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Why It’s Time to Move to the Clouds

Why It’s Time to Move to the Clouds. Jeffrey M. Kaplan Managing Director THINKstrategies, Inc. Why We Are Here… Is Technology an Enabler or Inhibitor?. Primary Market Drivers. Changing economic conditions Changing competitive forces Changing ecological concerns

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Why It’s Time to Move to the Clouds

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  1. Why It’s Time to Move to the Clouds Jeffrey M. Kaplan Managing Director THINKstrategies, Inc.

  2. Why We Are Here…Is Technology an Enabler or Inhibitor?

  3. Primary Market Drivers • Changing economic conditions • Changing competitive forces • Changing ecological concerns • Changing workplace requirements • Changing technologies • Changing priorities & sourcing policies

  4. Deployment Challenges 31.1% of SW projects cancelled before completed. 52.7% of projects cost nearly 190% of original estimates. Operational Costs Maintenance & management costs=>10x license fee. Escalating hardware & staff support costs. Over provisioning and under-utilization of SW licenses Economic/Budgetary Pressures Need to reduce IT costs and increase business benefits. Need to increase utilization to gain greater ROI. The Shortcomings of Legacy,On-Premise Apps

  5. On-Demand Has Become Mainstream

  6. The New Generation Thinks & Communicates Differently

  7. Changing Customer Expectations New, • Flexible, Operating Expense • Simplicity, Utilization • Rapid Time-to-Value • Vendor Management • More Analytics • Out-Tasking Options Old, • Fixed, Capital Investment • Complexity, Customization • High TCO, Uncertain ROI • Internal Support • Limited Visibility • Outsourcing Alternatives

  8. Shift from Outsourcing to Out-Tasking Businesses seeking functionality, not technology. IT outsourcing deals have failed. Selective outsourcing, or ‘out-tasking’ gaining attention. SaaS, managed services & cloud computing are forms of out-tasking.

  9. SaaS, Managed Services &Cloud Computing Inter-relatedOut-Tasking Alternatives Out-Tasking Alternatives SaaS Cloud Computing Managed Services

  10. Enabling Technologies Service management Web services & APIs Security Virtualization Open Source Solutions Blade Technology/Grid computing Broadband networks

  11. Today’s Perfect Storm The Economy Enabling Technologies Shifting Customer Attitudes

  12. Defining SaaS Subscription-Pricing Continuous Enhancements Built-In, Real-Time Analytics Rapid Deployment/Self-Provisioning User-Centric Process Orientation One-to-Many Software Design Network-Based Delivery Services-Oriented Applications Multi-Tenancy

  13. An Historical Perspective Cloud-Based Services Outsourcing Market Penetration Facilities Mgmt ASPs/MSPs 2010 2000 1970 1980 1990 Year

  14. Why Simple Hosting Fails Multiple Customers ASP/Hosting Company Too Complex Not Scalable Limited Value-Add Updates/Upgrades

  15. The Advantage of Multi-Tenancy SaaS Vendor Scalability Cost-Efficiencies Rapid Innovations

  16. SaaS AdoptionBeyond a Tipping Point 62% 32% 2007 2008 % of Respondents Using SaaS Source: THINKstrategies/Cutter Consortium

  17. Customer Satisfaction, Renewal& Referral Rates Source: THINKstrategies/Cutter Consortium >90%

  18. Shifting Adoption Patterns Unilateral End-User, SBU Adoption of SaaS Solutions Enterprise-Wide Acceptance and Adoption of SaaS

  19. Recent Mega-Deals = 500,000 suppliers “We evaluated a number of alternatives, but Aravo SIM was the best commercially-available solution capable of meeting our complex, global needs” - SVP and CIO of GE = 420,000 end-users "The Enterprise Cloud Computing business model is a strategic direction for us. It not only lowers IT costs, and creates faster end to end processes, but can also grow with our requirements both globally and locally.“ - Head of Corporate IT, Siemens AG

  20. New Government View “I’m all about the cloud computing notion. I look at my lifestyle, and I want access to information wherever I am. I am killing projects that don’t investigate SaaS first.” President Obama’s CIO, Vivek Kundra, WSJ 3/9/09

  21. Welcome to Gartner’s ‘Slope of Enlightenment’ Gartner’s Hype Cycle You are here.

  22. Market Adoption Forecast Laggards Mainstream Buyers Market Penetration Early Adopters Innovators 2006 2008 2010 2012

  23. SaaS Expands from Front- to Back- to Inter-Office Apps Back Office Front Office Inter-Enterprise ERP Finance … CRM SFA … Collaboration Supply-Chain … BUSINESS APPLICATIONS Market ‘Cloud Rush’

  24. Top Ten Showplace Application Categories Source: SaaS Showplace

  25. Top Ten Showplace Industry Categories Source: SaaS Showplace

  26. SaaS Expands from Business Apps to IT Management Back Office Front Office Inter-Enterprise ERP Finance … CRM SFA … Collaboration Supply-Chain … BUSINESS APPLICATIONS Data Protection Storage … Security Systems Mgmt … Network Mgmt Remote Access … IT Management

  27. Why IT Is Attracted to SaaS Most IT organizations spend 75-80% of their time reacting to problems, keeping systems and software up and running. They would prefer to focus on more strategic business initiatives.

  28. Traditional NSM = ERP of the IT World Too complicated Too expensive Too time-consuming Too ineffective >150 IT/Application Mgmt solutions on SaaS Showplace. SaaS Penetrating IT Management Market

  29. Managed Services/SaaS Convergence Managed Services SaaS

  30. Managed Services vs. SaaS SaaS • Provider delivers software functionality • Sold on a per user basis • Focus on application availability & performance • Quicker Time-to-Value • Lower TCO/Higher ROI • Shifts Burden to Provider Managed Services • Provider assumes management responsibility • Sold on an per device basis • Focus on network/system availability & performance

  31. Moving from SaaS Apps to Cloud Computing Cloud Computing Services “Top Strategic Technology for 2010” But what does “cloud computing” mean? SaaS Apps

  32. NIST Definition of the Cloud

  33. Key Customer Concerns & Industry Responses Responses, • SLAs • Certifications • User Configurations • DR/BC • Connectors • Online/Pro Services Concerns, • Reliability • Security • Customization • Compliance • Integration • Customer Support

  34. Balancing a Hybrid World Companies prefer choice. Businesses seeking combination of on-demand/on-premise solutions. Variety of appliances and applets becoming available. Cross-platform integration possible. Cloud location-independence becoming bi-directional.

  35. Private/Internal Clouds • Benchmarking Market Leaders • Amazon • Facebook • Google • Salesforce.com • Adopting Best Practices • Standardization • Simplification • Automation • Agility

  36. Cloud ComputingMarket Evolution v1.0 v2.0 • Focus on individual user • Standalone point apps • Horizontal applications • Emphasis on ease of use/price • Cloud only deployment • One size fits all, minimal customization • Limited interoperability • Emphasis on lower TCO • Proliferation of providers • Best-of-Breed Win • Focus on the enterprise • Scalable, secure platforms • Vertical/industry solutions • Emphasis on added functionality • Location independence • Multiple configurations, greater versatility • Greater integration capabilities • Emphasis on higher ROI • Industry shake-out & consolidation • Strategic Sources Win

  37. Does Cloud = Disintermediation? • Direct Sales/Delivery Model • Focus on Simplification/Ease-of-Use • Automated, Self-Provisioning Capabilities • Ease of Deployment/Configuration • Emphasis on Time-to-Value • Business vs. Tech Support Requirements • Lower Price Points/Tighter Margins

  38. Good News • SaaS vendors seeking channel partners to, • Extend reach • Penetrate new accounts • Create industry-specific solutions • Cloud computing is creating confusion • IT/business decision-makers need help understanding & leveraging cloud solutions and services to achieve corporate objectives.

  39. Change Your Business IT Services Business Services Information Services Business Evolution

  40. How You CanCapitalize on the Cloud • Augment internal operations • Test new applications/services • Handle spikes in demand • Expand service portfolio • Broaden partner relationships

  41. Platforms-as-a-Service (PaaS) App Engine S3 & EC2 Social Applications CPU and Storage Web Applications Enterprise Applications

  42. Help Clients SolveCloud Complexities

  43. New Breed of VARsand Consultants

  44. Benefits of Cloud-Enabled Channel Companies • Lower Upfront Costs • Mitigate Risks • Accelerate Deployment • Quicker Time-to-Value • Lower Total Cost Of Ownership (TCO) • Higher Return on Investment (ROI) • Greater Flexibility and Agility • Create Additional Market Opportunities

  45. Added Dimension of Cloud Computing Services Collaboration Communications Community Customer Experience ©2009, THINKstrategies, Inc. www.thinkstrategies.com Slide 45

  46. A New Level of Valuein the Cloud Market Dynamic clearinghouse of solutions Continuous updates, new ideas Real-time, aggregated data Meaningful benchmark studies Practical best practices forums Build a “club”, gain a competitive advantage ©

  47. New Cloud Players? • Banks • Insurance Companies • Retailers • Accounting Firms • Lawyers • BPOs • Hosting Companies • Telcos

  48. Prepare for the Cloud Inversion Future The Cloud Computing Inversion Services Technologies Past

  49. SaaS/Cloud Computing Changes Everything Re-architecting applications Re-structuring revenue models Repositioning marketing Re-orienting sales/support staff

  50. Common Pitfalls Balancing, • Multiple Offerings • Various Delivery Models • Competing Buyers • Conflicting Sales Channels • Varying Compensation Plans • Differing Revenue Recognition Models

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