2013 future of cloud computing study
TRANSCRIPT
North Bridge Future of Cloud Computing Survey in Partnership with GigaOM Research
3RD ANNUAL SURVEY 2013
@north_bridge @futureofcloud #futurecloud
North Bridge & GigaOM Thank Our 2013 Collaborators
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Demographics
Section 1
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“The fact that cloud vendor and user results
were consistent highlights the convergence
of provider and user needs and objectives.”
Jay Lyman, Senior Analyst
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Broadest industry survey
INCREASE
YoY
49%57
COLLABORATORS
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855
RESPONDENTS
Largest survey yet
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“This survey provides new insights into how cloud
computing is transforming IT. In particular it shows
that businesses are using cloud computing to
outpace their competition and that, over the next
five years, hybrid cloud will become the norm. This
echoes what we hear from customers and it’s why
comprehensive, hybrid cloud solutions are core to
our strategy.”
Steven Martin, General Manager of Windows Azure
Marketing & Operations
Who took the survey?
57%
43%
VENDORS
BUSINESS USER
OR IT DECISION
MAKERS
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One-third of respondents from C-suite
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C-LEVEL BUSINESS +
MID-MGT
IT OTHER
36%
31%
21%
12%
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Cloud Strategy & Growth
Section 2
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“Demand for cloud services continues to
grow as we’ve seen traffic to our own cloud
double in the past year to more than 18
billion requests per month. We anticipate this
growth for vendors will continue to scale
upward as more enterprises look to the cloud
and open source as a powerful combination
for digital innovation and agility.“
Dries Buytaert, CTO & Founder
18 Billion
Software leads over Infrastructure and Platform
%
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Software-as-a-service is now in use in nearly two-thirds of organizations
Growth of 15% from 2012
What types of cloud computing
technologies is your
organization using today?
Cloud growth is significantly outpacing traditional software
MEDIA & ENTERTAINMENT
BIG DATA(+ ANALYTICS)
SOCIAL, COLLABORATION
eCOMMERCE
MOBILE
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The cloud is expanding software’s reach.
How the cloud stacks up TODAY
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Software
Infrastructure
Storage
CDN
Platform
Database
25%
31%
33%
46%
66%
70%
Shows the relative “stage of
adoption” across the
broader categories of “as-
a-service” offerings
Cloud coverage will increase
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Software
Infrastructure
Storage
CDN
Platform
Database
25%
31%
33%
46%
66%
70%
0-12 mos
7%
11%
13%
11%
12%
13%
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“This year’s survey confirms what we hear from our
MSP users every day - delivering new cloud
services is overly complex and costly – which
ultimately impact SLA’s. To help accelerate
adoption of new cloud based applications to
enhance both business agility and resiliency, it's
clear providers need to adopt solutions that
prevent vendor lock-in, while maximizing
interoperability, reliability and simplicity.”
Ash Ashutosh, Founder & CEO
But Infrastructure takes the biggest leap ahead
%
Infrastructure as a Service
Growth of 29% over 2012#FutureCloud
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How the cloud will stack up next year
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Software
Infrastructure
Storage
CDN
Platform
Database
25%
31%
33%
46%
66%
70%
12+ mos
6%
8%
10%
11%
14%
13%
Platform growing but still early in adoption
%
Platform as a service growing rapidly
Growth of 22% from 2012#FutureCloud
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“This year’s Future of Cloud Computing survey
results confirm what we’re seeing in customer
demand for more choice and flexibility.
Companies want to balance automation and
control as their businesses and applications grow.
They want to be agile, scale rapidly, and focus on
building great apps, so they're relying increasingly
on PaaS providers to help them plan, build, deploy
and manage their applications in the cloud.”
Rob Walters, CTO
Which model will predominate?
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PUBLIC private HYBRID
Public cloud use to decline relatively
39%32%
TODAY5 YEARS
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Hybrid clouds rising
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27%
TODAY 5 YEARS
43%
Reasons to be private
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security, compliance
Reasons to be private
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security, compliance
fear
greed
hunger
Reasons to be private
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security, compliance
control (fear)
cost (greed)
reliability (hunger)
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can HYBRID be the best of both
Public leads today
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HYBRID
27%
Almost neck-and-neck between
Public and private clouds
PUBLIC
39%PRIVATE
34%
Hybrid leads in 5 years
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HYBRID
43% PRIVATE
25%
Overtaking both private
and public clouds
PUBLIC
32%
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“The ideal end-state for businesses is a flexible hybrid cloud strategy where IT is able to aggregate and deliver self-service access to a variety of cloud services, both internal and 3rd party, and run these workloads on any cloud that best fits the service. Citrix sees the future of cloud providing businesses the flexibility to deploy across internal and external clouds, while seamlessly aggregating internal and 3rd party SaaS services, ultimately giving line-of-businesses the agility and rapid response they need.”
Sameer Dholakia, Group VP and GM, Cloud Platforms
Group
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still matters
Economies of scale mean infrastructure is not for startups
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10.96% 7.88%
6.19% 2.22%
14.3%
2% <2%OTHER
Large infrastructure players lead the pack of up and coming companies, with 43% of responses
Long tail of up and coming vendors
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300 companies had less than 2% of votes
…indicating a wide open playing field for upstarts.
DEMANDWARE
Section 3
Drivers & Inhibitors
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Section 3
Drivers
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CONSISTENT drivers of adoption
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AGILITY
COSTSCALABILITY
54.5%
- 4%
54.3%
+ 1%
48.1%
- 2%
Organizations looking for AGILITY adopt SaaS
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1
2
3
4
55X more likely to use SaaS
Organizations looking for INNOVATION adopt SaaS
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1
2
3
44X more likely to use SaaS
Reasons for IAAS adoption
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Companies who see Capex to Opex and
agility as critical are 2.5X more likely to use
IaaS technologies
Companies who view Internal Mandates as
important for the cloud are 3X more likely to
use IaaS solutions
2.5X
3X
2.5X
Scalability is the strongest driver of PaaS adoption
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1
2
3
2.5X more likely to use PaaS
However, the relationships between drivers and PaaS adoption weaker than other forms of cloud computing,
indicating a more diverse landscape and lower adoption.
Support for Open Source
projects is also a very strong
driver for a small niche.
Investment in cloud ahead of internal mandates and customer demand
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Investments Internal Corp Mandates
CustomerDemand
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Section 3
Inhibitors
Security concerns easing, cost growing
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55%
46%
-18%
20%
28%
+50%
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“Security concerns continue to be the number one
barrier to adoption of cloud services. This isn't
surprising: companies are understandably reluctant
to move sensitive data and business functions to
the cloud when they don't understand the cloud
provider's capabilities. To further accelerate
adoption, cloud providers need to provide
increased clarity, more transparency, and better
assurance about their security controls."
Andrew Jaquith, CTO & SVP Cloud Strategy
Shift in emphasis from expense to TCO
5%19%
71%
17% 10%
68%
0%
10%
20%
30%
40%
50%
60%
70%
80%
INCREASED SPENDING LESS SPENDING SAME TO BETTER OVERALL TCO
2012 2013
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“Technology buyers expect cloud adoption
will make managing IT increasingly complex,
yet the plurality also expect overall better
cost of ownership. That's either wishful
thinking or an intriguing opportunity for
suppliers and systems integrators.”
David Card, Vice President Research
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Top inhibitors to cloud adoption
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65% 63%
RELIABILITY/BANDWITH/COM
PLEXITY
REGULATORY/COMPLIANCE/P
RIVACY
Top inhibitors to cloud adoption
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65% 63%
RELIABILITY/BANDWITH/COM
PLEXITY
REGULATORY/COMPLIANCE/P
RIVACY
… these are also reasons for private &hybrid cloud
choice as shown earlier ...
Vendor lock-in remains a significant issue
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Section 4
The Cloud Market & Ecosystem
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“We see the availability of consumer-grade
cloud services dramatically increasing the
complexity of IT infrastructure and that's
reflected in this survey. This so-called
‘Shadow IT’ is a major corporate risk and
complexity headache for IT managers.”
Matt Ravden, Chief Strategy Officer
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Business leads IT
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Organizations average
52% current use of
applications that advance
business priorities
Organizations average
36% current use of
applications that
advance IT priorities
Meanwhile…
And numbers of SaaS in
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business cloud applications
are in use by 50% or more
of all organizations
IT cloud applications are in
use by 50% or more of all
organizations4 0
The cloud is used extensively for business activities
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0
50
100
150
200
250
300
350
400
450
FILE SHARING BOX BUSINESS PRODUCTIVITY
CRM/MARKETING SOCIAL BUSINESS & COLLABORATION
CONTENT MANAGEMENT
HR ERP/FINANCE ECOMMERCE
Business Systems
50%
And more will gain usage in the next 12 months
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0
50
100
150
200
250
300
350
400
450
FILE SHARING BOX BUSINESS PRODUCTIVITY
CRM/MARKETING SOCIAL BUSINESS & COLLABORATION
CONTENT MANAGEMENT
HR ERP/FINANCE ECOMMERCE
Business Systems
13% plan to add
50%
Currently use
Plan to use
No SaaS IT applications used in half of all companies
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0
50
100
150
200
250
DEVELOPMENT & TESTING
BACKUP, DR, BC PROJECT MANAGEMENT
SECURITY HELPDESK SYSTEMS MANAGEMENT
BIG DATA & ANALYTICS
MOBILE
CURRENTLY USEIT Management
50%
0
50
100
150
200
250
300
350
DEVELOPMENT & TESTING
BACKUP, DR, BC PROJECT MANAGEMENT
SECURITY HELPDESK SYSTEMS MANAGEMENT
BIG DATA & ANALYTICS
MOBILE
But, fastest growth in SaaS application use to come in IT areas
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21% plan to add
IT Management
15% plan to add
14% plan to add
14% plan to add
13% plan to add
13% plan to add
6 out of top 7 fastest areas of growth are all in IT Areas: Big Data, followed closely by
Mobile, then Systems Management, Backup/DR/BC, Helpdesk and Security
50%
Currently use
Plan to use
Lots of growth in SaaS application use to come
0
50
100
150
200
250
300
350
400
450
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21% plan to add
Business Systems IT Management
15% plan to add
14% plan to add
14% plan to add
13% plan to add
13% plan to add
13% plan to add
Currently use
Plan to use
50%
Tech industry expected to see most benefit from cloud software
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MEDIA & ENTERTAINMENT
EDUCATION
PUBLIC SECTORFINANCIAL
TECHNOLOGY
Industry buzz in cloud verticals
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3Suffer legacy drag,
but still a leader in Cloud
1Initially just
email and DR
5CRM is most
popular app
6A place to test
“beachheads” or
industry-specific cloud
platforms – less
regulatory/compliance
constrained
1Accounts for 20% of
public cloud storage
2Driven by mobile, storage,
budget cuts and hybrid classes
Communication & MediaBanking
Manufacturing
Insurance
Healthcare
Education
1 IDC; 2 Edudemic; 3 Cloud Times; 4 CA; 5 Computer Science Corp; 6 Forbes
Cloud services market size & growth
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2013
$117 B
2016
PUBLIC CLOUD
ALONE
$110 B
2020
$220 B
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IT Readiness / Competitiveness
Section 5
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“Most organizations are going to adopt
cloud computing in multiple forms as part of
a hybrid IT infrastructure. Maintaining
application and data portability within such
environments requires open approaches,
such as open source and open standards.”
Gordon Haff, Cloud Evangelist
Ready or not?
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0
50
100
150
200
250
IT DEPARTMENT COST ALLOCATION
OPERATIONS SYSTEMS SUPPORT
INTERNAL PROCESSES POLICIES AROUND BUSINESS NEEDS VS IT
REQUIREMENTS AND PRIORITIES
PROCESSES FOR SUPPORTING EXTERNAL SERVICES THAT IT DOES
NOT PROVIDE
More than half of
respondents are not
tracking or reporting
service costs…
With greater adoption, cloud is now seen adding complexity
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The cloud was originally expected to reduce complexity, but with
experience many are seeing the opposite. This is typical of an early market.
COMPLEXITY NO COMPLEXITY /
NO IMPACT
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“The increased focus on cloud complexity
and training speak to lessons from enterprise
virtualization, as well as a lack of standards in
cloud computing implementation, where key
technologies are being used and vendors
are working to fill the gaps.”
Jay Lyman, Senior Analyst
Application growth, rise in complexity and need for interoperability create opportunity
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HYBRID / MULTI-CLOUD
PROVIDERS
CLOUD INTEGRATORS CLOUD BROKERS
CLOUD
MANAGEMENT
PRIVATE CLOUD
PROVIDERS
PUBLIC CLOUD
PROVIDERS
As new integrators and multi-cloud providers challenge the existing landscape with new
capabilities, cloud providers will need to increase interoperability in their services.
The cloud is leading to reduced IT headcount
17%
24%
20%
23%
38%
34%
16%
6%
9%
13%
2012
2013
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Reduced
Headcount
+7%
Plan to
Reduce
Headcount
+3%
No Impact
-4%
Expect to
Increase
Headcount
-10%
Increased
Headcount
+4%
-6%+10%
…But an increase in training
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EXPECT TO INCREASE TRAINING
39%
INTEND TO HIRE OUTSIDE RESOURCES
17%
SEE NO CHANGE IN MY TRAINING NEEDS
25%
N/A19%
….and may be looking to outside organizations to manage the gap
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Cloud Investment & Business Models
Section 6
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“We've seen that revenue growth among our 2013
‘Cloud 10’ comprised of the leading cloud
companies was very strong for 2012 registering
35.6% average growth – well above the muted
global IT spending growth of 2.1%. Going forward,
we expect that revenue momentum will continue
with average growth estimated at 23% across the
Cloud basket, outpacing broader IT spending
growth of 4.1% globally."
Kash Rangan, Research Analyst
Cloud investment - VC
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2011
2.4B
2010
1.6B
2012
1.8B
Through
May 2013
$281M
Cloud mergers and acquisitions
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Although venture numbers may be down,
innovation and acquisition thereof is on the rise.
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“It was interesting to see that almost half (45.7%) of survey takers said cloud computing was adding complexity to the management of IT, which is a problem the industry must address if it expects enterprises to fully embrace this model. On the upside, more than half of respondents (55.1%) said hybrid/multi-cloud providers will offer the biggest growth opportunities in the cloud ecosystem over the next 2-3 years - potentially a key to easing the complexity problem.”
Jo Maitland, Research Director, Cloud Computing
Subscription fees dominate for cloud vendors
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77%
23%
13% 16%10%
4%
66%
28%
21%16% 15% 12%
5%
2012 2013
The cloud business is still a subscription business, but around a quarter of
vendors are finding additional revenue through services and consulting.
451 Research Market Monitor Report
Cloud Segments and Overall Market Growth Through 2013
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$2,772
$9,194
$1,400
$3,775
$5,531
$17,958
$1,359
$4,988
2012 2016 2012 2016 2012 2016 2012 2016
35%
CAGR
12-16
38%
CAGR
12-16
28%
CAGR
12-16
CAGR
12-16
PaaSIaaS SaaS Cloud
$17,958
34%
2013 cloud IPOs are performing well
recent IPOs in SaaS
3
$1.4Bmarket capitalization at offer
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North Bridge investments in cloud companies
$2Bn+Doubled
1 IPO
1 Filed to go public
4 Acquisitions
4 New investments
Belmont
Technology
Incorporated
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Cloud formed is differentiated
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Cloud Formed
Cloud Washed
NOT investing INVESTING
The A B C ’s of Cloud Forming
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Amazing Because Cloud
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“While businesses are still seeing some benefit in moving standard applications to the cloud—CRM, HRM, etc.—the greatest potential for innovation and competitive advantage is no longer in ‘same but cloud’ but instead in ‘amazing because cloud’. That is, the most exciting innovations focus on benefits that can only be achieved in the cloud. There were source control, document management, and message buses behind the firewall before GitHub, Box, and Zapier, but they all use the cloud to provide a fundamentally different and more valuable experience. They are all ‘amazing because cloud’”
Rob Gonzalez, Co-Founder
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Predictions are tricky, especially when they involve the future
Section 7
Predictions
• Boundary-less computing
• New cloud formations
• BYOC - Bring Your Own Cloud (services)
• Out-Servicing
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Clouds will blow with the winds of change
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SaaS
PaaS
IaaS
Boundaries blurring…
Clouds will blow with the winds of change
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SaaS
PaaS
IaaS
APaaS
Boundary-less computing
IPaaS
“PaaS squeeze ?”
New formations
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SENSOR CLOUD
Expanding formations – including Sensor Cloud
MEDIA & ENTERTAINMENT
BIG DATA(+ ANALYTICS)
SOCIAL, COLLABORATION
eCOMMERCE(+ PAYMENTS)
MOBILE(+ LOCATION)
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SENSOR NET
APIs for business processes as a service
MEDIA & ENTERTAINMENT
BIG DATA(+ ANALYTICS)
SOCIAL, COLLABORATION
eCOMMERCE(+ PAYMENTS)
MOBILE(+ LOCATION)
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SENSOR NET
APIS
APIS
APISAPIS
APISAPIS
Additionally, year-over-year, cloud APIs on the rise
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CLOUD APIs
INCREASING YOY 11.3%
API growth & value
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10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
2005 2013
Programmable Web API Growth 2005-2013
Valued at $250M
Sold to Intel for $180M
In addition to continuing the rise of the enterprise, the latest APIs show
mobile as a driving force.
Everything-as-a-service
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Merging
BYOC
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Bring your own cloud
• Bring services used at home to work
• Sharing services to link customers and partners
• Combining data between services
• Combining shared services as new business
processes
Boundary-less computing
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PARTNERS
IPAD
CUSTOMERS
EMPLOYEES
WORK
HOME
NIKE FUEL
NEST
THERMOSTAT
TELEVISION INTERNET
OF THINGS
Cloudburst of Big Data
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IPAD
PARTNERS
CUSTOMERS
EMPLOYEES
WORK
HOME
NIKE FUEL
NEST
THERMOSTAT
TELEVISION INTERNET
OF THINGS
BIG DATA
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To 4 things customers want vendors to know
that could hurt vendors…
Lack of Control
Lack of Standards
Lack of Integration
Lack of ROI on TCO
… and pain relief customers want
Monitoring, Management & Transparency
Interoperability, Portability
Integration, Open APIs, Open Source
Business cases & proof
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Agility
Top themes in cloud
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Scalability
Drivers
Inhibitors
Now Future
Compliance/Pri
vacySecurity
Reliability
Business
Leads ITTCOCost
Interoperability
CUSTOMERS
EMPLOYEES
WORK
HOME PARTNERS
Boundary-less
Computing
Complexity
New
FormationsBYOC
SENSOR NET
North Bridge & GigaOM Thank Our 2013 Collaborators
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