Cloud as Catalyst: Navigating the Business+IT Transition · Key Trends A sea-ch i ti b t th d l f...

Cloud as Catalyst: Navigating the Business+IT Transition

March 21, 2012

E Cl d FEuroCloud FranceParis

Bill McNeeFo nder and CEOFounder and CEOSaugatuck [email protected]

Westport, CT ● Falmouth, MA ● Santa Clara, CA ● Wiesbaden Germany

Copyright 2011 ǀ Saugatuck Technology, Inc. ǀ All Rights Reserved ǀ www.saugatucktechnology.com ǀ +1.203.454.3900

Key Trends A h i ti b t th d l f th Cl d h d ith A sea-change in perspective about the use and value of the Cloud has occurred, with

enterprise leaders now fully embracing Cloud-enabled business computing architectures.– The Cloud is now seen as a powerful catalyst for rapid innovation, enabling new business and IT

solutions, uniting geos, enabling mobile execs / commerce, and linking social nets to business decisions. Hybrid on-premise+Cloud architectures are the preferred path forward for most enterprises Hybrid on-premise+Cloud architectures are the preferred path forward for most enterprises

short-term – especially in North America. Yet these may be transitory. – The biggest exceptions to this rule are smaller European, and the leapfrogging Asian firms that are

moving more rapidly to a pure-Cloud future, that will dominate ALL purchase plans globally by 2016. – While CRM, Collaboration, Customer Support and HCM will lead Cloud solution demand through 2016 –

followed by Collab. Commerce and BI / Analytics – on prem solutions closer to the “money” (e.g., Finance / Accounting, Budgeting, Reporting/Planning, GRC) will be slower to migrate to Public and Private Clouds.

– Social computing and Mobility solutions – key aspects of the boundary-free enterprise – are finding expression within the enterprise portfolio as key value differentiators for organizations that can harness their decision power and outreach to customers and business partnerstheir decision power and outreach to customers and business partners.

– The rise of terabytes of business data has tipped the scales toward financial return in the mgmt. of data quality to ensure Advanced Analytic platforms are supplied with high-quality materials for business insight.

– A new role and mission for IT is emerging that focuses on enabling business innovation and proactively managing solutions and their providers, including systems mgmt, change mgmt. and vendor mgmt. as key disciplines, that require new skill sets and place a premium on interpersonal communication.

Data integration and automated workflow in the Cloud will remain critical capabilities for long-term success, especially for hybrid large-enterprise environments.

Cloud Services Providers will prosper with a range of offerings, including Cloud-enabled BPO BP S d di t i i t f ISV d b i i ti kl d

Copyright 2012 ǀ Saugatuck Technology Inc. ǀ All Rights Reserved ǀ www.saugatucktechnology.com

BPO, BPaaS, and discrete services in support of ISVs and businesses migrating workloads.

Page: 2

Shifting IT Priorities Driven by CloudThe Internet was about connecting computers – the Web was about connecting the world –the Cloud is about connecting businesses, rethinking business processes, and driving rapid innovation and new business opportunities.

IT as a Cost Center• Era of Flat IT Budgets• Cost efficiency paramount

while maintaining value

Need to Support Growth / Innovation• Continued digital transformation of the while maintaining value

delivery• Need to redefine mission,

role & responsibility of IT in new Cloud centric era

gbusiness – internal process improvement, new Cloud-enabled products / services (Cloud Business), new partner and delivery modelsnew Cloud-centric era

• Evolving enterprise architecture

• Innovative use of new technologies –Cloud, Social Business, Mobility, Big Data, et al

• Globalization – helping the business p gremain relevant & competitive in global era


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Source: Saugatuck Technology Inc.

Cloud’s Evolving Strategic Importance for CIOs / CTOs

D i h i i d b CIO / CTO i 2010 i h d d d i h Dramatic change in attitude by CIOs / CTOs since 2010 in the degree and speed with which Cloud is now viewed as fundamental to IT planning and strategy.

Strong consensus emerging among the CIOs / CTOs that Cloud is just another weapon in the growing arsenal of tools to address evolving business needs – with a de facto recognition that the future will definitely be a mixed environment of on-prem, hosted, and public/private Cloud services, including hybrid deployments.


Page: 4

Source: Saugatuck Technology, Jan. 2012, n=12 large enterprise CIO / CTO deep dive interviews (all global companies)

What the CIOs / CTOs Had to Say

Q f R CIO/CTO I iQuotes from Recent CIO/CTO Interviews• It seems inevitable that a good chunk of IT solutions will

be Cloud-based in the future. Getting in front of the curve is important. (CIO, LifeScience)

• Our users are demanding it and the flexibility and speed

Saugatuck Insight• Most of the large enterprise IT leaders

we spoke in Jan. 2012 are now well beyond the learning phase.R hl 25 tOur users are demanding it, and the flexibility and speed

that the Cloud provides. More and more of our solution providers are now ONLY providing Cloud solutions. This is becoming less about an IT decision, and more about a market shift & growing end-user demand. (CIO, Media/Ent)

W b li th t ll f b i li ti h ld

• Roughly 25 percent are now aggress-ively moving toward the Cloud, in all of its forms. While still a minority, this group is developing and adopting 3-5 year plans to deploy a fully enabled• We believe that all of our business applications should

be delivered as cloud solutions. We are in the process of giving up our physical assets (data center) and moving existing applications to a cloud hosting provider and making plans to get rid of all of our traditional

year plans to deploy a fully enabled Cloud application / infrastructure environment, including plans to rip /replace a large chunk of their current data center footprint.g p g

applications. (VP IT Plan, BusSvcs)

• We operate two data centers with many apps having large databases at the core. We are not jumping whole-hog into the Cloud. Instead, we are nibbling at the edges getting familiar through testing and investments

p• The vast majority (65% +), however, are

taking a more pragmatic approach, leveraging the Cloud for new business requirements as they arise – but largely

edges, getting familiar through testing and investments in small, non-critical apps. (CIO, MktSvcs)

• Our environment demands such high levels of security that public cloud is out of the question; but we are investigating private cloud. (CIO, FinSvcs)

leaving the existing footprint in place.• Only one of the twelve deep-dive

interviews we conducted (8%) had no Cloud investment plans at present.


Page: 5


Saugatuck’s Cloud EcoStack™What Is It? What Is In It? Who Is In It?

Level 4

Cloud Business Services and Operations

Business Process Outsourcing, Managed

Services, Systems Integration, Related

Accenture, Appirio, Cognizant, Comcast, IBM, Infosys, Dell Services, SAP, Symantec, Tenzing, Verizon Wipro

Level 3 Cloud Business Solutions

Software -as-a-Service (SaaS)

ADP, Ariba, Adaptive Planning, DellHost Analytics, Intacct, Microsoft,NetSuite, Oracle, Salesforce, SAPSuccessFactors, Symantec,Taleo Workday

and Operations gServices

Verizon, Wipro

Level 2 Cloud Platforms & Hubs

Platform -as-a-Service (PaaS), Hosted services (e.g., analytics, business services, app dev, DBMS,

i t ti it )

Accenture, Amazon, Apprenda, Dell Boomi, Google, HP, IBM, Joyent,Microsoft, OpSource, Oracle, ProgressRackspace, SafeNet, Salesforce,S i S S ib VM

,

Taleo, Workday

Level 1

Cloud Infrastructure Services

Infrastructure -as-a-Service (IaaS) / “Cloud

Computing” (e.g., computing storage)

Amazon, AT&T, HP, IBM, Joyent,Latisys, Microsoft, NaviSite, NTT,OpSource / Data Dimension, Peer 1, Rackspace, Savvis, Verizon, Wipro

integration, security) Savvis, Servoy, Scribe, VMware,

Level 0 Cloud Technologies

Basic hardware, software, networking,

and services

Cisco, Dell, HP, IBM, Intel, Microsoft, OpenStack, Oracle, Red Hat, Ubuntu, VMmare

computing, storage) p , , , p



Page: 6

The Evolving Cloudscape

Through 2015, the largest driver of Cloud IT workloads will continue to be Cloud Business Solutions (including business apps, social business IT and mobile solutions).Key drivers shift from “better, faster and cheaper” to “transforming the enterprise.”

The Rise of Cloud IT and Cloud BusinessHigh

Wave I: 2001-2006Cost-Effective

SaaS 1.0Wave II: 2005-2010

Integrated

SaaS 2.0Wave III: 2008-2013Workflow-Enabled

Cloud IT EraWave IV: 2011-2016

Measured, Monitored, Managed

optio

n

Cost EffectiveSoftware Delivery

IntegratedBusiness Solutions

Mainstream SaaS Adoption

Business Transformation

Ubiquitous SaaS AdoptionFoc s on B siness Transformation

Post-SaaS Adoption• End-to-End Cloud Business Processes• Intelligent Hubs Linking Platforms• Virtualization on Mobile Devices

, , gBusiness Processes

Cloud ITGestation

Period• SaaS Remains Core

Ado

Early SaaS Adoption• Stand-alone Apps• Multi-tenancy• Limited Configurability• Focus on TCO / rapid deployment

Mainstream SaaS Adoption• Integrated w/ Business• SaaS Integration Platforms • Business Marketplaces

and SaaS Ecosystems• Customization Capability• Focus on Integration

• Focus on Business Transformation• ISV to SaaS Enablement • Server and Application Virtualization• SaaS Development Platforms (PaaS)• Public Cloud Infrastructure (IaaS)• Cloud Collaboration Platforms• Customized, Personalized Workflow

• Virtualization on Mobile Devices• Elastic Cloud Infrastructure• Standards for Workload Portability• SLAs for Composite Service Offerings• Support at Business Process Level

• PaaS Enables Composite Solutions• IaaS at the Margins

but evolving• Mobility,

Collaboration and

Source: Saugatuck Technology Inc

Low

deployment

2006 2007 2008 2009 2010 2011 2012 20132004 2005 2014 2015 20162003

Collaboration and Social Business

technologies Explode



Page: 7

After the Storm – The Shift to the Cloud Accelerates

Through 2016, Hybrid-Cloud becomes the enterprise platform of choice – a transitional platform, however, en route to a future dominated by public and private clouds.By 2016, 75 percent or more of NEW enterprise IT spend will be Cloud-based or Hybrid.

North America 2012 2014 2016

Cloud-based (pure-play) 5% 14% 34%

Cloud / On premise (H b id) 41% 67% 54%

But significant differences by region!

63%

60%

My company’s preference for deploying new business software (on a continuum from On-premise to Hybrid-Cloud

to pure-play Cloud) will be:

Cloud / On-premise (Hybrid) 41% 67% 54%

On-premise 53% 19% 11%50%

40%

47%

39%

30%

40%

50%

Europe 2012 2014 2016

Cloud-based (pure-play) 17% 23% 42%18%

13%10%

19%

0%

10%

20%

2012 2014 2016


On-premise 48% 17% 16%

Asia Pac 2012 2014 2016

S S t k T h l 2012 Cl d B i S l ti S Gl b l N 228 (F b 2012)

2012 2014 2016

On-premise

Cloud / On-premise(Hybrid or highly Interwoven deployemnt)

Cloud-based(pure-play)

Cloud-based (pure-play) 11% 26% 47%


On-premise 42% 16% 13%


Source: Saugatuck Technology , 2012 Cloud Business Solution Survey ,Global, N=228 (Feb 2012)

Page: 8

SaaS Business Software Purchase Plans

Notes on the Data• No business software

category will remain without massive Cloud 20%

27%

24%

12%

10%

13%

20%

19%

19%

16%

15%

16%

14%

13%

13%

Customer Service / Support

CRM / Salesforce Automation

Collaboration / Communications / Social

use by YE2014.• Finance/Accounting looks

to advance significantly through YE 2014.

• Three clear tiers emerge 17%

16%

12%

22%

15%

13%

17%

13%

15%

14%

16%

17%

16%

16%

16%

14%

12%

16%

15%

15%

Software Development / Test

Procurement / Sourcing / Spend Management

eCommerce / Collaborative Commerce

Human Resources / Talent Management

over time, delineated by “Not Planning to Implement” and with the top tier clearly based on current adoption trends: Collaboration CRM

8%

12%

13%

17%

12%

12%

12%

15%

13%

16%

19%

15%

16%

14%

18%

16%

17%

14%

13%

12%

Governance, Risk and Compliance

Budgeting / Reporting / Planning

Business Intelligence / Advanced Analytics

Software Development / Test

Collaboration, CRM, Customer Support, & HR.

• In top-tier categories, we see strong slowdowns in adoption through 2013, with re acceleration in

12%

8%

12%

10%

15%

14%

14%

16%

12%

18%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Finance / Accounting

ERP / Manufacturing / Supply Chain

Saugatuck Insight: This indicates the purchase of at least one instance in each category, and not all instances or uses. The core message is that the move toward the use of Cloud-based business software is inexorable, but not universal or complete. The fact that no categories add up to 100% suggests strongly that not all business software will be Cloud-based in the foreseeable future And again the closer we get to core enterprise money the less Cloud presence is expected

with re-acceleration in 2014. Source: Saugatuck Technology n=228

Aleady in Use (by YE2011) 2012 2013 2014 2015 or Beyond


in the foreseeable future. And again, the closer we get to core enterprise money, the less Cloud presence is expected.

Page: 9

SaaS Business Software Purchase Plans Select Solutions by Region

Notes on the Data• North America is the

dominant region for “Not Planning to Implement in Installed

201220132014

2015+Collaboration / Social

Installed201220132014

2015+

CRM / Salesforce Automation

Cloud” across most solution categories

• Asia (followed closely by NA) leads in Collaboration “Already in U ”

20142015+

HCM/ Talent Management

0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100%

20142015+

eCommerce / Collab Commerce

Use”.• Asia is also the

dominant region for implementing eCommerce by 2012.

0% 20% 40% 60% 80% 100%

Installed20122013

0% 20% 40% 60% 80% 100%

Installed20122013

Finance / AccountingBI / Advanced Analytics

0% 20% 40% 60% 80% 100%


2015+

0% 20% 40% 60% 80% 100%


2015+

BI / Advanced Analytics

Saugatuck Insight: Asian responses for Already “Installed” and for Planning to Implement by Year End “2012”, “2013”, and “2014” across most solution areas suggest near-term focused objectives for both internal and trading partner efficiencies.

Source: Saugatuck Technology n=228

0% 20% 40% 60% 80% 100%0% 20% 40% 60% 80% 100%Asia Europe North America


Page: 10

SaaS/Cloud Experiences

Notes on the DataKey statements regarding Cloud usage over time:

“Strongly Agree” + “Agree”

The most important long-term benefits of Cloud are greater business flexibility and agility vs. cost savings. 65%

• Overall, SaaS/Cloud are being deeply integrated into ongoing business

ti dMobile devices significantly improve value and usefulness of Social Cloud solutions. 61%

The risk of Cloud provider lock-in is an important business and technology concern at my company. 56%

My company is leveraging the Cloud for internal cost savings and business process 55%

operations and management.

• The trends toward more integrative uses and benefits are more clear.

• Costs are seen as lowerimprovement. 55%

Software-as-a-Service (SaaS) will continue to lead our Cloud spending through 2015 (vs. IaaS, PaaS, BPaaS et al). 53%

Embedding “social” capabilities into important business workflows is critical to our ’ 46%

Costs are seen as lower than anticipated - even so, nearly 2/3 of executives don’t agree that SaaS has met business value

company’s success.

My company is leveraging Cloud to create revenue-producing products / services. 45%

We can prove ROI from using Cloud-based social tools. 40%

Cloud Business Solutions have met or exceeded our value expectations. 37%

expectations. • Mobility’s influence is

clear- though perhaps not yet understood.

• And while CRM has long been the leading

We have reduced our procurement spend by using B2B marketplaces and Collaborative Commerce capabilities in the Cloud. 34%

Cloud is costing more than we anticipated. 32%

We have increased our sales revenue by using Cloud CRM and marketing tools. 31%

long been the leading SaaS business solution worldwide, it has not yet been seen to increase sales revenue.

Source: Saugatuck Technology n=228


y g g Source: Saugatuck Technology n=228

Page: 11

Infrastructure TCO: Cloud vs. In-house by Workload Size

Workload Sizes and DescriptionsSmall Medium Large

By YE2013, 85 percent of large enterprise data center capacity will be virtualized.By YE2014, 75 percent (+) of large enterprises will use Private Clouds for general workloads.

Small Medium LargePublic or Private

Cloud Public Cloud Public Cloud + Hosted / Dedicated Private Cloud

Hosted / Dedicated Private Cloud

• Web Serving on 2 virtual images • Web Serving on 6 virtual images

• Web serving on 8 dedicated servers

Workload Attributes

virtual images• Database on 1

virtual image• Application on 4

virtual images• 250 GB of disk

• Database on dedicated server• Application on 2 virtual images + 2

dedicated servers• 500 GB of disk• Each virtual image consists of 4

CPUs and 6 GB of memory

• Database on a cluster• Application on 6 dedicated

servers, • 3.5 TB of disk• Each dedicated server consists

of 12 CPU and 64 GB of memoryEach virtual image consists of 2 CPUs and 4GB of memory

CPUs and 6 GB of memory• Each dedicated server consists of

12 CPUs, 64 GB of memory

of 12 CPU and 64 GB of memory• DB cluster is two machines each

with 80 CPUs and 256 GB memory

Projected S i 20% t 40% 25% t 35% 15% t 20%

Saugatuck Insight: Vendors of Public Clouds and Hosting options can usually price dedicated equipment at 80% or less of what all but the largest firms can attain – due to their costs of HW acquisition and economies-of-scale in site costs staffing etc

Savings vs. Typical In-House

20% to 40% 25% to 35% 15% to 20%



what all but the largest firms can attain due to their costs of HW acquisition, and economies-of-scale in site costs, staffing, etc.

Page: 12

Large Enterprise Infrastructure – Operating View 2015

Elastic and Just-in-time Infrastructure: Agility– Dynamic and instantaneous availability of “unlimited” resources.– All aspects of data center (including storage function and specialized functionality

such as security) become plug & play and location / infrastructure independent.such as security) become plug & play and location / infrastructure independent. – Separation between Cloud and on-premises resources vanishes as enterprise

infrastructure becomes logically seamless / homogeneous.– Workload characteristics define the optimal infrastructure (e.g., dedicated, virtualized,

internal private cloud external private cloud or public cloud)internal private cloud, external private cloud, or public cloud).

Evolving Infrastructure Value: Massive Reduction in Support Costs– Universal abstraction eliminates inter-layer dependency testing and maintenance – Systems Integration testing shifts to Cloud / Platform provider– Massive reduction in people and support costs.

Self Aware Applications and Service Levels: IT Mgmt Business Value– Tools, processes, and service providers evolving to manage hybrid workloads

spanning architectures and infrastructuresspanning architectures and infrastructures.– IT management shifts from managing assets to managing businesses processes /

outcomes. Technology management skills increasingly become secondary to business and supplier management skills.


Page: 13


Cloud Drives New Mission for ITPeriod of IT Change: Pre-Cloud Transitory Cloud FuturePrimary Architecture Client / Server SaaS / Hybrid-Cloud Cloud

Primary Management Roles Asset & Cost Control Asset & Cost Definition Asset & Cost

CoordinationRoles Coordination

Primary Mission Supporting Business Operations

Enabling Business Improvement

Enabling Business Innovation

Core Control Mission Standardization of Technologies & Providers

Standardization of Providers & Services

Standardization(s) of InterfacesTechnologies & Providers Providers & Services Interfaces

Standard Approach to IT Development

and Delivery

1. Buy2. Build/Adapt3. Outsource

1. Buy & Rent2. Outsource3. Build/Adapt

1. Rent2. Outsource3. Adapt4 Buy4. Buy

Primary Approach to Business Data

Business Data Storage & Protection

Master Data Management

Master Data and Process Integration

Primary Role in I t ti

Integration of Things and D t

Integration of Things, D t d S i

Integration of Data, S i d PIntegration Data Data and Services Services, and Processes

Scope of Provider,Device, and App

Mgmt. Responsibility

Dozens of providers, 100s of devices, 1,000s of programs

100s of providers, 1,000s of devices, 100,00s of programs

100s of providers,1,000s of devices,100,000s of programs


Page: 14


Executive Summary Cloud is, in effect, still in its infancy. Yet it is already changing how enterprises (both large

and small) do business, find business, and build business – because it is fundamentally changing how technologies are delivered and used to enable the enterprise.

The greatest Cloud opportunities for any enterprise or IT provider are in enabling new g pp y p p gways of doing business, and creating entirely new businesses.

Over the short-term, Hybrid-Cloud becomes the enterprise platform of choice. However, it is only a transitional platform, en route to a future dominated by public and private clouds.

In order to fully enable and support Cloud traditional enterprise IT organizations In order to fully enable and support Cloud, traditional enterprise IT organizations, structures, and practices must be disassembled and rebuilt. Enterprise IT, in its traditional form, is not strong or pliable enough to enable or support effective enterprise Cloud use for business in most organizations.

Th t t th t f Cl d i f d b th t i t i ti ti i it t The greatest threat from Cloud is faced by those enterprises not investigating or using it to improve business. Denying or preventing Cloud use effectively thwarts enterprise business growth.

As with any business tool, Cloud must be effectively and efficiently managed in order to deliver business value. Given its infancy, the most advanced and effective uses of Cloud (and Cloud management practices) are still not well-known outside of a few, experienced executives and enterprises.


Page: 15

About Saugatuck Technology

CONTINUOUS RESEARCH SERVICES (CRS)

SAUGATUCK OFFERINGS AND SERVICESSaugatuck Technology provides subscription research / advisory and consulting services to senior business and IT executives, technology and software vendors, business / IT services providers, and investors. Our Mission is to help our clients make better business decisions and create new business value through trusted and objective insights into the key market trends and emerging technologies driving real change. Over the last few years, this has included a major focus on Software-as-a-Service (SaaS), Cloud Infrastructure, Social Business and Big Data technologies, among other key trends.

US AND EUROPEAN OFFICES •( )• Subscription access to Saugatuck’s ongoing premium research, providing independent

/ unbiased insights and guidance into key market trends, buyer behavior, "white-space" opportunities and disruptive market forces driving changes in business computing.

• A variety of advisory services, including telephone-based inquiry, and “Analyst Days”

USER STRATEGIC CONSULTING SERVICES• Leadership and Planning Workshops

St t d P A t

HeadquartersSaugatuck Technology Inc.8 Wright Street, 1st FloorWestport, CT 06880 USA(P) +1.203.454.3900Regional Sales: • East: Al Vanek@SaugatuckTechnology com

• • •

• Strategy and Program Assessments• Vendor Selection / Evaluations• Cloud Transition / Migration and Management Best Practices

VENDOR STRATEGIC CONSULTING SERVICES• Market Assessment• Strategy Validation• Opportunity Analysis

East: [email protected]

Silicon ValleySaugatuck Technology Inc.5201 Great America Parkway, Suite 320Santa Clara, CA 95054 USA(P) +1.408.727.9700 Regional Sales:

W t B B tt @S t kT h l• Positioning / Messaging / Go-to-Market Strategies• Competitive Analysis

THOUGHT-LEADERSHIP PROGRAMS• Custom research programs targeting key technology and business/IT investment

decisions of CIOs, CFOs and senior business executives• Delivered as research reports, position papers or executive presentations.

VALUE ADDED SERVICES

• West: [email protected]

GermanySaugatuck Technology Inc.Wilhelmstrasse 18 65185 Wiesbaden , Germany(P) +49.6123.630285Regional Sales:VALUE-ADDED SERVICES

• Competitive and market intelligence• Investment advisory services (M&A support, due diligence)• Primary and Secondary market research.

For more information about these or any other Saugatuck Technology service, please reach us through the contact information noted above. • To learn more about Saugatuck consulting and research offerings, go to www.saugatucktechnology.com or email Chris MacGregor for more information.

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g• Europe: [email protected]


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Cloud as Catalyst: Navigating the Business+IT Transition · Key Trends A sea-ch i ti b t th d l f...

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