Cloud Computing The Evolution of IT

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1 Cloud Computing The Evolution of IT 17 March 2010 IDC Cloud Computing Conference Moscow Copyright IDC. Reproduction is forbidden unless authorized. All rights reserved.

2 Agenda Market Overview What Is the State of Cloud Computing Today Competitive Highlights Vendor Comparison and SWOT Analysis Future Outlook The Impact of Cloud on the Future of the ICT Industry IDC Mar-10 2

3 Cloud Services Definition Cloud Services Consumer and business products, services, and solutions delivered and consumed in real-time over the Internet Key Attributes Shared, standard service built for a market (public), not a single customer Solution-packaged a turnkey offering, integrates required resources Self-service admin, provisioning; may require some on-boarding support Elastic scaling dynamic and fine-grained Use-based pricing supported by service metering Accessible via the Internet/IP ubiquitous (authorized) network access Standard UI technologies browsers, RIA clients and underlying technologies Published service interface/api e.g., web services APIs Deployment Models [Note: large gray zones between these two broad categories] Public - open to a largely unrestricted universe of potential users; designed for a market, not a single enterprise Private - designed for, and access restricted to, a single enterprise (or extended enterprise); an internal shared resource, not a commercial offering; IT Org is the vendor of the shared/std service to its users IDC Mar-10 3

4 Three Core Principals of Cloud Computing Abstraction CAPEX OPEX Scalability IDC Mar-10 4

5 IT Cloud Services Taxonomy Cloud Applications (Apps-as-a-Service) Cloud (Application) Platforms (Platform-as-a-Service) App Dev/Test App Deploy Cloud Infrastructure (Infrastructure-as-a-Service) IDC Mar-10 5

6 How Cloud Layers Map to Use Cases Cloud Applications (Apps-as-a-Service) Cloud (Application) Platforms (Platform-as-a-Service) Cloud Infrastructure (Infrastructure-as-a-Service) Application Development Software Application Server Middleware Data Access, Analysis, and Delivery Information & Data Management Integration & Process Automation Middleware Other Application Dev and Deployment Quality & Life-Cycle Tools Enterprise Portals System and Network Management Software Security Software Storage Software System Software Servers Storage Networks Clients Use Cases Collaborative Applications Content Applications Enterprise Resource Management Applications Supply Chain Management Applications Operations and Manufacturing Applications Engineering Applications Customer Relationship Management Applications IDC Mar-10 6

7 Cloud Architecture Private Designed for, and access restricted to, a single enterprise (or extended enterprise) An internal shared resource, not a commercial offering IT Org is the vendor of the shared/std service to its users Hybrid Enterprise s cloud services portfolio includes both private and public cloud services Some specific services are delivered through a combination of public and private models (e.g., private cloud bursting to a public cloud service) Public Designed for a market, not a single enterprise Open to a largely unrestricted universe of potential users IDC Mar-10 7

8 Worldwide IT Spending ($ billion) Cloud Services as a % of IT Worldwide IT Spending by Consumption Model IT Cloud Services On-Premise IT 10% % CAGR 26% 4% Source: IDC, September IDC Mar-10 8

9 IT Cloud Services Forecast Update Worldwide IT Cloud Services Revenue* by Product/Service Type Storage 9% Infrastructure Software 20% Servers 12% App Dev/Deploy 10% 2009 $17.4 billion Applications 49% Storage 14% Servers 15% Infrastructure Software 20% Source: IDC, September 2009 Applications 38% App Dev/Deploy 13% 2013 $44.2 billion * Includes revenue from delivery of Applications, Application Development & Deployment Software, Systems Infrastructure Software, Server capacity and Disk Storage capacity via the Cloud Services model; AD&D excludes online B2B messaging providers/exchanges IDC Mar-10 9

10 Worldwide IT Spending ($ billion) Cloud Services Growth Impact Sources of Incremental IT Spending Growth in 2013 Cloud vs. Traditional Products % 73% Net new IT growth = $27.3 billion IT Cloud Services growth Traditional IT product growth IT Cloud Source: IDC, September IDC Mar-10 10

11 Today an Optimally Run DC Beats Cloud Costs in the Long Run, but.. In H2 2009, IDC analyzed the costs of running 100% of a typical large businesses IT infrastructure in a DC versus the cloud: 30,000, ,000, ,000, Even with 3 year refresh cycles of 30%, DC remains much cheaper Final Score DC: 15M Cloud: 26M 15,000, Data Centre Cloud 10,000, ,000, Start up cost Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 IDC Mar Year 7 Year 8 Year 9 Year 10 After year 3, cloud costs exceeded the DC

12 Poorly Run DCs Can Very Quickly Dwarf Cloud Costs Most businesses DCs are a far cry from completely optimized. A worst case scenario of the analysis shows a different picture: 50,000, ,000, ,000, ,000, ,000, ,000, DC reaches space capacity in year 3. 50% refresh to highend servers required Year 6 requires build out for new facility + expensive refresh due to limited space Data Centre Cloud 20,000, ,000, ,000, ,000, Start up cost Year 2 Year 4 Year 6 Year 8 Year 10 Cloud costs are dynamic even if bad decisions are made initially capacity can be ramped up linearly IDC Mar-10 12

13 Summary: The State of Cloud Services Today Cloud services will be a key strategic technology that stands to rapidly grow in importance over the next 3 years. Most important points for planning include: Today Cloud Applications (SaaS) remains the most mature technology, but Cloud Infrastructure and Platforms will develop rapidly The price of cloud services will decline further as more vendors launch offerings, and competition increases Cloud services promise vastly more efficient and productive IT operations within business equating to more efficient business processes in general IDC Mar-10 13

14 Agenda Market Overview What Is the State of Cloud Computing Today Competitive Highlights Vendor Comparison and SWOT Analysis Future Outlook The Impact of Cloud on the Future of the ICT Industry IDC Mar-10 14

15 Cloud Landscape Vendor Strategies & Backgrounds Cloud Business Google Amazon SaaS Google Apps SalesForce.com PaaS IaaS Azure vcloud Computing On Demand App Engine EC2 Force.com Rackspace GoGrid Cloud IT Traditional IT Software Platform Microsoft VMware Infrastructure IBM IDC Mar-10 15

16 IBM Compute On Demand Overview Product Name Compute on Demand Cloud Service Type Year of Launch Infrastructure as a Service 2002 Strengths Very strong global reach, and support for a wide range of platforms Long experience and large degree of investment into service by IBM Opportunities Flexible variable cost model, with options for hourly, weekly, and annual rates Wide range of security and management tools within the offering Weaknesses Standards-based approach, but not agreed to by some key vendors Offering made for large enterprises and government Threats IBM focus broadening to Dynamic Infrastructure offerings Focus on buying into complete solution IDC Mar-10 16

17 Amazon Web Services Overview Product Name Amazon Web Services Cloud Service Type Year of Launch Infrastructure as a Service 2006 Strengths Weaknesses Utilizes Amazon s IT infrastructure 15 years of development and hundreds of millions invested Highly flexible, supports wide range of programming models, OS and DBs Opportunities Great for applications that require heavy processing for short duration delivering big savings Continued build out of platform enabling greater capabilities and easier usage Persistent storage costs extra must use Amazon EB3 or S3 Support seems expensive versus alternatives ranging from $100 USD to $400 USD per month Threats GoGrid, Google App Engine, and IBM offer competing services Amazon lacks customer relationship with enterprise IT buyers IDC Mar-10 17

18 Rackspace CloudServers Overview Product Name Cloud Servers Cloud Service Type Year of Launch Infrastructure as a Service March 2006 Strengths Allows combination of cloud and dedicated servers Standards-based approach to API based on DMTF Opportunities Global expansion leveraging Rackspace s DCs in UK and Asia One of the most open and flexible APIs Weaknesses Currently only available in US Currently only supports Linux instances (Windows instances in beta) Threats Limited tools means lots of manual monitoring and optimization Overlap and differentiation from hosting business IDC Mar-10 18

19 GoGrid Cloud Hosting Overview Product Name Cloud Hosting Cloud Service Type Year of Launch Infrastructure as a Service April 2008 Strengths Very high performance specs versus other platforms Free support, and management tools Weaknesses Majority of operation US-centric not yet a global player No dynamic scaling for workloads Opportunities Flexibility: allows pure cloud hosting and hybrid hosting API supports Java, Python, PHP, and Ruby Threats Smaller vendor, means potentially uncertain future 100% uptime guarantee has lots of fine print IDC Mar-10 19

20 Windows Azure Overview Product Name Windows Azure Cloud Service Type Year of Launch Platform as a Service Beta since July 2009 launch Feb 2010 Strengths Built to allow applications to run in cloud, or partly on premise and partly in cloud Uses Visual Studio SDK. Extensive automation features built in Opportunities Easy leap for businesses standardized on Microsoft Automation features for load balancing, VM management, mean lower barrier for entry Weaknesses Limited support for non Microsoft OS, programming languages, and DBs Current cost model problematic if only running small applications Threats Main competition at the moment coming from Amazon and Google Current reliance on Microsoft development stack may scare users (lock in) IDC Mar-10 20

21 Force.com Overview Product Name Force.com Cloud Service Type Year of Launch Platform as a Service September 2007 Strengths Developers can build on existing salesforce.com data objects, security models, user interfaces, etc. Over 130,000 custom apps deployed Opportunities Integration with 800+ salesforce.com apps ISV partnerships with BMC, and CA allows more routes to market Weaknesses Less control over platform versus alternatives No on-premise option can only run in salesforce.com hosted environment Threats Upper limit on growth??? Platform versus salesforce.com s core business Potentially very limiting in terms of portability IDC Mar-10 21

22 Google App Engine Overview Product Name Google App Engine Cloud Service Type Year of Launch Platform as a Service Beta since April 2008 Strengths Free to start: 500 MB storage, and 5 million page views per month Automatic scaling and management. No VM tailoring required, just write your app Opportunities Extremely low barrier for entry, ideal for pilots and testing Still in Beta expect development of new features Weaknesses Python is main development language. Java is supported but not all classes No support for relational DB; must use Google Bigtables Threats Strong lock in potential. Powerful but non standard APIs Still in Beta.. IDC Mar-10 22

23 VMware vcloud Overview Product Name vcloud Cloud Service Type Year of Launch Platform as a Service August 2009 Strengths Extension of VMware DC technology, potentially very good fit for VMware customers Growing eco-system of partners Weaknesses Still in very early stages of building out partner offerings Some aspects of the technology still under development Opportunities Good fit for businesses wishing to develop hybrid cloud architecture Compelling argument for portability given that eco-system of providers will all use same underlying platform and standards Threats Support for hypervisors outside of VMware at the moment is limited (and could remain so) Will take time to develop capabilities that already exist in other offerings IDC Mar-10 23

24 Agenda Market Overview What Is the State of Cloud Computing Today Competitive Highlights Vendor Comparison and SWOT Analysis Future Outlook The Impact of Cloud on the Future of the ICT Industry IDC Mar-10 24

25 Comparing the Two Key Aspects of Current Cloud Offerings Cloud providers today can be compared on two metrics: Automation and Adaptability. The basic strengths and weaknesses of each approach: STRENGTH WEAKNESS Automation Lower Cost: Easier migration & management Inflexibility in development and infrastructure environment Adaptability Capable of running almost any type of system, regardless of development platform or infrastructure Significant effort required to migrate, optimize and manage system within cloud environments IDC Mar-10 25

26 Cloud User Surveys - Challenges Q: Rate the challenges/issues of the 'cloud'/on-demand model Security Availability Performance On-demand paym t model may cost more Lack of interoperability standards Bringing back in-house may be difficult Hard to integrate with in-house IT Not enough ability to customize 87.5% 83.3% 82.9% 81.0% 80.2% 79.8% 76.8% 76.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% (Scale: 1 = Not at all concerned 5 = Very concerned) Source: IDC Enterprise Panel, 3Q09, n = 263, September 2009 IDC Mar-10 26

27 The Inhibitors Businesses Recognize for Cloud Adoption Security Encryption and security protocols Ensuring secure multi-tenant access to data Resilience against virus attack Availability How do we measure availability in the cloud? What does up time actually mean and how do we measure it? Availability versus usability the users suppliers perspective versus the users perspective Bandwidth Ensuring accessibility across the country / region / globe Build out of wireless networks (3G/LTE and WiMax) IDC Mar-10 27

28 The Real Problems on the Horizon That Will Make or Break Cloud Services Standards Common standards on development, deployment, and migration/transition Ability for businesses to move a system from one cloud to another no lock In Differentiation Different providers with different value propositions big vendors, telcos, hosting providers. Specialization and the emergence of best-of-breed providers in specific areas Competition Price competition and eco system competition No one dominant winner IDC Mar-10 28

29 The Fragmentation of Cloud Services Today The Future Multi Purpose Clouds High Security Cloud Test & Dev Cloud High Availability Cloud HPC Cloud Comms Cloud Low Cost Cloud IDC Mar-10 29

30 What Will the Future Look Like? Assuming the vendors take the natural path towards open standards and then are required to differentiate, businesses should expect the following: The costs of cloud services will drop even further as economies of scale ramp up No clear cut dominant winner. The era of cloud computing will embody a more fractured landscape of technology providers Vastly more efficient and productive IT operations within business equating to more efficient business processes in general IDC Mar-10 30

31 Contact Thank You Matthew McCormack IDC Mar-10 31

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