CLOUD ASSESSMENT CLOUD COMPUTING AND THE SYMANTEC VISION NOVEMBER 2012
CONTENTS INTRODUCTION 1 CLOUD MARKET SNAPSHOT 2 SYMANTEC CLOUD MODEL 4 FUTURE PROSPECTS & CLOUD DRIVERS 6 SIZING UP SYMANTEC CLOUD 7 ABOUT 8 2012 The 2112 Strategy Group LLC. Symantec Inc. commissioned The 2112 Group to conduct an independent and objective assessment of its cloud computing strategy and cloud plans for its global channel program. 2112 used a qualitative research methodology, interviewing dozens of Symantec and non-symantec partners in North America, Latin America, Europe and Asia. 2112 interviewed Symantec product and program managers, and reviewed strategic plans and marketing materials related to Symantec s cloud computing and.cloud initiatives. The conclusions of this report are solely those of The 2112 Group and are subject to change without notice. Information contained in this publication has been obtained by sources and methodologies of The 2112 Group LLC and is considered to be reliable but not warrantied. This publication may contain the opinions of The 2112 Group, which are subject to change from time to time. This publication is copyrighted by The 2112 Group. Any violation of the limited terms of reproduction or redistribution of this publication, in whole or in part, whether in hard-copy format, electronically or otherwise to persons not authorized to receive it, without the express consent of The 2112 Group, is in violation of U.S. copyright law and will be subject to an action for civil damages and, if applicable, criminal prosecution. Any questions should be directed to The 2112 Group at (347) 770-2112 or info@the2112group.com.
OVERVIEW Cloud computing is pervasive. The use of hardware and software resources delivered as a service over a private network or via the public Internet as an alternative to on-premises information technology installations is growing rapidly. Several years of cloud development by technology vendors and service providers have made as-a-service technologies a solid adjunct to the conventional IT paradigm. Security, backup and availability software vendor Symantec Corporation is among the early innovators of cloud solutions, having developed a number of products and services related to or used in cloud computing environments. Beyond its technology capabilities, Symantec has a vision for delivering advanced private, hybrid and public cloud deployments through its partner network. Symantec aims to promote and support partners in the adoption, strategies, sales, fielding and support of cloud products and services. The Symantec framework for describing and delivering cloud solutions to channel partners stratifies cloud computing into four distinct business-model actions: selling, managing, hosting and building. These models codify the way Symantec partners will logically sell, deliver and support cloud solutions and implementations. This go-to-market framework, along with its legacy experience in cloud development, puts Symantec in a solid position to claim the cloud channel mantle, particularly in a market where no one vendor has yet attained dominance. The 2112 Group, the leading provider of channel development and research services, assessed Symantec s cloud vision and offerings for the channel. Through interviews with Symantec and non- Symantec partners in markets around the world, 2112 found that Symantec s goal to be perceived as a cloud computing market leader is well within reach. Specifically, Symantec is actively responding to channel partner desires through the delivery and improvement of supporting elements such as the following: > > Training & Enablement: Guiding channel partners on cloud technologies and business models. > > Branding: Giving partners clearer cloud models and product nomenclatures. > > Channel Commitment: Making channel and direct sales roles unambiguously defined to resellers considering cloud expansions. > > Pricing & Margins: Delivering competitive and profitable pricing models to partners still in the early stages of developing their channel services practices. 2112 also assessed Symantec s channel framework and segmentation and the competitive landscape to provide a comparative picture of the market and channel. As a result of this broad examination of the vendor s cloud offerings, strategies and positioning, it is 2112 s opinion that Symantec is well-positioned to establish itself in the cloud channel and claim a leadership role in cloud computing relative to its solution providers. 1
CLOUD MARKET SNAPSHOT Cloud computing began as a marketing phrase used in reference to the cloud-shaped icon in network diagrams symbolizing the abstraction of Internet-connected devices. It has since, however, evolved into equal parts cultural phenomenon and technology revolution. In the enterprise, cloud has become the equivalent of gravity, binding disparate technologies and driving IT trends such as mobility and consumerization. Cloud is, in short, the underpinning of the next generation of the information age and it continues to grow. The total addressable market for cloud spending will top $200 billion by 2020, according to industry estimates. This rapid adoption is creating a wave of opportunity for technology companies suppliers and partners, alike as they look to expand their businesses and/or supplement revenues lost to aging, commoditized technologies. The expectation: Cloud computing will not merely provide replacement revenue, but will generate sustained incremental revenue and profitability through recurring fee structures for services and support. Cloud computing is equally disruptive. It s causing IT vendors and channel partners to rethink the way products and services are developed, sold and supported. Most technology vendors, service providers and channel partners today are still grappling with the steep changes in business models and go-tomarket strategies associated with cloud computing. Channel partners value-added resellers, solution providers, systems integrators, telephony agents and master agents must now adapt to an era in which technology delivery is driving out profitability and complexity. To date, more channel partners describe their cloud capacity as nascent and developing. CLOUD CHANNEL MATURATION DEVELOPING: 40% IMPLEMENTING AND EVOLVING: 39% NASCENT AND NEEDS WORK: 13% DONT HAVE A CLOUD STRATEGY BUT LOOKING INTO IT: 10% IMPLEMENTED AND MATURE: 5% NO CLOUD STRATEGY, NO PLANS FOR ONE: 3% The state of the cloud in the channel is challenged, as partners look for assurances that significant revenue can be generated from cloud computing products, services and professional support. Cloud adoption in the channel has also been slowed by a lack of technical skill, unclear business models and a lack of access to products and resources. Nearly two-thirds of partners say they still cannot fulfill all of their customers cloud expectations. As a result, uptake in the channel is broad, but not deep. Most channel partners touch the cloud, but few make the cloud a core business offering. 2
Attitudes are starting to change, thanks to the aggressive development and promotion of cloud products and services by vendors such as Symantec. There s a strong indication the channel will continue to invest in cloud products, services and vendor relationships. Nearly 97 percent of the channel has a cloud presence or plans for cloud expansion in the next 12 months. Forecasts indicate robust cloud expansion over the next 12 months growth that could push partner cloud earnings into the 11-20 percent range for gross business revenue and profit. 2012 CLOUD REVENUE AND PROFIT 50% 40% 40% 2010 2011 2012 35% 30% Anticipated Revenue Anticipated Profit 30% CLOUD AN INCREASING PORTION OF TOTAL PARTNER REVENUE 25% 20% AVERAGE 2011 CLOUD MARGINS TO PARTNERS 11-20% 20% 15% 10% 10% 5% 0% <10% 11-25% 26-50% 51-75% 76-90% >90% NONE 0% <10% 11-25% 26-50% 51-75% 76-90% >90% NONE Channel partners are motivated to meet the increasing demands for cloud services, particularly in the pricesensitive SMB and midmarket segments, where partners report strong demand for cloud offerings. The SMB segment is particularly rich in cloud opportunities related to core products including backup, storage and security. SMBs are looking for public services and software-as-a-service (SaaS), while enterprises want to build private clouds, endorsing any vendor s framework that seeks to address this bifurcated need. DEMAND SOURCES WHO BUYS Large Enterprise, 5.2% Consumer, 2.1% 40% 35% Small Enterprise, 8.9% SMB, 37.7% 30% 25% 20% Asks Buys Midmarket, 20.9% 15% 10% 5% Small Business, 25.1% 0% Consumer Small Business SMB Midmarket Small Enterprise Large Enterprise One driver of cloud growth in the channel is abundantly clear: Nearly two-thirds of reseller partners report losing sales because they do not currently have cloud solutions that meet their customers needs and this proportion is rising. Rising with it is the desire to partner with a vendor that has a wellarticulated strategy built around cloud products and services that can be used to build successful cloud computing engagements and practices. 3
SYMANTEC CLOUD MODEL Symantec is developing a cloud channel framework that leverages its core backup, storage and security technologies. As such, Symantec has four business models it will support in the channel: > > SELL: Partners can offer a wide range of cloud-based services and cloud-enabled products that deliver more value to customers with less time, trouble and technology. > > MANAGE: Partners monitor and manage applications and data in and through the cloud to assure availability, integrity and confidentiality. > > HOST: Partners can host and deliver highly secure, efficient and reliable solutions as-a-service based on and empowered by Symantec products. > > BUILD: Partners can build public and private cloud infrastructures that provide the highest levels of security, efficiency and availability to customers. Symantec is aligning with these cloud channel business models. By doing so, Symantec brings value to the cloud conversation by supporting partners ability to reach and support customers in a variety of implementations. Symantec sees these four partner business model strategies serving three distinct opportunities: the consumption, building and extension of pure cloud and hybrid services. Partners with a selling strategy that are looking to consume contract services hosted in and delivered through the cloud can leverage Symantec offerings such as communication security, data protection and management, authentication services, end-user protection, security incident and event monitoring and management, and managed services security. Partners embracing a similar sales model and looking to build hosted cloud resources they own and manage have a number of solid cloud offerings from Symantec from which to choose, including NetBackup/Backup Exec, Storage Foundation for Windows, Application HA (for high availability), Veritas Cluster Server and VirtualStore. Meanwhile, solution providers who want to extend IT capacity by selling third-party cloud resources delivered through hybrid clouds can take advantage of Symantec s Backup Exec.cloud and its cloudcapable cadre of security wares such as Symantec Endpoint Security, Symantec Protection Suite, PGP Encryption and the Control Compliance Suite. Moving up the business model strategy stack from sell to build, host and manage introduces additional opportunities across all three cloud markets for partners looking to differentiate with their people and technologies to sell, consult, deliver and support cloud computing services. Symantec s overarching channel cloud strategy explains how the company is engaging partners in the cloud while differentiating itself from competing vendors. The overall strategy touches all the nuances existing in overlapping cloud deployments that frequently combine elements such as build and host and sell and manage, for example. 4
This multifaceted approach, coupled with the fact that there remains, as yet, no dominant channel cloud market leader, indicates tremendous opportunity for Symantec to establish a secure foothold in the channel by converting existing Symantec Endpoint Protection, Backup Exec and NetBackup partners and customers to a cloud services model. Symantec has a sound and accurate strategy for segmenting its channel relationships in the cloud by dividing partners along four lines: > > SERVICE PROVIDERS: Communications service providers, Hosted ASP, MSP, and Telco > > GLOBAL: Strategic alliances > > TECHNOLOGY PARTNERS: Tech-enabled, OEM > > RESELLERS: VARs and specialists (master, solution, SMB) Like its business model, partner engagement and go-to-market strategies, Symantec s partner segmentation includes provisions to accommodate the market s multiple and frequently overlapping paths to the cloud. Symantec is working its cloud channel terms and definitions into the community to maximize communications with partners relative to the positioning and value of Symantec s cloud products, services and channel programs. 5
FUTURE PROSPECTS & CLOUD DRIVERS All of Symantec s efforts to deliver and align its cloud offerings in the channel demonstrate an acute awareness that cloud computing and the market for as-a-service technologies are far from static. Indeed, the cloud will look very different by 2020. Any successful cloud product, service, marketing and business-model strategy needs to evolve with the market and the partners that serve it. In the next five to seven years, IT vendors and service providers can expect software solutions, especially front-end applications built and delivered on the platform-as-a-service (PaaS) model, to grow larger, more modular and increasingly hardware-agnostic in ways that will make the abstract computing environment essentially invisible to the user. As a consequence, the hardware underpinnings of cloud computing are likely to become further commoditized, particularly because of the proliferation of cheap, low-power processors. The costs and ultimately the profitability of basic cloud computing development and deployment will erode, while the value proposition of specialty cloud service providers and the software and applications platform vendors who supply them will see a corresponding increase in fortunes. Around the time this new paradigm takes hold, experts expect a shift in the decision-makers and buying agents tasked with taking their IT to the next level. Indeed, the next generation of CIOs will ascend with more cloud experience and a vastly higher comfort level with hosted technologies than their predecessors. No longer will cloud be relegated to low-impact, low-value commodity services in this next generation of cloud-savvy IT leaders. Businesses will shift workloads to the cloud in ways mostly unimaginable today. This positive cloud trend will shift the way cloud products and services are marketed and sold, putting the onus on well-developed, value-added cloud provider services that leverage the best available underlying technologies in support of highly differentiated services. This will result in myriad new opportunities for cloud specialization in an ecosystem of cloud partners that will develop and deliver what today are often very specific and expensive on-premises applications. Choosing a vendor partner with a legacy of cloud product development and channel partner support will become even more vital in this new environment of advanced business cloud computing. 6
SIZING UP SYMANTEC CLOUD Thanks largely to its early efforts to engage in the cloud channel namely through the.cloud initiative with managed services offerings and programs, channel partners recognize Symantec s solid cloud footing and agree Symantec is well-positioned to be a cloud leader based on its brand, product, market share and success track records. Cloud computing is still in the development stage as vendors, channel partners and consumer businesses seek to find their best utilization of the cloud. So far, businesses have been focused on virtualizing legacy infrastructure and offloading commodity applications to cloud providers. This trend is reflected in the success the channel has had with selling and supporting virtualization software and cloud providers selling e-mail services. The cloud landscape is changing. Businesses are increasingly comfortable with cloud computing as a resource and are outsourcing more of their infrastructure and mission-critical applications to hybrid and third-party clouds. Cloud computing spending is expected to accelerate as more complex solutions migrate into hybrid and public cloud architectures. Symantec is bringing mature, well-developed cloud solutions to a market of technologies populated by a high volume of vendors with shallow market penetration, especially in the areas of cloud backup, storage, infrastructure management and security. 2112 concurs with channel partners that Symantec s brand, engineering prowess and marketing capacity will make it a powerful force in the cloud market and channel. As channel partners say, Symantec shows that it understands the cloud opportunity and is adjusting its products and channel accordingly to capitalize. Channel partners looking for cloud partners should follow Symantec s efforts to capture partner engagement, deliver support and secure the alignment of channel partners for its cloud initiative in this growing and important technology space. 7
ABOUT LAWRENCE M. WALSH is president and CEO of The 2112 Group, a business services company that specializes in helping technology companies understand emerging opportunities, value propositions and go-to-market strategies. He is editor-in-chief of Channelnomics, a blog about the business models and best practices of indirect technology channels; and he s director of the Cloud & Technology Transformation Alliance, a group of industry thought-leaders that explores challenges and best practices in the evolving technology marketplace. Walsh has spent the last 20 years as a journalist, analyst and industry commentator. He s previously served as editor of Information Security and VARBusiness magazines, as well as editor and publisher of Ziff Davis Enterprise s Channel Insider. He is co-author of The Power of Convergence, a book on the optimization of technology utilization through the collapsing and melding of business and technology management. Walsh is based in New York. Follow him on Twitter and Facebook: @lmwalsh2112, @channelnomics. THE 2112 GROUP, founded by channel thought-leader Lawrence M. Walsh, is the premier provider of channel development, market research, partner communications and strategic content to IT vendors, distributors and solution providers around the world. Based in New York, 2112 is dedicated to helping all members of the channel community achieve greater and sustained levels of success through strategic planning, market intelligence and smart decision-making. Our clients span the Fortune 500 to startups, distributors to next-generation cloud providers, and value-added resellers to managed service providers, all sharing a common view that the indirect technology channel is the best route to market. 2112 s Quarterly Channel Review reports are considered must reads among channel chiefs and solution provider executives. 2112 produces and facilitates several industry thought-leadership groups, including the Channel Vanguard Council, the Cloud & Technology Transformation Alliance and the Ingram Micro SMB 500. Our premier publication, Channelnomics, is an analysis Web site devoted entirely to providing the channel community with insights into the trends impacting the IT marketplace. Together, 2112 and Channelnomics provide the most comprehensive set of strategic, analytical and actionable products and services in the channel. >> Visit The2112Group.com >> Visit Channelnomics.com >> Follow @the2112group @channelnomics @lmwalsh2112 8