Hosting & Cloud Transformation Europe Keynote Presentation by William Fellows, VP of Research

1. Hosting Cloud Transformation
This is New Wave
William Fellows, VP Research

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3. Cloud is Transforming the Enterprise
1977 and all that
CloudScape
How real is it? Growth trends, market forecast
End User Adoption
Privatization
Transformation, Propaganda vs Reality, What Could Happen?
New Wave

4. Never Mind the Bollocks Here’s the Cloud
Silver Jubilee - 1977
Punk = technical accessibility &
DIY vs mainstream rock
Transformed music and culture,
disrupted incumbents
New Wave incorporated punk ethos
Embraced, enhanced - became the
new mainstream
Diamond Jubilee - 2012
Cloud = technical accessibility &
DIY vs mainstream IT
Transforming enterprise IT culture
disrupting incumbents
New Wave of IT incorporating cloud ethos
Embraced, enhanced – becoming the
new mainstream

5. Transformation: CloudScape – Service Overview
Interdisciplinary approach – 451 Research &
Tier 1
A comprehensive, coherent conceptual
framework, the Cloud Codex
Cloud marketplace surveillance and
analysis – vendors, service providers
Market sizing, surveys
End users: best practices, vendor selection,
peer events
Actionable advice to improve opportunity
for success
Supported by TheInfoPro and ChangeWave
Convergence is the key

6. Transformation: Early-Adopter Program
10 years working with early adopters and innovators
Cloud is a logical endpoint
Shining a light on the arc of adoption
250+ enterprises have participated across many verticals

7. CloudScape Codex: 8 Cloud Attributes
Programmatic
Interfaces Web
Management
Accounting Capabilities
Publically Granularity
Accessible
Multi-
tenancy Virtualization
Rapid and
Provisioning Automation
Scalability
and
Elasticity

8. Disruption
Profound economic uncertainty
Do more with less
Consumerization of IT
New models around IT-as-a-Service

9. So Where’s it Raining?
Growth trends, market forecast

10. Compute
Compute-
as-a-Service
Service
Stand Alone
Cloud Storage
as a Service
Infrastructure
PaaS from SaaS
Stand-Alone
Alone
PaaS
Pre-Production/
Testing Application
Lifecycle
Management
Management-
Integration-as-
Platform as a Service
as-a-Service
Service
a-Service
Cloud as-a-Service categories
Problem
Management
Systems Network IT Management-
Management
Monitoring & Mgmt as-a-Service
Service
Cloud Computing
Resource Utilization,
Capacity Planning &
Billing
Online Backup
Archiving
Software as a Service
ERP
CRM
Content and
Collaboration

11. Cloud Market Overview – Revenue ($bn)
Cloud Computing Cloud Computing + SaaS
$35
$30 $29.2
CAGR
25%
$25 $23.1
$20 $19.1
$15.2
$15
$12.1
$11.0
$9.3
$10 $8.3 CAGR
$6.1 42%
$5 $4.1
$2.7
$1.6
$0
2010 2011 2012 2013 2014 2015
Source: 451 Research Market Monitor (Data Cut 3/28/12)

12. Estimated 2012 Cloud Revenue Breakdown, Including SaaS
73%
IaaS
PaaS
13% SaaS-Infrastruture
7% 7%
SaaS-Enterprise Apps
Source: 451 Research Market Monitor (Data Cut 3/28/12)

13. Estimated 2012 Cloud Revenue Breakdown by Subsector
– Total $4.1bn (~220 vendors)
Segment Vendor Count
IaaS 89
Compute & Storage as a Service 83
Stand-Alone Cloud Storage 9
26% PaaS 74
PaaS from SaaS 11
Stand-Alone PaaS 35
Application Lifecycle Management
31
as a Service
24% 50%
Pre-Production/Testing 18
Integration as a Service 13
SaaS-Infrastructure 82
IT Management as a Service 60
Problem Management 10
Systems and Network Monitoring
40
& Management
Resource Utilization, Capacity
IaaS PaaS SaaS-Infrastruture Planning & Billing
15
Online Backup 17
Archiving 10
Source: 451 Research Market Monitor (Data Cut 3/28/12)

14. IaaS Market Overview ($m)
Amazon’s market to lose
2011-
2011-2015 CAGR: 47%
$5,782
$4,343
$3,143
$2,057
Amazon $1,242
Rackspace $641
Verizon Business
Joyent
2010 2011 2012 2013 2014 2015
SoftLayer Technologies
Others
Source: 451 Research Market Monitor (Data Cut 3/28/12)

15. PaaS Market Overview ($m)
‘PaaS from SaaS’ proving successful
SaaS’
2011-
2011-2015 CAGR: 47%
$3,073
$2,255
$1,576
$1,019
Salesforce.com $660
Microsoft $348
Google
Intuit
Engine Yard
2010 2011 2012 2013 2014 2015
Others
Source: 451 Research Market Monitor (Data Cut 3/28/12)

16. SaaS Infrastructure - ITMaaS Market Overview ($m)
ITMaaS increased functionality
2011-
2011-2015 CAGR: 40%
$869
$669
$496
$348
$225
Service-now.com Hewlett-Packard $122
CA Technologies BMC
2010 2011 2012 2013 2014 2015
IBM Others
Source: 451 Research Market Monitor (Data Cut 3/28/12)

17. SaaS Infrastructure – Storage Market Overview ($m)
Backup & Archiving
2011-
2011-2015 CAGR: 23%
$1,281
$1,074
$886
$719
$566
$446
Hewlett-Packard (Autonomy)
Seagate (Evault)
Symantec
SunGard
2010 2011 2012 2013 2014 2015
VMware
Others
Source: 451 Research Market Monitor (Data Cut 3/28/12)

18. Cloud As-a-Service 2012 & 2015 Revenue by Vertical: ~220 vendors
2015
17%
Technology & Telecom
26%
18% Financial (Banking & Insurance)
2012 27%
Government & Education
8%
7% Healthcare
6% Manufacturing & Automotive
6%
Retail & Consumer
9% 17%
Other (Media, Transportation Food &
9% 15% 18% Beverage, Oil and Gas, Real Estate)
16%
Source: 451 Research Market Monitor (Data Cut 3/28/12)

19. Cloud As-a-Service Revenue by Geography: ~220 vendors
Cloud Computing 2011 2012 2013 2014 2015
APAC $279 $489 $791 $1,168 $1,639
EMEA $548 $928 $1,462 $2,148 $3,022
NA $1,865 $2,725 $3,847 $5,030 $6,344
2015 15% 27% 58%
2014 14% 25% 60%
APAC
EMEA 2013 13% 24% 63%
NA
2012 12% 22% 66%
2011 10% 20% 69%
0% 20% 40% 60% 80% 100%

20. 89 IaaS vendors – 2012 revenue geo breakdown
United
States Europe
63% 24%
Asia
13%

21. 89 IaaS vendors – 2012 revenue by headquarters
Europe 6%
United States 90% 28 Vendors
47 vendors
Asia 3%
14
Vendors
Source: 451 Research Market Monitor (Data Cut 3/28/12)

22. Regional CloudScape
Many public clouds now up and running in Europe
Local champions emerging
Telcos still dominate IT landscape and MRR vs PAYG
Focus on private clouds
EU revising legislation
Patriot Act used as geo-political marketing device
Vendors seeking pan-Europe and per country models
Asia-Pac clouds coming on stream
Emerging markets: China, India, Brazil
RoW match US by ~2015 in compute
Governments: the cloud’s unlikely champions

23. Cloud Market Evolution

24. Transformation:
End user adoption

25. Cloud adoption snapshot: delivery model
65%
22%
SaaS
2%
6%
32%
22%
PaaS
18%
26%
51%
19%
IaaS
10%
15%
0% 10% 20% 30% 40% 50% 60% 70%
Already Deployed Beyond 12 Months
In 12 Months Not Deployed/No Plans
Source: The 451 Group Cloud End User Survey 2011

26. Cloud adoption snapshot: deployment model
Present In 12 Months
60%
51% 49%
50%
40%
30%
30% 28%
19%
20%
9%
10%
0%
Source: The 451 Group Cloud End User Survey 2011

27. Cloud adoption snapshot: drivers
Biggest Motivation for cloud usage
Cost savings on…
Flexibility in scaling IT up and down
Quicker time to market
Cost Savings on IT Staffing/Admin
Improved Productivity
Disaster recovery/business continuity
Self service delivery
0.0% 20.0% 40.0% 60.0% 80.0%
Source: The 451 Group Cloud End User Survey 2011

28. Cloud adoption snapshot: workload
Source: The 451 Group Cloud End User Survey 2011

29. Cloud adoption snapshot: inhibitors
Q: List the top three inhibitors/roadblocks you had to overcome
for your cloud project
Change/Learning
Complexity
Cost
IaaS SaaS
Security Change Learning Change Learning
Complexity Complexity
Buy-In Cost Security
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Source: TheInfoPro Final Cloud W2: Full Sample, n=97.
Note that due to multiple responses per interview, total exceeds 100%

30. Transformation:
Cost Center to Service Provider

31. Media: Internal service delivery function + IaaS, SaaS
Goals:
Print co media co Create an internal cloud service delivery function
Support digital strategy as a business Cut datacenter footprint
model, not a technical model 25% of capacity in cloud
Business Challenge: Benefits:
Socialize and synchronize cloud model Time to market
across 13 business units Consumerization of IT via Amazon,
Multi-tenancy, compliance, chargeback Google, Salesforce
in shared environments Common technology baseline - cloud
Demand spikes for competitions used for additional resource
Vendor benefits depend on how well Handling all game functions
data is segmented to work with it Support multiple clouds?

32. Energy: Internal service delivery via private cloud
Goals:
The prize: greater agility, save money
Overcome CFO scepticism with business case for cloud
Private cloud for most apps with hybrid for ‘infinite scale’ scale
Manage as one system
Challenges: Benefits:
Thousands of guerilla AWS users Enfranchise vs outlaw
Public cloud not ready, not cheaper Move to in-house private cloud for most
Inappropriate for many apps, insecure apps
Until DCs are depreciated there’s no Use more SaaS – controlled by IT
driver for change Most savings will come from hybrid IaaS
Eco reality: internal budgeting based on over multiple years for ‘infinite scale’
‘how much will you use next year?’ PaaS – some PoCs, no use case

33. Trader Media: Cloud service delivery template
Goals:
Project Spitfire to drive service delivery model
Develop new revenue lines faster
Reduce datacenter requirement
Replace with OpenStack, Citrix hybrid
within 3 years
Business challenge: Business benefit:
Provisioning is slow so use RightScale Cost management
and Amazon to spin up new sites Scale up/back and in multiple geos
Remain agnostic DevOps – no versioning
PaaS? Looking at roll-your own rather Consolidate management ops
than hosted lock-in
Got burned in Amazon’s Dublin 2011
outage

34. British Parliament: Service advisor, service provider
Goals:
Reduce cost — including license fee
Deliver IT as a service
Advisory role
Implement blueprint for change
Consumerization of IT, digitization, tablet device use
Business challenge: Business benefit:
Reduce cost by 25% in 2014-15 Alignment of cloud with key goals:
Extraordinary operating environment saving money, greater flexibility and
Security, data sovereignty, data digitization of services
migration, bandwidth, compliance, SLAs Existing service supplier relationship
Support 8,000 members and staff, Become advisor, not a hardware
plus 11,000 businesses supplier
144 apps, 1,500 locations – and mobile Blueprint for shared services

35. NHS Foundation Trust, Liverpool hospitals:
Private cloud service delivery = template for other NHS Trusts
Goals:
Reduce IT spend by 30%
Deliver IT as a service
Multi-vendor sourcing
Digitize records
Win hearts and minds!
Business challenge: Business benefit:
Financial, patients, internal processes, Phased approach: IT apps, business
security apps, ITaaS
Cost of 10GB networks from incumbent Other NHS Trusts could use its model
telcos Very attractive to storage vendors
Couldn’t use private cloud – medical Side-stepped incumbent telcos
records 15:1 server consolidation, 97%
Data growth: 80TB reduction with de-dupe, 24% overall
cost reduction

36. Transformation:
Unlocking your inner service provider self

37. Top ten considerations
1. Hosting industry focus
2. Basic cloud-hosting features
3. Time to market
4. Cost
5. Billing
6. Hardware and network support
7. IOPS
8. User management
9. Usability
10. Support

38. Privatization:
Bottling the magic of cloud

39. Private Cloud Enablement
Imitate Turn your own datacenter
Emulate into a cloud that works like
Replicate Amazon, Rackspace…
Advantages:
Security and compliance
Leveraging existing investment in datacenters
Powers new IT-as-a-service model inside organizations
New IT refresh cycle for suppliers!
But
Private cloud is ring-fenced and finite
Doesn’t reproduce elasticity of hosted cloud

40. Hybrid
Cloud service providers and hosting partners will be required
Hybrid model is dominant:
Virtualized, automated on-premise infrastructure with a
hosted elastic option
Rackspace, Amazon, VMware, Salesforce.com, Microsoft and others
acknowledge this
Converged infrastructure – big investments e.g. VCE
Community, partner, vertical
Service brokers, orchestration – arbitrage?

41. Private, hybrid cloud management
Abiquo Eucalyptus Puppet
AccelOps Flexiant Quest Software
Adaptive FluidOps Red Hat
Appcara FreedomOSS RightScale
Appistry Hatsize rPath
CA AppLogic Gale Technologies ScaleXtreme
Citrix Cloudstack Hexagrid Scalr
Cisco NewScale Joyent ServiceMesh
CloudShare Kaavo Skytap
CloudSoft Microsoft Star Analytics
Cloupia MorphLabs Tap In Systems
Cordys Nimbula The Big Four
Convirture OnApp Univa
CSC OpenNebula Verizon/CloudSwitch
ElasticHosts OpenStack Virtustream
Enomaly Opscode VMware
Ensim OpSource ZenOSS
enStratus Parallels Zimory

42. Internal Private and Hybrid Cloud Evolution
Phase 3: Hybrid Enablement
On-Ramps Cloud Brokers
Hybrid Cloud Management / Enablement
Focus Shifts Toward Hybrid Clouds
Phase 3: Hybrid Cloud Enablement
Phase 2: Management/Stabilization
Virtualization Management / Capacity Planning
Automation
Focus: Private Cloud Enablement
Phase 2: Management Stabilization
Phase 1: Initial Adoption
Hypervisor Administration/Monitoring
Focus: Consolidation
Phase 1: Virtualization <30%
2009 2010 2011 2012 2013+

43. Trusted advisors, brokers
Change and complexity is the friend of
professional services
Cloud is a proxy for IT transformation as
much as it is about buying some on-
demand VMs. ‘Moving to the cloud’ is a
loaded term, but it is the key opportunity
for integrators and providers of
professional services
Professional services firms will succeed
where enterprises recognize
organizational change as a requirement
for the cloud to be useful.
Cloud service brokerage will underpin a
multi-sourcing world where end users
require a range of execution venues for
different workloads and multiple delivery
points

44. Transformation:
Digital Infrastructure Convergence

45. Digital Infrastructure: Convergence or Chaos?
Align IT and facilities assets, third-party services,
and decision makers
Managing digital portfolio consistently
Common language, goals, cross-fertilization of assets
Datacenter design and operation to meet needs of dynamic
environments
Digital Infrastructure Services – the organizing principal for
successful deployments

46. What we are hearing
Rolling in…
Best Execution Venue
Cloudonomics
Security
PaaSification
Big Data
Propaganda vs reality
What could happen?
Red sky at night

47. Best Execution Venue
It’s right-tiering, like HSM and ILM for workloads
IaaS, PaaS, private
Vendors, service providers: everyone wants to be the
control point
Cloud is part of multi-sourcing strategies
Hosted cloud is ‘just another node’
Round-trip
Cloud brokers

48. Cloudonomics
IT cost center to IT as a service
Benchmarking against Amazon
• AMI a de facto standard?
• VMware in the enterprise
Cost allocation - it’s a rate card
Budgeting – run wild/consumption vs allocation
Support Opex vs Capex decisions
Showback and shadow billing
Budgeting reality, depreciation
Is the organization ready?

49. New lights to shine in the hedgerow of IT
Cost Management Spend Management
Big Four Cloudability
Cloud Cruiser CloudVertical
VAlign Raveld
Apptio
Sensible Cloud
VMware Digital Fuel
SatoriTech Ylastic
OpSource Cloudyn
Aria
eVapt Broker-dealers
Strategic-Blue
ComputeNext
CloudInsure

50. Security: a cloud enabler?
“Firewalls and VPNs are like cities we built hundreds
of years ago with a wall around them”
Cloud turns these inside out – what’s inside and what’s outside?
Most companies have no better security than cloud
But – privacy and security remain the responsibility of the user
Security as a cloud enabler:
Map levels of assurance to NIST controls
Data in motion – use ‘S’ protocol - SSH, TLS/SSL, IPSec, SFTP
Data at rest – encrypt it
Cloud providers and security – key management is the issue
Federated/admin identity?
CloudAudit - Cloud Security Alliance (auto selection)

51. PaaSification
ISVs get it – packaging, integration, mobility
Marketplaces, value creation
Polygot programming: developers
Continuous development/delivery vs traditional models
IaaS - leads to an examination of PaaS
Internal PaaS is automated IT governance
Private PaaS, roll-your-own
PaaS as the underlying model for apps built for cloud?

52. But
Hosted PaaS is automated vendor lock-in
Too many aaS
Way down CIO’s ‘to do’ list

53. Cloud and Big Data: TBD
Cloud is a deployment option – databases as VMs or
hosted services
True cloud databases to exploit distributed, elastic
environments? eg NuoDB, Xeround
Google BigTable (and Megastore) and Amazon Dynamo
use NoSQL – have inspired inspired Apache HBase,
Apache Cassandra, Hyper- table, Voldemort, Riak and
BigCouch
PaaS platforms VMware CloudFoundry and Red Hat
OpenShift support NoSQL. MapReduce, BitTorrent,
Dynamo inspire NewSQL
The ‘big data’ focus shifts from volume, variety and
velocity, to value, data hubs and analytics in operations

54. Propaganda vs reality
Cloudbursting
Multi-cloud strategies –
April 21st/August 7th/Feb 29th
changes everything
Jurisdiction shopping
Coke, Colas and Plan Bs

55. IT as a Service - what could happen?
IT departments won’t be needed
IT costs will diminish
Less complexity
Technology will become perpetual services,
not sell and forget
Dominant players will change
Incumbents will be forced into acts of
desperation
The IT vending machine: providing self-
service to your users is entirely possible

56. This is New Wave
Playground to production
New apps vs migration
Faster, more flexibly, more
devices
Virtual first cloud first?
Proxy for IT transformation
CIO: Career Is Over

57. Thank you. Questions? Comments?
william.fellows@451research.com

58. Title
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