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2013 Future of Cloud Computing Study
The North Bridge Future of Cloud Computing Survey 2013 highlights increasing adoption of cloud services, with over two-thirds of organizations now using Software-as-a-Service (SaaS) and a significant shift towards hybrid cloud models within five years. Key findings include a strong correlation between business needs and cloud strategies, and challenges with complexity and security concerns impacting adoption rates. Respondents anticipate that future growth in the cloud ecosystem will stem from hybrid/multi-cloud providers amid rising demand for flexibility and agility in IT solutions.
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2013 Future of Cloud Computing Study
- 1. North Bridge Futureof Cloud Computing Survey in Partnership with GigaOM Research 3RD ANNUAL SURVEY 2013 @north_bridge @futureofcloud #futurecloud
- 2. North Bridge &GigaOM Thank Our 2013 Collaborators #FutureCloud 2
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- 4. #FutureCloud 4 “The fact thatcloud vendor and user results were consistent highlights the convergence of provider and user needs and objectives.” Jay Lyman, Senior Analyst
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- 7. #FutureCloud 7 “This survey providesnew 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
- 8. Who took thesurvey? 57% 43% VENDORS BUSINESS USER OR IT DECISION MAKERS #FutureCloud 8
- 9. One-third of respondentsfrom C-suite #FutureCloud 9 C-LEVEL BUSINESS + MID-MGT IT OTHER 36% 31% 21% 12%
- 10. #FutureCloud 10 Cloud Strategy &Growth Section 2
- 11. #FutureCloud 11 “Demand for cloudservices 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 18 Billion
- 12. Software leads overInfrastructure and Platform % #FutureCloud 12 Software-as-a-service is now in use in nearly two-thirds of organizations Growth of 15% from 2012 What types of cloud computing technologies is your organization using today?
- 13. Cloud growth issignificantly outpacing traditional software MEDIA & ENTERTAINMENT BIG DATA (+ ANALYTICS) SOCIAL, COLLABORATION eCOMMERCE MOBILE #FutureCloud 13 The cloud is expanding software’s reach.
- 14. How the cloudstacks up TODAY #FutureCloud 14 Software Infrastructure Storage CDN Platform Database 25% 31% 33% 46% 66% 70% Shows the relative “stage of adoption” across the broader categories of “as- a-service” offerings
- 15. Cloud coverage willincrease #FutureCloud 15 Software Infrastructure Storage CDN Platform Database 25% 31% 33% 46% 66% 70% 0-12 mos 7% 11% 13% 11% 12% 13%
- 16. #FutureCloud 16 “This year’s surveyconfirms 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
- 17. But Infrastructure takesthe biggest leap ahead % Infrastructure as a Service Growth of 29% over 2012 #FutureCloud 17
- 18. How the cloudwill stack up next year #FutureCloud 18 Software Infrastructure Storage CDN Platform Database 25% 31% 33% 46% 66% 70% 12+ mos 6% 8% 10% 11% 14% 13%
- 19. Platform growing butstill early in adoption % Platform as a service growing rapidly Growth of 22% from 2012 #FutureCloud 19
- 20. #FutureCloud 20 “This year’s Futureof 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
- 21. Which model willpredominate? #FutureCloud 21 PUBLIC private HYBRID
- 22. Public cloud useto decline relatively 39% 32% TODAY 5 YEARS #FutureCloud 22
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- 24. Reasons to beprivate #FutureCloud 24 security, compliance
- 25. Reasons to beprivate #FutureCloud 25 security, compliance fear greed hunger
- 26. Reasons to beprivate #FutureCloud 26 security, compliance control (fear) cost (greed) reliability (hunger)
- 27. #FutureCloud 27 can HYBRID bethe best of both
- 28. Public leads today #FutureCloud 28 HYBRID 27% Almostneck-and-neck between Public and private clouds PUBLIC 39% PRIVATE 34%
- 29. Hybrid leads in5 years #FutureCloud 29 HYBRID 43% PRIVATE 25% Overtaking both private and public clouds PUBLIC 32%
- 30. #FutureCloud 30 “The ideal end-statefor businesses is a flexible hybrid cloud strategy where IT is able to aggregate and deliver self- service 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
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- 32. Economies of scalemean infrastructure is not for startups #FutureCloud 32 10.96% 7.88% 6.19% 2.22% 14.3% 2% <2%OTHER Large infrastructure players lead the pack of up and coming companies, with 43% of responses
- 33. Long tail ofup and coming vendors #FutureCloud 33 300 companies had less than 2% of votes …indicating a wide open playing field for upstarts. DEMANDWARE
- 34. Section 3 Drivers &Inhibitors #FutureCloud 34
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- 36. CONSISTENT drivers ofadoption #FutureCloud 36 AGILITY COSTSCALABILITY 54.5% - 4% 54.3% + 1% 48.1% - 2%
- 37. Organizations looking forAGILITY adopt SaaS #FutureCloud 37 1 2 3 4 55Xmore likely to use SaaS
- 38. Organizations looking forINNOVATION adopt SaaS #FutureCloud 38 1 2 3 44Xmore likely to use SaaS
- 39. Reasons for IAASadoption #FutureCloud 39 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 2.5 X 3X
- 40. 2.5X Scalability is thestrongest driver of PaaS adoption #FutureCloud 40 1 2 3 2.5Xmore likely to use PaaS However, the relationships between drivers and PaaS adoption weaker than other forms of cloud computing, indicating a more diverse landscape and lower adoption. Support for Open Source projects is also a very strong driver for a small niche.
- 41. Investment in cloudahead of internal mandates and customer demand #FutureCloud 41 Investments Internal Corp Mandates Customer Demand
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- 43. Security concerns easing,cost growing #FutureCloud 43 55% 46% -18% 20% 28% +50%
- 44. #FutureCloud 44 “Security concerns continueto 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
- 45. Shift in emphasisfrom expense to TCO 5% 19% 71% 17% 10% 68% 0% 10% 20% 30% 40% 50% 60% 70% 80% INCREASED SPENDING LESS SPENDING SAME TO BETTER OVERALL TCO 2012 2013 #FutureCloud 45
- 46. “Technology buyers expectcloud 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 46
- 47. Top inhibitors tocloud adoption #FutureCloud 47 65% 63% RELIABILITY/BANDWITH/COM PLEXITY REGULATORY/COMPLIANCE/P RIVACY
- 48. Top inhibitors tocloud adoption #FutureCloud 48 65% 63% RELIABILITY/BANDWITH/COM PLEXITY REGULATORY/COMPLIANCE/P RIVACY … these are also reasons for private &hybrid cloud choice as shown earlier ...
- 49. Vendor lock-in remainsa significant issue #FutureCloud 49
- 50. Section 4 The CloudMarket & Ecosystem #FutureCloud 50
- 51. “We see theavailability 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 51
- 52. Business leads IT #FutureCloud 52 Organizationsaverage 52% current use of applications that advance business priorities Organizations average 36% current use of applications that advance IT priorities Meanwhile…
- 53. And numbers ofSaaS in #FutureCloud 53 business cloud applications are in use by 50% or more of all organizations IT cloud applications are in use by 50% or more of all organizations4 0
- 54. The cloud isused extensively for business activities #FutureCloud 54 0 50 100 150 200 250 300 350 400 450 FILE SHARING BOX BUSINESS PRODUCTIVITY CRM/MARKETING SOCIAL BUSINESS & COLLABORATION CONTENT MANAGEMENT HR ERP/FINANCE ECOMMERCE Business Systems 50%
- 55. And more willgain usage in the next 12 months #FutureCloud 55 0 50 100 150 200 250 300 350 400 450 FILE SHARING BOX BUSINESS PRODUCTIVITY CRM/MARKETING SOCIAL BUSINESS & COLLABORATION CONTENT MANAGEMENT HR ERP/FINANCE ECOMMERCE Business Systems 13% plan to add 50% Currently use Plan to use
- 56. No SaaS ITapplications used in half of all companies #FutureCloud 56 0 50 100 150 200 250 DEVELOPMENT & TESTING BACKUP, DR, BC PROJECT MANAGEMENT SECURITY HELPDESK SYSTEMS MANAGEMENT BIG DATA & ANALYTICS MOBILE CURRENTLY USE IT Management 50%
- 57. 0 50 100 150 200 250 300 350 DEVELOPMENT & TESTING BACKUP, DR,BC PROJECT MANAGEMENT SECURITY HELPDESK SYSTEMS MANAGEMENT BIG DATA & ANALYTICS MOBILE But, fastest growth in SaaS application use to come in IT areas #FutureCloud 57 21% plan to add IT Management 15% plan to add 14% plan to add 14% plan to add 13% plan to add 13% plan to add 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 50% Currently use Plan to use
- 58. Lots of growthin SaaS application use to come 0 50 100 150 200 250 300 350 400 450 #FutureCloud 58 21% plan to add Business Systems IT Management 15% plan to add 14% plan to add 14% plan to add 13% plan to add 13% plan to add 13% plan to add Currently use Plan to use 50%
- 59. Tech industry expectedto see most benefit from cloud software #FutureCloud 59 MEDIA & ENTERTAINMENT EDUCATION PUBLIC SECTOR FINANCIAL TECHNOLOGY
- 60. Industry buzz incloud verticals #FutureCloud 60 3Suffer legacy drag, but still a leader in Cloud 1Initially just email and DR 5CRM is most popular app 6A place to test “beachheads” or industry-specific cloud platforms – less regulatory/compliance constrained 1Accounts for 20% of public cloud storage 2Driven by mobile, storage, budget cuts and hybrid classes Communication & Media Banking Manufacturing Insurance Healthcare Education 1 IDC; 2 Edudemic; 3 Cloud Times; 4 CA; 5 Computer Science Corp; 6 Forbes
- 61. Cloud services marketsize & growth #FutureCloud 61 2013 $117 B 2016 PUBLIC CLOUD ALONE $110 B 2020 $220 B
- 62. #FutureCloud 62 IT Readiness /Competitiveness Section 5
- 63. #FutureCloud 63 “Most organizations aregoing 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
- 64. Ready or not? #FutureCloud 64 0 50 100 150 200 250 ITDEPARTMENT COST ALLOCATION OPERATIONS SYSTEMS SUPPORT INTERNAL PROCESSES POLICIES AROUND BUSINESS NEEDS VS IT REQUIREMENTS AND PRIORITIES PROCESSES FOR SUPPORTING EXTERNAL SERVICES THAT IT DOES NOT PROVIDE More than half of respondents are not tracking or reporting service costs…
- 65. With greater adoption,cloud is now seen adding complexity #FutureCloud 65 The cloud was originally expected to reduce complexity, but with experience many are seeing the opposite. This is typical of an early market. COMPLEXITY NO COMPLEXITY / NO IMPACT
- 66. #FutureCloud 66 “The increased focuson 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
- 67. Application growth, risein complexity and need for interoperability create opportunity #FutureCloud 67 HYBRID / MULTI-CLOUD PROVIDERS CLOUD INTEGRATORS CLOUD BROKERS CLOUD MANAGEMENT PRIVATE CLOUD PROVIDERS 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.
- 68. The cloud isleading to reduced IT headcount 17% 24% 20% 23% 38% 34% 16% 6% 9% 13% 2012 2013 #FutureCloud 68 Reduced Headcount +7% Plan to Reduce Headcount +3% No Impact -4% Expect to Increase Headcount -10% Increased Headcount +4% -6%+10%
- 69. …But an increasein training #FutureCloud 69 EXPECT TO INCREASE TRAINING 39% INTEND TO HIRE OUTSIDE RESOURCES 17% SEE NO CHANGE IN MY TRAINING NEEDS 25% N/A 19% ….and may be looking to outside organizations to manage the gap
- 70. #FutureCloud 70 Cloud Investment &Business Models Section 6
- 71. #FutureCloud 71 “We've seen thatrevenue 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
- 72. Cloud investment -VC #FutureCloud 72 SOURCE: DOW JONES-VENTURE 2011 2.4B 2010 1.6B 2012 1.8B Through May 2013 $281M
- 73. Cloud mergers andacquisitions #FutureCloud 73 Although venture numbers may be down, innovation and acquisition thereof is on the rise.
- 74. #FutureCloud 74 “It was interestingto 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
- 75. Subscription fees dominatefor cloud vendors #FutureCloud 75 77% 23% 13% 16% 10% 4% 66% 28% 21% 16% 15% 12% 5% 2012 2013 The cloud business is still a subscription business, but around a quarter of vendors are finding additional revenue through services and consulting.
- 76. 451 Research MarketMonitor Report Cloud Segments and Overall Market Growth Through 2013 #FutureCloud 76 $2,772 $9,194 $1,400 $3,775 $5,531 $17,95 8 $1,359 $4,988 2012 2016 2012 2016 2012 2016 2012 2016 35% CAGR 12-16 38% CAGR 12-16 28% CAGR 12-16 CAGR 12-16 PaaSIaaS SaaS Cloud $17,958 34%
- 77. 2013 cloud IPOsare performing well recent IPOs in SaaS 3 $1.4B market capitalization at offer #FutureCloud 77
- 78. North Bridge investmentsin cloud companies $2Bn+ Doubled 1 IPO 1 Filed to go public 4 Acquisitions 4 New investments Belmont Technology Incorporated #FutureCloud 78
- 79. Cloud formed isdifferentiated #FutureCloud 79 Cloud Formed Cloud Washed NOT investing INVESTING
- 80. The A BC ’s of Cloud Forming #FutureCloud 80
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- 82. #FutureCloud 82 “While businesses arestill 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
- 83. #FutureCloud 83 Predictions are tricky,especially when they involve the future Section 7
- 84. Predictions • Boundary-less computing •New cloud formations • BYOC - Bring Your Own Cloud (services) • Out-Servicing #FutureCloud 84
- 85. Clouds will blowwith the winds of change #FutureCloud 85 Internal Hybrid Public SaaS PaaS IaaS Boundaries blurring…
- 86. Clouds will blowwith the winds of change #FutureCloud 86 Internal Hybrid Public SaaS PaaS IaaS APaaS Boundary-less computing IPaaS “PaaS squeeze ?”
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- 88. Expanding formations –including Sensor Cloud MEDIA & ENTERTAINMENT BIG DATA (+ ANALYTICS) SOCIAL, COLLABORATION eCOMMERCE (+ PAYMENTS) MOBILE (+ LOCATION) #FutureCloud 88 SENSOR NET
- 89. APIs for businessprocesses as a service MEDIA & ENTERTAINMENT BIG DATA (+ ANALYTICS) SOCIAL, COLLABORATION eCOMMERCE (+ PAYMENTS) MOBILE (+ LOCATION) #FutureCloud 89 SENSOR NET APIS APIS APISAPIS APISAPIS
- 90. Additionally, year-over-year, cloudAPIs on the rise #FutureCloud 90 CLOUD APIs INCREASING YOY 11.3%
- 91. API growth &value #FutureCloud 91 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 2005 2013 Programmable Web API Growth 2005-2013 Valued at $250M Sold to Intel for $180M In addition to continuing the rise of the enterprise, the latest APIs show mobile as a driving force.
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- 93. BYOC #FutureCloud 93 Bring your owncloud • 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
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- 95. Cloudburst of BigData #FutureCloud 95 IPAD PARTNERS CUSTOMERS EMPLOYEES WORK HOME NIKE FUEL NEST THERMOSTAT TELEVISION INTERNET OF THINGS BIG DATA
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- 97. To 4 thingscustomers 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 97
- 98. Agility Top themes incloud #FutureCloud 98 Scalability Drivers Inhibitors Now Future Compliance/Pri vacySecurity Reliability Business Leads IT TCOCost Interoperability CUSTOMERS EMPLOYEE S WORK HOME PARTNERS Boundary-less Computing Complexity New Formations BYOC SENSOR NET
- 99. North Bridge &GigaOM Thank Our 2013 Collaborators #FutureCloud 99
Editor's Notes
- #22 If you’re going to start private Economies of scale Capacity for elasticity internal or need hybrid or public? Automation? Management?
- #62 Gartner suggest the worldwide market will exceed US$109 billion in 2012,1 1 Gartner, The Channel, Link to Gartner article: http://www.gartner.com/it/page.jsp?id=2163616, 18 September 2012. IDC predicts global spending on public cloud services alone will approach US$100 billion in 2016.2 2 IDC, Link to IDC article: http://www.idc.com/getdoc.jsp?containerId=prUS23684912, 11 September 2012 Merrill Lynch numbers – TAM nearly doubled From $117bn to $220bn 2020