cloud benefits sandhill

7/31/2019 Cloud Benefits SandHill

1/13

Cloud Benefts 101:Whats In It for You?

Mastering The Cloud in Eight

Easy Steps: Top Strategies to

Rocket Your Companys Growth


2/13

This paper accompanies Part 3 o the eight-part

SAP Webinar series: Mastering The Cloud in

8 Easy Steps: Top Strategies to Rocket Your

Companys Growth.

Youve heard about the cloud, but youre wondering

what it means to you and your business. Attend this

FREE Webinar series to learn everything you need

to know to master the cloud and grow your company

including:

BeyondtheHotAir:

Whats Really in the Cloud?

CloudBenets101:

Whats In It or You?

RoadmaptoCloudSuccess:

How to Get There?

CompetitiveEdgeintheCloud:

Is the Sky the Limit?

Click here to register for the Webinars.

This white paper was made possible by SAP,

a leader in the cloud.

Title: Cloud Benefts 101:Whats In It for You?
https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=300582&sessionid=1&key=BAA35FA5E5F500A8DC5F9281C75C089A&sourcepage=registerhttps://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=300582&sessionid=1&key=BAA35FA5E5F500A8DC5F9281C75C089A&sourcepage=register


3/13

Cloud Benefts 101: Whats in it for You? 1

Cloud ComputingDelivers Business Value Beyond ITThink back to 1997 and the buzz surrounding the Internet. Consumers and

companies were excited about the technologys potential but worried about

security, privacy, bandwidth, standards, and more. In the end, what enabled

the Internet to transorm communication and commerce? Business value.

Fast orward to 2011. Cloud computing has emerged as the next transor-

mational technology wave similar to the Internet in 1997. According to the

ndings in Sand Hills 2011 Leaders in the Cloud research study (see Ap-

pendix A or an overview), cloud computing has moved beyond hype and is

already driving enterprise strategies today. The 100 CEOs and sotware

executives participating in the study indicated robust customer demand

today and optimism or the long-term growth o the cloud computing indus-

try and their revenues rom the cloud.

As evidence that cloud computing has moved beyond hype, more than 50

percent o the surveyed sotware executives indicated their customers initi-

ated cloud projects six months ago or even earlier. In addition, 43 percent

o the executives stated their companies now orecast that cloud-based

services and products will dominate 81 - 100 percent o their revenues in

ve years. Eighty-two percent indicated that cloud oerings and strategies

in the market today are enterprise ready or close to it.

Interviews with 40 executives in Sand Hills 2010 Leaders in the Cloud

research study (see Appendix B or an overview) uncovered compelling

real-world evidence that the business value o cloud computing is tangible

and the road to enterprise cloud adoption is shorter than our surveyed ex-

ecutives had anticipated.

The implication? Companies must act now to take advantage o several

cloud benets in order to revolutionizetheirbusiness.

This white paper explores the top competitive advantages that the execu-

tives participating in Sand Hills 2011 Leaders in the Cloud survey are

achieving rom their early cloud-computing initiatives. To put this inor-

mation into even sharper ocus, the paper includes three case studies o

companies that achieved signicant return on investment, innovation, and

scalability in the cloud.


4/13


Five Essential Areas Where Cloud ComputingHelps Companies Avoid Competitive MediocrityExecutives participating in Sand Hills 2011 Leaders in the Cloud survey are

achieving competitive advantages rom their early cloud-computing initia-

tives. The top ve benets they cited are as ollows:

Improvedbusinessagility

Generatedattractivereturnoninvestment

Acceleratedtimetovalue

Jump-startedinnovationprograms

Scaledthebusinessrapidly

ADVANTAGE #1:

Improve Business Agility

Business agility is the ocus o many corporate mission statements today

and thus, as Sand Hill expected, business agility was the No. 1 driver o

cloud computing adoption or 49 percent o respondents in the Sand Hill

survey (see Exhibit 1).

According to the respondents, business agility is all about accelerating

and empowering their business and allowing them to compete betterand

aster.

In the cloud, companies can create, deploy, scale, and manage cloud-based

applications much more quickly than traditional on-premise applications.

This IT agility in turn contributed to overall business agility.

Business agility

Cost efciency

Leverage core competencies and reeIT resources to ocus on innovation

Disaster recovery and businesscontinuity

Part o a green initiative

Dont know

Source:Sand Hill Group Cloud Computing Survey 2010

Exhibit 1: Top drivers of cloud computing adoption

3%

1%

0 20% 40% 60%

13%

22%

46%

49%


5/13


The surveyed executive o an electronics engineering company described

the deployment o a major cloud-based nancial application as taking seven

weeks including our weeks o due diligence across their 14 oces around

the world. He estimated that a traditional on-premise application wouldhave taken more than a year to deploy.

The Platorm-as-a-Service (Paas) and highly congurable Sotware-as-a-

Service (SaaS) aspects o cloud computing also enable companies to fexibly

and quickly respond to changing business requirements.

ADVANTAGE #2:

Generate an Attractive ROI

In todays challenging economic climate, it is not surprising that 46 percent

o executives surveyed cited cost eciency as the most important driver o

cloud computing or their companies (see Exhibit 1).

The good news is that many companies reported signicant cost savings or

cloud projects compared to their traditional alternatives; in act, 91 percent

o respondents reported cost savings overall, with 62 percent realizing sav-

ings greater than 10 percent.

Some early adopters o cloud computing even reported ve-old savings in

cost. Lets do the math. Looking at an apples-to-apples cost comparison be-

tween an on-premise solution and a SaaS solution over a ve- to seven-year

period, SaaS oten proves to be 25 - 50 percent less expensivea data point

validated by several o the interviewees. The ROI case is certainly compel-

ling. Moreover, the cost benets extend beyond the need or large up-rontinvestments. SaaS costs are spread out more evenly over time, and the sav-

ings add up over the longer term. According to one CIO,

CAsE sTuDy: Cost Advantages o the Cloud

A manuacturing company was very rustrated with the cost, complexity,and poor usability o its traditional on-premise applications. The company

evaluated several on-premise applications and corresponding cloud equiva-

lents or its HR, IT problem resolution, and CRM systems. The ndings,

which include the ollowing actors, make a convincing argument or the

multiple benets o cloud applications:

25percentlowerinvestmentthanwithtraditionalapplications

70percentfewerresourcestoadminister/runtheapplicationversus

traditional applications

Whenwedidathree-yearROIanalysis,itcameouttobreakevenbetweencloudand

on-premisesolutions.Atveyearsiswhenyouseethevalueofcloud,becauseatthree

years you are typically doing hardware refreshes and software upgrades of on-premise

solutions. CIO, high-tech company


6/13


25percentlowerTCO(totalcostofownership)overave-toseven-

year time rame compared to the on-premise application

40percentcostandtimesavingswithPaaSpilotproject

Impressiveimprovementsinusability,simplicity,performance,

and speed o implementation

Securityconcernsaddressedwithtotallyencrypteddatabaseplus

point-to-point security and access

ADVANTAGE #3:

Accelerate Time to Value

In business, time is money. Decisions. Development. Deployment. Every-

thing seems to happen aster in the cloudand thats good or business.

Said one surveyed business owner o a small healthcare company:

Ultimately, the all-important reason why cloud solutions will be cost-

eective is because o the return on investment: the ability to deliver value

aster to the business.

While the long-term TCO and ROI calculations underscore the bottom-line

benets o cloud solutions, executives who have experienced the power o

the cloud say that the real business benet is time to value.

In the cloud world, companies simply subscribe to a

cloud service and start using it immediately. I it doesnt

work out, they move on without having lost a lot o time

and money. The time to value or SaaS applications is a

ew weeksor less. In contrast, or an on-premise appli-

cation, a company pays 60 - 90 percent in the rst three

years; it must pay or the license and the hardware in

one lump sum, pay consultants over the rst one or two

years to congure and get it up and running, and hire an

internal team.

Consider these opportunities to save time and money in the cloud:

DevelopanddeploySaaSapplicationsinafractionofthetimeneeded

or traditional on-premise applications

Acquireinfrastructure-as-a-service(IaaS)computingresources

instantly with a credit card, rather than the months-long process o

Thebiggestdriverforusinwhywe

have75percentofourprocessesliving

outthereinsometypeofcloudservice

today is that I can produce results for

theorganizationmuchfaster. CIO,

manufacturing company

Thefasterourbusinesscaninnovateanditerate,thefasterwewillwininthe

marketplace. The business case is how long it takes us to create, deploy, scale, and

manageanapplicationtodayandhowmuchfaster,cheaper,andmoreefcientlywecan

deploy,scale,andmanageinthecloudenvironment.


7/13


purchase requisitions, requests or proposals (RFPs), server installs,

and testing associated with traditional on-premise options

WritePaaSapplicationsthattakeafractionofthedevelopmenttime

o traditional application development methods

Increasespeedofadoptionandend-usersatisfactionbecauseofuser-

riendly GUIs and minimal training

ADVANTAGE #4:

Jump-Start Innovation Programs

In addition to the capacity in the cloud or testing and experimentation with

systems overall, the surveyed business executives described how the cloud

enabled them to create sandboxes or internal and external developers to

collaborate on new ideas and projects. In act, 70 percent o the executives

said their companies use cloud-based SaaS applications today (see Exhibit

2). They noted that the investment and time required to create collaborative

orums with traditional application tools is oten prohibitive.

Also, these leading cloud technology adopters shared their enthusiasm

about cloud computing reeing up their budgets rom previous domination

by contractual maintenance spending. Moving such initiatives to the cloud

allowed their companies to ocus a majority o their time and money on

innovative ways to use technology to drive business.

Iveseenskunkworksakainnovationprojectswheresmartdevelopersgureout

somethinginterestingtodowiththecloudoveraweekend.Theycomeinandshowitto

theirboss,andtheirbossisblownawaybecausetheprojecttookatenthofthetimeand

cost of what it would if done in a normal way. So it becomes the bosss religion and he will

sponsorabiggerpilotandshowthebenetstoadecisionmakerhigherupinthechain

ofcommand.Thecloudbringstogetherthesepocketsofinnovationinthecompany.We

need that. Chief architect, petroleum company

Source:Sand Hill Group Cloud Computing Survey 2010

Exhibit 2:Current and projected adoptionof cloud-based models

Sotware as aService

0

20%

40%

60%

80%

Inrastructure as aService

Platorm as aService

70%

56%

18%

24%

12%

20%

Currently

In 3 Years


8/13


CAsE sTuDy: Innovation Sandbox

An e-commerce company wanted to build and prove out a lightweight devel-

opment ramework based on the companys core inrastructure or creating

innovative new cloud applications. Ater evaluating a number o options,

they built an internal cloud-based center or experimentationan innova-

tion sandbox. Driven by the desire to innovate in radically dierent ways

and to do so cost-eectively, the company put together a small team who

applied the cloud innovation sandbox to create a radically new and easier-

to-use GUI in less than a month.

The benets were immediate and included:

Providedverticalspecializationwithoutheavyinvestments

Realizedaturn-aroundtimeofweeksinsteadofmonthsorquarters

Gainedtheabilitytoexperimentwithradicaluserinterfaceandinter-

activeJavascripts

ADVANTAGE #5:

Elasticity and Scale

One o the key promises o cloud computing is its limitless capacity. Like

elastic that easily expands and contracts, companies using cloud computing

can scale up very quickly when their business demands it and also rapidly

scale down when the need is no longer present. The clouds ability to truly

deliver on the promise o limitless scaleboth up and downand do it rap-

idly is one o its dening characteristics and sets this technology apart romanything in the past.

The clouds elasticity and scale are key eatures that level the playing eld

or small and medium-sized enterprises (SMEs). These businesses can tap

into the clouds pooled resources and networked applications to deliver the

services to meet their business needs.

The cloud thus presents a signicant competitive advantage or many busi-

nessesthatexperiencecyclicaland/orunpredictabledemandpatterns.A

good example is the retail industry where seasonal shopping spikes around

various holidays can be unpredictable. The cloud enables these companies

to dynamically obtain the IT resources needed to service their peak de-

mand and then release those resources when the seasonal rush is over. Besto all, companies pay only or what they consume during a peak-use period.

CAsE sTuDy: Fluctuating Capacity Needs

A company annually conducted a month-long charitable-giving campaign.

Two years ago, it created an auction tool to sell o physical goods (shoes,

clothes, toys, urniture, etc.) and donate the proceeds to charity. This tool

is a typical three-tier Web application with a Web server, app server, and


9/13


a database. The resources demanded by the application began to increase

during the auction month as the bidding deadline neared. Then the loads

would spike dramatically at the end o the month as donors scrambled to

bid beore the auction closed.

For several years, the company dealt with signicant slowdown o the sys-

tem towards the end o the auction month when usage was highest. Because

users were unable to use the system, the company lost the opportunity to

substantially increase the auction contributions each year. They always

underestimated the resources this application would consume and ound it

dicult to predict accurately how popular the auction would be. IT had to

provision or the end o the month all the hardware, storage, and network-

ing that would be needed in advance o the peak load (which was oten

incorrectly orecasted). The result was an overly expensive project, which

pushed the company to look or alternative solutions.

They soon realized the solution to their issues was in the cloud. And

ater just two weeks, they rewrote the auction application to run on cloud

inrastructure. They ran it during the month-long campaign and closely

monitored resource usage. During the last several days, the team ramped

up capacity and continued to monitor usage. They projected how popular

the auction would be and expanded capacity accordingly to accommodate

the expected load. They then continued to dynamically ne-tune resources

based on real consumption and demand.

The benets to this company o the cloud-based auction solution were tangi-

ble and compelling:

Nosystemslowdownattheendofthemonth

Contributionsraisedweretwiceasmuchasinpreviousyearsbecause

the cloud inrastructure alleviated their previously limited computing

resources

Nearly50percentinresourcesavings;eveninthedevelopmentphase,

development and testing resources were only consumed on demand

rather than sitting idle most o the time

Costsavingsacrosstheentireprojectlifecycle

This fexible cloud solution gave the company the scale it needed to service

peak auction demand with almost instantaneous scalability. Thus, they en-

joyed great fexibility, agility, and speed while saving costs at the same time.

Conclusion: Sustainable Leadership andCompetitive Advantage in the CloudSotware industry analysts oten compare todays advent o the cloud to that

o the Internet in the late 1990s. The companies that were early in embrac-

ing the Internets cost-eective and interactive capabilities in marketing,


10/13


commerce, and communication in the 1990s continue today to be leaders

in their eld. Similarly, as evidenced in the three case studies cited above,

cloud leaders report their early cloud initiatives are producing business

benets that will keep their companies ahead o their competitors.

Sand Hills survey ound that many executives are already seizing this op-

portunity: 40 percent o these companies business and technology teams

are already working to drive their companys successul move to the cloud.

As the cloud technology wave hits, you, too, have a clear opportunity to lead

your company into the cloud era and realize business benets as well as the

competitive advantage o being a leading-edge cloud user.

Sand Hill recommends that companies take critical immediate steps to

ensure a successul transition to cloud solutions, as ollows:

1.EmbracechangeThe cloud represents a once-in-a-decade op-

portunity or business executives to reinvent their organizations. For

small businesses, the economic benets o consuming externally host-

ed resources and services are too compelling to ignore. Case studies

(Appendix B - Sand Hill research data) o small companies show many

with more than 80 percent o their serviceseven mission-critical ser-

vicesalready hosted in the cloud. Unortunately, not embracing the

cloud will cause long-term harm as other companies already using the

cloud are strategically better positioned or a competitive advantage.

2.Makeabusinessdecision(notanITdecision)The business

value o the cloud is impressive. Evaluate the many benets and total

cost o ownership o cloud solutions and compare them with tradition-

al alternatives. Early adopters have ound impressive cost and agilitybenets in embracing todays cloud solutions.

3.Think:cloud=outsourcingExternal clouds are simply Version

2.0 o the global trend to outsource unctionality in order to realize

business value. Thereore, it is critical that companies evaluate their

choice o a cloud vendor in the same way that they evaluate and select

an outsourcing partner. Ensure that unctionality and security require-

ments are met; review cost benets, risks, SLAs and contracts; and

choose trustworthy vendors with a good track record and the ability to

survive or the longer term.


11/13

APPENDIX A

Overview o Sand Hill 2011 Cloud Survey

DuringJanuary-February2011,SandHillGroupconductedaresearchstudy

to gauge sotware vendors cloud outlook or the coming year and beyond.

The study utilized an online survey to gather executives impressions on the

direction o the cloud market, their cloud strategies, and customer readi-

ness or adoption.

A total o 100 sotware CEOs and senior executives responded to the

24-question survey and provided insight about their cloud revenues today

and next year, customer attitudes and readiness, and which products and

services are gaining traction. Thirty-two percent o the respondents identi-

edthemselveswithtitlesofCEO/Presidents,andanother32percentiden-tiedasVicePresidentsofsales/marketing/services.

The study also identied the long-term trends including which layers o

the cloud stack will take hold in the next three to ve years. In addition,

researchers conducted in-depth telephone interviews with some executives

to gain more insight. Participants in the initial survey as well as the ollow-

up interviews were guaranteed that their identities would remain conden-

tial in order to protect the strategic nature o the corporate inormation

provided.

A broad cross-section o sotware companies participated in the survey.

Nearly three-quarters o the respondents were rom product companies.

The executives represented primarily midsize and small companies. Thirty-

seven percent were rom companies with less than $10 million in revenues,

and 28 percent have revenue o at least $10 million but less than $250 mil-

lion. About 18 percent o the respondents were companies with greater than

$1 billion in revenues.

The ndings o this study are intended to give sotware companies direc-

tional insight as they make business decisions. Although eorts were taken

to survey a wide variety o sotware companies, the study is not necessarily

a representative sample o U.S. sotware companies.

Beyond the Hot Air: Whats really in those Clouds? 9


12/13


APPENDIX B

Overview o Sand Hill 2010 Cloud

Research Study

In 2010, Sand Hill Group released a landmark research study identiying the

business value realized by companies deploying cloud-computing initia-

tives today. A two-phase interview study design uncovered both the in-depth

insight o specic customers and vendor experiences, and a quantitative

market survey provided a snapshot o cloud initiatives and priorities at a

variety o companies. The interviews and survey questioned respondents

about their current cloud initiatives, current and planned use o specic

cloud models, business benets, organizational and technical challenges,

and details o specic use cases.

In-depth Interviews

In order to gain an understanding o the cloud experience at a variety o

types o companies, Sand Hill conducted a total o 40 one-hour, in-depth

interviews. Twenty-two interviews involved CIOs, VPs o IT, systems archi-

tects, and technology directors at small, midsize, and large companies. This

group o executives represented a variety o industries, including insur-

ance and nance, energy, telecom, manuacturing, healthcare, media, and

technology.

To gain insight rom leading sotware vendors, Sand Hill conducted eight

interviews with executive-level individuals who were responsible or cloud

strategy and products within their organizations. Again, a mixture o repre-

sentatives rom large and small sotware companies was included.

Quantitative Survey

As part o the study, Sand Hill Group conducted two Web-based quantitative

surveys in collaboration with McKinsey & Co. and Tech-Web. These surveys

received a total o 511 qualied responses. Most respondents were CEOs,

CIOs, or other senior IT executives at their companies, which ranged in size

rom small businesses to global corporations.

The combination o qualitative interviews and quantitative surveys present

rst-hand accounts on the current state o cloud computing initiatives roman impressive cross-section o enterprises. However, the results may not be

reliably projectable across the universe o American businesses. Thereore,

the ndings and implications in this report are intended to provide direc-

tional guidance during product development.


13/13


About Sand Hill Group

SandHillGroup(http://www.sandhill.com)providesstrategicmanagement,

investment and marketing services to emerging market leaders. Sand Hill

Group is best known or its work in the $600-billion sotware and services

market. As ounder o the Enterprise and Sotware conerence series,

Sand Hill Group has been credited with uniting the sotware business eco-

system o executives, entrepreneurs, investors and proessionals. The rm

is also the publisher o SandHill.com, the premier online destination or

strategic inormation on the sotware business. The site and its newsletters

are read by thousands o top sotware industry executives every week. Sand

Hill Group also unds primary research into key technology and business

model trends that impact the sotware business.

Copyright 2011 Sand Hill GroupThe inormation contained herein has been obtained rom sources believed to be re-

liable. Sand Hill Group disclaims all warranties as to the accuracy, completeness or

adequacy o such inormation. The Sand Hill Group shall have no liability or errors,

omissions or inadequacies in the inormation contained herein or or interpretations

thereo. The reader assumes sole responsibility or the selection o these materials

to achieve its intended results. The opinions expressed herein are subject to change

without notice. Reproduction o this report in print or electronic orm is strictly pro-

hibited without written permission rom Sand Hill Group.

cloud benefits sandhill

Documents