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Sand Hill Group conducted forty in-depth interviews and surveyed more than 500 IT executives and to obtain a clear picture of the cloud computing initiatives, strategies and best practices taking hold in enterprises today. "Leaders in the Cloud" delivers unparalleled insight into customer perceptions of cloud computing, current and planned cloud initiatives, adoption drivers, business and technological benefits and challenges, strategies for deployment and best practices for success. The findings look closely at experiences with all types of cloud service models - SaaS, IaaS, and PaaS - and deployment models - public, private, community and hybrid clouds.The Enterprise Digital Report delivers the research findings via first-hand CIO quotes and more than a dozen charts and figures, and six use cases of specific cloud projects. The study identifies a complete list of the business benefits associated with cloud computing, and presents "Take Action Now" implications for both enterprise customers and cloud vendors. The Enterprise Digital Report includes an additional chapter on the unique market for federal government clouds, six additional cloud use cases and several additional pages of unedited customer comments about cloud computing. The license also includes a copy of the data file with quantitative findings from a survey of more than 500 IT executives about their cloud computing experiences.
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Leaders In The Cloud
Identifying the Business Value of Cloud Computing for Customers and Vendors
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
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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
3
About the authors
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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
Industry-leading advisory board
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Tony Redshaw, CIO
Daru Darukhwala, CTO
JP Rangaswami, Chief Scientist
James Barrese, VP Systems and Architecture
Michael Abbot, SVP Applications Software and Service
Gary S, Washington, Office of OMB
Survey of 511 IT execs with McKinsey and TechWeb
6
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%
40 confidential interviews with cloud leaders
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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
Cloud Feels Like 1997 for the Internet
Single Computer
Mainframes with terminals
Client/Server Computing
Network Computing
Cloud Computing
1960
1970
1990
2000
2010
Co
mp
lexi
ty
TimeCentralized Distributed
Low
Hig
h
Back to mainframes?
NIST Definition Well Accepted
CommunityCloud
PrivateCloud
Public Cloud
Hybrid Clouds
DeploymentModels
ServiceModels
EssentialCharacteristics
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
But Controversies Abound….
10
Is private cloud a cloud?
Is virtualization a cloud initiative?
Is SaaS app a cloud app?
Cloud Reality is Catching The Hype
11
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 Experimenting …
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
Agility: #1 driver for the move to the cloud
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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 …
Cost efficiency
Business agility
“We were halfway through the project and the business decided to dramatically change the requirements of the system. We were able to respond much more quickly than the original on-premise team would have delivered.” – CIO Business Services Company
Which cloud models are winning and why?
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70%
18%
12%
56%
24%20%
0%
10%
20%
30%
40%
50%
60%
70%
80%
SaaS IaaS PaaS
Currently
In 3 Years
CIO perspective on various cloud types
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“I don’t think [the public/private cloud issue] is really an ‘either/or’ question. It’s a combination.” – CIO, software company
44%
28%
20%
13%
54%
35% 36%
43%
0%
10%
20%
30%
40%
50%
60%
Private Public Community Hybrid
Currently
in 3 Years
Cloud investments expected to increase
15
“Today we’ve got 95 percent of applications running internally and 5 percent externally. In five years, that ratio will be 80 percent internal and 20 percent external.” – CIO, Fortune 500 financial company
Today
3% IT Budget spend on Cloud
In Three Years
7% - 30% IT Budget expected spend on cloud
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
Small, large companies have different concerns
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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
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?
Implications for customers
• Embrace change: start with experiments and pilots now
– Experience cloud business benefits first hand in a low-risk environment
• Think „Cloud = Outsourcing 2.0‟
– Innovate on “core” and outsource “context”
– Leverage cloud to enable real-time decision making and collaboration across the supply-chain
• Change IT skill sets
– Business requirements, vendor management, system architecture, new cloud platform skills
19
“I think a lot of companies in more traditional, mature industries like ours are missing out on a lot of opportunities to take advantage of what the cloud has to offer.” –CIO manufacturing company
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 sessions20
Sample Research Customers
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