Clouds Beyond the Hype

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1 s Beyond the Hype Positioning for the New Era of Enterprise IT Frank Gens SVP & Chief Analyst IDC June 11, 2009 Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.

2 Services: Five Essential Questions 1. What Are They? 2. Why Are They Important? 3. When Do You Need to Do Something? 4. How Are Enterprises Going to Adopt? 5. Where (and How Big) Is the Money?

3 Services: Five Essential Questions 1. What Are They? 2. Why Are They Important? 3. When Do You Need to Do Something? 4. How Are Enterprises Going to Adopt? 5. Where (and How Big) Is the Money?

4 What Are Services? Services = Consumer and Business products, services and solutions delivered and consumed in real-time over the Internet 1) Shared Services, 2) under Management, 3) accessible over the Internet (by people and other services) via Internet Standards Applications Platforms Collaboration IT Management Storage Softwareas-a-Service Platformas-a-Service Infrastructureas-a-Service Servers/ Processing

5 Part of a Greater Environment IT as Services IT Health Services Government Services Retailing Entertainment Financial Services Supply Chain Services Product Dev Services Storage Servers Network Equipment IT/Network Management Software Databases App Development/ Deployment Software Network Services IT Services IT supporting Services delivery

6 Services: Five Essential Questions 1. What Are They? 2. Why Are They Important? 3. When Do You Need to Do Something? 4. How Are Enterprises Going to Adopt? 5. Where (and How Big) Is the Money?

7 Why IT Services? Q: Rate the benefits commonly ascribed to the 'cloud'/on-demand model (1=not important, 5=very important) Easy/fast to deploy Pay only for what you use Low monthly payments Less in-house IT staff, costs 2t 1 4 2t 83.6% 81.5% 77.9% 77.5% Offers the latest functionality 77.0% Encourages more standard IT 73.3% Sharing systems/information simpler 67.2% Source: IDC Enterprise Panel, August 2008 n=244 SIM survey, June 2009 n=16 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% % responding 3, 4 or 5

8 Why Not Services? Q: Rate the challenges/issues of the 'cloud'/on-demand model (1=not significant, 5=very significant) 3 Security 88.5% Performance % Availability Hard to integrate with in-house IT Not enough ability to customize Worried cloud will cost more Bringing back in-house may be difficult Not enough major suppliers yet % 84.8% 84.5% 83.3% 81.1% 80.3% Source: IDC Enterprise Panel, August 2008 n=244 SIM survey, June 2009 n=16 65% 70% 75% 80% 85% 90% % responding 3, 4 or 5

9 Services: Five Essential Questions 1. What Are They? 2. Why Are They Important? 3. When Do You Need to Do Something? 4. How Are Enterprises Going to Adopt? 5. Where (and How Big) Is the Money?

10 Organizations Shifting Fast In Use Q: Current and future level use of cloud services in your organization? (1=none, 5=widespread) IT Management Apps 26.2% 39.3% Collaborative Apps 25.4% 46.3% Personal Apps 25.0% 36.1% Business Apps 23.4% 34.0% Current In 3 years App Development/Deployment Server Capacity Storage Capacity 16.8% 15.6% 15.5% 25.9% 28.7% 31.5% Source: IDC Enterprise Panel, August 2008 n=244 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% % responding 4 or 5

11 IT Services: Crossing the Chasm We Are HERE

12 Supplier Attributes Users Want Q: Importance of IT cloud services supplier attributes (1=not significant, 5=very significant) Offer competitive pricing Offer performance-level assurances/slas Understand my business and industry % 83.2% 81.1% Can move cloud offerings back on-premise Can provide a complete solution Are future-oriented, an innovator Can support many of my IT needs Have a large network of partners Have local presence Are a large, established company % 61.9% 58.2% 55.4% 54.1% 46.3% 40.6% Have done business with my organization 30.4% Source: IDC Enterprise Panel, August 2008 n=244 SIM survey, June 2009 n=16 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% % responding 4 or 5

13 Key Vendors Are Building Beachheads Force.com Blue Smart Business Platform / Synaptic AWS IaaS Apps/Engine Business by Design Practice on EC2 WebEx

14 Services: Five Essential Questions 1. What Are They? 2. Why Are They Important? 3. When Do You Need to Do Something? 4. How Are Enterprises Going to Adopt? 5. Where (and How Big) Is the Money?

15 How Can IT Services Support CIOs Ongoing Journey? Business Processes System A System C System E System D System B

16 How Can IT Services Support CIOs Ongoing Journey? Business Processes Interface & Access Consolidate: Reduce Costs & Improve Quality Collaboration/Messaging Integration, Event & Deployment Applications Information Infrastructure Storage Processing Service/Resource Mgmt & Security Service-Oriented IT Delivery Virtualize: Simplify Access, Improve End-to-End Mgmt & Maximize Use Automate: Add Speed, Predictability & Reduce Labor

17 Operating Model Applied Internally Business Processes Interface & Access Consolidate: Reduce Costs & Improve Quality Collaboration/Messaging Integration, Event & Deployment Enterprise/ Applications Private Storage ADD: Information Highly-scalable (up/down) Self-service provisioning Pay-per-use options Infrastructure Processing Service/Resource Mgmt & Security Virtualize: Simplify Access, Improve End-to-End Mgmt & Maximize Use Automate: Add Speed, Predictability & Reduce Labor

18 Public s as Sourcing Options Collaboration/Messaging Integration, Event & Deployment Business Processes Interface & Access Applications Information Infrastructure Storage Processing Service/Resource Mgmt & Security Collaboration (Application) Platforms ( Platform-as-a-Service ) Storage Applications Systems Infrastructure Software Servers/ Processing

19 Public s as Most of IT Business Processes Interface & Access Collaboration/Messaging Integration, Event & Deployment Applications Information Infrastructure Storage Processing Service/Resource Mgmt Info Management & Security & Security

20 -Aware/Enabled On-Premise Business Processes Interface & Access Collaboration/Messaging Integration, Event & Deployment Applications Information Infrastructure Storage Processing Service/Resource Mgmt & Security -Enabled On-Premise (e.g., Appliances)

21 The IT Portfolio: What s Moving First? = affinity range for cloud deployment Standard App Service Level: Low Application/Process characteristics Unique/Customized Service-Level: High Small Org Enterprise characteristics Very Large Org Ops Costs:Value = Low Steady Load Ops Costs:Value = High Variable Load Capital constrained Lowest-quartile service delivery benchmarks Capital readiily available Highest-quartile service delivery benchmarks Open/Public Info Single Enterprise Confidential Info Multi-Enterprise Start-up; IT green field Trailing-edge IT skills Established; IT legacy Leading edge IT skills Small Data Small Compute Large Data Large Compute Limited Broadband Market characteristics Plentiful Broadband Skills in limited supply Skills plentiful

22 The IT Portfolio: What s Moving First? Standard App Service Level: Low Application/Process characteristics App Dev & Test Ops Costs:Value = Low Steady Load Open/Public Info Single Enterprise Small Data Small Compute = affinity range for cloud deployment Unique/Customized Service-Level: High Ops Costs:Value = High Variable Load Confidential Info Core Bus. Apps for SMBs Multi-Enterprise Large Data Large Compute Secondary Database Backup Small Org Capital constrained Lowest-quartile service delivery benchmarks Start-up; IT green field Trailing-edge IT skills Enterprise characteristics Very Large Org Capital readiily available Highest-quartile service delivery benchmarks Established; IT legacy Inter-Enterprise Apps IT skills Industry s (e.g., Collab Development, Market Limited Broadband Data/ Information Archive Supply Chain/Logistics, characteristics Channel Apps) Leading edge Plentiful Broadband Skills in limited supply Skills plentiful

23 Services: Five Essential Questions 1. What Are They? 2. Why Are They Important? 3. When Do You Need to Do Something? 4. How Are Enterprises Going to Adopt? 5. Where (and How Big) Is the Money?

24 IT Spending: Looks Modest Worldwide IT Spending* by Consumption Model , 2012 Worldwide IT Spending ($ billion) IT Services On-Premise IT % CAGR 27% 5% % 100 * Includes enterprise IT spending on Business Applications, Systems Infrastructure Software, Application Development & Deployment Software, Servers and Storage Source: IDC, October

25 But a Big Growth Impact Sources of Incremental IT Spending* Growth in 2012 vs. On-Premise * Includes enterprise IT spending on Business Applications, Systems Infrastructure Software, Application Development & Deployment Software, Servers and Storage 2009 Source: IDC IDC, October 2008

26 Recession Will Accelerate Adoption 35% 24% 6% 47%

27 Essential Guidance Services will be essential tools for addressing the biggest business demands of IT Adoption is shifting from Early Adopters to Mainstream will be part of an expanding portfolio of options for the CIO Along with Traditional On-Premise and Next-gen On-Premise SOA is the common thread linking on-premise and cloud Now: smart portfolio management across the options will be the key to success Next stage: dynamic management across all models Speed, Cost, Scale, Rich Variety of Solutions Now is the time to begin understanding the options

28 Find more research at IDC exchange (

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