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

Leaders In The Cloud Customers Ccv7

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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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Page 1: Leaders In The Cloud Customers Ccv7

Leaders In The Cloud

Identifying the Business Value of Cloud Computing for Customers and Vendors

Page 2: Leaders In The Cloud Customers Ccv7

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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Page 3: Leaders In The Cloud Customers Ccv7

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

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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

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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

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Survey of 511 IT execs with McKinsey and TechWeb

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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%

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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

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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?

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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

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But Controversies Abound….

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Is private cloud a cloud?

Is virtualization a cloud initiative?

Is SaaS app a cloud app?

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Cloud Reality is Catching The Hype

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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

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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

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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

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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

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Cloud investments expected to increase

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“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

Page 16: Leaders In The Cloud Customers Ccv7

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

Page 17: Leaders In The Cloud Customers Ccv7

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

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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?

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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

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“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

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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

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Sample Research Customers

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