Cloud Computing 2010 An IDC Update

1. Cloud Computing 2010An IDC Update Frank Gens, Senior Vice President & Chief Analyst Robert Mahowald, Research Director, SaaS & Cloud Services Richard L. Villars, Vice President, Storage Systems & Executive Strategies David Bradshaw, Research Manager, Applications and Solutions, EMEA Chris Morris, Research Director, Services Research, Asia/Pacific IDC Executive Telebriefing 29 September 2009

2. Agenda • Cloud Services Global Overview - new CIS • Cloud Services Definition & Landscape - updated • Cloud User Survey - newfindings • Worldwide IT Cloud Services Forecast - updated • Q&A

3. Cloud Services Global Overview New Description: Cloud Services: Global Overview is IDC’s unique program that gives the "rolled-up" view of the entire opportunity for IT Cloud Service provision. This program will provide the complete Cloud services opportunity segmentation by 3 regions and by technology segment (7-10 Black Book segment level). For further drill down please see specific market programs. It will provide survey data on: • How quickly Cloud Services will be adopted and by which customer segments • How Cloud will impact vendor business models and service offerings • Will examine the customer benefits and challenges surrounding Cloud Services Coverage: • An IT Cloud Services Forecast, consisting of 7-10 Black Book-level categories (Servers, Storage, Apps, etc), with a 3-region split (EMEA, Americas, Asia Pacific), and an enterprise size split (large, medium, small) • IDC’s Cloud definition and taxonomy • Cloud user survey findings and spending intentions • Vendor Cloud strategy briefs driven by events, announcements • Industry structure/model scenarios, predictions - focused on mega-shifts IDC sees in industry structure, strategies and other topics Lead Analysts:Frank Gens, Robert Mahowald, Rick Villars Regional Associates: Chris Morris (AP), Satoshi Matsumoto (Japan), Vladimir Kroa (CEE), David Bradshaw & Chris Ingle (W. Europe), Lidice Fernandez (Latin America)

4. Cloud Services Definition - updated “casual description” • Shared, standard service – built for a market (public), not a single customer • Solution-packaged – a “turnkey” offering, integrates required resources • Self-service – admin, provisioning; may require some “on-boarding” support • Elastic scaling – dynamic and fine-grained • Use-based pricing – supported by service metering • Accessible via the Internet/IP – ubiquitous (authorized) network access • Standard UI technologies – browsers, RIA clients and underlying technologies • Published service interface/API – e.g., web services APIs Key Attributes Cloud Services Consumer and Business products, services and solutions delivered and consumed in real-time over the Internet

5. Cloud Services Definition- updated • Shared, standard service – built for a market (public), not a single customer • Solution-packaged – a “turnkey” offering, integrates required resources • Self-service – admin, provisioning; may require some “on-boarding” support • Elastic scaling – dynamic and fine-grained • Use-based pricing – supported by service metering • Accessible via the Internet/IP – ubiquitous (authorized) network access • Standard UI technologies – browsers, RIA clients and underlying technologies • Published service interface/API – e.g., web services APIs Key Attributes Public - open to a largely unrestricted universe of potential users; designed for a market, not a single enterprise Private - designed for, and access restricted to, a single enterprise (or extended enterprise); an internal shared resource, not a commercial offering; IT Org is the “vendor” of the shared/std service to its users DeploymentModels [Note: large gray zones between these two broad categories] Cloud Services Consumer and Business products, services and solutions delivered and consumed in real-time over the Internet

6. IT Cloud Services Taxonomy IT Cloud Services Cloud Applications (Apps-as-a-service) App Deploy App Dev/Test Cloud (Application)Platforms (Platform-as-a-Service) Cloud Infrastructure (Infrastructure-as-a-Service)

7. All Types of IT Software & HardwareAre or Will Be Offered as Cloud Services… Corresponding Primary MarketIDC ITProduct Taxonomy IT Cloud Services Collaborative Applications Content Applications Enterprise Resource Management Applications Supply Chain Management Applications Operations and Manufacturing Applications Engineering Applications Customer Relationship Management Applications Cloud Applications (Apps-as-a-service) Applications Application Development Software Application Server Middleware Data Access, Analysis, and Delivery Information & Data Management Integration & Process Automation Middleware Other Application Dev and Deployment Quality & Life-Cycle Tools Enterprise Portals App Deploy App Dev/Test Cloud (Application)Platforms (Platform-as-a-Service) App Dev & Deployment (Software-as-a-Service) Systems Infrastructure Software System and Network Management SoftwareSecurity SoftwareStorage SoftwareSystem Software Cloud Infrastructure (Infrastructure-as-a-Service) …many IT and Network Services will also be transformed and extended to support the cloud service delivery model… Servers Storage Networks Clients Systems Storage

8. Cloud Services Beyond the IT Industry Cloud Business (Process-as-a-service) Every Other Industries’ Cloud Services Cloud Applications (Apps-as-a-service) App Deploy App Dev/Test Cloud (Application) Platforms The IT Industry’s Cloud Services Cloud Infrastructure (Infrastructure-as-a-Service)

9. IT’s Cloud Opportunities Landscape Pureplay Cloud Telcos IT/NetworkManagementSoftware Servers HW & SWVendors Network Equipment Storage NetworkServices IT Services – Consulting, Integration, etc. App Development/ Deployment Software IT & Network Svcs Provide IT Products/Services to enable (public & private) Cloud SPs“arms dealer” Provide IT as Cloud Services Provide Services around IT Cloud Services

10. Cloud User Surveys - Benefits Pay only for what you use 77.9% Easy/fast to deploy to end-users 77.7% 75.3% Monthly payments 68.5% Encourages standard systems Requires less in-house IT staff, costs 67.0% Always offers latest functionality 64.6% 63.9% Sharing systems with partners simpler 54.0% Seems like the way of the future 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Q: Rate the benefits commonly ascribed to the 'cloud'/on-demand model (Scale: 1 = Not at all important 5 = Very Important) Source: IDC Enterprise Panel, 3Q09, n = 263, September 2009

11. Cloud User Surveys - Challenges 87.5% Security Availability 83.3% 82.9% Performance 81.0% On-demand paym’t model may cost more Lack of interoperability standards 80.2% Bringing back in-house may be difficult 79.8% 76.8% Hard to integrate with in-house IT 76.0% Not enough ability to customize 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Q: Rate the challenges/issues of the 'cloud'/on-demand model Source: IDC Enterprise Panel, 3Q09, n = 263, September 2009

12. Cloud User Surveys – Adoption Areas 67.3% Collaboration applications Web applications/Web serving 66.9% Data Back-up or Archive services 59.4% 55.6% Business apps (CRM, HR, ERP) Personal productivity apps 55.1% Data/Content Distribution services 54.8% 52.9% Storage capacity on demand IT Management software 51.3% Server capacity on demand 50.6% 49.8% Business Intelligence/Analytics Application dev/test/deploy platform 49.1% IT/Information Security 48.6% 0% 10% 20% 30% 40% 50% 60% 70% 80% Q: Rate your likelihood to pursue the cloud model for the following (Scale: 1 = Very Unlikely 5 = Very Likely) Source: IDC Enterprise Panel, 3Q09, n = 263, September 2009

13. Cloud User Surveys – Vendor Requirements Offer competitive pricing 91.6% 88.6% Offer Service Level Agreements (SLAs) Option to move 'cloud' offerings back on premise 87.8% Provide a complete solution 86.0% Understand my business and industry 84.5% Allow managing on-premise & cloud together 82.1% 81.0% Support many of my IT needs Offer both on-premise and public cloud services 79.2% Are a technology and business model innovator 78.3% Have local presence, can come to my offices 72.9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q: How important is it that cloud service providers… (Scale: 1 = Not at all important 5 = Very Important) Source: IDC Enterprise Panel, 3Q09, n = 263, September 2009

14. IT Cloud Services Forecast Update(preliminary) Servers Servers 12% 15% Applications Applications 38% Storage 49% 9% Storage 14% Infra-structure Software Infra-structure 20% App App Software Dev/Deploy Dev/Deploy 20% 13% 10% Worldwide IT Cloud Services Revenue* by Product/Service Type 2013 $44.2 billion 2009 $17.4 billion Source: IDC, September 2009 * Includes revenue from delivery of Applications, Application Development & Deployment Software, Systems Infrastructure Software, Server capacity and Disk Storage capacity via the Cloud Services model; AD&D excludes online B2B messaging providers/exchanges

15. Cloud Services as a % of IT IT Cloud Services On-Premise IT 10% CAGR 26% 5% 4% Worldwide IT Spending by Consumption Model 600 500 44 400 17 Worldwide IT Spending ($ billion) 300 416 200 359 100 0 Source: IDC, September 2009 2009 2013

16. Cloud Services Growth Impact IT Cloud Services growth Traditional IT product growth Sources of Incremental IT Spending Growth in 2013 Cloud vs. Traditional Products 485 460.4 480 27% Net new IT growth = $27.3 billion 475 470 465 73% Worldwide IT Spending ($ billion) 460 455 IT Cloud 433.1 450 445 440 435 430 2012 2013 Source: IDC, September 2009

17. Cloud’s Position in Asia/Pacific • Familiarity is high • But opinion is low! Source: IDC Asia/Pacific End-user Cloud Computing Survey, 2009, n=667

18. Cloud’s Position in Europe 14% 12% 10% 8% 6% 4% 2% 0% UK Nordics Germany Spain France Benelux Italy Survey: % of respondents in country/region using 7 or more IT cloud services* Source: IDC European Enterprise Services Survey 2009, n = 533 * Survey list of cloud services included: email/calendar, financials, app dev, collaboration, CRM, HRM, security, office productivity, storage/backup, app platform

19. Upcoming IDC Cloud Research Plans Cloud Landscape Cloud Services: Global Overview - NEW Asia/Pacific Cloud Services and Technologies - NEW Central and Eastern European Cloud, Hosting and Outsourcing Services United States SaaS and Cloud Services Spending by Vertical 2009 (special report) - NEW Cloud Software/Apps SaaS and Cloud Services European SaaS and Cloud Services Le Marché du Software as a Service (report - France) Japan SaaS and Cloud Services Business Analytics Solutions European Business Analytics Markets & Strategies Software Pricing & Licensing Cloud (application) Platform Application Development & Deployment and Cloud Services Application Life-Cycle Management

20. Upcoming IDC Cloud Research Plans Cloud Infrastructure Enterprise System Management Security Services Security Products Storage Solutions: Storage and the Cloud (report series) - NEW Servers in the Cloud (special report) - NEW Services around Cloud Services SOA and Cloud Services: The Professional Services Opportunity WW Consulting & System Integration Services IT Education & Certification ICT Offerings for Cloud SPs Datacenter Networks NGN Operations Storage Solutions: Storage and the Cloud - NEW Servers in the Cloud (special report) - NEW

21. Essential Guidance • Economic benefits of cloud have risen as adoption drivers, tying last year’s leading driver: speed of deployment • Top concerns remain: security, availability, and performance • Cloud adoption momentum is strong around collaboration, “cloudifying” Web commerce, and data backup/archive • Core business apps, IT infrastructure services, analytics, and app dev/test/deploy are next in line • Top vendor requirements are: pricing; SLAs; dynamism across public cloud, private cloud, and traditional environments; and understanding customers’ business/industry • The recession knocked down cloud adoption forecasts, but less than traditional IT – cloud’s growth advantage widened in 2009

22. Contact us at: gcoimbra@idc.com Questions?