2009 Cloud Computing Trends Report

Irvine Louisville San Francisco

2009 CLOUD COMPUTING TRENDS REPORT

February 2009

TABLE OF CONTENTS

2009 Cloud Computing Trends Report

The Survey Page 3

The Participants Page 4

Executive Summary Page 5

Familiarity with Hosting Page 6

Cloud Computing Defined Page 7

Cloud Computing Drivers Page 8, 9 and 10

Cloud Computing Obstacles Pages 11

Pricing & Timing Pages 12

IT Services in the Cloud Page 13

Solutions in the Cloud Page 14

Ways to Pay Pages 15

Further Analysis Page 16

About Hosting.com Page 17

THE SURVEY


Hosting.com proactively engages with clients and prospects to effectively understand their business goals to build solutions that are both client relevant and applicable. A core component of Hosting.com’s client engagement strategy is the use of surveying tools.

The Cloud Computing Trends Survey was launched on December 17, 2008 and respondents had until January 23, 2009 to respond.

The survey was conducted and hosted electronically. The survey asked approximately 11 questions and took between 6 and 10 minutes to complete.

In sharing the results, Hosting.com will provide general demographic information about respondents and the companies they represent; however, Hosting.com will not reveal the specific identity of any respondent or company.

THE PARTICIPANTS


644 Respondents C-level Executives and Business Decision Makers

Over 40% were CXOs, President, Owner or Vice President Industries

All major industries represented including Financial Services, Retail, Social Networking, Healthcare, Manufacturing, IT Service Providers, Marketing and Advertising, Non Profits and City Governments.

Number of employees

69% had fewer than 100 employees 11% had greater than 1,000 employees

Annual Revenues

Ranged from less than $1M to over $100B64% are less than $10M13% are greater than $100M

EXECUTIVE SUMMARY


This Cloud Computing Trends Report introduces new data into the cloud marketplace. This survey provided insight into the expectations small, medium and large businesses have of cloud computing, their intended uses, reasons for adopting, and expected time-frames for implementing cloud-based solutions.

Surprisingly, this e-book reveals that there is little difference between how larger companies and small businesses will utilize Cloud Computing . Specifically:

• The driving factors for adopting cloud services are nearly the same for all company sizes.• Business size plays no role in how quickly cloud technologies will be adopted.• Executive leadership in small businesses list cloud computing as a priority at the same rate as

executives with large companies.• Small businesses are likely to receive a greater amount of IT Services from a cloud platform.• Increased education on cloud benefits, solutions and design is needed for businesses of all sizes.

As cloud providers continue to create cloud-based solutions that provide reduced costs, scalability, improved service level agreements, increased flexibility and overall performance they must keep in mind a new force in cloud computing that will demand immediate, measurable results – small businesses..

2009 is slated to be a banner year for cloud computing providers and solutions. Until now, the expected primary source for increased revenues was large companies, specifically for test and development environments. However, over the past several months decreased revenues and operating budgets have driven small businesses to explore and implement production cloud environments.`

FAMILIARITY WITH HOSTING


Which services does your company currently receive from a hosting provider?Multiple selections were allowed

Online Storage

Application Hosting

Database Hosting

Email Hosting

Web Hosting

21%

30%

32%

54%

72%

This intended purpose of this question was to establish the respondents’ familiarity with hosted services and extending IT functions to an external provider. 90% of respondents currently use a hosting provider in some capacity.

CLOUD COMPUTING DEFINED


When you hear the term “cloud-computing,” what definition first comes to mind?

47% Fundamental change in how technology services are provided19% A tool, if delivered properly, that can provide instant value to my company 9% A tool that might work for another company13% Another buzzword – all hype12% Unsure

Analysis: Two-thirds of the respondents believe Cloud Computing will have a major impact on the IT industry. Contrastingly, 22% were familiar with the term but did not believe it would provide value to their company. The chart above illustrates that larger companies view the cloud more positively; primarily, due to their familiarity with cloud computing solutions. Less than 1% of respondents from companies with 250+ employees were unsure how they would define cloud computing. Most service providers, vendors and software manufacturers have adjusted their service offerings for the booming trend toward Cloud Computing - they must keep the 62% of small businesses in mind when developing these solutions.

REDUCED COSTS DRIVING CONSUMERS TO ENGAGE CLOUD COMPUTING


To the best of your knowledge, please select the three most important factors that will drive companies to invest in cloud computing. After selecting the three, please place them in order of importance.

Ranked Number 1 Ranked in Top 3

Cost Savings 34% 65%

Uptime/High Availability 17% 46%

Performance 12% 43%

Consumption-based Pricing 12% 33%

Scalability 7% 40%

Flexibility 6% 41%

Rapid Deployment 5% 24%

Continued…

FACTORS DRIVING CONSUMERS TO CLOUD COMPUTING


Company-size did not alter the expectations that our respondents have of cloud-computing solutions. The three most important factors driving consumers to invest in Cloud Computing are nearly the same for all businesses. Likewise, the two least important factors when stacked against the other drivers listed on page 8 were exactly the same.

Continued…

Top 3In order of ranking

2 LeastIn order of ranking

250+ Employees

1. Reduced Costs2. Uptime3. Scalability

1. Rapid Deployment2. Consumption-based Pricing

50-249 Employees1. Reduced Costs2. Uptime3. Scalability

1. Consumption-based Pricing2. Rapid Deployment

1-49 Employees

1. Reduced Costs2. Uptime3. Performance

1. Rapid Deployment2. Consumption-based Pricing

MOST & LEAST IMPORTANT FACTORS DRIVING CONSUMERS


Company-size did not alter the expectations that our respondents have of cloud-computing solutions. The three most important factors driving consumers to invest in Cloud Computing are nearly the same for all businesses. Likewise, the two least important factors when stacked against the other drivers listed on page 8 were exactly the same.

Continued…

250+ Employees

50-249 Employees

1-49 Employees

Top 3 1. Reduced Costs2. Uptime3. Scalability

1. Reduced Costs2. Uptime3. Scalability

1. Reduced Costs2. Uptime3. Performance

2 Least 1. Rapid Deployment2. Consumption Pricing

1. Consumption Pricing2. Rapid Deployment

1. Rapid Deployment2. Consumption Pricing

CLOUD COMPUTING OBSTACLES


To your best knowledge, what are the top three obstacles Cloud Computing providers must overcome? (Multiple selections were allowed)

Secu

rity

Administration/S

upport

Control/V

endor Lock

In

Perform

ance

Provid

er Reputations

Consumption Pric

ing

Speed to

Activa

te

Portabilit

y

64%58%

40% 39%30% 27%

21% 21%

Analysis: Security also top concern in other Cloud Computing Studies including recent surveys by Third Brigade, Information Week and CIO Research.

ENTERPRISE-SPECIFIC OBSTACLES


Large companies expect higher levels of Security and Control.

Companies 250+ employees - 75% selected Security (selected by 58% of all others) 45% selected Control (selected by 38% of all others)

Due to their size, larger companies are more frequently the targets of malicious data attacks and have a greater need to protect their assets due to compliancy and regulatory requirements. Types of Cloud Computing solutions Enterprises will pursue include: R&D projects, quick promotions, online collaboration, partner integration, social networking , new business ventures.

Analysis: Security for companies of all sizes will become less of a concern due to advances in virtualized technologies that have produced increased security options to meet any organizations business demands. Recent advances, especially those made by VMWare have made shared virtual cloud environments as secure as single-tennant environments.

EXECUTIVE ORDERS


Has Cloud Computing been identified as a priority by your organization’s executive leadership?

Analysis: As companies continue to recognize the monetary and technology benefits of Cloud Computing, the number of executives identifying Cloud Computing as a priority will increase. Factors such as the adoption of Software-as-a-Service (SaaS) models, Virtualization and access to broadband and wireless networks provide mobile workforces with new approaches for delivering and receiving business applications. Again, there is no difference between small and larger companies.

ALL RESPONDENTS: 24% - YES 61% - NO 15% - UNSURE

% Answering Yes

250+ Employees 25%

50-249 Employees 23%

1-49 Employees 24%

TIMING


How quickly do you think Cloud Computing and its benefits will evolve to have an impact on your company?

Next 12 Months Unsure

250+ Employees 33% 27%

50-249 Employees 31% 25%

1-49 Employees 34% 40%

33% - NEXT 12 MONTHS 17% - NEXT 24 MONTHS 36% - UNSURE 5%-NEVER

Analysis: Significant market opportunity exists for cloud providers within small businesses. 34% of respondents believe Cloud Computing will evolve to impact their business in the next 12 months. 40% were unsure which providers can use as an opportunity to effectively engage, educate and build solutions that provide tangible benefits for small businesses.

Over the next 12 months, what percentage of your IT services do you estimate will be delivered from a cloud platform?

IT SERVICES IN THE CLOUD


Analysis: Compared to a September 2008 study by InformationWeek, the likelihood of organizations to deliver their IT services on a Cloud platform has doubled (13% responded that greater than 25% of their IT services would be in the Cloud) indicating that Cloud Computing is trending upward. An appealing aspect of Cloud Computing is little knowledge is required to set up, configure and maintain the technology and the supporting infrastructure.

No Intention of Using

1% - 9%

10% - 25%

26% - 50%

51% - 75%

More Than 75%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

12%

39%

23%

12%

8%

6% More Than 80% With 50% + 1-49

Possible “Unsure” Response

WEB APPLICATIONS BEST-SUITED FOR CLOUD COMPUTING


To your best knowledge, what two solutions are best-suited for a Cloud Computing environment?

Hosting Web Applications was the most popular solution for all companies. The two most popular based on company size were:

2 Most Popular

250+ Employees 1. Web Applications 2. Application Server

50-249 Employees 1. Web Applications 2. Application Server

1-49 Employees 1. Web Applications 2. Database Server

70% Web Applications 7% File/Print Server41% Database Server 7% Traditional IT37% Application Server 7% Other (Popular write-ins: Media, File, Raw 20% Testing/Development storage, Email)

WAYS TO PAY


Select the manner in which you would most prefer to pay for Cloud Computing services?

Analysis: There was a large difference between how small companies wanted to pay for cloud computing services when compared with larger companies. 32% of companies with 250+ employees preferred annual contracts compared to 13% of companies with 1-49 employees. For unpredictable businesses, paying for services used is alluring; until, the first bill with multiple overages and unexpected costs is received. Unsure responses were evenly distributed between all company sizes.

Month-to-Month, No con-tracts, Charged on Usage

32%

Month-to-Month, No Con-tracts, Base Fee Plus Re-

source Bursting16%

Annual Contract, Based on Resource Needs and Burst-

ing, 18%

Unsure34%

EDUCATION NEEDED AND WANTED


The survey data convincingly illustrates the need for additional education around cloud computing, its uses and benefits. Examples demonstrating this need include:

• 25% Define Cloud Computing as a Buzzword or Are Unfamiliar with the Term• 36% Are Unsure When Cloud Computing Will Impact Their Business• 12% Have No Intention of Using Cloud Computing• 39% Foresee 1-9% of Their IT Services Being in the Cloud in 2009

Analysis: Across all industries and all company sizes there is a significant number of individuals interested in Cloud Computing that have not been presented with compelling or relevant information regarding Cloud Computing. The willingness of those that are familiar with Cloud Computing to adopt it combined with the large number of companies that are still seeking information and have not formed a conclusive opinion signals a strong market opportunity. Innovative providers that develop client-driven solutions will continue to shape the Cloud Computing landscape.

How Respondents Prefer to Learn More About Cloud Computing

49% - Read Articles and White Papers 29% - Webinars

42% - Test it Myself 21% - Discussions with Providers

FURTHER ANALYSIS


Thank you for your interest in the Cloud Computing Trends Report. To schedule a personalized, in-depth analysis for your organization, please email Aaron Hollobaugh to schedule an appointment.

Hosting.com and IT Business Edge will be launching a Cloud Computing White Paper at the end of March. The White Paper will provide in-depth analysis of Cloud Computing’s practical business benefits.

Hosting.com will be coordinating webinars to share this information with interested parties in March & April. All individuals that download the eBook will be invited to attend.

Visit www.Hosting.com/cloud for more information about Cloud Computing Solutions provided by Hosting.com and to participate in the CloudNine Beta (90 days of complimentary Cloud Computing Hosting).

mailto:[email protected]

http://www.hosting.com/cloud/

https://secure.hosting.com/cloud/cloudnine-beta.aspx

ABOUT HOSTING.COM


Hosting.com provides enterprise colocation, cloud computing, dedicated hosting, managed hosting, disaster recovery and business continuance services to a global customer base demanding a high level of security, reliability and responsiveness. Hosting.com monitors, manages, and enhances the web based platforms of Web 2.0 companies, software as a service providers (SaaS), content distribution networks (CDN), and medium to large enterprises whose web presence is crucial and high availability mandatory. Hosting.com currently operates SAS 70 certified data centers in Louisville, Kentucky; Irvine, California; San Francisco, California and is currently expanding into Silicon Valley and Northern Virginia.

For more information, please visit www.Hosting.com or call the company at 800-446-7627.

http://www.hosting.com/

SOURCES


• Cloud Computing Survey: IT Leaders See Big Promise, Have Big Security Questions (October 21, 2008). CIO Research.

• Cloud Computing Survey (September 2008). Information Week.

• Cloud Computing Security. Third Brigade.

Irvine Louisville San Francisco

2009 CLOUD COMPUTING TRENDS REPORT

February 2009

Technology

2009 Cloud Computing Trends Report