Winn wl cloud_study_webinar

Generating Demand:
Enterprise IT Buying in the Early Cloud Era
March 2011

© by WaveLength Market Analytics and Winn Technology Group. All Rights Reserved.
© by WaveLength Market Analytics and Winn Technology Group. All Rights Reserved. 1

Today’s Speakers
•  WaveLength Market Analytics: Founded in 2001, has specialized in
combining the knowledge of technology markets, products and services
with data management & quantitative analysis resulting in improved
strategies for impacting demand generation success.

•  Speaker – Natalie Robb, Principal Analyst with WaveLength Market
Analytics has over 20 years of market research and data analytics
experience focused in the Information technology and
telecommunications industries.

•  Winn Technology Group: Since 1990 has supported over 800 technology
firms with thousands of demand generation solutions.

•  Speaker – Geoffrey Swallow, President of Winn Technology Group,
has over 32 years experience in technology marketing.


Demand Center (Generation) Strategies

•  Part 3 of 8 part Webinar Light series

•  Practicing what we preach
•  Thought leadership content
•  Focused content and messaging
•  Market drivers
•  Leveraging the demand center


Agenda
•  Study Background and Goals
•  Intro: Many Technology Segments Competing for the Customer
•  Baseline on the Cloud Market: Adoption & Penetration
•  Moving the Market: Motivators & Barriers Useful to Messaging
•  Reaching the Customer: Role of Partners
•  Summing Up: Enter the Early Cloud Era


Background on the Research
•  Primary research conducted by Winn Q3/Q4 2010.
•  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:
•  Telephone survey
•  Supplemented by e-survey
•  Landing page developed to provide respondents
the ability to answer via web
•  Provided incentive to increase response rates
•  Sample size = 126


Goals
•  To inform demand generation programs by
understanding penetration, concerns and
motivators, apps and IT strategies, buying
habits and partner involvement, & future
plans
•  Large and medium-sized enterprises to
understand key differences among 3
segments:
▫  Pioneers: Using or testing a cloud
solution
▫  Planners: Planning for a cloud solution
▫  Stragglers: Not planning a cloud
solution at this time


Many Technology Segments Competing for the
Customer
Infrastructure Software as a Service Communications
as a Service Platform as a Service as a Service
Cloud Services-enabling Products & Services
Consulting & Professional Services for Cloud

Cloud Vendors

Managed
Telecom
Software Hardware Services/IT Systems
Service
Vendors Vendors Outsourcing Integrators
Providers
Providers

= Business model re-alignment and sales channel challenges for entire industry

Cloud Market Adoption and Penetration

58% are Doing “Something” in the Cloud
•  More enterprises doing or
thinking about the cloud than
those that aren’t
•  Those actively using or trialing a
Cloud Cloud cloud solution, Cloud Pioneers,
Pioneers Stragglers more likely to be:
41% 42%
▫  Larger with global networks
▫  Commercial enterprise
Cloud
Planners
▫  Have more remote and more mobile
17% workers
▫  Actually already using a cloud
solution, as opposed to just testing

Takeaways: 1) Limit demand generation for cloud solutions to organizations with
1000 employees or more at this point in market development; 2) Message on how
your solution addresses and helps remote and mobile workers.

Besides SaaS: Private Clouds and PaaS Most Common
•  Pioneers mostly use Platform-as-a-Service & hosted private clouds
•  In the next 24 months, Pioneers and Planners aim for internal private
clouds, public clouds, and take note HYBRID clouds
•  NOTE: Since hybrid clouds are more challenging, therefore more
medium-term…it suggests very quick market development reminiscent
of the VOIP market rise.

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=126


Cloud Apps Not Yet Mission Critical
•  Email, collaboration, CRM, and HR will dominate the next 2 years
•  Enterprise mission-critical apps on a more distant cloud

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


Pioneers Mostly Migrate Legacy Apps
•  … of which email is obviously a legacy app
•  Planners are more ambitious; not only do they plan on using public and
hybrid clouds in greater numbers, they also intend on migrating legacy
apps, as well as implementing new ones

Q: Does, or will your organization in the next 24 months, use cloud architecture to.. ? (n=78)


Pioneers & Planners More Likely to Use SAN,
NAS, & Virtualized Storage
•  Pioneers and Planners both have a higher percentage of virtualized
servers and higher virtualization densities than Stragglers
•  Virtualization is not a requirement for cloud, but both improve
resource utilization

Percentage of Each Segment Using Key Technologies 
87%  89.5% 
80%  72.7%  68.4%  70.3%  71.2% 
58.1%  62.3% 
60%  52.6%  52.9% 
46.3%  41.7% 
40% 

20% 

0% 
Virtualized Servers  Virtualized Storage  SANs  NAS 

Cloud Pioneers  Cloud Planners  Cloud Stragglers 


Pioneers Already Outsource More Than Planners
and Far More than Stragglers
•  Nearly 60% of Pioneers outsource at least one function, compared to 14% of
Stragglers
•  Targeting organizations that already outsource would be effective way to penetrate
enterprise market

Q1. Yes or no, do you outsource any of the following functions? N=126


Shift to Cloud Architectures Well-Underway

• Although degree of penetration into IT • Cloud apps are those that were “born”
Enterprise Cloud
Penetration

Adoption & Planning
is unknown, more enterprises of the Internet, such as email,
implementing or planning “something” collaboration, and customer
in the cloud than those that are not relationship management
•  Enterprises don’t want to be left • Mission-critical enterprise cloud apps
behind nowhere on the horizon
• Cloud Pioneers profile: • Continuum of clouds will exist, as
• Large, publicly traded or private some clouds more suited to certain
company apps than others
• Higher than average number of • Public clouds & hybrids models are
remote workers or many smaller closer than they appear
branch offices
• Higher than average number of
mobile workers
• Outsource more, higher usage of
SANs, virtualized storage and servers


Moving the Market: Motivators & Barriers

Top Motivators: Cost Cutting & Speedy
Application Deployment
71%
63%
52% 52% 47%
38.7% 42%
35% 32% 31% 30%
17.1% 18.8% 15.2% 19% 17%
9.1% 8.6% 6.7% 9.4% 6.3% 6.5% 6.5% 3%

Cloud Pioneers & Planners Stragglers

Q: Using a scale from 1 to 6where 1 is not at all important and 6 is extremely important, please rate the following as motivators in your transition to
cloud computing? N=126 % who say motivator is 5 or 6.

Takeaway: 1) Include cost reduction and app rapid deployment in solution
messaging; 2) Appeal to competitiveness that they risk being left behind

Reduced Control is Top Security Concern for
Pioneers
•  Pioneers, those with cloud experience, worry less about all
concerns
•  Planners worry most about data breaches, and Stragglers are
concerned with all security issues

Q: Using a scale from 1 to 6 where 1 is not at all important and 6 is extremely important, please rate the following as security concerns that limit
adoption to cloud computing? N=126

Pioneers Find Network Delays the Top Concern,
Even Over Security
Pioneers find start-up costs too high and a void of trusted 3rd party relationships
Planners find lack of remediation (not truly usage-based yet) and poor
interoperability their top concerns
Stragglers will need those trusted 3rd party relationships to contemplate cloud

Cloud Stragglers Cloud Planners Cloud Pioneers
Extent following concerns limit cloud
adoption? Average Rank Average Rank Average Rank
Network delays 4.13 6 4.14 8 5.75 1
Initial start-up costs too high 5.16 2 3.98 10 5.27 2
Lack of trusted 3rd party relationships 5.64 1 4.09 9 5.14 3
Lack of reporting/management tools 4.11 7 4.63 5 5.02 4
Reduced control/visibility 4.80 4 4.26 7 4.58 5
Network downtime 3.95 9 5.16 3 4.23 6
No vendor neutral APIs 4.40 5 5.05 4 4.23 7
Technology not yet proven 4.98 3 4.26 6 4.10 8
Lack of audit/remediation/reporting 4.11 8 5.77 1 4.08 9
Poor interoperability b/t cloud venders 3.93 10 5.28 2 3.96 10
& internal IT
Q: Using a scale from 1 to 6where 1 is not at all important and 6 is extremely important, please rate the following as concerns that limit adoption to
cloud computing? N=126

The Network is Underlying Infrastructure Getting
Most Evaluation… from all Market Segments
•  Storage and virtualization software are 2nd and 3rd
•  Vendors should not ignore management tools; while they are less
important now, they’ll be increasingly important as performance
improves and approaches commoditization

Q. Starting with a 1, please ran the following according to how much evaluate a cloud provider’s underlying infrastructure? (N=78)


Generate Demand by Appealing to Motivators &
Mitigating Risks

•  Reduce costs, do more with less, • It might be more expensive than you
Message to Motivators

Message to Mitigate Risks
lower fixed costs, improve value, etc. think to start up, but there is a
•  Become more nimble in IT and learning curve and the following apps
develop and roll out new apps more will likely be less expensive
quickly • Beware the network delay, so prepare
your network to yield higher
• .. Making business leaner, more agile performance
and more competitive to increase • If reduced control is a real concern,
industry leadership start with an application that can
•  All without losing control… tolerate a lower level of performance
• Security is about preparation; don’t
• Vendors should educate on the do cloud until the network and apps
are secure
importance of their management
tools; be increasingly important as • We are the most qualified to help you
get to the cloud
performance improves and
approaches commoditization


Reaching the Customer: Role of Partners

In Selecting Partner for Cloud Services,
Professional Services is Most Critical for Both
Pioneers and Planners
•  The market most demands qualified professional services
•  SLAs and business process re-engineering also needed
•  Performance management & monitoring lags… but probably won’t for long, as
management offers genuine differentiation
Cloud Pioneers- First Mention Cloud Pioneers- Overall
Cloud Planners- First Mention Cloud Planners-Overall

59.9% 59.8%
55.1%
47.6%
44.9%
41.5% 38.6% 36%
30.5% 29.9%
18.9% 19% 19.5%
9.5%
13.2% 10.3% 11.3% 14.3% 9.4% 9.5%
13.6%
5.7%
% %

Professional Business Performance SLAs Creation of Training
services process re- management vertical
engineering & monitoring applications
Q: In selecting your most important partner, which 2 capabilities were most critical… ? (n=78)
23

Planners Involve More Tech Segments than
Pioneers in Cloud Implementation
•  More Pioneers involve software vendors and fewer involve Telco
service providers
•  More Planners involve consultants and fewer engage service
providers

Q: For each of the following types of participants in cloud implementation, on a scale of 1 to 6 where 1 means “not at all involved” and 6 is very
Involved,” what’s the involvement level of… ? (n=78)


… But, Overwhelmingly Systems Integrators Most
Important Partner for Pioneers while its
Software for Planners
•  Hardware vendors also important to Pioneers
•  Telcos least important to both Pioneers and Planners

Q: Your internal IT staff aside, which single partner was most important for your deployment… ? (n=78)

Buying Behaviors Typical of Shifting Market: Top
Management & Trusted 3rd Parties Very
Important
•  Nearly half of Pioneers say top •  Pioneers and Stragglers both
business management is very plan on leaning on trusted 3rd
involved party more than a cloud
Those Who Strongly Agree or Agree:
provider Strongly Agree or Agree:
Those Who
Top Business Management is Very We are more likely to use a
Involved with Purchasing Decisions consultant to help create our cloud
Regarding Cloud Computing strategy than work with cloud
service provider partners
47.2%
48.1%
35.7%
30.4% 35.1%

14.3%

Cloud Cloud Cloud Cloud Cloud Cloud
Pioneers Planners Stragglers Pioneers Planners Stragglers


Brand, Ability to Manage, Application Features &
Functions, Monitored Service Levels Will Become Key
Service Differentiators

•  Imperative to own the customer had never been stronger
Channels

•  Hardware & network companies will be increasingly under pressure as the
primary decision-maker changes from the enterprise to the enterprise’s data
center partner, but brand can become an important component of the apps
or data center’s service sale
•  Telcos need to avoid the temptation of rapidly entering the market with
large IT outsourcing partners that will ultimately compete with them
•  All vendors interests would be well-served by educating their best channel
sales partners


Generating Demand Will Require Fewer, but
More Substantive Partners
Technology
Partnerships

• Cloud is mostly about application delivery, so the strong role of software
vendors is not surprising
• Storage and app vendor partnerships will be increasingly important
• Server and network vendors would be well-served by developing closer
relationships with application vendors
• Network hardware vendors can best support their telco customers in service
delivery by avoiding direct competition with them
• Integrators, consultants, and other distribution partners need to develop
cloud services management capabilities- program managing across
organizations within their partner ecosystems


Enter the Early Cloud Era…

Many Say ROI & Deployment Speed Expectations
Not Met… Yet Still Pioneers are Largely Satisfied
with their Cloud Solution
•  About a third willing to sign multi-year contracts with cloud
services provider
•  Organizations clearly have realistic expectations as they learn….

Q: On a 1 to 6 scale, how much do you agree with the following statements… ? Base = Pioneers (n=58)


No Turning Back…Pioneers and Planners Both
Estimate that 30% of IT Will be in Cloud By 2015

•  Even Stragglers expect to be using Cloud by 2015!!!

Q: What percentage of your IT will be outsourced to a cloud provider by 2012? 2015 ? (n=126)


Generate Demand During the Early Cloud Era

Target the Right
Use the Right Message
Audience
Don’t bother with organizations with Position your message as to how your
fewer than 1000 employees at this point solution addresses needs of remote and
in the market mobile workers

Look for organizations with high levels of
Make sure you highlight your professional
outsourcing, & key technologies like
services capabilities and strengths
SANs, server & storage virtualization

Educate & partner with your best Address motivators as speed of
solution partners deployment and cost reduction

Don’t ignore enterprise’s top business Address concerns of security risks,
management reduced control, & network performance


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