2009 CLOUD COMPUTING TRENDS REPORT

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1 Irvine Louisville San Francisco 2009 CLOUD COMPUTING TRENDS REPORT February 2009

2 TABLE OF CONTENTS The Survey Page 3 The Participants Page 4 Executive Summary Page 5 Familiarity with Hosting Page 6 Cloud Computing Defined Page 7 Cloud Computing Drivers Page 8, 9 and 10 Cloud Computing Obstacles Pages 11 Pricing & Timing Pages 12 IT Services in the Cloud Page 13 Solutions in the Cloud Page 14 Ways to Pay Pages 15 Further Analysis Page 16 About Hosting.com Page 17

3 THE SURVEY Hosting.com proactively engages with clients and prospects to effectively understand their business goals to build solutions that are both client relevant and applicable. A core component of Hosting.com s client engagement strategy is the use of surveying tools. The Cloud Computing Trends Survey was launched on December 17, 2008 and respondents had until January 23, 2009 to respond. The survey was conducted and hosted electronically. The survey asked approximately 11 questions and took between 6 and 10 minutes to complete. In sharing the results, Hosting.com will provide general demographic information about respondents and the companies they represent; however, Hosting.com will not reveal the specific identity of any respondent or company.

4 THE PARTICIPANTS 644 Respondents C-level Executives and Business Decision Makers Over 40% were CXOs, President, Owner or Vice President Industries All major industries represented including Financial Services, Retail, Social Networking, Healthcare, Manufacturing, IT Service Providers, Marketing and Advertising, Non Profits and City Governments. Number of employees 69% had fewer than 100 employees 11% had greater than 1,000 employees Annual Revenues Ranged from less than $1M to over $100B 64% are less than $10M 13% are greater than $100M

5 EXECUTIVE SUMMARY This Cloud Computing Trends Report introduces new data into the cloud marketplace. This survey provided insight into the expectations small, medium and large businesses have of cloud computing, their intended uses, reasons for adopting, and expected time-frames for implementing cloud-based solutions. Surprisingly, this e-book reveals that there is little difference between how larger companies and small businesses will utilize Cloud Computing. Specifically: The driving factors for adopting cloud services are nearly the same for all company sizes. Business size plays no role in how quickly cloud technologies will be adopted. Executive leadership in small businesses list cloud computing as a priority at the same rate as executives with large companies. Small businesses are likely to receive a greater amount of IT Services from a cloud platform. Increased education on cloud benefits, solutions and design is needed for businesses of all sizes. As cloud providers continue to create cloud-based solutions that provide reduced costs, scalability, improved service level agreements, increased flexibility and overall performance they must keep in mind a new force in cloud computing that will demand immediate, measurable results small businesses is slated to be a banner year for cloud computing providers and solutions. Until now, the expected primary source for increased revenues was large companies, specifically for test and development environments. However, over the past several months decreased revenues and operating budgets have driven small businesses to explore and implement production cloud environments. `

6 FAMILIARITY WITH HOSTING Which services does your company currently receive from a hosting provider? Multiple selections were allowed Web Hosting 72% Hosting 54% Database Hosting Application Hosting 32% 30% Online Storage 21% This intended purpose of this question was to establish the respondents familiarity with hosted services and extending IT functions to an external provider. 90% of respondents currently use a hosting provider in some capacity.

7 CLOUD COMPUTING DEFINED When you hear the term cloud-computing, what definition first comes to mind? 47% Fundamental change in how technology services are provided 19% A tool, if delivered properly, that can provide instant value to my company 9% A tool that might work for another company 13% Another buzzword all hype 12% Unsure Answered Either Fundamental Change or Instant Value 250+ Employees = 82% 1-49 Employees = 62% Analysis: Two-thirds of the respondents believe Cloud Computing will have a major impact on the IT industry. Contrastingly, 22% were familiar with the term but did not believe it would provide value to their company. The chart above illustrates that larger companies view the cloud more positively; primarily, due to their familiarity with cloud computing solutions. Less than 1% of respondents from companies with 250+ employees were unsure how they would define cloud computing. Most service providers, vendors and software manufacturers have adjusted their service offerings for the booming trend toward Cloud Computing - they must keep the 62% of small businesses in mind when developing these solutions.

8 REDUCED COSTS DRIVING CONSUMERS TO ENGAGE CLOUD COMPUTING To the best of your knowledge, please select the three most important factors that will drive companies to invest in cloud computing. After selecting the three, please place them in order of importance. Ranked Number 1 Ranked in Top 3 Cost Savings 34% 65% Uptime/High Availability 17% 46% Performance 12% 43% Consumption-based Pricing 12% 33% Scalability 7% 40% Flexibility 6% 41% Rapid Deployment 5% 24% Continued

9 FACTORS DRIVING CONSUMERS TO CLOUD COMPUTING Company-size did not alter the expectations that our respondents have of cloudcomputing solutions. The three most important factors driving consumers to invest in Cloud Computing are nearly the same for all businesses. Likewise, the two least important factors when stacked against the other drivers listed on page 8 were exactly the same Employees Employees 1-49 Employees Top 3 In order of ranking 1. Reduced Costs 2. Uptime 3. Scalability 1. Reduced Costs 2. Uptime 3. Scalability 1. Reduced Costs 2. Uptime 3. Performance 2 Least In order of ranking 1. Rapid Deployment 2. Consumption-based Pricing 1. Consumption-based Pricing 2. Rapid Deployment 1. Rapid Deployment 2. Consumption-based Pricing Continued

10 MOST & LEAST IMPORTANT FACTORS DRIVING CONSUMERS Company-size did not alter the expectations that our respondents have of cloudcomputing solutions. The three most important factors driving consumers to invest in Cloud Computing are nearly the same for all businesses. Likewise, the two least important factors when stacked against the other drivers listed on page 8 were exactly the same Employees Employees 1-49 Employees Top 3 1. Reduced Costs 2. Uptime 3. Scalability 1. Reduced Costs 2. Uptime 3. Scalability 1. Reduced Costs 2. Uptime 3. Performance 2 Least 1. Rapid Deployment 2. Consumption Pricing 1. Consumption Pricing 2. Rapid Deployment 1. Rapid Deployment 2. Consumption Pricing Continued

11 CLOUD COMPUTING OBSTACLES To your best knowledge, what are the top three obstacles Cloud Computing providers must overcome? (Multiple selections were allowed) 64% 58% 40% 39% 30% 27% 21% 21% Analysis: Security also top concern in other Cloud Computing Studies including recent surveys by Third Brigade, Information Week and CIO Research.

12 ENTERPRISE-SPECIFIC OBSTACLES Large companies expect higher levels of Security and Control. Companies 250+ employees - 75% selected Security (selected by 58% of all others) 45% selected Control (selected by 38% of all others) Due to their size, larger companies are more frequently the targets of malicious data attacks and have a greater need to protect their assets due to compliancy and regulatory requirements. Types of Cloud Computing solutions Enterprises will pursue include: R&D projects, quick promotions, online collaboration, partner integration, social networking, new business ventures. Analysis: Security for companies of all sizes will become less of a concern due to advances in virtualized technologies that have produced increased security options to meet any organizations business demands. Recent advances, especially those made by VMWare have made shared virtual cloud environments as secure as single-tennant environments.

13 EXECUTIVE ORDERS Has Cloud Computing been identified as a priority by your organization s executive leadership? ALL RESPONDENTS: 24% - YES 61% - NO 15% - UNSURE % Answering Yes 250+ Employees 25% Employees 23% 1-49 Employees 24% Analysis: As companies continue to recognize the monetary and technology benefits of Cloud Computing, the number of executives identifying Cloud Computing as a priority will increase. Factors such as the adoption of Software-as-a-Service (SaaS) models, Virtualization and access to broadband and wireless networks provide mobile workforces with new approaches for delivering and receiving business applications. Again, there is no difference between small and larger companies.

14 TIMING How quickly do you think Cloud Computing and its benefits will evolve to have an impact on your company? 33% - NEXT 12 MONTHS 17% - NEXT 24 MONTHS 36% - UNSURE 5%-NEVER Next 12 Months Unsure 250+ Employees Employees 1-49 Employees 33% 27% 31% 25% 34% 40% Analysis: Significant market opportunity exists for cloud providers within small businesses. 34% of respondents believe Cloud Computing will evolve to impact their business in the next 12 months. 40% were unsure which providers can use as an opportunity to effectively engage, educate and build solutions that provide tangible benefits for small businesses.

15 IT SERVICES IN THE CLOUD Over the next 12 months, what percentage of your IT services do you estimate will be delivered from a cloud platform? More Than 75% 6% More Than 80% 51% - 75% 8% With 50% % - 50% 12% 10% - 25% 23% 1% - 9% 39% Possible Unsure Response No Intention of Using 12% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Analysis: Compared to a September 2008 study by InformationWeek, the likelihood of organizations to deliver their IT services on a Cloud platform has doubled (13% responded that greater than 25% of their IT services would be in the Cloud) indicating that Cloud Computing is trending upward. An appealing aspect of Cloud Computing is little knowledge is required to set up, configure and maintain the technology and the supporting infrastructure.

16 WEB APPLICATIONS BEST-SUITED FOR CLOUD COMPUTING To your best knowledge, what two solutions are best-suited for a Cloud Computing environment? 70% Web Applications 7% File/Print Server 41% Database Server 7% Traditional IT 37% Application Server 7% Other (Popular write-ins: Media, File, Raw 20% Testing/Development storage, ) Hosting Web Applications was the most popular solution for all companies. The two most popular based on company size were: 2 Most Popular 250+ Employees 1. Web Applications 2. Application Server Employees 1. Web Applications 2. Application Server 1-49 Employees 1. Web Applications 2. Database Server

17 WAYS TO PAY Select the manner in which you would most prefer to pay for Cloud Computing services? Unsure 34% Month-to-Month, No contracts, Charged on Usage 32% Annual Contract, Based on Resource Needs and Bursting, 18% Month-to-Month, No Contracts, Base Fee Plus Resource Bursting 16% Analysis: There was a large difference between how small companies wanted to pay for cloud computing services when compared with larger companies. 32% of companies with 250+ employees preferred annual contracts compared to 13% of companies with 1-49 employees. For unpredictable businesses, paying for services used is alluring; until, the first bill with multiple overages and unexpected costs is received. Unsure responses were evenly distributed between all company sizes.

18 EDUCATION NEEDED AND WANTED The survey data convincingly illustrates the need for additional education around cloud computing, its uses and benefits. Examples demonstrating this need include: 25% Define Cloud Computing as a Buzzword or Are Unfamiliar with the Term 36% Are Unsure When Cloud Computing Will Impact Their Business 12% Have No Intention of Using Cloud Computing 39% Foresee 1-9% of Their IT Services Being in the Cloud in 2009 How Respondents Prefer to Learn More About Cloud Computing 49% - Read Articles and White Papers 29% - Webinars 42% - Test it Myself 21% - Discussions with Providers Analysis: Across all industries and all company sizes there is a significant number of individuals interested in Cloud Computing that have not been presented with compelling or relevant information regarding Cloud Computing. The willingness of those that are familiar with Cloud Computing to adopt it combined with the large number of companies that are still seeking information and have not formed a conclusive opinion signals a strong market opportunity. Innovative providers that develop client-driven solutions will continue to shape the Cloud Computing landscape.

19 FURTHER ANALYSIS Thank you for your interest in the Cloud Computing Trends Report. To schedule a personalized, in-depth analysis for your organization, please Aaron Hollobaugh to schedule an appointment. Hosting.com and IT Business Edge will be launching a Cloud Computing White Paper at the end of March. The White Paper will provide in-depth analysis of Cloud Computing s practical business benefits. Hosting.com will be coordinating webinars to share this information with interested parties in March & April. All individuals that download the ebook will be invited to attend. Visit for more information about Cloud Computing Solutions provided by Hosting.com and to participate in the CloudNine Beta (90 days of complimentary Cloud Computing Hosting).

20 ABOUT HOSTING.COM Hosting.com provides enterprise colocation, cloud computing, dedicated hosting, managed hosting, disaster recovery and business continuance services to a global customer base demanding a high level of security, reliability and responsiveness. Hosting.com monitors, manages, and enhances the web based platforms of Web 2.0 companies, software as a service providers (SaaS), content distribution networks (CDN), and medium to large enterprises whose web presence is crucial and high availability mandatory. Hosting.com currently operates SAS 70 certified data centers in Louisville, Kentucky; Irvine, California; San Francisco, California and is currently expanding into Silicon Valley and Northern Virginia. For more information, please visit or call the company at

21 SOURCES Cloud Computing Survey: IT Leaders See Big Promise, Have Big Security Questions (October 21, 2008). CIO Research. Cloud Computing Survey (September 2008). Information Week. Cloud Computing Security. Third Brigade.

22 Irvine Louisville San Francisco 2009 CLOUD COMPUTING TRENDS REPORT February 2009

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