Research Highlights and Outlook Focus on Managed Private-Cloud Services

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TECHNOLOGY BUSINESS RESEARCH, INC.

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Research Highlights and Outlook Focus on Managed Private Cloud Services

Technology Business Research Webinar Series

Oct. 24, 2013

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2 TBR Quarterly Webinar Series | 10.24.13 | www.tbri.com | ©2013 Technology Business Research Inc.

Cloud Business Research Highlights and Outlook: Webinar Presenter

Ramunas SvarcasSenior Analyst and Engagement Manager,Professional Services [email protected]@rjsTBR

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Managed Private Cloud and Professional Services

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Cloud Business Quarterly: Cloud Benchmark Definitions

SOURCE: TBR

Managed Private Cloud Taxonomy

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CLBQ Research Highlights and Outlook

Managed Private Cloud

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Managed Private Cloud Market Summary

The cloud computing delivery model is not an anomaly, rather a continuously evolving mechanism for providing IT services

What is happening in the managed private cloud market?

What segment of managed private cloud services is seeing the highest demand?

What segment of managed private cloud services is seeing the greatest growth?

TBR


TBR Position


Total IT services revenue growth continues to decline, but cloud-related revenues continue to expand as clients search for IT cost savings

What is Happening?As services portfolios expanded to include managed private cloud services, revenue for managed private cloud services grew 45% in 1Q13. Continued interest in cloud solutions is expected to result in an $18 billion market for cloud managed private services at the end of 2013 and double in size again to $37 billion by 2018.

Largest sub-segment?Industry-specific, vertical-focused solutions coupled with the transition of core products to new business models is enabling vendors to ride the rising wave of cloud “as a Service” offerings. Infrastructure as a Service dominates managed private cloud services revenues as clients convert capital costs to operating expenses.

Greatest Growth?The fastest-growing managed service market, Business Process as a Service is evolving as vendors create differentiated solutions that leverage legacy strengths with unique cloud IP and assets. Increased value is generated by the application of analytics to data created through the outsourcing of business processes.

TBR


Managed Private and Professional Services Cloud Market

Cloud Market Sizing and Forecast

Managed private and professional services revenues are expected to grow hand-in-hand as clients continue to leverage vendors for assistance

Doubled

Will Double

TBR


Managed Private Cloud Services Revenue Growth

Managed private cloud revenue growth is outperforming total services growth as clients embrace the cost savings of hosted cloud services

Managed Private Cloud Revenue Growth

From the 2013 TBR Private Cloud Customer Survey, clients interested in cloud are choosing to build their own private clouds 30% of the time, while system integrators host and manage their cloud environments

70% of the time.

Managed Private Cloud Revenue Growth

Outperforming Total Service Revenue Growth

TBR


TBR Position


IaaS solutions are the prevalent approach in reducing IT infrastructure cost




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Segment Growth

Managed Private Cloud Market Segments

While managing hardware infrastructure dominates revenues, business platforms incorporating new solutions led managed services growth

Private Dynamic Applications, or Software as a Service (SaaS), and Infrastructure as a Service (IaaS) dominate the landscape and accounted for 37% and 40%, respectively, of total managed private cloud services revenue in 1Q13.

$464 $513 $551 $596 $695 $723 $775 $845 $909 $936$346 $367 $416

$509$557 $581 $615

$767$851 $901

$161$183

$203$234

$284 $293$316

$374$418 $423

$29 $31

$34 $36

$51 $53 $59

$98 $117

$155

$1,001$1,094

$1,204$1,374

$1,587 $1,650$1,765

$2,084$2,296

$2,415

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13E

Reve

nue

(in $

Mill

ions

)

CLOUD REVENUES BY SEGMENT AMONG VENDORS COVERED IN MANAGED PRIVATE CLOUD MARKET BENCHMARK

Business Platforms:128.8%PaaS: 47.2%

Dynamic Apps: 52.7%

IaaS: 30.7%

TBR

SOURCE: TBR ESTIMATES

Total 1Q13 YTY Growth: 44.6%

1Q13 Growth YTY:

TBR


Private IaaS Revenue Growth: Percentage and Dollar Growth

IT services vendors are re-engineering portfolios, replacing traditional ITO with Cloud IaaS offerings

Private Cloud IaaS: Growth Leaders

The up-and-coming players are focusing on developing human capital resources and expanding portfolio offerings to effectively compete with the established revenue leaders who began embracing

“as a Service” offerings in the early stages of adoption of cloud computing.

Revenue Leaders

Up-and-coming Players

Within the cloud market, initial engagements are small test cases; successfully implemented will lead to additional opportunities and revenues.

TBR



The bevy of data centers enable dollar growth leadership in managed private IaaS as clients look to reduce capital infrastructure costs


The 2013 TBR Private Cloud Customer Survey also indicates that reduction of total cost of ownership is the second most perceived benefit of moving to a managed private cloud.

Leaders, except Rackspace, are cannibalizing legacy-hosted, infrastructure-managed services and replacing them with cloud IaaS services.

Revenue Leaders


TBR



Industry-specific solutions help services firms rapidly expand managed services revenues


With virtualization an old concept, vendors such as VMware are expanding services offerings to include managed IaaS offerings to accommodate the growing trend to host and then manage IT infrastructure.

Up-and-comers are relying on legacy expertise and strengths to create offerings for the financial, retail, healthcare and manufacturing verticals.

Revenue Leaders


TBR


TBR Position


The merging of analytics with BPO on the cloud is generating high interest from clients and driving demand growth for vendors




TBR


Private Cloud BPaaS: Growth Leaders

Private BPaaS Revenue Growth versus Total Cloud Revenue Growth

Niche BPaaS solutions in industry verticals and analytics capabilities are driving growth leadership in the BPaaS market

The number of vendors competing in the managed private cloud BPaaS market is considerably smaller than for other cloud services, as BPO has become a commodity service with low profitability. Adding capabilities, and

thus value, to the service is re-energizing the market.

Leaders

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Private BPaaS Revenue Growth: Percentage and Dollar Growth

Dollar revenue growth leadership tracks closely to revenue growth as BPO vendors add value to offerings

Private Cloud BPaaS: Growth Leaders

Many enterprises have outsourced their business processes. The additional value with automation, cloud delivery and coupling of analytics with BPO has yet to be fully demonstrated, resulting in BPaaS recording the

lowest dollar revenue growth of all managed private cloud services.

Leaders

TBR


Applying analytics to business process outsourced services is key to creating value for clients and generating revenue growth for vendors

Vendor Offering Description

TCS E-commerce Platform

Provides clients managed commerce business service, including merchandising and content management, order life cycle management, campaign management, site operations, analytics and Web operations, through a hosted private cloud delivery model

Infosys BigdataEdge Applies analytics to data acquired from multiple sources including business process outsourcing operations; the solution is designed to improve business efficiency for clients, enabling them to pursue growth initiatives faster.

Xerox ConnectKey Leverages a software platform that integrates with Xerox multifunction printers to provide cloud-based services, back-office process automation and document management

HP Customer Engagement as a Service (CEaaS)

Provides clients with a set of cloud-based contact center tools that help deliver customer service in a single platform through enhanced features such as social media marketing, mobile integration and customer analytics

Private Cloud BPaaS: Portfolio Expansion

While BPO enables companies to reduce operational costs by having others execute daily business processes, the application of analytics enables information to be derived from the data collected through outsourced activities,

leading to better business execution decisions and resulting in improved operations.

TBR


TBR Position


Managed private cloud revenues continue to expand as clients search for IT cost savings

What is Happening?

Managed private cloud services growth will continue to expand at double-digit rates, resulting in a $37 billion market by 2018.

Largest sub-segment?

Infrastructure as a Service and switching from capex to opex costing models to provide IT services will continue to dominate the market.

Greatest Growth?

Business Process as a Service will continue to expand, providing to clients improved operational efficiency and enlightened decision-making capabilities through the application of analytics.

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Questions?

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Cloud Benchmarks

Managed Public and Professional Services Cloud Benchmark: Professional Services Cloud Focus

11/7/2013

Cloud Components Benchmark TBD

Public Cloud Benchmark January, 2014


Private Cloud 11/14/2013

Cloud Professional Services December, 2013

Hybrid Cloud January, 2013

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Cloud Business Quarterly Research Highlights and Outlook: Webinar Presenters

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Ramunas SvarcasSenior Analyst and Engagement Manager,Professional Services [email protected]@rjsTBR

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Research Highlights and Outlook Focus on Managed Private-Cloud Services

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