Cloud Computing: Destiny or Dis-Intermediation
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1 THINKstrategies Strategic Consulting Services Cloud Computing: Destiny or Dis-Intermediation Presented by, Jeffrey M. Kaplan Managing Director THINKstrategies , THINKstrategies [ Slide 1
2 Agenda Changing Customer Requirements Shifting Competitive Landscape Defining Terms, Dispelling Myths Business Implications New Models for Success Slide 2
3 Today s Perfect Storm Macro-Market Trends Enabling Technologies Shifting Customer Attitudes Slide 3
4 Key Macro-Market Challenges Economic Uncertainty Changing Workplace Key Challenges Growing Competition Escalating Expectations Slide 4
5 The Shortcomings of Legacy, On-Premise Apps Deployment Challenges 31.1% of SW projects cancelled before completed. 52.7% of projects cost nearly 190% of original estimates. Operational Costs Maintenance & management costs=>10x license fee. Escalating hardware & staff support costs. Over provisioning and under-utilization of SW licenses Economic/Budgetary Pressures Need to reduce IT costs and increase business benefits. Need to increase utilization to gain greater ROI. Slide 5
6 On-Demand Has Become Mainstream Slide 6
7 The New Generation Thinks & Communicates Differently Slide 7
8 Changing Customer Expectations Old, Fixed, Capital Investment Complexity, Customization High TCO, Uncertain ROI Internal Support Limited Visibility Outsourcing Alternatives New, Flexible, Operating Expense Simplicity, Utilization Rapid Time-to-Value Vendor Management More Analytics Out-Tasking Options Slide 8
9 Inter-Related Out-Tasking Alternatives Out-Tasking Alternatives SaaS Managed Services Cloud Computing Slide 9
10 Market Penetration An Historical Perspective Outsourcing SaaS/Cloud Computing Facilities Mgmt ASPs/MSPs Year Slide 10
11 Defining SaaS Subscription-Pricing Continuous Enhancements Built-In, Real-Time Analytics Rapid Deployment/Self-Provisioning User-Centric Process Orientation One-to-Many Software Design Network-Based Delivery Services-Oriented Applications Multi-Tenancy Slide 11
12 How SaaS & ASP/Hosting Differ Customer Application ASP/Hosting Company Same legacy applications Upfront perpetual license Still inflexible architecture Limited accessibility Single-instance, inefficient Slide 12
13 Enabling Technologies Service management Web services & APIs Security Virtualization Blade technology Grid computing Broadband networks Slide 13
14 Multi-tenant SaaS Uses Common, Scalable Code SaaS Vendor Slide 14
15 SaaS Adoption Beyond a Tipping Point % of Respondents Using SaaS 62% 32% Source: THINKstrategies/Cutter Consortium Slide 15
16 Customer Satisfaction, Renewal & Referral Rates >90% Slide 16
17 Shifting Adoption Patterns Unilateral End-User, SBU Adoption of SaaS Solutions Enterprise-Wide Acceptance and Adoption of SaaS Slide 17
18 Recent Mega-Deals = 500,000 suppliers We evaluated a number of alternatives, but Aravo SIM was the best commercially-available solution capable of meeting our complex, global needs - SVP and CIO of GE = 420,000 end-users "The Enterprise Cloud Computing business model is a strategic direction for us. It not only lowers IT costs, and creates faster end to end processes, but can also grow with our requirements both globally and locally. - Head of Corporate IT, Siemens AG Slide 18
19 New Government View I m all about the cloud computing notion. I look at my lifestyle, and I want access to information wherever I am. I am killing projects that don t investigate SaaS first. President Obama s CIO, Vivek Kundra, WSJ 3/9/09 Slide 19
20 RightNow Secure Cloud DoD, GSA, and the Agency for Healthcare Research and Quality (AHRQ) using RightNow s Secure Government Cloud. DoD deployments include, U.S. Air Force Personnel Center (AFPC) Medical Education and Training Campus (METC) AHRQ can: Support 30 web resources and Health IT projects Manage incoming web inquiries, reducing demand on agents Provide constituents with a central, self-learning knowledge base Encourage dialogue with consumers, researchers, clinicians, educators, employers, and providers on health care issues Facilitate technical assistance questions Quickly add content, resources or the latest research on website Analyze customer feedback. Slide 20
21 LA-Google Story $7.25 million deal Google Apps serving 34k employees Replaces Novell GroupWise Deployment and support provided by CSC Privacy clause, Includes provision providing the city with unlimited damages if its nondisclosure agreement (NDA) is breached by Google. >50 state county/local agencies in CA have asked Los Angeles for information about its agreements > 20 government agencies outside of CA have sought information on the Google plan Slide 21
22 Market Penetration Market Adoption Forecast Laggards Mainstream Buyers Early Adopters Innovators Slide 22
23 SaaS Expands from Front- to Back- to Inter-Office Apps Back Office ERP Finance Front Office Collaboration CRM/SFA BUSINESS APPLICATIONS Inter-Enterprise Procurement Supply-Chain Market Cloud Rush Slide 23
24 Top Ten Showplace Application Categories Customer Relationship Management 103 Collaboration 80 Accounting/Financial 78 Source: SaaS Showplace Document Management 67 Project Management 62 Enterprise Resource Planning (ERP) 55 Marketing 49 Human Resource Management (HRM) 47 ecommerce 46 Messaging 44 Slide 24
25 SaaS Expands from Business Apps to IT Management Back Office ERP Finance Front Office Collaboration CRM/SFA BUSINESS APPLICATIONS Inter-Enterprise Procurement Supply-Chain Data Protection Storage Security Systems Mgmt IT Management Network Mgmt Remote Access Slide 25
26 Why IT Is Attracted to SaaS Most IT organizations spend 75-80% of their time reacting to problems, keeping systems and software up and running. They would prefer to focus on more strategic business initiatives. Slide 26
27 SaaS Penetrating IT Management Market Traditional NSM = ERP of the IT World Too complicated Too expensive Too time-consuming Too ineffective >100 IT/Application Mgmt solutions on the SaaS Showplace. Slide 27
28 Managed Services/SaaS Convergence Managed Services SaaS Slide 28
29 Managed Services vs. SaaS Managed Services Provider assumes management responsibility Sold on an per device basis Focus on network/system availability & performance SaaS Provider delivers software functionality Sold on a per user basis Focus on application availability & performance Quicker Time-to-Value Lower TCO/Higher ROI Shifts Burden to Provider Slide 29
30 Moving from SaaS Apps to Cloud Computing Top Strategic Technology for 2010 Cloud Computing Services SaaS Apps But what does cloud computing mean? Slide 30
31 NIST Definition of the Cloud Slide 31
32 Where are the Channel Opportunities in the Clouds? Slide 32
33 Traditional Role of Channel Partners Satisfy specific user requirements and vertical market needs Address technical complexities & provide specialized skills, Planning, Design, Integration, Management, Training & Support Skills Extend sales reach/functional capabilities Expand addressable market opportunities Slide 33
34 Does SaaS/Cloud = Disintermediation? Direct Sales/Delivery Model Focus on Simplification/Ease-of-Use Automated, Self-Provisioning Capabilities Ease of Deployment/Configuration Emphasis on Time-to-Value Business vs. Tech Support Requirements Lower Price Points/Tighter Margins Slide 34
35 Good News SaaS vendors seeking channel partners to, Extend reach Create industry-specific solutions Cloud computing is creating confusion Vendors need help packaging raw capabilities Users need help understanding and leveraging resources Slide 35
36 Why the time is right for the Channel in SaaS SaaS has gained mainstream acceptance, less education required. SaaS vendors perfecting direct selling strategies/techniques. Continued growth requires greater vertical market penetration. Expanding market penetration requires industry-specific skills. Economically extending market reach requires third-party channel partners w/ trusted relationships. Establishing new channel relationships accelerates market growth. Existing and emerging players hungry for new channels to market. Slide 36
37 SaaS Expands from Business Apps to Industry Solutions Back Office ERP Finance Front Office Collaboration CRM/SFA BUSINESS APPLICATIONS Inter-Enterprise Procurement Supply-Chain Manufacturing Financial Services Retail Vertical Market/Industry-Specific Solutions Slide 37
38 Key Customer Concerns Concerns, Reliability Security Customization Compliance Integration Customer Support Slide 38
39 Clouds Come In Many Forms Public Clouds Hybrid Clouds Private Clouds Internal Clouds Slide 39
40 Users Must Solve Cloud Complexities Slide 40
41 Channel Opportunities Integration Opportunities Consulting Opportunities Geography-Specific Relationships Industry-Specific Solutions Customer Support Training Slide 41
42 Helping Customers Find the Right Balance Help make cloud computing location-independent. Help select the right choices. Help integrate on-demand/ on-premise solutions. Help maximize value of solutions Slide 42
43 Design, Deliver & Manage Private Clouds Benchmark Market Leaders Amazon Facebook Google Salesforce.com Adopt Industry Best Practices Standardization Simplification Automation Agility Slide 43
44 Benefits of SaaS/Cloud- Enabled Channel Companies Lower Upfront Costs Easier Deployment Quicker Time-to-Value Lower Total Cost Of Ownership (TCO) Higher Return on Investment (ROI) Greater Flexibility and Agility Create Additional Market Opportunities Slide 44
45 Added Dimension of SaaS and Cloud Computing Communications Community Customer Experience Collaboration Slide 45
46 A New Level of Value in the SaaS Market Dynamic clearinghouse of solutions Continuous updates, new ideas Real-time, aggregated data Meaningful benchmark studies Practical best practices forums Build a club, gain a competitive advantage Slide 46
47 How You Can Capitalize on the Cloud Augment internal operations Test new applications/services Handle spikes in demand Expand service portfolio Broaden partner relationships/ channels to market Slide 47
48 Platforms-as-a-Service (PaaS) S3 & EC2 App Engine CPU and Storage Web Applications Enterprise Applications Social Applications Slide 48
49 New Breed of VARs and Consultants Slide 49
50 New Channels to Market Banks Insurance Companies Retailers Web companies PS Firms Slide 50
51 On-Demand Services & The IT Industry Inversion Future Services The IT Industry Inversion Technologies Past Slide 51
52 Key Challenges Facing Established Vendors Re-architecting applications Re-structuring revenue models Repositioning marketing Re-orienting sales/support staff Surviving market shakeout Slide 52
53 Common Pitfalls Balancing, Multiple Offerings Various Delivery Models Competing Buyers Conflicting Sales Channels Varying Compensation Plans Differing Revenue Recognition Models Slide 53
54 Shift from Selling Boxes to Business-Oriented Services Slide 54
55 Sell To CXOs, Not Geeks Slide 55
56 Transform Firefighters to Business Consultants Slide 56
57 Provide Insight, Not Data Slide 57
58 Building Proper Target Market Segmentation Service Levels Functional Layer Planning & Design Deployment & Integration Monitoring & Management Maintenance & Refresh Business Applications Security Mobility Desktop Computing Data Centers Network Infrastructure Size of Accounts Vertical Markets Slide 58
59 The Circles of Success Community Ecosystem Specialized Skills Platform Core Functionality Platform Specialized Skills Ecosystem Community Slide 59
60 Change Your Business IT Services Business Services Information Services Business Evolution Slide 60
61 Raising Your Value By Leveraging the Cloud Strategic IT/BPO Transformer Consulting Services Managed Services Multivendor Integration Services Supplier Tactical Implementation/Maintenance Services Slide 61
62 Goal: Changing the Vendor/Customer Relationship Direct vendor/user connection Greater customer insight Ongoing feedback Real-time analytics Aggregated user data Operational benchmarks Continuous enhancements Higher satisfaction/retention/referrals Slide 62
63 The Key to Success Selling and Retaining Trust Is Your Strongest Competitive Advantage! Slide 63
64 Good Luck! Slide 64
65 For More Information Slide 65
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