This document provides an outline and overview of cloud computing research conducted by Sand Hill Group. It discusses how cloud computing is a disruptive innovation that levels the playing field for small companies. The document analyzes the current state and future outlook of the cloud market, including predictions that 40% of workloads will be in the cloud within 3 years. It also covers implications of cloud computing for customers and vendors, including how it changes IT operations and business models. Key cloud service models like Infrastructure as a Service, Platform as a Service, and Software as a Service are discussed.

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. Background on the
Research Study

3. Leaders In The Cloud
Identifying the Business Value of Cloud Computing
for Customers and Vendors

4. About Sand Hill Group
Investment and Advice
• Provider of
investments and
management advice
to emerging
enterprise
technology leaders
Publishing
• SandHill.com 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. 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. 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. 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. 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. 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. Cloud Computing
Tsunami: The Wake-up
Call?
The Evolution of Cloud Computing

11. Cloud Computing is….

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. Mobile Phones + Google Apps: Poor Artisans in Remote
Villages of India Sell their Folk Arts on eBay
13

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
Levels the Playing
Field for small
companies
Represents a
Competitive Threat
to the Incumbents
Cloud Computing: The New Disruption

16. Business Drivers…
16
Agility, speed, flexibility
The rise of Business Networks
Collaboration
Global Recession
Global Commerce
Simplicity
Innovation

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. Latest Study results..
18

19. Complexity- and Confusion-as-
a-Service:
Unwrapping the Maze of Cloud Options and
definitions

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. 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. And Controversies Abound….
22
Is private cloud a cloud?
Is virtualization a cloud
initiative?
Is SaaS app a cloud app?

23. Where’s the market today?
What’s the outlook for the next
3 years?

24. Cloud Feels Like 1997 for the Internet

25. Analysts Forecast a healthy CAGR

26. When will the Tipping point occur?

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. 2014: A possible tipping point
Source: Saugatech Research, 2010

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. 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. Implications for
Customers and
Vendors

32. Infrastructure: The Change

33. Assembly Line IT

34. Robotics Factory IT

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. 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. 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. Workflow-based integration & CloudSourcing

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. 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. 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. 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. 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. PaaS Network Effect

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. But it’s still very early for PaaS

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. 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. 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. 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. 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. More Information, Assistance, and Offers
• Opinion Editorial on SandHill.com
– http://sandhill.com/opinion/editorial.php?id=296
• Weekly Blog on cloud trends, vendors, customers,
people, and solutions
–http://sandhill.com/opinion/daily_blog.php?id=71
• Purchase Digital Enterprise License of research:
Unlimited Internal Use:
– http://sandhill.com/research/reports.php?id=3
• 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. Cloud Thought Leadership…
Research Industry Analysis, Blogs,
Workshops, Strategy Consulting

54. Cloud Thought Leadership (contd…)
Conferences
Webinars
Podcasts
Newsletters
Opinion Editorials
Events

55. Sample Research Customers and Consulting
Clients
55

57. © 2009 Ness Technologies – Proprietary and Confidential
November 2010
Boston
Achieving Technology Leadership in
the Cloud

58. www.ness.com
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

59. www.ness.com
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

60. www.ness.com
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

61. www.ness.com
Options, Options, Options
61

62. www.ness.com
Ness Cloud Assessment Clears the Air
Action Plan and
Success Criteria
Cloud Strategy with
Projected ROI
Current Arch. /
Technology
Market Climate
Business
Objectives

63. www.ness.com
State of the Public Cloud: The Cloud Adopters'
Perspective
October 2010 Appirio study focused on existing cloud adopters
63http://thecloud.appirio.com/StateofthePublicCloudWhitepaperThanks1.html
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

64. www.ness.com
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? http://www.cloudsecurityalliance.org/csaguide.pdf
► 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

65. www.ness.com
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

66. Q & A
66
Thank You