Emerging Enterprise Cloud Adoption Paths

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Presentation given at Cloud Fair Seattle 2012 on Emerging Enterprise Cloud Adoption Paths

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<ul><li><p>Emerging Enterprise Cloud Adoption Paths</p><p>April 18, 2012</p></li><li><p>Everest Group is a leading global services advisory firm</p><p>Range of servicesOverview</p><p> More than 20 years of experience d i i Gl b l 1000 StrategyStrategy S b i tiS b i tiadvising Global 1000</p><p> Recognized for positioning clients for the next generation of global services combination of deep </p><p>StrategyConsulting and research services to turn insights into decisions</p><p>StrategyConsulting and research services to turn insights into decisions</p><p>SubscriptionsResearch reports, data sets, customized tracking services</p><p>SubscriptionsResearch reports, data sets, customized tracking services</p><p>insights, strategic decision-making approaches, and implementation expertise</p><p> Distinctive combination of consulting </p><p>ImplementationConsulting services to capture value from decisions</p><p>ImplementationConsulting services to capture value from decisions</p><p>ResourcesWebinars, research, and blogsResourcesWebinars, research, and blogs</p><p>and research capabilities</p><p> Over 1,000 engagements, covering IT and business processes</p><p>We serve enterprises, service providers, and service enablers</p><p>Service ProvidersEnterprises</p><p> Rich data sets and subscription research based on over 75 business processes, 150 service delivery locations, 500 captives, 100 service providers, and 18,000 outsourcing </p><p>Services Industry</p><p>Service Enablers</p><p>Proprietary &amp; Confidential. 2012, Everest Global, Inc. 2</p><p>contracts</p></li><li><p>ITO and the Enterprise Cloud OpportunityOver $500 billion in infrastructure-related outsourcing contracts are coming to term in the next three yearsthe next three years</p><p>Global Infrastructure-related Outsourcing Contracts Announced TCV, US$ billions</p><p>Global Infrastructure-related Outsourcing Contracts by Expiration Year Estimated ACV, US$ billions</p><p># of contracts Latin America Asia Pacific EMEA North America Total</p><p>IO 28 113 512 513 1,166</p><p>AO &amp; IO 14 66 251 290 621</p><p>Contract Volume Breakdown</p><p>AO &amp; IO 14 66 251 290 621</p><p>Total 42 179 763 803 1,787</p><p>Total ACV (US$) $1 billion $5 billion $28 billion $49 billion $84 billion</p><p>A d ti 5 9 6 3 5 9 6 2 6 1</p><p>Proprietary &amp; Confidential. 2012, Everest Global, Inc. 3</p><p>Average duration 5.9 years 6.3 years 5.9 years 6.2 years 6.1 years</p><p>Total TCV (US$) $7 billion $29 billion $168 billion $306 billion $510 billionSource: Everest Group Transaction Intelligence Database</p></li><li><p>Global IT Services Market ForcesEnterprises face pressure to respond to extreme market demands for efficiency and flexibility</p><p>Demand for FlexibilityDemand for Efficiency</p><p>flexibility</p><p>Increasing Value Focus Increasing Pace of Innovation Consumerization of IT Device proliferation</p><p>C d l ti</p><p> Ongoing budget pressure Demand for business value</p><p>V d i i Compressed cycle time Strategic focus</p><p> Vendor pricing Security and regulatory </p><p>compliance</p><p>Drive to Improve Utilization Need for Responsiveness Rapid volume growth; high </p><p>variability; explosion of data / l it</p><p> High cost single-tenant modelsU d tili ti f Extreme complexity</p><p> Anytime / anywhere access Speed / on-demand service Configurability</p><p> Underutilization of dedicated hardware</p><p> Suboptimal skill mixes Underachievement of </p><p>economies of scale</p><p>ExtremeDemands on</p><p>IT and BusinessFunctions</p><p>Proprietary &amp; Confidential. 2012, Everest Global, Inc. 4</p></li><li><p>Impact of Next Generation IT ComponentsDisruptive Next Generation IT models are positioned to meet the demanding market needs creating game changing opportunities</p><p>Efficiency Impact Flexibility Impact </p><p>Next Generation Data Centers Dramatically lowered cost</p><p> Standardization equals </p><p>needs, creating game-changing opportunities</p><p>s</p><p>Data CentersDesigned to take advantage of modular, hyper-scale and high-density principles</p><p> Reduced latency Simplified management Highly scalable </p><p>speed Right-sized capacity Just-in-time capacity</p><p>i</p><p>o</p><p>n</p><p>M</p><p>o</p><p>d</p><p>e</p><p>l</p><p>s</p><p>Talent FactoriesHigh talent, low cost resources organized by an optimized workforce pyramid</p><p> Optimized staffing pyramid leading to improved resource utilization</p><p> Remote support from low cost locations</p><p> Improved access to specialized skills and technical expertise </p><p> Enhanced resource scalability</p><p>x</p><p>t</p><p>G</p><p>e</p><p>n</p><p>e</p><p>r</p><p>a</p><p>t</p><p>Cloud ServicesIT delivered as a service through private, public, and/or hybrid cloud models</p><p> Dynamic workload shift to achieve 4-5X efficiency gain </p><p> Pooled resources/multi-tenancyC t li k d t ti</p><p> On-demand processing and storage capacity </p><p> Self-service provisioning Capital avoidance</p><p>N</p><p>e</p><p>x Cost linked to consumption</p><p>MobilitySmartphones, tablets, sensors and other mobile end point</p><p> Lower device end-user TCO (for certain segments) </p><p> Productivity improvements</p><p> Simplified AppStore delivery of capabilities</p><p> Always on connectivity</p><p>Proprietary &amp; Confidential. 2012, Everest Global, Inc. 5</p><p>and other mobile end-point technologies.</p><p>y p Location and motion </p><p>information utility</p><p>y y Ubiquitous user access</p></li><li><p>Enterprise Cloud Business Value DriversCloud delivery models are creating enterprise-class value across several operational and financial leversand financial levers</p><p>Server consolidation/ i t li ti</p><p>Operational Levers Key Financial Levers</p><p>Observations</p><p>Effi i</p><p>virtualization</p><p>Multi-tenant service models</p><p>Capex avoidance</p><p>Reduced operations and</p><p>Levers and impact differ by delivery model BPaaS</p><p>Observations</p><p>EfficiencyBenefits Management Automation</p><p>Standardization Outsourced maintenance and support</p><p>Reduced operations and mgmt costs</p><p> BPaaS SaaS PaaS IaaS Private / hybrid cloud</p><p>Cloud Cloud ImpactImpact</p><p>Active workload management</p><p>Increased Agility</p><p> Private / hybrid cloud</p><p>Economics sensitive to contextspecific factors Refresh cycle</p><p>Flexibility Benefits</p><p>g y</p><p>Extended Reach</p><p>New Capabilities</p><p>Revenue growth Migration approaches </p><p>and costSignificant variations in value impact across vendors / CSPs</p><p>Reduced operating costs</p><p>Proprietary &amp; Confidential. 2012, Everest Global, Inc. 6</p><p>p</p><p>Consumption-based billinge</p><p>vendors / CSPscosts</p></li><li><p>Theres No Such Thing as Enterprise CloudThe Cloud is comprised of several different delivery models, each with different attributes and characteristics</p><p>Business Business Process as aProcess as a</p><p>Description</p><p>End-to-end business process delivered as a </p><p>Common Services Payroll Order-to-cash</p><p>P t</p><p>attributes and characteristics</p><p>Process as a Process as a Service Service ((BPaaSBPaaS))</p><p>Software as a Software as a S iS i</p><p>service</p><p>Multi-tenant applications and business services</p><p> Procure-to-pay Hire-to-retire</p><p> CRM HCM</p><p>PublicPublicCloud Cloud </p><p>ServicesServices Platform as a Platform as a ServiceService</p><p>Service Service ((SaaSSaaS))</p><p>Multi-tenant application development and hosting </p><p> Email Collaboration F&amp;A</p><p> Dev Only Dev + Runtime</p><p>Infrastructure Infrastructure as a Service as a Service </p><p>Service Service ((PaaSPaaS))</p><p>Shared data center, infrastructure hardware and software resources</p><p>p genvironments</p><p> Compute (Server / OS) Storage Database</p><p>Dev Runtime</p><p>as a Se ceas a Se ce((IaaSIaaS))</p><p>and software resources Database Networking Content Delivery</p><p>Private / Hybrid Clouds Compute (Server / OS) Storage</p><p>Internally shared data center, infrastructure hardware and software</p><p>Proprietary &amp; Confidential. 2012, Everest Global, Inc. 7</p><p>(On-Premise or Hosted) Databasehardware and software resources</p></li><li><p>Enterprise Cloud Adoption PatternsA set of common adoption paths and strategies are beginning to emerge for how enterprises are capturing value from cloud services</p><p>AAObserverObserver</p><p>BBOpportunistsOpportunists</p><p>CCSolutionersSolutioners</p><p>DDTransformersTransformers</p><p>EEProviderProvider</p><p>Cloud a low priority due Cloud adoption Cloud adoption Cloud models leveraged Cloud models providing </p><p>enterprises are capturing value from cloud services</p><p>Cloud a low priority due to risk and / or perceived adoption constraints (e.g., regulatory requirements)</p><p>Cloud adoption opportunistic; primarily driven by business unit / departmental initiatives</p><p>Cloud adoption intentionally driven by business / functional use cases and needs</p><p>Cloud models leveraged broadly across the enterprise, integrated with traditional models, often driving wide-scale IT transformation</p><p>Cloud models providing foundation for new, integrated service delivery business model based on services market principles</p><p>Description</p><p>Cloud Penetration</p><p> None / limited Individual buyers</p><p> Limited / Modest Ind. / dept buyers</p><p> Modest LOB buyers</p><p> Modest / Ext Enterprise buyer</p><p> Modest / Ext Enterprise buyers</p><p> None Individual use POC / pilots Limited Limited</p><p>Cloud Penetration</p><p>IaaS</p><p>SaaS</p><p> None Private POCs Limited Modest Extensive</p><p> Business Business Business / IT IT Business / ITIT I fl</p><p>Private / Hybrid</p><p>Primary Buyers</p><p> High Limited Modest High High</p><p> None None Project basis Architect Broker</p><p>IT InfluenceCloud strategy</p><p>Integration</p><p>Management</p><p>Proprietary &amp; Confidential. 2012, Everest Global, Inc. 8</p><p> None / Limited None / Limited None / limited Emerging Extensive</p><p> None None Policy only Emerging Extensive</p><p>Management</p><p>Governance</p></li><li><p>Enterprise Cloud Infrastructure EconomicsImproving utilization and eliminating excess capacity are the key to realizing cost efficiencies from cloud infrastructure models</p><p>EliminateExcess Capacity </p><p> Eliminate spend on unused peak </p><p>3</p><p>efficiencies from cloud infrastructure models</p><p>capacityPrivate Cloud </p><p>Server Utilization</p><p> Shift peak loads to public cloud(s)L d d</p><p>Move Peak Load to Public2</p><p> Leverage on-demand pay-as-you-go flexibility</p><p> Shift loads to fill valleys (where possible)</p><p> Maximize private cloud </p><p>Keep Base Load in Private</p><p>1</p><p>Proprietary &amp; Confidential. 2012, Everest Global, Inc. 9</p><p>utilization</p></li><li><p>Cloud Infrastructure Services Impact Infrastructure delivery based on the cloud has the potential to unlock extraordinary workload level economics and flexibility benefitsworkload-level economics and flexibility benefits</p><p>Enterprise Workload Cost by Platform1$ / GHz hrs, Indexed vs Dedicated </p><p> Hybrid models can drive truly disruptive economics</p><p>100 Applicable at individual workload </p><p>and portfolio level Dynamic bursting not required to </p><p>capture initial benefits</p><p>6560-65 Peak Load</p><p>Public Cloud</p><p>p</p><p>Base LoadBase Load</p><p>Public Cloud Shift spike compute hours </p><p>to public cloud Pay only for consumption25</p><p>Virtualized/ Private Cloud</p><p>Public Cloud</p><p>Dedicated Hybrid Model</p><p>Base LoadBase LoadPrivate CloudPrivate Cloud</p><p> Keep base compute Keep base compute hours in private cloudhours in private cloud</p><p> Maximize utilizationMaximize utilizationPhysical</p><p>ServerUtilization:</p><p>7% N/A(service provider)</p><p>18% 40%</p><p>Proprietary &amp; Confidential. 2012, Everest Global, Inc. 10</p><p>1 Assumes average workload mix and profile; 15% of total peak workload hours shifted to public cloud in an on-demand model; does not include application migration costsSource: Everest Group Cloud Value Assessment Model </p><p>( p )</p></li><li><p>Enterprise Cloud ImpactRecent engagements illustrate the value creation potential of cloud solutions f th t ifor the enterprise</p><p>Case Example I Case Example I --Fortune 200 Global Energy CompanyFortune 200 Global Energy CompanyCase Example I Case Example I --Fortune 200 Global Energy CompanyFortune 200 Global Energy Company</p><p>Case Example II Case Example II --Fortune 250 Consumer Goods CompanyFortune 250 Consumer Goods CompanyCase Example II Case Example II --Fortune 250 Consumer Goods CompanyFortune 250 Consumer Goods Companyo tu e 00 G oba e gy Co pa yo tu e 00 G oba e gy Co pa yo tu e 00 G oba e gy Co pa yo tu e 00 G oba e gy Co pa y</p><p> Formulated sourcing strategy for corporate IT infrastructure supporting operations in 28 countries on 5 continents</p><p> Formulated sourcing strategy for corporate IT infrastructure supporting operations in 28 countries on 5 continents</p><p>o tu e 50 Co su e Goods Co pa yo tu e 50 Co su e Goods Co pa yo tu e 50 Co su e Goods Co pa yo tu e 50 Co su e Goods Co pa y Consolidated IT Outsourcing </p><p>agreements for 12 operating companies into a single service provider</p><p>Build a solution that has high</p><p> Consolidated IT Outsourcing agreements for 12 operating companies into a single service provider</p><p>Build a solution that has highcontinents Reduce asset ownership Outsource commodity skills Secure variable pricingExplored Next Generation cloud</p><p>continents Reduce asset ownership Outsource commodity skills Secure variable pricingExplored Next Generation cloud</p><p> Build a solution that has high availability during and after transition</p><p> Reduce cost of IT</p><p> Evaluated proposals for comprehensive</p><p> Build a solution that has high availability during and after transition</p><p> Reduce cost of IT</p><p> Evaluated proposals for comprehensive Explored Next Generation cloud solutions with 4 global providers Strong cloud capabilities SAP expertise and global reach</p><p>Ability to transition quickly</p><p> Explored Next Generation cloud solutions with 4 global providers Strong cloud capabilities SAP expertise and global reach</p><p>Ability to transition quickly</p><p> Evaluated proposals for comprehensive IT infrastructure outsourcing Traditional IT outsourcing solutions Cloud-based solution</p><p> Evaluated proposals for comprehensive IT infrastructure outsourcing Traditional IT outsourcing solutions Cloud-based solution</p><p> Ability to transition quickly Assessed proposals for broad managed </p><p>services solutions with different cloud mixes</p><p>Range of savings potential</p><p> Ability to transition quickly Assessed proposals for broad managed </p><p>services solutions with different cloud mixes</p><p>Range of savings potential</p><p> Awarded contract to provider that proposed cloud-based solution, albeit with a more conservative transformation timeline than original cloud proposal</p><p> Awarded contract to provider that proposed cloud-based solution, albeit with a more conservative transformation timeline than original cloud proposal</p><p>Proprietary &amp; Confidential. 2012, Everest Global, Inc. 11</p><p> Range of savings potential Variety of cloud intensiveness Range of savings potential Variety of cloud intensiveness</p><p>timeline than original cloud proposaltimeline than original cloud proposal</p></li><li><p>Case Example I Global Energy CompanyService providers proposed a diverse set of solutions to meet the clients Next Generation IT solution design objectivesGeneration IT solution design objectives</p><p>Dedicated Shared</p><p>Solution Overview</p><p> Solution leverages true public cloud (via partner)</p><p>Solution Description</p><p>Provider A PhysicalDedicated Private Cloud</p><p>Public CloudVirtual Private CloudSAPSAP</p><p> Solution leverages true public cloud (via partner) ~80% of workloads to cloud-based services; </p><p>includes DR SLAs reflect standard (public) offering, not </p><p>customized to client situation</p><p>Provider B</p><p>Dedicated Private CloudPhysical Virtual Private Cloud</p><p>SAP</p><p> 82% of workloads to private cloud, includes DR SAP resides fully in cloud environment No minimum commitments required SLAs reflect shared environment</p><p>Provider C Dedicated Private CloudPhysicalSAPSAP</p><p> Solution aggressively virtualizes (20:1 ratio) and transitions to a dedicated, single-tenant environment; excludes DR</p><p> Client-specific SLA s met</p><p>VirtualPhysicalBaselineSAPSAP</p><p> Status quo does not transform infrastructure No formal service levels; no self-service portal; no </p><p>consumption-based service model; no service catalog; no ability to track application usage </p><p>Proprietary &amp; Confidential. 2012, Everest Global, Inc. 12</p><p>100%50%25% 75%0% Inco...</p></li></ul>