Cloud Adoption on the Rise: Global Services Report Highlights Growing Role of Cloud Delivery

Enterprise Cloud Adoption
Role of Cloud in Global Services

Cloud Vista
Report: May 2012

Copyright © 2012, Everest Global, Inc.
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Introduction – context and scope

Context
 It is a commonly held belief that cloud computing technologies are increasingly transforming the way IT is delivered and
consumed, within an enterprise setting. As of today, the market remains in a state of flux, with a large number of service
providers with varying legacies vying for success
 Based on live market data for the calendar year 2011, this research is an attempt to understand:
– Adoption trends of cloud technologies within enterprise IT services
 Who is adopting?

 What are the adoption scenarios?

 What do buyers look for when evaluating a global services deal, with cloud delivery?

– The role of global services providers
 What are the different roles that can be played by global services providers in facilitating buyers’ transition to the cloud?

 What is the nature of the opportunities that global services providers can capitalize upon?

 What are the key success factors for global services providers to capitalize on the cloud opportunity?

Scope of this research
 This research is the first in a series of semi-annual reports on adoption trends of enterprise cloud services
 This edition analyzes the market for cloud delivery within the context of enterprise global services (ITO and BPO). The focus
of this report is on:
– Cloud delivery within a global services setting
 The analysis does not include, for instance, pure hosting or public cloud adoption trends, or pure SaaS implementations

– Enterprise adoption
 In this analysis we focus on cloud service deals that impact a large portion of the buyer’s organization, i.e., a business

unit (BU), a geography, or the global enterprise. For instance, deals limited to isolated implementation of SaaS, or cloud
platforms are not part of this research scope

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Introduction – methodology and research application

Methodology
 This research is based on:
– Global services deal data captured as part of Everest Group’s proprietary database for the calendar year 2011
– Publicly available data on global services deals
– Everest Group‘s expert perspectives
 Given the current hype, and plethora of opinions around cloud adoption, this research is deliberately anchored in a fact-based
approach. All insights are based on publicly available, or Everest Group‘s proprietary market data

How can this report be used?
For service providers:
 This report can be used to understand:
– Nature of cloud-related opportunities in the global services market
– Different roles that services providers can play within the cloud delivery landscape, in line with existing and potential
capabilities
– Investments and capabilities that (e.g., alliances, physical infrastructure, and professional services) make for winning
strategies in the global services market for cloud related opportunities

For service recipients:
 This report can be used to understand:
– Role of cloud services in transforming the enterprise; specifically, areas of adoption that offer optimal enterprise benefits
– Cloud adoption through global services in their specific industries
– Different roles that services providers can play in enabling the transition to cloud

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Table of contents

Topic Page no.

 Summary of key insights 6

 Section I: Overview – cloud engagements 9
– Number of deals 10
– Deal size 11
– Service scope and cloud layer 12

 Section II: Cloud trends 13
– Cloud deployment trends 13
– Buyer adoption 18
– Provider roles 24

 Section III: Deal spotlight 30
– Evaluation framework 31
– Telenor – CSC deal analysis 32
– AstraZeneca – HCL deal analysis 34
– Maersk Line – HP deal analysis 36

 Section IV: Appendix 38
– Glossary 39
– Recommended research 40

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Insight #1: Enterprises are increasingly demanding cloud delivery as
part of large ITO deals and adoption statistics suggest that rapid
growth of cloud services will continue for some time

Cloud delivery is rapidly becoming an integral part of large global services deals
 In H2, 2011, 8% of all large global services deals had cloud delivery as a part of scope, up from 4% in H1, 2011;
this indicates rapidly increasing adoption of cloud services within the matrix of global service delivery
 Most large service providers adopted the cloud paradigm by developing cloud capabilities. Given the nature of
entrenched relationships, we believe that these service providers actively compete in the market for cloud services
 In fact, cloud represents an attractive opportunity for most service providers
– The average TCV of global services deals with cloud delivery in scope (2011) was US$168 million; compared to
US$95 million for deals without cloud delivery in scope
– The average contract duration for global services deals with cloud delivery in scope (2011) was 68 months;
compared to 60 months for deals without cloud delivery in scope

Cloud services help service providers make inroads into new buyer segments
 Cloud computing and pay-as-you go models make it easier for buyers in hitherto underserved segments to gain
access to enterprise class technology
– Approximately 38% of all global services contracts with cloud delivery in scope were awarded by enterprises
with less than US$500 million in revenues
– Along with traditional leaders in global services adoption such as Banking, Financial Services, and Insurance
(BFSI), healthcare and life sciences, government and non-profit sectors are also driving cloud adoption in global
services. The government sector accounts for 14% of all global services deals with cloud delivery in scope, while
the non-profit sector accounts for another 6%

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Insight #2: Service recipients ask for cloud as a part of their
transformation agenda

Both service recipients and service providers see transformational value in cloud delivery models
 Transformation features as a prominent theme in most enterprise deals with cloud delivery in scope
– Infrastructure transformation and modernization as the dominant theme was seen in 53% of all such deals
 From a service recipient’s perspective, cloud delivery models allow for greater flexibility and go hand-in-hand with
widespread infrastructure virtualization and consolidation
– Often the infrastructure transformation agenda serves as a precursor to rationalization and upgrade of
fragmented and legacy application portfolios
 Service providers also capitalize on the transformational potential of cloud delivery models as buyers ask for more
(e.g., more and more effective innovation, value beyond traditional labor arbitrage)
– Service providers are making significant investments to develop standardized cloud solutions to enable them to
offer transformational value with relatively shorter deployment and implementation cycles

Cloud services yield flexibility and cost benefits across a diverse variety of environments
 Within the infrastructure transformation agenda, cloud delivery models are being deployed across a wide variety of
environments
– Many enterprises are prioritizing workloads with high variability, e.g., testing and development, to quickly
capture benefit from cloud (73% of all cloud related deals with infrastructure transformation as the dominant
theme)
– However, cloud solutions are also being deployed for production and data continuity environments
 Cloud delivery models are also being deployed as a part of the application transformation agenda
– As many as 54% of application transformation cloud deals involve porting of custom business applications to a
cloud environment
– Productivity suites and ERP (22% each) comprise other important areas of cloud-driven transformation

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Insight #3: Service providers blend emerging cloud services
with traditional models to provide integrated solutions for the
enterprise
Service providers are driven by their legacy to define their roles within the cloud paradigm
 Mostly MNCs such as HP and IBM are providing end-to-end stacks, combining hardware, software, hosting, and
management services through a cloud delivery model that complements ongoing traditional delivery in the large
enterprise as well
 Asset light players with a consulting and professional services heritage are investing in partnerships with hosting
providers to enable cloud infrastructure solutions, coupled with strong capabilities in integration, customization and
cloud environment management
 Pure play cloud service providers are most often providing specific solutions to date as they adopt to different
business and go-to-market models with large, global enterprise solutioning requirements. However, many are
making the right moves to build skills and alliances to target the enterprise service landscape

Service recipients prefer to customize standard solutions, with a single provider responsible for integrated
delivery
 Service recipient prefer enterprise solutions with standard components that can be assembled utilizing reference
architectures into an integrated delivery model
– 63% of deals with cloud delivery in scope involved customization of such standard solutions rather than ground-
up solution development
 Where cloud is a part of integrated enterprise service delivery and the scope involves management and
professional services for the cloud environment, service recipients prefer the solution “owner” to provide these
services
– Only 8% of deals with cloud management services in scope involved implementation of third-party solutions
– Only 5% of all such deals were exclusive of solution development/customization or hosting services; i.e.,
comprising pure professional services scope

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Contents

 Overview – Cloud engagements

 Cloud trends

 Deal spotlight

 Appendix

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Cloud adoption is rapidly gathering momentum within the
enterprise ITO market

Trend in cloud related global service deals
2011; Number
100% = 113
73

H1
35% 40
 Despite an overall decrease
65% in the volume of global
H2 sourcing activity, the
proportion of ITO deals with
cloud elements doubled in
H1 H2
H2 2011, as compared to H1
Trend in global service deal signings  We believe that this
2011; Number represents initial signs of a
secular trend of high-paced
100% = 1,947 1,047 enterprise cloud adoption as
900 part of ITO deals

Proportion of enterprise ITO
deals with cloud elements
H2 46%
54% H1 (2011)

H1 = 4% H2 = 8%
H1 H2
Source: Everest Group (2012)

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Transformational scope, deployment of proprietary solutions,
and higher onshore involvement leads to higher deal value
and duration for cloud leveraged deals
Average TCV of deals1 Average deal duration
2011; US$ million 2011; Number of months

168

95
68 60

With cloud Without cloud With cloud Without cloud

 Cloud technology is being increasingly leveraged by service providers to bolster their clients’ transformation
programs
 Such transformational deals tend to be significantly larger than “run-the-business” ITO deals and are inherently
more difficult to offshore
 Further, deals that include implementation or customization of proprietary cloud solutions can potentially command
a price premium over “run-the-business” deals

1 Deals with TCV>= US$5 million

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Enterprise cloud solutions are being adopted as a part of ITO
deals, with IaaS solutions leading cloud adoption

Services scope in deals with cloud delivery Cloud layers in scope
2011; Number 2011; percentage of deals

100% = 113
74%
BPO ITO+BPO
3%
4%

24%

9%
93%
ITO BPaaS SaaS IaaS

 Enterprise cloud adoption is driven largely by infrastructure-as-a-service (IaaS). Though many enterprises continue
to experiment with piecemeal SaaS implementations (e.g., back-up, and temporary storage), they are not classified
as enterprise adoption
 While standalone PaaS adoption within a services context is rare, we believe middleware is an integral part of
these deals, whether delivered on a “as-a-service” or traditional model
 Healthcare vertical (healthcare records etc.) is driving the adoption of business process-as-a-service (BPaaS)

1 Deals with TCV>= US$5 million

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Contents


 Cloud trends
– Cloud deployment trends
– Buyer adoption
– Provider roles

 Deal spotlight

 Appendix

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From a global service perspective, transformation of
infrastructure is the major driver of cloud adoption across
enterprises
Driver of cloud adoption Driver of cloud infrastructure transformation
2011; percentage of deals 2011; Number of deals

100% = 60
N = 113
53%
Includes application
transformation
18%

28%
23%

82%
Application Application Infrastructure Core infrastructure
transform implementation transform transformation

 Buyers believe that the existing legacy infrastructure is unable to cope with business demands and, thus, are looking for
alternatives. Global service providers are leveraging cloud solution and services to assist in this transformational journey
 Cloud model is also leveraged to improve application landscape. Buyers are implementing native cloud applications as well
as transforming their existing legacy application environment through cloud delivery
 However, meaningful application transformation in the cloud, is usually accompanied by a significant transformation of the
underlying infrastructure

1 Analysis includes multi-tower deals; sum of column percentages may not add up to 100
Source: Everest Group analysis

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Cloud is helping the buyers in creating a flexible and scalable
infrastructure environment, many buyers are even porting
production systems to the cloud
Driver of cloud adoption Typical role of cloud infrastructure
2011; Number of deals 2011; percentage of deals

N = 60
100% = 113
73%

Other 33%
47% Infrastructure
deployment 53% 23%
transformation

Test/ Test/ Data continuity
Development Development
environment and production
environment

 Along with the concomitant cost benefits, buyers see value in the flexibility and ability to scale computing resources up or
down by deploying cloud solutions
 Workloads with significant variability in computing resource requirements are moved to the cloud to reduce average
consumption by “right-sizing” infrastructure; testing services are one such example


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Transformation and implementation of business application is
a major component across cloud service engagements

Applications included in cloud engagements
2011; percentage of deals
 Buyers are leveraging cloud application
N = 113 delivery to increase the value they provide to
their clients and partners by enhancing their
business applications
Business
54%
applications
 The typical challenges in ERP provisioning for
development still persist. Cloud delivery is
allowing the buyers to create agile
Productivity 22% infrastructure and provisioning mechanism for
ERP

 Productivity applications provide a “low risk”
ERP 22% cloud experiment and have an early mover
advantage that drives their adoption

 IT department is yet to leverage cloud delivery
IT 2% and therefore presents significant opportunity
(e.g., IT management in a SaaS model,
testing tools, application packaging, and data
continuity tools)


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Apart from implementation of cloud applications, the cloud
delivery model has a significant role in transforming existing
application portfolios
Cloud application engagements – transformation and implementation
2011; Number of deals

100% = 26 100% = 58 32
Application Application
type provider

Custom 35% 41% ISV
applications

Application Application
45%
transformation 55%
implementation
Standard 65% Service
applications 59%
provider

 There is a significant demand to transform the landscape across application types, leveraging cloud delivery. We believe this
will also drive demand for consulting and higher value-added global services
 For implementation, service providers that own cloud applications stand to benefit. Many service engagements require these
providers to transform existing applications by deploying their own cloud solution, and subsequent engagements may also
lead to implementation of ISV applications


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Contents


 Cloud trends
– Buyer adoption
– Provider roles

 Deal spotlight

 Appendix

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Along with traditional markets such as North America and the
United Kingdom, APAC is emerging as an attractive market
for cloud adoption in global services
Average deal value (all ITO and BPO deals with cloud delivery); US$ million
% of total number of deals (all ITO and BPO deals with delivery); N = 113

Though Europe reports a
large proportion of deals,
average opportunity size is
208.4 likely to be lower
185.8
20%

32% 49.4
25%

North America and the UK 107.2
17%
continue to drive adoption

APAC is emerging as an
attractive market with cloud
solution elements being a part
of relatively large deals


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Cloud adoption is driven by buyers at opposite ends of the
size spectrum; there is little adoption within the US$2-10
billion revenue class
% of deals with cloud delivery (buyer revenue < US$0.5 billion) % of deals with cloud delivery (buyer revenue US$2-10 billion)
% of deals with cloud delivery(buyer revenue US$0.5-2 billion) % of deals with cloud delivery (buyer revenue >US$10billion)

27%
40%
24%
33%
13% UK
Europe
31% 20%
North America 10%
33%
63%
6%

23% 23%
APAC

15%

38%

 Smaller buyers are gaining access to enterprise class technology with little capital expenditure by leveraging the cloud
 Large enterprises leverage cloud technologies as a part of the transformation process to drive simplified and uniform processes


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While industry verticals with traditionally high ITO/BPO
penetration drive cloud adoption, government and non-profit
sectors represent significant opportunities
Industry adoption of cloud services Verticals leading cloud adoption
N =113

Government 14%

Manufacturing 14%

Retail and distribution 11%
 Industries with mature global services
Services 11% program see potential in cloud
delivery and are demanding
Healthcare and life sciences 10% transformational solutions from
service providers as they seek to
Banking, financial Services, and insurance 10% generate the next layer of value
beyond labor arbitrage
Non-profit 6%
 Government and non-profit sectors
Energy and utilities 5% (e.g., education) are early adopters of
cloud principles in terms of using
Electronic and hi-tech 4% SaaS based cloud solutions. Given
their experience with cloud, they are
Travel and transport 4% willing to experiment with it even in a
global service context
Telecom 3%

Others 8%


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Single tower deals across infrastructure and applications
drive cloud adoption in the enterprises

Tower bundling within ITO deals with cloud delivery

47 44
4 towers 9% 14%
3 towers 11%

2 towers 30%

86%

1 tower 51%

Infrastructure Application
outsourcing outsourcing

Buyers prefer to have a simple global service engagement that includes cloud delivery. Though, cloud is one of the
components of the overall engagement, buyer preference for simpler engagements indicates that they are still in the
early stages of adoption
Note: Application towers consist of application development and maintenance. All other towers (e.g., system integration, and package implementation) are merged in
these two towers

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Cloud solution elements are most commonly delivered as a
part of datacenter management and infrastructure
transformation deals
Distribution of towers in cloud engagements

N =113 Includes ERP implementation,
ERP maintenance, other
33% package implementation and
system integration deals

17%
15% 15% 14%
11%
7%

Datacenter Network End-user Helpdesk Application Application Other
computing development maintenance

 At the current stage of market and technology evolution, the business case for cloud implementation is most
favourable within the context of infrastructure modernization
 Within the global services market, cloud implementation is viewed as a transformational tool, and not as an end in
itself. As such, cloud solution elements figure most commonly in deals involving elements of server consolidation,
mass virtualization, and overall infrastructure modernization


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Contents


 Cloud trends
– Buyer adoption
– Provider roles

 Deal spotlight

 Appendix

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Cloud service providers perform a variety of roles across
various stages of transformation

 Provider hosts buyer’s cloud solution on its own datacenters

Host
 The provider may or may not own the assets on its books
 By definition, cloud application (SaaS) and infrastructure hosting providers
will generally perform this role

Consult
 Typical consulting role Design Build/customize
performed by a provider
 Provider offers design services
before selection and  Build-up of a
for cloud solutions.
implementation of a cloud ground-up cloud
 Typically needed when a cloud
solution solution (generally
solution is built ground-up for a
 Generally includes roadmap, infrastructure) for a
specific buyer
strategy, readiness specific buyer
 Design and build solution elements
assessment, cloud selection,  Customization and
are usually combined
etc. implementation of
 Typically, provided by players with
 Can be performed by typical industry standard
deep technology legacy and
global service provider or IT solution
in-house solutions
and management
consulting firms

 Service provider offers pure management of cloud applications.
Manage

 Includes service integration and orchestration, “lights-on,” and other
management activities (e.g., testing the cloud)
 Typically, provided by pureplay service providers that do not own in-house
solutions

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Global services providers perform multiple roles in a cloud
delivery engagement

Roles played by cloud service providers1
Increasing role of global service providers in the cloud

N =113 74%

54%
43%
26%

Build Customize Host Manage

 Most of the service providers offer cloud management services as management contracts tend to lead to longer
contract duration. Moreover, buyers believe that service providers are better suited to manage a new delivery
model
 With most ITO-related cloud adoption occurring in the IaaS space, there is a clear buyer preference to engage with
providers who offer hosting services
 Providers with in-house cloud solutions offer customization services of their offerings and it is fairly evident that the
buyers prefer these providers. A template-based standard cloud solution is easier to customize, implement, and
manage, which reduces the overall overhead and time to deploy


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Service providers with strong in-house solutions are more
likely to seize cloud-related ITO/BPO opportunities…

Distribution of cloud solutions Buyer preference for building and customizing cloud
2011; Number of deals 2011; Number of deals

100% = 58 100% = 78

Third-party solutions
17%

Build
37%

Customize 63%
83%
In-house solutions

 Buyers are more comfortable with service providers who can provide the full portfolio of services, and have existing
in-house solutions
 Within the current state of industry maturity, buyers are more comfortable customizing existing solutions, rather
than building a ground-up solution
– Buyers see value in a standard solution, as they seek to consolidate fragmented legacy portfolios
– Further, buyers prefer to customize existing solutions, as such implementation exercises tend to be less
expensive, require lower deployment time, and involve lower risk

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…as pureplay cloud management/consulting opportunities are
seldom independent of implementation or hosting
requirements
Cloud management and other roles of service providers

100% = 113

Cloud
management not
in deal scope
80% Smaller opportunity for pureplay
26% 63% consulting/management services
48%

74% 8% 5%

Includes build/ Includes Includes Includes third- Excludes build/
Cloud customize host consult/ party solution customize/host
management design implementation
in deal scope

 Solution implementation lies at the heart of the ITO/BPO cloud opportunity; service providers that own the solution are
naturally leading contenders for the cloud management opportunity
 In the absence of industry standard solutions, service providers who own proprietary in-house offerings, sophisticated system
integration and professional services capabilities are likely to be more successful in providing end-to-end cloud solutions
within the global services market

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The ability to provide an in-house technology stack solution,
along with evolved hosting capabilities, is helping MNC
service providers make inroads into the cloud market
Distribution of cloud solution implementation MNCs and offshore provider cloud engagements
2011; Number of deals 2011; Number of deals

100% = 113
100% = 62 13
In the absence of Offshore providers
Hosted by in-house solutions
31% 6%
buyer / third-party and evolved hosting
capabilities, most
77% offshore service
providers rely on
Hosted by partnerships
69%
service provider

23% 94%

MNC providers
In-house solution Third-party solution

 Within the current global services context, cloud solutions are being implemented largely as part of infrastructure transformational deals
– MNC service providers with expertise in asset-based deals, and proprietary solutions are in pole position to capitalize on the market
opportunity, as they are able to provide an integrated solution across the consult-to-manage spectrum
 Offshore providers are yet to develop the transformational expertise that is expected from a cloud service provider. Though they are
leveraging cloud solutions during execution of outsourcing engagements, cloud is not a central element in most of their contracts
 Over the long term, we expect offshore players to become more competitive as they invest in partnerships with technology providers (or
their own solutions)
– Further, with the evolution of industry standards, the importance of proprietary solutions could diminish. Coupled with the
commoditization of infrastructure, and adoption of cloud solution elements in non-transformational deals, global delivery models could
become an important value proposition over the long term

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Contents


 Cloud trends

 Deal spotlight

 Appendix

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Everest Group framework explores key enterprise cloud
adoption based on four key parameters

Buyer value
 What is the overall value of cloud
solution and services on buyer’s IT
landscape?
 Will the engagement create a
meaningful impact on the business of
the client?
Market impact Capability assessment
 Will this impact the competitive  Has the provider deployed an
landscape in terms of newer in-house solution, partnered with
offerings, engagement models, providers, and developed solution
Deal spotlight
pricing, etc.? grounds up?
 Is the engagement indicative of  In-house technology, services,
acceptance of cloud principles in an differentiators, integration,
industry, geography, and business investments, complexity, challenges,
function? etc.
Provider benefits
 Will the engagement enable the
provider to further penetrate existing/
acquire newer clients with cloud
solutions and services
 Will the market view the provider as
a capable partner for cloud
transformation?

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Telenor Sweden-CSC: Implementation of BizCloud – CSC’s
on-premise private cloud solution (page 1 of 2)

Summary of scope Deal statistics
 Follow-on from Telenor-CSC agreement in 2010 Client Telenor
 Management and modernization of Telenor Sweden’s
Service provider CSC
billing and CRM systems
 Implementation and management of on-premise Duration Five years
private cloud solution
TCV (estimated) US$35 million
 CSC’s BizCloud offering is the core solution
 Involves rebadging of Telenor employees Towers included Infrastructure – datacenters
Application transformation

Buyer value  Buyer value will be driven by migration to a pay-as-you-go model
 Implementation of the deal is expected to benefit Telenor by way of simpler provisioning and
greater flexibility in reacting to peak requirements
 Significant benefits for workloads requiring high peak capacity, e.g., testing services
 Telenor envisages higher service levels and faster turnaround for its customers without an
increase in costs

Capability assessment  The deal with Telenor highlights an important success story for CSC BizCloud, particularly in
Europe
 The deal demonstrates the viability of CSC’s on-premise, private cloud strategy; for
consumer-facing applications, the ability to provide a secure, stable solution is an attractive
proposition
 CSC’s ability to rapidly implement a secure private cloud solution, with established service
levels and pricing, showcases the strength of its solution, as well as its integration capabilities

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Telenor Sweden-CSC: Implementation of BizCloud – CSC’s
on-premise private cloud solution (page 2 of 2)

Provider benefits  We expect this deal to help CSC in marketing its BizCloud offering; CSC is likely to position
BizCloud as a solution that offers benefits similar to a public cloud solution, but leaves the
customer with greater control
 Overall CSC’s presence in Europe, particularly, the Nordics, receives a boost from this deal

Market impact  BizCloud is built on Vblock architecture, and deals, such as the one between CSC and
Telenor, may provide momentum to Vblock becoming one of the standard configurations in
IaaS implementations
 We believe that solutions such as CSC’s BizCloud may mature to provide meaningful
alternatives to public cloud solutions depending on criteria such as scale, variability in
demand, complexity of integration, security, and compliance requirements

Analyst consensus
One of the deals that signals the emergence of the on-premise private cloud as a viable model for buyers with
concerns about data location and security, but who want to access the benefits of a flexible pay-as-you-go model.

The deal is important because it promises significant improvements for Telenor’s subscriber facing processes by way
of standardization, reduced provisioning time, and easier access to applications.

The deal is an example of buyers’ preference for templatized, proprietary solutions with standard SLAs and prices,
along with the opportunity to start capitalizing on cloud computing benefits after a short implementation cycle.

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Astra Zeneca-HCL: Global Infrastructure Transformation
(page 1 of 2)

 Management and transformation of global Client Astra Zeneca
datacenters across 60 countries
Service provider HCL Technologies
 Hosting and migration of existing datacenters
 Management of global collaboration platform Duration Five years
 Server virtualization
TCV (estimated) US$1 billion
 Storage and backup transformation
 Hybrid cloud implementation Towers included Infrastructure – datacenter management

Buyer value  Significant value capture through global infrastructure transformation – we expect significant
business impact on both CAPEX and OPEX
 By implementing hybrid cloud models, Astra Zeneca will be able to build a flexible, scalable
infrastructure, with significantly higher asset utilization
 Further, we expect significant buyer benefits by way of implementation of globally
standardized service levels, and processes, as well as a global delivery platform

Capability assessment  Demonstrates HCL’s capabilities in competing with traditional asset-heavy infrastructure
outsourcing majors
 The deal showcases HCL’s ability to deliver a global transformation program for a large
enterprise that involves:
– Significant hosting capabilities
– Management and transformation of existing datacenters
– Ground-up implementation and management of a cloud infrastructure environment
 We believe that the deal delivery will significantly leverage HCL’s MyCloud platform – part of
it’s MTaaS (management tools as a service) offering
– MyCloud platform helps monitor and manage a cloud infrastructure environment, and is
partly co-developed with partners such as Computer Associates

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Astra Zeneca-HCL: Global Infrastructure Transformation
(page 2 of 2)

Provider benefits  A competitive win against traditional infrastructure outsourcing majors will enable HCL to
showcase its capabilities in bulge bracket IO deals – we expect significant marketing benefits
for HCL
 We expect the deal to provide further traction to HCL in larger infrastructure transformation
deal, especially in Europe

Market impact  This deal is indicative of the fact that buyers are increasingly facing limitations of traditional
infrastructure set-ups
 Cloud computing offers them a transformational tool that helps them realize the advantages of
scalability and flexibility, along with cost advantages
 With increasing maturation of cloud technologies, we expect several such deals, which have
buyers implementing global transformation projects with cloud implementation as a core
component

Analyst consensus
Incumbent service providers will have to evolve their customers’ infrastructure over the duration of the relationship.
Buyers are looking to capture value by building flexible, scalable infrastructure with pay-as-you-go models, and are
willing to move to service providers who can provide such value.

While buyers typically tend to prefer standardized proprietary solutions, for complex deployments across large global
enterprises, a ground-up approach is required.

HCL’s deal with Astra Zeneca demonstrates the service provider’s maturing capabilities in the infrastructure
outsourcing space, and underlines HCL’s ability to compete against major MNC providers in complex asset-based
infrastructure deals.

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Maersk Line-HP: Global infrastructure, applications, and
services transformation (page 1 of 2)

 Part of Maersk Line’s streamLINE initiative to optimize routes, Client Maersk Line
simplify customer processes, and improve management
Service provider HP
information systems
 Global virtualization and private cloud deployment, with migration Duration Five years
of four global Maersk Line datacenters in Asia and North America
TCV (estimated) US$150 million
 Global application portfolio consolidation
 Complete management of end-user computing, and internal Towers included Infrastructure – datacenters,
helpdesk across 38,000 users and 100 countries using HP desktops, and helpdesk
Workplace platform Application modernization
 Global service delivery, with rebadging of Maersk Line employees

Buyer value  Like all major transformation programs, we expect significant value for Maersk Line from this
deal:
– Unlocked value from captive asset base, and cost benefits of private cloud deployment
– Standardization of applications and processes
– OPEX benefits from global services delivery

Capability assessment  The deal showcases HP’s ability to package and deliver the entire technology stack
(hardware assets, software, and services) into a global transformation solution
 While the deal is a custom engagement, we expect HP to have taken a modular approach to
solutioning. As such, the deal also showcases the success of HP’s investments in
infrastructure assets, management platforms, and tools

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Maersk Line-HP: Global infrastructure, applications and
services transformation (page 2 of 2)

Provider benefits  We see significant marketing benefits for HP, as this deal serves as a validation for the
provider’s philosophy of the instant-on-enterprise
 Further, this deal is likely to help HP make inroads in the shipping and logistics sector

Market impact  With global enterprises increasingly listing infrastructure consolidation as one of their key IT
priorities, we expect similar deals in the market
 Such opportunities are likely to fall to service providers who are able to provide an integrated
technology stack
 However, one of the key barriers to such deals will be the volume of legacy infrastructure and
applications; as the complexity of transformation increases, buyers may feel daunted and
grow skeptical of the business case

Analyst consensus
This deal underlines the growing role of cloud implementation in major transformational deals. Cloud is viewed as a
strategic weapon by both service providers and buyers to achieve transformation and deliver greater value through
enhanced flexibility and pay-as-you-go models.

The deal also highlights HP’s ability to offer an integrated technology stack as part of a major transformational
solution. Such opportunities are more likely to be won by service providers who can provide an end-to-end solution
comprising a global hardware asset base, software and management platforms, and global services.

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Contents


 Cloud trends

 Deal spotlight

 Appendix

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EGR-2012-4-R-0682a

Appendix: Glossary of key terms used in this report

Term Definition
In-house solutions A branded cloud solution of a provider across any cloud layer
Third-party solutions A cloud solution implemented by a provider that is owned by either a partner or a third-
party provider
Infrastructure Core focus is on flexibility, scalability, availability, and resilience of infrastructure
transformation leveraging cloud solutions and services. This may include transforming existing
infrastructure, sourcing add-on infrastructure from the cloud, or a combination of both
Application Core focus is on transforming an on-premise application, business process, or some
transformation fundamental change in an application delivery and architecture. The engagement may
or may not focus on infrastructure transformation
Data continuity In data continuity, core focus is to protect the organization data in terms of creating
data recovery, disaster management, data back-up, and related implementation
Application type An off-the-shelf / customized independent software vendor (ISV) application is treated
as “standard,” whereas an application specifically built for a buyer is treated as
“custom”
Application provider In application provider type, an ISV implies the typical product companies (that may or
type may not offer services), a service provider implies the typical global service providers
that may also have its own branded cloud solution

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Appendix: Additional ITO research references

The following documents are recommended for additional insight on the topic covered in this research report. The
recommended documents either provide additional details on the topic or complementary content that may be of
interest

1. Service Provider Cloud Strategies – “As Unique as Everyone” (ERI-2011-4-R-0495a); 2011: This report provides a
comprehensive overview of the strategies of global service providers in terms of their focus in cloud ecosystem, challenges
they foresee, buyers concerns, expectations from cloud, partnerships, and their future plans to tap the cloud opportunity. The
report will be useful for both the buyers to understand strategies of these providers and service providers to understand the
broader market

2. Social Networks for Global Delivery – Get that ITCH (EGR-2012-4-R-0662); 2012: This viewpoint report analyzes the role
of an internal social network for improving the global delivery model. The report discusses challenges and issues in global
delivery such as resourcing, collaboration, overheads. It provides a framework for service providers which they can leverage
to create their own internal social platforms and augment their delivery models

For more information on this and other research published by the Everest Group,
please contact us:

Ross Tisnovsky, Senior Vice President: ross.tisnovsky@everestgrp.com
Chirajeet Sengupta, Practice Director: chirajeet.sengupta@everestgrp.com
Yugal Joshi, Senior Analyst: yugal.joshi@everestgrp.com
ITO Team: ITOresearch@everestgrp.com
Everest Group
Two Galleria Tower
13455 Noel Road, Suite 2100 Phone: +1-214-451-3110
Dallas, TX 75240 Email: info@everestgrp.com
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EGR-2012-4-R-0682a

About Everest Group

Everest Group is an advisor to business leaders on the next generation of global services with a
worldwide reputation for helping Global 1000 firms dramatically improve their performance by
optimizing their back- and middle-office business services. With a fact-based approach driving
outcomes, Everest Group counsels organizations with complex challenges related to the use
and delivery of global services in their pursuits to balance short-term needs with long-term goals.
Through its practical consulting, original research, and industry resource services, Everest
Group helps clients maximize value from delivery strategies, talent and sourcing models,
technologies, and management approaches. Established in 1991, Everest Group serves users
of global services, providers of services, country organizations, and private equity firms in six
continents across all industry categories. For more information, please visit www.everestgrp.com
and research.everestgrp.com.

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EGR-2012-4-R-0682a

Everest Group
Leading clients from insight to action

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Cloud Adoption on the Rise: Global Services Report Highlights Growing Role of Cloud Delivery

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