winning the cloud race in asia pacificdownload.parallels.com/summit/apac2011/day1_2_chris... ·...

Winning the Cloud Race in Asia Pacific

Chris Morris

IDC Asia Pacific

Interest Security Reliability Location Ecosystem Experience

Cloud in 2012

IT will be fully embedded into business operations

by 2020.

Different buyers are emerging.

n = 225

IDC 2011 Cloud Forum - Delegate Pre-Poll, May 2011 (N=300)

Interest

Internal, on-premises private

cloud managed by our own resources

22%

Internal, on-premises private

cloud managed by external resources

22%Outsourced

(hosted) virtual private cloud managed by

vendor15%

Outsourced (hosted) virtual private cloud

manged by your organisation

12%

Varies depending on application type

and business requirement

25%

We have not decided yet

4%

N=138

Deployment Preferences Evolve

Initial public cloud enthusiasm

replaced by the reality of the scale of

on-premises private cloud projects.

Virtual private clouds seen as a safer

and more achievable way to gain

cloud benefits

While still strong intentions for on-

premises private cloud solutions,

currently a stronger tendency to use

external resources to manage and/or

host it

Mature organisations understand

that matching the deployment model

to the workload is a case by case

exercise

Source: IDC 2011 APeJ Cloud End-User Survey, N = 718


Cloud 2011

By 2013, there will have been numerous major public

cloud failures and/or security breaches.

No surprise, right?

n = 225


Security

Security will change from the cloud's chief

impediment to a major accelerator by 2015.

What!?

n = 225


Security


Cloud 2011

Stuff Happens: Always has, always will

IT 101: The Cloud is NOT

Foolproof

SLAs Matter – so read

them!

Service selection processes

must account for service

availability, RTOs and RPOs

Increasing number of public

cloud business continuity

solutions facilitate high

availability without massive

cost

Some applications just won’t

suit some cloud deployment

models

“Frankly, we screwed up.

AWS explicitly advises

that developers should

design a site’s

architecture so that it is

resilient to occasional

failures and outages

such as what occurred

yesterday, and we did

not follow that advice”

By 2014, major public cloud providers will have

addressed uptime concerns so effectively that

reliability will be a non-issue in moving to the cloud.

Technology AND process make the difference.

n = 225


Reliability


Cloud 2011

Location Matters Invest or Partner

With increasing cloud adoption and

mission-critical use of cloud

applications emerging, the location

of assets and data now matters

Cloud sourced infrastructure and

applications is a commonly

evaluated alternative to on-

premises delivery

Regional hubs in Asia Pacific not

always good enough

Massive investments in new data

centers across APeJ - $3.7B+ at 30

June

New entrants such as property

developers and telcos expanding

the ecosystem

Cost of market entry means that

partnerships the preferred route to

market in lower value countries.

Aging

facilities

Economics of

refurb or

replace vs.

economy of

scale

Shift to OpEx

as IT

investment

direction

Compliance

extends beyond

the applications

to infrastructure


Cloud 2011

By 2014, several of the leading IT vendors will have

stumbled badly in the transition to cloud, putting

them at risk of acquisition or vanishing.

n = 225


Ecosystem

Beware The Power Shift

Traditional ICT

Supplier Model

Hardware Software

Services

Enterprise Customer

Current Locus of

Power

Market

Shift

Cloud Computing

Hardware & Software

OEM

Services Provider

Future Locus of

Power

‘Consumer’ of

Services

Future Cloud Business

Business

Process

Provider

Services

Provider

Further Expansion

of Power

Market

Shift

‘Consumer’ of

Business Services


Cloud 2011

Private Cloud is Difficult … unless you get help

Cloud Stage 2009 2010 2011 2012 2013 2014Virtualization 26% 34% 40% 50% 62% 72%

Standardization 16% 25% 37% 42% 48% 55%

Automation 16% 32% 40% 45% 53% 63%

Service level management 18% 24% 35% 40% 46% 54%

Self service 5% 14% 23% 25% 33% 41%

2009 2010 2011 2012 2013 2014

Server devices Server devices Server devices Server devices Server devices Server devices

Storage devices Storage devices Storage devices Storage devices Storage devices Storage devices

C&SI Network devices Network devices Network devices Network devices Network devicesHardware,

software deploy &

support

Sys infrastructure

management tools

Sys infrastructure

management tools

Sys infrastructure

management tools

Sys infrastructure

management tools

Sys infrastructure

management tools

Training C&SI C&SI C&SI C&SI C&SIHardware,

software deploy &

support

Hardware,

software deploy &

support

Hardware,

software deploy &

support

Hardware,

software deploy &

support

Hardware,

software deploy &

support

Training Training Training Training Training

Investment focus

areas

Within the APeJ Private Cloud implementations, IDC surveys of end-users show that

by 2014, less than half expect to complete their private cloud projects


2011 Cloud Pin-up: vPC

0% 5% 10% 15% 20% 25% 30% 35% 40%

Evaluating options

Developing implementation plans

Selecting cloud technology vendors

Implementing plan

Testing solution/proof-of-concept (PoC)

Currently in use

Emerging end-user preference for locally hosted virtual

private cloud as an interim step in the cloud journey

The public cloud model is not yet mature enough to provide the

level of SLA around availability

The services currently offered by pure-play cloud providers are

not always backed up by robust IT processes


Cloud 2015 Report Card


Subject Score Performance

Interest 90%

Now understands the need to differentiate submissions dependent on

workload.

Has overcome the early need to over-achieve.

Security 85% Has improved performance to level where cloud is above average and

compares favourably with other participants.

Reliability 80%

Certain elements of performance are above average, but group

assignments with other participants sometimes omit key

requirements.

Location 95% Delivery of services from appropriate locations is now excellent,

providing the alternatives needed for different business requirements.

Ecosystem 80%

Significantly expanded from initial attempts, with services available for

all size use cases and industries. Partnering and revenue models still

need improvement.

Experience 80%

Lack of experience has hampered performance, but ongoing group

assignments and practical knowledge are being transformed into best

practice processes.

Overall

Assessment A

Cloud has made significant progress over the last three years and

integrated well with the rest of the class. Cloud can now be

considered a fully-fledged member of the IT class.

IT Service Delivery 2015

Outsourcing

3.0 arrives

Hybrid

environments

the reality

IT team skills

inventories

revamped

Supplier

portfolio

transformed

IT Service Delivery 2015: Another Tool in the Bag

Public cloud is Outsourcing 3.0

Delivers a full portfolio of services from mission-critical to commodity

Part of an extended sourcing model available to all organizations

Service sourcing and management is a key element of the CIO capability

The IT team has acquired new and different skills and IT management team is now skewed to service management rather than technology

The due diligence step in service selection is as crucial as in outsourcing

Source: IDC 2011

IT Service Delivery 2015: What Will the Impact Be?

Outsourcing

3.0 arrives

Hybrid

environments

the reality

IT team skills

inventories

revamped

Supplier

portfolio

transformed

Industries are “digitizing”, with

new services based on cloud

platforms

As IaaS commoditises, CSPs

will form higher value

community clouds

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01100011 01101100 01101111 01110101 01100100

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01101101 01101111 01110010 01100101 00100000

01100010 01101100 01101111 01101111 01100100

01111001 00100000 01100011 01101100 01101111

01110101 01100100

IT Service Delivery 2015: IaaS Will Go Vertical

CSP have multiple roles in today‟s

Big Data ecosystem

“Big Data” services must be part of

your cloud service portfolio

Disk capacity purchased

directly by cloud service

providers in 2010

IT Service Delivery 2015: Big Data


Outsourcing

3.0 arrives

Hybrid

environments

the reality

IT team skills

inventories

revamped

Supplier

portfolio

transformed

IT Service Delivery 2015: Mass-market Services Still Important

Follow the money…. Application Developers are

voting with their feet for the Public Cloud

Your enterprise’s ability to exploit this avalanche of new services in the cloud depends on you getting good at using/managing public clouds

80% of new enterprise apps

will be developed for cloud in

2011

20% of 2015 spending on

enterprise applications will

be via the cloud model

Cloud service brokers that provide integration,

management, security and other services across

public cloud offerings will emerge as powerful

industry players by 2015.

n = 225


IT Service Delivery 2015: New Ecosystem Roles

By 2013, the percentage of customer systems

managed by third-party providers (including cloud

services, hosters, outsourcers) will double from its

current levels.

n = 225


IT Service Delivery 2015: Relationships Expand

IT Service Delivery 2015: Many Vendors Will Vanish

25 years ago, vendors faced a similar transition, to the “Second Platform”…

Those without viable cloud strategies will falter, then be acquired or vanish

Definition of a new enterprise architecture based on services rather than technology an essential first step

Supplier selection and management will impact service delivery processes

35% of Your key vendors will

be „WikiTrivia‟


Outsourcing

3.0 arrives

Hybrid

environments

the reality

IT team skills

inventories

revamped

Supplier

portfolio

transformed

IT Service Delivery 2015: IT Organizations are Cloud Brokers

IT departments are increasingly multi-source, hybrid organisations,

taking on the role of “services brokers”

IT departments want to manage internal and external services as a

unified portfolio: costing, service quality, utilisation, asset prioritisation

Hybrid asset management, granular service metering, and chargeback,

are critical to this new shape of IT as a service centre

“Extremely/Very Important

for our IT organisation to be

involved in pre-

sale/sale/purchase of our

SaaS Apps” Public Cloud

Services

On-Premises

Traditional &

Private Cloud

Services

The Cloud Threat: Reality or Perception?

Initial channel reaction to cloud

phenomenon…

– Cloud means fewer end customers buying

infrastructure

• Many resellers still highly leveraged in hardware

• Partner margins continue to be under pressure

• Cloud service re-sale not expected to yield margins

much better than hardware re-sale; likely less

– Early cloud providers focused on direct to end

user

– As trust in cloud computing increases, it exerts

pressure on the channel to adapt

IDC opinion is both threat and opportunity for

partners

– IDC predicts slight contraction in channel

Source: IDC, 2010; n= 175

Q. Do you view cloud computing as...

A Match Made in Heaven: Why The Cloud Needs The Channel

Cloud “trust” is still in question Partners have “trusted” relationships with end customers

Cloud providers don’t want to build large field sales and account management organizations

Reach is one of several “raison d’etre” for the channel

Do not have or necessarily want to have the infrastructure to provide 1st call support

The channel is already set up to provide this

Mixed cloud offerings are integrated solutions

Partners are logical sources of integration

Cloud needs more vertical market specialization

Vertical partners know their market’s requirements

End customers need cloud guidance Qualified partners will have the necessary professional services capabilities

Partners need cloud training Enterprise distributors are sources for partner training, etc.

The Cloud The Channel

Dis

trib

uto

rs a

re a

Co

mm

on

Th

rea

d

A Match Made in Heaven: Why The Channel Needs The Cloud

1. Hardware margins continue

to deteriorate for resellers

2. Resellers need to offer high

margin services to offset

declining hardware margins

3. This fundamental shift has

been slow to occur for many

resellers

4. Cloud is a highly consultative

engagement with high

professional services attach

5. Cloud promotes channel

transition to services oriented

business model

N = 175

Source: IDC, 2010

Hardware

40.0%

Software

24.0%

Services

36.0%

Reseller Revenue Mix

Five Years Ago

Hardware

34.0%

Software

24.0%

Services

42.0%


Today


In the Future (est.)

Revenue Mix - In the Cloudy Future

Services

56.0%

Hardware

20.0%

Software

24.0%

15%6%

27%

17%

28%

19%

18%

25%

7%

18%

5%15%

0%

20%

40%

60%

80%

100%

Today Five Years Ago

>25%

21-25%

16-20%

11-15%

6-10%

1-5%

Retained Gross

Margin %

Reseller Retained Gross Margin

Today vs. Five Years Ago

Perc

en

t o

f re

sp

on

den

ts

Where’s the money?

1

10

100

1000

10000

100000

1000000

2010 2011 2012 2013 2014 2015

$ B

illio

n

APeJ Total IT Spend

APeJ Total Public Cloud

APeJ Prof Services for All Cloud

APeJ Private Cloud infrastructure

Note: y-axis is logarithmic

Growth rate is as important as size

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

2010 2011 2012 2013 2014 2015

$ B

illio

n

APeJ Total IT Spend

APeJ Total Public Cloud

APeJ Prof Services for All Cloud

APeJ Private Cloud infrastructure

CAGR Public Cloud 52%

CAGR Total IT Spend 14%CAGR Cloud Prof Svcs 41%CAGR Private Cloud Infra 33%

APeJ market growth is based

on the mature markets as

much as the emerging

markets

Regional growth plans must

address both requirements as

each deliver different types of

growth opportunities

Watching the Markets is Vital

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

2010 2011 2012 2013 2014 2015

$ M

illio

ns Applications

Applications D & D

Public Cloud IaaS

Virtual Private Cloud

vPC

US$516M

(16%) Public IaaS

US$975M

(30%)

Revenue & Margins*

• APeJ Cloud Services TAM and Margins 2011

10%

20%

Gro

ss m

arg

in

20% 40% 60% 80% 100%

Applications

US$1,355M

(42%)

Appl.

Dev &

Deploy

US$386

M

(12%)

Source: IDC APeJ Cloud Services Forecast 2011-2015, Vendor/Provider Executive Interviews (*Gross margins)

12-25%

19-27%

8-18%

15-22%

Cloud category Share of TAM

Five Opportunities in The Cloud How The Cloud is an Opportunity for The Channel

Deploy and manage private clouds

– New MSP offering

Help customers migrate to public clouds

– Professional services and consulting

engagements

Resell public cloud services

Build, then offer internal private cloud to

end customers

– Become a cloud service provider

– Alternative to building out is “white label”

programs

Develop and resell applications in The

Cloud

– ISV & SaaS opportunities

60% of resellers offer or plan to offer in

2010 Cloud professional services

Less than 20% of respondents are

NOT creating Cloud professional

services offerings

Source: IDC, 2010N = 175 Source: IDC, 2010N = 175

Source: IDC, 2010N = 175 Source: IDC, 2010N = 175

Source: IDC 2010; n = 175

Q. Do you plan to offer cloud-based

professional or consulting services?

The Moving Cloud Provider Landscape

Ecosystem Management

Services

Business Process Services

Information Services

Application Services

Application Infrastructure

Services

System Infrastructure Services

Telco,

Web 2.0

ISV, Content

Provider/ Aggregator

BPO Lead

Service Provider,

Solution Partner

IT M

eg

a V

en

do

r, t

he

en

able

r

The Changing Role

Pri

vate

Clo

ud

, Vir

tual

Pri

vate

Clo

ud

, Pu

bli

c C

lou

d

Cloud Opportunities Requiring New Skill Sets

Readiness Assessment

Services

Datacenter Assessments

Security Assessments

Application Virtualization Assessments

Cloud Strategy Development

Cloud Roadmap Development

Infrastructure Virtualization Strategy and Architecture

Application Sourcing

Strategies

Implementation &

Transformation Services

Infrastructure Virtualization

Migration Services

Application Virtualization

Services

Automation

Service Integration

Security and BCDR

Change Management

Policy Definition

Governance

Billing

Support

Multi Vendor Support

Recommendations

Large revenue opportunities exist in both the public and private cloud markets

Adoption profile different for mature vs emerging markets

Different ‘standardized’ offerings needed in different markets – local partners vital

Intentions towards public and private cloud use are evenly distributed Large revenue opportunity in private cloud enablement i.e. hardware, software and

services to build cloud environments

Any cloud service provider (CSP) must deal with a hybrid environment and the management required for multiple suppliers

Cloud marketing programs need to acknowledge: The differences in regional markets

The uneven understanding of the use of cloud services and cloud computing technologies

The importance of channel partners in reaching deeper in to the market

43

Contact Information

Email me at

[email protected]

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