Drive Profits with Credible Marketing of Cloud Services James Staten, Forrester Research

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Drive Profits with

Credible Marketing of

Cloud Services

Session 1

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Drive Profits with Credible Marketing

of Cloud Services

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Cloud Computing or Cloud Confusion?

While “We Do Cloud” might get you the meeting

Cloud confusion will delay the purchase

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Which of these types of deployments are cloud?

PaaS

Storage -as-a-service DB-as-a-service

SaaS

Cloud billing

IaaS

VM hosting On-demand scaling

MSP

Dedicated hosting DC outsourcing Traditional IT

Cloud computing

• Variable costs/terms

• Standardized deployments

•Multitenant

• Highly automated

• Low control

•Limited customization

Traditional computing

• Fixed cost/terms

• Varied deployments

• Single tenant

• More manual

• High control

• High customization

IT virtualization

Web

services

ASP

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Cloud computing

A standardized IT capability (services,

software, or infrastructure) delivered

in a pay-per-use, self-service way

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SMB cloud use examples

 AirBnB — Simplified scalability and DB

mgmt

 TC3 Health — Healthcare payment

management and analysis.

 Kelley Blue Blook – Hybrid hosting and fast

feature delivery

 Costumes 4 Less – Elastic eCommerce

scaling. 300% traffic increase approaching Halloween

 Yelp — customer behavior analysis

 Nimbus Health & DDS Ventures —

Medical and Dental patient records SW, HIPAA compliant thru the cloud

 Pathwork Diagnostics — cancer tissue

analysis

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Cloud Computing: What makes it different



Economies of Scale

– Delivering the same service to multiple customers

– One deployment, many customers

– Scale by expanding the same deployment

– Scale by repeating the same deployment

– Very high consistency



Militant Automation

– Standardize and automate everything possible

– Channel every request possible through the self-service portal, the APIs

– Restrict variation from the standard



Significantly higher profitability through volume

– Very low prices, very high volumes

– Base prices are falling all the time…but not to zero

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Cloud interest map

Which segments have the most interest/adoption of public clouds?

Base: 1,290 IT hardware decision-makers Source: Forrsights Hardware Survey, Q3 2011

“What are your firm’s plans to adopt pay-per-use hosting of virtual servers (also known as cloud computing infrastructure-as-a-service or IaaS) at infrastructure-as-a-service providers such as Amazon Web Services, Terremark, Savvis, or Rackspace/Mosso?”

Overall Consumer products High-tech products Industrial products Retail Wholesale Transportation Professional services

Media, entertainment, and leisure Telecommunications

Financial services Insurance

Healthcare Education and social services

Government Canada France Germany UK US 2 to 19 20 to 99 100 to 499 500 to 999 1,000 to 4,999 5,000 to 19,999 20,000 or more 0% 5% 10% 15% 20% 25% 0% 5% 10% 15% 20% 25% 30% P e rc e n t a lr e a d y a d o p te d C lo u d I a a S

Percent planning to adopt Cloud IaaS

Overall 2010

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Know Thy Enemy: Amazon Web Services



Thinks of the data center as shelf space – drives inventory turns

– System designed for high volume, massive scale

– Wants massive variety on standard shelves

– Automates everything from the beginning – minimize ―inventory touches‖



Helps the shopper, shop for themselves

– Everything self-service, APIs everywhere

– Wants other sellers working its shelves



Weakness: Not equipped to customize

– Traditional hosting is hard for them

– Managed services is a foreign concept

– On the customer premise is out of the question

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Know Thy Enemy: Salesforce.com



Singular platform drives economies of scale

– Take it or leave it functionality

– Rapid iteration of capabilities and features

– Lots of surface-level customizations possible



Everything attaches to the core

– Enhancements primarily through proprietary calls/software

– Lots of modules and add-ons



Weakness: A Roach Motel

– Easy to get in, nearly impossible to get out

– Low cost to start that escalates the more you use it

– Proprietary customization creates the trap

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Where You Have an Advantage: Choice



Cloud solutions have narrow fits

– Fit to purpose is hard to make fit all

– Many customers need the personal touch – hand holding

– Self service assumes you know what you are doing

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Different cloud services appeal to different buyers

Depth of knowledge



Excel, Web page



Access, SQL Server



Scripting



Basic coding



Advanced coding



Advanced coding and

integration



Infrastructure scalability &

availability

Cloud level of abstraction



SaaS configuration,

simple PaaS



Scripting/

configuration platform



Coding platform,

cloud services



IaaS

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Cloud Vendor

responsibility Customer _{responsibility}

 Physical support infrastructure (facilities, rack space, power, cooling, cabling, etc)

 Abstracted services (SaaS application, hosted framework, hypervisor, virtual firewall, etc)

 Physical and virtual

infrastructure security and availability (servers, storage, network bandwidth, etc)

 Basic monitoring

 Element management

 Your application

 Architectural views (e.g., scalability, availability, recovery, data quality, and security)

 Governance (who has authority / responsibility to make changes and how)

 Lifecycle management (birth, growth, failure, and recovery)

 Enterprise integration (Identity management, access control, etc.)

 Testing, monitoring, diagnosis, and verification

 Network of metadata (categories, capabilities, configurations, and dependencies)

Secure cloud computing is an uneven handshake

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Where You Have an Advantage: Choice



Cloud solutions have narrow fits

– Fit to purpose is hard to make fits all



Mix traditional MSP with cloud services

– A portfolio of capabilities gives customers more options and broader appeal

– Knowing the differences and how to apply them makes you valuable

– Lots of workloads can’t and won’t move to cloud – ever

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A portfolio of options helps customers cost optimize

their deployments

Dedicated

hosting

(traditional

outsourcing)

Virtual

hosting,

SaaS

Cloud

infrastructure

Common

Transient

Metered

Custom

Fixed

Owned

ERP

SFA, HR

Web

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The new IT deployment portfolio

Physical

Virtual

Private

cloud

Decision tree Workload management GRC

Common

Transient

Metered

Custom

Fixed

Owned

Public

cloud

Virtual

hosting

Trad out

Common

Transient

Metered

Custom

Fixed

Owned

CapEx

OpEx

Flexible

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Where You Have an Advantage: Choice



Cloud solutions have narrow fits

– Fit to purpose is hard to make fits all



Mix traditional MSP with cloud services

– A portfolio of capabilities gives customers more options and broader appeal

– Knowing the differences and how to apply them makes you valuable

– Lots of workloads can’t and won’t move to cloud – ever



Many SMBs fear the cloud

– Will move slower than you think

– Will favor private clouds to keep these apps off the public Internet

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Cloud interest map

Which segments have the most interest/adoption of public clouds?

Base: 1,290 IT hardware decision-makers Source: Forrsights Hardware Survey, Q3 2011

“What are your firm’s plans to adopt pay-per-use hosting of virtual servers (also known as cloud computing infrastructure-as-a-service or IaaS) at infrastructure-as-a-service providers such as Amazon Web Services, Terremark, Savvis, or Rackspace/Mosso?”

Overall Consumer products High-tech products Industrial products Retail Wholesale Transportation Professional services

Media, entertainment, and leisure Telecommunications

Financial services Insurance

Healthcare Education and social services

Government Canada France Germany UK US 2 to 19 20 to 99 100 to 499 500 to 999 1,000 to 4,999 5,000 to 19,999 20,000 or more 0% 5% 10% 15% 20% 25% 0% 5% 10% 15% 20% 25% 30% P e rc e n t a lr e a d y a d o p te d C lo u d I a a S

Percent planning to adopt Cloud IaaS

Overall 2010

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What are your firm’s concerns, if any, with pay-per-use hosting of virtual servers?

Security tops all cloud concerns, still

1% 7% 9% 4% 21% 17% 27% 22% 32% 36% 59% 2% 6% 6% 7% 16% 17% 23% 24% 26% 26% 30% 38% 39% 62% Don’t know Other reason None - we don’t have any concerns Too difficult to understand The offering capabilities don’t match our needs Software licensing issues The performance isn’t good enough Service levels are insufficient or non-existent Specific compliance requirements that the service …

Our application vendor or custom apps aren’t … Vendor lock in that makes it difficult to leave the …

Too immature We believe our total costs are cheaper Security concerns about security/privacy issues in …

2011 (n=397) 2010 (n=603)

Base:North American and European IT hardware decision-makers at companies with 20 to 999 employees Source: Forrsights Hardware Survey, Q3 2011

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Base: 860 North American and European IT executives and technology decision-makers at small and medium businesses Source: Forrsights Hardware Survey, Q3 2011

Which of the following initiatives are likely to be your firm’s/organization’s top hardware/IT infrastructure priorities over the next 12 months?

Build an internal private cloud operated by IT (not a service provider)

1%

43% 32% 18% 5%

SMB (20-999 employees) (N=860)

Don’t know/ does not apply Not on our agenda Low priority High priority Critical priority

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Base: North American and European IT decision makers at small and medium businesses with 20 to 999 employees

“Which of the following initiatives are likely to be your firm’s/organization’s top hardware/IT infrastructure priorities over the next 12 months?”

(Percentage of respondents who answered ―critical‖ or ―high‖ priority)

16% 15% 48% 61% 61% 28% 20% 43% 60% 66% 22% 23% 44% 63% 59%

Use cloud infrastructure-as-a-service (IaaS) at a service provider

Build an internal private cloud operated by IT (not a service provider)

Automate the management of virtualized servers to gain flexibility and resiliency

Maintain or implement broad use of server virtualization as the standard server deployment model

Consolidate IT infrastructure via server consolidation, data center consolidation, or server virtualization

2011† (N=860) 2010* (N=993) 2009 (N=907)

Source: Enterprise and SMB Hardware Survey, North America And Europe, Q3 2009 *Source: Forrsights Hardware Survey, Q3 2010 †Source: Forrsights Hardware Survey, Q3 2011

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Internal cloud reality check:



Cloud infrastructure requires:

– Standardized operating procedures

– Fully automated deployment and management

– Self-service access for deployers

– Business units sharing the same infrastructure

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Source: See the April 2009 ―Which Cloud Computing Platform Is Right For You?‖ report

Hosted is the fast path to private cloud

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November 2011 “TechRadar™ For Infrastructure & Operations Professionals: Cloud Computing, Q4 2011”

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So, what should you do?

• Discretely call out what is and isn’t cloud

• Think hybrid for every solution

• You don’t have to be big to be relevant

• Keep the emphasis on what the customer is

trying to accomplish

• The big revenue: Managed services

Make cloud only part of your portfolio

Offer private cloud services

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Credible Marketing of Cloud Services Means

1. Demonstrate your understanding of what really is cloud computing

1. Hosting is NOT cloud computing – saying so will hurt your credibility 2. What makes it different

3. Understanding its unique economic model

4. Explaining the uneven handshake

2. Be clear about what you offer

1. What cloud services do you offer

2. What value do you bring atop these services

3. What non-cloud services you offer that compliment a good cloud strategy

3. Be a trusted advisor

1. Know what is the right (and wrong) use of cloud computing

2. How can they best take advantage?

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How SMBs can best take advantage of cloud



Where to start:

– Commodity applications

– Cloud: Replace with SaaS

– Non-cloud: outsource as managed applications

– New applications/services

– Cloud: Start with SaaS

– Non-cloud: Where no suitable SaaS exists, host and manage off-prem

– Web and mobile

– Cloud: Host on IaaS or PaaS to leverage elasticity

– Non-cloud: Host if mostly static, supplement with CDN services

– Custom apps/test & development

– Cloud: Leverage IaaS or PaaS for developer productivity, scalability testing, Q&A and production – where it makes sense

– Non-cloud: Use traditional hosting where capacity has lower transiency or immediacy

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So, what should you do?

Make cloud only part of your portfolio

• Biggest opportunity: Hosted private clouds

• Next: Remote management of on-premise

• Be prepared to move from IaaS to PaaS by 2015

Offer private cloud services

• Partner for capability and expertise

• Partner for geographic reach

• Resell where your managed value carries forward

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Cloud partnering strategy map

You

Your IP

Foundational cloud capabilities

(IaaS, PaaS, Infrastructure, Mgmt SW, Automation)

Broaden

Appeal

Broaden

Appeal

Provider Networks Open Communities Industry Alliances SW Certifications Expertise Areas Services Offered Locations Other non-cloud Services Business Consulting Services Managed

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Thank you

James Staten

+1 650.581.3824

jstaten@forrester.com

@Staten7

www.forrester.com

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Want to see more Forrsights data? Email: Forrsights@forrester.com

Today’s presentation powered by Forrester’s Forrsights

 Forrester’s Forrsights delivers forward-looking insight into:

 Buying behavior shifts

 Business model migrations

 Disruptive technologies (e.g. Cloud, Mobility, SaaS, Video)

 We help strategists at vendors responsible for setting strategy and

identifying market opportunities

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Buying Decision IT Decision Makers Business Decision Makers Employee Workforce

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IT thinks most apps will stay on premise

“Today, what percentage of your firm’s total x86 server OS instances are in each of the following categories? In four years, what percentage of your firm’s total x86 server OS instances will be in each of the following

categories?”

Source: Forrsights Hardware Survey, Q3 2011

Today (avg.)

Four years

from now (avg.)

On physical servers not virtualized operated in our data centers

48.8% 23.7%

On relatively static virtual servers in our data centers

34.3% 38.6%

On a dynamic private cloud pool of virtual servers in our data centers

8.2% 20.4%

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IT thinks most apps will stay on premise

“Today, what percentage of your firm’s total x86 server OS instances are in each of the following categories? In four years, what percentage of your firm’s total x86 server OS instances will be in each of the following

categories?”

Base: 263 technology decision-makers at North American small and medium businesses using x86 servers Source: Forrsights Hardware Survey, Q3 2011

Today (avg.) Four years from

now (avg.)

On physical servers not virtualized operated in our data centers

48.8% 23.7%

On relatively static virtual servers in our data centers

34.3% 38.6%

On a dynamic private cloud pool of virtual servers in our data centers

8.2% 20.4%

Hosted private cloud IaaS, where our virtual servers are isolated from other customers

1.7% 7.2%

Total On Premise 93% 89.9%

Public cloud IaaS, where virtual servers are on servers shared with other customers

1.7% 3.7%

Traditional hosting offering, virtual or physical, that is not cloud IaaS

3.9% 3.9%

Outsourced Service Provider 1.3% 2.5%