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Cloud MSP Strategy in 2013 and Beyond

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Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046

The Cloud MSP Opportunity Cloud computing technologies will radically reduce the IT investment costs that were once a barrier to market entry for many sizes and types of businesses further expanding the cloud market beyond large enterprises to a broader segment of organizations. Market Opportunity Cloud management services constitute a new segment comprising cloud security services, IT operations management and storage management (including backup and recovery services). The segment is forecast to grow to $4 billion by 20141.

The global market for cloud computing technologies is growing at a CAGR of 24% over the next five years, with an aggregate of over $300 Billion over that period. Gartner is predicting Infrastructure-as-a-Service (IaaS), cloud management & security devices, and Platform-

as-a-Service (PaaS) are growing from $7.6B in 2011 to $36B in 2016, a CAGR of 36%2. The global Platform-as-a-Service (PaaS) market is growing from $900M in 2011 to $2.9B in 2016, achieving a

26.6% CAGR. At this projected rate, PaaS will generate an average of $360M a year in revenue between 2011 and 2016. Gartner projects that the largest segments will be Application Platform Services (aPaaS) which generated 35% of total PaaS spending in 2011, followed by cloud application lifecycle services (12.5%)3.

Solution Provider Landscape Snapshot While there are approximately 200 providers providing cloud infrastructure management, monitoring, setup, and optimization services in the USA4. Of these professional service firms the market is grouped into several tiers.

Large IT consulting service providers which provide cloud solutions ($50 to $1B). Niche providers which focus primarily on cloud solutions (At least two dozen of these firms focus on Microsoft

Systems Center with revenues ranging from $1 to $50M). The market is fragmented by skill as the technology requires a high degree of certification and competency across multiple technologies and platforms.

o Split between ISVs, SIs, and regional providers. o Disparate reseller, incentive, VAR models.

1 http://www.gartner.com/it/page.jsp?id=2163616 2 Forecast Analysis: Enterprise Infrastructure Software, Worldwide, 2011-2016, 3Q12 Update Published: 18 October 2012 ID:G00234775. 3 Market Trends: Platform as a Service, Worldwide, 2012-2016, 2H12 Update Published: 5 October 2012 ID:G00239236. 4 System Center 2012 helps you manage your IT environments across traditional datacenters, private and public clouds, client computers, and devices.

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Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046

Cloud MSP Leadership Strategy Microsoft Systems Center is the dominant product in the market today with more than half of the installed customer base for IT systems management. The total market penetration is growing to include not only enterprises, but also small and mid-market companies as cloud adoption grows the entire market. As the cloud optimizes every business the opportunity to provide managed services covers the entire IT spectrum from IT management to desktop management, storage, security, communications, and beyond to include applications management.

Cloud MSP Market Size Enterprise Mid-Market SMB Government USA Operating Companies # 5,753 11,343 35,793 1,649

Average Deal Size $ $ 250,000 $ 150,000 $ 75,000 $ 100,000 Annual Market Revenue

Potential at 10% per year in millions

$143.8 $170.1 $268.4 $16.5

Solutions Strategy for MSP Services

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Ephor Group | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046

Exhibits A. MSP Cloud Market Size Microsoft

B. The Microsoft Platform Stack