TBR's Cloud Services Research Overview

CLOUD BUSINESS QUARTERLYSM

Technology Business Research Cloud Portfolio
Discussion Document
Spring 2012

TBR
T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C .

TBR

Executive Summary
4 Technology Business Research (TBR) Cloud Research Overview
5 TBR’s Cloud Research Products

TBR’s Public Cloud Market Landscape
7 TBR Public Cloud Market Landscape Overview
10 TBR Public Cloud Market Landscape Examples

TBR’s Cloud Vendor Reports
17 Vendor Report Overview
19 Salesforce.com Examples
21 Google Cloud Examples
23 Microsoft Cloud Examples

TBR’s Cloud Computing Adoption Study
26 Table of Contents
28 Methodology
29 Cloud Computing Adoption Study Examples

2 Technology Business Research Cloud Portfolio – Discussion Document ©2012 Technology Business Research, Inc.

Executive Summary: TBR’s Cloud Services Practice TBR

Executive Summary:
TBR’s Cloud Services Practice


TBR evaluates cloud from all angles to give customers recommendations
and actionable insights to drive customer adoption
TBR Cloud Services Topical Research Areas

Workloads

Competitive
Public Cloud
Landscape

Cloud
Practice

Purchasing Private/
Trends Hybrid Cloud

Partner
Ecosystem


TBR’s cloud portfolio provides insights into to public and private cloud
vendor business models, trends, and adoption behaviors
TBR Cloud Services Research Products
Who is winning in What and why are
public cloud? customers buying?
• 35+ cloud vendors Vendor Purchasing • SaaS, PaaS, IaaS, SECa
• Total cloud market Reports Studies aS Adoption
sizing • Purchase scenarios
• Key trends and • Buying criteria
scenarios • Customer Satisfaction
Public Cloud Public Cloud
• Segments and
Region breakouts
Market Adoption
Landscape Studies

How do cloud leaders Who is buying
build their business? Private/Hybrid private/hybrid clouds
• Cloud Strategy Cloud Vendor Cloud and how?
(Public, Private and Reports Purchasing • Purchasing scenarios
Services Portfolio) Studies • Buying criteria
• Revenue and • Roles and
Profitability relationships
• GTM, Resource • Customer Satisfaction
Management and
Sales Tactics


TBR

TBR’s Public Cloud Market Landscape and
Example Slides


TBR’s Public Cloud Market Landscape TBR
Cloud computing is a viable business model, driving growth within
traditional hardware, software, telco and services businesses
TBR Public Cloud Market Landscape Research Objective
With the quarterly Public Cloud Market Landscape Reports, TBR will deliver research focused on performance by
segment and geography empowering clients to focus offerings and routes to market in support of companies that
deliver the most value, and thus profit.

Public Cloud Business Models are Maturing Key Areas of Focus:
• Those vendors that succeed in elevating customer • How are leading and emerging cloud vendors
usage of public cloud offerings to a strategic level performing across segments and workloads?
will own both customer loyalty and “share-of- • What business models and vendor strategies are
wallet” in the cloud for the foreseeable future. succeeding in revenue growth?
• Organizations adopting public clouds and related • What are key trends in the vendor landscape?
services seek what all buyers of IT want – clear ROI, • Segments:
minimal disruption and security risks, and simple
• Software-as-a-Service (SaaS)
implementation.
• Platform-as-a-Service (PaaS)
• “Trusted partners” to those end-users will utilize
comprehensive product portfolios that transition • Infrastructure-as-a-Service (IaaS)
customers from ad hoc, early stage individual • Revenue and growth analysis overall and by
offering purchases to strategic corporate-level segment:
purchasing. • Public cloud revenue
• % change
• Absolute change (revenue)
• Geographic Analysis
• Key Alliances and Acquisitions

TBR’s research targets key public cloud deployment scenarios to
determine the drivers of customer adoption and innovative vendors
TBR Public Cloud Market Landscape: 37 Covered Vendors
Amazon AWS Salesforce.com
AT&T SAP AG
BMC CenturyLink (Savvis)
CA Technologies
Cisco
Citrix
GoGrid
Symantec
Verizon + Terremark
VMware
Wipro
SaaS
Google Zoho
HP Box
IBM Dell
Informatica Enomaly
Intuit
Microsoft
TWC (Navisite)
Workday
ServiceNow
Fujitsu
PaaS IaaS
NetSuite EMC
Dimension Data (OpSource) CSC
Oracle Joyent
Rackspace Equinix
Redhat

TBR’s Public Cloud Market Landscape provides actionable insight based
on vendor activity, competitive benchmarks and scenario analysis
The TBR Public Cloud Market Landscape Includes:
Executive Summary
TBR Position Growth & Revenue Leaders
Key Findings and Trends Geographic Overview
Segment View Key Alliances & Acquisitions

Scenario Discussion: Scenario Discussion: Scenario Discussion:
Infrastructure-as-a-Service Software-as-a-Service Platform-as-a-Service
Growth & Revenue Leaders Growth & Revenue Leaders Growth & Revenue Leaders
Scenario Analysis Scenario Analysis Scenario Analysis
Resource Management Resource Management Resource Management
Key Alliances & Acquisitions Key Alliances & Acquisitions Key Alliances & Acquisitions

Geographic Discussion
Americas, EMEA, APAC



Public Cloud Market Landscape
Third Calendar Quarter 2011

Publish Date: Jan. 17, 2012

TBR

Customer cloud spending increased across verticals and geographies,
despite economic concerns, and TBR projects 23% growth through 2012
TBR Estimated Public Cloud Revenue
Aggregated TBR Public Cloud Landscape Revenue and Growth
$45
$43.00 Total
Estimated Public Cloud Revenue (in $ Billions)

TBR’s Public Cloud Market Landscape covers 35 vendors.
$40 Public
The 3Q11 Public Cloud Market Landscape includes revised revenue total Cloud
$33.00
$35 for the covered vendors going back to 1Q10 based on both additional Market
insights and net new vendors covered. Vendors added in 3Q11 include
$30 CenturyLink, Dimension Data, EMC, Equinix, and Fujitsu.
$23.00
$25

$20 $18.10
42% year-to-year quarterly growth Public
$15 Cloud
$12.86
$10.31 Market
$8.58 $9.24 $9.88
$10 $7.26 $7.92 Revenue
$5.98 $6.44
in TBR’s
$5 $3.07 $3.17 $3.19 $3.81 $4.14
$2.41 $2.68 covered
vendors
$-
3Q10 4Q10 1Q11 2Q11 3Q11 Fst 4Q11 Est 1Q12 2010 Est. 2011 Est. 2012
Calendar Quarter Calendar Quarter
Calendar Year
TBR Public Cloud Market Covered in the Cloud Market Landscape Report TBR Public Cloud Market Estimate

SOURCE: COMPANY DATA; TBR ESTIMATES


At just over half of TBR’s total covered public cloud market revenue, Intuit,
Microsoft, and Salesforce.com show the potential for cloud run rates

Estimated TBR Public Cloud Market Landscape Vendor and Aggregated Segment Revenue Totals
TBR Equinix
$4,500 EMC
TBR covers 35 companies
Estimated Public Cloud Revenue (in $ thousands)

Fujitsu
ServiceNow
$4,000 across all public cloud Workday
segments and geographies Enomaly
Dell
$3,500 Box
Zoho
Wipro
VMware
$3,000 Intuit Verizon + Terremark
Symantec
CenturyLink (Savvis)
$2,500 SAP AG
Salesforce.com
Redhat
$2,000 Microsoft Rackspace
Oracle
Dimension Data (OpSource)
NetSuite
$1,500 TWC (Navisite)
Microsoft
Salesforce.com Intuit
$1,000 Informatica
IBM
HP
$500 Google
GoGrid
Citrix
Cisco
$0
CA Technologies
2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 Fst 4Q11 BMC
AT&T
Calendar Quarter Amazon AWS



The public cloud “gold rush” continues, driving ongoing pure-play
double-digit growth and cross-industry new entrants
TBR 3Q11 Estimated Public Cloud Revenue Growth vs. Corporate Revenue Growth
Dell* Traditional vendor offering public cloud through acquisitions and R&D
130% CA Technologies are still small, but are experiencing rapid growth in the segment.
Hosting and telecom providers are accelerating
Year-to-year Public Cloud Revenue Growth

public cloud entry, building a cohort within TBR’s
110% public cloud benchmarked vendors. ServiceNow
Verizon + Terremark
Rackspace
90% CenturyLink (Savvis) Dimension Data (OpSource)
Workday
Enomaly
VMware GoGrid
AT&T
70% Box
Amazon AWS
IBM
BMC Pure play public cloud vendors
Oracle continue to experience high,
50% Redhat
Wipro
HP
Symantec
double-digit growth as customers
Microsoft across business segments
Zoho
30% EMC Google Salesforce
increasingly adopt public cloud
Fujitsu solutions and incorporate them
SAP into core operations.
TWC (Navisite) Early public cloud vendors AWS and
10% Intuit Citrix Informatica Salesforce.com sustain their size and
Cisco growth through expanded offerings.
-10% 10% 30% 50% 70% 90% 110%
-10% NetSuite

Key:
*TBR does not recognize public cloud revenue from Dell
Year-to-year Corporate Revenue Growth Weighted Unweighted
prior to 1Q11.


Vendors with public SaaS as a significant part of their portfolios are
experiencing the most rapid overall growth
Corporate Revenue Growth vs.
TBR Estimated Public Cloud SaaS Revenue Growth
140%
Dell
Year-to-year Public Cloud SaaS Revenue Growth (%)

Pure-play
120%
vendors

ServiceNow
100%
Workday

80%
Fujitsu
CA Technologies Google Box
IBM
60%
BMC Zoho
Oracle Weighted
HP Symantec Average
40% Microsoft Key
Absolute
Salesforce.com
Average
TWC (Navisite) VMware
20% Intuit SAP

Cisco Informatica
Citrix
0%
-10% 10% 30% 50% 70% 90% 110%
Year-to-year Corporate Revenue Growth (%)

• Pure-play SaaS vendors such as Box, Workday and ServiceNow continue to lead in both cloud and corporate
revenue growth as demand for point solutions continues to increase.
• More experienced cloud and traditional virtualization vendors, such as VMware, Google and
Salesforce.com, experienced comparable public cloud and corporate growth patterns as rapidly growing public SaaS
solutions comprise larger portions of their overall revenue than competitors.


Public cloud vendors are beginning to address the European security
conundrum by building datacenters in the region
EMEA 3Q11 Summary

Key Insights Vendor Activities
• Although many vendors are • Despite EU security concerns, many
looking to expand into EMEA with vendors are establishing a physical
their public cloud portfolios, presence in EMEA, launching many
security remains a large concern new datacenters.
for the EU, and regulations are • In 3Q11 Amazon launched a
hindering adoption in the region. datacenter in Stockholm, Google
• European cloud vendors are launched a datacenter in Dublin, and
building datacenters across Salesforce.com announced plans to
Europe to keep data local – build a datacenter in London in 2012.
addressing customer concerns • In an announced partnership with
about cloud security and Capgemini, Microsoft will gain a new
TBR’s estimated accelerating adoption. outlet to deploy its Azure platform in
public cloud market • South Africa is a growing EMEA, with plans to expand into an
across covered customer of public cloud additional 22 countries.
vendors in EMEA computing, as the country is more • Rackspace launched its European
revenue increased economically stable and cloud initiative in early 2011 and is
46% year-to-year. technologically advanced than its expanding its presence in the region.
neighbors. The nation has
recently joined Brazil, Russia,
India and China in the economic
block known as BRICs.


TBR

TBR’s Cloud Vendor Reports and Examples


TBR’s Cloud Vendor Reports TBR
TBR’s cloud reports cover all aspects of vendors’ cloud strategies to
enable subscribers to better understand and compete in the market
Cloud Business Quarters Reports and Report Structure:
1Q/3Q Reports Initial Response: 5-7 pages Report: 15-20 pages
IBM Cloud Timing: Timing:
Amazon AWS Within 48 hours of companies’ Within 20 business days of
ServiceNow earnings announcements companies’ earnings announcements
Verizon + Terremark Includes: Includes:
• TBR Position • TBR Position
Rackspace
• SWOT Analysis • Strategic Outlook and Overview
2Q/4Q Reports
• Financial Model Assessment • SWOT Analysis
Google Cloud • Go-To-Market Strategy • Scenario Discussion
Salesforce.com • Resource Management • Financial Model Assessment
Microsoft Cloud Strategy • Segment and Landscape Analysis
Oracle Cloud • Go-To-Market Strategy
• Sales Discussion
• Resource Management Strategy
• Geographic Analysis
• Alliances, Acquisition, and
Portfolio Discussions



Highlights from Recent
TBR Cloud Business Quarterly Deliverables

TBR

Salesforce.com: TBR’s Cloud Vendor Reports TBR
Salesforce.com is expanding its customer base and diving into the social
enterprise, but expenses will continue to outweigh revenue in 2012
TBR Position Company Objectives
Salesforce.com’s bet that volume will outweigh Scale customer base to gain market share and enable increased cross-
expenses is a good strategy to increase market and upselling
share, but the company is not making up Salesforce.com is among the largest SaaS vendors and constantly seeks
enough ground in volume to sustain added scale. The company will focus on growth over profit as it builds a
profitability. TBR believes the company will not stable base to upsell and cross-sell, betting that volume will outweigh
slow its growth rate – or turn a profit – until expenses in coming years.
2013. Differentiate and add value to solutions to retain customers and
In 4Q11, Salesforce.com achieved stellar year- increase share of wallet
to-year growth of 38% to $632 million, but As SAP, Oracle and Microsoft enter the cloud market, Salesforce.com
reported an operating loss of $6 million. An differentiates its solutions with CRM and SFA to add a “social” layer. In
operating loss for a fifth consecutive quarter 2012, it will increasingly expand into the social enterprise. Although
begs the question: How far will Salesforce.com Salesforce.com has historically focused on growing one product at a
go to sustain such high growth? With year-to- time, as it did with CRM, Force.com and Chatter, TBR believes the
year quarterly growth averaging 37% across launch of the social enterprise product family will be successful but
2011, and a $3 billion 2012 run rate target, TBR expensive due to acquisition and integration costs along with increased
believes Salesforce.com will sustain high growth sales headcount and training.
but at the cost of profitability. Sales and
marketing expense growth dramatically Gain early-to-market success in the social enterprise
outpaces customer growth, at 41% and 9%, Salesforce.com caters to customers’ social interest by spearheading the
respectively, indicating churn and increased deal social enterprise trend along with Google, Microsoft and Zoho. The risk
sizes (primarily due to larger deals). As is that social enterprise capabilities are sold at lower price points than
Salesforce.com ramps up social enterprise traditional enterprise solutions, making volume the key to success.
solutions, it will continue increasing sales and In 4Q11, Salesforce.com generated 40% of new business outside of
marketing expenses to gain market share. CRM, signifying success in other areas, such as ServiceCloud and
Radian6.


Salesforce.com: TBR’s Cloud Vendor Reports TBR
A focus on customer and portfolio expansion, rather than profitability,
will increase Saleforce.com’s share in the crowding cloud market
TBR Assessment of Salesforce.com’s two-year strategic outlook
Key Takeaways Strategic Outlook
• Salesforce.com leveraged a disruptive
Financial: Salesforce.com’s fifth consecutive quarter of
unprofitability indicates its lack of a sustainable profitability technology, SaaS, to differentiate itself and enter
expansion strategy; however, the company’s growth strategy the market, and its success fueled competition.
has been successful, evidenced by record revenue growth in Expanding outside of its core CRM market and
4Q11. continuing to differentiate its portfolio are
essential to long-term growth and success
Go to Market: In 2011, Salesforce.com focused on selling into against competitors.
new verticals, such as the public sector. In 2012, the company • Salesforce.com will continue to see high revenue
will expand its portfolio to increase share of wallet and will growth in 2012 as its social enterprise portfolio
attract new customers looking to leverage cloud benefits. gains traction and solutions continue to launch.
Resource: Salesforce.com is investing to rapidly expand into • Expanding into the social enterprise enables
the public SaaS and PaaS markets before it is saturated by Salesforce.com to increase share of wallet by
vendors such as Microsoft, Oracle, SAP and Zoho. offering solutions to its large and existing
SALESFORCE.COM NET REVENUE, GROWTH, customer base. The company’s social enterprise
TBR OPERATING MARGIN AND PROJECTIONS has expanded from CRM into marketing, social
Net Revenue Growth Year-to-year

$3,500,000 50%
Net Revenue, In $ Thousands

$3,000,000
38.4% 38.3% 36.8%
40% Dashed
media, social networking, human capital
33.8%
$2,500,000
31.5%
26.9%
21.7% 30% line management, services and support, sales and
36.2%
$2,000,000
29.0% 20% represents finance and will it continue moving further into
$1,500,000
10% operating the back office.
$1,000,000
0%
at • TBR believes the company will focus on its
$500,000
breakeven
$0 -10% recently released products through 2012 and will
4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2010 2011 2012
Est. Est. look to further penetrate the back-office market,
Revenue Revenue Growth Year-to-year Operating Margin namely in human capital management, finance
NOTE: Annual revenue and projections are for calendar 2010-2012, respectively.
SOURCE: SALESFORCE.COM AND TBR and supply chain, in 2013.

Google: TBR’s Cloud Vendor Reports TBR
Google Apps will benefit from narrowing its strategic focus to the social
enterprise, but faces stark competition from Microsoft and IBM in 2012
TBR Assessment Cloud Business Strategic Objectives
Google Apps grew an estimated 25% year-to-year in 4Q11, Drive competition in the productivity space, particularly with
and will continue to accelerate adoption in the cloud- Microsoft Office365, for customers seeking cloud-based,
based productivity space; however, even with high collaborative solutions and embracing the social enterprise
adoption rates compared to peers, the company is barely In TBR’s Winter Cloud Adoption Study, Google Apps’ 28%
monetizing its Apps portfolio. adoption rate was higher than Microsoft Office365’s rate of
Google is marketing its cloud business as the “social 24%. TBR estimates Google Apps is growing 25% year-to-year
enterprise,” spurred by the dramatic shift from static and believes that as businesses move toward the social
desktop applications to social and collaborative cloud- enterprise, adoption and revenue growth will increase.
based productivity suites. Similar to Chatter launching Google is shuttering unsuccessful products to refocus
Salesforce.com into the social enterprise space, Google is resources on core areas of mobile, social and the cloud
promoting its cloud business (Google Apps, Google App
Engine and Google+) not only as cost-effective but also as Google CEO Larry Page announced the shutdown of 12
more mobile, social and collaborative than Microsoft products during the 4Q11 earnings call, but product teams
Office365 and IBM Lotus Notes. will remain intact to focus on more successful and growing
areas, such as Google Apps, Android and Google+.
Social Enterprise Although Apps represents a small portion (under 1%) of
Social Google’s overall revenue, TBR believes the company will focus
Media OnDemand more resources on its Apps portfolio in 2012 to drive
Sharing and
Access increased sales, retain customers and edge out a large,
Collaboration
growing list of competitors. As an early-to-market cloud
vendor, Google has had the luxury of scaling its customer base
with little competition; however, those days are long gone.
Customers now have a list of traditional and trusted vendors,
such as Microsoft and IBM, that offer competing products and
may take market share based on relationships and security
concerns.
SOURCE: TBR


Google: TBR’s Cloud Vendor Reports TBR
Google has stopped relying solely on its brand, and will increase adoption
in 2012 by improving its reseller program and adding value to its portfolio
TBR Assessment of Google’s two-year strategic outlook
Key Takeaways Strategic Outlook
Financial: Google is experiencing high adoption of its • Google is top of mind for customers thanks to its
cloud products, but the products’ low price points drag widespread search and personal usage, and will
revenue and profitability below competitors such as continue to successfully penetrate the business world
Microsoft and IBM. through Google Apps and Google App Engine.
• The Apps business will continue driving the majority of
Go to Market: Google leverages brand recognition and
its massive web presence to reach the market, but will revenue from SMBs and the midmarket through 2012;
rely more heavily on partners to drive sales, especially however, in 2H12, revenue from large enterprises will
into large accounts. begin to increase as Google’s improved reseller program
targeting large accounts gains traction.
Resource: Google is building datacenters across APAC to • Google App Engine will begin to drive increased
drive revenue from the quickly growing region. revenue in 2H12 as developer platforms become
increasingly important for customers to build and
TBR GOOGLE PAID-FOR CLOUD REVENUE, OPERATING INCOME AND customize apps. With vendor integration rising, App
GROWTH
Engine will enable more vendors to sell through Google,
Google Cloud Revnue (In $ Millions)

$300 $60
Operating Income (In $ Millions)

increasing revenue on all fronts.
$250 $50
• Google+ will drive Google’s social enterprise. It may be
$200 $40
more useful inside organizations (for projects, teams
$150 $30 and videoconferencing) than as a “Facebook-killer,” as
$100 $20 companies may not see value in another social media
$50 $10 site if they already use vendors such as Facebook and
$- $0
LinkedIn. Familiarity with Google is higher than
4Q10 1Q11 2Q11 3Q11 4Q11 Est. CY2010 CY 2011 Est. familiarity with Salesforce.com, giving Google+ Pages an
1Q12 CY2012
SOURCE: TBR AND GOOGLE Google Cloud Revenue Operating Income advantage over Chatter with customers taking early
steps into the social enterprise trend.

Microsoft: TBR’s Cloud Vendor Reports TBR
Microsoft will leverage established offerings to write the next chapter
of its software saga in the cloud
TBR Assessment Corporate Strategic Objectives
Rather than re-inventing itself through cloud, Microsoft is Support hybrid cloud adoption by integrating public and
capturing success in the cloud market by repackaging its private cloud strategies with System Center 2012 hub
solutions to gain cloud customers and revenue. The company is Microsoft is integrating its public and private cloud
in the early stages of its cloud strategy, and its cloud platform strategies to support movement between the
offerings are comprised primarily of core products, including platforms. With the launch of System Center 2012 in
Hyper-V, SQL Server and System Center. By leveraging existing mid-2012, the company will enable hybrid cloud
offerings, Microsoft ensures a seamless transition for customers deployment and drive revenue across both public and
upgrading to cloud-based IT, as well as established routes to private cloud portfolios.
market to target new customers adopting Microsoft cloud Leverage partnerships to drive cloud adoption in the
solutions. This foundation of offerings and routes to market will SMB market
ensure long-term success as Microsoft’s cloud business moves
beyond the growth stage toward maturity. Partnerships provide Microsoft routes to market and
increase the addressable customer base for cloud
TBR MICROSOFT CLOUD REVENUE AND YEAR-TO-YEAR GROWTH
solutions. To help drive adoption and compete with
$1,000 160%
Google in the SMB market, Microsoft partnered with
$900 140%
MasterCard in 4Q11 to offer a 10% discount to
$800
120%
MasterCard customers.
In $ Millions

$700
$600 100% Expand geographic presence of cloud business solutions
$500 80% Microsoft is expanding its cloud presence globally,
$400 60% deploying cloud solutions in regions with rapid IT
$300
$200
40% adoption. In addition to feature updates to Office 365 in
$100 20% 4Q11, Microsoft made the cloud productivity solution
$0 0% available in 22 additional markets – notably Argentina,
4Q10 1Q11 2Q11 3Q11 4Q11
South Africa and Taiwan.
Microsoft Cloud Revenue Microsoft Cloud Growth Year-To-Year
*Microsoft Enterprise Cloud Revenue
SOURCE: TBR ESTIMATES AND MICROSOFT


Microsoft: TBR’s Cloud Vendor Reports TBR
Microsoft will continue to leverage partners and its systems management
capabilities to drive cloud revenue
Revenues TBR MICROSOFT CLOUD REVENUE AND OPERATING INCOME
Microsoft is driving cloud revenue through partnerships and $1,000
integrating solutions to tailor cloud solutions to customer $900
$800
needs. In 4Q11 Microsoft announced a partnership with $700

In $ Millions
MasterCard to increase adoption by SMB customers by $600
providing pricing discounts to MasterCard small business $500
$400
merchants and account holders. With the anticipated launch $300
of System Center 2012 in mid-2012, Microsoft will benefit $200
from an integrated public and private cloud portfolio, $100

promoting hybrid environments to drive revenue across $-
4Q10 1Q11 2Q11 3Q11 4Q11
each portfolio. Microsoft Cloud Revenue Microsoft Cloud Operating Income

Expenses SOURCE: TBR ESTIMATES AND MICROSOFT

TBR believes up-front development and deployment costs
represent the majority of Microsoft’s cloud expenses. S&M
TBR ESTIMATED MICROSOFT CLOUD SEGMENT REVENUE
and R&D spending to develop and bring to market solutions,
including Office 365 and System Center 2012, continues to $1,000,000
$900,000
cut into the profitability of Microsoft’s cloud business. $50,124

Revenue (i n $ Thousands)
$800,000
Margins $700,000
Up-front costs will begin to level out as the cloud portfolio $600,000 $27,934
matures, resulting in higher margins in Microsoft’s cloud $500,000
$840,620
business. TBR estimates Microsoft’s total cloud operating $400,000
$300,000
margin was approximately 16.5% in 4Q11. The Server and $599,671
$200,000
Tools, Windows and Business divisions, three of Microsoft’s $100,000
highest-margin business, provide the majority of the $0
functionality for the company’s cloud strategy and account 4Q10 4Q11
for its above-average cloud margin. Public Cloud Revenue Private Cloud Revenue


PROPRIETARY WORK: FOR CLIENT

Cloud Computing Adoption Study
February, 2012

TBR

Cloud Computing Adoption Study: Table of Contents TBR
Study Overview Workloads on Public Cloud (cont.)
5 Methodology 33 Overall Roadmap to Cloud
Services
Executive Summary
Public Cloud Segments
7 TBR Position
Public Software as a Service
8 Adoption of Public Cloud Services
37 Key Findings
11 Key Findings
39 Offerings Purchased
12 Adoption of Public Software as a Service
14 Adoption of Public Infrastructure as a Service 40 Offerings Considered
16 Adoption of Public Platform as a Service 41 Key Vendors
18 Adoption of Public Security as a Service 44 Post-Purchase Satisfaction
Public Infrastructure as a Service
Public Cloud Adoption Drivers and Barriers
46 Key Findings
22 Key Findings 48 Offerings Purchased
24 Drivers to Public Cloud Adoption 49 Offerings Considered
25 Drivers to Future Public Cloud Adoption 50 Key Vendors
26 Key Segments That Drive Cloud Adoption 51 Post-Purchase Satisfaction
27 Business and IT Barriers Public Platform as a Service
Workloads on Public Cloud 53 Key Findings
30 Business Functions for Public Cloud 55 Offerings Purchased
32 Private Cloud Adoption 56 Offerings Considered

Cloud Computing Adoption Study: Table of Contents TBR

Public Platform as a Service
57 Key Vendors
58 Post-Purchase Satisfaction
Public Security as a Service
60 Key Findings
62 Key Security Functions
63 Key Vendors
64 Post-Purchase Satisfaction
Appendix
67 Supplemental Material – Cloud Adoption
74 Supplemental Material – Purchasing Assessment
89 Supplemental Material – Public Software as a Service
97 Supplemental Material – Public Infrastructure as a Service
104 Supplemental Material – Public Platform as a Service
111 Supplemental Material – Public Security as a Service
115 Demographics


Cloud Computing Adoption Study: Methodology TBR
TBR surveyed 302 IT purchasers across three business segments to
understand the public cloud purchasing landscape in the United States
Methodology

TBR conducted 1,496 online Sample: 100 - Small business (10-99) surveys
surveys with IT decision-makers 101 - Midmarket (100-999)surveys
working at firms based in the 101 - Large business (1000+) surveys
United States who are
responsible for or who influence
public cloud services purchasing.

302 respondents indicated that Survey Dates: December 2, 2011 – January 2, 2012
they had adopted public cloud.

Respondents: Total Respondents – 1,496
Public Cloud adopters – 302

SOURCE: TBR WINTER 2011, CLOUD COMPUTING ADOPTION STUDY; TOTAL N= 1,496, N=302 FOR PUBLIC CLOUD ADOPTERS

Cloud Computing Adoption Study: TBR Position TBR
To capitalize on the vast public cloud opportunity, vendors must address
security concerns and provide clear business benefits to customers
Public Cloud Market Summary

Nearly three in four businesses are either using
or planning to purchase public cloud

Drivers and Barriers are varied – but cost
reduction and security remain on top

Customers want to shift more sophisticated
workloads to the cloud

SOURCE: TBR WINTER 2011, CLOUD COMPUTING ADOPTION STUDY; TOTAL N= 1,496

Cloud Computing Adoption Study TBR
Three of four IT buyers want public cloud services and Software as a
Service is the leading public cloud segment
Public Cloud Adoption

Adoption remains on the upswing.
74% Market opportunity is growing
Buyers are considering multiple vendors
of businesses either use or
plan to purchase a public Dominant vendors have not emerged
cloud service in 6 months

50% Applications lead adoption
Buyers are looking for solutions
of non-adopters plan to Software and Infrastructure as a Service lead
purchase a SaaS application
Vendors must get past security issues
within 6 months


Cloud adoption is near 40% - with public cloud adoption at 20% and 54%
intending to add public cloud
Overall Cloud Adoption Rates
FIGURE 1.0

Overall Cloud
adoption rate =
N= 1,496 39%
IT Decision
makers and
Line of
Public Cloud
Business
adoption rate =
Managers in
20%
U.S

Considering Public
Cloud = 54%

• Of the 1,496 respondents who participated in the study, 39% have adopted cloud
computing.
• 54% of respondents intend to add public cloud services within 12 months.

Not only is overall adoption increasing, but cross-cloud adoption is
increasing for applications, platforms and infrastructure
Adoption Rates for Public Cloud
Cloud Segment
Adoption of Private Cloud among Public Cloud users
FIGURE 1.1
Adopted SaaS
Public Cloud 69%

20%

Not
IaaS
Considering 53%
Public Cloud
26%

PaaS
Considering
50%
Public Cloud

54%
SECaaS
22%
FIGURE 1.2
N=1,496
N=302 for public cloud adopters
N=302 for public cloud adopters

20% of the respondents have adopted public cloud and 54% are considering adoption of public cloud
computing services. SaaS leads the cloud segments with an adoption rate of 69% among cloud users.

While SaaS, the leading public cloud segment, dominates adoption, all
segments will see increased future growth as cloud becomes the norm
Key Findings and Conclusions
Key Findings Conclusions and Implications
• Public cloud adoption is rapidly growing across
• The public cloud adoption rate is 20%, business segments and the “gold rush” will
but it is growing at a rapid 40% year-to- continue as customers realize value through
Adoption year according to TBR research. The cost savings, scalability, integration and
Rates & majority of adoption comes from SaaS, portability.
Drivers though each type of cloud segment is • Though majority of customers expect modest
progressing at a different rate . savings between 10% - 29%, they complained
• Over 50% of respondents indicated cost about lower cost savings than expected,
savings as their primary purchase driver. opening up opportunities for low-cost vendors
to capitalize on.
• Those vendors that can quantify cloud
Data security and privacy are top concerns computing benefits, map workloads to
Barriers for both public cloud adopters and non- deployment options while alleviating
adopters among other concerns such as customers’ security-related concerns to create
unclear ROI and legacy infrastructure . a trustworthy cloud will accelerate adoption
within lagging segments.
SaaS is the most popular segment and is TBR believes there is a large revenue opportunity
growing across multiple applications, while for security vendors as it remains an overarching
Key Solution
SECaaS saw the lowest adoption rate. concern. Trusted security vendors, Symantec,
Segments However, as security is a top concern, TBR McAfee and Trend Micro will continue as leaders
believes SECaaS will begin to see rapid in this space as customers flock to proven
adoption as public cloud moves from a nice- security solutions over newer-to-market pure
to-have to core workloads and functions. cloud plays.

TBR

For additional information please contact:

Stuart Williams (stuart.williams@tbri.com), Director – TBR Software Practice


About TBR Contact Us
Technology Business Research (TBR) is a leading independent 1.603.929.1166
technology market research and consulting firm specializing in the info@tbri.com
business and financial analyses of hardware, software, networking
equipment, wireless, portal and professional services vendors.
www.tbri.com
11 Merrill Drive
Serving a global clientele, TBR provides timely and accurate market Hampton, NH 03842
research and business intelligence in formats that are tailored to USA
clients’ needs. Our analysts are available to further address client-
specific issues or information needs on an inquiry or proprietary
consulting basis.

TBR has been empowering corporate decision makers since 1996.

To learn how our analysts can address your unique business needs,
please visit our website or contact us today.

TBR

This report is based on information made available to the public by the vendor and other public sources. No representation is made that this information is accurate or complete. Technology Business
Research will not be held liable or responsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is not and should not be
construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value, purchase, sale or retention of securities. This report is copyright-protected and
supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce.

TBR's Cloud Services Research Overview

Recommended

Recommended

More Related Content

What's hot

What's hot (17)

Viewers also liked

Viewers also liked (20)

Similar to TBR's Cloud Services Research Overview

Similar to TBR's Cloud Services Research Overview (20)

Recently uploaded

Recently uploaded (20)

TBR's Cloud Services Research Overview