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WHITE PAPER

Why Cloud Should Be Part of Your Company's Document

Management Strategy

Sponsored by: Sharp

Keith Kmetz

October 2014

IDC OPINION

The cloud represents a new and evolving computing platform for the online delivery of many different products and services. IDC's market forecasts demonstrate an inevitable near-term shift to this platform with literally trillions of smart devices connected to it, including MFPs and other intelligent business devices such as interactive whiteboards and displays. While customers may have questions about cloud implementation, a simple dialogue with their technology supplier should allow them to determine whether a cloud solution is the right fit for their organization's business needs. In general, IDC sees the cloud as a win-win opportunity for suppliers and customers alike.

IN THIS WHITE PAPER

IDC views the transition to the cloud as a seismic shift for the future IT market. This includes defining the cloud and its relevance for business and identifying what topics and questions small and medium-sized businesses (SMBs) should consider prior to implementing cloud as part of a comprehensive document management strategy.

SITUATION OVERVIEW

Cloud services continue to grow and evolve at a phenomenal rate, particularly as companies of all sizes seek to leverage the power of the Internet to reduce operational costs while increasing access to business information. Not surprisingly, we see new cloud offerings entering the market regularly and often creating new product segments and deployment options.

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These market figures demonstrate that it is not a matter of if the cloud will dominate the future IT market landscape; it's a matter of when the cloud will drive the market. The answer is obviously sometime in the very near future. This fundamental IT shift is a call to action. That is, companies of all kinds should already be considering strategies, services, and devices that leverage the cloud to address two fundamental business requirements:

1. An ongoing effort to drive down the business' operational costs 2. The need to increase the availability of business-related content

Defining Cloud Services

Of course, all the excitement around cloud services requires us to pause and define exactly what we are talking about. IDC's shorthand for "cloud" is accessing shared IT resources "on demand" over the Internet from a public cloud or software-as-a-service (SaaS) provider. Private solutions are another type of cloud service that can be built locally in a company's datacenter (e.g., enterprise private cloud services). Buyers generally pay for and use only those assets required and usually order and access the assets through a self-service portal. In general, the use of the cloud makes offerings easier and less expensive to access.

Cloud services fall into three broad categories with a common set of criteria and a variety of deployment models:

 Application services or SaaS (e.g., ERP, collaboration, accounting, documentmanagement, and CRM from vendors such as ADP, Google, Microsoft, and salesforce.com)

 Platform services or PaaS (e.g., application development/deployment and middleware delivered via the cloud services model from vendors such as IBM, Oracle, HP, and Microsoft)  Servers, storage, and system infrastructure services or IaaS (e.g., servers, system

management, and security services delivered via the cloud from vendors such as IBM, AT&T, Nirvanix, EMC, and Cisco)

Why Is the Cloud Significant for Your Business?

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FIGURE 1

Time Frame for Cloud Adoption by Company Size

Q. When do you expect your company to adopt cloud-based services or cloud technology application for use by your employees?

Source: IDC's Cloud and Mobile Print Multiclient Study, 2012

The cloud has a significant impact on organizations leveraging this technology (see Figure 2). Not only are a number of companies expected to adopt cloud technologies, but this adoption spans a

substantial range of computing applications. Both front-office (e.g., email, collaborative, personal productivity) and back-office (e.g., data backup, IT management, server/storage capacity) applications show high levels of current or future migration to the cloud, so the impact is significant for the business as a whole and specifically for the company's internal IT functions.

0 10 20 30 40 50 60 70 80 90 100 <100 employees (n = 215) 100–499 employees (n = 211) 500–999 employees (n = 141) 1,000+ employees (n = 255) (% o f re s p o n d e n ts )

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FIGURE 2

Solutions/Services Already Deployed to the Cloud

Q. What solutions/services have already been deployed to the cloud? What solutions/services will be deployed to the cloud in the future?

n = 433

Source: IDC's Cloud and Mobile Print Multiclient Study, 2012

As Figure 2 shows, IT decision makers indicated that only a few document-related solutions and services have already been deployed to the cloud at any notable level. Email stands out as the most prominent application deployed to the cloud at present. However, in the future, IT decision makers expect to deploy a majority percentage of select solutions and services to the cloud in the categories of collaboration,

storage/backup, data analytics, general IT and mobile device management, document processing, etc. These results indicate that a fast-moving transition to the cloud is near across a wide range of applications and technologies. Companies of all types will need to seriously consider a cloud solution strategy for their business operations in order to keep up with a transitioning market and maintain a competitive edge. The ongoing challenges of a low-growth economy over the past several years have forced businesses to operate more efficiently, but often with fewer resources. To effectively compete in today's business climate, most companies need to rely on a

growing range of technologies (e.g., devices, data, and applications) to meet this business objective. The emergence of the cloud as a repository for all types of business-related data and information offers an efficient avenue to maximize access to such IT technologies while minimizing the costs.

0 10 20 30 40 50 60 70 80 90 Mobile printing

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In a survey, IDC asked IT decision makers about the importance of several cloud characteristics to their companies (see Figure 3). Not surprisingly, factors surrounding cost efficiencies were rated as important, but other cloud characteristics such as facilitating collaboration and faster deployment of applications were highly rated. In addition, all of these factors were almost always given a rating of at least 3 on a scale of 1–5 (1 = not at all important, 5 = very important). This means there seems to be at least some understanding from the marketplace that cloud offers obvious benefits to businesses.

FIGURE 3

Importance Ratings of Cloud Characteristics

Q. Please evaluate how important the following characteristics of cloud are to your company (1 or 2 = unimportant; 3 = neutral; 4 or 5 = important).

n = 433

Source: IDC's Cloud and Mobile Print Multiclient Study, 2012

Key Benefits of a Cloud Implementation

The benefits of moving to the cloud appear to be fairly obvious to IDC's respondent base (see Figure 4). When considering issues such as…

 Reducing total IT spend per employee

 Improving IT staff productivity and service levels to end users  Reducing total spend on software licensing and maintenance

0 20 40 60 80 100

Facilitate collaboration across remote and/or distributed teams Easier/more cost-effective access to document services Ability of cloud applications to interact with noncloud

applications

Establish "standard services" Faster deployment of applications Flexible migration of workloads between private and public

clouds

Automated and rapid scaling Meter usage Self-service through a portal…faster delivery and reduces IT

workload

Cost efficient

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 Reducing total spend on custom software development and support  Reducing total IT and hardcopy hardware spend

 Increasing revenue by enabling the company to deploy new revenue-generating programs faster …over 70% of respondents rated each of these benefits as important across all company sizes. In fact, very few, if any, respondents said that these benefits are unimportant.

FIGURE 4

Importance Ratings of the Anticipated Benefits of Moving to the Cloud

Q. Please rate the importance of each statement with respect to what your company's

anticipated economic benefits of moving to the cloud will be (1 or 2 = unimportant; 3 = neutral; 4 or 5 = important).

n = 433

Source: IDC's Cloud and Mobile Print Multiclient Study, 2012

Of course, there a number of other inherent benefits of the cloud outside the productivity and financial gains noted previously. However, these additional benefits are also part of the cloud's overall value proposition to adopters:

 Scalability. The cloud is scalable so that storage capacity is available for as long as users need it and for as much as they need. Additionally, the payment model is scalable in that cloud users pay for only what is used and how much is needed.

0 20 40 60 80 100

Reduce our carbon footprint, power, cooling, and related costs

Increase revenues by deploying new revenue-generating programs faster

Reduce total IT spend per employee Improve IT staff productivity and service levels to end users Reduce total spend on custom software development and

support

Reduce total spend on software licensing and maintenance Reduce total IT and hardcopy hardware spend

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 Automatic application updates…no intervention required. Applications are automatically updated so that no IT intervention is needed. This is particularly important for resource-constrained SMBs.

 On-the-go access to critical business information for the mobile worker. The cloud allows an increasingly mobile workforce to remotely access important business information. Users are no longer "tethered" to the network to do their jobs. Instead, the cloud provides the repository for anytime, anywhere access to data/documents so that mobile workers can perform work-related tasks "on the go." The hardware tools leveraged for this access include media tablets and smartphones. The explosive growth projections for these mobile hardware devices highlight the crucial requirement for mobile workers to operate at peak efficiency even while they are moving about during the business day.

 IDC forecasts that the worldwide media tablet market will grow from 218.8 million units in 2013 to 303.5 million units by 2018, a 6.8% CAGR.

 IDC forecasts that the worldwide smartphone market will grow from 1.01 billion devices in 2013 to 1.84 billion devices by 2018, a 13% CAGR.

 Important business information is backed up on the cloud. The cloud provides backup in case of catastrophic events. Business data is stored in the cloud within offsite datacenters.

Differences Between SMBs and Large Enterprises with Respect to the Cloud and

Its Benefits

Cloud's benefits are apparent even to SMBs. While some might think that cloud adoption would be relegated to large companies with deep IT resources, IDC's research shows that respondents from SMBs with fewer than 500 employees comprehend the benefits of cloud. However, we observe some important differences between SMBs and large enterprises:

 Smaller companies rely on their suppliers for technical knowledge. Respondents from these companies tend to give many more "don't know" responses when asked about cloud characteristics.

 Related to the "don't know" responses in smaller companies, larger

companies often are further along in adopting cloud-based technologies and more aware of the critical issues around deployment than small companies.  Related to company size and IT resources, smaller companies place less

importance on metering usage, IT staffing efficiencies, governance, regulatory requirements, and the need to support numerous U.S. and

worldwide locations than larger companies. This finding is probably a result of

smaller companies not having the size and scope of larger organizations; thus, support for such an infrastructure is not required. However, it does point to the need for smaller companies to have some access to outside expertise for IT support and the cloud.

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IDC believes the operational and cost benefits of the cloud make the technology even more important to cost-conscious SMBs (particularly small offices). Since these

businesses often do not have sophisticated IT departments (or may not have one at all), the opportunity for suppliers to provide the technical "know-how" to bring SMBs into the cloud marketplace is compelling. As noted in our research results, there are a lot of unknowns about the cloud that are causing SMBs to embrace cloud technology more slowly than their larger brethren. To gain this necessary expertise, smaller companies should look to suppliers that can help with the inevitable transition to the cloud. To help SMBs that are considering a cloud-based services model for their business, IDC offers questions and topics to discuss with technology suppliers. While large enterprises appear to be well on their way to moving forward with a cloud strategy,

SMBs seem understandably less sure about making such a move. To help guide the discussion, we present some of the top-of-mind concerns expressed by survey respondents regarding cloud adoption (see Figure 5). Not surprisingly, many of the issues revolve around the technology's cost benefits, security, and IT governance requirements, including the impact on current IT infrastructure.

FIGURE 5

Top-of-Mind Concerns About Cloud Adoption

Q. What concerns are top of mind for you with respect to cloud adoption?

n = 433

Source: IDC's Cloud and Mobile Print Multiclient Study, 2012

0 10 20 30 40

Not enough suppliers offering on-demand model Regulatory requirements won't allow us to put systems

and/or information outside of our direct control IT governance issues, particularly related to defining

standard services and SLAs

Network infrastructure (routers/switching) limits on-demand model

Not enough ability to customize to our organization's needs Cloud cannot support the operational requirements of

critical applications

Degraded network speed or overloaded provider systems could bog down system performance

Will cost more than the traditional license/own model Internet access or service provider's systems will go down Keeping our systems and information outside of our firewall Integration with in-house IT systems and management

(% of respondents)

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Topics and questions related to cloud adoption and implementation to discuss with your technology supplier include:

 Proof that cloud implementation can work for your business. This may seem like an obvious point, but it is worth discussing how this new technology will benefit your customers. In this instance, we see customers as both internal (employees) and external (buyers of your goods or services) to your organization. Ask if they use these services in their own current business as well as in other businesses they may have owned in the past. You may also want to know the supplier's

experience in providing cloud technologies to businesses similar to yours (e.g., customers within the same industry and/or customers with a similar number of employees or similar revenue).  Cost impact. While cloud is touted to cut costs, there are a number of issues to consider that

can impact your business from a bottom-line standpoint.

 Creating new business processes versus replacing existing business processes. Is this implementation a net-new capability for your company, or does it replace an existing process? If it is new, consider the benefits that can be gained by improving information access or other business process efficiencies, in addition to the direct cost of the service. If it is a replacement for an existing process, you should consider the soft cost savings often realized, such as reduced support and maintenance costs, software costs, and related equipment costs.

 Demonstration of cost savings. Related to proof that cloud can work for your business (as noted in the first bullet of this list), have your supplier detail the cost savings

(e.g., hardware, software, maintenance) you can anticipate as a result of the implementation. Ask your supplier to share the cost savings experienced by other customers, either within your industry and/or with a similar number of employees or similar revenue.

 Security and general IT requirements. IDC's research has identified the threat of security, or lack thereof, as a commonly perceived concern for deploying solutions to the cloud. Ask your supplier to outline its security implementation approach in order to alleviate any concerns that you may have.

 Identify what you are comfortable with. You may want to implement cloud for some processes while keeping other processes inside the company. Talk to your supplier about which document types or business processes you might want to start to move off-premise and into the cloud. IDC's research has shown that companies of all sizes appear to be comfortable with moving email, collaborative, and personal productivity applications to the cloud. On the other hand, our data shows that companies are less comfortable with the deployment of traditionally sensitive data such as finance or human resources to the cloud. As a result, you may want to consider cloud deployment in phases. Think about which business processes are priorities for current deployment and which could be deployed later on based on your company's comfort level.

 Know where your cloud-based business information is being hosted. This isn't necessarily a critical issue of needing to know the details, but it's your business information. You want to know where it is.

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 New cloud implementations need to integrate within your existing IT infrastructure. Key questions and issues for suppliers to address include:

 How well will the cloud solution integrate with the existing in-house IT systems and management?

 Does your network infrastructure (routers/switching) limit the on-demand (cloud) model, or could adoption result in degraded network performance (speed or overloaded provider systems)?

 The supplier should also be able to demonstrate that a cloud implementation will offer the benefit of simplifying future software deployments and/or upgrades for the company. The supplier should also articulate the specific impacts of this benefit for your business.  What if the Internet goes down? Can cloud support the operational requirements of critical

applications?

 Compliance. Are there any internal governance issues, particularly related to defining standard services and service-level agreements (SLAs), as well as external regulatory requirements for your particular business (e.g., HIPAA for healthcare) that should be considered before

implementing a cloud-based solution?

FUTURE OUTLOOK

It's important to understand that cloud services are not an isolated IT growth segment but are part of a broader picture for future IT industry transformation and growth. Cloud is interconnected and

accelerated by a number of IT forces, including mobile devices, wireless networks, "big data,"1 and social networking technologies. Together, these forces are creating another wave of IT growth. The last similar growth spurt occurred several years ago when the PC and other technologies such as LANs and relational databases combined to extend IT's value to many more users and uses. We anticipate that the cloud, along with mobile, wireless, "big data," and social networking

technologies, will literally reach billions of users. According to IDC figures, approximately 2.8 billion people are already connected to the Internet (with nearly half through mobile devices). Just as significant, we expect that we'll also see trillions of smart devices connected to this platform. This will lead to an expansion of new applications and services built upon the evolving cloud platform.

We believe that MFPs and other intelligent business devices such as interactive whiteboards and displays represent a few of the device types that will leverage the cloud and associated technologies. The MFP is in the midst of transforming from a "box" that produces hardcopy output to a

comprehensive document processing unit for both paper and digital documents for businesses of all types. Most MFPs incorporate "smart" document platforms that facilitate both internal and external third-party software development to enhance the value of the MFP beyond paper-based output. The cloud provides another avenue of new capabilities for the MFP by enabling access to a broader range of content in such a manner. Interactive whiteboards and digital displays are also part of the business communication ecosystem that will leverage the cloud in the future.

1

IDC defines big data technologies as hardware and software technologies and architectures

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IDC's wealth of research and market commentary on the cloud reveals the inevitability of the technology's role in the future computing environment. Customers' recognition of key cloud benefits revolving around cost, collaboration, increased access to business information, and overall efficiency gains is evident. While there are ongoing concerns around working within the current IT infrastructure, security, and costs, suppliers that can address and alleviate such worries stand to benefit as the market evolves toward the cloud and mobile platform. Customers who make the move to carefully begin implementing this new platform should expect to benefit from greater operational efficiencies and lower operational costs. Ultimately, this can be a win-win scenario for suppliers and customers alike.

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About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company.

Global Headquarters

5 Speen Street Framingham, MA 01701 USA 508.872.8200 Twitter: @IDC idc-insights-community.com www.idc.com Copyright Notice

External Publication of IDC Information and Data — Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason.

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