The Move to Cloud Computing Through The Double Dip. Robert McNeill VP Research HfS Research Ltd

Transcription

1 The Move to Cloud Computing Through The Double Dip Robert McNeill VP Research HfS Research Ltd

2 Agenda» Introducing HfS Research» Impact of a Double-Dip Recession on Sourcing» Demystifying the Cloud» Concerns and Challenges over Cloud» Key Takeaways and Recommendations

3 The Impact of a Double-Dip Recession on Sourcing

4 Buyers are going into this planned recession with a move to outsourcing. They are knowledgeable. Q. Overall, is the prospect of a "Double Dip" Recession currently increasing / decreasing your organization's current focus on outsourcing? Source: HfS Research September 2011 Sample: 157 Buy-side Organizations

5 Four-out-of-every-ten buyers already expect layoffs and wage-arbitrage of IT and finance Source: HfS Research September 2011 Sample: 157 Buy-side Organizations

6 Business function leaders seeking to re-engineer business processes in this double dip climate Source: HfS Research September 2011 Sample: 157 Buy-side Organizations

7 Four drivers to today s outsourcing: cost, standardization, global flexibility and technology services Source: HfS Research September 2011 Sample: 157 Buy-side Organizations

8 Demystifying the Cloud IaaS PaaS SaaS BPaaS Business Platform

9 Brokering and Orchestration Security Cloud Stratification Across Many Silos Outcomes Process Software Platform Infrastructure

10 Differing Delivery Models Public Private Community Hybrid

11 Business execs enthusiastic with the potential of Cloud s business impact, however the appeal to the IT community is also strong To what extent do the following aspects of the "Cloud" value proposition appeal, as it pertains to your job? Answer selected: Appeals to a great extent Business Executives IT Executives Cloud drives down the overall cost of running business applications Cloud drives down the cost and time to configure applications Cloud facilitates a virtual / distributed organization We can implement the business apps we need much quicker when they are provisioned in the Cloud Cloud brings us predictability of future application costs Cloud empowers us to access best-in-class applications quickly, that we could never have done in the past Cloud helps us store, access and manage data more easily Cloud enables us to focus on transforming our business, and not our IT Cloud frees us from the stranglehold of software vendors (easier to switch) Cloud forces us to conform to better ways of running business tasks / functions Cloud will help us store, access and manage data more securely Cloud gives our business staff access to complex business apps that our IT staff can't configure properly Cloud will help us access social networks Not entirely sure what benefits Cloud brings, we're just following the crowd 0% 10% 20% 30% 40% 50% 60% 70% Source: HfS Research and The Outsourcing Unit at the London School of Economics, November 2010 Sample: 628 Enterprises

12 Business & IT Professionals view Cloud Business Services as Innovative What is your general opinion about Cloud Business Services? It is an enabling business services/it delivery model that drives innovation in organizations It is a new technological platform that can transform organizational forms I don't understand it enough to offer an opinion It is an evolving model that is years away from a business reality Current Cloud offerings are not suitable to my organization It is mainly marketing hype IT Executives Business Executives 0% 20% 40% 60% 80% % Business and IT Executives Source: HfS Research and The Outsourcing Unit at the London School of Economics, November 2010 Sample: 628 Enterprises

13 Cloud is becoming mainstream in the enterprise Source: HfS Research and The Outsourcing Unit at the London School of Economics, November, 2010 Sample: 407 Enterprises

14 Mainstream corporate apps being delivered via Cloud services will more than double in 18 months Source: HfS Research and The Outsourcing Unit at the London School of Economics, November, 2010 Sample: 628 Enterprises

15 Concerns and Challenges over Cloud Security Privacy Reliability High Availability

16 As an end-consumer, we ve been using Cloud for a long time

17 In return, you re willing to give away Your personal information (cell phone, pictures, address) for ads and other purposes

18 Business executives need reassurance over data privacy and data being housed offshore How much of a concern are the following business risks posed by Cloud Business Services to your business function, compared to your existing risks for non-cloud services? Business risks are greater Business risks are unchanged Business risks are lessened Data security & privacy Data being housed offshore Compliance / regulatory issues Exit strategy and Lock-in risks Availability of quality external support Credibility of suppliers Disaster/recovery of data Business detriment of not adopting Cloud services Availability of consulting support to optimize ongoing services Availability of consulting support prior to implementation Data management 0% 20% 40% 60% 80% 100% % Business Executives Source: HfS Research and The Outsourcing Unit at the London School of Economics, November, 2010 Sample: 414 Enterprises

19 Business execs lack knowledge of the legal and contractual issues Please evaluate the following contractual / legal risks to your organization with Cloud Business Services High risk No additional risk Low risk Not enough information to evaluate Data-protection and regulatory compliance concerns Contingency in the event of business supplier failure Intellectual Property Concerns Service Level Agreements not detailed enough. Non-performance risks (e.g. Compensation for failure) Viability of Service Level Agreements Service Quality Measures Exit provisions Customized Contracts 0% 20% 40% 60% 80% 100% % Business Executives Source: HfS Research and The Outsourcing Unit at the London School of Economics, November, 2010 Sample: 414 Enterprises

20 Delivery and support expectations and challenges of Cloud Business Services Governance Support Change Configuration

21 Expectations to deliver on Cloud on in-house IT staff are high To what extent will your organization seek to rely on the capabilities of the following firms to help implement your move to the Cloud? Will rely extensively Will rely moderately Will not rely at all Undecided Our in-house IT department Software/Cloud vendor? (i.e. Oracle, Salesforce.com, Amazon) Professional IT / BPO services firms (i.e. Accenture, ADP, Cognizant, IBM, Infosys, HP) Legal firms claiming Cloud contract expertise Consultants (i.e. Deloitte, KPMG, McKinsey, EquaTerra, TPI) 0% 20% 40% 60% 80% 100% % Business Executives Source: HfS Research and The Outsourcing Unit at the London School of Economics, November, 2010 Sample: 414 Enterprises

22 Key Takeaways and Recommendations Innovate Better Faster Cheaper

23 Key Takeaways Adoption intentions and drivers:» Cloud business services are no longer hype, with two-thirds of business and IT executives viewing Cloud-enabled services delivery models as driving innovation in their organizations» Business executives show greater enthusiasm for the Cloud value proposition, but over half of IT execs see powerful value in Cloud s ability to drive out cost, increase speed to deployment and facilitate virtual work environment» Over 60 percent of organizations already have strong momentum towards Cloud Business Services adoptions. Concerns and Challenges:» Business and IT executives need reassurance over Cloud s potential negative impact on data privacy and being housed offshore. IT executives voice concerns over provider lock-in, loss of competitive advantage and developing an exit strategy» Business executives need more education over legal and contractual issues with Cloudenablement Delivery and support expectations and challenges:» Expectations to deliver on Cloud on in-house IT staff are high from the business function can it deliver?

24 Recommendations» Are you ready for the Cloud? Have you performed an application portfolio review to see what applications could move to cloudbased delivery» Are you a good fit for the Cloud? Have you looked at the security, risk, integration and management requirements required for cloudbased delivery?» Have you closely looked at economics of Public versus Private and evaluated the risk concerns/trade-offs?» Do you understand what is legacy baggage versus an asset? For instance do you need all your previous data and customizations?» Assess provider cloud credentials with a grain of salt. Really work out what is really just yesteryear s hosting and applications delivered through an integrated Cloudwashed Powerpoint presentation versus technology that was built on and delivered from the internet

25 Thank you! Robert McNeill

26 Appendix

27 % Business Executives Most business executives unclear of future Cloud budgetary investment What percentage (as a rough estimate) of your present departmental IT budget do you expect to see allocated to the cloud? 35% Within the next 18 months Within the next 5 years 30% 30% 25% 20% 15% 21% 23% 16% 16% 13% 11% 15% 16% 20% 10% 5% 6% 6% 5% 5% 0% Over 20% 10-20% 5-10% 1-5% zero Undecided Don t know % Departmental IT Budget devoted to Cloud Business Services Source: HfS Research and The Outsourcing Unit at the London School of Economics, November, 2010

28 Legacy versus Cloud Dynamics Evolving Service Provider Dynamics Legacy Dynamics Cloud Dynamics Deal Type Deal Length Deal Focus Deal Team Horizontal silos - infrastructure, network, applications, business processes Long term years with a Billion Dollar Diet Asset intensive - (transfer of capital and labor) Pyramid (partner approach), heavy onsite PMO Vertically integrated processes often with a strong industry orientation Shorter / leaner / iterative relationships - Initially less than 3 years Asset Lite - (Leveraging external cloud computing services) Flatter (expert ninjas) delivering value from offshore centers of expertise Deal Partners Established ecosystems Cloud Ecosystem (new Cloud / SaaS partners and aggregrators) Deal Flow US and W. EU Global - growth especially from BRIC Scalability One-to-one / mess for less One-to-many (repeatable solutions delivered from a multi-tenant platform High management costs (3-6% of Potentially less management costs (due to utility outsourcing deal) nature of providing service to many clients Management Cost Innovation and Flexibility Lack of innovation and flexibility (due to cost of change, inflexible technology and service platform etc Increased innovation and flexibility (based on ease of development, productization of IP)

29 % Business Executives However, those business executives with significant influence over Cloud investments are expecting to allocate 20-30% of their IT budgets to Cloud services What percentage (as a rough estimate) of your present departmental IT budget do you expect to see allocated to the cloud? n = 84 business executives with significant influence over Cloud investment 35% 30% 25% 20% 15% 21% 30% 23% 16% Within the next 18 months Within the next 5 years 16% 13% 11% 15% 16% 20% 10% 5% 6% 6% 5% 5% 0% Over 20% 10-20% 5-10% 1-5% zero Undecided Don t know % Departmental IT Budget devoted to Cloud Business Services Source: HfS Research and The Outsourcing Unit at the London School of Economics, November, 2010

30 IT execs are less bullish about Cloud investments over the next 18 months. Five year expectations are similar across both business and IT executives Source: HfS Research and The Outsourcing Unit at the London School of Economics, November, 2010