Three of Four Cloud Purchasers Agree: Insights from TBR’s Public Cloud Adoption Study

TBR

TECHNOLOGY BUSINESS RESEARCH, INC.

Three Out of Four Purchasers Agree:Insight from TBR’s Public Cloud Adoption Study

SOFTWARE BUSINESS QUARTERLYSM

Original Webinar Date: February 15, 2012Presenter: Stuart Williams, Software Practice Director ([email protected])

TBR Webinar SeriesWinter 2012

mailto:[email protected]

TBR

Three Out of Four Agree: Insight from TBR’s Public Cloud Adoption Study ©2012 Technology Business Research Inc.

Today’s Presenter

Stuart WilliamsDirector, Software Practice Technology Business Research, Inc. (TBR)

Twitter: @s2_williams

2

TBR


Three out of four IT buyers want pubic cloud services...Are you ready to sell them what they want?

Adoption remains on the upswing.

Market opportunity is growing

Buyers are considering multiple vendors

Dominant vendors have not emerged

Applications lead adoption.

Buyers are looking for solutions

Software and Infrastructure-as-a-Service lead

Vendors must get past security issues

of businesses either use or plan to purchase a public cloud service in 12 months

of non-adopters plan to purchase a SaaS application within 12 months

74%

65%

SOURCE: TBR WINTER 2011, CLOUD COMPUTING ADOPTION STUDY; TOTAL N= 1,496

3

TBR


Nearly three-in-four businesses are either using or planning to purchase public cloud

Drivers and Barriers are varied – but cost reduction and security remain on top

Customers want to shift more sophisticated workloads to the cloud

Part One: Adoption of Public Cloud Services

In order to capitalize on the vast public cloud opportunity, vendors need to first understand the drivers of adoption

4

TBR


Cloud adoption is near 40% - with equal public and private cloud adoption - and 54% intend to add public cloud

Out of the 1,496 respondents who participated in the study, 39% have adopted cloud computing54% of respondents intend to add public cloud services within 12 months

SOURCE: TBR WINTER 2011, CLOUD COMPUTING ADOPTION STUDY; TOTAL N= 1,496

N= 1,496 IT Decision

makers and Line

of Business

Managers in U.S

Overall Cloud

adoption rate = 39%

Public Cloud

adoption rate = 20%

FIGURE 1.0

Overall Cloud Adoption Rates

5


TBR


Not only is overall adoption increasing, but cross-cloud adoption is increasing for applications, platforms and infrastructureAdoption Rates for Public Cloud

20% of the respondents have adopted public cloud and 54% are considering adoption of public cloud

SOURCE: TBR WINTER 2011, CLOUD COMPUTING ADOPTION STUDY; TOTAL N= 1,496, N=302 FOR PUBLIC CLOUD ADOPTERS

54%

26%

20%

N=1,496

Adopted Public Cloud

Not Considering Public Cloud

Considering Public Cloud

Public Cloud Segment

SaaS69%

IaaS53%

PaaS50% N=302 for public cloud adopters

N=302 for public cloud adopters

FIGURE 1.1FIGURE 1.2

6

Public Cloud Adoption Additional Adoption of Private Cloud


TBR


The overall Public Cloud revenue opportunity is growing in line with adoption…

SOURCE: COMPANY DATA; TBR ESTIMATES

$2.41 $2.68 $3.07 $3.17 $3.19 $3.81 $4.14

$9.88$12.86

$18.10

$5.98 $6.44 $7.26 $7.92 $8.58 $9.24 $10.31

$23.00

$33.00

$43.00

$-

$5

$10

$15

$20

$25

$30

$35

$40

$45

3Q10 4Q10 1Q11 2Q11 3Q11 Fst 4Q11 Est 1Q12 2010 Est. 2011 Est. 2012

Estimated Public Cloud RevenueAggregated TBR Public Cloud Landscape Revenue and Growth

TBR Public Cloud Market Covered in the Cloud Market Landscape Report TBR Public Cloud Market Estimate

Estim

ated

Pub

lic C

loud

Reve

nue

(in $

Bill

ions

)

Calendar Quarter

TBR

Estim

ated

Pub

lic C

loud

Reve

nue

(in $

Bill

ions

)

TBR

42% year-to-year quarterly growth

CAGR: 23%

Calendar Quarter Calendar Year

TBR’s 3Q11 Public Cloud Market Landscape includes a top-down cloud market estimate and a bottom-up tracker of over 35 vendors.

Total Public Cloud Market

Public Cloud Market Revenue in TBR’s covered vendors


7

TBR


…however monetization is greater for SaaS than Paas and IaaS

TBR estimates a revenue spike across segments in 4Q11 due to seasonality.

Although SaaS accounts for the majority of TBR’s public cloud market revenue, PaaS and IaaS are experiencing rapid growth and once implemented, are more sticky than SaaS and closer to customers’ core business processes.

70%

8%

22%

SaaS YtY Growth: 38%PaaS YtY Growth: 43%IaaS YtY Growth: 50%

SOURCE: COMPANY DATA; TBR ESTIMATES

% CMLRevenue


8

TBR


SaaS has the highest adoption rate spurred by complete business suites, project management, desktop and messagingPublic Software-as-a-Service

Key Findings What you need to know

SaaS saw the highest adoption rate among public cloud adopters, at 69% with cost savings acting as the major driver.

• SaaS will continue to gain momentum across all market segments from SMBs to enterprises

• As SaaS offerings continue to scale and vendors continue to build offerings by considering buyer infrastructure limitations and integration needs

Google and Microsoft are clear leaders in the SaaS-based desktop and messaging markets.

Microsoft is winning with public cloud deployments of its widely used Office suite. Google Apps is in direct competition with Microsoft Office 365, and is positioning itself as a more cost effective complete business suite

Both public cloud purchasers and non-purchasers are considering purchasing SaaS-based project management, desktop and messaging solutions in the near future.

SaaS spending will continue to grow across multiple business applications, however complete business suites, project management, desktop solutions and messaging drive will continue to drive adoption in the SaaS market

Adoption Rates & Drivers

Vendor Selection

Key Offerings

SOURCE: TBR WINTER 2011, CLOUD COMPUTING ADOPTION STUDY; N =302 FOR PUBLIC CLOUD ADOPTERS, N FOR SaaS ADOPTERS = 209


9

TBR


Though there are few established leaders and mature offerings, rapid growth will transform the PaaS market


50% of cloud adopters surveyed have adopted PaaS offerings with cost and increased functionality being the key drivers to purchase from both traditional and pure play cloud vendors

• PaaS is gaining increasing importance as customers migrate application development to the cloud

• The market will see increased adoption as customers customize and develop new applications

Besides IBM leading the market share of testing for development, there are no clear winners, indicating its nascent state and opportunity for vendor penetration and growth

• Emerging solutions will have the opportunity to gain significant share in the rapidly growing space

• Increased adoption of SaaS solutions is leading to integration issues and will create a portfolio of opportunities for PaaS vendors

Though Storage for development has higher adoption rates, all PaaS offerings will see relatively equal traction in the market in the next 6 months

• The PaaS market is still in evolvement stages• All PaaS segments will experience fast paced

growth in coming quarters as customers develop custom applications for both internal use and as product add-ons


Vendor Selection

Key Offerings

Public Platform-as-a-Service

SOURCE: TBR WINTER 2011, CLOUD COMPUTING ADOPTION STUDY; N=302 FOR PUBLIC CLOUD ADOPTERS, N FOR PaaS ADOPTERS=152


10

TBR


Demand for storage due to increased data volume drives IaaS


• Based on the survey results, 53% of the cloud adopters have purchased IaaS offerings

• Drivers include cost savings, scalability and increased data volume

• As customers gain trust in public cloud solutions, IaaS adoption is increasing and becoming a core part of the IT system

• However, basic storage and computing IaaS will quickly become a commodity

• No clear winner emerged –a mix of traditional and pure play vendors such as Amazon, Rackspace, IBM and HP

• Vendors offering public and private cloud have better opportunity based on the overall cloud adoption trend

• Security – from the hardware level to the application to user control and compliance – remains a fundamental barrier to adoption

• Vendors than can certify their cloud offerings – and ecosystem – will have an advantage

• More than 65% customers reported having purchased storage solutions

• Nearly 50% of non-adopters plan to purchase storage in the next 6 months

• Storage offerings will continue to drive the sales of IaaS offerings among both cloud adopters and non-adopters

• Vendors can also expect cloud-based systems management to see increased future growth from cloud adopters


Vendor Selection

Key Offerings

Public Infrastructure-as-a-Service

SOURCE: TBR WINTER 2011, CLOUD COMPUTING ADOPTION STUDY; N=302 FOR PUBLIC CLOUD ADOPTERS, N FOR IaaS ADOPTERS =161


11

TBR





Part Two: Drivers and Barriers to Pubic Cloud Adoption

Making the jump to public cloud services is a leap of faith for many

12

TBR


Leading Purchase Influencers and Drivers

Customers want to leverage cloud to extend scalability, improve performance, and reduce costs

Customers face… Customers seek to… Why cloud?

Data growth is driving up costs

Improve their spend-to-performance ratio

Offloading low risk, high-demand workloads to the cloud reduces management burden and related costs

Rising demands on traditional IT infrastructure

Improve speed and performance

Buyers want to give their end-users the best possible speed and improved IT performance, and consider cloud the means to do so.

New business demands require IT to be agile

Improve scalability

Cloud deployments let customers keep costs relatively low while still accessing innovative, new technology offerings

Evaluation criteria driving purchases from cloud providers:

• Cloud Provider:• Expertise• Pricing• Support

• Cloud Infrastructure:• Data Security• Network

Availability• Compliance



13

TBR


Cloud vendors that overcome security concerns and prove the ROI for shifting specific workloads will win customers

Barriers to Adoption Drivers to Green Lighting Cloud Purchases

Purchase Barriers and Drivers

Data security and data confidentiality concerns are top barriers to adoption of public cloud computing services

• Customers reported data privacy concerns as the biggest business risk in adoption of cloud computing services as they want to retain physical control of critical data

• Data security was cited as the biggest IT concern in adoption of cloud services

• Other adoption barriers include legacy infrastructure, complexity of integration of cloud offerings with existing applications and infrastructure and unclear ROI benefits from cloud investments

Costs savings, improved data security from cloud based security services, keeping pace with technology advancements and scalability are the key drivers fro cloud adoption.

• More than 50% of respondents indicated cost savings as the primary driver for purchasing public cloud computing services

• Respondents also valued other key mentions such scalability to add capacity, adoption of advanced technology standards and the need for improved data security as reasons to buy

SOURCE: TBR WINTER 2011, CLOUD COMPUTING ADOPTION STUDY; N=302 FOR ADOPTERS

14


TBR


Key Findings What you need to know• SaaS offerings are continuing

to grow across multiple business applications

• 69% of the cloud adopters surveyed have deployed SaaS solutions

• 65% of non-cloud adopters plan to purchase SaaS solutions in the next 6 months

• Over 50% of respondents indicated cost savings as their primary purchase driver.

• Unlike the earlier days of adoption, SaaS offerings have gained traction across SMBs as well as large enterprises

• Increased demand for complete business suites, desktop productivity and project management will drive the growth for SaaS further

• Lack of complete business suites is creating an opportunity for vendors

Key Driver for growth

in cloud computing

Key Findings and Conclusions

SaaS offerings are the durable driver of cloud computing adoption, and will continue to be for the near future


15


TBR



• 79% of SaaS users are either using or plan to purchase PaaS offerings

• Opportuntity exists for SaaS vendors to build a PaaS ecosystem

• Increased adoption of SaaS applications is creating a need for integration of SaaS solutions with existing on-premise solutions

• Larger and established SaaS vendors can leverage this opportunity to extend their SaaS offerings with PaaS capabilities in order to gain leadership in both SaaS and PaaS segments

Other Growth


Platform follows Software-as-a-Service as customers look to extend and integrate their public and private cloud investments


16


TBR


Key Findings What you need to know• Security and data privacy

remain the biggest inhibitors• Other barriers include

• Legacy infrastructure• Complexity of

integration • Unclear ROI

• More than 60% public cloud customers are considering private cloud and over 70% have plans to invest in hybrid cloud

• Nearly 25% of both adopters and non-adopters of pubic cloud are concerned about cloud-to-cloud integration

• Vendors should clearly indicate cost benefits across various cloud offerings to their customers and map workloads to deployment options while alleviating customers’ security-related concerns to create a trustworthy cloud

• The support and emergence of strong certifications and open standards across the layers of cloud abstraction will alleviate customer concerns


While security remains at the top of the barriers, worries about cloud-to-cloud integration complexity are on the horizon


17

Barriers to Adoption


TBR





Part Three: Shifting to the cloud

As confidence build in public cloud offerings, customers are looking to shift more workloads to a cloud model

18

TBR


CRM and project management lead the core functions most suited for public cloud…Business Functions Best Suited for Cloud Computing

Nearly 45% of the respondents indicated CRM to be the best suited application for cloud computing. Project management, sales, marketing and communications also ranked high among business functions that customers want to shift to cloud.

SOURCE: TBR WINTER 2011, CLOUD COMPUTING ADOPTION STUDY; N=302 FOR PUBLIC CLOUD ADOPTERS

FIGURE 1.13

19


TBR


…while customers prefer business functions, such as accounting and finance, on private cloud for security and confidentialityBusiness functions best suited for private cloud

Customers remain concerned about security, confidentiality and regulatory compliance, and prefer business functions such as Accounting and Finance with critical information on private cloud while creating a hybrid cloud, as it allow customers to retain physical control of their data.


FIGURE 1.14

20


TBR


IT efficiency will drive business effectiveness by creating services that better address line of business needs

21

Part Three: Completing the journey to the cloud

Unconsolidated Server Consolidation Virtualization Cloud Services

Top three drivers for cloud adoption by cloud adopters

1. Cost savings2. Improved data security3. Move to more advanced

technology

TBR Cloud Adoption Study: January 2012

Business functions best suited for cloud

Public Cloud Private Cloud

1. CRM2. Project

Management3. Marketing and

communications

1. Accounting and finance

2. HR management3. Research &

technology

IT continues to focus on infrastructure…

…while business functions want to shift applications to public and private clouds

TBR


Overall Roadmap from Server Consolidation to Virtualization to Cloud Services

Integrated solutions improve IT’s ability to respond and provide services to lines of business to improve internal effectiveness

22

Unconsolidated Server Consolidation Virtualization Cloud Services

Business Journey

Technical Journey

Cloud Services:IT Benefits

1. Cost savings2. Improved data security3. Rapid scalability4. Rapid rollout 5. Flexibility6. Reduced labor

Cloud Services:Business Benefits

Self service and billing Scaling services to meet

increased requirements IT supports lines of

business in a new way Outward facing benefits to

customers

Part Three: Completing the journey to the cloud

TBR


Q & A Session

Stuart WilliamsDirector, Software Practice Technology Business Research, Inc. (TBR)

Email: [email protected]: @s2_williams

23

TBR


TBR Cloud Resources:

TBR Topic Research:• Winter 2012 U.S. Public Cloud Services Adoption Report• Winter 2012 Cloud Professional Services Adoption Report• Summer 2012 Private/Hybrid Cloud Purchasing Report TBR Cloud Business Quarterly Reports:• Public Cloud Market Landscape Report

• Cloud Vendor Reports:• Salesforce.com• Amazon AWS Cloud• Google Apps Cloud• Microsoft Cloud• IBM Cloud• Rackspace• Verizon / Terremark Cloud• Oracle Cloud

24

TBR

TECHNOLOGY BUSINESS RESEARCH, INC.

About TBR

Technology Business Research (TBR) is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, networking equipment, wireless, portal and professional services vendors.

Serving a global clientele, TBR provides timely and accurate market research and business intelligence in formats that are tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996.

To learn how our analysts can address your unique business needs, please visit our website or contact us today.

Contact Us

[email protected] Merrill DriveHampton, NH 03842USA

This report is based on information made available to the public by the vendor and other public sources. No representation is made that this information is accurate or complete. Technology Business Research will not be held liable or responsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is not and should not be construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value, purchase, sale or retention of securities. This report is copyright-protected and supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce.

All reports are available in PowerPoint and PDF. If you are viewing a PDF and require access to data, tables, etc. for use in internal documents, please visit www.tbri.com

and download the PowerPoint version.

mailto:[email protected]

http://www.tbri.com/

http://www.tbri.com/

TBR


APPENDIX

TBR


Study Methodology


TBR conducted 1,496 online surveys with IT decision-makers working at firms based in the United States who are responsible for or who influence public cloud services purchasing.

302 respondents indicated that they had adopted public cloud.

Complete Quota:

100 - Small business (10-99)101 - Midmarket (100-999)101 - Large business (1000+)

Survey Dates: December 2, 2011 – January 2, 2012

Respondents: Total Respondents – 1,496Public Cloud adopters – 302

Methodology

27

Appendix: Demographics

TBR



Respondent Industry, by Cloud Adopters


Respondent Industry

FIGURE 6.0

TBR


Company Revenue Size


Total Adopters, Viewed by Company Revenue Size

FIGURE 6.1


TBR


Adoption Rate for Private Cloud

SOURCE: TBR WINTER 2011, CLOUD COMPUTING ADOPTION STUDY; N=448 FOR PRIVATE CLOUD ADOPTERS

Private cloud adoption across business segments

FIGURE 6.7


Date post:	14-Sep-2014
Category:	Technology
View:	843 times
Download:	0 times