I D C M a r k e t S c a p e : C a n a d i a n P u b l i c I a a S V e n d o r A n a l y s i s

Transcription

1 33 Yonge St., Suite 420, Toronto, Ontario Canada, M5E 1G4 C O M P E T I T I V E A N A L Y S I S I D C M a r k e t S c a p e : C a n a d i a n P u b l i c I a a S V e n d o r A n a l y s i s Mark Schrutt I N T H I S E X C E R P T The content for this excerpt was taken directly from the IDC MarketScape: IDC MarketScape: Canadian Public IaaS 2013 by Mark Schrutt (Doc # CASSC13). All or parts of the following sections are included in this excerpt: IDC Opinion, In This Study, Situation Overview, Future Outlook, Essential Guidance, and Synopsis. Also included is Figure 7. I D C O P I N I O N The Canadian public infrastructure-as-a-service (IaaS) market is forecast to grow by more than a 50% CAGR over the next four years. It is a fast-moving, competitive, and emerging market that by 2016 will be valued at more than C$250 million. IDC believes that the timing is right to assess the primary vendors of public IaaS and provide our perspective on which providers will set the path as the market matures. Using the IDC MarketScape methodology, our premiere research tool, we evaluated a dozen vendors on close to 100 criteria. The IDC MarketScape assesses a vendor's current capabilities, a vendor's strategy to drive public IaaS sales, and the Canadian buyer's view on market leadership. IDC approached the provider scoring from the perspective of the average Canadian business: midsize (500 employees) to large (up to 5,000 employees) organizations. We invited firms with more than C$20 million in hosting revenue or C$1 million in public IaaS sales to participate in the study. In summary, IDC found: The ability to fund massive datacentre facilities and scale compute and storage resources are key to success in the public IaaS market. Scale was a critical criterion in the IDC MarketScape and was balanced against more traditional factors such as consulting, integration and ongoing support. Most Canadian-based IaaS providers are leaning toward a managed, virtual private IaaS model. IDC believes vendors need to expand their IaaS portfolio to include self-serve, on-demand access to infrastructure resources to better match customer demands. While 60% of buyers preferred to have IaaS delivered from within Canadian borders, buying in-canada solutions ranked unusually low on the list of factors that are weighed when making decisions around cloud. IDC believes that while the stated preference for in-canada solutions is important in terms of relationship management, it is also a convenient excuse for other factors that revolve around knowledge and comfort with nontraditional vendors as well as inexperience in managing the reputational risk of outsourcing. Filing Information: June 2013, IDC #CA3SSC13, Volume: 1 Canadian Strategic Sourcing and Cloud Services: Competitive Analysis

2 IBM scored the highest in the IDC MarketScape. Most of the vendors ranked as Major Players. Cloud is relatively new, and offerings continue to evolve, so market leadership is still an insecure position. We believe that over the next two to three years, there is time for vendors to make significant moves in the IDC MarketScape rankings. #CA3SSC IDC

3 I N T H I S S T U D Y This IDC study uses the vendor assessment model called IDC MarketScape. This research is a quantitative and qualitative assessment of the characteristics that explain a firm's success in the marketplace and help anticipate its ascendancy. This study assesses the capability and business strategy of many of the leading public infrastructure-as-a-service vendors active in the Canadian market. This evaluation is based on a comprehensive framework and set of parameters expected to be most conducive to success in providing infrastructure-based cloud services during both the short term and the long term. A significant and unique component of this evaluation is the inclusion of the perception of cloud buyers of both the key characteristics and the capabilities of these IaaS providers. As one would expect of market leaders, overall, these firms performed very well on this assessment. This study is composed of two key sections. The first part is a definition or description of the characteristics that IDC analysts believe make a successful public IaaS provider. These characteristics are based on buyer and vendor surveys and key analysts' observations of industry best practices. The second part is a visual aggregation of multiple firms into a single bubble chart format. This display concisely exhibits the observed and quantified scores of the cloud providers. A review of each vendor and a description of each vendor's public IaaS services are also provided. The document concludes with IDC's essential guidance to support continued growth and improvement of these firms' offerings. M e t h o d o l o g y IDC MarketScape criteria selection, weightings, and vendor scores represent wellresearched IDC judgment about the market and specific firms. IDC analysts tailor the range of standard characteristics by which firms are measured through structured discussions, surveys, and interviews with market leaders, participants, and end buyers. Market weightings are based on user interviews, buyer surveys, and the input of a review board of IDC experts in each market. IDC analysts base individual firm scores and, ultimately, firm positions on the IDC MarketScape, on surveys and interviews with the firms, publicly available information, and buyer experiences in an effort to provide an accurate and consistent assessment of each firm's characteristics, behavior, and capability. S I T U A T I O N O V E R V I E W T h e M a r k e t p l a c e f o r I a a S The Canadian public IaaS market is still developing, having had its first in-canada offerings for just over four years. As such, IDC established realistic criteria for inclusion in the study. Vendors had to have either C$1 million in public IaaS compute 2013 IDC Excerpt of #CA3SSC13 1

4 and/or storage services or C$20 million in hosting revenue and currently offer infrastructure-based public and/or VPC cloud services to Canadian users. Today, there are well over 1,000 vendors offering cloud services such as SaaS and PaaS in the Canadian market. The selection process is far easier in the infrastructurebased cloud market. Massive investments in technologies, facilities, and operational personnel are the table stakes in the IaaS space. There are only a handful of vendors with the means to offer in-canada public IaaS services as well as a small number of global IaaS players (with no Canadian DC presence) that are targeting the Canadian market with in-country direct sales or partners. This study includes 12 vendors. And while there surely will be new entrants to the market, IDC categorizes IaaS vendors into four groups: Large systems integrators (SIs). These vendors offer a full range of cloud technologies, including hardware and software as well as public IaaS, with a particular focus on "hybrid" cloud environments. As they do for the majority of their IT services, the large SIs target the midmarket and enterprise-sized organizations with their IaaS offerings. Public IaaS in particular is promoted to the commercial businesses with revenue of C$500 million or more. Their public IaaS offerings are promoted as enterprise grade, typically in a virtual private, vendor-managed, or pay-as-you-go model or in some combination of these. Telecom-based providers. Telecoms offer the full scope of infrastructure services, including hosting, networking, and managed application services. They have yet to build out their portfolio to include extensive software or professional service options. Instead, the telcos have focused on providing infrastructurebased services to their target customer set. A key differentiator for telecombased providers is their ability to offer network and Internet components embedded in their cloud services, which results in seamless, high-availability IaaS services. Telecoms also promote their offerings as in-canada and fully data resident. IDC anticipates that over the next 12 months, telecom-based providers will extend their public IaaS to include both VPC and non-vpc offerings and, instead of competing on price, will continue to rely on their in-canada offerings and end-to-end value proposition. Cloud-centric providers. Cloud-centric firms are vendors with infrastructure services offerings centered on IaaS. IDC included Microsoft and Amazon Web Services in this IDC MarketScape. The field of specialty cloud providers will soon expand to include Google (Compute Engine) and VMware. Both Microsoft and AWS view cloud as an extension of their traditional business and leverage massive investment in datacentre assets to package and deliver services. AWS has used a similar mass-market approach that quickly vaulted Amazon.com Inc. into the world's largest online retailer. Microsoft on the other hand expanded its development platform by launching Azure in Both providers now offer a full range of cloud services and are building extensive VAR and channel relationships. Hosting firms. Hosting firms are mostly focused on infrastructure services and limit the availability of other associated cloud services. The IaaS services provided by these vendors are best suited for firms that have a range of 2 Excerpt of #CA3SSC IDC

5 infrastructure requirements, including colocation and private and public IaaS. The hosting firms active in Canada offer managed, virtual private cloud (VPC) services. The target market for hosters spans small and midsize businesses (SMBs) to the upper end of the midmarket. F U T U R E O U T L O O K The cloud market is the fastest-growing IT segment in Canada. Cloud involves all facets of ICT, crossing lines between telecom, datacentre, services, software development, and applications. Along with big data and mobility, cloud is one of the most important and hyped technology trends to hit Canada in over a decade. Cloud is complex and confusing, and if buyers do not make informed decisions, cloud can introduce additional risk and cost to running IT. Cloud will undoubtedly have a permanent impact on the Canadian IT landscape, and IDC believes the timing is right to take an unbiased view of who is setting the path to follow and who is expected to lead the public IaaS market. I D C M a r k e t S c a p e : C a n a d i a n P u b l i c I a a S M a r k e t V e n d o r A s s e s s m e n t The IDC vendor assessment for the Canadian Public IaaS market represents IDC's opinion on which providers are well positioned today through current capabilities and which providers are best positioned to gain market share over the next few years. Positioning in the upper right of the grid indicates that providers are well positioned to gain market share. For the purposes of analysis, IDC divided potential key strategy measures for success into two primary categories: capabilities and strategies. Positioning on the y-axis reflects the provider's current capabilities and menu of services and how well aligned the provider is to customers' current needs. The capabilities category focuses on the capabilities of the company and services today, here and now. Under this category, IDC looks at how well a provider is building/delivering capabilities that enable it to execute its chosen strategy in the market. Positioning on the x-axis, or strategies axis, indicates how well the provider's future strategy aligns with what customers will require in three to five years. The strategies category focuses on high-level strategic decisions and underlying assumptions about offerings, customer segments, business, and go-to-market plans for the future, in this case defined as the next three to five years. Under this category, analysts look at whether or not a provider's strategies in various areas are aligned with IDC's expectations of shifting customer requirements (and spending) over a defined future time period. Figure 7 shows each provider's position in the vendor assessment chart. A provider's market share is indicated by the size of the bubble IDC Excerpt of #CA3SSC13 3

6 F I G U R E 7 I D C M a r k e t S c a p e : C a n a d i a n P u b l i c I a a S M a r k e t V e n d o r A s s e s s m e n t Source: IDC, 2013 V e n d o r P r o f i l e s The sections that follow provide an overview of the various providers in this study. Cloud offerings are continuously changing, and as such, IDC recommends readers refer to vendor Web sites for the most recent information on the vendors' public IaaS portfolio. BLACKIRON/Rogers BLACKIRON was formed as an operating division of Primus Telecommunications Group Incorporated (PTGi) in October BLACKIRON combined all of Primus' IT and managed services businesses into one unit. Subsequently, the BLACKIRON 4 Excerpt of #CA3SSC IDC

7 division was sold to Rogers Communications in April 2013 and is now operating under the Rogers Business Services arm of RCI. BLACKIRON goes to market with a slightly different focus and message than it had when IT services were under the Primus umbrella. Where Primus had targeted SMEs up to the 500-employee level, BLACKIRON's focus is on the next layer up, namely the upper midmarket, businesses with 100 2,000 employees. Realizing this market had different buying criteria and a potentially heightened set of IT requirements, BLACKIRON has branded its hosting services as mission critical and enterprise ready. BLACKIRON's newest datacentre, located in the Toronto area, is certified tier 3 and LEED silver, the first facility of its kind in Canada. BLACKIRON boasts PCI compliance and SAS 70 and plans to certify each of its datacentres by the Uptime Institute. BLACKIRON has built a portfolio of highly resilient, secure, and geographically diversified datacentres to back up this message. BLACKIRON currently has eight facilities with 38,000 sq ft of raised floor. It plans on expanding its capacity by over 4,000 sq ft later in 2013 and an additional 20,000 sq ft in BLACKIRON provides a full suite of managed hosting services including colocation, dedicated hosting, managed storage, and backup. It currently delivers its IaaS offering out of the Toronto and Ottawa sites and expects to go live in Edmonton before the end of BLACKIRON was one of the first Canadian cloud providers, having launched its service in BLACKIRON has made a series of changes, enhancements, and upgrades to its service, culminating with a relaunch of its IaaS offering to coincide with its rebranding in October BLACKIRON's public IaaS is a VPC model and is packaged as a "cloud organization" with integrated security, network communications, backup, and customer portal. BLACKIRON follows a consultative sales approach to cloud computing. It has a fourstep process, beginning with a requirements definition and moving through solution design, delivery, and support. BLACKIRON offers four levels of support: selfmanaged, managed basic, managed proactive, and consultative management. BLACKIRON's value proposition is built on a value proposition similar to that of other telecom-based providers, that being an extensive facilities footprint, a communications network, and end-to-end capabilities. BLACKIRON differentiates itself with value-added services, hybrid computing, and the level of detail it has put into its cloud offering. BLACKIRON is a Major Player in this IDC MarketScape assessment in the public IaaS space. BLACKIRON also has a proven partner channel with VAR and SIs focusing on the healthcare and financial services industries. IDC anticipates that while not completely formalized, BLACKIRON will expand this channel and IaaS will be a significant contributor to growth in its reseller segment. We also expect BLACKIRON will extend the functionality of its IaaS offering, provide additional flexibility and control of cloud resources to its clients, and expand its services to include SaaS, PaaS, and true-metered public IaaS offerings IDC Excerpt of #CA3SSC13 5

8 E S S E N T I A L G U I D A N C E A d v i c e f o r P r o v i d e r s For more than 25 years, outsourcing vendors have delivered to their clients IT services with more often than not the same IT staff and facilities that they had before. This asset-based onshore model has withstood two recessions, the emergence of the global players, and the tier 1s' own embrace of offshoring. IDC Canada projects that this traditional model of outsourcing will hit its peak by 2015 and thereafter gradually decline. Growth instead will come from alternative outsourcing models such as virtual desktop, utility, and cloud computing. The good news for traditional outsourcers is that while these alternative models will cannibalize some traditional business, they will more dramatically expand the way in which services are delivered and the market for those services. And in many cases, it will be the larger Canadian IT service vendors that will be providing services such as cloud. As the incumbents in the Canadian outsourcing market, firms such as IBM and HP have some risk but also an enormous amount to gain from cloud computing. But this base, just like traditional outsourcing in itself, will be under constant pressures (such as pricing and contractual flexibility). IDC anticipates that along with tipping the pendulum away from traditional outsourcing, cloud will stimulate a continued expansion of datacentre space in Canada. Already, firms such as TELUS, Savvis, OnX, and Bell are making significant investments to enlarge their footprint in support of increased demand. IDC also expects further expansion of new players in the Canadian marketplace, as exhibited by Amazon's, Google's, and Microsoft's increasing presence in Canada. IDC believes that cloud will have its winners and losers. The big winner will be the customer, or the IT buyer. Cloud provides sourcing decision makers with more options as well as holding the promise of helping companies become more productive and enabling new streams of revenue and new ways of doing business: Recruiting and retaining qualified staff. The IT team is not necessarily as virtual as the technology. It will be critical for service providers to make investments not only in IT assets but in their consulting practice needed to drive mindshare and develop cloud-based solutions for their customers. Virtualization skills are some of the most sought after in Canada. Service providers need to become an employer of choice and continue to sustain and build on this effort. Reaching the SMB market. The Canadian small and midsize businesses segment is a deep and rich sector that historically has been difficult to market to. Public IaaS holds promise, but vendors will be challenged to differentiate themselves and influence decision makers. The two national telco carriers, TELUS and Bell, hold a distinct advantage in this marketplace, yet it will take a tremendous marketing effort for them to be successful. Not depending on new business. There will be some cannibalization of sales as vendors roll out their IaaS offerings. This crossover may be sizable, and as such, vendors should not discount the potential that customers will move their 6 Excerpt of #CA3SSC IDC

9 dedicated hosting environment to the cloud and therefore should not build their business cases solely on net-new business. A d v i c e f o r B u y e r s Align your efforts. The shift to a more business-focused IT department is already underway. More progressive CIOs have built closer ties and integrated IT (resources, activities, and sourcing decisions) with the business. By focusing on what solutions are needed rather than how they are delivered, CIOs are crafting IT departments that will look far different than traditional IT but are much more flexible, responsive, and effective. Plan. Planning starts with the needs of the business, how IT can support the business' goals, and what options are available for IT to do its job better and more cost effectively. Cloud changes how IT gets done, sometimes supplementing, and in other situations replacing, how services are delivered. Companies need to reassess their IT strategy and determine if and when traditional technologies and tasks such as test/dev and backup and recovery can be moved to the cloud. This new IT strategy cannot sit on the shelf. Planning needs to be a continuous process that realigns the business and IT and addresses the rebalancing between internally and externally provided service and hosting, public, private, and hybrid IaaS. Scale quickly. In today's uncertain economy, leading CIOs are driving toward a sustainable, low-cost framework that provides their companies the ability to expand and shift strategies as their business dictates. Infrastructure-based cloud technologies are enabling top Canadian companies to take advantage of the current climate. There is too much at stake. Canadian companies need to move quickly to take cloud off the drawing board and into production. Manage IT. IT needs to take a lead role not only in evaluating and selecting cloud providers but also in ensuring services are implemented seamlessly and managed properly. Cloud providers need to be integrated into the ongoing IT management and governance framework. The IT management framework needs to address measuring the quality and effectiveness of the services and how additional services are added, reduced, and removed. Furthermore, cloud needs to be managed as part of the full IT portfolio and continuously monitored and adjusted to ensure that it enables rather than inhibits a company's success. L E A R N M O R E R e l a t e d R e s e a r c h Canadian Infrastructure Outsourcing Forecast (IDC #CA4SSC13, May 2013) Worldwide Hosted Private Cloud Services Forecast: New Models for Delivering Infrastructure Services (IDC #238689, December 2012) 2013 IDC Excerpt of #CA3SSC13 7

10 Who's Jumping on the Cloud? Canadian Cloud Adoption Patterns and Attitudes (IDC #CA3CCS12, December 2012) Canadian Cloud Buyer Budget and Cost Expectations (IDC #CA4CCS12, December 2012) Canadian Cloud Software Forecast and 2011 Vendor Shares (IDC #CA6ECA12, October 2012) Canadian IT Services 2011 Vendor Shares: A Look at 2011 Performance, Strategy, and Future Prospects for the Top 10 Players in Canada (IDC #CA19ES12, September 2012) Worldwide and Regional Public IT Cloud Services Forecast (IDC #236552, August 2012) Worldwide SaaS and Cloud Software Forecast and 2011 Vendor Shares (IDC #236184, August 2012) Canadian Public IT Cloud Services: Forecast Summary (IDC #CA6ES12, July 2012) Canadian Hosting, Data Centre and IaaS Competitive Overview (IDC #CA9SSC12, April 2012) S y n o p s i s This IDC study assesses the capability and business strategy of many of the leading public infrastructure-as-a-service (IaaS) vendors active in the Canadian market. The Canadian public IaaS market is forecast to grow by more than a 50% CAGR over the next four years. It is a fast-moving, competitive, and emerging market that, by 2016, will be valued at more than C$250 million. "IDC believes that the timing is right to assess the primary vendors of public IaaS and provide our perspective on which providers will set the path as the market matures," says Mark Schrutt, director, IT Services and Enterprise Applications. "Using the IDC MarketScape methodology, our premiere research tool, we evaluated a dozen vendors on close to 100 criteria. The IDC MarketScape assesses vendors' current capabilities, vendors' strategies to drive public IaaS sales, and the Canadian buyer's view on market leadership. IDC approached the provider scoring from the perspective of the average Canadian business: midsize (500 employees) to large (up to 5,000 employees) organizations. We invited firms with more than C$20 million in hosting revenue or C$1 million in public IaaS sales to participate in the study. In summary, IDC found that the minority of providers ranked in the Leader category. Cloud is relatively new, offerings continue to be rolled out, and market leadership is still being formed. We believe that over the next two to three years, there is time for vendors to move up the IDC MarketScape rankings. That said, IBM scored the highest in the IDC MarketScape. Most of the vendors ranked as Major Players." 8 Excerpt of #CA3SSC IDC

11 C o p y r i g h t N o t i c e This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit Please contact the IDC Hotline at , ext (or ) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2013 IDC. Reproduction is forbidden unless authorized. All rights reserved IDC Excerpt of #CA3SSC13 9