Enterprise Cloud Computing Evolution

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1 Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved. The Continuing Enterprise Cloud Computing Evolution A Market Overview based on Primary Research Benchmarking, November 2012

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The WaveLength team releases the first of its three-volume series, The Continuing Enterprise Cloud Market Evolution. Our series aims to help IT, telecom, and cloud marketers better understand medium and large enterprise cloud prospects and customers. It’s finally here.. catch the first presentation of our three-volume series where we look at the state of the market for cloud solutions and how its changed over the last 18 months.

Transcript of Enterprise Cloud Computing Evolution

Page 1: Enterprise Cloud Computing Evolution

1 Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

The Continuing Enterprise Cloud Computing Evolution A Market Overview based on Primary Research Benchmarking, November 2012

Page 2: Enterprise Cloud Computing Evolution

• Key Findings

• Goals and key questions

• What is the cloud market from a vendor or provider perspective?

• What is the study’s big picture of the enterprise cloud?

• What are the enterprise cloud market segments ?

• What is the near-term future of enterprise cloud?

• Summing Up

• Appendix: Goals and methods

Agenda

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 3: Enterprise Cloud Computing Evolution

Cloud computing adoption among medium to large

enterprises is now widespread

Cloud segments have demographic trends

Cloud model preferences and vendors vary by segment

Project priorities vary by segment

Enterprises will rapidly deploy more cloud solution in coming

year

Pros use every type of cloud, with most common being public cloud (91%) & least common is hybrid (45%); Pioneers use internal private cloud (56%) & PaaS (46%); 83% of Pros use AWS data center, contrasted with 28% of Pioneers, who mostly use traditional IBM & Verizon.

Nearly 90% of responding enterprises use of plan to use some type of cloud computing solution; the market is comprise d of 19% Cloud Pros who have multiple clouds, 59% Pioneers who use or test a cloud, 12% Planners who intend to deploy and 10% Stragglers who have no plans.

Cloud Pros and Pioneers tend to be very large enterprises in banking/finance, manufacturing, higher education, or business services; while Planners and Stragglers are smaller and in government, healthcare and heavy industries.

Cloud Pros implement network-related projects to prepare for Cloud and Pioneers improve storage and security. About or greater than 70% of Pros add LAN bandwidth, WAN bandwidth and WAN optimization, while about 70% of Pioneers add SANs, NAS and encryption.

Percentage of IT in the cloud estimates are slightly higher in 2012 than in 2011. Pros expect to increase cloud as a percentage of IT from about 28% to 38% in the next 3 years, while Pioneers hope to more than doubles its percent of IT in the cloud from nearly 15% to 33%.

Five key study findings on enterprise cloud computing migration among 97 medium to large enterprise IT buyers

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 4: Enterprise Cloud Computing Evolution

Goal and key questions

How has the market changed

in the last 18 months?

Help IT and telecom marketers better understand medium and

large enterprise cloud prospects and customers

How does enterprise IT vary

by segment?

What are market segments and who are they?

How do future cloud plans vary by

segment? How do cloud

solutions vary by segment?

What’s the current market for cloud

solutions?

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 5: Enterprise Cloud Computing Evolution

How’s the cloud market from a vendor or provider perspective? In a challenging macroeconomic environment, cloud has a profound impact….

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Enabling technologies prosper

“Virtualize everything” continues

Nicira’s network virtualization has high-profile user in eBay, and a buyer in VMware

VMware’s Monster VMs grow from 32 to 64 virtual CPUs

Zerto’s cloud-based disaster recovery services for enterprises and service providers include virtual replication

Object storage takes root

Cloudian launched free, object-based storage platform, storing up to 100TB

Scality grew 120% year-over-year and signed agreements supporting over 50 million users

Cleversafe launched Object-based Dispersed Storage System for Big Data, promising to reduce required storage and network bottlenecks supporting “exabyte and beyond” storage

WAN optimization and content delivery importance renews

Aryaka, a cloud-based WAN optimization and app acceleration service provider partners with AWS

Akamai buys FastSoft to improve website and web application performance across the first and last miles, as well as through the cloud, without requiring client software or browser plug-ins

Sources: Company Press Releases

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Telco & CDN providers renew grow

Large integrators & outsourcers see gains

Pure-play cloud vendors grow unabated

Cloud platforms find market acceptance

“Enterprise customer segment is finally seeing revenue increases even without any lift from the economy– its first…in more than four years. The growth was small, but still a positive trend.” AT&T, July 24, 2012 “Legacy Savvis…year-over-year increases of 11.5% in managed hosting and cloud services revenues and a modest increase in network services revenues.” CenturyLink, Aug. 10, 2012 “Cloud infrastructure solutions growth, accelerated to 22% year-over-year, made up 58% of our total revenue. And in terms of brand-new customers to Akamai, over 75% purchased a cloud infrastructure solution.” Akamai, July 25, 2012

Many tech segments benefit

“Revenue was up 34% over last year, for the 6th consecutive quarter of year-over-year revenue growth in the mid-30% range. There's no other enterprise software company of our scale growing at this rate.” Salesforce.com, July 24, 2012 “Overall, the Data Center & Cloud business had a strong first half of 2012, up 25% through midyear. Within our SaaS business, revenue was up 18% from last year. Our collaboration and data sharing products, which account for over half of the total SaaS revenue, increased 33%.” Citrix, July 25, 2012 “Dedicated cloud revenue increased…representing 4.1% sequential growth & 21% growth on a year-over-year basis. Public revenue cloud…12.1% sequential growth & 69% growth on a year-over-year basis..” Rackspace, August 7, 2012

“We doubled last year’s revenue, with contribution from all areas, private cloud, public cloud and our industry-based solutions.” IBM, July 18, 2012 “Demand continues to grow for cloud solutions, for application re-platforming and also for new software-as-a-service solutions from both the established technology players, as well as from newer SaaS providers.” Accenture, June 28, 2012

With more than 100 large enterprise customers, Cloudstack was contributed to the Apache software foundation which runs some of most successful open-source cloud projects. eBay announced they use OpenStack to manage a high-volume dev, test and experimentation environment where apps are created for eBay marketplaces. Neustar ported its UltraDNS to AWS.

Sources: Company earnings calls, press releases

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Hardware landscape changing, but data center and storage provide bright spots

“Overall switching revenues flat this quarter… with fixed switching up 3% and modular switching down 7%...Routing growing revenues 4% year-over-year while many of our peers are experiencing negative growth... Data center business had strong growth with revenues up 87%.”

Cisco, August 15th, 2012

“On a less positive note, the mainstream server market continues to show weakness…. Turning to Enterprise Servers, Storage and Networking. Revenue of $5.1 billion was down 4% year-over-year. Storage, the continued strong performance of 3PAR, with more than 60% growth, and StoreOnce, with double-digit growth, did not offset the decline in EVA and Tape revenue. ”

HP, August 15th, 2012

Sources: Company Earnings Calls

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What about enterprises? How do they benefit?

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Cloud brings increased agility, cost savings, new functionality and competitive advantage

Cloud computing growth

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

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Turning to the study, what’s the big picture of enterprise cloud? Understanding cloud services first requires looking through a wider lens of where the journey to the cloud begins-- virtualization and outsourcing.

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Among all respondents, disaster recovery is outsourced the most

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Q. Yes or no, do you outsource any of the following functions… ? (n=97)

Storage

Data backups

Perimeter Security

Network Management

Disaster Recovery

Biggest growth for outsourcing is storage-related where levels are twice last year’s levels. Security is also up about 80% and network management stayed neutral.

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 13: Enterprise Cloud Computing Evolution

Nearly half of all servers are virtualized, along with about a third of storage and workloads

Q. Regarding storage/servers/Tier 1 workloads/Tier 2 workloads, what percentage is virtualized? (n=96)

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Respondents most use IBM and Verizon data centers

• In addition to any internal data center, most respondents avoid single vendor dependencies by using an average of 2.1 data center companies

• The minimum was 1 and the maximum was 9 vendors

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 15: Enterprise Cloud Computing Evolution

Cloud use hits nearly 80% of respondents, and like last year, most common deployment models are still PaaS and private clouds

Q: For each of the following types of cloud deployment, we’d like to know if it’s currently in production, in trial, planned in 24 months? N=97

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Up from 58% of medium to large organizations in just 18 months, most now test or use some type of cloud solution. Penetration of PaaS and hosted private clouds are about the same as last year, while public clouds more than doubled. Internal private clouds and IaaS grew about 60%.

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 16: Enterprise Cloud Computing Evolution

With nearly half of all respondents using an HR cloud app, it surpasses CRM as the top enterprise app in the cloud

Q. Again for apps, is a cloud computing architecture in production, in trial, planned, or not planned? N=78 16

Human Resources

Customer Relationship Management

Desktop Apps

Accounting/Finance

Business Intelligence

Supply Chain/Enterprise Resource Management

48.2%

34.6%

25.6%

18%

17.9%

9.4%

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 17: Enterprise Cloud Computing Evolution

No surprise that accounting is most often a private cloud and CRM is most likely public

Q. Again for apps, is a cloud computing architecture in production, in trial, planned, or not planned? N=42

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Customer Relationship Management

Human Resources 64% 24%

47% 44%

Desktop Apps 62% 31%

Private Public

Accounting/Finance 68% 11%

Supply Chain/Enterprise Resource Management

64% 25%

Business Intelligence 67% 27%

Hybrid

21%

12%

9%

10%

7%

12%

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 18: Enterprise Cloud Computing Evolution

Email and backup/data recovery remain top infrastructure-related app in the cloud

Q. Again for apps, is a cloud computing architecture in production, in trial, planned, or not planned? N=78

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*Not Included in 2011

Email

Remote desktop management

Backup storage/ disaster recovery

Tier 1 storage

Collaboration

Communications

Portals

39%

38.1%

30%

26.2%

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 19: Enterprise Cloud Computing Evolution

Most infrastructure-related apps use private clouds, but remote desktop & collaboration have more even split

19 Q. Again for apps, is a cloud computing architecture in production, in trial, planned, or not planned? N=42

Backup storage/ disaster recovery

Collaboration

Portals

Communications 70% 14%

Email 26% 74%

Private Public

71% 21%

Tier 1 storage 77% 11%

67% 28%

Remote desktop management 73% 17%

58% 31%

Hybrid

11%

10%

9%

16%

5%

11%

16%

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 20: Enterprise Cloud Computing Evolution

What are the enterprise cloud market segments?

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The medium to large enterprise market evolved into four broad segments

S: For each type of cloud deployment, we’d like to know if it’s currently in production, in trial, is planned in 24 months? N=96

Cloud Pioneers: Using cloud computing

Cloud Planners: Planning for cloud

Cloud Stragglers: No plans

In 2012, multi-cloud users emerged as a segment called the Cloud Pros. Accounting for about 19% of the sample, Cloud Pros truly lead the way by using four or more cloud solutions.

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Cloud Pros: Using multiple clouds

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 22: Enterprise Cloud Computing Evolution

Pros and Pioneers tend to be larger organizations, while Planners and Stragglers are smaller

Emerging segment Cloud Pros, like Pioneers, are mostly very large organizations. Planners tend to be medium-sized and Stragglers are all medium; all suggesting that cloud is no longer new technology.

Cloud Stragglers

Cloud Pros

Cloud Pioneers

Cloud Planners

S: How many employees does your organization have? N=96

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 23: Enterprise Cloud Computing Evolution

Cloud Pros

Cloud Pioneers

Financial services/banking, business services and manufacturing

Each segment contains the range of verticals, but some industries more prevalent than others

Cloud Planners

Cloud Stragglers

Business services, manufacturing and higher education

Financial services/banking, media, healthcare and government

Utilities, construction, mining and education

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 24: Enterprise Cloud Computing Evolution

Pros virtualize more than Pioneers and Pioneers virtualize more than Planners

Enterprises that use virtualization continue to increase. Last year, 73% of Pioneers used server virtualization, compared to this year’s 95%.

Q. Regarding storage/servers/Tier 1 workloads/Tier 2 workloads, what percentage is virtualized? (n=96)

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Each segment outsources different functions

25 Q. Yes or no, do you outsource any of the following functions… ? (n=96)

Storage

Data Backups

Perimeter Security

Network Management

Disaster Recovery

Across all IT functions, Stragglers outsource more, while Pioneers outsource storage and security significantly more than last year.

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 26: Enterprise Cloud Computing Evolution

Stragglers manage their own data centers, while other segments outsource more

Q: Which best describes your data center operations… ? (n=96) 26

Cloud Stragglers

Cloud Pros

Cloud Pioneers

Cloud Planners

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Data center trends mirror overall outsourcing trends. Last year, 68% of Pioneers internally hosted and managed their own data centers, compared to 47% now.

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Turning to cloud, nearly all Cloud Pros use a public cloud while half of Cloud Pioneers use an internal private cloud

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Q: For each of the following types of cloud deployment, we’d like to know if it’s currently in production, in trial, is planned in 24 months? N=78

27 Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Changes from last year are 1) Use of public clouds has doubled, and 2) use of internal private clouds surpassed hosted private clouds.

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Pros and Pioneers use multiple data centers with AWS serving nearly all, while Pioneers use IBM, Verizon, and Rackspace

Q: Which of the following data centers does your organization use? (n=90)

The open standards

divide?

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

AWS lags among Cloud Pioneers suggesting increased competition from other proprietary solutions as well as open standards.

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Pros expand existing data centers, while most Pioneers finished their data center consolidation & expansion

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Q: For each of the following we’d like to know if it’s currently in production, in trial, being planned in the next 24 months, no plans? N=76

Pros

Pioneers

Planners

Planned within 24 months Completed /In Process

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 30: Enterprise Cloud Computing Evolution

Most already finished or don’t expect to add 10G switching for increased capacity or new management tools

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Q: For each of the following we’d like to know if it’s currently in production, in trial, being planned in the next 24 months, no plans? N=76

Pros

Pioneers

Planners

Planned within 24 months Completed /In Process

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 31: Enterprise Cloud Computing Evolution

Experience is a powerful teacher: network is top project priority for Pros while security, storage & virtualization for Pioneers

Q: For each of the following were they necessary before cloud computing, during initial deployment, follow-on, future plans, or no plans? N=78 31

Last year, security projects got top priority in pre-cloud prep work while network-related projects were in the bottom half of the list. This year’s results show cloud’s strains on the network.

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 32: Enterprise Cloud Computing Evolution

What about future enterprise IT plans?

Page 33: Enterprise Cloud Computing Evolution

Expect even more outsourcing in coming years

Q: On a 1 to 10 scale, how much do you agree with the following statements… ? N=96

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Cloud Stragglers

Cloud Pros

Cloud Pioneers

Cloud Planners

Percentage that strongly agree that they will increase outsourcing in the next 24 months:

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Expectations for IT outsourcing increases are even stronger this year than last year; nearly 46% of Pioneers this year compared to 32% of them last year expect to outsource more.

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Pioneers aim for hybrids, private clouds and increased use of IaaS - while Pros look to add more PaaS-based apps and hybrid clouds

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The 24-Month Plan

Q: For each of the following types of cloud deployment, we’d like to know if it’s currently in production, in trial, is planned in 24 months? N=96

34 Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Results for Pioneers rank similarly to last year’s results. Given the increased experience, knowledge and sophistication of newly-emerged Pros, rankings are about what we’d expect to see.

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Close to last year’s levels, by 2015 Pros expect 38% and Pioneers expect 33% of IT to be in cloud

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Q. What percentage of your IT is currently cloud-based? (n=74) Q: What percentage of your IT will be outsourced to a cloud provider by 2012? 2015? N=96

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

For cloud users, an average of 4.4% of IT is cloud-based

Page 36: Enterprise Cloud Computing Evolution

Summing Up

Page 37: Enterprise Cloud Computing Evolution

Cloud computing adoption among medium to large

enterprises is widespread

Cloud segments have demographic trends

Cloud model preferences and vendors vary by segment

Project priorities vary by segment

Enterprises will rapidly deploy more cloud solution in coming

year

Pros use every type of cloud, with most common being public cloud (91%) & least common is hybrid (45%); Pioneers use internal private cloud (56%) & PaaS (46%); 83% of Pros use AWS data center, contrasted with 28% of Pioneers, who mostly use traditional IBM & Verizon.

Nearly 90% of responding enterprises use of plan to use some type of cloud computing solution; the market is comprise d of 19% Cloud Pros who have multiple clouds, 59% Pioneers who use or test a cloud, 12% Planners who intend to deploy and 10% Stragglers who have no plans.

Cloud Pros and Pioneers tend to be very large enterprises in banking/finance, manufacturing, higher education, or business services; while Planners and Stragglers are smaller and in government, healthcare and heavy industries.

Cloud Pros implement network-related projects to prepare for Cloud and Pioneers improve storage and security. About or greater than 70% of Pros add LAN bandwidth, WAN bandwidth and WAN optimization, while about 70% of Pioneers add SANs, NAS and encryption.

Percentage of IT in the cloud estimates are slightly higher this year than last. Pros expect to increase cloud as a percentage of IT from about 28% to 38% in the next 3 years, while Pioneers hope to more than doubles its percent of IT in the cloud from nearly 15% to 33%.

Five key study findings on enterprise cloud computing migration among 97 medium to large enterprise IT buyers

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 38: Enterprise Cloud Computing Evolution

The market has evolved as manageability improved, but performance is the new barrier

We are here

More Enduring Differentiation Current offerings very similar; no sustainable differentiation

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2011 2012

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 39: Enterprise Cloud Computing Evolution

How will the near-term enterprise cloud market evolve?

Read two upcoming reports and learn more about the four cloud segments and their preferences for 1) Service packaging and

marketing, and 2) Sales channels and buying

WaveLength Market Analytics LLC (www.wlanalytics.com)

Winn Technology Group, Inc. (www.winntech.net)

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.

Page 40: Enterprise Cloud Computing Evolution

• Goal: Understand broad enterprise migration-to-the cloud trends and the channel to customer

• Random sample drawn from Winn Enterprise/mid Market DB that included high-level IT decision-makers (Senior Managers, Directors, and VPs)

• Primary research data collection methodology collected by Winn Q2/Q3 2012 by using a telephone survey, supplemented by e-survey, landing page provided to provide respondents the ability to answer via Web, and incentives to increase response rates

• Sample size = 96; weighted to present distribution of US companies greater than 500 employees

• Using only SaaS alone not considered a cloud user or planner; they had to use another cloud service model and must actually have IT staff working on it

• Update from 2011 “Five Key Themes on Enterprise Cloud Migration”

Appendix: Goals and Methods

Copyright © 2012 WaveLength Market Analytics LLC & Winn Technology Group, Inc. All Rights Reserved.