1

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Outlook 2018 European Cloud Market Trends and developments: analyst view

Gregor Petri @gregorpetriResearch VP CSP Enterprise Markets Research Lead Benelux Region

24 January - Amsterdam

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First

CloudBy 2019, Nearly 90% of Organizations

in Mature Economies Will Have Adopted Cloud Services

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Cloud as a Percent of IT SpendingLeading Hyperscale Data Centers

The Pace of Change Is Not Equal

0

500

1000

1500

2000

2500

3000

3500

2017

Communi-cation Services

IT Services

Devices

Enterprise SoftwareData Center Systems

3.5 Trillion IT Spend

Regional aggregate data

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36,775

6,277

16,418

37,970

5,348

58,838

11,388

29,811

44,000

8,385

84,069

17,648

52,244 51,279

11,663

112,899

26,065

82,506

59,889

15,300

0

20,000

40,000

60,000

80,000

100,000

120,000

Cloud Application Services (SaaS)

Cloud Application Infrastructure Services

(PaaS)

Cloud System Infrastructure Services (IaaS)

Cloud Business Process Services (BPaaS)

Cloud Management and Security Services

2015 YR2016 YR2017 YR2018 YR2019 YR2020 YR2021 YR

Steady Sustained Cloud Market Growth

17.4% CAGR

22.6% CAGR

25.9% CAGR6.7% CAGR

16.2% CAGR

185 Billion Global

Revenue by 2018

SaaS PaaS IaaS BPaaS Mgmt&SecaaS

2

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By 2018, SaaS will become a dominant model for consuming new application software functionality and will be adopted by 80% of all organizations. By 2019, more than 30% of the 100 largest vendors' new software investments will have shifted from cloud-first to cloud-only. By 2022, most PaaS offerings will evolve to a fundamentally serverless model, rendering the cloud platform architectures dominating in 2017 as legacy architectures. Through 2020, public cloud IaaS workloads will suffer at least 60% fewer security incidents than those in traditional data centers.

Strategic Planning Assumptions

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Market Opportunity MapInfrastructure as a Services (IaaS)

, $82.0

Data Center Outsourcing , $41.8

Co-location , $30.6

End User Device Outsourcing

(Desktop & Mobile) , $28.2

Hosting , $48.0Infrastructure

Utility Services , $41.1

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

-15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

2016

Indu

stry

Mar

gin

Estim

ate

2016- 2021 CAGR

Global

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Infrastructure as a Services (IaaS)

, $19.2

Data Center Outsourcing ,

$16.5

Co-location , $6.9

End User Device Outsourcing (Desktop &

Mobile) , $17.1

Hosting , $10.3

Infrastructure Utility Services , $18.2

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

-15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%

2016

Indu

stry

Mar

gin

Estim

ate

2016- 2021 CAGR

Western| Europe

Market Opportunity Map

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40%44%

44%

37%

Last FY

FY-1

IaaS Market Share Trend

AmazonFrom 40% to 44% share

Rest of Top10From 16% to 19%

Rest of Marketfrom 44% to 37% share

3

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2017 Magic Quadrant for Cloud IaaS

From "Magic Quadrant for Cloud Infrastructure as a Service, Worldwide," 15 June 2017 (G00315215)

• The market consolidated around two clear leaders.

• The feature gap with the rest is growing, not shrinking.

• Cloud IaaS is not a commodity. Moving is challenging.

• Providers' size and scale matter.

• Public cloud security is adequate for most workloads.

• Customers do not always save money.

• Local sourcing matters to some customers.

• Customers decouple choice of cloud IaaS from managed service decisions.

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2017 Magic Quadrant for Cloud MSPs • Most MSPs are small.

• There will be significant market consolidation in the next five years.

• Pricing and offering structure are evolving.

• Automation is critical.

• MSPs have limited experience with large-scale data center migrations.

• Only AWS has a strong MSP ecosystem.

• Managed services for AWS and Azure are frequently delivered differently.

• MSPs rarely deliver true multicloud solutions.

From "Magic Quadrant for Cloud Infrastructure as a Service, Worldwide," 15 June 2017 (G00315215)

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MultiCloud

EcoSystems

Trust

Edge

Need for

Native

Hybri

Buildover Buy

Productsnot

Projects

Leader-ship

IaaSPaaS

+

Major Trends

Taking the Cloud to New Heights

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All Organizations Exist in Business Ecosystems

Ecosystems

4

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Enterprise Focus

Products and

ServicesAssets

Multidisciplinary by Design

Dynamically Connected and Reconfigurable

Semiporous Boundaries

Continually Sensing, Learningand Reconfiguring

MomentsProducts

Services

Markets

Ecosystem Focus

Ecosystems

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Where would you put your money?

public infrastructure

privateinfrastructure

In the bank Under the bed

Trust

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“Through 2020, 95% of cloud security

failures will be the customer's fault."

Source: "Clouds Are Secure: Are You Using Them Securely?" G00281279

INFaaS PBaaSPaaSIn-house

I

IaaS SaaS

Process

Data

Application

Platform

Infrastructure

Outcome

Responsibility Customer

Responsibility Provider

Trust

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Trust

5

Cloud Adoption Models

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Typical Enterprise Cloud Playbook

Mode 2(Digital)

HyperScale

HR

Other

Service

ERP?

CRM

Office

DevOpsTime to Market

ElasticityTest/Dev

ProductionDR

LegacyNon x86

… and the …Data

CentreFuture

ConsumeDon’t Run

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© 2018 Gartner, Inc.ID: 347681CloudChasm

"Replace With SaaS Now" Boulevard

"Rewrite Now"Road

(Rarely traveled)

"Lift and Shift"Freeway

"Replace WithSaaS Later"

Lane

"Rewrite forCloud Later“

Lane

SaaS

Mode 2IaaS + PaaS

On-PremisesData Center

Mode 1IaaS

The Cloud Rush

Why You Must Adopt Cloud-Native Architectures Today, Not Tomorrow

§ True cloud value comes from adopting cloud native concepts and architectures

§ Following the Lift and Shift Freeway can turn out to be an expensive detour

Go Nativedon’t Lift

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By the end of 2018, 10% of organizations will close their on-premises data centers in favor of colocation, cloud, or both.A strategy that includes multiple infrastructure as a service (IaaS) and platform as a service (PaaS) providers will become the common approach for 80% of enterprises by 2019, up from less than 10% in 2015.Through 2017, more than 50% of organizations that evaluate large-scale data center migration to cloud IaaS will decide to remain with their existing infrastructure.

Strategic Planning Assumptions Multicloud

6

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Digital Demands Will Drive a New “Make” Strategy for ApplicationsBy 2020 80% of application purchases supporting digital business will be “Make” not “Buy”

Buildnot Buy

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What Is a Product in This Digital World? It:

Can serve external or internal customers

Delivers capabilities customers value

Has a name and can be clearly defined

Can be a repeatable service

Can be a platform (one- or multi-sided)

Can be bought, sold or subscribed to

Probably has competition

Productsnot Projects

You Build it,

You Run it!

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A Project to Productize Back-end and Legacy IP

Business Users

IT Service Broker Team

Public Cloud Management Team

Private Cloud Management Team Traditional IT

Management Team

Application Group

Hybrid IT

A Team Sport With New Roles

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Get Ready for the Digital Ecosystem Surge —Power Up Your Digital Ecosystem Readiness

Technology

Organization

LeadershipEscape Velocity Focus leadership

practices on mastering interdependenceBuild organizationstrength with an external mindset

Focus technologyplanning on interoperability

Leadership

7

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Predicts 2018: Stimulate Creativity to Generate Successmainstream is

adopting advanced technologies faster

pace of change essential to

success.

risk-averse orgs must embrace

risk-tolerance or …

Recognize Disruptions

Earlier

What’sPassé

What’sNext

Engagement bots

AI

Emp. Cust.Soc.

AR/VR

Security4all

GDPR+ IoT

Digital Disruptions

QCSkills Giants

Buy,Build,BrokerGET BIG, GET NICHE or GET OUT25 CONFIDENTIAL AND PROPRIETARY I © 2018 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or its affiliates.25 CONFIDENTIAL AND PROPRIETARY I © 2018 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or its affiliates.

CIO Resolutions for 2018

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Cloud Computing à Future of Digital

~

Printing Press à Renaissance

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Recommended Reading: Gartner Trend Insight Reports

u Capitalizing on Your Business Ecosystems Economyu Digital Trust — Redefining Trust for the Digital Erau Digital Business Success Depends on Civilization Infrastructureu Supply Chain Leaders Must Be Prepared to Transform in a Disruptive Worldu Digital Disruption and the New Disruptors: Recognize, Prioritize and Respondu 2017 Hype Cycles Highlight Enterprise and Ecosystem Digital Disruptions