The document is a summary of the 3rd Annual Survey 2013 on the Future of Cloud Computing conducted by North Bridge and GigaOM Research. Some key findings from the survey include: - Hybrid cloud models are expected to become the norm with hybrid cloud usage projected to increase from 27% today to 43% in the next 5 years. - Infrastructure as a Service (IaaS) saw the biggest growth of 29% from 2012, followed by Platform as a Service (PaaS) at 22% growth. - Security remains the top barrier to cloud adoption but concerns are easing. Cost is now a growing concern compared to previous surveys where it was the top driver for adoption.

1. 3RD ANNUAL SURVEY 2013
North Bridge Future of Cloud Computing Survey in Partnership with GigaOM Research
@north_bridge
@mjskok
@futureofcloud
#futurecloud

2. North Bridge & GigaOM Thank Our 2013 Collaborators
#FutureCloud
2

3. “Clearly, even in the 3rd year of our survey, we're still very early
in the cloud-computing revolution. Yet the cloud formations
we identified in last year’s survey continue on an unstoppable
rise. Self-empowered consumers and businesses are taking the
lead, and in many instances, regardless of IT. But IT is investing
heavily both adapting internal infrastructure and adopting
public infrastructure to respond on demand while managing
the inevitable issues of compliance and regulation through
hybrid approaches. And to realize the promise of the
cloud, there is a unmistakable call for the industry as a whole
to help reduce complexity, and provide better
interoperability.”
Michael Skok, General Partner
@mjskok; @north_bridge; @futureofcloud; #futurecloud
#FutureCloud
3

4. Section 1
Demographics
#FutureCloud
4

5. “The fact that cloud vendor and user results
were consistent highlights the convergence
of provider and user needs and objectives.”
Jay Lyman, Senior Analyst
#FutureCloud
5

6. Broadest industry survey
57
49%
COLLABORATORS
INCREASE
YoY
#FutureCloud
6

7. Largest survey yet
855
RESPONDENTS
#FutureCloud
7

8. “This survey provides new insights into how cloud
computing is transforming IT. In particular it shows
that businesses are using cloud computing to
outpace their competition and that, over the next
five years, hybrid cloud will become the norm. This
echoes what we hear from customers and it’s why
comprehensive, hybrid cloud solutions are core to
our strategy.”
Steven Martin, General Manager of Windows Azure
Marketing & Operations
#FutureCloud
8

9. Who took the survey?
57%
VENDORS
43%
BUSINESS USER
OR IT DECISION
MAKERS
#FutureCloud
9

10. One-third of respondents from C-suite
IT
36%
OTHER
21%
31%
C-LEVEL
12%
BUSINESS +
MID-MGT
#FutureCloud
10

11. Section 2
Cloud Strategy & Growth
#FutureCloud
11

12. 18 Billion
―Demand for cloud services continues to
grow as we‘ve seen traffic to our own cloud
double in the past year to more than 18
billion requests per month. We anticipate this
growth for vendors will continue to scale
upward as more enterprises look to the cloud
and open source as a powerful combination
for digital innovation and agility.―
Dries Buytaert, CTO & Founder
#FutureCloud
12

13. Software leads over Infrastructure and Platform
What types of cloud computing
technologies is your
organization using today?
%
Software-as-a-service is now in use in nearly two-thirds of organizations
Growth of 15% from 2012
#FutureCloud
13

14. Cloud growth is significantly outpacing traditional software
SOCIAL, COLLABORATION
MEDIA & ENTERTAINMENT
MOBILE
BIG DATA
(+ ANALYTICS)
eCOMMERCE
The cloud is expanding software’s reach.
#FutureCloud
14

15. How the cloud stacks up TODAY
Software
70%
Infrastructure
66%
CDN
33%
Database
25%
Shows the relative “stage of
adoption” across the
broader categories of “asa-service” offerings
Storage
46%
Platform
31%
#FutureCloud
15

16. Cloud coverage will increase
0-12 mos
Software
70%
Infrastructure
66%
CDN
33%
Database
25%
7%
11%
Storage
46%
13%
11%
Platform
31%
12%
13%
#FutureCloud
16

17. “This year’s survey confirms what we hear from our
MSP users every day - delivering new cloud
services is overly complex and costly – which
ultimately impact SLA’s. To help accelerate
adoption of new cloud based applications to
enhance both business agility and resiliency, it's
clear providers need to adopt solutions that
prevent vendor lock-in, while maximizing
interoperability, reliability and simplicity.”
Ash Ashutosh, Founder & CEO
#FutureCloud
17

18. But Infrastructure takes the biggest leap ahead
%
Infrastructure as a Service
Growth of 29% over 2012
#FutureCloud
18

19. How the cloud will stack up next year
12+ mos
Software
70%
Infrastructure
66%
CDN
33%
Database
25%
6%
8%
Storage
46%
10%
11%
Platform
31%
14%
13%
#FutureCloud
19

20. Platform growing but still early in adoption
%
Platform as a service growing rapidly
Growth of 22% from 2012
#FutureCloud
20

21. “This year’s Future of Cloud Computing survey
results confirm what we’re seeing in customer
demand for more choice and flexibility.
Companies want to balance automation and
control as their businesses and applications grow.
They want to be agile, scale rapidly, and focus on
building great apps, so they're relying increasingly
on PaaS providers to help them plan, build, deploy
and manage their applications in the cloud.”
Rob Walters, CTO
#FutureCloud
21

22. Which model will predominate?
PUBLIC
private
HYBRID
#FutureCloud
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23. Public cloud use to decline relatively
39%
TODAY
32%
5 YEARS
#FutureCloud
23

24. Hybrid clouds rising
43%
27%
TODAY
5 YEARS
#FutureCloud
24

25. Reasons to be private
security, compliance
#FutureCloud
25

26. Reasons to be private
security, compliance
fear
greed
hunger
#FutureCloud
26

27. Reasons to be private
security, compliance
control
cost
reliability
(fear)
(greed)
(hunger)
#FutureCloud
27

28. can HYBRID be the
best of both
#FutureCloud
28

29. Public leads today
PUBLIC
39%
PRIVATE
34%
HYBRID
27%
Almost neck-and-neck between
Public and private clouds
#FutureCloud
29

30. Hybrid leads in 5 years
PUBLIC
32%
HYBRID
43%
Overtaking both private
and public clouds
PRIVATE
25%
#FutureCloud
30

31. “The ideal end-state for businesses is a flexible hybrid cloud
strategy where IT is able to aggregate and deliver selfservice access to a variety of cloud services, both internal
and 3rd party, and run these workloads on any cloud that
best fits the service. Citrix sees the future of cloud providing
businesses the flexibility to deploy across internal and
external clouds, while seamlessly aggregating internal and
3rd party SaaS services, ultimately giving line-of-businesses
the agility and rapid response they need.”
Sameer Dholakia, Group VP and GM, Cloud Platforms
Group
#FutureCloud
31

32. still matters
#FutureCloud
32

33. Economies of scale mean infrastructure is not for startups
14.3%
10.96%
7.88%
6.19%
2.22%
2%
OTHER
<2%
Large infrastructure players lead the pack of up and coming
companies, with 43% of responses
#FutureCloud
33

34. Long tail of up and coming vendors
300 companies had less than 2% of votes
DEMANDWARE
…indicating a wide open playing field for
upstarts.
#FutureCloud
34

35. Section 3
Drivers & Inhibitors
#FutureCloud
35

36. Section 3
Drivers
#FutureCloud
36

37. CONSISTENT drivers of adoption
SCALABILITY
54.5%
- 4%
54.3%
+ 1%
COST
AGILITY
48.1%
- 2%
#FutureCloud
37

38. Organizations looking for AGILITY adopt SaaS
5X
more likely to use SaaS
5
4
3
2
1
#FutureCloud
38

39. Organizations looking for INNOVATION adopt SaaS
4X
more likely to use SaaS
4
3
2
1
#FutureCloud
39

40. Reasons for IAAS adoption
2.5
X
Companies who see Capex to Opex and
agility as critical are 2.5X more likely to use
IaaS technologies
Companies who view Internal Mandates as
important for the cloud are 3X more likely to
use IaaS solutions
3X
#FutureCloud
40

41. Scalability is the strongest driver of PaaS adoption
2.5X
more likely to use PaaS
Support for Open Source
projects is also a very strong
driver for a small niche.
3
2
1
2.5X
However, the relationships between drivers and PaaS adoption weaker than other forms of cloud
computing, indicating a more diverse landscape and lower adoption.
#FutureCloud
41

42. Investment in cloud ahead of internal mandates and customer demand
Investments
Internal Corp
Mandates
Customer
Demand
#FutureCloud
42

43. Section 3
Inhibitors
#FutureCloud
43

44. Security concerns easing, cost growing
55%
-18%
46%
28%
+50%
20%
#FutureCloud
44

45. ―Security concerns continue to be the number one
barrier to adoption of cloud services. This isn't
surprising: companies are understandably reluctant
to move sensitive data and business functions to
the cloud when they don't understand the cloud
provider's capabilities. To further accelerate
adoption, cloud providers need to provide
increased clarity, more transparency, and better
assurance about their security controls."
Andrew Jaquith, CTO & SVP Cloud Strategy
#FutureCloud
45

46. Shift in emphasis from expense to TCO
80%
70%
60%
50%
40%
30%
20%
10%
5%
17%
71%
19%
0%
INCREASED SPENDING
10%
LESS SPENDING
2012
68%
SAME TO BETTER OVERALL TCO
2013
#FutureCloud
46

47. ―Technology buyers expect cloud adoption
will make managing IT increasingly
complex, yet the plurality also expect overall
better cost of ownership. That's either wishful
thinking or an intriguing opportunity for
suppliers and systems integrators.‖
David Card, Vice President Research
#FutureCloud
47

48. Top inhibitors to cloud adoption
65%
RELIABILITY/BANDWITH/COM
PLEXITY
63%
REGULATORY/COMPLIANCE/P
RIVACY
#FutureCloud
48

49. Top inhibitors to cloud adoption
65%
RELIABILITY/BANDWITH/COM
PLEXITY
63%
REGULATORY/COMPLIANCE/P
RIVACY
… these are also reasons for private &hybrid cloud
choice as shown earlier ...
#FutureCloud
49

50. Vendor lock-in remains a significant issue
#FutureCloud
50

51. Section 4
The Cloud Market & Ecosystem
#FutureCloud
51

52. ―We see the availability of consumer-grade
cloud services dramatically increasing the
complexity of IT infrastructure and that's
reflected in this survey. This so-called
‗Shadow IT‘ is a major corporate risk and
complexity headache for IT managers.‖
Matt Ravden, Chief Strategy Officer
#FutureCloud
52

53. Business leads IT
Organizations average
52% current use of
applications that advance
business priorities
Meanwhile…
Organizations average
36% current use of
applications that
advance IT priorities
#FutureCloud
53

54. And numbers of SaaS in
4
business cloud applications
are in use by 50% or more
of all organizations
0
IT cloud applications are in
use by 50% or more of all
organizations
#FutureCloud
54

55. The cloud is used extensively for business activities
450
400
350
50%
300
250
200
150
100
50
0
FILE SHARING BOX
BUSINESS
PRODUCTIVITY
CRM/MARKETING SOCIAL BUSINESS &
COLLABORATION
CONTENT
MANAGEMENT
HR
ERP/FINANCE
ECOMMERCE
Business Systems
#FutureCloud
55

56. And more will gain usage in the next 12 months
Currently use
Plan to use
450
13% plan to
add
400
350
50%
300
250
200
150
100
50
0
FILE SHARING BOX
BUSINESS
PRODUCTIVITY
CRM/MARKETING SOCIAL BUSINESS &
COLLABORATION
CONTENT
MANAGEMENT
HR
ERP/FINANCE
ECOMMERCE
Business Systems
#FutureCloud
56

57. No SaaS IT applications used in half of all companies
50%
250
200
150
100
50
0
DEVELOPMENT &
TESTING
BACKUP, DR, BC
PROJECT
MANAGEMENT
SECURITY
HELPDESK
IT Management
SYSTEMS
MANAGEMENT
BIG DATA &
ANALYTICS
MOBILE
CURRENTLY USE
#FutureCloud
57

58. But, fastest growth in SaaS application use to come in IT areas
Currently use
Plan to use
14% plan to
add
13% plan to
add
350
13% plan to
add
21% plan to
add
15% plan to
add
300
14% plan to
add
250
50%
200
150
100
50
0
DEVELOPMENT &
TESTING
BACKUP, DR, BC
PROJECT
MANAGEMENT
SECURITY
HELPDESK
SYSTEMS
MANAGEMENT
BIG DATA &
ANALYTICS
MOBILE
IT Management
6 out of top 7 fastest areas of growth are all in IT Areas: Big Data, followed closely by
Mobile, then Systems Management, Backup/DR/BC, Helpdesk and Security
#FutureCloud
58

59. Lots of growth in SaaS application use to come
Currently use
Plan to use
450
400
350
13% plan to
add
300
14% plan to
add
13% plan to
add
21% plan to
13% plan to
add
add
15% plan to
add
14% plan to
add
250
200
50%
150
100
50
0
Business Systems
IT Management
#FutureCloud
59

60. Tech industry expected to see most benefit from cloud software
EDUCATION
TECHNOLOGY
MEDIA & ENTERTAINMENT
PUBLIC SECTOR
FINANCIAL
#FutureCloud
60

61. Industry buzz in cloud verticals
Banking
Communication & Media
3Suffer
legacy drag,
but still a leader in Cloud
1Accounts
for 20% of
public cloud storage
Insurance
Education
6A place
2Driven by
mobile, storage, budget cuts
and hybrid classes
Healthcare
to test
“beachheads” or
industry-specific cloud
platforms – less
regulatory/compliance
constrained
1Initially
just
email and DR
1
IDC; 2 Edudemic; 3 Cloud Times; 4 CA; 5 Computer Science Corp; 6 Forbes
Manufacturing
5CRM
is most
popular app
#FutureCloud
61

62. Cloud services market size & growth
2020
2013
$220 B
$117 B
2016
PUBLIC CLOUD
ALONE
$110 B
#FutureCloud
62

63. Section 5
IT Readiness / Competitiveness
#FutureCloud
63

64. ―Most organizations are going to adopt
cloud computing in multiple forms as part of
a hybrid IT infrastructure. Maintaining
application and data portability within such
environments requires open
approaches, such as open source and open
standards.‖
Gordon Haff, Cloud Evangelist
#FutureCloud
64

65. Ready or not?
250
200
More than half of
respondents are not
tracking or reporting
service costs…
150
100
50
0
IT DEPARTMENT COST OPERATIONS SYSTEMS INTERNAL PROCESSES
POLICIES AROUND
PROCESSES FOR
ALLOCATION
SUPPORT
BUSINESS NEEDS VS IT SUPPORTING EXTERNAL
REQUIREMENTS AND SERVICES THAT IT DOES
PRIORITIES
NOT PROVIDE
#FutureCloud
65

66. With greater adoption, cloud is now seen adding complexity
COMPLEXITY
NO COMPLEXITY /
NO IMPACT
The cloud was originally expected to reduce complexity, but with
experience many are seeing the opposite. This is typical of an early market.
#FutureCloud
66

67. ―The increased focus on cloud complexity
and training speak to lessons from enterprise
virtualization, as well as a lack of standards in
cloud computing implementation, where key
technologies are being used and vendors
are working to fill the gaps.‖
Jay Lyman, Senior Analyst
#FutureCloud
67

68. Application growth, rise in complexity and need for interoperability create opportunity
HYBRID / MULTI-CLOUD
PROVIDERS
CLOUD
MANAGEMENT
CLOUD INTEGRATORS
PRIVATE CLOUD
PROVIDERS
CLOUD BROKERS
PUBLIC CLOUD
PROVIDERS
As new integrators and multi-cloud providers challenge the existing landscape with new
capabilities, cloud providers will need to increase interoperability in their services.
#FutureCloud
68

69. The cloud is leading to reduced IT headcount
+10%
2013
24%
Reduced
Headcount
+7%
2012
17%
-6%
23%
Plan to
Reduce
Headcount
+3%
20%
34%
No Impact
-4%
38%
6%
Expect to
Increase
Headcount
-10%
16%
13%
Increased
Headcount
+4%
9%
#FutureCloud
69

70. …But an increase in training
N/A
19%
EXPECT TO
INCREASE TRAINING
39%
SEE NO CHANGE IN
MY TRAINING NEEDS
25%
INTEND TO HIRE
OUTSIDE RESOURCES
17%
….and may be looking to outside organizations to manage the gap
#FutureCloud
70

71. Section 6
Cloud Investment & Business Models
#FutureCloud
71

72. ―We've seen that revenue growth among our 2013
‗Cloud 10‘ comprised of the leading cloud
companies was very strong for 2012 registering
35.6% average growth – well above the muted
global IT spending growth of 2.1%. Going
forward, we expect that revenue momentum will
continue with average growth estimated at 23%
across the Cloud basket, outpacing broader IT
spending growth of 4.1% globally."
Kash Rangan, Research Analyst
#FutureCloud
72

73. Cloud investment - VC
2013
$3.4B
(as of 9/30/13)
2011
$2.6B
2010
$2.1B
2012
$4.2B
#FutureCloud
73
SOURCE: DOW JONES-VENTURE

74. Cloud mergers and acquisitions
Venture numbers are up and
innovation and acquisition thereof is also on the rise.
#FutureCloud
74

75. ―It was interesting to see that almost half (45.7%) of survey
takers said cloud computing was adding complexity to
the management of IT, which is a problem the industry
must address if it expects enterprises to fully embrace this
model. On the upside, more than half of respondents
(55.1%) said hybrid/multi-cloud providers will offer the
biggest growth opportunities in the cloud ecosystem over
the next 2-3 years - potentially a key to easing the
complexity problem.‖
Jo Maitland, Research Director, Cloud Computing
#FutureCloud
75

76. Subscription fees dominate for cloud vendors
2012
77%
2013
66%
28%
23%
21%
13% 16%
16% 15%
10% 12%
4%
5%
The cloud business is still a subscription business, but around a quarter of
vendors are finding additional revenue through services and consulting.
#FutureCloud
76

77. CAGR
12-16
451 Research Market Monitor Report
Cloud Segments and Overall Market Growth Through 2013
34%
$17,95
$17,958
8
CAGR
12-16
35%
CAGR
12-16
$9,194
38%
$4,988
CAGR
12-16
28%
$5,531
$3,775
$2,772
$1,359
2012
2016
IaaS
2012
$1,400
2016
PaaS
2012
2016
SaaS
2012
2016
Cloud
#FutureCloud
77

78. 2013 cloud IPOs are performing well
3
$1.4B
recent IPOs in SaaS
market capitalization at offer
#FutureCloud
78

79. North Bridge investments in cloud companies
Belmont
Technology
Incorporated
$2Bn+
Doubled
1 IPO
1 Filed to go public
4 Acquisitions
4 New investments
#FutureCloud
79

80. Cloud formed is differentiated
NOT investing
INVESTING
Cloud Washed
Cloud Formed
#FutureCloud
80

81. The A B C ’s of Cloud Forming
#FutureCloud
81

82. Amazing Because Cloud
#FutureCloud
82

83. ―While businesses are still seeing some benefit in moving
standard applications to the cloud—CRM, HRM, etc.—the
greatest potential for innovation and competitive
advantage is no longer in ‗same but cloud‘ but instead in
‗amazing because cloud‘. That is, the most exciting
innovations focus on benefits that can only be achieved in
the cloud. There were source control, document
management, and message buses behind the firewall
before GitHub, Box, and Zapier, but they all use the cloud
to provide a fundamentally different and more valuable
experience. They are all ‗amazing because cloud‘‖
Rob Gonzalez, Co-Founder
#FutureCloud
83

84. Section 7
Predictions are tricky, especially when they involve the future
#FutureCloud
84

85. Predictions
• Boundary-less computing
• New cloud formations
• BYOC - Bring Your Own Cloud (services)
• Out-Servicing
#FutureCloud
85

86. Clouds will blow with the winds of change
Boundaries blurring…
SaaS
PaaS
IaaS
Internal
Hybrid
Public
#FutureCloud
86

87. Clouds will blow with the winds of change
Boundary-less computing
SaaS
APaaS
PaaS
“PaaS squeeze ?”
IPaaS
IaaS
Internal
Hybrid
Public
#FutureCloud
87

88. New formations
SENSOR CLOUD
#FutureCloud
88

89. Expanding formations – including Sensor Cloud
SENSOR NET
MEDIA & ENTERTAINMENT
SOCIAL, COLLABORATION
MOBILE
(+ LOCATION)
eCOMMERCE
(+ PAYMENTS)
BIG DATA
(+ ANALYTICS)
#FutureCloud
89

90. APIs for business processes as a service
APIS
SENSOR NET
MEDIA & ENTERTAINMENT
APIS
SOCIAL, COLLABORATION
APIS
APIS
APIS
MOBILE
(+ LOCATION)
eCOMMERCE
(+ PAYMENTS)
APIS
BIG DATA
(+ ANALYTICS)
#FutureCloud
90

91. Additionally, year-over-year, cloud APIs on the rise
CLOUD APIs
INCREASING YOY
11.3
%
#FutureCloud
91

92. API growth & value
Programmable Web API Growth 2005-2013
10,000
9,000
8,000
7,000
Valued at $250M
6,000
5,000
4,000
3,000
2,000
Sold to Intel for $180M
1,000
2005
2013
In addition to continuing the rise of the enterprise, the latest APIs show
mobile as a driving force.
#FutureCloud
92

93. Everything-as-a-service
Merging
#FutureCloud
93

94. BYOC
Bring your own cloud
•
•
•
•
Bring services used at home to work
Sharing services to link customers and partners
Combining data between services
Combining shared services as new business
processes
#FutureCloud
94

95. “Cloud services are being adopted and used in a “boundary-less”
way where users are seamlessly integrating them at home and work
across all their devices. And in an increasingly mobile pattern of
business today companies are compelled to accept and adopt this
BYOC model. In fact businesses themselves are adopting the
boundary-less approach as they look to disintermediate and
squeeze money from their value chains, focus on their core
competencies and “out-service” (outsource non-core services) via
the cloud. With all this in mind they are looking to gain competitive
advantage from a core benefit of the cloud, namely continuous
innovation by passing it along to their customers in the form of faster
time to market and responsiveness to market needs.”
Michael Skok, General Partner
@mjskok; @north_bridge; @futureofcloud; #futurecloud
#FutureCloud
95

96. Boundary-less computing
CUSTOMERS
EMPLOYEES
HOME
NIKE FUEL
PARTNERS
WORK
IPAD
TELEVISION
NEST
THERMOSTAT
INTERNET
OF THINGS
#FutureCloud
96

97. Cloudburst of Big Data
CUSTOMERS
EMPLOYEES
PARTNERS
HOME
WORK
NIKE FUEL
IPAD
TELEVISION
NEST
THERMOSTAT
BIG DATA
INTERNET
OF THINGS
#FutureCloud
97

98. #FutureCloud
98

99. To 4 things customers want vendors to know
that could hurt vendors…
Lack of Control
Lack of Standards
Lack of Integration
Lack of ROI on TCO
… and pain relief customers want
Monitoring, Management & Transparency
Interoperability, Portability
Integration, Open APIs, Open Source
Business cases & proof
#FutureCloud
99

100. Top themes in cloud
Agility
Drivers
New
Formations
BYOC
Scalability
SENSOR NET
Cost
TCO
Boundary-less
Computing
Business
Leads IT
CUSTOMERS
EMPLOYEE
S
PARTNERS
HOME
WORK
Reliability
Inhibitors
Compliance/Pri
vacy
Security
Now
Interoperability
Complexity
Future
#FutureCloud
100

101. North Bridge & GigaOM Thank Our 2013 Collaborators
#FutureCloud
101