2013 Cloud Computing Outlook: Private Cloud Expected to Grow at Twice the Rate of Public Cloud

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1 Private Cloud Expected to Grow at Twice the Rate of Public Cloud In This Paper Security, privacy concerns about the cloud remain SaaS is the most popular cloud service model in use today Microsoft, Google and Amazon still ruling the cloud market Executive Brief A QuinStreet Excutive Brief. 2013

2 Executive Summary Private cloud is the most popular cloud deployment model, according to a survey of IT professionals and executives who are involved in the cloud computing purchase process. The survey was conducted by Palmer Research and QuinStreet Enterprise, the publisher of well-known IT media brands that include eweek, Datamation and CIO Insight. The survey found 65 percent of respondents use or plan to use the private cloud deployment model. Despite the best efforts of cloud computing vendors, and increased adoption in recent years, concerns around security (mentioned as extremely or very inhibiting by 70 percent of respondents), privacy (69 percent), uptime (62 percent) and the control of data (61 percent) remain the most likely inhibitors to adopting cloud computing services and applications. Software as a service (SaaS), which pre-dates the term cloud computing and goes back to the application service provider (ASP) concept of the late 1990s and early 2000s, is the most popular form of cloud computing service used by survey respondents. Nearly 80 percent use or plan to use SaaS. The survey also examined attitudes toward cloud computing vendors. When measuring unaided brand awareness, respondents mentioned popular consumer-tech crossover brands the most, with 32 percent naming Amazon, 19 percent Microsoft and 11 percent Google. When discussing purchasing criteria for cloud computing, respondents cited system reliability as the most important criteria when they were in the initial stages of exploring solutions, regardless of the respondent s company size. Later in the sales cycle, when selecting vendors to include in an RFP, respondents cited customer service (90 percent) as important. Cloud Computing Deployment Models There are multiple ways to deploy cloud computing, including public clouds that offer cloud services to anyone willing to pay for them; private clouds deployed by organizations for use by those to whom they grant access; hybrid clouds, which combine elements of public and private deployment models; and community clouds, where organizations that share certain goals or concerns share a common infrastructure. From the beginning, concerns over security and privacy have been listed as inhibitors to cloud adoption, and that still holds true today. Seventy percent of respondents find security extremely or very inhibiting, the survey found, while 69 percent said the same about privacy, control and monitoring. Given these stubborn concerns over security and privacy, it s not surprising that the private cloud deployment model is the most popular among survey respondents, with 36 percent currently using a private cloud and 1

3 another 29 percent planning to use a private cloud. Private clouds allow businesses to take advantage of the efficiency of cloud computing without exposing their data and applications to those outside the organization. The public cloud deployment model was not far behind private clouds, with 32 percent of respondents using public clouds and 14 percent planning to use them. Hybrid and community cloud deployments have lower rates of usage among survey respondents (11 percent and 8 percent, respectively) and seem less familiar based on the number of respondents who said they didn t know or weren t sure they were using such models. Private cloud is the predominant cloud computing deployment model, and it looks to be growing at twice the pace of the public cloud model. It s clear there is a tremendous opportunity for vendors that offer private cloud infrastructure and tools. Respondents also show higher rates of interest in hybrid clouds in the future compared to public clouds. Once again, concerns over data security and control are likely the reason respondents are looking to keep at least some of their cloud infrastructure in house. Public cloud providers might want to consider tweaking their offerings or messaging to increase their appeal to customers choosing private or hybrid cloud deployments, whether because of security and privacy concerns or other factors. Cloud deployment model usage 100% 80% 60% 3 29% 5 67% 82% 40% 14% 0% 3 32% 10% 11% 8% Private cloud Public cloud Hybrid cloud Community cloud Currently using Planning to Use in 12 months Don't Know/Not Sure Q. Which of the following cloud deployment models are you currently using, planning to use in the next 12 months, not sure if you will use, don't know. N = 341 2

4 Within private or hybrid clouds, organizations have a choice on how exactly they want to deploy their cloud environment. They can handle it in-house if they have the skills, staff and expertise; they can turn to an independent cloud provider that specializes in clouds; or they can use a third-party hosting service like those that traditionally offer Web hosting. In what is probably another nod to security and privacy concerns, nearly half (46 percent) of respondents using or planning to use a hybrid or private cloud handle deployment in-house. Thirty percent are using third-party hosting services, and 22 percent are using independent cloud providers. Third-party vs. in-house deployments 2% 4 30% Third party hosting service Independent cloud provider In-house deployment Other 22% Q. : Which of the following ways are you deploying or planning to deploy your private or hybrid cloud? (Please check only one) BASE: Currently using or planning to use a private cloud or hybrid cloud N = 244 Types of Cloud Services The survey asked respondents about three cloud service types: software as a service (SaaS), which allows users ondemand access to software applications hosted in the cloud; infrastructure as a service (IaaS), in which a cloud provider hosts physical and virtual machines and computing resources; and platform as a service (PaaS), in which a cloud provider hosts an entire computing platform, possibly including the operating system, programming language execution, databases and Web server, so software developers can more efficiently run software applications without paying for the underlying infrastructure. Unsurprisingly, the SaaS cloud service type is the most popular service used among survey respondents. SaaS applications are becoming widespread throughout the business and personal lives of IT and non-it users alike, with companies like 3

5 Salesforce.com, Google s Gmail, and many mobile and social media applications living in the cloud. According to the survey, 45 percent of respondents are using SaaS and 33 percent plan to use it. Adoption by cloud service type 50% 40% 30% 4 41% 41% 33% 34% 34% 23% 2 24% 10% 0% SaaS IaaS PaaS Using Plan to Use in 12 Months No plans to use Q. At what stage or stages is your organization in for providing the following types of services: SaaS, IaaS, PaaS? N = 341 All Materials Confidential Among the respondents currently using or planning to use SaaS, reliability, security and performance were the benefits most frequently cited as important or extremely important. Important SaaS benefits 1 Reliability Security Performance Cost Overall ease of use Saves money and time Scalability Adherence to SLAs Eases installation Reduces deployment time Devide independence/location Ease of upgrading software Drives IT efficiency API interfaces Multi-tenancy 93% 90% 88% 81% 81% 80% 7 70% 70% 69% 68% 6 57% 50% 0% 40% 60% 80% 100% Q. Please rate the importance of the following benefits, provided by using SaaS on a 5 point scale. Summary of top 2 box. Currently using or plan to use. N = 264 4

6 IaaS is used by 26 percent of the survey respondents, with another 34 percent saying they are planning to use it. Businesses that use IaaS tend to use it to supplement their existing infrastructure. A retailer might turn to an IaaS provider to provide scalability during the busy holiday season rather than investing in infrastructure that will be underutilized for much of the year. Enterprises can also use IaaS to make it easier for internal business units to access the computing resources they need in a private cloud deployment. It s not surprising, then, that scalability, cost savings and improved flexibility were the most commonly cited benefits of IaaS among survey respondents. Important IaaS benefits Scalability Cost savings Improves flexibility Speeds up maintaining/monitoring IT File based storage Integrates with on-premise data center Virtual machines Load balancers Cloud carries (VPNs) Hypervisors Image libraries 83% 80% 79% 7 73% 73% 71% 68% 63% 61% 59% 0% 40% 60% 80% 100% Q.. Please rate the importance of the following benefits, provided by using IaaS on a 5 point scale. Summary of top 2 box. Currently using or planning to use. N = 202 Compared to SaaS, in which deployments are often relatively simple and require nothing more than an Internet connection and Web browser on the user s end, IaaS implementations can be more complicated because of their need to work with existing infrastructure. With more respondents planning to use IaaS than are actually using it, the survey also asked respondents how they are maximizing their IT use and scaling their existing infrastructure. Nearly half (47 percent) of respondents said some of their infrastructure is currently virtualized but there is room for improvement, while 23 percent said they are in the process of implementing a cloud infrastructure. 5

7 Maximizing IT infrastructure use 60% 40% 47% 52% 48% 40% 28% 30% 23% 18% 11% 11% 13% 12% 0% Some infrastructure is virtualized, but there is scope for improvement We are in the We have virtualized process of most of the critical implementing infrastructure cloud infrastructure We have implemented a private cloud infrastructure Total < 50 Employees Employees > 1,000 employees Q. How are you maximizing the utilization of IT infrastructure? N = 341 When asked about how they scale their IT infrastructure to meet business needs, 43 percent of respondents admitted they scale IT resources on an ad hoc basis, while only 10 percent said they dynamically scale and design on-premise and cloud services. Scaling IT to meet business needs 60% 5 40% 43% 3 40% 4 28% 19% 14% 31% 22% 14% 10% 10% 10% 0% We scale IT resources on an ad hoc basis We have no formal processes for scaling IT We proactively measure scale IT based on consumption We dynamically scale and design on-premise and cloud services Total < 50 Employees Employees > 1,000 employees Q. How does your IT Infrastructure scale to meet changing business needs? N = 341 6

8 PaaS is the least used cloud service type among survey respondents, which isn t surprising because its offerings are the most niche of the three types addressed in the survey. Only 24 percent of respondents said they are currently using PaaS, but like IaaS, more than one-third of respondents said they are planning to use PaaS in the future. When discussing the benefits of PaaS, respondents using or planning to use PaaS cited the reduction of daily operational costs (81 percent rated it as extremely or very important) and operating system support (78 percent) as the leading benefits. Important PaaS benefits Reduces daily operational costs OS Support Enables scale up/down Helps customize business needs Speeds web server functions/deployment Lower upfront costs Facilitates database access Speeds development of new apps 81% 74% 73% 72% 70% 72% 68% Programming language environment 5 0% 40% 60% 80% 100% Q.. Please rate the importance of the following benefits, provided by using PaaS on a 5 point scale. Summary of top 2 box. Currently using or plan to use. N = 200 It s important to remember that the SaaS model of cloud service goes back more than a decade, while IaaS and PaaS are more recent developments in cloud services. But adoption of IaaS and PaaS is picking up quickly, with as many respondents planning on using PaaS and IaaS in the future as SaaS. Future surveys may well find more equal levels of adoption among the three cloud service types, especially IaaS and SaaS. 7

9 Cloud Computing Vendors and Brands Cloud computing is a very busy market with nearly every major IT vendor offering cloud services, cloud-based applications or cloud-related products. The vendors include traditional IT heavyweights like IBM and Microsoft, companies that bridge the consumer and tech space like Amazon and Google, and the aforementioned hosting companies, like Rackspace, that are making a play for cloud computing business. Given Amazon s strong brand appeal across consumer and IT lines, the fact that it has a large, established user base, and its penchant for marketing and easy online transactions, it s probably not surprising that the company led the way in unaided brand awareness among the cloud computing vendors at 32 percent. (The question read: When you are evaluating a cloud computing vendor or selecting vendors to send an RFP, which vendors/brands come to mind? ) Microsoft (19 percent) and Google (11 percent) followed Amazon in unaided awareness. When respondents were asked what brands they are currently using for cloud computing, Microsoft was mentioned most often, (22 percent of respondents). Google (19 percent) was a close second, followed by Amazon (16 percent). It s also worth noting that a number of vendors, including Google, VMware, Salesforce, Oracle, Cisco, Symantec and AT&T, had usage rates among respondents that exceed their unaided brand awareness. Unaided brand awareness vs. usage. 3 30% % 0% Amazon Microsoft Google IBM Rackspace HP Dell Citrix VM Ware Salesforce Cisco Symantec Apple Box AT&T Verizon Oracle SAP Intel EMC Usage Unaided awareness Q. When you are evaluating a cloud computing vendor or selecting vendors to send an RFP, which vendors/brands come to mind? N = 341 Q: Please indicate which cloud computing vendors listed you are using,. Please check all that apply N = 341 8

10 Microsoft, Google and Amazon also led the way among survey respondents when asked which cloud computing vendors they are evaluating. More than one-third (34 percent) said they are evaluating Microsoft, 32 percent said Google, 31 percent said Amazon, and 24 percent each cited IBM and VMware. Beyond evaluating, the survey asked respondents which vendors they are selecting for RFPs. Here Microsoft scored 6 percent, slightly behind the 9 percent each that were choosing Google, Amazon and Rackspace for RFPs. One takeaway from this data is that the brand halo effect whether or not a brand scores highly in unaided brand awareness or whether it s being evaluated doesn t necessarily translate into inclusion in an RFP. Cloud Service Brand Consideration Microsoft 34% 32% Google 9% Amazon 31% 9% IBM 24% VM Ware 24% 23% Cisco Rackspace 9% HP Evaluating Citrix Selecting for RFP Symantec EMC Oracle Salesforce Intel AT&T 18% 18% SAP 0% 10% % 3 40% Q. Please indicate which cloud computing vendors listed you are evaluating or selecting for an RFP.. Please check all that apply. (N = 341) 9

11 Purchase Considerations The survey also asked respondents how they went about shopping for cloud computing solutions, asking what was important to them when they started searching for vendors, what was important in the later stages of vendor selection and what types of resources they found helpful when making a decision. In the early stages of evaluating cloud computing vendors, system reliability (92 percent), technology expertise (86 percent), and pricing and maintenance (80 percent) were listed as the most important criteria. Most important purchasing criteria: early stage Systems reliability Tech expertise Pricing & maintenance Vendor reputation Ease of working with tech teams 92% 8 80% 74% Total solutions provider 64% Sales training for team One stop shop Market leadership 50% 47% 52% 0% 40% 60% 80% 100% Q. When you are in the initial stages of evaluating cloud computing vendors, please rate the importance of the following criteria on a five point scale. < Summary of Top 2 Box: (5,4) N = 225 In the later stages of vendor evaluation, survey respondents seem to be focusing more on the interactions they expect to be having with their chosen vendor. Ninety percent said customer service was the most important late-stage criteria. Having a well-known brand was a lesser factor among survey respondents, which might explain why several vendors ranked higher in usage among respondents than in unaided brand awareness, and why an evaluation doesn t always lead to inclusion on an RFP. Those considering the purchase of cloud solutions appear to place more weight on service and on finding the right solution for their needs than brand. 10

12 Most important purchasing criteria: late stage Customer service Best value prop Free test drives Customer references/case studies Ability to meet complicance standards Capabilities combining all cloud Peer/colleague recommendations Well known brand Vendor comparison charts ROI calculations Best practices guide 90% 82% 72% 70% 69% 64% 61% 0% 40% 60% 80% 100% Q. When you are selecting vendors for an RFP for cloud computing, please rate the importance of the following criteria on a five point scale. < Summary of Top 2 Box: (5,4) N = 67 Survey respondents also showed a desire to try out cloud computing solutions before they buy them. When asked about important information sources while making a decision, software trials led the pack with 71 percent of respondents. At the RFP stage, trials again proved popular. When respondents who were selecting vendors for RFPs were asked which resource elements were most valuable in driving their decision, 78 percent said free vendor test drives. Survey Methodology The survey was conducted online by Palmer Research using an invitation sent to IT professionals and executives in the QuinStreet Enterprise database. All respondents were involved in the cloud computing purchasing process. The survey was completed by 341 qualified professionals on April 2 and 3, The margin of error is +/- 5.3% at 95 percent confidence level. 11

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