Enterprise cloudadoption

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Enterprise cloudadoption

  1. 1. Enterprise Cloud AdoptionRole of Cloud in Global ServicesCloud VistaReport: May 2012 Copyright © 2012, Everest Global, Inc. EGR-2012-4-R-0682a
  2. 2. Our research offerings for global servicesSubscription information Market Vista This report is included in the Global services tracking across functions, sourcing models, locations, and following subscription(s) service providers – industry tracking reports also available – Cloud Vista Banking, financial Healthcare Finance & accounting In addition to published services, insurance research, a subscription may include analyst inquiry, data Information cuts, and other services Procurement Cloud Vista technology If you want to learn whether your organization has a Human resources Recruitment process Global sourcing subscription agreement or request information on pricing and subscription options, Service provider Transaction PricePoint please contact us: Intelligence Intelligence – info@everestgrp.com – +1-214-451-3110 Custom research capabilities  Benchmarking | Pricing, delivery model, skill portfolio  Peer analysis | Scope, sourcing models, locations  Locations | Cost, skills, sustainability, portfolio  Tracking services | Service providers, locations, risk  Other | Market intelligence, service provider capabilities, technologies Copyright © 2012, Everest Global, Inc. 2 EGR-2012-4-R-0682a
  3. 3. Introduction – context and scopeContext It is a commonly held belief that cloud computing technologies are increasingly transforming the way IT is delivered and consumed, within an enterprise setting. As of today, the market remains in a state of flux, with a large number of service providers with varying legacies vying for success Based on live market data for the calendar year 2011, this research is an attempt to understand: – Adoption trends of cloud technologies within enterprise IT services  Who is adopting?  What are the adoption scenarios?  What do buyers look for when evaluating a global services deal, with cloud delivery? – The role of global services providers  What are the different roles that can be played by global services providers in facilitating buyers’ transition to the cloud?  What is the nature of the opportunities that global services providers can capitalize upon?  What are the key success factors for global services providers to capitalize on the cloud opportunity?Scope of this research This research is the first in a series of semi-annual reports on adoption trends of enterprise cloud services This edition analyzes the market for cloud delivery within the context of enterprise global services (ITO and BPO). The focus of this report is on: – Cloud delivery within a global services setting  The analysis does not include, for instance, pure hosting or public cloud adoption trends, or pure SaaS implementations – Enterprise adoption  In this analysis we focus on cloud service deals that impact a large portion of the buyer’s organization, i.e., a business unit (BU), a geography, or the global enterprise. For instance, deals limited to isolated implementation of SaaS, or cloud platforms are not part of this research scope Copyright © 2012, Everest Global, Inc. 3 EGR-2012-4-R-0682a
  4. 4. Introduction – methodology and research applicationMethodology This research is based on: – Global services deal data captured as part of Everest Group’s proprietary database for the calendar year 2011 – Publicly available data on global services deals – Everest Group‘s expert perspectives Given the current hype, and plethora of opinions around cloud adoption, this research is deliberately anchored in a fact-based approach. All insights are based on publicly available, or Everest Group‘s proprietary market dataHow can this report be used?For service providers: This report can be used to understand: – Nature of cloud-related opportunities in the global services market – Different roles that services providers can play within the cloud delivery landscape, in line with existing and potential capabilities – Investments and capabilities that (e.g., alliances, physical infrastructure, and professional services) make for winning strategies in the global services market for cloud related opportunitiesFor service recipients: This report can be used to understand: – Role of cloud services in transforming the enterprise; specifically, areas of adoption that offer optimal enterprise benefits – Cloud adoption through global services in their specific industries – Different roles that services providers can play in enabling the transition to cloud Copyright © 2012, Everest Global, Inc. 4 EGR-2012-4-R-0682a
  5. 5. Table of contentsTopic Page no. Summary of key insights 6 Section I: Overview – cloud engagements 9 – Number of deals 10 – Deal size 11 – Service scope and cloud layer 12 Section II: Cloud trends 13 – Cloud deployment trends 13 – Buyer adoption 18 – Provider roles 24 Section III: Deal spotlight 30 – Evaluation framework 31 – Telenor – CSC deal analysis 32 – AstraZeneca – HCL deal analysis 34 – Maersk Line – HP deal analysis 36 Section IV: Appendix 38 – Glossary 39 – Recommended research 40 Copyright © 2012, Everest Global, Inc. 5 EGR-2012-4-R-0682a
  6. 6. Insight #1: Enterprises are increasingly demanding cloud delivery aspart of large ITO deals and adoption statistics suggest that rapidgrowth of cloud services will continue for some timeCloud delivery is rapidly becoming an integral part of large global services deals In H2, 2011, 8% of all large global services deals had cloud delivery as a part of scope, up from 4% in H1, 2011; this indicates rapidly increasing adoption of cloud services within the matrix of global service delivery Most large service providers adopted the cloud paradigm by developing cloud capabilities. Given the nature of entrenched relationships, we believe that these service providers actively compete in the market for cloud services In fact, cloud represents an attractive opportunity for most service providers – The average TCV of global services deals with cloud delivery in scope (2011) was US$168 million; compared to US$95 million for deals without cloud delivery in scope – The average contract duration for global services deals with cloud delivery in scope (2011) was 68 months; compared to 60 months for deals without cloud delivery in scopeCloud services help service providers make inroads into new buyer segments Cloud computing and pay-as-you go models make it easier for buyers in hitherto underserved segments to gain access to enterprise class technology – Approximately 38% of all global services contracts with cloud delivery in scope were awarded by enterprises with less than US$500 million in revenues – Along with traditional leaders in global services adoption such as Banking, Financial Services, and Insurance (BFSI), healthcare and life sciences, government and non-profit sectors are also driving cloud adoption in global services. The government sector accounts for 14% of all global services deals with cloud delivery in scope, while the non-profit sector accounts for another 6% Copyright © 2012, Everest Global, Inc. 6 EGR-2012-4-R-0682a
  7. 7. Insight #2: Service recipients ask for cloud as a part of theirtransformation agendaBoth service recipients and service providers see transformational value in cloud delivery models Transformation features as a prominent theme in most enterprise deals with cloud delivery in scope – Infrastructure transformation and modernization as the dominant theme was seen in 53% of all such deals From a service recipient’s perspective, cloud delivery models allow for greater flexibility and go hand-in-hand with widespread infrastructure virtualization and consolidation – Often the infrastructure transformation agenda serves as a precursor to rationalization and upgrade of fragmented and legacy application portfolios Service providers also capitalize on the transformational potential of cloud delivery models as buyers ask for more (e.g., more and more effective innovation, value beyond traditional labor arbitrage) – Service providers are making significant investments to develop standardized cloud solutions to enable them to offer transformational value with relatively shorter deployment and implementation cyclesCloud services yield flexibility and cost benefits across a diverse variety of environments Within the infrastructure transformation agenda, cloud delivery models are being deployed across a wide variety of environments – Many enterprises are prioritizing workloads with high variability, e.g., testing and development, to quickly capture benefit from cloud (73% of all cloud related deals with infrastructure transformation as the dominant theme) – However, cloud solutions are also being deployed for production and data continuity environments Cloud delivery models are also being deployed as a part of the application transformation agenda – As many as 54% of application transformation cloud deals involve porting of custom business applications to a cloud environment – Productivity suites and ERP (22% each) comprise other important areas of cloud-driven transformation Copyright © 2012, Everest Global, Inc. 7 EGR-2012-4-R-0682a
  8. 8. Insight #3: Service providers blend emerging cloud serviceswith traditional models to provide integrated solutions for theenterpriseService providers are driven by their legacy to define their roles within the cloud paradigm Mostly MNCs such as HP and IBM are providing end-to-end stacks, combining hardware, software, hosting, and management services through a cloud delivery model that complements ongoing traditional delivery in the large enterprise as well Asset light players with a consulting and professional services heritage are investing in partnerships with hosting providers to enable cloud infrastructure solutions, coupled with strong capabilities in integration, customization and cloud environment management Pure play cloud service providers are most often providing specific solutions to date as they adopt to different business and go-to-market models with large, global enterprise solutioning requirements. However, many are making the right moves to build skills and alliances to target the enterprise service landscapeService recipients prefer to customize standard solutions, with a single provider responsible for integrateddelivery Service recipient prefer enterprise solutions with standard components that can be assembled utilizing reference architectures into an integrated delivery model – 63% of deals with cloud delivery in scope involved customization of such standard solutions rather than ground- up solution development Where cloud is a part of integrated enterprise service delivery and the scope involves management and professional services for the cloud environment, service recipients prefer the solution “owner” to provide these services – Only 8% of deals with cloud management services in scope involved implementation of third-party solutions – Only 5% of all such deals were exclusive of solution development/customization or hosting services; i.e., comprising pure professional services scope Copyright © 2012, Everest Global, Inc. 8 EGR-2012-4-R-0682a
  9. 9. Contents Overview – Cloud engagements Cloud trends Deal spotlight Appendix Copyright © 2012, Everest Global, Inc. 9 EGR-2012-4-R-0682a
  10. 10. Cloud adoption is rapidly gathering momentum within theenterprise ITO marketTrend in cloud related global service deals2011; Number 100% = 113 73 H1 35% 40  Despite an overall decrease 65% in the volume of globalH2 sourcing activity, the proportion of ITO deals with cloud elements doubled in H1 H2 H2 2011, as compared to H1Trend in global service deal signings  We believe that this2011; Number represents initial signs of a secular trend of high-paced 100% = 1,947 1,047 enterprise cloud adoption as 900 part of ITO deals Proportion of enterprise ITO deals with cloud elementsH2 46% 54% H1 (2011) H1 = 4% H2 = 8% H1 H2Source: Everest Group (2012) Copyright © 2012, Everest Global, Inc. 10 EGR-2012-4-R-0682a
  11. 11. Transformational scope, deployment of proprietary solutions,and higher onshore involvement leads to higher deal valueand duration for cloud leveraged dealsAverage TCV of deals1 Average deal duration2011; US$ million 2011; Number of months 168 95 68 60 With cloud Without cloud With cloud Without cloud Cloud technology is being increasingly leveraged by service providers to bolster their clients’ transformation programs Such transformational deals tend to be significantly larger than “run-the-business” ITO deals and are inherently more difficult to offshore Further, deals that include implementation or customization of proprietary cloud solutions can potentially command a price premium over “run-the-business” deals 1 Deals with TCV>= US$5 millionSource: Everest Group (2012) Copyright © 2012, Everest Global, Inc. 11 EGR-2012-4-R-0682a
  12. 12. Enterprise cloud solutions are being adopted as a part of ITOdeals, with IaaS solutions leading cloud adoptionServices scope in deals with cloud delivery Cloud layers in scope2011; Number 2011; percentage of deals 100% = 113 74% BPO ITO+BPO 3% 4% 24% 9% 93% ITO BPaaS SaaS IaaS Enterprise cloud adoption is driven largely by infrastructure-as-a-service (IaaS). Though many enterprises continue to experiment with piecemeal SaaS implementations (e.g., back-up, and temporary storage), they are not classified as enterprise adoption While standalone PaaS adoption within a services context is rare, we believe middleware is an integral part of these deals, whether delivered on a “as-a-service” or traditional model Healthcare vertical (healthcare records etc.) is driving the adoption of business process-as-a-service (BPaaS) 1 Deals with TCV>= US$5 millionSource: Everest Group (2012) Copyright © 2012, Everest Global, Inc. 12 EGR-2012-4-R-0682a
  13. 13. Contents Overview – Cloud engagements Cloud trends – Cloud deployment trends – Buyer adoption – Provider roles Deal spotlight Appendix Copyright © 2012, Everest Global, Inc. 13 EGR-2012-4-R-0682a
  14. 14. From a global service perspective, transformation ofinfrastructure is the major driver of cloud adoption acrossenterprisesDriver of cloud adoption Driver of cloud infrastructure transformation2011; percentage of deals 2011; Number of deals 100% = 60N = 113 53% Includes application transformation 18% 28% 23% 82% Application Application Infrastructure Core infrastructure transform implementation transform transformation Buyers believe that the existing legacy infrastructure is unable to cope with business demands and, thus, are looking for alternatives. Global service providers are leveraging cloud solution and services to assist in this transformational journey Cloud model is also leveraged to improve application landscape. Buyers are implementing native cloud applications as well as transforming their existing legacy application environment through cloud delivery However, meaningful application transformation in the cloud, is usually accompanied by a significant transformation of the underlying infrastructure 1 Analysis includes multi-tower deals; sum of column percentages may not add up to 100Source: Everest Group analysis Copyright © 2012, Everest Global, Inc. 14 EGR-2012-4-R-0682a
  15. 15. Cloud is helping the buyers in creating a flexible and scalableinfrastructure environment, many buyers are even portingproduction systems to the cloudDriver of cloud adoption Typical role of cloud infrastructure2011; Number of deals 2011; percentage of deals N = 60 100% = 113 73% Other 33% 47% Infrastructuredeployment 53% 23% transformation Test/ Test/ Data continuity Development Development environment and production environment Along with the concomitant cost benefits, buyers see value in the flexibility and ability to scale computing resources up or down by deploying cloud solutions Workloads with significant variability in computing resource requirements are moved to the cloud to reduce average consumption by “right-sizing” infrastructure; testing services are one such exampleSource: Everest Group analysis Copyright © 2012, Everest Global, Inc. 15 EGR-2012-4-R-0682a
  16. 16. Transformation and implementation of business application isa major component across cloud service engagementsApplications included in cloud engagements2011; percentage of deals  Buyers are leveraging cloud applicationN = 113 delivery to increase the value they provide to their clients and partners by enhancing their business applications Business 54%applications  The typical challenges in ERP provisioning for development still persist. Cloud delivery is allowing the buyers to create agileProductivity 22% infrastructure and provisioning mechanism for ERP  Productivity applications provide a “low risk” ERP 22% cloud experiment and have an early mover advantage that drives their adoption  IT department is yet to leverage cloud delivery IT 2% and therefore presents significant opportunity (e.g., IT management in a SaaS model, testing tools, application packaging, and data continuity tools)Source: Everest Group analysis Copyright © 2012, Everest Global, Inc. 16 EGR-2012-4-R-0682a
  17. 17. Apart from implementation of cloud applications, the clouddelivery model has a significant role in transforming existingapplication portfoliosCloud application engagements – transformation and implementation2011; Number of deals100% = 26 100% = 58 32Application Applicationtype provider Custom 35% 41% ISVapplications Application Application 45% transformation 55% implementation Standard 65% Serviceapplications 59% provider There is a significant demand to transform the landscape across application types, leveraging cloud delivery. We believe this will also drive demand for consulting and higher value-added global services For implementation, service providers that own cloud applications stand to benefit. Many service engagements require these providers to transform existing applications by deploying their own cloud solution, and subsequent engagements may also lead to implementation of ISV applicationsSource: Everest Group analysis Copyright © 2012, Everest Global, Inc. 17 EGR-2012-4-R-0682a
  18. 18. Contents Overview – Cloud engagements Cloud trends – Cloud deployment trends – Buyer adoption – Provider roles Deal spotlight Appendix Copyright © 2012, Everest Global, Inc. 18 EGR-2012-4-R-0682a
  19. 19. Along with traditional markets such as North America and theUnited Kingdom, APAC is emerging as an attractive marketfor cloud adoption in global services Average deal value (all ITO and BPO deals with cloud delivery); US$ million % of total number of deals (all ITO and BPO deals with delivery); N = 113 Though Europe reports a large proportion of deals, average opportunity size is 208.4 likely to be lower 185.8 20% 32% 49.4 25% North America and the UK 107.2 17% continue to drive adoption APAC is emerging as an attractive market with cloud solution elements being a part of relatively large dealsSource: Everest Group (2012) Copyright © 2012, Everest Global, Inc. 19 EGR-2012-4-R-0682a
  20. 20. Cloud adoption is driven by buyers at opposite ends of thesize spectrum; there is little adoption within the US$2-10billion revenue class % of deals with cloud delivery (buyer revenue < US$0.5 billion) % of deals with cloud delivery (buyer revenue US$2-10 billion) % of deals with cloud delivery(buyer revenue US$0.5-2 billion) % of deals with cloud delivery (buyer revenue >US$10billion) 27% 40% 24% 33% 13% UK Europe 31% 20% North America 10% 33% 63% 6% 23% 23% APAC 15% 38%  Smaller buyers are gaining access to enterprise class technology with little capital expenditure by leveraging the cloud  Large enterprises leverage cloud technologies as a part of the transformation process to drive simplified and uniform processesSource: Everest Group (2012) Copyright © 2012, Everest Global, Inc. 20 EGR-2012-4-R-0682a
  21. 21. While industry verticals with traditionally high ITO/BPOpenetration drive cloud adoption, government and non-profitsectors represent significant opportunitiesIndustry adoption of cloud services Verticals leading cloud adoption2011; percentage of dealsN =113 Government 14% Manufacturing 14% Retail and distribution 11%  Industries with mature global services Services 11% program see potential in cloud delivery and are demanding Healthcare and life sciences 10% transformational solutions from service providers as they seek to Banking, financial Services, and insurance 10% generate the next layer of value beyond labor arbitrage Non-profit 6%  Government and non-profit sectors Energy and utilities 5% (e.g., education) are early adopters of cloud principles in terms of using Electronic and hi-tech 4% SaaS based cloud solutions. Given their experience with cloud, they are Travel and transport 4% willing to experiment with it even in a global service context Telecom 3% Others 8%Source: Everest Group (2012) Copyright © 2012, Everest Global, Inc. 21 EGR-2012-4-R-0682a
  22. 22. Single tower deals across infrastructure and applicationsdrive cloud adoption in the enterprises Tower bundling within ITO deals with cloud delivery 2011; Number of deals 47 44 4 towers 9% 14% 3 towers 11% 2 towers 30% 86% 1 tower 51% Infrastructure Application outsourcing outsourcingBuyers prefer to have a simple global service engagement that includes cloud delivery. Though, cloud is one of thecomponents of the overall engagement, buyer preference for simpler engagements indicates that they are still in theearly stages of adoption Note: Application towers consist of application development and maintenance. All other towers (e.g., system integration, and package implementation) are merged in these two towersSource: Everest Group (2012) Copyright © 2012, Everest Global, Inc. 22 EGR-2012-4-R-0682a
  23. 23. Cloud solution elements are most commonly delivered as apart of datacenter management and infrastructuretransformation dealsDistribution of towers in cloud engagements2011; percentage of dealsN =113 Includes ERP implementation, ERP maintenance, other 33% package implementation and system integration deals 17% 15% 15% 14% 11% 7% Datacenter Network End-user Helpdesk Application Application Other computing development maintenance At the current stage of market and technology evolution, the business case for cloud implementation is most favourable within the context of infrastructure modernization Within the global services market, cloud implementation is viewed as a transformational tool, and not as an end in itself. As such, cloud solution elements figure most commonly in deals involving elements of server consolidation, mass virtualization, and overall infrastructure modernization 1 Analysis includes multi-tower deals; sum of column percentages may not add up to 100Source: Everest Group (2012) Copyright © 2012, Everest Global, Inc. 23 EGR-2012-4-R-0682a
  24. 24. Contents Overview – Cloud engagements Cloud trends – Cloud deployment trends – Buyer adoption – Provider roles Deal spotlight Appendix Copyright © 2012, Everest Global, Inc. 24 EGR-2012-4-R-0682a
  25. 25. Cloud service providers perform a variety of roles acrossvarious stages of transformation  Provider hosts buyer’s cloud solution on its own datacenters Host  The provider may or may not own the assets on its books  By definition, cloud application (SaaS) and infrastructure hosting providers will generally perform this roleConsult Typical consulting role Design Build/customize performed by a provider  Provider offers design services before selection and  Build-up of a for cloud solutions. implementation of a cloud ground-up cloud  Typically needed when a cloud solution solution (generally solution is built ground-up for a Generally includes roadmap, infrastructure) for a specific buyer strategy, readiness specific buyer  Design and build solution elements assessment, cloud selection,  Customization and are usually combined etc. implementation of  Typically, provided by players with Can be performed by typical industry standard deep technology legacy and global service provider or IT solution in-house solutions and management consulting firms  Service provider offers pure management of cloud applications. Manage  Includes service integration and orchestration, “lights-on,” and other management activities (e.g., testing the cloud)  Typically, provided by pureplay service providers that do not own in-house solutions Copyright © 2012, Everest Global, Inc. 25 EGR-2012-4-R-0682a
  26. 26. Global services providers perform multiple roles in a clouddelivery engagementRoles played by cloud service providers12011; percentage of deals Increasing role of global service providers in the cloudN =113 74% 54% 43% 26% Build Customize Host Manage Most of the service providers offer cloud management services as management contracts tend to lead to longer contract duration. Moreover, buyers believe that service providers are better suited to manage a new delivery model With most ITO-related cloud adoption occurring in the IaaS space, there is a clear buyer preference to engage with providers who offer hosting services Providers with in-house cloud solutions offer customization services of their offerings and it is fairly evident that the buyers prefer these providers. A template-based standard cloud solution is easier to customize, implement, and manage, which reduces the overall overhead and time to deploy 1 Analysis includes multi-tower deals; sum of column percentages may not add up to 100Source: Everest Group (2012) Copyright © 2012, Everest Global, Inc. 26 EGR-2012-4-R-0682a
  27. 27. Service providers with strong in-house solutions are morelikely to seize cloud-related ITO/BPO opportunities…Distribution of cloud solutions Buyer preference for building and customizing cloud2011; Number of deals 2011; Number of deals 100% = 58 100% = 78Third-party solutions 17% Build 37% Customize 63% 83% In-house solutions Buyers are more comfortable with service providers who can provide the full portfolio of services, and have existing in-house solutions Within the current state of industry maturity, buyers are more comfortable customizing existing solutions, rather than building a ground-up solution – Buyers see value in a standard solution, as they seek to consolidate fragmented legacy portfolios – Further, buyers prefer to customize existing solutions, as such implementation exercises tend to be less expensive, require lower deployment time, and involve lower riskSource: Everest Group (2012) Copyright © 2012, Everest Global, Inc. 27 EGR-2012-4-R-0682a
  28. 28. …as pureplay cloud management/consulting opportunities areseldom independent of implementation or hostingrequirementsCloud management and other roles of service providers2011; Number of deals 100% = 113 Cloudmanagement not in deal scope 80% Smaller opportunity for pureplay 26% 63% consulting/management services 48% 74% 8% 5% Includes build/ Includes Includes Includes third- Excludes build/ Cloud customize host consult/ party solution customize/host management design implementation in deal scope Solution implementation lies at the heart of the ITO/BPO cloud opportunity; service providers that own the solution are naturally leading contenders for the cloud management opportunity In the absence of industry standard solutions, service providers who own proprietary in-house offerings, sophisticated system integration and professional services capabilities are likely to be more successful in providing end-to-end cloud solutions within the global services marketSource: Everest Group (2012) Copyright © 2012, Everest Global, Inc. 28 EGR-2012-4-R-0682a
  29. 29. The ability to provide an in-house technology stack solution,along with evolved hosting capabilities, is helping MNCservice providers make inroads into the cloud marketDistribution of cloud solution implementation MNCs and offshore provider cloud engagements2011; Number of deals 2011; Number of deals 100% = 113100% = 62 13 In the absence of Offshore providers Hosted by in-house solutions 31% 6%buyer / third-party and evolved hosting capabilities, most 77% offshore service providers rely on Hosted by partnerships 69% service provider 23% 94% MNC providers In-house solution Third-party solution Within the current global services context, cloud solutions are being implemented largely as part of infrastructure transformational deals – MNC service providers with expertise in asset-based deals, and proprietary solutions are in pole position to capitalize on the market opportunity, as they are able to provide an integrated solution across the consult-to-manage spectrum Offshore providers are yet to develop the transformational expertise that is expected from a cloud service provider. Though they are leveraging cloud solutions during execution of outsourcing engagements, cloud is not a central element in most of their contracts Over the long term, we expect offshore players to become more competitive as they invest in partnerships with technology providers (or their own solutions) – Further, with the evolution of industry standards, the importance of proprietary solutions could diminish. Coupled with the commoditization of infrastructure, and adoption of cloud solution elements in non-transformational deals, global delivery models could become an important value proposition over the long termSource: Everest Group (2012) Copyright © 2012, Everest Global, Inc. 29 EGR-2012-4-R-0682a
  30. 30. Contents Overview – Cloud engagements Cloud trends Deal spotlight Appendix Copyright © 2012, Everest Global, Inc. 30 EGR-2012-4-R-0682a
  31. 31. Everest Group framework explores key enterprise cloudadoption based on four key parameters Buyer value  What is the overall value of cloud solution and services on buyer’s IT landscape?  Will the engagement create a meaningful impact on the business of the client?Market impact Capability assessment Will this impact the competitive  Has the provider deployed an landscape in terms of newer in-house solution, partnered with offerings, engagement models, providers, and developed solution Deal spotlight pricing, etc.? grounds up? Is the engagement indicative of  In-house technology, services, acceptance of cloud principles in an differentiators, integration, industry, geography, and business investments, complexity, challenges, function? etc. Provider benefits  Will the engagement enable the provider to further penetrate existing/ acquire newer clients with cloud solutions and services  Will the market view the provider as a capable partner for cloud transformation? Copyright © 2012, Everest Global, Inc. 31 EGR-2012-4-R-0682a
  32. 32. Telenor Sweden-CSC: Implementation of BizCloud – CSC’son-premise private cloud solution (page 1 of 2)Summary of scope Deal statistics Follow-on from Telenor-CSC agreement in 2010 Client Telenor Management and modernization of Telenor Sweden’s Service provider CSC billing and CRM systems Implementation and management of on-premise Duration Five years private cloud solution TCV (estimated) US$35 million CSC’s BizCloud offering is the core solution Involves rebadging of Telenor employees Towers included Infrastructure – datacenters Application transformationBuyer value  Buyer value will be driven by migration to a pay-as-you-go model  Implementation of the deal is expected to benefit Telenor by way of simpler provisioning and greater flexibility in reacting to peak requirements  Significant benefits for workloads requiring high peak capacity, e.g., testing services  Telenor envisages higher service levels and faster turnaround for its customers without an increase in costsCapability assessment  The deal with Telenor highlights an important success story for CSC BizCloud, particularly in Europe  The deal demonstrates the viability of CSC’s on-premise, private cloud strategy; for consumer-facing applications, the ability to provide a secure, stable solution is an attractive proposition  CSC’s ability to rapidly implement a secure private cloud solution, with established service levels and pricing, showcases the strength of its solution, as well as its integration capabilities Copyright © 2012, Everest Global, Inc. 32 EGR-2012-4-R-0682a
  33. 33. Telenor Sweden-CSC: Implementation of BizCloud – CSC’son-premise private cloud solution (page 2 of 2)Provider benefits  We expect this deal to help CSC in marketing its BizCloud offering; CSC is likely to position BizCloud as a solution that offers benefits similar to a public cloud solution, but leaves the customer with greater control  Overall CSC’s presence in Europe, particularly, the Nordics, receives a boost from this dealMarket impact  BizCloud is built on Vblock architecture, and deals, such as the one between CSC and Telenor, may provide momentum to Vblock becoming one of the standard configurations in IaaS implementations  We believe that solutions such as CSC’s BizCloud may mature to provide meaningful alternatives to public cloud solutions depending on criteria such as scale, variability in demand, complexity of integration, security, and compliance requirementsAnalyst consensusOne of the deals that signals the emergence of the on-premise private cloud as a viable model for buyers withconcerns about data location and security, but who want to access the benefits of a flexible pay-as-you-go model.The deal is important because it promises significant improvements for Telenor’s subscriber facing processes by wayof standardization, reduced provisioning time, and easier access to applications.The deal is an example of buyers’ preference for templatized, proprietary solutions with standard SLAs and prices,along with the opportunity to start capitalizing on cloud computing benefits after a short implementation cycle. Copyright © 2012, Everest Global, Inc. 33 EGR-2012-4-R-0682a
  34. 34. Astra Zeneca-HCL: Global Infrastructure Transformation(page 1 of 2)Summary of scope Deal statistics Management and transformation of global Client Astra Zeneca datacenters across 60 countries Service provider HCL Technologies Hosting and migration of existing datacenters Management of global collaboration platform Duration Five years Server virtualization TCV (estimated) US$1 billion Storage and backup transformation Hybrid cloud implementation Towers included Infrastructure – datacenter managementBuyer value  Significant value capture through global infrastructure transformation – we expect significant business impact on both CAPEX and OPEX  By implementing hybrid cloud models, Astra Zeneca will be able to build a flexible, scalable infrastructure, with significantly higher asset utilization  Further, we expect significant buyer benefits by way of implementation of globally standardized service levels, and processes, as well as a global delivery platformCapability assessment  Demonstrates HCL’s capabilities in competing with traditional asset-heavy infrastructure outsourcing majors  The deal showcases HCL’s ability to deliver a global transformation program for a large enterprise that involves: – Significant hosting capabilities – Management and transformation of existing datacenters – Ground-up implementation and management of a cloud infrastructure environment  We believe that the deal delivery will significantly leverage HCL’s MyCloud platform – part of it’s MTaaS (management tools as a service) offering – MyCloud platform helps monitor and manage a cloud infrastructure environment, and is partly co-developed with partners such as Computer Associates Copyright © 2012, Everest Global, Inc. 34 EGR-2012-4-R-0682a
  35. 35. Astra Zeneca-HCL: Global Infrastructure Transformation(page 2 of 2)Provider benefits  A competitive win against traditional infrastructure outsourcing majors will enable HCL to showcase its capabilities in bulge bracket IO deals – we expect significant marketing benefits for HCL  We expect the deal to provide further traction to HCL in larger infrastructure transformation deal, especially in EuropeMarket impact  This deal is indicative of the fact that buyers are increasingly facing limitations of traditional infrastructure set-ups  Cloud computing offers them a transformational tool that helps them realize the advantages of scalability and flexibility, along with cost advantages  With increasing maturation of cloud technologies, we expect several such deals, which have buyers implementing global transformation projects with cloud implementation as a core componentAnalyst consensusIncumbent service providers will have to evolve their customers’ infrastructure over the duration of the relationship.Buyers are looking to capture value by building flexible, scalable infrastructure with pay-as-you-go models, and arewilling to move to service providers who can provide such value.While buyers typically tend to prefer standardized proprietary solutions, for complex deployments across large globalenterprises, a ground-up approach is required.HCL’s deal with Astra Zeneca demonstrates the service provider’s maturing capabilities in the infrastructureoutsourcing space, and underlines HCL’s ability to compete against major MNC providers in complex asset-basedinfrastructure deals. Copyright © 2012, Everest Global, Inc. 35 EGR-2012-4-R-0682a
  36. 36. Maersk Line-HP: Global infrastructure, applications, andservices transformation (page 1 of 2)Summary of scope Deal statistics Part of Maersk Line’s streamLINE initiative to optimize routes, Client Maersk Line simplify customer processes, and improve management Service provider HP information systems Global virtualization and private cloud deployment, with migration Duration Five years of four global Maersk Line datacenters in Asia and North America TCV (estimated) US$150 million Global application portfolio consolidation Complete management of end-user computing, and internal Towers included Infrastructure – datacenters, helpdesk across 38,000 users and 100 countries using HP desktops, and helpdesk Workplace platform Application modernization Global service delivery, with rebadging of Maersk Line employeesBuyer value  Like all major transformation programs, we expect significant value for Maersk Line from this deal: – Unlocked value from captive asset base, and cost benefits of private cloud deployment – Standardization of applications and processes – OPEX benefits from global services deliveryCapability assessment  The deal showcases HP’s ability to package and deliver the entire technology stack (hardware assets, software, and services) into a global transformation solution  While the deal is a custom engagement, we expect HP to have taken a modular approach to solutioning. As such, the deal also showcases the success of HP’s investments in infrastructure assets, management platforms, and tools Copyright © 2012, Everest Global, Inc. 36 EGR-2012-4-R-0682a
  37. 37. Maersk Line-HP: Global infrastructure, applications andservices transformation (page 2 of 2)Provider benefits  We see significant marketing benefits for HP, as this deal serves as a validation for the provider’s philosophy of the instant-on-enterprise  Further, this deal is likely to help HP make inroads in the shipping and logistics sectorMarket impact  With global enterprises increasingly listing infrastructure consolidation as one of their key IT priorities, we expect similar deals in the market  Such opportunities are likely to fall to service providers who are able to provide an integrated technology stack  However, one of the key barriers to such deals will be the volume of legacy infrastructure and applications; as the complexity of transformation increases, buyers may feel daunted and grow skeptical of the business caseAnalyst consensusThis deal underlines the growing role of cloud implementation in major transformational deals. Cloud is viewed as astrategic weapon by both service providers and buyers to achieve transformation and deliver greater value throughenhanced flexibility and pay-as-you-go models.The deal also highlights HP’s ability to offer an integrated technology stack as part of a major transformationalsolution. Such opportunities are more likely to be won by service providers who can provide an end-to-end solutioncomprising a global hardware asset base, software and management platforms, and global services. Copyright © 2012, Everest Global, Inc. 37 EGR-2012-4-R-0682a
  38. 38. Contents Overview – Cloud engagements Cloud trends Deal spotlight Appendix Copyright © 2012, Everest Global, Inc. 38 EGR-2012-4-R-0682a
  39. 39. Appendix: Glossary of key terms used in this reportTerm DefinitionIn-house solutions A branded cloud solution of a provider across any cloud layerThird-party solutions A cloud solution implemented by a provider that is owned by either a partner or a third- party providerInfrastructure Core focus is on flexibility, scalability, availability, and resilience of infrastructuretransformation leveraging cloud solutions and services. This may include transforming existing infrastructure, sourcing add-on infrastructure from the cloud, or a combination of bothApplication Core focus is on transforming an on-premise application, business process, or sometransformation fundamental change in an application delivery and architecture. The engagement may or may not focus on infrastructure transformationData continuity In data continuity, core focus is to protect the organization data in terms of creating data recovery, disaster management, data back-up, and related implementationApplication type An off-the-shelf / customized independent software vendor (ISV) application is treated as “standard,” whereas an application specifically built for a buyer is treated as “custom”Application provider In application provider type, an ISV implies the typical product companies (that may ortype may not offer services), a service provider implies the typical global service providers that may also have its own branded cloud solution Copyright © 2012, Everest Global, Inc. 39 EGR-2012-4-R-0682a
  40. 40. Appendix: Additional ITO research referencesThe following documents are recommended for additional insight on the topic covered in this research report. Therecommended documents either provide additional details on the topic or complementary content that may be ofinterest1. Service Provider Cloud Strategies – “As Unique as Everyone” (ERI-2011-4-R-0495a); 2011: This report provides a comprehensive overview of the strategies of global service providers in terms of their focus in cloud ecosystem, challenges they foresee, buyers concerns, expectations from cloud, partnerships, and their future plans to tap the cloud opportunity. The report will be useful for both the buyers to understand strategies of these providers and service providers to understand the broader market2. Social Networks for Global Delivery – Get that ITCH (EGR-2012-4-R-0662); 2012: This viewpoint report analyzes the role of an internal social network for improving the global delivery model. The report discusses challenges and issues in global delivery such as resourcing, collaboration, overheads. It provides a framework for service providers which they can leverage to create their own internal social platforms and augment their delivery models For more information on this and other research published by the Everest Group, please contact us: Ross Tisnovsky, Senior Vice President: ross.tisnovsky@everestgrp.com Chirajeet Sengupta, Practice Director: chirajeet.sengupta@everestgrp.com Yugal Joshi, Senior Analyst: yugal.joshi@everestgrp.com ITO Team: ITOresearch@everestgrp.com Everest Group Two Galleria Tower 13455 Noel Road, Suite 2100 Phone: +1-214-451-3110 Dallas, TX 75240 Email: info@everestgrp.com Copyright © 2012, Everest Global, Inc. 40 EGR-2012-4-R-0682a
  41. 41. About Everest GroupEverest Group is an advisor to business leaders on the next generation of global services with aworldwide reputation for helping Global 1000 firms dramatically improve their performance byoptimizing their back- and middle-office business services. With a fact-based approach drivingoutcomes, Everest Group counsels organizations with complex challenges related to the useand delivery of global services in their pursuits to balance short-term needs with long-term goals.Through its practical consulting, original research, and industry resource services, EverestGroup helps clients maximize value from delivery strategies, talent and sourcing models,technologies, and management approaches. Established in 1991, Everest Group serves usersof global services, providers of services, country organizations, and private equity firms in sixcontinents across all industry categories. For more information, please visit www.everestgrp.comand research.everestgrp.com. Copyright © 2012, Everest Global, Inc. 41 EGR-2012-4-R-0682a
  42. 42. Everest GroupLeading clients from insight to actionEverest Group locations Dallas (Headquarters): info@everestgrp.com +1-214-451-3000 New York: info@everestgrp.com +1-646-805-4000 Toronto: canada@everestgrp.com +1-416-865-2033 London: unitedkingdom@everestgrp.com +44-207-887-1483 Delhi: india@everestgrp.com +91-124-496-1000 www.everestgrp.com | research.everestgrp.com | www.sherpasinblueshirts.com Copyright © 2012, Everest Global, Inc. 42 EGR-2012-4-R-0682a

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