RESEARCH REPORT. 5th Annual Trends in Cloud Computing

Transcription

1 RESEARCH REPORT 5th Annual Trends in Cloud Computing NOVEMBER 2014

2 5 th $Annual$Trends$in$Cloud$Computing:Section1 1 AboutthisResearch CompTIA s5 th $Annual$Trends$in$Cloud$Computing$studybuildsonpreviousCompTIAresearchinthe cloudcomputingspace,furtherexploringtrends,challenges,andopportunities.theobjectivesofthis studyinclude: B CollectinformationonendBuserpurchasedriversand/orinhibitors B AssessdepthofcloudusageandwaysinwhichitischangingITbehavior B Evaluateadoptionpatternsamongendusersandmaptochannelbusinessmodels B Tracktheexperienceofchannelpartnersofferingcloudsolutions,buildingcloudpractices B Measureimpactofcloudcomputingonchannelroles/vendorrelationships Thisstudyconsistsoffivesections,whichcanbeviewedindependentlyortogetherassectionsofa comprehensivereport.theindividualsectionsandfullreportcanbeviewedatthecloudcomputing researchpageonthecomptiawebsite. Section1:MarketOverview Section2:UsagePatterns Section3:Challenges Section4:BusinessModelAnalysis Section5:ChannelDynamics Thisstudywasconductedintwoparts. PartI:quantitativeonlinesurveyof400ITandbusinessprofessionalsintheUnitedStatesinvolvedinIT decisionbmaking(akaendusers).datacollectionoccurredduringjune2014.themarginofsampling erroratthe95%confidencelevelis+/b5.0percentagepoints.samplingerrorislargerforsubgroupsof thedata. PartII:quantitativeonlinesurveyof400ITfirmsintheUnitedStates(akachannel).Datacollection occurredduringjuly2014.themarginofsamplingerroratthe95%confidencelevelis+/b5.0 percentagepoints.samplingerrorislargerforsubgroupsofthedata. Forbothsurveys,CompTIAworkedwiththeresearchfirmResearchNowtofacilitatedatacollection usinganindependentpanel.aswithanysurvey,samplingerrorisonlyonesourceofpossibleerror. WhilenonBsamplingerrorcannotbeaccuratelycalculated,precautionarystepsweretakeninallphases ofthesurveydesign,collectionandprocessingofthedatatominimizeitsinfluence. CompTIAisresponsibleforallcontentcontainedinthisseries.Anyquestionsregardingthestudyshould [email protected]. CompTIAisamemberoftheMarketingResearchAssociation(MRA)andadherestotheMRA scodeof MarketResearchStandards.

3 SECTION 1: Market Overview

4 KeyPoints InthefiveyearsthatCompTIAhasbeenstudyingcloudcomputing,thetopichasshiftedfroma potentialgamebchangertoanessentialingredientofmodernit.idcestimatesthepubliccloud markettohavereached$45.7billionin2013,andtheyexpectittogrowat23%cagrthrough2018. Ontheprivatecloudside,IDCestimatesthatworldwidespendingonhostedprivatecloudservices willsurpass$24billionby2016. BothchannelfirmsandendusersareexperiencingdisruptionastheymovetowardscloudBenabled infrastructureandsolutions.fortybonepercentofchannelfirmscitecloudasacatalystfornew directionsrequiringbusinesstransformation.fromanenduserperspective,over90%ofu.s.firms claimsomeformofcloudcomputing,andover60%ofthosefirmsstatingthatcloudcomponents representatleastathirdoftheiroverallitarchitecture. Althoughadoptionratesarehighandmarketnumbersarepositive,thereisstillconfusionrelatedto cloudcomputing.twentybeightpercentofsurveyrespondentsidentifyingascloudusersselected neitherprivatenorpubliccloudastheirusagemodel,pointingtoconfusionoverterminologyorlack ofrecognitionfortheircloudmodel.clearingupthisconfusionshouldnotbeaprimaryactivitybut insteadshouldbeusedasneededwhilediscussingoptionsforitoperations. 5 th $Annual$Trends$in$Cloud$Computing:Section1 2

5 5 th $Annual$Trends$in$Cloud$Computing:Section1 3 TheFirstFiveYearsofCloudComputing InthefiveyearsthatCompTIAhasbeen studyingcloudcomputing,thetopichas shiftedfromapotentialgamebchangerto anessentialingredientofmodernit.in fact,thedisruptionthatcloudcomputing bringstobackbendcomputing (traditionallydonebyonbpremise mainframesandservers)alongwiththe disruptionthatmobilitybringstofrontb endcomputing(traditionallydoneby desktoporlaptoppcs)isusheringina neweraofit. Thesignificanceoftheneweracomes fromthechangesthatwilltakeplacein organizationalworkflowandinthe distributionoftechnologyproductsand services.fromanenduserperspective, companiesmayinitiallyviewcloud computingasanalternativeoptionfor existingprocessesandapplications. Eventually,businesseswillmovetowards anewarchitecturebuiltontheunique propertiesofcloudsystems.froma channelperspective,cloudcomputingwill offeranewplatformforbuildingservices, allowingchannelfirmstoaddnewvalue indistancingtheirclientsfromthe logisticsofitandfocusingthemonthe ultimategoalstheyhavefortechnology. ThepreviouserasofIThavelastedfor25B 30years.Afterfiveyears,then,theeraof cloudcomputingisjustgettingstarted. Thenextdecadewillseecloudcomputing becomeevenmoreacceptedasa foundationalbuildingblock,anditmay evenfadeintothebackgroundas discussionsturnmoretowardsthe managementofoverallarchitectureand theservicesbuiltonthatarchitecturethat driveabusinessforward. WhataDifference5YearsMake Thepast5yearshasseenmajorchangesinthe fieldofcloudcomputing,bothfromthe perspectiveofthechannelandfromendusers. HerearesomecommentsfromCompTIA s inauguralcloudcomputingreport,alongwithbrief updatesineacharea(withmoredetailstofollow throughoutthisreport). Asignificantchunkofthechannelis cautiouslydippingintocloudcomputing : Thechannelisnowallinonthecloud, with93%offirmscharacterizingtheir cloudsolutionsasmatureorsomewhat mature. Boththechannelandenduser communitiescraveamoreauthoritative, uniformdefinitionofcloudcomputing : Mostclouddiscussionsnolongerinclude definitions,butthatismoreduetoa broadinterpretationofcloudratherthan agreementonaspecificdefinition. Thesweetspotforthechannelisselling cloudtomediumisizedcompanies : AdoptionatmediumBsizedcompaniesis strongest(97%),thoughlargecompanies arebasicallyinthesamezone(96%).small firmslagat84%. Transitioningtothecloudwillmean dealingwithexistingitinvestmentsand systemsandundertakingtheintegration workinvolvedintyingmultiplecloudand onipremiseenvironmentstogether : Whilemuchofthediscussionoverthepast fiveyearshasfocusedoninitialmigrations tothecloud,manyendusersarenow performingsecondarymigrationsand quicklybuildingamultibcloudenvironment thatincludesonbpremisesystems.

6 SizingtheCloudMarket Ascloudcomputinghasmaturedfromanemergingarchitecturaloptiontoadisruptivenewplatformfor manyitservices,themarketviewhaschanged.intheearlydays,mostanalystfirmstreatedcloud computingasasingleentity;comptia sfirstcloudreportincludedestimatesfromgartnerthat predictedoverallcloudrevenuetogrowfrom$46.4billionin2008toover$150billionby2013.theonly additionalbreakdownofthemarketwasalongthemajorservicemodels SaaS,PaaS,andIaaS.Atthe time,idcwasprojectingthesaasmarkettoreach$40.5billionby2014. Twoyearslater,theestimatesreflectedsignificantprogressintheperceptionofcloudcomputingasa broadplatform.gartner sestimatesforcloudrevenuenowincludedservicemodelsbydefault.2015 projectionspeggedsaasat$22.1billion,paasat$1.8billion,andiaasat$22billion.themarketwasalso growingfasterthanpredicted.these2015projections,totaling$45.9billion,were17%higherthan Gartner s2015projectionsfromthepreviousyear. Moreimportantly,Gartnerusedtwoadditionalcategoriesforcloudrevenue.Thefirst,BusinessProcess asaservice,includedindirectinvestmentsmadeforcloudcomputing(suchasdatacenter/network upgrades)alongwithoverallprocessesthatwerebuiltusingcloudcomponents(suchaspayrollor expensemanagement).thesecondwascloudmanagementandsecurity,twospecificservices surroundingtheuseofcloudresources.together,thesecategoriesaccountedforover70%ofgartner s totalcloudprojectionof$207billionfor2016. Ithasnowbecomeraretofindestimatesthatencompassthefullsetofactivitiesthattakeplaceinthe cloudarena.projectionsmaybreakthingsdownbyservicemodel,deploymentmodel,orbusiness process.considerthefollowing: IDCreportsthattheworldwide publiccloudservicesmarket reached$45.7billionin2013and isprojectedtogrowata compoundannualgrowthrate (CAGR)of23%through2018. Theybreakthistotaldownby SaaS($32.9billion),PaaS($6.4 billion),andiaas($6.4billion). Theyalsoidentifysecondary marketsthatarethrivingas standalonesegments. Forprivatecloud,IDCestimates thatworldwidespendingon SecondaryMarketsinIDCPublicCloudDefinition SecondaryMarket EnterpriseResourceManagement (ERM)Applications CustomerRelationshipManagement (CRM)Applications 2013Revenue $10,780 hostedprivatecloudserviceswillsurpass$24billionby2016.thisincludesdedicatedprivate clouds,wherephysicalresourcesarereservedexclusivelyforsingleusers,andvirtualprivate clouds,whereapubliccloudproviderofferssharedvirtualresourceswithgreaterdegreesof customercontrolandsecurity.obviously,thereisroomforinterpretationbetweenvirtual privateclouduseandpublicclouduse. $8,135 Server $3,981 CollaborativeApplications $3,374 SecuritySoftware $2,922 Othermarkets $16,556 5 th $Annual$Trends$in$Cloud$Computing:Section1 4

7 ManydifferentcloudBrelatedsegmentsareblossomingintorobustmarketsoftheirown. InfoneticsResearchpredictsthemanagedcloudsecuritymarketwillgrowat11%CAGRthrough 2017,resultingin$9.2billioninrevenue.Technavioexpectsthecloudsystemmanagement softwaremarkettogrowat33%cagroverthe2013b2018period.marketsandmarketsbelieves thatthecloudanalyticsmarketwillgenerate$16.5billioninrevenueby2018.theseareasand manyothersaredevelopingintosubstantialopportunitiesascompaniesbecomemore groundedincloudtechnology. Afterfiveyears,theindustryhasreachedapointwhereitisdifficulttotalkgenerallyaboutthe cloud market. Thebreadthofofferingsbasedonacloudfoundationhasgrown,andmanycompaniesare takingstepsbeyondinitialcloudmovesandconsideringstrategiesthatassumecloudcomponents. TheTransformationofBusiness Fromchannelfirmstoendusers,mostcompaniesareexperiencingadrasticchangeinthewaythey approachitandoverallbusinessoperationsthankstothecloud.lastyear,comptiaestablishedmodels forbothchannelbusinessmodelsandcloudadoptionprogression: ChannelPerspective EndUserPerspective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th $Annual$Trends$in$Cloud$Computing:Section1 5

8 "#$%"'(%)%*+)+',-"'(.%//0*'12+#/0++'3"%/+,-"$%4-/'?/*54(35%7$,($($"9(42"0;*$%( ;<7' ")+$4(#*2($"9(%"2'0"%(+$4(<=(4"/'"2>( 6:7' "%2"(#*2(2"0522$,(2"'"$5"()*4"/( 697' 8"9(:$+$0+/()*4"/%(+2"()*2"(/502+;'"( 657' 6"$4*2%(35%7$,(#*2(07+$,"( 587' 1+2,$%(*$(32*450-(%+/"%(4"0/$$,( 567' "#"$%'"()*'"(+,+$%-(*.%*/"%0"$0"( "# Today sitchannelcontinuestoundergoatransitionalongwiththerestoftheindustry,triggeredby changesinthewaysthatcustomersbuyitgoodsandservices,newtypesofcompetitionandthe forwardmarchofthemessuchascloudcomputingandmobility.ineffect,thechannelhashadtostep upitsgame,morphinginsomecasesfromastraightresellerofproducts particularlyhardware toa multifacetedproviderofservicesandsolutions.whilesomefirmswillmaintainstatusquo,mostwill shifttheirbusinessmodeloratleastembraceahybridapproach,addingaservicescomponent alongsideaproductbbasedrevenuestream. Forthosemovingdownthepathofbusinesstransformation,thecloudistheprimarydriver.In CompTIA s4 th $Annual$State$of$the$Channelstudy,4in10respondentscitedcloudaspushingthemin newdirections.cloud sinfluencespansfairlyevenlyacrossallsizecompanies,withmediumandlarger firmsreportingitasaprimarydriverinslightlyhighernumbersthanthesmallerchannelfirms.halfofall respondentssaidthatattainingcloudexpertiseisgoingtobe veryimportant tothefutureprospects ofanindividualchannelfirm;halfalsoplacedasmuchimportonundertakingmanagedservicesand becomingproficientinsellingservices. Clouditselfissubtexttomanyoftheotherbusinesstransformationdrivers.Forexample,customer demandfordifferentdeliverymodelsforit,aprimarychangeagent,canbedirectlyrelatedtothe emergenceofthecloudcomputingbusinessmodel.cloudoffersanalternative,andfairlyattractive, waytoprovidetechnologyservicestotheendcustomerbeyondsellingthemthespeedsandfeedsofan 5 th $Annual$Trends$in$Cloud$Computing:Section1 6

9 ITproduct.ThinkofthewidespreaduseofSaaSapplicationssuchasGoogleDocsorcloudBbasedstorage andothercomputeinfrastructurefromthelikesofamazonormicrosoft. Aschannelfirmsrespondtothechangesintheindustrydrivenbycloudcomputing,theyarediscovering whichbusinessmodelfitstheircurrentpractice.thebroadadoptionofdifferentcloudbusinessmodels reflectsthediversemakeupofthechannel,andtheplansforfutureadoptionpointtotheforcesdriving transformationformanyfirms. Thedifferentbusinessmodelsdirectly applytothedifferentchallengesbeing facedbyendusersateachstageofcloud adoption.althoughenduserfirmsmay besomewhataggressiveinclassifying theiradoptionprogress,thebasicpattern likelyholdstrue,withthebulkoffirmsin themiddlestagesofadoption.ingeneral, cloudcomputinghasdefinitelypassed intoamassadoptionphase,withover 90%ofU.S.firmsclaimingsomeformof cloudcomputingandover60%ofthose firmsstatingthatcloudcomponents representatleastathirdoftheiroverall ITarchitecture.Softwareisprobablythe pieceofarchitecturethatismostquickly becomingcloudbbased,andthereisstill plentyofheadroomforgrowth:with Gartnerprojectingthetotalenterprise softwaremarkettoreach$320billionin 2014,the$22billionthatcomesfrom SaaSrepresentsjust6.9%ofthemarket. In2011,CompTIAfoundthat mediumb sizedbusinessesareutilizingcloudmore thansmallorlargebusinesses. This trendremainstruetoday;although mediumbsizedfirmsandlargefirmsare identicalinoveralladoptionrate, mediumbsizedfirmstendtohavea greaterpercentageofcloudbbased 5"6*.# 3/#4)%+ $//+*."2 3/#4)%+ "#$%'$()*+((,#%+"-)(./)0$1#* architecture.thesecompaniesstillrepresentasweetspotofsortsforcloudcomputing theyhave sizableitrequirementsbutarealsonotconstrainedbylegacysystemsandcomplexity. StillConfused ButDoesitMatter? Allofthestrongchannelmomentumandadoptionprogressovershadowsanissuethathasbeen presentincloudcomputingdiscussionssincethelaunchofamazonwebservicesin2006:whatexactly isthecloud?intheearlydaysofcloudcomputing,therewashealthydebatebetweenthosewhofelt )#$ "#$ +,-./$ 0123-/45$ $ "#$ "#$%'%#()#*+,-./,0$)#* %#$ ()*+,-.+/0$ 12/34,-5467$ 89+$ %*#$ %#$ %"#$ '#$ #$ >877$ *,2<8452/$ %)#$ %(#$ 8979:45$ ;,<<21=$ "# ''#$ :,6/9;2,.+<$ "# 5 th $Annual$Trends$in$Cloud$Computing:Section1 7

10 cloudrepresentedamassiveshiftinitandthosewhofeltlikecloudwasjustanewmarketingterm. Today,thatdebatehasmostlydieddown,butitisnotclearthattheindustryhasreachedresolution. Hintsofconfusioncanbeseeninthedeploymentmodelthatendusersidentifyinuseattheir companies.fortypercentofrespondentswhoidentifiedascloudusersselectedprivatecloud,and32% selectedpubliccloud.thesetwooptionsshouldaccountfor100%ofcloudusage(withsomecompanies usingbothoptions),but28%ofrespondentsdidnotselecteither,pointingtoconfusionover terminologyorlackofrecognitionfortheircloudmodel. Thebalancebetweenpubliccloudandprivatecloudisalsoapointworthconsidering.Otherstudies havealsoseenstrongmomentumtowardsprivateclouds,suchasinformationweek sstudyfindingthat thepercentageofenterprisesreportingfunctionalprivatecloudsmorethandoubledfrom21%to47% betweenapril2012anddecember2013.however,therearealsostudiesthatindicatepubliccloudas thedominantmodel,suchasrightscale s2014$state$of$the$cloud$reportfindingthat87%ofall organizationsareusingpubliccloudsystems. "#$#%'$()*%)+,-+./0(%#1+,203*45+6,7'1)+ <$,#7+4'=,$>+#%%'))+ ;'),3$%'+0,,1(45+ 89'$4#11/+2#4#5'7++ ;#0(7+'1#)*%(/+ "#$%'## ()(*'# "#$%'## $%012*# 34,5-# +,(*-#./# +,(*-# $%012*# 34,5-# # 34,5-# 8,5%39#/,'$:;<# Finally,vendorawarenessandusageseemstoindicateconfusioninthemarket.Mostcloudpundits recognizeamazonwebservicesastheleaderinpubliciaas,yetamazonfallsbehindmicrosoft,google, andibmasacompanycomptiarespondentsrecognizeasatopchoiceinthisfield.similarly,thetop systemcompaniesclaimtouseforprivatecloudconstructionisvmware svcloud,butthisdoesnot 5 th $Annual$Trends$in$Cloud$Computing:Section1 8

11 trackwithindustryobservationsthatopenstackhasthegreatestmomentum.instead,companiesare likelyawareofusingvmwareforvirtualizationandareassumingthattheyusethesamevendorfor privatecloud(thisfindingwascorroboratedbysimilardatainrightscale sstudy). Theconfusioncanmostlikelybetracedbacktothedefiningcharacteristicsofatruecloudsolution. AccordingtotheNISTdefinitionthathasbeeninplacesinceCompTIA sinauguralstudy,those characteristicsarebroadnetworkaccess,resourcepooling,measuredservice,onbdemandselfservice, andrapidelasticity.anobviousproblemwiththesecharacteristicsisthattheythemselvesrequiresome definition.forexample,howrapidlymustsystemsgroworshrinktoconstituterapidelasticity?other characteristicsleavesomeroomforinterpretation.forexample,aprovidermightclaimthatatwobyear contractwithmonthlychargesconstitutesmeasuredservice. Anadditionalcharacteristichascreptintomanyclouddiscussions thetendencytoclassifyasystemas cloudbbasedifitisexternallymanaged.withamazonwebservicesactingastheprimaryexampleof cloudcomputingafteritslaunchin2006,manypeopleweredrawntoadiscussionofcloudcomputing becomingasortofutility.externalprovisionandmanagementfitintothisframework,eventhoughthe definingcloudcharacteristicscanbeprovidedoninternalsystemswiththerightsoftware. Therearemanyavailablecomputingmodels.SomefitastrictNISTdefinitionofcloudcomputingand someonlyshareasubsetofcharacteristics.ultimately,enduserswillchoosethesystemsthatclosest meettheirneedsforfunctionandcost.overlookingindividualcharacteristicsmayleadtoacompetitive disadvantage,butthisisalongbtermriskasmanycompaniesarestillgainingfamiliaritywith virtualizationorhostedmodels.fornow,agreeingonnomenclatureisnotcritical.itismoreimportant tounderstandhowtousealltheavailableoptionstobuilditsystemsthatdrivetoday sbusinesses forward. 5 th $Annual$Trends$in$Cloud$Computing:Section1 9

12 SECTION 2: Usage Patterns

13 KeyPoints AscloudcomponentsarebecomingmoreprevalentinITarchitectures,morecompaniesarerelying oncloudcomputingforbusinessprocessessuchasstorage(59%),businesscontinuity/disaster recovery(48%),andsecurity(44%).thisstrongusageandstrongmarketindicatorsshowthatcloud computingisbecomingadefaultpartoftheitlandscape. Althoughadoptionratesarehighandmarketnumbersarepositive,thereisstillconfusionrelatedto cloudcomputing.thisconfusionwillhinderendusersandchannelfirmsfromfullytransforming theiritpracticesandofferings.only46%ofchannelfirmswithcloudofferingsdescribedtheircloud businessascompletelymature anestablished,strategicpartofbusinessplans. Theimpactofcloudcomputingwillcontinuetodrivecompaniestoclarifyissuesaroundusageand movetowardsgreatermaturitywiththemodel.endusersstillreportawiderangeofbenefits,led bytheabilitytocutcosts.approximatelyhalfofchannelfirmsseefasterrevenuegrowthandlarger profitsfromcloudofferingsthanfromtraditionalofferings. 5 th $Annual$Trends$in$Cloud$Computing:Section2 2

14 BuildingTowardsCloud:EnabledArchitecture Cloudcomputinghasbecomeanacceptedoptionforcompaniesastheyplanouttheirsystemsand architecture,andeachcompanywillmovethroughdistinctphasesofadoptionastheyincorporatecloud components.inlastyear scloudstudy,comptiadefinedfourstagesinthecloudadoptionprogression forcompanieswhowereadoptingcloudfortheirownbusinessoperations(akaendusers).companies willenterthisprogressionandmovethroughstagesbasedonseveralfactors,includingtechnicalknowc how,risktolerance,andbudgetaryconstraints. "#$%'%#()#*+,#-,.//0#* 12(.,03.*4 5#*67,0)78"9/. :$""+,#%$7)#* ;,8*/<#,3.%=; *%%+),)-%%+),)+%%+) -#./0$)1/'#"2) -304%56),78.30") "#$%'() <3%(20'() -'/0$8>-3'$6"#36) -3''9)'9)$'($6:5) *(56=3%'() 1#25';0D%'() +6$#3058) -%8;6(5);'"6/2) +'#3$6E)1';:<*F) IntheExperimentphase,companiesaresimplybuildingfamiliaritywiththecloudmodel,including terminologyandbasicworkingprinciples.duringthisstage,acompanymaytestoutcloudsystemsby buildingsamplevirtualinstancesorusingsoftwareonafreetrialbasis.theseproofcofcconcept undertakingswillmostoftenbeperformedonpubliccloudsystems,sincetheyarereadilyavailableand requireminimalinvestment.companiesmayinvestigatetheprosandconsofprivateclouds,butvery fewwillbeginbuildingoutthosesystemsatthistime. Next,companieswillmoveintoaNon:criticalUsestage.Here,cloudsystemswillactuallybeusedfor operationalworkflow,thoughbusinesseswillnotchoosetomigratetheirmostimportantsystemsor mostsensitivedata.typically,aperipheralsystemwillbechosen,whichstillallowscompaniestolearn 5 th $Annual$Trends$in$Cloud$Computing:Section2 3

15 5 th $Annual$Trends$in$Cloud$Computing:Section2 4 thefinedetailsbehindacloudtransitionandalsogainafirstchandappreciationfortheintegration challenges. Onceacertainlevelofcomfortwiththecloudmodelhasbeenachieved,companieswillmoveintoFull Production.Businessesatthisstagehaveunderstoodandmitigatedtheirsecurityconcernsandview cloudsystemsasaviableoptionformostitoperations,includingsomesystemsthatmaybebusinessc critical.policiesandprocedureswillbebuiltandmodifiedasfirmschangethewaytheyprocureand utilizetechnology. ThefinalstepintheprogressionisamovetoTransformedIT.Thosecompaniesthathavestartedup overthepastfivetosevenyears,typicallyhavingbuiltalltheirbusinesssystemsaroundcloudsolutions, aretheprimaryresidentsofthiscategoryatthispointintime.here,companiesarenotsimplymoving existingsystemsorapplicationsintothecloud;theyarechangingthewaytheyworkinordertoreapthe fullbenefit. Inthisfinalstage,somethinginteresting happens:thecloudisnolongeradistinct focusarea.ratherthantakingspecific actionsforcloudservices,suchas technicalmigrationsorworkflow restructuring,companiesconsiderthe entirearchitecture.withapplicationsin placeandpoliciesset,businessescan concentrateontheoperationofitand theinnovativewaytheywouldliketouse theirtechnologytodrivegrowth.instead ofbeingafocalpoint,cloudisdeeply integratedintonewformsofit operationsandmanagement. EvenwiththetypicalinflationthatcomeswithselfCclassification,veryfewcompaniesplacethemselves inthetransformeditstage.fullproductionmaybeslightlyinflated,butthemajorityoffirmstoday shouldfallsomewhereinthemiddletwocategories.ahealthynumberoffirmsarestillenteringthe market,ledbysmallfirmsandthosefirmsthatmayhaveamorecautiousapproachbasedon technologyfamiliarityorregulatoryconcerns. SolvingChallengesinEachStage Ascloudcomputingwasmaturing,securitywasamajorhurdlethatkeptcompaniesfromenteringthe Experimentphase.Otherfactorssuchasperformanceorreliabilityalsoplayedarole.Now,withthe adoptionrateover90%,therearefewvariablesthatarestillkeepingcompaniesfromexploringcloud options. Thebarrierstoentryhavelargelybeenreplacedbythechallengesthatcomeasbusinessesimplement cloudsystems.thefirstchallengeissimplyinmovingfromonestagetoanother.thiscouldcomeasa surprisetosomefirms,astheymayholdanexpectationthattheinitialmigrationandintegrationpose thelargestobstaclestosmoothcloudoperations. "#$ %"#$ %"#$ "#$ '#$ (#$ ()#$ #$ )#$ #$ (*#$ *#$ +,-./$ 0/1234$ 54,66$ "#$%#'()#*)+,,'-.'/#0$1.'234+' 789/-24/:;$ <=:>?-2@?,6$ AB/$ C-,:BD=-4/1$ EC$ F366$ G-=13?@=:$ 5=3-?/H$I=49CEJKB$ "# $%'()$*+,-.$/$0)1'-$0123'45$L$M,B/H$%**$AN5N$O-4B$3B2:.$?6=31$?=493@:.$ <7CH$ P#$ <7CH$ )#$ <7CH$ (#$ <7CH$ #$

16 Infact,companiesthathaveprogressedthroughseveraladoptionstagesfindthatthetransitions becomemoredifficultastheadoptionstrategymovesforward.ofthosecompaniesthathave progressedtothenonccriticalusestage,28%ratethetransitionfromtheexperimentstageasrequiring significanteffort.ontheotherendofthescale,63%ofcompaniesthathaveprogressedtothe TransformedITstageratethefinaltransitionasrequiringsignificanteffort. "#$%'()"*)+,-"*.)/0,1)2'3.4)',)2'3.4) 56740"14*') %#$ %"#$ "#$ 8,*9$0":$3)) ;<4) 8,*9$0":$3)) ;<4) (#$ '#$ %#$ =%)) >0,?%$:,*) =%)) >0,?%$:,*) (%#$ '#$ *+,-./01023$45267$ 82946/74$45267$ :-;<-=./<7$45267$ "# $%'()$*+,-.$/$0)1'-$0123'45$F$G/E4?$%))$HI:I$=6AE$>E-<;$.02>9$.2A,>J<;$ Largercompaniestendtohavemorematurityincloudadoptionthansmallercompanies,buttheyalso havemoredifficultyinmakingtransitions.considerthetransitionbetweennonccriticaluseandfull Production:43%oflargecompaniessaidthatthistransitionrequiredsignificanteffort,comparedtojust 25%ofsmallbusinesses.Whilethelargecompanieshavemoreresourcesthattheycandevotetothe problem,theyalsohavemuchgreatercomplexity.solutionprovidersassistingsmallbusinessesshould takenotethatcloudcomputingmayopennewdoorsfortheirclients,butaddingcomplexityto workfloworarchitecturemaycomplicatetheroutetocloudcbasedoperations. Withineachstage,therearedifferentchallengesthatrisefromadoptingcloudcomputing.Integration, ofcourse,isaconstantchallengefromstagetostage.thebulkofthecostandeffortforanyitprojectis typicallyconsumedbyintegration,andcloudcomputingisnodifferent.ifanything,cloudintegration maybeevenmorechallengingforfirmsasitrequireswebapisthatmaybeunfamiliartothetechnical team.furthermore,thetechnicalteammaynotalwaysbedirectlyinvolvedinprocurement.integration 5 th $Annual$Trends$in$Cloud$Computing:Section2 5

17 5 th $Annual$Trends$in$Cloud$Computing:Section2 6 maybecomplicatedbylinesofbusinessprocuringtheirownapplicationswithoutbeingawareofhow theywillfitintotheoverallsystem. IntheExperimentstage,challengesalsoincludeROIcalculationandthecloudlearningcurve.As companiesbuildtheirunderstandingofcloudcomputinginpreparationforbusinessuse,theyneedhelp indeterminingtheassociatedcostsandbecomingproficientwiththeavailableoptions.educationis especiallyimportantforallbusinesses thelearningcurvewascitedasachallengeby40%oflarge companies,34%ofmediumcsizedfirms,and40%ofsmallbusinesses. AscompaniesmoveintotheNonCcriticalUsestage,thetechnicalchallengesbecomemoreapparent. Thelearningcurvenowfocusesonthedetailsbehindacloudmigration,suchasthesecuritythatwillbe requiredandtheactualapplicationusagethatdrivesthesolutioncost.inaddition,companiesgrow concernedabouttheportabilityoftheircloudapplication.thirtycfourpercentofcompaniesidentify vendorlockcinasachallengeforthenonccriticalusestage,comparedtojust23%ofcompanieswho identifythisasachallengefortheexperimentstage. Movingforward,thechallengesbegintoshiftfromtechnicaltobusinessCrelated.Thetoptwochallenges thatcompaniesciteinthefullproductionstagearemakingchangestoitpolicy(43%)andmodifying workflow(41%).thisiswhentechnicalexpertisemustbematchedwithbusinessknowledge.businesses arefindingthatthegreatestbenefitsofcloudcomputingarenotnecessarilythecostcrelatedperksthat comefromswappingsystems,butinsteadaretheagilityandspeedthatcomefromreconfiguring operations. ThisrealizationleadsintothefinalstageofTransformedIT,whereworkflowmodificationisthetop challenge.ascompaniesrecarchitecttheirbusinessprocesses(includingsystems,applications,and workflow),theyrealizethatevenfurtherinvestmentisneededtoreachanoptimalstate.fortycfour percentofcompaniescitehighercthancexpectedcostsasachallengeinthisstage,showingthatthe opportunityforvaluablecloudservicescertainlydoesnotendafterthefirstmigration. MovingtoaMulti:CloudEnvironment Theactionsthatcompaniesaretakingfollowingtheirfirstmigrationactasfurtherproofofthe opportunitiesthatexist.bygaininghandsconexperiencewithcloudsystems,businessesareableto comparethetheoreticaltothepracticalandmakedecisionsonhowtobestoptimizetheir infrastructure. Thenumberofcompaniesmakingsecondarymigrationsisrising.Lastyear,44%ofcompanieshad movedeitherinfrastructureorapplicationsfromonepubliccloudtoanother,25%ofcompanieshad movedfromapubliccloudintoaprivatecloud,and24%ofcompanieshadmovedfromapubliccloud backtoanoncpremisesystem.theprimarytakeawayfromallthismovementisthatnoonemodelisthe bestanswerforeveryworkload.companieswillbeutilizingeverytypeofsystemastheyfindthemultic cloudapproachthatworksforthem,andthemanagementofallthesesystemswillbeasignificant challengeformostfirms. Thereasonsforsecondarymigrationsvarydependingonthetypeoftransition.Movementbetweentwo publiccloudproviderscouldbedrivenbyanumberoffactors,suchasbetterofferings/features(citedby 44%ofcompaniesmakingsuchamove),securityconcerns(32%),cost(31%)oradesireforopen

18 standards(31%).movementbacktoanoncpremisesystemwasprimarilydrivenbysecurity(60%).other reasonsforsuchamoveincludedfailuretointegrate(27%)andfailuretoachievecostgoals(21%). "#$%'($)"*' +),%*-+'./' =0>' "#$%'($)"*' +),%*-+'.0' 0?>' %8-' 9:82-7' +%,12-' ($)"*' ()7614:';<(' 9)"+-B'()76CD;E8' "# $%'()$*+,-.$/$0)1'-$0123'45'F'<18-B'=GG'HI9I'J+78'"8%4K'$)"*')76"L4K' Ofcourse,thesemigrationsdonotindicatewholesalemovesfromonemodeltoanother.Acompany maymoveanumberofapplicationstoapubliccloudproviderinearlystagesofadoption,thenmove someofthoseapplicationstoaprivatecloudandsomebackonpremisewhileleavingsomeinthe originalcloudprovider.notonlyisitchallengingtodeterminethecorrectmodelforapplication,butit alsorequiresefforttomakethetransition.twentycsixpercentofcompaniesmigratingfromonepublic cloudtoanothersaidthatthesecondarymoveactuallyrequiredmoreeffortthantheinitialproject. Thislevelofeffortisstartingtobeunderstoodbycompanieswhoareinearlierstagesofadoptionand anticipatingasecondarymove.thirtycthreepercentofcompaniesestimatethatasecondarymigration willrequiremoreeffortthanthefirst.nearly40%ofthesecompaniesexpecttomakesuchamovein thenextyear,citingreasonssuchassecurity(49%),cost(49%),andofferingsorfeatures(42%).solution providerswillhavetobeawareofthemanydifferentvendorsinthisnewlandscape,andtheymayturn todistributorstoactasaninitialfilterfordiscoveringthebestoptions. 5 th $Annual$Trends$in$Cloud$Computing:Section2 7

19 SECTION 3: Challenges

20 KeyPoints CompaniesmovingthroughtheprogressionmodeltowardsTransformedITwillneedtounderstand thevariousapplicationsthatarebeingusedandchoosethebestmodelforrunningthose applications.themostcommoncloudapplicationsarecurrentlyproductivitysuitesand ,but manyotherapplicationsarebecomingcloudcandidates,especiallyinthesmbspace. RogueIT,wherealineofbusinessprocurestechnologywithoutinvolvingtheITdepartment,isnot necessaryrampantbutisstillarealphenomenon.only12%ofcompaniessaytheydonotconsult withtheitdepartmentorallowthemtogivefinalapproval,butissuessuchasintegrationand securityarestillreasonforbusinessestobuildaprocurementprocessthatallowseveryonetovoice theirconcerns. AsbusinessescontinuetotransformtoutilizecloudIT,therewillbeaseriesofinternalchangesthat willtakeplace.decidingonnewpolicies/procedures,hiringandretrainingtoimprovetheit departmentskillmix,andcontractingwithoutsidefirmsareallactivitiesthatcompaniesundertake astheyreconfiguretheiroperations. 5 th $Annual$Trends$in$Cloud$Computing:Section3 2

21 RestructuringOperationsonaCloudFoundation AscompaniesmovemoreandmoretowardsacloudCbasedarchitecture(asdescribedinSection2),they willfocuslessoncloudinfrastructureandmoreonbusinessprocessandworkflow.thisisamajorpart ofthetransitiontotransformedit:choosingnewapplications(orrebuildingapplications)inorderto takefulladvantageofcloudcharacteristicsandbuildingnewpoliciesandproceduresthatenablegreater businessagility. "#$%'((")*+,#-./+0123#4(+-35)61 54+"" 71%)$ "#$%##'()*+",-.$/0' 123' 453' 623' 789$:' 4;3' 1<3' 1=3' <43' 413' 4A3' B*::9C*)9-*%' <=3' 443' 453' D$)/"9:'+#E/*(' <23' 4<3' 463' FC'()#%,' <=3' <53' 4=3' BGH' =<3' <A3' 423' IG'89%9J8%/' ==3' <43' 4K3' I:('+#E' =K3' <K3' <<3' 7L(%#'89%9J8%/' ;63' <13' ==3' 7GM' ;<3' =<3' <<3' N$%9%,$9:'89%9J8%/' ;63' ;A3' =;3' B9::'B%/)' ;13' ==3' =13' "# $%'()$*+,-.$/$0)1'-$0123'45'S'9#P'=11'TUOU'V)8#'"#$%J',:*"+',*8("-%J' Thefirststepinthisoperationaljourneyistounderstandtheapplicationsthatarebeingusedand choosethebestmodelforrunningthoseapplications.alargepartoftheclouddiscussionoverthepast fiveyearshascenteredonsoftwaredevelopment,withdevelopersnowabletoquicklycreatetest environmentsandbuildapplicationsoutsidetheconstraintsofanoncpremisesystem.thediscussionis quicklyturningtothoseapplications,whichcantakeadvantageofelasticresourcesandcloudcbased datastores.obviously,theaddressablemarketforapplicationusageisfargreaterthanforapplication development. Businessproductivitysuitesand arethetwomostpopularapplicationsthatcompaniesareplacing inthecloud.itisverylikelythatsomeoftheseapplicationsaresimplyhostedapplications,butthisisa goodexampleofacasewheredifferencesinterminologyarelessimportant.formostendusers,the primaryconcernforanapplicationlike isthattheroutineupkeepandmaintenanceareperformed 5 th $Annual$Trends$in$Cloud$Computing:Section3 3

22 externallyratherthantyingupinternalresources.sincethemainfunctionoftheseapplicationsislargely unchangedbetweenahostedmodelandacloudmodel,thefewdifferencesthatexistmaybetoosubtle tomakeanimpactformanyusers. Withotherapplications,though,thecloudmaybeopeningnewpossibilities.CompTIAhaspreviously notedthatmediumcsizedbusinessesrepresentasweetspotforcloudoperationsbecausetheir infrastructureneedsaregrowingwhiletheirresourcesarestillfairlyconstrained.thecurrent applicationusagepatternsvalidatethisposition mediumcsizedbusinessesareoftenclosertolarge firmsincloudapplicationusage,andtheyareactuallyleadinglargefirmsinsomeinstances.thisshows thatmediumcsizedfirmsaremoreaggressivelytargetingcloudapplicationsasawaytoexpandtheir technologyfootprintbeyondwhattheycouldachievethroughtraditionalmeans. 4/-,).)+")56+)'/)7+'#8)9/6):+";)*/1<+"$().)"2/321"')=8")>?0)<6/#,6()) "#$ '#$ %"#$ "#$%"'()*+,($"-).)'/)0#/1) "2/32%) ) > 6*=95.+4*5$?,/3:$2/,34/*$ %> D0+),+B),)=A$/7$?,/3:$2/,34/*$ "> <99:$=/$?9*=.+,)E9$=9?C*/,/5A$ > 6*?/..9?=$/-9.+4/*$ ()*+,$+--./0+,$ 1/*23,4*5$ "# $%'()$*+,-.$/$0)1'-$0123'45$I$J+29F$'K%$L>@>$M.82$N)=C$,)*9$/7$B32)*922$+--,)?+4/*$-./?3.989*=$ Theavailabilityofcloudapplicationscreatesanewissueforbusinesses.Theeaseofaccessand simplicityofuseallowindividualdepartmentstoutilizetheirownbudgettoprocureapplications(or infrastructure,forthatmatter).thisbehavior,knownasrogueitsincetheitfunctionissometimes bypassed,isappealingtobusinessunitssincetheyhavethebestknowledgeofwhattheyrequireto achievetheirgoals.whilerogueitmaynotyetberampant,itisgrowing:companiesinthecomptia surveysawlinesofbusinessprocuringcloudapplicationsanywherefrom18%to36%ofthetime,a slightincreasefromlastyear snumbers. 5 th $Annual$Trends$in$Cloud$Computing:Section3 4

23 ThemainissuewithrogueITiswhetherornottheITdepartmentisbeingleftcompletelyoutofthe loop,butmostinstancesoflobprocurementstillkeepitinvolvedinsomeway.infact,theincidenceof ITdepartmentsonlybeinginformedornotinvolvedatallisdominatedbysmallcompanies,whichoften donothaveanitfunction.forsolutionprovidersservingthesmbspace,thiswillbeanareatowatchas theyincreasinglyactastheoverarchingitfunctionratherthansimplyprovidingpointsolutions. Determiningthebestprocessforprocurementwillbeamajortaskforcompaniesofallsizesmoving forward.allowingthelobtoprocuretechnologyallowsforgreateragility,butitalsohasthepotential tocreatecostlyproblems.integrationandsecurityaretheprimaryissuesthatalobmightnotconsider. Integrationtypicallyaccountsforthelion sshareofcostandeffortinanitproject,anditismuchmore effectivetodealwithsecurityupfrontratherthanrepairabreach.itdepartmentsandsolution providerscanhelpdrivethediscussiontowardsanewstyleofprocurementthatallowsforagilitywhile ensuringthatitconcernsaresurfaced. InternalChanges BuildingnewprocessesforprocurementisjustthefirststepinITbecomingmoreofapartnertothe linesofbusinessratherthansimplyasupplier.theabilitytousetechnologythroughthecloudcan streamlinethewayitisprovided,butitcanalsostreamlinegeneralworkflows.atransformationof internaloperationsistakingplaceascompaniesareapplyingtechnologyacrosstheentireorganization incompletelynewways. Thistransformationdoesnotcomefromabusinesssimplyapplyingthecurrentknowledgeandskillsof anitdepartmentorsolutionprovidertothetaskathand.aswithprocurement,theremustbenew waysofcombiningtheitfunctionwithotherfunctionalareasinordertoproduceanewstandardfor operations. SmallbusinessesespeciallyshouldtakecaretoexaminetheirITandbusinessoperations.TwentyCthree percentofsmallbusinessesusingcloudsolutionshavenotundertakenanyoperationalchangesatthis point,comparedtojust3%ofmediumcsizedbusinessesand9%oflargebusinesses.partly,thisisdueto theamountoftimespentinthecloudsofar operationalchangesarelesscommonamonglate adopters,wherethereisaheavierconcentrationofsmallbusinesses.itisalsolikelythatmanysmall businesseshavelessbandwidthtoreviewtheiroperationalprocedures.withcloudcomputingbeinga lessdirectmethodforbuildingandusingit,itmaybeadvisableforsmallercompaniestobeginbuilding moreoperationalaptitudeinordertooptimizetheirworkflowwithcloudsystems. 5 th $Annual$Trends$in$Cloud$Computing:Section3 5

24 5 th $Annual$Trends$in$Cloud$Computing:Section3 6 Thereisanunfortunatesidetothisdisruptionandstreamlining.Cloudcomputinghascausedsome amountoftrepidationamongitstaffthankstothepossibilityofoutsourcingcomputeresource(andthe subsequentmaintenance).nearlyoneinfivecompaniesreportsreducingthenumberofitstaff, showingthatthismaybealogicalstepforsomebusinesses.however,itshouldbenotedthatthisaction islistedatthebottomofthelistofchangesacompanymayhaveundertaken,justasitisnearthe bottomofthelistofbenefitslistedbycloudusers.asthejobmarketadjuststotherealitiesofcloud, proactiveitworkerscangetinvolvedinavarietyofotheractionstheirbusinessmaybetakingtobetter utilizecloudresources.thismayinvolvechangestopolicy,itrestructuring,oruseofoutsidefirms. PoliciesandProcedures Changestopolicyorprocedurearethemostcommonactiontakenbycompanieswhohavemovedinto acloudenvironment.whetheritisredefiningstepsthattheitteammusttakeastheyadminister solutionsorbuildingnewprocessesformakingdecisionsontechnology,actionsrelatedtopolicyand procedurearethetopthreeitemsonthelistofchangesdrivenbycloudcomputing. Continuingatrendfrompreviousyears,securitytopsthelistofitemsthatcompaniesareaddressingas theymodifypolicies.throughtheearlydaysofcloudadoption,securitywascommonlycitedasthe primefactorpreventingcompaniesfrommovingtocloudsolutions.withthevastmajorityofcompanies havingstartedsomeformofcloudadoption,itisapparentthatcompaniesareeitheracceptingsome "#$%"'()*"+$,(-%./$"(01()'234(( "#$ #$ %#$ %#$ %"#$ %"#$ '%#$ ('#$ )#$ #$ %#$ %%#$ %"#$ (%#$ ("#$ '(#$ *+,-.+,$/-01+2$34$56$789:$ ;3/829.8+,$<=8>$3-87=,+$.30?9/@$ * ,$56$,+?9280+/8$ A+<$03/=832=/BC09/9B+0+/8$833D7$ E,9?8+,$03/=832=/BC09/9B+0+/8$833D7$ A+<$?3D=.=+7$432$56$,+.=7=3/$09F=/B$ G-=D8$/+<$?3D=.=+7C?23.+,-2+7$ ;>9/B+,$+H=7I/B$?3D=.=+7C?23.+,-2+7$ JK($ JK%$ L3-2.+M$;30?65EN7$ "# $%'()$*+,-.$/$0)1'-$0123'45$O$G97+M$%))$PQLQ$R207$-7=/B$.D3-,$.30?-I/B$

25 levelofriskorfindingwaystomitigatecloudsecurityconcerns atleastfortheapplicationstheyare placinginthecloud.however,thediscussionaroundsecurityhasnowshiftedfromaddressingbasic concerns(whichdrivesinitialadoption)tofocusingonfinerdetails(whichdrivesfullproductionuse). Anotherareafrequentlyaddressedinpolicychangesistheproperstorageofcompanydata.CompTIA s studiesonthebigdatatrendshowthatmanycompaniesfeelthattheiruseofdataislessthanoptimal, inpartbecausetheydonothavestrongoverarchingdatamanagementpractices.theuseofcloud systemsforstorageandbackuponlycomplicatesanalreadycomplexsituation,andmanycompanies maybenefitfromadataauditandeducationonbestpracticesinmanagingdatainacloudenvironment. Securityanddatamanagementareexamplesofpoliciesthatarebroaderinnatureandapplytothe entirecompany.buildingthesepolicieswillbeacrosscdepartmentaleffort,butshouldstillinvolve significantinputfromtheitteam.theitteammustlearnhowtomeettheneedsofthebusinesswith minimaldelay,andtheyalsomustproperlyunderstandandconveytheneedtomaintainacompany s riskposture.thebestpolicieswillrepresentanagreementatalllevelsofthecompanyonhowcloud resourceswillbeprocuredandused.thiswillnotnecessarilymeanthatallinformationflowsthrough theitteamforapproval,buttheitteamshouldbecomfortablewiththeirlevelofawarenessand responsibilityintheprocess. InternalITDepartmentChanges AsidefrompoliciesandproceduresthatgetcreatedoralteredwithinanITdepartment,otherchanges maytakeplacethatallowittobebetterequippedtodealwithacloudenvironment.thesechanges maybeperipheraltothespecificcloudsolutionsbeingputinplace,buttheystillhaveaneffectonthe overallimplementationcost.companiespursuingcloudprojectsshouldconsiderwhethertheseactions wouldbeaworthwhilepartoftheircloudinvestmentgiventheirbusinessobjectives. Thefirstareatoconsideristheneedforneworimprovedtoolstocontrolormonitoracloudsolution.In somecases,thiscouldbeasimpleextension.forexample,asystemadministratormayusesoftware providedbyhisvirtualizationvendortospinupnewvirtualmachines.inacloudsituation,thiswilllikely behandledthroughawebfrontend,andtheremaybelittletrainingrequiredtocreatenewservers. Theremayevenbegenericmachineimagesthathavebeensavedbyotheruserstoeliminatethemore tediousstepsinvolvedingettingavmorinstanceupandrunning. Othertoolswillbenewadditionsto theittoolbox.thirdpartysoftware maybeneededthatcanprovidea comprehensiveviewofan architecture,allowingadministrators toseevitalinformationfromboth cloudsystemsandoncpremise systemsinasinglepaneofglass. Theremaybearequirementtotiea company sfinancialsystemtoacloud providertodetermineusagefor billingpurposes.theseareexamples oftoolsthatcanbemajorprojectson theirown,drivingcostshigherand TypesofSkills/RolesCompaniesHave AddedtoITDepartments 52% Cloudarchitect 49% Skillstobuildprivateclouds 48% Departmentalliaisons 40% Integrationspecialists 25% Compliancespecialist 5 th $Annual$Trends$in$Cloud$Computing:Section3 7

26 5 th $Annual$Trends$in$Cloud$Computing:Section3 8 necessitatingaheavytimeinvestmentaswell. TheotherprimaryareatoconsiderwithintheITdepartmentisthepersonnel.Asmentionedbefore, staffreductionmaybeanaftereffectofacloudtransition,butthemorelikelyscenarioisthatcompanies willrestructuretheitdepartmentinsomeway.infact,44%ofcompaniesthathaveperformedit restructuringhavehirednewworkerstobolsteritefforts asignificantjumpfromlastyear.thismay beespeciallytruewherecloudcomputingisusedtoaddnewcapabilitiestoabusiness,andasizableof amountofequipmentremainsoncpremise. Atanorganizationallevel,themovementtowardstransitioningtheITdepartmentfromsupplierto partnerseemstobemakinggoodprogress.overhalfofthecompaniesinthesurvey(57%)saythatthe ITteamhasbeenabletomoveawayfrommaintenancetasksandbecomeinvolvedinmoreinnovative work.anevengreaternumber(69%)saythattheitdepartmenthasbecomemoreintegratedwith otherlinesofbusinesstounderstandhowtomeettheirneedsthroughcloudsolutions.theimplication isthatthetechnicalknowledgeheldbytheseworkersisstillvaluable,andnewrolesarebeing developedthatrequirenewskills. UseofOutsideCompanies$ OneofthebiggestsurpriseswithITCrelatedchangesisthelownumberofcompaniesthatareusing outsidefirms,althoughthatnumberappearstobegrowing.lastyear,only11%ofcompanies contractedwithanoutsidefirmfortheircloudinitiatives.thisyear,thenumbergrewto17%,as companiesofallsizesincreasedtheirutilizationofexternalservicesandsupport. Whilethedirectionforthirdpartyassistanceispositive,theincidenceamongthesmallestcompanies (whichareleastlikelytohaveinternalexpertise)hasstillnottakenoffdramatically.thereareseveral factorsthatcouldbecontributingtothis.amongcompaniesthatdidpartnerwithasolutionprovider, thetopreasonthattheyeliminatedpotentialcandidateswasthatthecostsweretoohigh.although lowercostsisstillthetopdriverforcloudsolutions,manycompaniesfindthatparticularapplicationsdo notactuallyhavelowercosts,mainlyduetounexpectedexpenses.ascompaniesmorecloselyexamine theirtransitioncost,theadditionaloverheadrequiredtocontracttheworkmightbeenoughtodeter themcompletelyfromoutsourcing. Lookingatchannelfirmsthatareprovidingcloudservices,67%saythattheyexperiencedademandfor cloudservicesthatoutstrippedtheircapacitytosupplyasolution.thiscouldbeastatementoftechnical capabilityorsimplyrawbandwidth.inaddition,50%saidthattheylostasaletoanonctraditionalit solutionprovider,suchasavendor,distributor,ortelecomcarrier.bothofthesenumbersare significantlyhigherthanlastyear sresults. Takentogether,thesedatapointssuggestthattherearesomegaps eitherrealorperceived inthe abilityofsolutionproviderstoadequatelysupportcloudservices.forsmbs,thehurdlesofadditional overheadcostandstruggleswithsolutionprovidercapacitymaybetoolargetoovercome.asaresult, thesecompaniesmayworkdirectlywithcloudprovidersinmanyinstances.eventhoughtheymay receiveservicesbeyondtheactualproductbeingprocured,thisislikelynotconsidered contracting by theendusersinceitallcomesdirectlyfromtheprovider. Solutionprovidersshouldbeawarethattheseperceptionsmayexistandshouldtakeactiontoaddress them.fortheissueofcost,solutionproviderswillneedtobepreparedtofullyexplainthevalueofa

27 cloudsolutionandtheaddedbenefitthattheproviderisabletodeliver.theissueofcapacitymaybe morechallenging.ifacustomerdesiresasolutionbeyondthetechnicalcapabilityofaproviderorifthe providerisfullybooked,hiringortrainingcansolvetheproblembutarenotimmediatefixes.one suggestionforsolutionprovidersistolookforpartnerswithspecializedexpertise,thenactasafocal pointwiththecustomertoprovideacompletesolution. 5 th $Annual$Trends$in$Cloud$Computing:Section3 9

28 SECTION 4: Business Model Analysis

29 KeyPoints Alongwithgreateradoptionofcloudwithinthechannelhascomeamorepositiveoutlook.Nearly twothirds(63%)ofchannelfirmsdescribedtheimpactcloudcomputinghashadonthechannelin thepastfiveyearsas extremelypositive, whileanother30%deemedit positive. Channelfirms alsohavemoreconfidenceintheirabilitieswithcloudandtheroleitplaysintheiroverallportfolio. FiftyCsevenpercentofrespondentsdescribedtheircloudbusinessasmatureandstrategic, comparedwith46%withsimilarsentimentin2013. AmongthecloudCbasedbusinessmodelframeworksoutlinedbyCompTIA,channelfirmsreported significantincreasesinthestrategicimportanceofeachofthosetheyoperateincomparedwitha yearago.therewassomeretrenchment,however,inthepercentageoffirmsthatareengagedin twoofthefourframeworksfrom2013.theenable/integrateandmanage/supportmodelsbothsaw adeclineinparticipation. ManyoftheactivitiesandservicesintheEnable/IntegrateandManage/Supportcloudmodels requireacomplexsetofskills.someofthechannelfirmsthatinitiallyrushedintothismarketmay havefoundtheworkeitherexceededtheircapacitytoaddresswhilecontinuingtobalancetheir legacybusinessorthatthenecessaryresourcestotrainorretrainstaffontheseserviceswastoo costly.oneofthekeychallengesofdoingcloudcbasedintegrationishavingaworkingknowledgeof amorassofwebcbasedapis,adevelopmentskillthatisnotinthewheelhouseofthemajorityofthe channel. CommitmenttotheBuildbusinessmodelforcloudappearstobethestrongest.Morethanhalfof channelfirmstoday(52%)participateinthismodel,with64%ofthemdescribingthispartoftheir cloudbusinessasstrategicandcore,comparedwith46%whodidsoin th $Annual$Trends$in$Cloud$Computing:Section4 2

30 BusinessTransformationwithintheChannel:PathtotheCloud Justasenduserorganizationsaremovingthroughvariousstagesofadoptionwithrespecttocloud computing,theitchannelhasbeenchartingitsowncourseoverthelastfiveyears.generallyspeaking, channelfirmthinkinghasevolvedfrom cloudissomethingtofear to cloudisacatalystforbusiness transformationandnewopportunities. Infact,4in10respondentsinCompTIA srecent4 th $Annual$ State$of$the$Channelstudycreditedcloudcomputingforpushingtheminnewbusinessdirections,the topresponseamidahostofotherbusinesstransformationdriversthatintheirownrightarecloudc related. Themostpressingquestionchannelfirmsfacerelatedtocloudadoptionconcernsbusinessmodel choice orchoicesasthecasemaybe.inthissectionofcomptia s5 th $Annual$Trends$in$Cloud$ Computingreport,wewilldiscussthevariousmodelsthathavegainedtractionwithinthechanneltoday andprovidedetailsintohowthose modelsarestructuredandperforming. Firstoff,however,let sacknowledgethat thechannelhascomealongwaywith cloudfromwhereitsatfiveyearsago.in 2010,just1in10channelfirmsreported anyinvolvementwithsellingorusing cloudsolutions.today,somelevelof adoptionisnearcuniversal,withheavy involvementquiteprevalentinsome circles.thenumberofcompanies identifyingas borninthecloud has jumpedconsiderably,thoughit s importanttonotethatthismightbe moreafunctionoflatchingontocatchy marketinglingothanitisthatallofthese "#$%"'(%)%*+)+',-"'(.%//0*'12+#/0++'3"%/+,-"$%4-/'?/*54(35%7$,($($"9(42"0;*$%( ")+$4(#*2($"9(%"2'0"%(+$4(<=(4"/'"2>( "%2"(#*2(2"0522$,(2"'"$5"()*4"/( 8"9(:$+$0+/()*4"/%(+2"()*2"(/502+;'"( 6"$4*2%(35%7$,(#*2(07+$,"( 1+2,$%(*$(32*450-(%+/"%(4"0/$$,( "#"$%'"()*'"(+,+$%-(*.%*/"%0"$0"( companiesarepurelycloudcbasedandnotofferinganytraditionalchannelbusinesslinessuchas productresalesorprojectwork. Alongwithgreateradoptionhascomeamorepositiveoutlook.Nearlytwothirds(63%)ofchannelfirms describedtheimpactcloudcomputinghashadonthechannelinthepastfiveyearsas extremely positive, whileanother30%deemedit positive. Smallerchannelfirmsgavehighermarkstocloud s impactthanmediumandlargecsizedcompanies,74%versus52%and48%respectively.thisisperhaps reflectiveofthefactthattheytendtoselltoenduserorganizationsthatarealsoquitesmallinnature. ForSMBs,manywithouttheirownITdepartment,cloudCbasedofferingsopendoorstotechnologythat mightnothavebeenaffordableoreasyforthemtoscaleandmanageintraditionalformats,whilealso providingaccesstolessexpensivesourcesofbasicitneedssuchasstoragecapacity. Revenueclassificationisonecaveattonoteamidstthechannel scloudenthusiasm.whatconstitutes cloudcbasedrevenuevs.oncpremisesornonccloudrevenuecanbeblurryanddefineddifferently dependingonthechannelfirminquestion.consideraresellerthatbundlesacloudcbasedbc/dr solutionwithalargeoncpremiseshardwaresale.thatresellermighttallythatdealastwodifferent sourcesofrevenueorconverselycounttheentiredealasacloudcrelated.thelatteraccountingwould 567' 567' 587' 657' 6:7' 697' "# $%'()$*"("+$,-$"#+$.#(+)$%-54>(D(E+%"A(FGH(IJ@J(<=(07+$$"/(:2)%( 5 th $Annual$Trends$in$Cloud$Computing:Section4 3

31 inflatethatreseller scloudcclassifiedrevenuequitesignificantly.downtheroad,whensomecustomers decidenottoupgradeoncpremisessolutionstothesamedegreetheydotoday,therecouldbea negativeeffectonchannelrevenuereliantoncloudsolutionsonly,absentothersystems,forexample. Channelfirmsalsohavemoreconfidenceintheirabilitieswithcloudandtheroleitplaysintheiroverall portfolio.fiftycsevenpercentofrespondentsdescribedtheircloudbusinessasmatureandstrategic, comparedwith46%withsimilarsentimentin2013.again,smallerchannelfirmsassessedthemselvesas maturewithcloudwithgreaterfrequencythaneithermediumcorlargecompanies.thiscouldcome downtowhatvariouscompaniesaredoingwithcloud.forexample,asmallchannelfirmreselling cloudcbased foritscustomers arelativelylowchangingcfruitsolution wouldrightlycharacterize thatbusinessasquitemature.ontheotherhand,alargercompanyattemptingtoputtogethermore complexcloudofferingssuchasthosethattieintobusinessanalyticsorinvolvecustomdevelopmentfor mobileappsmaystillhaveawaystogotoconsidertheirfunctionsallgrownup. Optimismaboutcloudisevenevidentamongthosechannelfirmsreportingalowdegreeofmaturity withthemodeltoday.roughlyhalf(46%)saidtheywereconfidenttheywereontherightpathwith theircloudefforts,anincreasefrom2013.another46%expressedatleastsomedegreeofconfidencein wheretheyareheaded. "#$%'()*+,*+-./0/1--0"#-)-$0, "#$%7, 8*(19.#- /1--0"+- :1,.;<01=, "#$%%'()*+,-./%) 0+,-./%) 1-"%234%56./%) >+-?578699%') :$,)%"*%7#)#8%-$) 7'+;2<=6,%2) 7+-95)(%6$) 7+*6$%2)>-#8)BCA) -9)BD?EF) G+;$7%H)I+*JKLM,) "# $%'()$*+,-.$/$0)1'-$0123'45)N)O6,%H)PDD)78699%'):$,)>-#8)7'+;2)+Q%$-95,) 5 th $Annual$Trends$in$Cloud$Computing:Section4 4

32 It snotallroses,however.onafewfronts,namelywithintwoofthemorecomplexcloudbusiness models,thefindingsshowsomeretrenchment.thistrendwillbediscussedinmoredetailinthe businessmodelsubcsectionsbelow,butthepullbackseenincloudmodelsdealingwithintegrationand enablementaswellasmanagementandsupportcouldbeattributedtodegreeofdifficulty encountered.inparticular,smallerchannelfirmsreportedtheseactivitiesatmuchlowerratesin2014 thanin2013,whichcouldindicatethattheirinitialenthusiasmmayhavebeentemperedasthey encounteredeitherresourceissues,skillsgapsorotherobstaclesthatcausedthemtorethinktheirlevel ofcommitment. Nomatterthepaceofchange,allofthesefirmshavehadtomakestrategicandtacticaldecisionsabout whichcloudbusinessmodelormodelstopursue.theybasethesedirectionalchoicesonanumberof factors,includingthecompany scurrentoperatingmodel,specificcapabilitiesandstaffing,aswellas focusareasinthemarket.it snotaneasyexercise.infact,itappearstobegettingmoredifficult.nearly 6in10channelfirms(59%)citedtheneedtodeterminethecorrectbusinessmodelasachallengeto launchingacloudbusiness,upfrom45%in2013.thatsuggestsadegreeoftrialanderrorgoingon,with channelfirmsstillcastingaboutfortherightfitfortheircompany. Thequestionsaremyriad: Resellavendor scloudsolutions? Aggregateandbrokercloudservicesfromavarietyofdifferentsources? IntegrateandcustomizecloudCbasedappsandservices,orsimplyselltheinfrastructuretoan enduserandprovideconsulting? Actasamanagedservicesproviderforcloudsolutions? 5 th $Annual$Trends$in$Cloud$Computing:Section4 5

33 "#$%'$()*+((,#%+"-./0+1#.2 '$)"% 3.#4)%+53.#4)()#* 6*/7"+58*9+:./9+,/*/:+5;$<<# '8'--+'8'+--+' %465$'8"59-3'8'(:4"5.' "#$%"'()'*'+),' -..'/0"12'3#' 4%56.'$6#%. '' I266' )<53C6-46' J06#:D>3' 7>3?"-1#>' A"-BFG/' H->-?.'+"95$2' ;"$<53$3%"' (#21>?' =%23#D5E-1#>' =6#%.';??"?-1#>'8'A"#B"-?'+"95$2' Tocaptureinformationabouttheircloudbusiness,theCompTIAstudypresentedrespondentswithfour broadtypesofcloudoperatingmodelsandaskedwhich,ifany,theyhaveengagedinduringthepast year.theabovediagramdepictsthefourbusinessmodelareas,alongwiththesubcategoriesofwork activitythatareassociatedwiththem.thelongerbars,suchasiaas/paas/saasand Consulting/Advising/ITSolutionsrepresentactivitiesthatcanaccompanyanyofthefourmainbusiness models.itshouldbenotedthatthesefourmodelsarebynomeansreflectiveofeverypossibletypeof channelmodelapplicabletocloud;howevertheydorepresentafairlycompletepictureofthetypeof cloudworkbeingdoneacrosstoday schannel. Manysolutionprovidersareinvolvedwithmorethanoneofthemodels,includingapopulationthat reportsactivityinallfourbuckets.acrosstheboard,channelfirmsreportedsignificantincreasesinthe strategicimportanceofeachofthecloudbusinessmodelstheyoperateincomparedwithayearago. Below,eachbusinessmodelisbrokenoutindetail. 5 th $Annual$Trends$in$Cloud$Computing:Section4 6

34 "#$%'$()*+((,#%+"4%#8:#* "#$%'$()*+((,#%+"6*7#"7+5+*. "#$%'$()*+((,#%+",-.$/).01+"234((+((5+*. 9"-*.# 8/#7)%+ )#$ %*#$ %#$ %)#$ 89=,14$ %#$ $//+*."0 8/#7)%+ "#$ %"#$ '#$ +,-./$ 0123-/45$ C79D $ E7=4:19=4$ %(#$ 8979:45$ ;,<<21=$ 89=,14$5$ 89=,14$ (#$ ;2,1F4G$H2><BEIJ6$ "# CloudModelElement1:Build AstrongstartingpointforthecloudformanyfirmsisthecategoryofBuild,whichisdefinedinthestudy as: Typically$this$involves$firms$procuring$vendor;based$hardware$and$software$products$to$construct$private$ and/or$hybrid$clouds$for$customers.$they$may$also$offer$consulting$guidance$on$the$best$it$architecture,$ configuration$and$product$choices$for$the$project.$$ TheBuildcategorysawaslightincreaseinparticipationin2014,with52%ofchannelfirmsdoingworkin thisareacomparedwith48%lastyear. Thebumpupisabitsurprising.TheBuildcategoryrepresentsabitofacloudlaunchingpadforsolution providers.forexample,ofthosefirmsthatarealsooperatingoneoftheotherthreecloudbusiness models,7in10startedwithawithbuildpracticebeforeaddingtheothers.thismakessensegiventhat thismodelmapstotraditionalnonccloudcrelatedstrengthsininfrastructureproductssalesand implementationwork.it snotaleapoutofthecomfortzoneformostchannelplayers. 5 th $Annual$Trends$in$Cloud$Computing:Section4 7

35 5 th $Annual$Trends$in$Cloud$Computing:Section4 8 Butwithfiveyearsandcountingunderourbeltswithcloud,itwouldseemtomakesensethatwe dhita ceilingonnewbuildentrants.clearlythat snotthecase.oneexplanationliesintheactionsgoingonat thecustomerlevel.asoutlinedinsection2ofthisreport,endusercloudmigrationpatternshave accelerated,whichhasincludedapercentageofcompaniesthatarepullingtheirsolutionsbackfroman initialstayinthepubliccloudtoaprivatecloudinstallationwithintheirownfourwalls.savvychannel firmskeepingatabonthesetypesofcustomertrendsmayhaveseenanincreasedrevenueopportunity inthismodelthispastyear. ThecommitmenttotheBuildmodelisevidentinthefactthat64%ofrespondentsdescribedthispartof theircloudbusinessasstrategicandcore,comparedwith46%whodidsoin2013.thisjumpsuggests thatoperationsinthiscategoryhavereachedamaturitylevelthatisdeliveringrevenueresultsbeyond thenicectochavevariety.labelingtheirbuildactivitiesincloudasstrategicskewedslightlyhigherfor smallchannelfirms,whileafull8in10respondentsthatoperatematurecloudbusinessesidentifiedthis pieceoftheirbusinessasstrategicandcore. IntermsoffocusareaswithintheBuildframework,thefindingsshowasizeableincreaseinthosethat aremainlyprocuringhardwareandsoftwaretools,thenresellingtocustomerstobuildprivateclouds. SixtyCfourpercentofchannelfirmsinthiscategoryaredoingthisactivity,comparedwith31%lastyear. Againthismaypointtoendusersdemandingmoreprivatecloudimplementationsafterexperimenting withtheirworkloadsandapplicationsinthepubliccloud.amongsmallchannelfirms,86%areprocuring andresellingprivatecloudinfrastructuretoclientstoday.manyoftoday svendors,includingvmware andhewlettcpackard,havetakentomarket cloudoutofabox typesolutionsthatenablecustomersto constructprivatecloudsinarelativelyturnkeymanner.it slikelythatthesmallchannelfirmsmakingup that86%areresellingsolutionslikethis,alongwithtypicalhardware. Farfewer(13%)reportthattheirBuildbusinessisprimarilyaboutleveraginganexistingcustomer sonc premisehardwareandlayeringsoftwareandmanagementtoolstobuildaprivateorhybridcloud solution. CloudModelElement2:Provide/Provision Thiscategorysawaslightdropinparticipationin2014,from49%ofchannelfirmsdoingcloudin2013 to42%in2014.andyet,thoseinvolvedinprovide/provisionconsiderthisactivitymuchmorestrategic thanlastyear.twothirdspeggedthismodelascoretotheirbusiness,upfrom49%in2013.clearly,for thosemakingthecommitmenttoparticularcloudbusinessmodels,theyareexperiencingsomepositive traction. Aquickdefinition: Typically$these$firms$are$reselling$and$provisioning$IaaS$offerings$such$as$storage$and$compute$capacity$ from$amazon$web$services$or$saas$offerings$such$as$google$apps.$they$are$also$evaluating$and$ aggregating$various$cloud$services$for$customers.$ $ Withinthismodel,thereareseveralsubcategoriesofactivitiesthatchannelfirmspursuetoday. Consistentwith2013findings,6in10channelfirmsdoingcloudreportwhitelabelingavendor scloud offerings,leadingwiththeirownbrandonwhatistypicallyasaasdeal.aschannelfirmslooktoelevate theirownbrandingandimprovemarketingandsalesexpertiseastheymoveawayintoservicesmodels,

36 whitelabelingmakessense.seecomptia s4 th $Annual$State$of$the$Channelreportforadeepdiveon currenteffortswithinthechanneltodrivesalesandmarketingchangewithintheirorganizations. AlsowithinProvide/Provision,asignificantamountofactivityoccursintheresellingofvendorcloudC basedsolutions.thinkaboutabusinessbuiltaroundsellingmicrosoftoffice365orgoogleapps.halfof channelfirmsinthiscategorydosotoday,includingtwothirdsofthelargestchannelentities. Mostsurprisingly,67%ofchannelfirmssaidtheywereoperatingtheirowncloudandsellingservices directtocustomersinthisfashion.thishighpercentageseemscounterintuitivetowhatappearstobe happeninginthemarketplacetoday,wherechannelfirmsareeschewingthebuildingoftheirownnocs infavorofusingthemuchlowercpricedservicesofthemegacproviderssuchasamazonwebservices. It spossiblethatthisisexactlywhatrespondentsaretalkingabouthere.theyresellservicesthatreside inthepubliccloudtodaydirectlytotheircustomers.itisalsopossiblethatchannelfirmsoffering managedservicestodayoperateinthisfashion,usingapsatooltoruntheircustomer ssystems, storageandotheroperations,buttyingthepsatoolintoamazonoranotherlargepubliccloudprovider toserveasitsbackend.technically,thebackendisn treallythemsp sown,buttheymaycountitas partoftheircloudservices. Whichcloudservicesaretheyselling? Amongthe42%ofchannelfirmsinvolved inprovide/provisionmodelforcloud,the usualsuspectsofstorage, ,business productivityappsandvirtualdesktopare amongthemostpopularcloudservices movingthroughthechanneltoday. BetweenhalfandtwoCthirdsofchannel firmshavetheseservicesintheircloud portfolio,althoughthenumberoffering andstoragesolutionsdeclined slightly.thiscouldbeattributedtothe growingnumberofendusersthatsimply accesssuchservicesdirectlyfromthe likesofamazonorgoogle. "#$%"'()*+%"'(,("-$./"0)$12*(-3,$45,6$7*5$ "#$%'()*"'+$',-./)0.('$1.$21,2"'.133('451'5".$.671#.8"1,+9:7$-)#$'5'$#$+;1()/#(/<$,4= 89 :565$5-5/;<=,$ A9 B0,(-*,,$#")0=<'(6;$5##,$ C9 DE5(/$ F9 G6"53*$ H9 J9 B0,(-*,,$="-<-0(6;$ K9."//5L"5<"-$ M9.5//$=*-6*$,"/0<"-,$ 8N9 $O(-5-=*$,"/0<"-,$ B;$6P*$Q0EL*,R$ 3(#1'$G.$,,+(#(()(,4/A. 71.-)$..5'"+1A/<-#4A,"1+.",1/").A"35('$+I-#8J1.#KLE "2.3(,,$'A"35()-$. MNE"2#8".$#8(#"O$'J1.#(.-)0,$A,"1+.",1/")3(+$-# $3(-, P"1'A$%Q"35:RST. "# TheNo.1solutionreportedlybeingsoldiscloudCbasedbusinessintelligenceanddataanalytics,which couldindicateamovingupstreamtomoresophisticatedsolutionsinthecloud.withcloudversionsof analyticstoolsnowavailable,solutionprovidershaveanopportunitytosellpredominantlysmb customerssolutionsthatmayhavebeenbeyondfinancialreachintheoncpremisesform.nonethelessit isasurprisingcategorytolandatthetopofthislistofcloudsolutionsbeingsoldbythechannel.one furtherexplanationcouldbethatchannelfirmsareincludingrevenuegeneratedbybuildingmanaged servicesdashboardsorusingwebanalyticssuchasgoogleanalyticsinsomeoftheworkthatthey providetocustomersanddointernally. TheProvide/Provisionmodelhasperhapsthelowestbarriertoentryofallfourofthecloudbusiness frameworks.it snotabigleaptoresellavendor ssaasapplicationsifyouarealreadyresellingthat vendor sotherproductsandservices.however,themarginsonvendorsaassalestendtobeonthe lowerside,whichrequireschannelfirmstofindwaystoaddvaluetoincreaseprofitability. 5 th $Annual$Trends$in$Cloud$Computing:Section4 9

37 5 th $Annual$Trends$in$Cloud$Computing:Section4 10 CloudModelElement3:Enable/Integrate TheEnable/Integratebusinessframeworkforcloudtookahitin2014intermsofthenumberofchannel companieswithofferingsinthiscategory.andyetforthosefirmsinthisspace,thecommitmentruns deepandthesolutionstheyareproviding forexample,mobileapplicationdevelopmentccarethekind ofrobust,highcmarginofferingsthatboostprofitabilitysignificantly. Considerthefollowingdefinitionforthemodel: Typically$they$are$providing$integration$and$implementation$services$that$may$include$tying$a$customer s$ on;premise$it$solutions$to$its$cloud;based$solutions$or$customizing$cloud;based$solutions$to$fit$a$ particular$business$need$or$vertical.$ In2013,halfofchannelfirmswithcloudintheirportfoliosofferedservicesthatfallwithinthe Enable/Integrateframework.Theserunthegamutfromdeploymentofcloudsolutionsandintegration withonpremisessystemstocustomizationandconsulting.thepercentageworkinginthismodel droppedto39%thispastyear,anotabledecline.additionally,aquarterofrespondentsin2013saidthis businessmodelcategoryhadgreatestgrowthpotentialamongthefourframeworksforcloud,just behindprovide/provisionandbuild.just9%didthispastyear. Whytheretrenchment?Asmentionedabove,thismightbeacaseofbitingoffmorethanyoucanchew. ManyoftheactivitiesandservicesintheEnable/Integratestablerequireacomplexsetofskills.Someof thechannelfirmsthatinitiallyrushedintothismarketmayhavefoundtheworkeitherexceededtheir capacitytoaddresswhilecontinuingtobalancetheirlegacybusinessorthatthenecessaryresourcesto trainorretrainstaffontheseserviceswastoocostly.oneofthekeychallengesofdoingcloudcbased integrationishavingaworkingknowledgeofamorassofwebcbasedapis,adevelopmentskillthatis notinthewheelhouseofthemajorityofthechannel. Smallestchannelfirmswereleastlikelytoparticipateinthisbusinessframework.Just23%ofthemdo socurrently,comparedwithjustmorethanhalfofmediumandlargecounterparts.thefactthat90cplus percentofchannelfirmsfallintothesmallcsizecategorymightalsohelptoexplainthelowparticipation ratesinthiscategory. ForthosethatareinvolvedwithEnable/Integrate,theworkcanbelucrative.Thebusinessmodel encapsulatesanumberofactivities.roughlytwocthirdsofcompaniesinvolvedinenable/integrateare currentlyprovidingthefollowing:deploymentofcloudsolutions,integrationofoncpremisetoolsand infrastructuretocloudsolutionsandcustomization,oftentomeetverticalindustryneeds.anotherthird areengagedincloudcbasedapplicationdevelopment,mostlikelybuildingsaasappsorextensionsto appsthattiecloudinwithanendcustomer scurrentenvironment.manyofthepaasplatformsinthe cloudsimplifythistypeofwork.thelevelofinvolvementintheseareasremainsonaparwiththe percentagesfromlastyear sversionofthestudy. Morechannelfirmsthisyearhavegonedowntheroadofmobileapplicationdevelopmenttosynchand interactwithcloudsolutions.sixtycfourpercentofrespondentsoffertheseservicescurrently,compared with54%in2013.asmobilecontinuestogrowinstatureacrossalltypesofapplications,expectthat categorytoaccelerate.anothergrowthareathatillustratestherelativematurityofcloudasasolution todayfocusesonmigrationservices.channelfirmsinthisrealmareeithermovingacustomerfromone

38 publiccloudprovidertoanother oftenbecauseofdissatisfactionwithprovider#1ccorreorienting appsandinfrastructurebackonpremisesforsecurityorotherreasons. CloudModelElement4:Manage/Support Ongoingmanagementandsupportforoperationalcloudenvironmentsshould,intheory,presenta majoropportunityareaforchannelfirmsthatserveonthefrontlinetotheircustomers.andyet,similar tothedownwardtrajectoryoftheenable/integratecategory,themanage/supportmodelsawasharp declineinthenumberofchannelcompaniescurrentlyprovidingthoseservices. Aquickdefinition: Typically$they$are$delivering$the$ongoing$management$and$support$of$cloud;based$services$as$project$ work$or$in$a$contractual,$recurring$revenue$model.$they$are$also$adding,$scaling$or$troubleshooting$cloud$ services$as$needed.$ In2013,61%ofrespondentsinvolvedincloudreportedactivitiesinthisbusinessmodel.Thatdropped to47%thispastyear,thoughthenumberthatsaidtheyplantooffertheseservicesinthecomingyear cameinatahealthy46%. Oneexplanationfortheretrenchment fromlastyearcouldalsobethatsome channelfirmsrushedintooquickly,only tofindtheydidnotunderstandthe underlyingbusinessmodel,whichin somecasesrequiresashiftfrom transactionaltorecurringrevenue.with thatcomesahostofchangesthatneed tobemadeinsideanorganization, includingaretrainingofsalesrepsused tosellingproductstonowpushservicesc relatedcontractualdeals.it snotalow barformanyorganizations.implications formarketingandbrandingalsoexist whenmovingtoaservicesprovidertype "#$$%'()*+,'-**%$./'01%*)$2'3#$#2%45-667*.'5%*8)9%,' '()**%+,-(.% /01,2(%+,-(.% 3)-40%+,-(.% :;<' ofbusiness.seecomptia s4 th $Annual$State$of$the$ChannelreportforaninCdepthlookattheimpact movingtorecurringrevenuemodelshasonacompany,includingthesignificantshiftispromptsinsales andmarketingstructure. AmongcompaniesthatpulledbackfromtheManage/Supportframeworkthisyear,smallfirmsdidso mostprecipitously.nearly6in10participatedinthisbucketin2013.thisyearthatwasdownto35%. Mediumsizedfirmsalsosawadropfrom71%to59%yearonyear.Largefirmsheldsteadyintheiryear onyearadoption. ForcompaniesinvolvedinManage/Support,thecommitmentishigh,similartowhatisbeingseeninthe Enable/Integratearena.Activitiesinthiscategoryconfercompaniesinmanycaseswithacontractual relationshiptothecustomer,likemanagedservices,andthemuchcdesiredrecurringrevenuestream. >?<' :;<' =:<' "#$% "#% A><'7B'9"#$$%' C*+,')$'3#$#2%D *.'+7D%' 97$,)D%*').',.*#.%2)9' #$D'97*%'.7'."%)*' E-,)$%,,F')$9-D)$2' >?<'7B',+#' 97+6#$)%,% '52-607%85(9:;<=.% "# 5 th $Annual$Trends$in$Cloud$Computing:Section4 11

39 Thiscanhelpeliminatethehighsandlowsassociatedwithproductsalesand/projectworkandensurea longerctermcustomerrelationship.twothirdsofplayershereconsiderthisworkstrategicandcoreto theirbusiness,includingupwardsof80%ofcompaniesthatassessedtheircloudactivitiesasmature. $ Avarietyofservicesfallintothiscategory,andchannelactivityincreasedinallareasdespitethepoolof overallparticipantsdiminishing. =0,"/*#+1('"?02'(13#14#?'12$(3#4'"18"#41 #+'12#$513#1/+#3)'"1 MINH1 MINO1 8<9- ;=9-7;9- =/+/,'4'+31#814$*>2#$51'+?0"#+4'+3(1 8;9-7;9-9/()%#/"5(13#1)'.12$(3#4'"(1$+5'"(3/+51 2#$51$*0:/*#+;12#(3(;1'32<1 8:9-7;9-7'4#3'14#+03#"0+,1#812#$51(#$*#+(1#+1 "'2$""0+,1%/(0(1 7>9-8:9- "#$%'()##*+,-"'./0"0+,12$(3#4'"12#$51 (#$*#+(1#+11."#6'231%/(0(1 8=9- "#"$%'())*+,-./0120%3-43/"5",%-6%"+-*#-6%" A#$"2'B1@#4.CDE(1 "# $%'()$*+,-.$/$0)1'-$0123'451F1G/('B1HII12)/++'1J"4(1K03)12#$51#L'"0+,(1 5 th $Annual$Trends$in$Cloud$Computing:Section4 12

40 SECTION 5: Channel Dynamics

41 KeyPoints ComparedwithnonCcloudbusinessofferingsbychannelfirms,cloudsolutionsandservicesare growingfasterintermsofrevenueanddeliveringhigherprofitmargins.andwhilethatwasalsothe casein2013basedontheselfcassessmentofstudyrespondents,thenumberreportingsuch positivesforcloudactivitiesjumpedthisyear.thisyear,twothirdsofrespondentsreportedhigher profitmarginsoncloudbusinessthannonccloud,upfromhalflastyear.therevenuegrowthratefor cloudvs.nonccloudsolutionsalsoshotupeightpercentagepointsfrom2013. Twothirdsofchannelfirmsmaintainedthesamemixofbusinessmodelsfortheircloudpractices amongthefouroutlinedinsection4ofthisreport:build,provide/provision,enable/integrateand Manage/Support.Butanotherthird,includinghalfofmediumandlargeCsizedcompanies, respectively,tookonadditionalcloudbusinessmodelframeworks,suggestingtheyhadreaped positiveresultsfromtheirexistingcloudstreamsandfeltconfidentaboutbranchingoutintomore. Fourin10respondentspredictedcloudrevenuetogrowsignificantly(15%ormore)inthecoming year.thatcompareswith26%thatrespondedsimilarlyin2013.thissunnyoutlookwasshared consistentlyacrossallchannelfirmsizes,andregardlessofthenumberofbusinessmodel frameworkstheyparticipateinforcloud. Challengesremaininadoptingcloud.Thelistremainslargelyunchangedfromyearspast: determiningthecorrectbusinessmodel,balancingcloudvs.nonccloudbusinesses,initialcosts,sales restructuringandthelike.butthenumberofrespondentsdistinguishingthesechallengesas very significant rosebyanaverageofabout10percentagepointsacrossallitems.itseemsmoretime withcloudhasrevealeditscomplications. 5 th $Annual$Trends$in$Cloud$Computing:Section5 2

42 TakingStockoftheCloud;basedBusiness Regardlessofthebusinessmodelormodelsthatchannelfirmsareembracingaroundcloud,thebigger questionoverthelastfiveyearshasconcernedmonetization.inotherwords,howtoturncloudintoa sizeablerevenuestream,generateprofitsandsatisfycustomers.thissectionofcomptia s5 th $Annual$ Trends$in$Cloud$Computing$reporttakesstockofthecurrentrevenueandprofitpictureforthechannel s cloudactivities,aswellasexaminesthechallengesthatfirmshavefacedastheyhaveaddedacloud practice.additionally,weexaminecustomerdemandandhabitswithrespecttocloud,twofactorsthat obviouslyinfluencethechannel sactionsandpotentialsuccessinthisarea. Unlikethenascentdaysofcloudwhensimpledefinitionsdominatedthedebateanddiscussion,enough timeandexperiencetodayhaveaffordedchannelfirmsadegreeofhindsightandsetofmetricstobegin understandingthetruevalueoftheircloudactivities,whetherminorormajorinscope.channelfirms largelyreportapositivetrajectorywithrespecttotheircloudcbasedlinesofbusiness,whichunlike previousyearsnowcomprisesalarger andgrowingccpieceoftheiroverallrevenuepicture. "#$%'"$%"#$()*+,(-$#./0(123/'"(4$()5#00"* )*+,('26(728#9*325",(1$,+.82: ;"$'3."2(<"'"0+"(=$>85( )*+,('26(728#9*325",(1$,+.82: ;"$'3."2(1$?8(@#$A302( %$ %)$?($ #?$ "#$ '($ ""$"'$ "'$ ''$ >$ "?$ *+,-./ ,25 : , +-;25-,2 </6= ,25 *+,-./ ;2 </6= B6=5C2D<6;EFGHI+ "# $%'()$*+,-.$/$0)1'-$0123'45$JK-+2D?C1-882/L5;+70,1C/6=36M Infact,whencomparedwithnonCcloudbusinessofferingsbychannelfirms,cloudsolutionsandservices aregrowingfasterintermsofrevenueanddeliveringhigherprofitmargins.andwhilethatwasalsothe casein2013basedontheselfcassessmentofstudyrespondents,thenumberreportingsuchpositives forcloudactivitiesjumpedthisyear.inthecaseofprofitmarginsforcloudviscacvisnonccloudproducts 5 th $Annual$Trends$in$Cloud$Computing:Section5 3

43 andservices,theleapwasquitesignificant.roughlyhalfof2013respondentssaidcloudreapedhigher margins,whichgrewtotwocthirdsofferingthatassessmentthisyear.marginreportingcanbefuzzy, whichshouldbenoted.channelfirmsarebundlinginanumberofnonccloudactivitiesandsolutions withtheircloudsales nonccloudintegrationwork,forexample thatmightsignificantlyboostthe profitsonasaasdealthatinandofitselfisnothighmargin.likewise,perceptionmightbeatplayhere, aschannelfirmsnotethecommoditizationanddecliningmarginsonhardwareandassumehigher profitscomingfromtheircloudsales. Therevenuegrowthrateforcloudvs.nonCcloudsolutionsalsoshotupeightpercentagepointsfrom 2013.AmongchannelfirmsthatidentifytheircloudCbasedbusinessasmatureandstrategic(SeeSection 4foradditionaldetailoncloudmaturityrates),thenumbersrunevenhigher.Approximatelythree quartersofthispopulationreportthatbothrevenuegrowthrateandprofitmarginsoncloudwaresare higherthannonccloudproductsandservices.makessenseasthiscategoryoffirmisofteninvestedin morethanoneofthecloudbusinessmodelframeworksoutlinedinsection4andhascommittedheavily tocloudasafoundation. Thechannelupswingmirrorswhatmanyvendorstheyworkwithareseeingintheirowncloudefforts. Microsoft,forexample,releasedquarterlyresultsinOctoberthatshoweditscommercialcloudrevenue frombusinesscustomers(notconsumers),grewby$662million,or128%.ceosatyanadellasaysthe company'scloudcomputingbusinessismovinginthedirectiontoreach$4.4billioninrevenuethisyear, andwhilestillafractionofthesalesgeneratedfromitsconventionalsoftwareclicensedproductsitis expandingatafasterpace.andthat sgoodnewsforthechannel,consideringthatahealthyportionof Microsoft scloudrevenueresultsfromitspartnerssellingcloudcbasedoffice365. Onecaveat.ItmustbementionedthatselfCreportingonfinancials profitability,revenuegrowth,etc. isnota100%truebarometer,asrespondentscanattimestendtoinflateresultslackcomplete transparencyintothehardnumbers.thatsaid,thetrajectoryinthestudyfindingsisundeniablymoving inanupwarddirectionforcloudwhencompareddirectlytoconventionallinesofchannelbusiness.and unlessacompanyisabonafide borninthecloud entity,mostwillremainhybridinnature,operating withamixofrevenuestreamsfromcloudandnonccloudsources. Therevenuemixforchannelfirmsisindeed quiteahybridofvaryingsourcesfrom hardwaresalesandmanagedservicesto cloudsalesandconsulting.cloudrevenuehas establishedalargerpresencethaninpast yearswithinthechannelrevenuecgenerating activities.thisincludesnotonlythecloud solutionsthemselves,butalsoanyconsulting workandinfrastructure e.g.hardwareand softwaretobuildaprivatecloud thatgoes alongaspartofthesale. Twothirdsofchannelfirmsmaintainedthe samemixofbusinessmodelsfortheircloud practicesamongthefouroutlinedinsection4 ofthisreport:build,provide/provision, ChannelRevenueSplitLast12Months 25% NonCcloudsoftwaresales 21% CloudCbasedsales,including infrastructureandconsulting 20% NonCcloudhardwaresales 13% NonCcloudconsulting 11% Managedservices 10% NonCcloudbreak/fix 9% NonCcloudintegration 7% NonCcloudtelecomservices 5 th $Annual$Trends$in$Cloud$Computing:Section5 4

44 Enable/IntegrateandManage/Support.Butanotherthird,includinghalfofmediumandlargeCsized companies,respectively,tookonadditionalcloudbusinessmodelframeworks,suggestingtheyhad reapedpositiveresultsfromtheirexistingcloudstreamsandfeltconfidentaboutbranchingoutinto more. Expectationsforcontinuedrevenuegrowthexpansionalsosoared.Fourin10respondentspredicted cloudrevenuetogrowsignificantly(15%ormore)inthecomingyear.thatcompareswith26%that respondedsimilarlyin2013.thissunnyoutlookwassharedconsistentlyacrossallchannelfirmsizes, andregardlessofthenumberofbusinessmodelframeworkstheyparticipateinforcloud. Operationallyspeaking,anotherindicatorthatthechannelistakingthemetricsaroundcloudseriouslyis theattentiontheyarepayingtothemannerinwhichcloudcbasedrevenueisdistinguishedfromnonc cloudrevenue.thisexerciseallowsforfarmoreaccuratetrackingofwheretheirsalesarecomingfrom. "#$%'()*+%',$'-.)%#/0'12$.3456+"78"'5)2+' G:67#:.H3?96#1.#19?<2#9686/E6#:.E9<6:# $*# $*(# )"# ',"# ("# '("# A96?167#:6;?9?16#:?56:#16?B:# '"# +$"# (*"# $%"# -./01#2/.3# '"# "# I.E9<6J#A.B;KLM0:# "# $%'()$*+,-.$/$0)1'-$0123'45$N#O?:6J#**#<C?//65#>9B:#3=1C#<5.E7#.P69=/D:# OfparticularnoteisthejumpinfirmsthathaveimplementedcommercialPSA(ProfessionalServices Automation)toolstotracktheirvariousrevenuesources.PSAsoftwareisnotinexpensive.Infact,ina CompTIATrends$in$Managed$Services$Operationsstudyfrom2012,just46%ofMSPswereusing commercialpsasoftwaretoruntheiroperations andthatpopulationhasbeentheprimarytargetfor theseplatforms.sothefactthattoday sfirmsareshellingoutthedollarsanddeployingthesesystems asawaytotracktheircloudrevenuestreamsistellingandspeaksvolumesabouttheircommitment. 5 th $Annual$Trends$in$Cloud$Computing:Section5 5

45 TheincidencerateofthevariousactionstakenontherevenueCtrackingfront,includingaltering accountingcodesandcreatingseparatesalesteamsassignedtocloudandnonccloudbusiness,is consistentacrossallsizesofchannelcompanies,thoughmediumcsizedbusinessesdidshowahigher propensityforfollowingspecificvendorspecificationsfortallyingcloudsales. ChallengesandTransitionLogistics Whilefiveyearsworkingwithcloudhasclearlyinjectedmoreconfidenceandbetterresultsintothe channel,it salsoallowedenoughtimeforproblemsandchallengestobubbleuptothesurface,andin somecasescausechannelfirmstoretrenchabitintheiractivitylevel(seesection4formoredetails). First,let sreviewthetransitionpaththatfirmsaretakingtoaddcloudtotheirportfolios.thefindings revealachangethatsuggestsabitmorecautionfornewcomers.fiftycsixpercentoffirmsdoingcloud todaygottherebyproactivelypursuingasinglesegmentofthemarket SaaSsales,forexample that theyfoundtobeanaturalextensiontotheirexistingbusiness.thatnumberdoubledfrom2013when 28%offirmschartedtheircoursethisway.Meanwhilethisyear,36%offirmssaidtheypursuedmultiple cloudbusinessmodelsegmentsatonceinaquesttogettomarketrapidly,downfrom57%n2013. Thetrendtowardamoremeasuredapproachsuggeststhatcompaniesareadoptingarealisticattitude abouttheircapabilitiesandresourcestomovewholesaleintoanewbusinessmodelarenaandtackleall thatentails.thesmallestchannelfirms(70%),inparticular,optedtopursueasinglecloudbusiness segmentthatcomplementedtheircurrentactivities,comparedwith4in10mediumandlargecsized entities,respectively.smallerfirmstendtobemoreriskcaverse,givenconsiderationsaroundcashflow andcredit,sothisfindingisnotsurprising. Asmentionedabove,extendedexperiencewithanewbusinesslineisboththeavenuetoimproveand becomeskilledwhilealsotheplayingfieldfortrial,errorandtribulation.thecloudtransitionisno differentandwithseveralyearsundertheirbelts,channelfirmstodayhaveamoresoberingviewpoint whenaskedaboutthevariousobstaclestheyhavefaced. 5 th $Annual$Trends$in$Cloud$Computing:Section5 6

46 "#$$%'%()*%%+%,)-.%/0)12'234#56)70)"#%$)8)92(%) 5-9-+$%'%'()*""+2"+%*9-)E4/%'-//)$2.-0) OMPL) OMPQ) :=<) =;<) C*0*'3%'()'--./)21)0-(*3D)E4/%'-//)*'.) 3024.)/*0-/) ::<) =B<) A'%#*0)32/9/)8%'1+*/ )-93B;) ::<) =A<) 5-3%.%'()<:%3:)6-'.2+/)92)<2+,)<%9:) "%'()3024.)-7"-+#/-)89-3:'%3*0)*'.) /*0-/;) "#$%%'()$*+,-+%'()*'.)/*0-/)$-//*(%'() 12+)3024.) :?<) =A<) =><) =:<) :;<) F24+3-G)=2$"HAIJ/) "# Thelistofchallengesremainslargelyunchangedfromyearspast:determiningthecorrectbusiness model,balancingcloudvs.nonccloudbusinesses,initialcosts,salesrestructuringandthelike(seechart above).butthenumberofrespondentsdistinguishingthesechallengesas verysignificant rosebyan averageofabout10percentagepointsacrossallitems.itseemsmoretimewithcloudhasrevealedits complications.sodespitealltheoptimismnotedinthisyear sfindingsaroundcloudrevenuegrowth andprofitmargins,itappearsthatthechannelisstillstrugglingabitwithsettlingintotherightmodel. Whilethesefindingswerelargelyconsistentacrossallrespondents,smallchannelfirmsidentifiedcash flowandotherfinancialconsiderationstobeamoresignificanthurdlethanmediumorlargerfirms.and confirmingthatmoreexperiencewithsomethingopensyouuptomoregrowingpains,thefirmswith matureandstrategiccloudbusinessespeggedtheabovechallengesas verysignificant ingreater numbersthananyotherrespondenttype. 5 th $Annual$Trends$in$Cloud$Computing:Section5 7

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hannelfirmstackledthevariouscloudchallengesinanumberofways.First,throughinvestment, includingtechnicalandsalestraining,thepursuitofcredit,hiringanewetc.theyalsoexercisedrestraint asatactic,transitioningonlyaportionoftheirbusinesstocloudatfirstwithplanstoscalelateras needed.theseactionswereundertakenconsistentlyacrossallchannelfirmsizes,butwithagreater incidenceamongcompaniesidentifyingascloudmature. Mostinterestingisthewhiteflagbeingwavedwhenitcomestothedatacenterdecision.Earlyoninthe cloudmarch,manyinthechannelproclaimedthattheywouldbuildandoperatetheirownnocsto serveupcloudsolutionsandessentiallyactasanotherpieceofthepubliccloud.today,withthepublic cloudmarketcoalescingaroundseveralmammothproviderssuchasamazon,googleandmicrosoft,the channelisbackingdown.theycanneverexpecttoreasonablycompeteonpricingforcloudcompute servicesthattheamazonsoftheworlddroproutinely.thisyear,halfofchannelfirmssaidtheyare contractingwithathirdcpartyproviderforuseofadatacenterforcloud,comparedwith31%in2013. Expectthatpercentagetoriseinsuccessiveyears. 5 th $Annual$Trends$in$Cloud$Computing:Section5 8

48 CustomerDynamics Endusercustomersaretheothermajorpieceofthecloudequationforthechannel.Fromthechannel s pointofview,bothdemandforcloudandunderstandingofithaveclimbedupwardamongcustomers. Comparedwith2013whenanet63%characterizeddemandaseitherhighorveryhigh,nearly8in10 didsothisyear.seesection1foramoredetailedbreakdownofcloudmarketsizeandprojectionsfor future. Smallchannelfirmsarehearingthe customercloudcclamoringtwiceasloudly astheirmediumcandlargecsized brethren.twothirdsofsmallfirms reportedthedemandtheyareseeingas veryhigh, comparedwithathirdofthe othertwo,respectively.asdiscussedin Section4ofthisreport,smallerchannel firms whichrepresentthepluralityof thechannelecosystem tendtosellto SMBcompanieslikethemselves.And cloudopensdoorsforsmbsthatmight notopeninthepast;namelyaccessto applicationsandothertoolsthatare otherwisecostcprohibitiveintheir 2''1,3)"#$%'()*'+,-)4,)+)%5'116')2+(7'$) "#$%'()*'+,-).%()/%"-)0%/"1%,#) "#$ conventionalsoftwareclicensingformat.hencethemodel sattractivenessandonepotentialreasonfor highdemand. Smallchannelfirmsalsocreditedtheircustomersasmoreknowledgeableingeneralaroundcloud, whichisabigchangefromfiveyearsagowhencomptiaresearchfoundessentiallylittleawarenessof whatcloudwasatthecustomerlevel. Greaterdemandbringsitsownsetofchallenges,chieflyaroundcapacitytodeliver.Unlessachannel firmhasadequatecapacityandskillstomeetthatdemand,theywillhavetoeitherturnawayorlose business.thiswasaproblemin2014;with67%ofchannelfirmsclaimingthatcustomerdemandfor cloudsolutionsoutstrippedtheirabilitytodeliverincertaininstances.thatisupsharplyfrom4in10 thatranintothesameproblemin2013.alsomoreprevalentthisyear:losingaclouddealtoanother solutionprovider,vendorordistributor,whichhalfofrespondentsexperiencedvs.athirdlastyear. Clearlywithdemandgrowing,theplayersarescramblingabittodeterminebestroutestomarketand optimallevelsofinternalstaffing.inparticular,thedemandctoccapacitybalancingactwillbeastruggle. Withcustomerscuriousaboutcloudanddemandup,freshconversationshavebeensparkedbetween channelfirmsandtheirexistingclients,whiledoorsareopeningtopotentialnewcustomersseeking,in someinstances,abettermousetraptomeettheirtechnologyneeds. Caseinpoint?Sevenin10channelfirmssaythatcloudhasgenerallystrengthenedtheircustomer relationships,upslightlyfromlastyear,withjust15%onaverageclaimingithasweakenedties.thisis encouragingnewsgiventhefactthatmanyinthechannelhavefearedpubliclythatcloudwoulddrivea wedgebetweenthemandtheircustomers.there sbeenrampantapprehensionaboutsuchilleffectsas %#$ '#$ )*+,$-./-$ 0./-$ 123*4-56$ -./-$ (#$ 7248$$$$$$ )*+,$924$ 8(%9/'#):,;%",$'('-) <=',)0'//4,3)/%"-)0'(64;'#) ) >?@ ):;<623*+$=*35>=$ $$$ $ $2;6<6+.??*=$@[email protected],$ $ AB@ $72<6$@92;=$<59*$62$A+3$ $ $26-*+$6-5>$1B$ $ C?@ $72<6$<59*$=;*$62$95@C$2D$ $ $<?*@.A@$<29;E2>$ 12;+@*F$:23?GHIJ<$ "# $%'()$*+,-.$/$0)1'-$0123'45$K$L5<*F$MM$@-5>>*9$A+3<$4.6-$@92;=$2N*+.>/<$ 5 th $Annual$Trends$in$Cloud$Computing:Section5 9

49 aresurgenceinvendordirectsalesandendusercustomerschoosingaselfcservicemodelfortheirit solutions,i.e.procuringsaasapplicationsonline.andwhilebothofthesetrendsarehappeningtoa certainextent,comptiadatasuggestnotatsuchdireexpensetomostofthechannel,especiallythose thathavereachedahighlevelofcloudmaturitytodayandintendtoremaincommitted. 5 th $Annual$Trends$in$Cloud$Computing:Section5 10

50 CompTIA.org 2014 CompTIA Properties, LLC, used under license by CompTIA Member Services, LLC. All rights reserved. All membership activities and offerings to members of CompTIA, Inc. are operated exclusively by CompTIA Member Services, LLC. CompTIA is a registered trademark of CompTIA Properties, LLC in the U.S. and internationally. Other brands and company names mentioned herein may be trademarks or service marks of CompTIA Properties, LLC or of their respective owners. Reproduction or dissemination prohibited without written consent of CompTIA Properties, LLC. Printed in the U.S Oct2014