1) Cloud computing enables entrepreneurs and small businesses to inexpensively access robust computing resources through public cloud platforms like AWS. 2) Adoption of public cloud services is growing rapidly across industries, though security concerns and regulatory issues still present barriers for some organizations. 3) Incumbent technology vendors face pressure to transition to new "cloud purchase models" that focus on usage-based pricing and software-as-a-service offerings.

1. Cloudpreneurs
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2. Cheap computing +
Small in-house server Small Public Cloud Instance
$31.55/mo $16.06/mo
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3. Agility +
INTAKE TICKET BUILD
IT
Manager assigns
PROJECT MANAGER – Ongoing
Engineer
ARM contacts
oversight and coordination
Agency CIO Engineer builds VM
Engineer installs &
4 configures OS
High Level
M Backup & Recovery
Review
Network Monitoring
Second engineer
Initial completes QA
T Executive
Review Engineer completes
MVM Scan
1 Solution 6
Th up
Review w s
lo g
ol etin
F e SOLUTIONING CUSTOMER VERIFIES
Contact AND DEPLOYS
communication and coordination
m
M/W/F ns 3
PROJECT MANAGER – Ongoing
Agencies
IT Infrastructure tio
ra
Engineering Ite Verify specs / stack
Infrastructure
T 2 engineers,
5 Deploy
Agency business
Final Review
owners and SI
design solution
App Scan
Iterations
Project
approved, PM
assigned Verify
Complete
60-150+ days Minutes
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4. New experiences =
Social
Rapid
Local development /
iteration
Mobile Heterogeneous
clients
Cloud
Bursty
Big-data computations
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5. Entrepreneurial groundswell
Salesforce.com Workday
Workday
Regional sales team HR manager
Intermedia
Intermedia AWS
AWS
Small business owner IT Infrastructure manager
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6. Explosive growth
25% Explosive 3-70x
25% Rapid 1-3x
23% Fast 0-1x
27% Contracting 0-0.5x
1 > 100 VMs under management, *annualized growth based on 5 months data
SOURCE: Newvem analysis of AWS instances under monitoring McKinsey & Company | 6

7. Including enterprise
Public IaaS adoption
Deployed
5
at scale 10
Selective 37
deployment 43
None 58
47
2010 2012
SOURCE: McKinsey Quarterly Survey on information and technology strategy, 2010, 2012; n=532 CIOs McKinsey & Company | 7

8. Not monolithic
High
Public : <10%
Private: 70%
▪ Banking Remainder on
▪ Insurance traditional architecture
▪ Healthcare
Degree of
regulation
▪ Manufacturing
▪ Distribution
▪ Transportation
▪ High Tech
Public : 20-25% Low
Private: 60-75% Low High
Remainder on
Complexity and
traditional architecture data
interdependence
across application
domains
E: McKinsey Cloud Computing Survey, 2010, 2012 McKinsey & Company | 8

9. Security & regulatory barriers
2010 2012
1 1 Security
2 2 Regulatory
exposure
3 3 Skills
4 4 Business case
5 5 Interoperability
6 6 Cloud
awareness
7 7 Changing
business
processes
8 8 Governance
OURCE: McKinsey Cloud Computing Survey, 2010, 2012 McKinsey & Company | 9

10. Security issues can be mitigated
From To
▪ Rigid policy based ▪ Business-focused risk-
security approach management approach that
engages business leaders
▪ Focus on securing ▪ Focus on securing
technology information and
(networks, servers) processes
▪ One size fits all ▪ Workload specific
policies (i.e., “we’re analysis to match risk
going 100% cloud” with application and
or “we forbid cloud” data criticality
▪ Specialized IT ▪ Integrated service managers
talent aligned to aware of business
technology “towers” implications
E: McKinsey on Business Technology: Protecting information in the cloud McKinsey & Company | 10

11. Incumbents under pressure
Traditional Product Model
Traditional Product Model Cloud Purchase Model
Cloud Purchase Model
Revenue
Revenue
rvi on
e ll
ll
se
Ma oing
Us oing
ct
s
se llati
s
e
.
sa
ce
nt
nt
in t
ag
g
g
ta
-fro
-fro
n
On
On
Tra
In s
Up
Up
Source: McKinsey cloud initiative McKinsey & Company | 11

12. Huge value at stake
Cloud / SaaS +
Mobility + Big
Data
Client server +
ERP
PCs +
Mini- Productivity SW
computers +
Transaction
systems
‘70-’80 ‘80-’90 ’90-’00 Now
Efficiency & Workgroup Standardization Innovation through
record-keeping decision and efficiency insight and
making rapid execution of
ideas
McKinsey & Company | 12