the maturing cloud professional services market and vendor opportunity

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TECHNOLOGY BUSINESS RESEARCH, INC.

The Maturing Cloud Professional Services Market and Vendor Opportunity TBR’s Cloud Business QuarterlySM Webinar Series

July 30, 2014

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2 TBR Webinar Series | 7.30.14 | www.tbri.com | ©2014 Technology Business Research Inc.

Cloud Professional Services Highlights: Presenters

Ramunas SvarcasPrincipal Analyst, Professional Services

Email: [email protected]: @rjsTBR

Cassandra MooshianCloud and Professional Services Analyst

Email: [email protected]: @cmooshian

mailto:[email protected]


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TBR Cloud Research Overview

The TBR Cloud Program consists of specific vendor, comparative vendor and customer analysis supported by modeling and primary research

Reports analyzing vendors’ cloud businesses cover all relevant segments and track performance across cloud-driven metrics including operating expenses,

operating profit, headcount breakouts and geographic breakouts.

TBR’s benchmarks provide analysis through qualitative and metric-based comparisons of key vendors in a market segment. Cloud data models are

included with benchmarks, and this TBR research and analysis is built from the ground up based on 15-plus years of vendor-centric financial models.

TBR cloud customer reports provide primary-research-based insights into purchasing behavior, vendor adoption, satisfaction and demand across multiple

cloud offerings and professional services segments.

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TBR’s continuous portfolio expansion elevates clients’ knowledge about what ‘cloud’ really means to vendors and customers

Accenture CSC RackspaceAWS Dell ServiceNowAtos Fujitsu TCSCognizant IBM Verizon

Capgemini Microsoft

Deloitte OracleGoogle SAPHP WiproInfosys

Salesforce.comWorkday

Hybrid CloudCustomer Report

Private CloudCustomer Report

Cloud Professional ServicesCustomer Report

Topical Cloud Reports: 2014 reports include Orchestration, and LOB vs. IT

Public CloudBenchmark

Managed Private Cloud &Professional Services Benchmark

Cloud ComponentsBenchmark

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Combining different view points provides our customers a comprehensive overview of the cloud market

Vendor Reports Benchmarks

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Cloud Business Quarterly: Cloud Benchmark Definitions

Cloud Professional ServicesSubsegment: Includes:

Cloud ConsultingProvide strategic and tactical advice in a particular area of expertise for the use of cloud computing services; this includes selection of a cloud environment, planning and design of private clouds as well as cloud brokerage services.

Cloud Systems Integration (SI)Offer assistance in making diverse components, such as infrastructure (hardware and software) or cloud services work together in the cloud environment.

Cloud Applications Development and Maintenance (ADM)

Software development that encompasses requirements of engineering design, implementation, testing and maintenance to construct software for cloud computing; software maintenance concerns all activities needed to keep the system operational after it has been delivered to the user for cloud computing.

Cloud Operations, Management and Maintenance Services

Assistance in the maintenance, enhancement and monitoring of cloud environments, including hardware, such as storage, servers and network, and support of the overall interaction of the infrastructure; includes cloud orchestration, which features aggregation, integration and management of multiple cloud offerings, service and application catalogue and security services.

Professional Services Cloud Taxonomy

SOURCE: TBR

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Cloud Business Quarterly: Cloud Benchmark DefinitionsManaged Private Cloud Services

Subsegment: Includes:

Managed Private Dynamic Apps Managed and/or hosted software workloadsClient-owned and/or licensed software hosted by third-party vendor

Managed Private PaaS

Managed and/or hosted platformsCustom infrastructure provided to either conduct software application development or run existing software; this includes the operating environment, which manages workflow and collaboration, and the underlying hardware, such as servers and networking.

Managed Private IaaSManaged and/or hosted infrastructure The provision of infrastructure (hardware: compute and storage; software; and/or networking) on a utility basis to run licensed software; the infrastructure is solely dedicated to the client.

Managed Private BPaaS

Managed and/or hosted business processesApplications delivered “as a Service” that are used by business process service provider personnel that perform activities on behalf of the service recipient; the infrastructure, hardware and software are solely dedicated to the client and may include custom and/or proprietary software designed for the client.

SOURCE: TBR

Managed Private Cloud Taxonomy

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Research Highlights and Outlook:

Cloud Professional Services

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Cloud Professional Services Market Summary

The evolving cloud market is here to stay, and vendors are looking for ways to best capitalize on opportunity

What is the state of the cloud professional services market?

What are the primary drivers of cloud professional services purchasing?

Which vendors are winning in which segments? What are customer preferences?

TBR Position

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The cloud professional services landscape has matured over the past 5 years; demand remains strong, as cloud services are more sophisticated

TBR Position

Which vendors are winning in which segments? What are customer preferences?Vendors continually innovating in security, to stay ahead of cyber threats, will fare best in the cloud space across public, private, hybrid and professional services.

What are the primary drivers of cloud professional services purchasing? The dynamic nature of cloud and the onslaught of orchestration and hybrid integration services necessitate third-party involvement in the form of advisory, integration and management.

What is the current state of the cloud professional services market? Demand remains strong across the four service lines as organizations adapt to the global IT landscape, leading to the adoption of multiple cloud services and solutions to optimize operations.

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2010

2011 2013-142012-13

Market consolidation, hybridization and automation lead managed IT services vendors to piece together and manage complex environments.

2014-15

Tech Companies: Includes HP, IBM, Dell, Fujitsu

SIs: Includes Accenture, Deloitte, Capgemini

ISVs: Includes SAP, Oracle, Microsoft

Vendors: India-based vendors and MSPsTrends: Automation (CSC, IBM), vertical focus (Infosys, Dell), e-commerce

CPS Market Pendulum

Hybridization and automation, the emerging trends in the cloud professional services space, will lead to the next wave of cloudCloud Professional Services Market Trending

Wave 1

Wav

e 2

Wav

e 3

Wave 4 —

Now

Wave 5 — Now

The next wave:SIs, large-scale tech companies and managed IT services vendors

2016

State of the Market

The cloud professional services market will soon swing back to the start of the pendulum with the increasing popularity of hybrid integration and orchestration. SIs

are at the forefront of this next wave.

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Managed Private and Professional Services Cloud Market

Market Sizing and Forecast

Managed private cloud growth is expected to outpace cloud professional services growth due to orchestration and management gaining popularity

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Managed cloud services is the largest and fastest-growing services segment, indicating continued market demand for third partiesProfessional Services Cloud Market Segments


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Growth will continue but at a decelerated rate as budget dollars fall short of expectations — a glaring trend across the board in 2014

2014:$20 billion

2018: $31 billion

2010: $5 billion

Downward Pressure:• Security• Desired versus actual

budgets• Business versus IT buy-in

Upward Momentum:• Cost savings and efficiencies from

automation• Complex environments drive demand for

advisory and orchestration services.

Global Cloud Professional Services Market Opportunity

+41.4%

CAGR

for four years

+10.7% CAGR

for four years

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Cloud Professional Services Revenue Growth

Cloud professional services revenue continues to grow as customers seek advisory and implementation services for increasingly complex clouds

Deloitte and Accenture will grow in popularity in coming quarters and take more share, as the complexity of cloud environments and hybridization of clouds necessitate third-party advisory and

planning services.

Consulting and SI drive the majority of cloud professional services revenue and determine which vendors come out on top.

Current State of the Market

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Hybrid integration and the orchestration of entire cloud environments are driving the popularity of SIs in the cloud space

TBR Position




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Professional services continue to lead cloud service adoption as companies seek advisory and integration services at each stage of adoption

Adoption and Drivers

37% 35%45% 46%

21% 20%

86% 82%

0%

20%

40%

60%

80%

100%

2013 2014 2013 2014 2013 2014 2013 2014

(n =2216)

(n =2177)

(n =2216)

(n =2177)

(n =2216)

(n =2177)

(n =2216)

(n =2177)

Public Cloud Private Cloud Hybrid Cloud Prof. Services

Inci

dence

of Clo

ud

Serv

ices

Ado

ptio

nPURCHASED CLOUD SERVICES

SOURCE: TBR

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Public cloud and private cloud purchases are the logical next

step in building cloud environments.

Professional services is the first step in cloud

exploration and building cloud environments

1.

Integration to form hybrid cloud is the last step in building

cloud environments.3.2.

Customer Landscape

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Third-party advisory services lead to customer adoption of the full spectrum of cloud professional services — a trend we expect to continue

Hybrid and private cloud adoption are driving more “customize” and “run” opportunities for professional services vendors.

Customer Landscape

Adoption and Drivers

Advisory has led to:

<- Mature ->

<- Maturing ->“Design” “Build” “Customize” “Run”

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Cloud Consulting Services: Growth Leaders

Demand for cloud consulting remains elevated, as customers lack confidence and expertise around cloud and seek third-party assistanceCloud Consulting Revenue Percentage and Absolute Dollar Growth

The growing complexity of cloud environments drives the demand for cloud consulting services, resulting in vendor opportunity for the foreseeable future.

Tenure as a leading consultant goes a long way in the cloud consulting space, indicating customers’ propensity to go with trusted, tried-and-true vendors.

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Cloud SI Services: Growth Leaders

Deloitte and Capgemini are acquiring to grow cloud SI revenue, while HP, IBM and Accenture lead in absolute dollar growthCloud SI Revenue Percentage and Absolute Dollar Growth

Well-established SIs

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Cloud ADM Services: Growth Leaders

The alliance between CSC and HCL will alter the ADM vendor landscape in coming quartersCloud ADM Revenue Percentage and Absolute Dollar Growth

Leaders stand out in cloud ADM more than other segments, indicating strong customer preferences

Dollar growth leaders are more apparent when looking at ADM than C&SI.

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TBR Position


Security is critically important to customers, making vendors with innovative portfolios most attractive




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Well-known and trusted SIs have a leg up on the competition, touting case studies and tenure, while applications-focused vendors lead in growth

Cloud Professional ServicesRevenue Leaders

Cloud Professional ServicesGrowth Leaders

Company Revenue Key Strategies Company YTY Growth

Key Strategies

IBM $386 million

Use SoftLayer and invest in cloud innovation centers to drive customer prospects.

Dell 57.7%

Develop and deploy security solutions through Dell SecureWorks to alleviate barriers to cloud adoption.

HP $352 million

Embrace OpenStack services and solutions to drive developer and customer interest in HP Helion.

Capgemini 54.8%

Grow and develop partnerships and increase IP-based asset development to expand into the U.S. cloud market.

Accenture $311 million

Leverage legacy consulting capabilities to generate cloud professional services sales.

HCL 52%

Enter alliances to expand its Center of Excellence (CoE) resources for supplying services to the banking vertical.

Vendor Landscape

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Partnering

SOURCE: TBR AND COMPANY DATANote: Not all alliances have been identified for all vendors.

New/enhancedin 1Q14

As interoperability becomes increasingly important to customers with hybrid environments, vendors partner to drive agnosticism

Vendor Landscape

41 new or enhanced partnerships in 1Q14

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Security is the No. 1 concern for customers and a key vendor differentiator — making it the biggest reason to hire a third party

Vendor Landscape

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Offerings:

T-Systems Clean Pipe ServiceMobile Encryption App

Dell Secure Mobile Access SolutionAdvanced Endpoint Threat Detection Service

VMware Acquired AirWatch, an enterprise mobility security and management vendor

Fujitsu Biometric as a Service (BaaS)

Vendors across the landscape, both ISVs and SIs, are building out security portfolios to better meet customer demand

Vendor Landscape

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Cloud Professional Services Vendor Keys to Success

Vendor Landscape

SIs with Hardware:Develop comprehensive and integrated cloud portfolios with value-add security and orchestration services; promote infrastructure to appeal to customers with, or plans to adopt, bring-your-own-device (BYOD) policies.

Software Vendors:Promote security capabilities and the long-term cost-saving benefits of adopting automated, cloud-based software solutions; promote business intelligence (BI) and analytics capabilities.

SIs without Hardware:Maintain strategic relationships with infrastructure providers and public cloud vendors to promote lead sharing.

Consultants:Focus on long-term business outcome-driven road maps and provide case studies from customer industries and adjacent verticals.

Rather than trying to excel at everything, vendors must focus on core value propositions to develop loyal cloud professional services followings

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TBR Position


The ever-increasing complexity of the cloud landscape necessitates third-party involvement in the form of IT services vendors




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Questions?

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TBR Cloud WebinarsTBR Cloud Research Overview

Cloud Program Webinar Focus Webinar Date

Public Cloud Expansion! Expansion! Expansion! July 23, 2014

Private CloudCutting through the fog: What is private cloud, and what role does it play in the broader IT market?

TOMORROWJuly 31, 2014

Visit https://tbrevents.webex.com/ to register for the upcoming private cloud webinar or www.youtube.com/user/TBRIChannel to access the recording of the public cloud webinar.

https://tbrevents.webex.com/

http://www.youtube.com/user/TBRIChannel

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Cloud Business Quarterly Research Highlights and Outlook: Contact Information

James McIlroy Vice President of SalesEmail: [email protected]: 603.929.1166

Twitter: @TBRincSlideShare: www.slideshare.net/TBR_Market_InsightYouTube: www.youtube.com/user/TBRIChannelLinkedIn: www.linkedin.com/company/technology-business-research

Ramunas SvarcasPrincipal Analyst, Professional Services

Email: [email protected]: @rjsTBR

Cassandra MooshianCloud and Professional Services Analyst

Email: [email protected]: @cmooshian


https://twitter.com/TBRinc

http://www.slideshare.net/TBR_Market_Insight

http://www.youtube.com/user/TBRIChannel

https://www.linkedin.com/company/technology-business-research



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Supplemental Slides

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Managed Private Cloud Services: Growth Leaders

SI and IT infrastructure expertise are invaluable in the managed private cloud space, evidenced by HP’s, IBM’s and Fujitsu’s top spotsManaged Private Cloud Revenue Percentage and Absolute Dollar Growth

Traditional IT vendors and SIs HP, Fujitsu and IBM are leading the charge in managed private cloud. With significant recent investments in their cloud portfolios, particularly around open source, these

vendors are the ones to beat, with competitors placing invisible targets on their backs.

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Applications Outsourcing (AO) Revenue Cannibalization

Vendors must adjust to cloud business models as applications outsourcing revenues increasingly turn into cloud-based ADM revenues

AO revenue growth has fluctuated between 0% and 5% year-to-year over the past two years, while ADM revenue growth has ranged between 25% and 45% over the same period, indicating some cannibalization of traditional AO revenues and a threat to traditional AO business models and vendors.

TBR defines Applications Outsourcing as: includes support and maintenance of enterprise applicationsTBR defines ADM as: software development that encompasses requirements of engineering design, implementation, testing and maintenance to construct software for cloud computing; software maintenance concerns all activities needed to keep the system operational after it has been delivered to the user for cloud computing. An example of ADM includes Fujitsu’s Global Legacy Modernization Services.

Cloud Cannibalization of Traditional Revenue

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Cloud Vendor Reports (Cloud Business Quarterly)

Benchmarks (Benchmark XLS data is also available)

• Accenture Cloud*• Amazon Web Services*• Atos Cloud*• Capgemini Cloud*• Cognizant Cloud*• CSC Cloud*• Dell Cloud*• Deloitte Cloud*• Fujitsu Cloud*• Google Cloud*• HP Cloud*• IBM Cloud*• Infosys Cloud*• Microsoft Cloud*• Oracle Cloud*• Rackspace* • Salesforce.com • SAP Cloud*• ServiceNow* • TCS Cloud*• Verizon Cloud*• Wipro Cloud*• Workday

Public Cloud BenchmarkThe public cloud program compares and analyzes the strategies, results and drivers of 50 key vendors in the public cloud segment across Software as a Service, Platform as a Service and Infrastructure as a Service.

Managed Private & Professional Services Cloud Benchmark*The managed private cloud and professional services program compares and analyzes the strategies, results and drivers of 29 key vendors in the managed private cloud and professional services market across Business Process as a Service, Software as a Service, Platform as a Service, Infrastructure as a Service, cloud consulting, cloud SI and cloud ADM.

Cloud Components Benchmark*The cloud components program compares and analyzes the strategies, results and drivers of 12 key vendors that sell the building blocks of software and hardware used to construct public and private clouds.

Note: There are also three semiannual cloud adoption studies and cloud topic reports (Cloud Security is available now and Cloud Orchestration is upcoming).

Syndicated Research CoverageTBR Cloud Practice Syndicated Coverage

*Semiannual Report

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