Outline

• Brief Background on the Cloud Research

• Cloud Computing Tsunami: The Wake-up Call?– Why cloud is a disruptive innovation and the next Wave in technology

• Complexity- and Confusion-as-a-Service: Unwrapping the Maze of Cloud Options– A working definition of the cloud

• Where’s the market today and where is it headed?

• Implications of cloud computing for customers and vendors (Business Value, Opportunities, Markets, Risks etc) – Infrastructure-as-a-Service– Platform-as-a-Service– Software-as-a-Service

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Background on the Research Study

Leaders In The Cloud

Identifying the Business Value of Cloud Computing for Customers and Vendors

About Sand Hill Group

Investment and Advice

• Provider of investments and management advice to emerging enterprise technology leaders

Publishing

• SandHill.com Web site

• Software Pulse electronic newsletter delivered to over 12,500 executives each week

Research

• Producer of strategic reports about key enterprise software industry trends which aim to provide executives with meaningful, actionable insight into the critical issues they face

The business strategy destination for enterprise software executives

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M.R. Rangaswami, Sand Hill Group, LLC, co-founder

• Held Global VP Marketing positions at Oracle and Baan• Strategic advisor to fast growth companies• Profiled on the front page of the Wall Street Journal• Named to Forbes “Midas 100” list as one of the most

influential investors in technolog

About the authors

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About the authors

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Kamesh Pemmaraju. Leading Cloud Research at Sand Hill Group

• Held Global VP Engineering/Director Quality at Pegasystems, Solidworks, Apani Networks

• Brought to market leading technology products in Enterprise BPM, 3D-CAD systems, Enterprise Security, High Transaction Websites, and Embedded Real-time

• Consulted at GE, GM, Siemens, Sun, Visa International, NASD, Motorola on technology, security, and quality issues

Industry-leading advisory board

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Tony Redshaw, CIO

Daru Darukhanvala, CTO

JP Rangaswami, Chief Scientist

James Barrese, VP Systems and Architecture

Michael Abbot, SVP Applications Software and Service

Gary S, Washington, Office of OMB

Survey of 511 IT execs with McKinsey and TechWeb

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Title/Position Percent of Respondents

Board Member/CEO 14%

CIO/CTO 13%

Other C-level executive 6%

Senior IT executive 18%

Other senior executive 10%

IT manager 7%

Other manager 6%

Staff 6%

Consultant 15%

Other 5%

40 confidential interviews with cloud leaders

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Sector Companies ExecutivesHealthcare 1 1Insurance and Financial Services 3 4Publishing and Media 3 3Telecom 1 2Federal Government 3 6Technology 4 4Business and Software Services 3 3Software Vendors 8 8Electronics 1 1Manufacturing 2 2Energy 1 6Total 30 40

Cloud Computing Tsunami: The Wake-up

Call?

The Evolution of Cloud Computing

Cloud Computing is….

• A Game Changer• The Next Big Wave in IT• A Disruptive Technology

“An innovation that is disruptive allows a whole new population of consumers access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.” – Clayton Christensen, The Innovator’s Dilemma

Mobile Phones + Google Apps: Poor Artisans in Remote Villages of India Sell their Folk Arts on eBay

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A whole new population of consumers…

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Mainframes • Big iron• 1960’s,

1970’s

Client Server• Enterprise• 1970’

1980’s

Internet• Web 1.0,

1990’s• The PC

revolution

Mobile

2000’s

Cloud

Web 2.0

2000’s and beyond

Interconnected Devices + Anytime, Anywhere Internet Access +

Continuous Cloud-based Services

2 Billion Internet users5 Billion Mobile Phones

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Levels the Playing Field for small companies

Represents a Competitive Threat to the Incumbents

Cloud Computing: The New Disruption

Business Drivers…

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Agility, speed, flexibility The rise of Business Networks Collaboration Global Recession Global Commerce Simplicity Innovation

Agility: #1 driver for the move to the cloud

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Don’t know

Part of a Green initiative

Disaster recovery and business continuity

Leverage core competencies and free IT resources to focus on innovation

Cost efficiency

Business agility

0% 10% 20% 30% 40% 50% 60%

1%

3%

13%

22%

46%

49%

Latest Study results..

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Complexity- and Confusion-as-a-Service:

Unwrapping the Maze of Cloud Options and definitions

Everyone has their own “cloud” definition

• The Cloud disruption is so large and touches so much of the industry, that people can only see the bit that affects them and hence they cast it in that light

• Vendor confuse terms and push their agendasTwitter Storm after Larry Ellison defines Oracle’s “cloud”

Litmus Test: If you have to buy hardware just to get started, it is not Cloud @Werner RT @benioff Beware of the false cloud

To get going, we will use a the following definition and debate later:

An rapidly scalable, elastic, cost-efficient IT capability (applications, platforms, and infrastructure) delivered as a service over a network in a pay-per-use, on-demand self-service manner.

NIST Definition Well Accepted

CommunityCloud

Private Cloud

Public Cloud

Hybrid Clouds

DeploymentModels

ServiceModels

EssentialCharacteristics

Common Characteristics

Software as a Service (SaaS)

Platform as a Service (PaaS)

Infrastructure as a Service (IaaS)

Resource Pooling

Broad Network Access Rapid Elasticity

Measured Service

On Demand Self-Service

Low Cost Software

Virtualization Service Orientation

Advanced Security

Homogeneity

Massive Scale Resilient Computing

Geographic Distribution

Source: NIST

And Controversies Abound….

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Is private cloud a cloud?

Is virtualization a cloud initiative?

Is SaaS app a cloud app?

Where’s the market today?

What’s the outlook for the next 3 years?

Cloud Feels Like 1997 for the Internet

Large Potential Huge Market

HypeUncertainty

• New Technology

Analysts Forecast a healthy CAGR

When will the Tipping point occur?

Bold Predictions

“I think, in three years, the industry will get to 40 percent in the cloud. In five years and beyond, it could get to 70 percent.” – CIO, major software vendor

2014: A possible tipping point

Source: Saugatech Research, 2010

Cloud investments set to increase..

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Today

3% IT Budget spend on Cloud

In Three Years

7% - 30% IT Budget expected spend on

cloud

Cloud Reality is Catching The Hype

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Don’t know

No plans

Deploying mission-critical applications

Implementing and deploying non-critical applications

Implementing Pilot projects for Experimenting and testing

Watching and Learning

0% 10% 20% 30% 40% 50% 60%

2%

3%

18%

33%

52%

53%

“Compared to what we were doing before, the cloud is a giant bed of roses.” – CIO, business services company

Some SMB’s have 80% of services in the cloud

Implications for Customers and Vendors

Infrastructure: The Change

Assembly Line IT

Robotics Factory IT

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Chief Informa-tion Officer (CIO), 30%

A committee of senior executives,

25%

Heads of business units, 14%

IT department, 27%

No one, 5%

Pendulum swinging back to the CIO and the IT department

• Developers using Public IaaS services under the Radar

• Business buying direct from Cloud vendors

• Governance, operational, expenses, and security issues

• CFO, CIO and IT under pressure to rationalize

SaaS evolution

Wave1: 2001-2006: Cost-effective Software Delivery– Single/Standalone/point solution: function-specific, entry-level

(CRM, Conferencing, Project Mgt, Collaboration etc)– Challenges: Business Bypassed IT, Governance/security

issues, Integration demands, Business Process Orchestration

Wave2: 2006:2010: Integrated Business solutions– New wave of integration products (Informatica, Pervasive,

Boomi (Now Dell), Cast Iron (now IBM)– Inter-SaaS Linking (Intaact & SalesForce Data transfer)– Opportunities: Web-Services based Integration API’s,

Customization by VAR’s and SI’s

SaaS evolution (contd..)

• Wave 3: 2008-2013: Workflow-enabled Business Transformation

• Business process and workflow orchestration with external cloud services (outside the firewall) and on-premise services

• Inter-Enterprise Collaboration

–Opportunities: (Cloudsourcing)• Cloud Integrators and BPM vendors for integrating business

workflows: Point solutions (e.g Appirio, Bluewolf) • Business Solution Providers can help provide holistic solutions

involving multiple external SaaS solutions (e.g NetSuite, SAP, Workday, SalesForce, Google) and integration with social Websites Facebook and Twitter

Source: Saugatuck Research, Strategic Perspectives, How Suite It Is – Five Points Along A Spectrum of Cloud Offerings

Workflow-based integration & CloudSourcing

Implications for Cloud Solution Providers

• Wave 3 is where is industry is headed. Customers of composite solutions expect:

• Vertical domain, web integration expertise and channel• Ongoing support of the WHOLE solution and quick turnaround

service times• Transparency of solution performance• Holistic SLA agreements (not just for one link in the chain)• Challenge: Weakest link

• Understand the customer’s legacy burden and provide secure hybrid architectural extensions to minimize disruption to installed base

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Business Model Implications of SaaS

• Revenue model is very different • Up-front License model to recurring subscription model. • Slower GAAP Revenues

• Major Impact on Sales• Smaller deal sizes• Relationship vs transactional selling model

• Marketing Role change• Help reduce sales cycle• Lead Qualification more than Lead generation

• Channel Model change• High-value, business process, and implementation skills

• Operations• TCO , SLA, security, Infrastructure, Support is on you• Traditional packaged software vendors lack operations skills

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Large/Small Company Perspectives

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Large Enterprises Small and Midsize Businesses

Implementing pilot projects 62% 46% Watching and learning 38% 49% Implementing and deploying noncritical applications

35% 34%

Deploying mission-critical applications

12% 25%

No plans 6% 4% Don’t know 0% 1%

“I firmly believe that my data is safer in [the cloud vendor’s] hands than it is in mine” – SMB CIO

What is PaaS?

• Services to develop, collaborate, integrate, test, deploy, host and maintain applications [ideally] in the same integrated development environment

• Ideal PaaS is built upon:– Infrastructure-as-a-Service Layer– Middleware layer (APIs’, run-time support, glue that cements

the different pieces)– Development Layer (tools, debuggers, IDE’s etc)

PaaS will be the future of cloud services

So while much of cloud computing’s success today comes from the simple metaphors we’ve used to describe it, we have to avoid being trapped by those metaphors. EC2 is not AWS; clouds are not machines. It’s the surrounding ecosystem that matters, and we ignore it at our peril – Alistair Croll

Platform Services help create an ecosystem for even greater innovations, simplicity, and cost efficiencies

PaaS Network Effect

PaaS is sweet spot

• The real value is in the Applications and Data• PaaS enables Cloud Development and

infrastructure abstraction further blurring the boundary between Infra and apps

• SaaS customers want extensions and configurability

• All Major Cloud Players “moving up the stack” (AWS, VMWare, Oracle, HP)

• IaaS will be commodity• Lock-in is a big concern for customer

But it’s still very early for PaaS

Workloads in the cloud

Innovation, skunk-work projects, new development, QA,

Load testing

Backup, Disaster Recovery,

Redundancy

Collaboration, CRM, HR, Office Productivity,

ERP, and Business Analytics (SaaS)

Characteristics: Spiky traffic patterns, self-

contained, virtualizable, scalable architecture

Public Vs Private

• Compelling economics of public cloud. On-demand capacity for workloads that are

• “Spiky”, seasonal, short-term, commodity, non-core applications

• Mission-critical apps have to stay in the datacenter

• Security, Compliance, and Control• Massive Investments in legacy Infrastructure • Long-term contracts for datacenter space and vendor

relationships• Cost of re-architecture and cloud migration

• No one-size fits all solution: Multiple cloud services to meet business, security, SLA needs

• Potential Risk: Weakest link48

Workloads For Hybrid Clouds

• Web-Serving Workloads: Many permutations– Scale the front-end web servers in the cloud, leave logic

processing and data-base in-house– Load balancers, CDN in-house. Rest in the Cloud – Run internally for normal loads, burst out for seasonal peak

demands

• Highly parallelized massive data analytics (MapReduce, Hadoop style processing) in the cloud and logic processing inside

• Hybrid Storage and Retrieval: Augment high-bandwidth on-premise storage with less frequently accessed Cloud storage. Backup, archival, DR. Single Management solution

Workloads For Hybrid Clouds – Contd..

• Development and QA– Multiple cloud environments for development, test, load,

stress, scalability, and build. Create and tear down only as needed

– Move from cloud to data center or vice versa at various stages of the Application Lifecycle Management (ALM).

• Hybrid workflows across SaaS applications and services and data inside the data center.– SaaS CRM application reaching out to an ERP system for

access to financial data.– Application running on public cloud accessing DNS on-

premise

• Collaboration infrastructure (Wiki’s, project boards etc)

Several customer concerns, but responsibility is shifting to the vendors

Does it make economic sense?

How will we handle security

and compliance?

How will we handle legal matters?

Is it mature, reliable, and

stable?

Once we’re in, how do we get out?

(portability)

How do we interoperate with

our existing “stuff”?

How will we manage the

cultural change and fear of job loss?

Do I have re-write everything?

Do we need new skills?

More Information, Assistance, and Offers

• Opinion Editorial on SandHill.com– http://sandhill.com/opinion/editorial.php?id=296

• Weekly Blog on cloud trends, vendors, customers, people, and solutions– http://sandhill.com/opinion/daily_blog.php?id=71

• Purchase Digital Enterprise License of research: Unlimited Internal Use:– http://sandhill.com/research/reports.php?id=3

• Additional Go-to-market and lead generation:– Customer webinars and events– Co-branded whitepapers, podcasts, and marketing collateral– Sales enablement and briefing sessions

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Cloud Thought Leadership…

Research Industry Analysis, Blogs, Workshops, Strategy Consulting

Cloud Thought Leadership (contd…)

Conferences

WebinarsPodcasts

NewslettersOpinion Editorials

Events

Sample Research Customers and Consulting Clients

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©2009 Ness Technologies – Proprietary and Confidential

November 2010Boston

Achieving Technology Leadership in the Cloud

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Offshore Product Development Established 2001

60+ Client Labs in 5 locations throughout India and Eastern Europe► Multi-shore development model

2,500 talented resources delivering 1,000 software releases per year

Best Practices from every engagement are institutionalized through the Ness Tech Council and applied to new clients through Strategic Consulting

Ness developed SMART Platform implements best practices workflow and metrics through unique value-added IP

Ness Software Product LabsEngineering Effectiveness

Client

Labs

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Council

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Consulting

Client Goals

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NIST (National Institute of Standards and Technology) defines cloud computing as a "a pay-per-use model for enabling available, convenient, on-demand network access to a shared pool of configurable computing resources — for example, networks, servers, storage, applications, services — that can be rapidly provisioned and released with minimal management effort or service provider interaction".

Cloud Computing Defined

59

www.ness.com

It’s Very Cloudy Out There

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Private Cloud

Performance

Quality of Service

SaaSPlatform Cloud

ROI

Infrastructure

Security

Hybrid Cloud

Cloud Broker

QA Cloud Cloud Services

IntegrationSLAsArchitecture

Global Delivery

Disaster Management

Regulatory Compliance

Internationalization

Data Clouds

Governance

Monitoring

Virtualization

Open SourceData Management

www.ness.com

Options, Options, Options

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www.ness.com

Ness Cloud Assessment Clears the Air

Action Plan and Success Criteria

Cloud Strategy with Projected ROI

Current Arch. / Technology

Market Climate

Business Objectives

www.ness.com

State of the Public Cloud: The Cloud Adopters' PerspectiveOctober 2010 Appirio study focused on existing cloud adopters

63http://thecloud.appirio.com/StateofthePublicCloudWhitepaperThanks1.html

While basic challenges like security and manageability remain at the top of the list, new challenges around cloud-to-cloud integration, SaaS silos and mobile access are also a priority.

• 75%+ say cloud-to-cloud integration and better mobile access are important priorities (more than 80% still say security and manageability are priorities)

• 65% say enhancing existing cloud apps is a high or essential relative priority

• Only 4% have fully integrated their cloud applications with each other

www.ness.com

What kind of technology does your product use? Java, C++, J2EE, .Net?► Application Server, DB, 3rd Party Components, Open Source, Etc

► Tell us about the commercial products that you use to build your product? (what license fees do you pay??)

What kind of architecture does your product have – 2 tier, n tier?► SOA

► Multi-tenant support

► International support (Unicode, multi-currency)

Security / regulatory requirements? http://www.cloudsecurityalliance.org/csaguide.pdf

► Geographic distribution requirements?

Performance / SLA requirements?

Integration needs – cloud to cloud, cloud to client, hybrid cloud?

Implementation requirements?

Competitive environment and customer expectations

Technology acquisition strategy

Some Critical Cloud ConsiderationsWhere to Begin

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www.ness.com

Ness Cloud Assessment Summary

Cloud computing offers significant tangible benefits*► ROI – Clients report 50% - 200% reduced costs

► Speed – Deliver applications in weeks, not months

► Innovation – Quickly design, develop and deploy many applications. • Low investment makes it easy to walk away from failing efforts

Significant considerations► What do you need / want from the cloud?

► Business risk in moving / not moving to the Cloud

► Current technology position to achieve objectives

► Resources available to achieve objectives

Next Steps► Leverage Ness Cloud Readiness Assessment

► Meet with Ness Strategic Consulting• Determine scope

• Identify stakeholders

• Conduct Assessment and create plan of action

*Courtesy of Sandhill Inc 2010

Q & A

66

Thank You