits to balanceshort-term needs with long-term goals. Through its practical consulting, original research, and industry resourceservices, Everest Group helps clients maximize value from delivery strategies, talent and sourcing models,technologies, and management approaches. Established in 1991, Everest Group serves users of global services,providers of services, country organizations, and private equity firms in six continents across all industry categories.For more information, please visit www.everestgrp.com and research.everestgrp.com.Everest Group locationsDallas (Corporate Headquarters) Toronto India / Middle Eastinfo@everestgrp.com canada@everestgrp.com india@everestgrp.com+1-214-451-3000 +1-416-865-2033 +91-124-496-1000New York Londoninfo@everestgrp.com unitedkingdom@everestgrp.com+1-646-805-4000 +44-207-887-1483Stay connectedWebsites Twitter Blogswww.everestgrp.com @EverestGroup www.sherpasinblueshirts.comresearch.everestgrp.com @Everest_Cloud www.gainingaltitudeinthecloud.comThis report is also a part of the For more information on this report please contact the analysts:Cloud Vista annual Chirajeet Sengupta, Practice Directorsubscription plan that offers chirajeet.sengupta@everestgrp.comcontinuous market intelligencethat allows service providers and Abhishek Singh, Senior Analystbuyers to base decisions on abhishek.singh@everestgrp.commarket realities Soumit Banerjee, Senior AnalystCloud Vista includes: soumit.banerjee@everestgrp.com Cloud deal analysis Yugal Joshi, Senior Analyst Quarterly cloud market update yugal.joshi@everestgrp.com Service provider cloud strategy assessment S. Sivaram, Analyst Thematic cloud research sivaram.s@everestgrp.com To subscribe to Cloud Vista, please get in touch with us at info@everestgrp.com Proprietary & Confidential. © 2012, Everest Global, Inc. 8

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