From niche to mainstream--opportunities in Private Hybrid Cloud

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TECHNOLOGY BUSINESS RESEARCH, INC.

From Niche to Mainstream: RealizingPrivate & Hybrid Cloud OpportunitiesHighlights from TBR’s Private/Hybrid Cloud Migration Workload and Platform Report

Oct. 24, 2012

Allan KransSenior Analyst, Software [email protected]@allankrans

mailto:[email protected]

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2 TBR Quarterly Webinar Series | 10.24.12 | www.tbri.com | ©2012 Technology Business Research Inc.

Private & Hybrid Cloud Adoption:Where is the Opportunity to Capture

Customers’ Workload Migrations?

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Private cloud adoption is increasing, at the expense of traditional on—premise deployments

Private clouds are currently seen as another tool, rather than a strategic workload choice

The redefinition of “private and hybrid clouds” and shift to proactive workload sourcing limit short—term disruptive adoption growth

TBR Webinar: From Niche to Mainstream — Realizing Private & Hybrid Cloud Opportunities

Private/Hybrid Cloud Adoption — Current State

Private and public clouds are opposite sides of the same cloud coin for customers

SOURCE: TBR PRIVATE/HYBRID CLOUD MIGRATION STUDY. N = 420

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The redefinition of “private and hybrid clouds” and shift to proactive workload sourcing limit short—term disruptive adoption growth

Private/Hybrid Cloud Adoption — Current State




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Vendors can capture opportunity by breaking current stereotypes of private cloud as expensive and only for sensitive workloads

Public Cloud vs. Private Cloud — Perception & Challenges

Canonical

Public Cloud

Private Cloud

Customer Perception: “Why can’t everything be (or be like) public cloud?”

Vendor Challenge: Drive adoption above base offerings by highlighting tradeoffs, justifying additional costs

Customer Perception: “This is great, but how can I afford and implement it?”

Vendor Challenge: Highlight multiple private cloud pricing models, advantages vs. other deployment methods

“We don’t have to go into the private space, with the additional security and cost because we have no HIPAA considerations” — IT Director, MM Public Sector



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Current Cloud Perception

Though they share the “cloud” naming convention, public and private are currently viewed as the opposite sides of the same coin

Public Cloud Private Cloud

Initial Sentiment “More is More” “Use Sparingly”

Adoption Barriers Security Cost

Benefits Cost Security

Adoption Pressure Bottoms Up Top Down

Workloads Horizontal & Vertical Horizontal



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Private Cloud Market Evolution

Current private cloud dynamics will be redefined as customers increase the use cases and adoption of the delivery mechanism

Current Market

Sentiment “Use Sparingly”

Adoption Barriers Cost

Benefits Security

Adoption Pressure Top Down

Workloads Horizontal

Future Market

“Use More”

Cost

Efficiency & Value

Outside—In

Vertical

Private Cloud



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Private cloud adoption is increasing, at the expense of traditional on-premises deployments


The redefinition of “private and hybrid clouds” and shift to proactive workload sourcing limit short-term disruptive adoption growth

Private/Hybrid Cloud Opportunity Summary




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A majority of businesses have adopted or plan to adopt private cloud, as public cloud users look to complement or extend cloud usage

Current Private Cloud Adoption & Consideration (n=420)

With public cloud adoption more widespread, customers’ adoption and evaluation of private cloud is rapidly increasing —signaling the next step in the evolution to cloud

72% using or considering private cloud

vs. 74% for public cloud (source: 2011 TBR Public Cloud Adoption Study)

39%

Current Adopters of Private/Hybrid Clouds

33%

Non-Adopters Considering Adopting Private/Hybrid Clouds

29%

Non-Adopters Not Considering Adopting Private/Hybrid Clouds



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Private and Hybrid Cloud Adoption

Private and hybrid cloud adoption will grow largely as an alternative to traditional on-premises technologies

Traditional On-premises Deployment

Private Cloud

Hybrid Cloud

% W

orkl

oad

Dep

loym

ents

Current Future

18%12%

5% 3%

62%50%

Traditional on-premises use will erode: 62% of private cloud and 48% of hybrid cloud deployments formerly used traditional on-premises solutions.



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“We are now getting to the point where our private cloud adoption is starting to exceed our legacy utility environment.” – VP, LE Financial Services

Tighter alignment of IT to the business will accelerate private cloud drivers and erode barriers to growth

2012 2013 2014

Private Cloud

% A

dopti

on

Redefinition of DriversBenefits: Just Security Efficiency & ValueCost: Barrier Driver (TCO)Pressure: Internal External Outside-In

Shifting Adoption BarriersSecurity: Breach Execution RiskCost: TCO Business CaseWorkloads: Horizontal Vertical

Alignment of IT & business circumvent barriers

Deeper experience will highlight currently

obscure advantages



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The redefinition of “private and hybrid clouds” and shift to proactive workload sourcing limit short-term disruptive adoption growth

Private/Hybrid Cloud Opportunity Summary

Private and public clouds are opposite sides of the same cloud coin



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Current private and hybrid cloud adoption is driven by IT’s need to keep pace with business infrastructure requirements

Current Adoption Cycle

Workloads

1.Desktop Productivity2.Backup and Recovery3.Data Warehousing4.Virtualization/OS5.Storage for Development

IT Performance Constraints

Business

IT

Private Cloud Solutions

“The infrastructure group just couldn’t keep up with the demands that software development had.” – VP, IT

Largely horizontal workloads focus on IT’s need to scale infrastructure capacity



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Initial Hypotheses

Private cloud migration is becoming increasingly complex as customers gain a deeper understanding of the private/hybrid delivery method


1. Security is the pivotal workload attribute driving private cloud adoption

2. Higher cost is a foregone conclusion vs. traditional IT and public cloud

3. Initial deployment costs are one of the largest adoption barriers

Disproved

Disproved

Validated

Security ranks in the top 10, yet private cloud’s ability to reduce costs, improve service delivery are the largest drivers for current, future adopters.

Numerous “flavors” of cost reduction are driving private cloud adoption, with many respondents citing cost savings vs. public cloud.

Particularly for future adopters, the upfront cost of shifting IT delivery methods and procuring necessary assets are prominent adoption barriers.


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An increase in vertical workloads highlights IT’s effort to proactively use private cloud to meet business requirements

Proactive partnering with business stakeholders is the model envisioned, but not yet achieved for future private cloud adoption

Future P/H Workloads

1. Backup and Recovery2. Desktop Productivity3. Application Streaming4. Storage for Development5. Virtualization/OS

Private Cloud

Business

IT

“Currently, we’re a tools provider, that’s specifically it. When you’re looking at IT at my level, I need to be aligned with the business, helping the business move forward.” — MM Retail CTO

Other Delivery Methods

Public Cloud Traditional On- premises



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Summary

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Private and hybrid clouds can be positioned as an alternative to traditional on-premises technologies

Joint workload evaluation for private clouds by business & IT execs is needed, not yet occurring

The perception of private cloud as “secure cloud” is fading as customers seek to achieve other cost and delivery benefits

Realizing the Private/Hybrid Cloud Opportunity

Breaking “secure but expensive” perception will spur private cloud adoption beyond current niche



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Questions?

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For further information, please contact:

Stuart Williams James McIlroyDirector, Software & Cloud Practice Vice President, [email protected] [email protected]

Allan KransSenior Analyst, Software [email protected]@allankrans

TBR - @TBRInc




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Appendix

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Research Methodology:

• In-depth interviews across North America and western Europe with key private/hybrid infrastructure purchase decision makers (executive, LOB, IT).• 300 online surveys with Private/Hybrid Cloud

Infrastructure purchase decision makers by business size: o Midmarket firms (500—2,500 employees)o Large enterprises (2,501+ employees)

• Focus on in-depth interview insights in target industries of:

o Communication and Mediao Industrialo Banking & Financial Serviceso Pharma & Life Scienceso Retail & Distributiono Public Sector

Client Outcomes

• Understand client maturity in the migration to complex hybrid environments.• Identify and target opportunity for customers’

migration to private and hybrid cloud deployment across six different industries and two business segments.• Position offerings and services against buyer

purchasing scenarios and buying criteria.

TBR’s Private/Hybrid Cloud Workload & Platforms Report enables vendors to anticipate and capture opportunity surround workload transitionsPrivate/Hybrid Cloud Workloads & Platform Report Methodology & Client Outcomes

TBR Webinar: Realizing the Private & Hybrid Cloud Market Opportunity

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Workload Categories Considered for Private and Hybrid Clouds

TBR’s Private/Hybrid Cloud Workload & Platforms Report: Definitions

Applications Security & Governance

Systems Management

BI/ Analytics and Enterprise Performance Management

Development Environment

• ERP • Governance • Systems Provisioning • Data Marts • Test

Environment• Accounting and Finance • Security • Virtualization

Management, OS • Data Warehousing • Computing for Development

• Desktop Productivity, Email, Messaging Collaboration and Conferencing

• Data Backup/Archiving, Business Continuity and Disaster Recovery

• Transaction Database

• Storage for Development

• HR/Human Capital Management

• Applications Servers/Streaming • BI/Analytics • Development

Environment

• Supply Chain/Procurement/ Inventory Management

• Systems Management

• Transactional Processing

• CRM/Sales Force Automation• Industry Applications• Custom Applications• Project Management/Help

Desk

TBR Webinar: Realizing the Private & Hybrid Cloud Market Opportunity

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