Boston Cloud Dinner/Discussion November 2010


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  • - Fundamentally disruptive
    - See the humans in the pictures?
    - Machines should do what machines do best and humans what humans do best
  • - people doing what people are NOT good at
    - everything is a silo: people, processes, & technology
  • - people doing what people ARE good at
    - credit suisse story: ticket-wall
  • Boston Cloud Dinner/Discussion November 2010

    1. 1. Outline • Brief Background on the Cloud Research • Cloud Computing Tsunami: The Wake-up Call? – Why cloud is a disruptive innovation and the next Wave in technology • Complexity- and Confusion-as-a-Service: Unwrapping the Maze of Cloud Options – A working definition of the cloud • Where’s the market today and where is it headed? • Implications of cloud computing for customers and vendors (Business Value, Opportunities, Markets, Risks etc) – Infrastructure-as-a-Service – Platform-as-a-Service – Software-as-a-Service 1
    2. 2. Background on the Research Study
    3. 3. Leaders In The Cloud Identifying the Business Value of Cloud Computing for Customers and Vendors
    4. 4. About Sand Hill Group Investment and Advice • Provider of investments and management advice to emerging enterprise technology leaders Publishing • Web site • Software Pulse electronic newsletter delivered to over 12,500 executives each week Research • Producer of strategic reports about key enterprise software industry trends which aim to provide executives with meaningful, actionable insight into the critical issues they face The business strategy destination for enterprise software executives 4
    5. 5. M.R. Rangaswami, Sand Hill Group, LLC, co-founder • Held Global VP Marketing positions at Oracle and Baan • Strategic advisor to fast growth companies • Profiled on the front page of the Wall Street Journal • Named to Forbes “Midas 100” list as one of the most influential investors in technolog About the authors 5
    6. 6. About the authors 6 Kamesh Pemmaraju. Leading Cloud Research at Sand Hill Group • Held Global VP Engineering/Director Quality at Pegasystems, Solidworks, Apani Networks • Brought to market leading technology products in Enterprise BPM, 3D-CAD systems, Enterprise Security, High Transaction Websites, and Embedded Real-time • Consulted at GE, GM, Siemens, Sun, Visa International, NASD, Motorola on technology, security, and quality issues
    7. 7. Industry-leading advisory board 7 Tony Redshaw, CIO Daru Darukhanvala, CTO JP Rangaswami, Chief Scientist James Barrese, VP Systems and Architecture Michael Abbot, SVP Applications Software and Service Gary S, Washington, Office of OMB
    8. 8. Survey of 511 IT execs with McKinsey and TechWeb 8 Title/Position Percent of Respondents Board Member/CEO 14% CIO/CTO 13% Other C-level executive 6% Senior IT executive 18% Other senior executive 10% IT manager 7% Other manager 6% Staff 6% Consultant 15% Other 5%
    9. 9. 40 confidential interviews with cloud leaders 9 Sector Companies Executives Healthcare 1 1 Insurance and Financial Services 3 4 Publishing and Media 3 3 Telecom 1 2 Federal Government 3 6 Technology 4 4 Business and Software Services 3 3 Software Vendors 8 8 Electronics 1 1 Manufacturing 2 2 Energy 1 6 Total 30 40
    10. 10. Cloud Computing Tsunami: The Wake-up Call? The Evolution of Cloud Computing
    11. 11. Cloud Computing is….
    12. 12. “An innovation that is disruptive allows a whole new population of consumers access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.” – Clayton Christensen, The Innovator’s Dilemma
    13. 13. Mobile Phones + Google Apps: Poor Artisans in Remote Villages of India Sell their Folk Arts on eBay 13
    14. 14. A whole new population of consumers… 14 Mainframes • Big iron • 1960’s, 1970’s Client Server • Enterprise • 1970’ 1980’s Internet • Web 1.0, 1990’s • The PC revolution Mobile 2000’s Cloud Web 2.0 2000’s and beyond
    15. 15. 15 Levels the Playing Field for small companies Represents a Competitive Threat to the Incumbents Cloud Computing: The New Disruption
    16. 16. Business Drivers… 16 Agility, speed, flexibility The rise of Business Networks Collaboration Global Recession Global Commerce Simplicity Innovation
    17. 17. Agility: #1 driver for the move to the cloud 17 1% 3% 13% 22% 46% 49% 0% 10% 20% 30% 40% 50% 60% Don’t know Part of a Green initiative Disaster recovery and business continuity Leverage core competencies and free IT resources to focus on innovation Cost efficiency Business agility
    18. 18. Latest Study results.. 18
    19. 19. Complexity- and Confusion-as- a-Service: Unwrapping the Maze of Cloud Options and definitions
    20. 20. Everyone has their own “cloud” definition • The Cloud disruption is so large and touches so much of the industry, that people can only see the bit that affects them and hence they cast it in that light • Vendor confuse terms and push their agendas Twitter Storm after Larry Ellison defines Oracle’s “cloud” Litmus Test: If you have to buy hardware just to get started, it is not Cloud @Werner RT @benioff Beware of the false cloud To get going, we will use a the following definition and debate later: An rapidly scalable, elastic, cost-efficient IT capability (applications, platforms, and infrastructure) delivered as a service over a network in a pay-per- use, on-demand self-service manner.
    21. 21. NIST Definition Well Accepted Community Cloud Private Cloud Public Cloud Hybrid Clouds Deployment Models Service Models Essential Characteristics Common Characteristics Software as a Service (SaaS) Platform as a Service (PaaS) Infrastructure as a Service (IaaS) Resource Pooling Broad Network Access Rapid Elasticity Measured Service On Demand Self-Service Low Cost Software Virtualization Service Orientation Advanced Security Homogeneity Massive Scale Resilient Computing Geographic Distribution Source: NIST
    22. 22. And Controversies Abound…. 22 Is private cloud a cloud? Is virtualization a cloud initiative? Is SaaS app a cloud app?
    23. 23. Where’s the market today? What’s the outlook for the next 3 years?
    24. 24. Cloud Feels Like 1997 for the Internet
    25. 25. Analysts Forecast a healthy CAGR
    26. 26. When will the Tipping point occur?
    27. 27. Bold Predictions “I think, in three years, the industry will get to 40 percent in the cloud. In five years and beyond, it could get to 70 percent.” – CIO, major software vendor
    28. 28. 2014: A possible tipping point Source: Saugatech Research, 2010
    29. 29. Cloud investments set to increase.. 29 Today 3% IT Budget spend on Cloud In Three Years 7% - 30% IT Budget expected spend on cloud
    30. 30. Cloud Reality is Catching The Hype 30 2% 3% 18% 33% 52% 53% 0% 10% 20% 30% 40% 50% 60% Don’t know No plans Deploying mission-critical applications Implementing and deploying non-critical… Implementing Pilot projects for… Watching and Learning “Compared to what we were doing before, the cloud is a giant bed of roses.” – CIO, business services company Some SMB’s have 80% of services in the cloud
    31. 31. Implications for Customers and Vendors
    32. 32. Infrastructure: The Change
    33. 33. Assembly Line IT
    34. 34. Robotics Factory IT
    35. 35. 35 Chief Information Officer (CIO), 30% A committee of senior executives, 25% Heads of business units, 14% IT department, 27% No one, 5% Pendulum swinging back to the CIO and the IT department • Developers using Public IaaS services under the Radar • Business buying direct from Cloud vendors • Governance, operational, expenses, and security issues • CFO, CIO and IT under pressure to rationalize
    36. 36. SaaS evolution Wave1: 2001-2006: Cost-effective Software Delivery – Single/Standalone/point solution: function-specific, entry-level (CRM, Conferencing, Project Mgt, Collaboration etc) – Challenges: Business Bypassed IT, Governance/security issues, Integration demands, Business Process Orchestration Wave2: 2006:2010: Integrated Business solutions – New wave of integration products (Informatica, Pervasive, Boomi (Now Dell), Cast Iron (now IBM) – Inter-SaaS Linking (Intaact & SalesForce Data transfer) – Opportunities: Web-Services based Integration API’s, Customization by VAR’s and SI’s
    37. 37. SaaS evolution (contd..) • Wave 3: 2008-2013: Workflow-enabled Business Transformation • Business process and workflow orchestration with external cloud services (outside the firewall) and on-premise services • Inter-Enterprise Collaboration –Opportunities: (Cloudsourcing) • Cloud Integrators and BPM vendors for integrating business workflows: Point solutions (e.g Appirio, Bluewolf) • Business Solution Providers can help provide holistic solutions involving multiple external SaaS solutions (e.g NetSuite, SAP, Workday, SalesForce, Google) and integration with social Websites Facebook and Twitter Source: Saugatuck Research, Strategic Perspectives, How Suite It Is – Five Points Along A Spectrum of Cloud
    38. 38. Workflow-based integration & CloudSourcing
    39. 39. Implications for Cloud Solution Providers • Wave 3 is where is industry is headed. Customers of composite solutions expect: • Vertical domain, web integration expertise and channel • Ongoing support of the WHOLE solution and quick turnaround service times • Transparency of solution performance • Holistic SLA agreements (not just for one link in the chain) • Challenge: Weakest link • Understand the customer’s legacy burden and provide secure hybrid architectural extensions to minimize disruption to installed base 39
    40. 40. Business Model Implications of SaaS • Revenue model is very different • Up-front License model to recurring subscription model. • Slower GAAP Revenues • Major Impact on Sales • Smaller deal sizes • Relationship vs transactional selling model • Marketing Role change • Help reduce sales cycle • Lead Qualification more than Lead generation • Channel Model change • High-value, business process, and implementation skills • Operations • TCO , SLA, security, Infrastructure, Support is on you • Traditional packaged software vendors lack operations skills 40
    41. 41. Large/Small Company Perspectives 41 Large Enterprises Small and Midsize Businesses Implementing pilot projects 62% 46% Watching and learning 38% 49% Implementing and deploying noncritical applications 35% 34% Deploying mission-critical applications 12% 25% No plans 6% 4% Don’t know 0% 1% “I firmly believe that my data is safer in [the cloud vendor’s] hands than it is in mine” – SMB CIO
    42. 42. What is PaaS? • Services to develop, collaborate, integrate, test, deploy, host and maintain applications [ideally] in the same integrated development environment • Ideal PaaS is built upon: – Infrastructure-as-a-Service Layer – Middleware layer (APIs’, run-time support, glue that cements the different pieces) – Development Layer (tools, debuggers, IDE’s etc)
    43. 43. PaaS will be the future of cloud services So while much of cloud computing’s success today comes from the simple metaphors we’ve used to describe it, we have to avoid being trapped by those metaphors. EC2 is not AWS; clouds are not machines. It’s the surrounding ecosystem that matters, and we ignore it at our peril – Alistair Croll Platform Services help create an ecosystem for even greater innovations, simplicity, and cost efficiencies
    44. 44. PaaS Network Effect
    45. 45. PaaS is sweet spot • The real value is in the Applications and Data • PaaS enables Cloud Development and infrastructure abstraction further blurring the boundary between Infra and apps • SaaS customers want extensions and configurability • All Major Cloud Players “moving up the stack” (AWS, VMWare, Oracle, HP) • IaaS will be commodity • Lock-in is a big concern for customer
    46. 46. But it’s still very early for PaaS
    47. 47. Workloads in the cloud Innovation, skunk- work projects, new development, QA, Load testing Backup, Disaster Recovery, Redundancy Collaboration, CRM, HR, Office Productivity, ERP, and Business Analytics (SaaS) Characteristics: Spiky traffic patterns, self- contained, virtualizable, scalable architecture
    48. 48. Public Vs Private • Compelling economics of public cloud. On- demand capacity for workloads that are • “Spiky”, seasonal, short-term, commodity, non-core applications • Mission-critical apps have to stay in the datacenter • Security, Compliance, and Control • Massive Investments in legacy Infrastructure • Long-term contracts for datacenter space and vendor relationships • Cost of re-architecture and cloud migration • No one-size fits all solution: Multiple cloud services to meet business, security, SLA needs48
    49. 49. Workloads For Hybrid Clouds • Web-Serving Workloads: Many permutations – Scale the front-end web servers in the cloud, leave logic processing and data-base in-house – Load balancers, CDN in-house. Rest in the Cloud – Run internally for normal loads, burst out for seasonal peak demands • Highly parallelized massive data analytics (MapReduce, Hadoop style processing) in the cloud and logic processing inside • Hybrid Storage and Retrieval: Augment high-bandwidth on-premise storage with less frequently accessed Cloud storage. Backup, archival, DR. Single Management solution
    50. 50. Workloads For Hybrid Clouds – Contd.. • Development and QA – Multiple cloud environments for development, test, load, stress, scalability, and build. Create and tear down only as needed – Move from cloud to data center or vice versa at various stages of the Application Lifecycle Management (ALM). • Hybrid workflows across SaaS applications and services and data inside the data center. – SaaS CRM application reaching out to an ERP system for access to financial data. – Application running on public cloud accessing DNS on- premise • Collaboration infrastructure (Wiki’s, project boards etc)
    51. 51. Several customer concerns, but responsibility is shifting to the vendors Does it make economic sense? How will we handle security and compliance? How will we handle legal matters? Is it mature, reliable, and stable? Once we’re in, how do we get out? (portability) How do we interoperate with our existing “stuff”? How will we manage the cultural change and fear of job loss? Do I have re-write everything? Do we need new skills?
    52. 52. More Information, Assistance, and Offers • Opinion Editorial on – • Weekly Blog on cloud trends, vendors, customers, people, and solutions – • Purchase Digital Enterprise License of research: Unlimited Internal Use: – • Additional Go-to-market and lead generation: – Customer webinars and events – Co-branded whitepapers, podcasts, and marketing collateral – Sales enablement and briefing sessions 52
    53. 53. Cloud Thought Leadership… Research Industry Analysis, Blogs, Workshops, Strategy Consulting
    54. 54. Cloud Thought Leadership (contd…) Conferences Webinars Podcasts Newsletters Opinion Editorials Events
    55. 55. Sample Research Customers and Consulting Clients 55
    56. 56. © 2009 Ness Technologies – Proprietary and Confidential November 2010 Boston Achieving Technology Leadership in the Cloud
    57. 57. Offshore Product Development Established 2001 60+ Client Labs in 5 locations throughout India and Eastern Europe ► Multi-shore development model 2,500 talented resources delivering 1,000 software releases per year Best Practices from every engagement are institutionalized through the Ness Tech Council and applied to new clients through Strategic Consulting Ness developed SMART Platform implements best practices workflow and metrics through unique value-added IP Ness Software Product Labs Engineering Effectiveness Client Labs Ness Tech Council Ness Strategic Consulting Client Goals
    58. 58. NIST (National Institute of Standards and Technology) defines cloud computing as a "a pay-per-use model for enabling available, convenient, on-demand network access to a shared pool of configurable computing resources — for example, networks, servers, storage, applications, services — that can be rapidly provisioned and released with minimal management effort or service provider interaction". Cloud Computing Defined 59
    59. 59. It’s Very Cloudy Out There 60 Private Cloud Performance Quality of Service SaaS Platform Cloud ROI Infrastructure Security Hybrid Cloud Cloud Broker QA Cloud Cloud Services IntegrationSLAsArchitecture Global Delivery Disaster Management Regulatory Compliance Internationalization Data Clouds Governance Monitoring Virtualization Open Source Data Management
    60. 60. Options, Options, Options 61
    61. 61. Ness Cloud Assessment Clears the Air Action Plan and Success Criteria Cloud Strategy with Projected ROI Current Arch. / Technology Market Climate Business Objectives
    62. 62. State of the Public Cloud: The Cloud Adopters' Perspective October 2010 Appirio study focused on existing cloud adopters 63 While basic challenges like security and manageability remain at the top of the list, new challenges around cloud-to-cloud integration, SaaS silos and mobile access are also a priority. • 75%+ say cloud-to-cloud integration and better mobile access are important priorities (more than 80% still say security and manageability are priorities) • 65% say enhancing existing cloud apps is a high or essential relative priority • Only 4% have fully integrated their cloud applications with each other
    63. 63. What kind of technology does your product use? Java, C++, J2EE, .Net? ► Application Server, DB, 3rd Party Components, Open Source, Etc ► Tell us about the commercial products that you use to build your product? (what license fees do you pay??) What kind of architecture does your product have – 2 tier, n tier? ► SOA ► Multi-tenant support ► International support (Unicode, multi-currency) Security / regulatory requirements? ► Geographic distribution requirements? Performance / SLA requirements? Integration needs – cloud to cloud, cloud to client, hybrid cloud? Implementation requirements? Competitive environment and customer expectations Technology acquisition strategy Some Critical Cloud Considerations Where to Begin 64
    64. 64. Ness Cloud Assessment Summary Cloud computing offers significant tangible benefits* ► ROI – Clients report 50% - 200% reduced costs ► Speed – Deliver applications in weeks, not months ► Innovation – Quickly design, develop and deploy many applications. • Low investment makes it easy to walk away from failing efforts Significant considerations ► What do you need / want from the cloud? ► Business risk in moving / not moving to the Cloud ► Current technology position to achieve objectives ► Resources available to achieve objectives Next Steps ► Leverage Ness Cloud Readiness Assessment ► Meet with Ness Strategic Consulting • Determine scope • Identify stakeholders • Conduct Assessment and create plan of action *Courtesy of Sandhill Inc 2010
    65. 65. Q & A 66 Thank You