Cloud Strategies for Addressing IT Challenges
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1 Cloud Strategies for Addressing IT Challenges Mark Bowker Senior Analyst Enterprise Strategy Group
2 Introduction Mark Bowker, Senior Analyst U.S. Headquarters 20 Asylum Street Milford, MA Enterprise Strategy Group Beijing Office RM 2504, 14# Building Jianwai Soho 39 East 3rd-Ring Road Chao Yang District Beijing, China São Paulo Office Rochaverá Corporate Towers Av. das Nações Unidas, º Andar São Paulo - SP Brasil
3 Agenda Virtualization acceleration Cloud computing strategies Organizational dynamics Steps towards success Cloud strategies for addressing IT challenges According to ESG's 2011 IT Spending Intentions Survey nearly a quarter of organizations would increase use of cloud computing services as an alternative to in-house applications and/or infrastructure as part or their cost containment strategy. In this session, industry analyst Mark Bowker will share current ESG research on what s working for companies today from the applications side and what organizational changes you should expect to see when implementing a cloud strategy. Bowker will also provide a check list of steps that should be taken to ensure that a cloud computing implementation successfully aligns with your corporate strategy and culture Enterprise Strategy Group
4 What s on the Horizon for IT Business look more for business process improvement and ROI Cloud computing and SaaS make significant gains in importance Top areas for IT skills shortages and 2011 hiring plans: Application development Virtualization Database administration Information security 2011 Enterprise Strategy Group 4
5 Measures that are Part of IT Cost Reduction/Cost Containment Strategies, Three-Year Trend Which of the following general measures are part of your organization s IT cost reduction or cost containment strategies? (Percent of respondents, multiple responses accepted) 2009: Organizations nearly three times as likely to cancel project or reduce headcount to cut costs than they were to use cloud. 2011: Organizations are essentially as likely to consider cloud computing as a cost containment strategy. Postpone projects Renegotiate contracts Hiring freeze Purchase new technologies with improved ROI Cancel projects Reduce number of vendors we work with Increase use of cloud computing services as alternative to in-house applications and/or infrastructure Reduce headcount Increase IT outsourcing 13% 17% 23% 25% 22% 18% 20% 20% 26% 35% 32% 23% 26% 29% 29% 24% 38% 38% 52% 49% 46% 46% 44% 55% 55% 62% 61% 0% 10% 20% 30% 40% 50% 60% 70% 2009 (N=429) 2010 (N=448) 2011 (N=499) 2010 Enterprise Strategy Group
6 Top 10 IT Priorities: 2010 vs Increase use of server virtualization 1. Increase use of server virtualization 2. Information security initiatives 2. Manage data growth 3. Improve data backup and recovery 3. Information security initiatives 4. Manage data growth 4. Major application deployments or upgrades 5. Major application deployments or upgrades 5. Improve data backup and recovery 6. Data center consolidation 6. Desktop virtualization 7. Business continuity/disaster recovery programs 7. Data center consolidation 8. PC refresh 8. Business continuity/disaster recovery programs 9. Regulatory compliance initiatives 9. PC refresh 10. Desktop virtualization 10. Regulatory compliance initiatives 2011 Enterprise Strategy Group
7 Evolution of Server Virtualization Demographics Sample size: 463 respondents. Geographic scope: North America. Company size: 12% large midmarket ( employees), 88% enterprise (1,000+ employees). Industry focus: Representative sample across all industries (except IT vendors, VARs, etc.). Respondents: Senior IT managers and technology specialists. All respondents screened for day-to-day knowledge of and/or familiarity with their organization s server virtualization environment and strategy Enterprise Strategy Group
8 Research Highlights - General Server virtualization is becoming ubiquitous However, market immaturity reflected by 58% of organizations having virtualized less than 1/3 of servers. IT-owned workloads dominate 59% have not virtualized any mission critical applications. Users are reaping benefits Reduced capital and operations costs, reduced floor space, improved provisioning time, etc. Dynamic IT remains elusive More a vision than a reality. There will be significant market maturity in the next 24 months Lots of expected growth, hurdles still to overcome Enterprise Strategy Group
9 ESG s Server Virtualization Maturity Model Segmentation Percent of current virtualization users, by segment Laggards, 22% Followers, 53% Leaders, 25% 75% of the market 58% less than 30% virtualized 56% less than 250 virtual machines Massive opportunity a) 70% of organizations using more than one hypervisor b) Percentage of VMs in production jump from 39% today to 58% in 24 months primarily laggards and followers c) 31% expect 25:1 VM consolidation in 24 months 2011 Enterprise Strategy Group
10 Top Developments to Enable More Widespread Usage Additional training for IT staff tops list of accelerators across maturity model Scale with existing investment: Visibility, reporting, analytics, and route cause analysis Faster provisioning Better tools Applications: Compliance and security Integration with backup, recovery, and DR Confidence 2011 Enterprise Strategy Group
11 Enterprise Strategy Group Getting to the bigger truth. TM Cloud Computing 2010 Enterprise Strategy Group
12 CAPEX vs. OPEX Approval In general, is it currently easier to get approval for capital expenditures or operational expenditures in your organization? (Percent of respondents, N=611) Don t know/no opinion, 4% It is easier to get approval for capital expenditures, 20% There is no difference, 46% It is easier to get approval for operational expenditures, 30% 2010 Enterprise Strategy Group
13 Cloud provider s message to end-users You have options besides owning infrastructure Driven by economics and time to market The current state of IT is inflexible, slow to react, and uncompetitive Negative impact to time to market Negative to the bottom line Negative impact on SLAs We have the skillset and expertise required to deliver high value IT services Improve application availability and uptime Defer to the experts 2010 Enterprise Strategy Group
14 Cloud Landscape Consumers Businesses Channel Partners Cloud-Based Application Service Providers Cloud Infrastructure Providers Enabling Technologies (servers, storage hardware, virtualization software, file system software, etc.) 2011 Enterprise Strategy Group Dotted line = sells to
15 Key tenants of cloud computing On-demand self service Broad network access Resource pooling Rapid elasticity Measured service 2011 Enterprise Strategy Group
16 Public Cloud s Expected Impact on IT Strategies In your opinion, to what extent will public cloud computing services impact your organization s IT strategy over the next five years? (Percent of respondents, N=611) No impact: we have no plans to utilize cloud computing services over the next five years, 14% Don t know, 4% Significant impact: we have a formal strategy to use numerous cloud computing services, which will result in major changes to our IT infrastructure and/or processes, 13% Little impact: we will use a small number of cloud computing services, which will not result in any notable changes to our IT infrastructure and/or processes, 28% Moderate impact: we will tactically deploy some cloud computing services, which will result in some, but not major, changes to our IT infrastructure and/or processes, 42% 2010 Enterprise Strategy Group
17 Cloud Overview How we defined SaaS: A software distribution model in which applications are hosted by a vendor or service provider and made available to customers over a network, typically the Internet. How we defined IaaS: A computing model in which the equipment including servers, storage and networking components used to support an organization s operations is hosted by a service provider and made available to customers over a network, typically the Internet. The service provider owns the equipment and is responsible for housing, running and maintaining it, with the client typically paying on a per-use basis Enterprise Strategy Group
18 SaaS Usage Trends Based on the previous definition(s), are any of the applications used by your organization currently delivered via the SaaS model? (Percent of respondents, N=611) Don t know, 4% No, we do not currently use SaaS and have no plans to do so, 21% Yes, we currently use SaaS, 34% No, we do not currently use SaaS, but we are interested, 21% No, we do not currently use SaaS, but we plan to, 21% 44% have less than 10% of applications delivered via the SaaS model today 2010 Enterprise Strategy Group 59% intend to have greater than 30% of applications delivered via the SaaS model in 36 months
19 Applications Currently and Potentially Delivered via SaaS Customer Relationship Management (CRM) Collaboration/ file sharing & project management Data protection Biggest SaaS Advocates CIO (58%) CFO/ finance (14%) Line of business managers (19%) 2010 Enterprise Strategy Group
20 IaaS Usage Trends Based on the previous definition, is your organization currently using IaaS for any of its IT infrastructure requirements? (Percent of respondents, N=611) Don t know, 6% Yes, we currently use IaaS, 17% No, we do not currently use IaaS and have no plans to do so, 34% No, we do not currently use IaaS, but we plan to, 18% No, we do not currently use IaaS, but we are interested, 26% 2010 Enterprise Strategy Group
21 Key Findings for IaaS Usage Current users more likely to be: Larger organizations (in terms of employees, production servers, IT budgets) Leading-edge IT consumers and organizations with more risk-tolerant management teams Transportation & logistics and federal government 2011 IaaS spending will be more significant among Western European organizations Midmarket organizations more likely to have no 2011 IaaS spending plans 2010 Enterprise Strategy Group
22 IT Transformation Competing strategies Business risk IT Line of Business Developers & Engineers Physical Virt IaaS PaaS SaaS 2011 Enterprise Strategy Group
23 IT Transformation Line of Business Developers & Engineers IT Catalogue of services Physical Virt IaaS PaaS SaaS 2011 Enterprise Strategy Group
24 IT Transformation organizational dynamics IT Fabric Manager Specialties Physical Virt IaaS PaaS SaaS 2011 Enterprise Strategy Group
25 How to get started Focus on business process not technology Research your options & understand risk/ reward Privacy concerns, control, maturity of offering, performance, economic benefits On board your organization Align existing skillsets to new roles Collaborate as a team Prioritize IT transformation Plan for a self assessment Create a roadmap 2010 Enterprise Strategy Group
26 Thank You For more information, please contact Mark Bowker, Senior Analyst Blog: Twitter: markbowker Getting to the bigger truth. TM 2010 Enterprise Strategy Group
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