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PROPRIETARY AND CONFIDENTIAL, MARITZ COPYRIGHT 2008 1

June 2009

Maritz Research on Research Series:

Assessing the Impact of Cloud Computing on IT Strategy and Spending

Speaker: Michael Allenson, Maritz Research


“The trend toward cloud computing may be revolutionizing the tech industry, but it isn't happening overnight.

While tech companies have been rushing to offer cloud-based services, there are still plenty of unexplored uses and unresolved technical challenges, according to executives at Hewlett-Packard, Intel and Yahoo.”

San Jose Mercury NewsJune 9, 2009


“Many consumers and businesses already find it convenient or cost-effective to use Web-based e-mail, business software applications and other computing services delivered over the Internet.

“But those services still represent only ‘a small percentage’ of the world's total computing workload.”

Russ Daniels, HP’s CTO for Cloud Services StrategySan Jose Mercury NewsJune 9, 2009


Objectives and Methodology

Methodology

•U.S.-based business sample•Hybrid qualitative/quantitative online session using DynamicInsights •Data collected in April 2009•100 total IT decision-makers•Respondents drawn from Linked In and Greenfield Online

Study Objectives

•Part of ongoing research on research (self-funded)

•Focus on topics of keen interest to our Tech industry clients, in this case Cloud.

•Often use innovate data collection or methods or design approaches.

U.S. Business Sample CompositionBy size of company in revenues


Cloud Computing is a lot of different things depending on who you speak with

“An analogy I like to use is similar to the power grid. As customers’

demand for more electricity increases, the power station needs

to increase output in order to maintain service levels. Cloud

computing is similar to the power station. Not only is it scaling in

terms of performance or response time, but also in service offering.”

“Infrastructure or software platforms as a service. Relies

on the internet for pay per use model.”

“In a "nutshell" it is computing in the cloud. It eliminates the need for the infrastructure (hardware, software,

applications) to exist locally.”

“A server hosted by another organization, that we place our software tools and other data

on. This frees my organization from having to host these

services ourselves.”

Cloud Computing is:


In this report we’ll focus on a number of dimensions of Cloud Computing

• Current approach to Cloud Computing

• Concerns about and barriers to adopting Cloud Computing

• Software as a service

• Storage as a service

• Public vs. private Cloud

• The Cloud brandscape


I. Current Approach to Cloud Computing


Nearly half of the companies have recently become more aggressive in their investigation of Cloud solutions

Compared to 6 months ago, do you feel your company will be more aggressive, less aggressive or have no change to your planned approach to implementing cloud computing services, such as Software as a Service (SaaS), Storage as a Service, or Infrastructure as a Service (computing) (IaaS)?

“Obviously, any cost savings measure will be a big hit for

the near to mid-term. If providers can also offer rapid implementation of common

software services, I would see this as a benefit.”

“More offerings are showing up with more choices. It is becoming more affordable. The issues with security and reliability are being addressed.”


2/3 of those at Large or Enterprise companies have done at least some research into adopting Cloud Computing solutions

So far, how much has your company investigated options for employing cloud computing solutions such as these?

65%

74%


The perceived benefits of Cloud Computing fall into three major categories

How would the implementation of cloud computing benefit your organization, specifically from a resource and cost savings perspective?

IT Restructure/Reduction

“It can save companies the cost of IT, but also to integrate IT resources in order to play a greater computing power.” (Large)

Time Management

“It can reduce the project time and save a lot of money. The resource is huge, and help our company solve the problems

easier.” (Large)

Cost Reduction

“Upfront cost is greatly reduced and its only operational cost remains along with device and location independence.

its a great benefit to our company as a cost reduction mechanism.” (Large)


Cloud Computing solutions are expected to have a wide variety of impacts – SaaS impacts OS choice

Would SaaS impact the dependence on operating systems for servers/computers?

Will the advent of Software as a Service (SaaS) impact your reliance or dependence on operating systems that run on your servers, desktops and notebook computers within your company?

82%

73%

80%


Fewer servers may be needed

How much do you agree with each of the following potential impact that adopting a public, private, or blended cloud computing solution might have for a company like yours?


Requirements for individuals machines will change

How will the advent of Software as a Service (SaaS) impact either the number of servers, desktops and notebooks you will purchase or the infrastructure within each of the computers you may purchase (e.g. the processor speed, hard drive, operating system, and other components) for your company?

Would SaaS impact the types – OS, speed, hard drive, etc- of the computers you use?


Cloud Computing is expected to allow for a more nimble, de-centralized work force

80%

85%

79%

7%

5%

10%

Medium (15)

Large (41)

Enterprise (42)Companies using

cloud computing will be more nimble,

able to easily staff up wherever the best

labor is available (including home workers), while

maintaining a strong, safe infrastructure.

79%

80%

89%

0%

7%

5%

Medium (14)

Large (41)

Enterprise (44)

Top 2 -Agree Bottom 2 - Disagree

Cloud computing will enable individuals

with a simple portable computer with

wireless connectivity, access to endless computing power

and all the software they may

need.

How much do you agree or disagree with each of the following statements regarding the longer term impact of cloud computing.


II. Concerns About and Barriers to Adopting Cloud Computing


Security is the biggest concern, access/downtime issues are the only other substantial barrier to adoption

What would you say are the most significant drawbacks or dangers companies may be concerned with in adopting and using cloud computing offerings?


Security concerns are heavily focused on sensitive customer data

What would you say are the most significant drawbacks or dangers companies may be concerned with in adopting and using cloud computing offerings?

“If personal client data is stored in the cloud, the risk of security breaches is prevalent. “

(Enterprise)

“If it's an outsource solution, such as Amazon's Web services, security and compliance comes

into mind. We would not necessarily want to put our Credit card processing engine

there.” (Enterprise)

Security/Privacy Concerns


Beyond security, there is some comments that suggest Cloud is not ready for prime time

ReliabilityBarriers to Storage as a Service

(Beyond Security)

Many have said that a barrier to using shared storage services is maintaining the security of the data, as well as compliance with both privacy policies and government privacy requirements. Besides these issues, what might keep you from using outside shared storage services?

“If the reliability of the internet link was not very high, we might not want to risk loss of data or loss

of functionality by depending on remote

servers.” (Large)

“Speed is also a huge issue for cloud storage. I have

experimented with it personally and it is too slow

right now to make it useful on a large scale.” (Large)

Speed

Cost

“Cost structure would have to be very attractive. Also that cost offset would be spent improving the WAN monitoring and reliability.”

(Large)


IT professionals see the potential for Cloud solutions to mature

93%

68%

70%

7%

17%

5%

Medium (14)

Large (41)

Enterprise (44)

Top 2 - Agree Bottom 2 -Disagree

Once mature, cloud computing

services will allow companies

to have more secure data and manage better in

the face of emergencies.

How much do you agree or disagree with each of the following statements regarding the longer term impact of cloud computing.


III. Software as a Service


SaaS can save companies money and resources

How much do you agree or disagree with the following statement impacting the businesses that use Software as a Service (SaaS)?

Enterprisen=44

Largen=41

Mediumn=15


SaaS is not about solving a need for better or different software

How much do you agree or disagree with the following statement impacting the businesses that use Software as a Service (SaaS)?

Enterprisen=44

Largen=41

Mediumn=15


IV. Storage as a Service


Roughly half of companies have seriously investigated Storage solutions – Expected initiatives are mainly back-up related

So far, how much has your company investigated options for employing Storage as a Service?


Storage as a Service derives its main benefits from the ability to back up data externally

If you were to adopt storage as a service applications, what might be the main benefits of such an effort? How would these services help your company?

Reduce Cost

“It will greatly save our storage space and then

we can reduce the backup computer for data storing. It will greatly reduce the

running costs for my company.” (Large)

“Don't have to deal with backup media. Also my data would be off site in case of a disaster such a fire or theft.” (Enterprise)

Reduce Back-up Needs

Disaster Recovery

“Inherent off site data protection in case of a

disaster in the local office. This would simplify disaster

recovery as we no longer need to plan on bringing

servers up in a DR environment.”

(Enterprise)


V. Public vs. Private Clouds


Private clouds are more attractive – with consideration increasing with company size

Enterprisen=44

Largen=41

Mediumn=15

Public vs. Private Cloud Consideration

Some companies utilize the public cloud by contracting with a service provider for a certain level of computing power to be distributed to their company as needed; others utilize private cloud installations that use the same principles but are wholly owned by the enterprise How strongly will you consider utilizing public and private cloud computing services?


Data security is a main factor when considering a public cloud – any sensitive data requires a private cloud

Public Cloud Private Cloud

“Some of our engineering apps have

massive data sets that moving in/out of a public

cloud is not really viable.” (Enterprise)

“Anything with critical data or proprietary

transactions seems better suited to private

clouds.” (Enterprise)

“More generic stuff like network

management for public.” (Enterprise)

Public - things I am OK to breach -

research data, old project data.

(Enterprise)“Private - HR

records, finance, project

confidential, etc.” (Enterprise)

I would think applications that don't contain extremely

sensitive data or information would be good

candidates for public.” (Medium)

“Private is well suited for a suite of

medical applications.”

(Medium)

“Platform as a

Service”“Public I would

use Office apps” (Large)

When or for what kinds of applications would you consider using a public cloud computing solution vs. using a private cloud computing solution?


VI. The Cloud Brandscape


Cloud reduces IT decision maker’s perceived dependency on Microsoft

How much do you agree or disagree with each of the following statements regarding the longer term impact of cloud computing


While Google is a challenge to Microsoft, there is not consensus on the expected impact

“Google Docs is direct competition to Microsoft, so it will definitely lower the cost and have a negative impact as Microsoft's

monopoly in the market.” (Large)

“ Cloud computing solutions can be easy to use and you can access it anywhere-less

reliance on Microsoft Office” (Medium)

“Almost all our software is Microsoft based, so it very likely we will continue to opt for Microsoft as our primary vendor” (Large)

“Microsoft professional products are usually good, on the whole. Developers already widely use Microsoft's tools. Many companies

running on MS may opt for this cloud option out of loyalty” (Large)

How much do you agree or disagree with each of the following statements regarding the longer term impact of cloud computing


40%

33%

28%27%

33%

40%

In the cloud, IT decision makers are somewhat more confident in Google than Microsoft, particularly Enterprise

40%

23%

37%

Companies will do equally

good job

Companies will do

equally good job

Companies will do equally

good job

Enterprisen=44

Largen=41

Mediumn=15

Which Company is More Capable to Succeed in Cloud Computing?

When comparing Google and Microsoft, which company do you feel is more capable of helping companies be successful in harnessing the possibilities of cloud computing? Which one do you feel will do the best job?


While familiarity with EC2 is moderate, Amazon is seen as having simple development and proven applications

How familiar are you with Amazon.com’s efforts in cloud computing? What will be the benefits for companies that choose to work with Amazon for cloud computing services? What will they offer or provide that will be a benefit to the market?

Applications - “Flexibility that applications can be shared, used and not limited to the physical

locations. The biggest benefit is increase of productivity.”

(Enterprise)

Ease of Development - “Web scale computing becomes more

convenient and easier. Developers can relax as they do

not have to spend that much time developing applications.

They already have a platform.” (Enterprise) Reduce Storage/Computing

Costs - “Reduction in computing costs. Amazon has set a

benchmark for low cost computing and storage costs. Other benefits will largely be dependent upon

what additional services both by Amazon and others can provide.”

(Enterprise)


Familiarity and existing relationships are seen as key benefits to working with Dell/HP for Cloud Computing

Key Benefits

“These are both trusted companies and some

organizations may find it easier/more palatable to move to someone like HP for CC services.”

(Large)

“HP has the experience and the know how and the reputation that

many trust.” (Large)

“HP has extensive experience already with storage capabilities”

(Enterprise)

Both Dell and HP have made significant investments building centralized computing and data centers that are offered as a service to companies. What are the potential benefits of having companies such as Dell and HP offering these kinds of cloud computing services?

Key Benefits

“Uniformity and familiarity. Dell provides all hardware for my

immediate branch. We would tend to choose Dell for a data center, because we trust them, and they may offer savings for economy of

scale.” (Large)

“Dell is already in our data centers so we are happy to pursue this

with them. (Large)

“Dell makes great reliable infrastructure components”

(Enterprise)


Poll Questions1) In our research as well as other studies, interest in Cloud Computing services including Software, Storage, Infrastructure and Platform is clearly increasing. What are your expectations for the coming year for whether this heightened interest will translate into near-term adoption of various Cloud Services?

• Adoption of Cloud services will be significant and widespread consistent with heightened expectations• Adoption of Cloud services will grow quickly, but companies will not be as aggressive as current interest levels suggest• Companies will be hesitant to adopt cloud services right away and it will be a slow build

2) How long will it take large and enterprise companies to realize significant efficiencies in use of monetary and other resources if they adopt a variety of Cloud services?

• Significant efficiencies achieved quickly• Significant efficiencies achieved over a few year period• Modest efficiencies over time• Little to no efficiencies realized• More complexity rather than efficiency

3) How important do you feel it is to closely study adoption of cloud services in the next year or two to understand the experience and real impact of Cloud services on IT strategy and implementation?

• Extremely important• Important• Somewhat important• Not very important• Not at all important


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