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8/8/2019 Evolution of Cloud Computing Markets[1]
1/18
Making Leaders Successul Every Day
J 6, 2010
The Evoto O CodComptg Mrkets Ste Red, Ph.D., Hoger Ksker, Ph.D., d Psc Mtzke
or Vedor Strteg Proessos
http://www.forrester.com/8/8/2019 Evolution of Cloud Computing Markets[1]
2/18
2010, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Inormation is based on best availableresources. Opinions refect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar,and Total Economic Impact are trademarks o Forrester Research, Inc. All other trademarks are the property o their respective companies. Topurchase reprints o this document, please [email protected]. For additional inormation, go to www.orrester.com.
For Vedor Strteg Proessos
ExECuTiVE SuMMaRy
Looking past the current industry hype surrounding all things cloud, Forrester believes that cloud
computing is a sustainable, long-term I paradigm, and the successor to previous mainrame, client/
server, and network computing eras. Underpinned by both technology and economic disruptions, the
cloud will undamentally change the way technology providers engage with business customers and
individual users. But, at the moment, most customers are suering rom cloud conusion as vendor
marketing stretches the term cloudacross a wide variety o capabilities and, worse, ails to explain
the potentials and the limitations o cloud computing in a well-structured way. Forresters taxonomy o
cloud computing markets provides vendors and customers with clear denitions and labels or cloud
capabilities. With this taxonomy in hand, vendor strategists can position their oerings in the overall
cloud market and better articulate their business value propositions to customers.
TablE OF COnT EnTSCod Comptig Cases A MacroShit O
Tech Idstr Markets
Bsiess Ad Techoog Iterpa Gies Rise
To Cod Comptig
Strctrig The Cod Market
Three Impicatios O A Cod Comptig
Market Segmetatio
The ICT Idstr I The Cod Era
RECOMMEnDaTiOnS
Cod Comptig Wi Stimate A Maor Shit
O The IT Ecosstem
nOTES & RESOuRCES
Forrester zed cod comptg dopto
2010 sed o ts Eterprse ad SMb Sotwre
Srve, north amerc ad Erope, Q4 2009;
qres; d coverstos wth m vedors,
cdg Csco Sstems, Cords, HP, Hsp,
ibM, Mcrosot, netSte, Orce, sesorce.com,
d SaP.
Reated Research Docmets
Smrt Comptg Drves The new Er O iT
Growth
Decemer 4, 2009
TechRdr For irstrctre & Opertos
Proessos: Cod Comptg, Q3 2009
Octoer 2, 2009
yet aother Cod
J 30, 2009
J 6, 2010
The Evoto O Cod Comptg Mrketsb Stea Ried, Ph.D., Hoger Kisker, Ph.D., ad Pasca Matzke
wth Chrstopher Mes, Thoms Mede, Ph.D., Joh R. Rmer, d Mrosw lsserm
2
3
5
8
11
14
mailto:[email protected]://www.forrester.com/http://www.forrester.com/go?docid=55157&src=57232pdfhttp://www.forrester.com/go?docid=55157&src=57232pdfhttp://www.forrester.com/go?docid=54338&src=57232pdfhttp://www.forrester.com/go?docid=54338&src=57232pdfhttp://www.forrester.com/go?docid=54907&src=57232pdfhttp://www.forrester.com/go?docid=54907&src=57232pdfhttp://www.forrester.com/go?docid=54338&src=57232pdfhttp://www.forrester.com/go?docid=54338&src=57232pdfhttp://www.forrester.com/go?docid=55157&src=57232pdfhttp://www.forrester.com/go?docid=55157&src=57232pdfhttp://www.forrester.com/http://www.forrester.com/mailto:[email protected]8/8/2019 Evolution of Cloud Computing Markets[1]
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2
ClOuD COMPuTInG CAuSES A MACRO-SHIT O TECH InDuSTRy MARKETS
Cloud computing has an impact on many o the core segments o the $2.4 trillion worldwide spend
by businesses and governments on inormation and communications technology (IC) products
and services (see Figure 1). At the highest level, cloud computing changes how customers deploy
soware applications and middleware, it draws spending rom portions o the outsourcing market,
and it cannibalizes customer investment in hardware and data centers.
Over time, the net eect o cloud adoption will be a transormation o traditional soware and
hardware market segments into I services.
igre 1 Forresters Tech idstr Mrket Overvew
Source: Forrester Research, Inc.57232
Global business and government spending on ICT products and services
(US$ billions, 2010)
OS$25
Middleware$117
Custom-builtapplications
$88
Applications$168
Servers$56 PCs
$162
Peripherals$56
Other$32
Storage$41
Strategyand otherconsulting
services$90
Networkoutsourcing
$29
Distributedenvironmentoutsourcing
$60
Desktopoutsourcing
$28
Applicationsoutsourcing
$28
Mainframeoutsourcing
$31
Computer hardwaresupport services
$71
$27
$31
$29
Telcos$182
Enterpriseand
SMBs$151
Systemsintegration
project work$202
Computer
equipment$347
IT outsourcing$246
Software$398
Communicationsequipment
$333
ITservices
$291
$2,500
Telecom services$885
Cloud impact
(numbers may not total to the totals shown because of rounding)
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Cod Comptig uderpis The next Era O Tech Idstr Ioatio
Te tech industry has seen several large paradigm changes over the past our decades: 1) Te
mainrame computing era enabled business growth to be untethered rom the number o employees
needed to process transactions manually; 2) the personal computing era empowered business users
to run their businesses based on individual data and applications on their PCs; and 3) a decade
o network computing established an unprecedented level o transparency o inormation across
multiple groups inside a company and an amazing rate o data exchange between enterprises.
Each o these revolutions brought with it new economies o scale. Te cost-per-transaction, the cost
o automating oce and desktop processes, and nally the cost o network bandwidth ell quickly
and enabled business users to apply IC solutions more broadly to create business value. Forrester
believes that cloud computing will help unleash the next wave o tech-enabled business innovation,
which we call Smart Computing.1 Te advent and eventual widespread adoption o cloud computing
inrastructure and applications will be a major stimulus or the Smart Computing paradigm.
Forresters denition o cloud computing thereore ocuses not on the technology but on the delivery
model that enables the change o business models:
A standardized IT capability (services, sofware, or inrastructure) delivered via Internet
technologies in a pay-per-use, sel-service way.2
Given the looming shi o user adoption and spending to a new technology and business model
or much o the IC industry, we have structured this report to answer vendor strategists crucial
questions: 1) Why cloud computing, and why now? 2) What is the structure o the new market
opportunity? 3) How will cloud computing change vendors business models? And how shouldvendors transition current market share and IP to new cloud-based businesses? 4) What are the
longer-term implications o cloud computing?
Vendor strategists ace the challenge o simultaneously creating value or customers and prospects,
communicating their rms cloud positioning, keeping up with competitors, and preparing or a
potentially disruptive change o their business model.
BuSInESS AnD TECHnOlOGy InTERPlAy GIvES RISE TO ClOuD COMPuTInG
Tree major market orces both enable cloud computing and drive its adoption by computing userorganizations (i.e., subscribers to cloud services) and by service providers:
1. I becomes embedded in the business. As enterprises have awakened to the increasing
interdependence o business and I issues, they are building I capabilities within a
broader business context. Te Internet has driven a gradual migration o unctionality rom
applications designed or single departments or processes toward resources that are shared
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and interconnected between people, departments, and companies. And buyers are more
likely to measure technology investments in business terms, measuring technology value in
terms o improved business outcomes, not traditional measures like the scope or speed or size
o technology inrastructure. Forrester reers to this evolution as the shi rom inormationtechnology (IT) to business technology (BT).3
2. Shared service architectures mature. Te simultaneous shi toward shared I resources
reinorces the preerence or one-to-many service architectures that leverage homogeneous
platorms or more economical delivery o a broad portolio o business services and solutions.
Internal consolidation and virtualization o data centers is just the beginning or many
companies.4 Te quest or higher utilization o I resources then leads users to try out shared
platorms operated by external service providers, which have signicantly higher levels o
resource sharing and thereore lower per-unit costs.
3. echnology Populism spreads. As the overall population becomes more Internet-literate,
consumers, and digital natives in particular, are using technology to manage and integrate their
private and business lives.5 Increasingly, digital devices and services will combine to create the
personal cloud, an integrated resource or organizing, preserving, sharing, and orchestrating
personal inormation and media.6 Te rapid evolution o the personal cloud on the consumer
side raises business users expectations or immediate, universal access and unlimited scale o
technology resources.
Cod Comptig Promises Rea Ecoomic Beefts As We
Te combination o these three trends with the potential economic and unctional superiority
o external cloud inrastructures vis--vis internal enterprise I will continue to drive companydecisions to out-task the planning, building, and managing o technology assets and processes.
Senior executives, and in particular CFOs, are beginning to value the potential economic benets
associated with cloud computing, particularly:
Faster time-to-value. Beyond tactical cost reduction, companies are beginning to value thenearly immediate availability o cloud computing services without capital commitments. As
cloud computing converts xed costs into variable costs, it releases capital or investment in
other areas o the business and allows companies to adjust their spending to changing business
needs. In some instances, cloud computing can also enhance the balance sheet strength and
credit rating o a company because the business will be able to direct more capital into revenue-generating activities.
Improved business exibility. From a strategic perspective, companies are trying to achieveI fexibility. Companies need to move swily to adapt to change, seize new opportunities,
and meet the demands or increased productivity and reduced costs. Similarly, as business
workloads and requirements expand and contract, I organizations must quickly match their
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computing resources to current business needs. As cloud computing provides fexible access
to inormation system operations, it helps companies continue to change while maintaining a
competitive advantage.
Bt Preaet Cod Washig Erodes Cstomer Credibiit
Tese driving trends and prospective benets create widespread awareness o cloud computing.
However, not all vendors are leveraging this momentum appropriately. Some are hesitating, and
others are overusing the word cloud. Some vendors and services providers recognized the
cloud momentum early and started to add the cloud tag to many o their existing services. For
example, relabeling as cloud computing a traditional application service provider (ASP) service
mischaracterizes its (nonexistent) pay-per-use and sel-service characteristics. Forrester calls such a
misuse cloud washing.7 Most enterprise customers recognize old wine in new skins pretty quickly.
Nevertheless, cloud washing has been a signicant roadblock to cloud computing adoption because:
Cloud washing causes customers to tune out. I vendors relabel everything as a cloud service,the term cloud computing ceases to mean anything. Vendors waste the unique opportunity to
leverage the benets that cloud computing oers to customers. And or those customers who
have not read enough about the structure o the cloud computing market, they may have the
wrong perception about the technology; cloud washing can create unrealistic expectations that
are impossible or vendors to meet and that impede sales.
Cloud washing diminishes the credibility o existing enterprise solutions.A second andequally harmul side eect is the cloud washing o highly reliable large-enterprise solutions.
Most o these solutions are usually characterized by high perormance, mass volumes o data,
and high availability. Tey are running on-premise or in long-term outsourcing relationshipstoday. Vendors talking up the promise o cloud computing in general terms risk undermining
existing systems investments and creating unrealistic expectations or new, much-lower-cost
cloud solutions displacing traditional enterprise systems.
STRuCTuRInG THE ClOuD MARKET
o guide vendor strategists toward the most promising opportunities, and improve industry
understanding as a prerequisite or realizing those opportunities, Forresters cloud computing
taxonomy introduces a comprehensive way to categorize cloud market oerings and understand
their relationship with more traditional deployment models such as ASP and business processoutsourcing (BPO).
Two Dimesios Defe Cod Comptig Market Segmets
Our cloud computing taxonomy uses two dimensions to dene distinct market segments:
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1. Whatresources are shared (horizontal dimension). Dierent layers o the traditional
I resource stack can be shared by pillars o cloud services: inrastructure, middleware,
applications, and inormation and processes (see Figure 2-1). Inrastructure services in the
cloud replace the purchase o hardware like servers or storage. Middleware in the cloudprovides a pre-integrated, standardized middleware stack to replace the licensing, installation,
integration, and operation o such soware. Te same applies to business applications in the
cloud, which replace the traditional purchase and installation o soware packages with a
subscription access to a managed environment. Finally, inormation, business processes, rules,
and the people who perorm them can be replaced by cloud-based services.
2. With whom resources are shared (vertical dimension). Increased levels o sharing start with
a single company via a private cloud service, then proceed to a dened and trusted number o
companies, and nally move up to the unlimited and anonymous public crowd (see Figure 2-2).
Increasing levels o sharing in the vertical dimension are associated with three distinct favors o
cloud computing:
Private clouds. Tese services share computing capabilities within a single company. I Iorganizations go beyond the virtualization o inrastructure and use fexible sel-service
provisioning tools, the relationship between I and business can be described as a private cloud.
An important dierence between large-scale corporate data centers and private clouds is the
governance model, i.e., how the CIO engages with the business side o the enterprise. I this
engagement is characterized by high standardization o inrastructure and the risk o fuctuating
utilization on the I side rather than on the business side, then the business side perceives the
corporate data center as a private cloud services provider.
Hosted (virtual private) clouds. In this layer, I capabilities are provided by service providers,similar to traditional hosting or outsourcing models but with ar more fexibility regarding
consumption-based pricing, standardization, and usage fexibility.
Public clouds. Services in this layer are oered via the Internet in a standardized, sel-service,and pay-per-use way. Tere are only a ew already-consolidated large-scale public cloud
service providers, such as Amazon.com, that handle huge volumes o identical services without
individual customer interactions.
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igre 3 Forresters F Cod Comptg Toom
Source: Forrester Research, Inc.57232
Infrastructure Middleware Applications
Purecloudmarket
Extendedcloudmarket
Public cloud
Hosted(virtual private)
cloud
Private cloud
Level ofsharing
Businessvalue
Informationand processes
Dynamicinfrastructure
services
IaaS SaaSPaaS BPaaS
Integration-as-a-service
Dynamicapps
services
DynamicBPO
services
Infrastructurevirtualization
tools
Middlewarevirtualization
tools
Appsvirtualization
tools
BPvirtualization
tools
THREE IMPlICATIOnS O A ClOuD COMPuTInG MARKET SEGMEnTATIOn
Te wide variety o services categorized as cloud computing will change the tech industry
signicantly. New supplier business models will become evident in each pillar o the cloud
taxonomy, with dierent market dynamics and evolution, ranging rom incubation to mass
adoption. Vendors will also develop new engagement models with enterprise customers, or
example, ocusing on application standardization versus customization. And strategists will come to
grips with an increasing shi in user spending rom products (computers) to services (computing).
1. new Cod Bsiess Modes Come Ito ocs
Soware-as-a-service (SaaS) applications are already in widespread use, while the new people-
centric business process services are just about to spin o rom their old noncloud origins.
Statements about the overall cloud market are likely to be meaningless given the variety o marketsegments, each o which is driven by dierent business models, revenue streams, and buying
behaviors. Although the business models might be signicantly dierent in the dierent business
value pillars o the taxonomy, we can identiy some common characteristics:
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Te public cloud is a mass-volume I services market. Public clouds are highly standardizedand massively shared, and accordingly the ability to customize eatures and business logic is
restricted. Many inrastructure-as-a-service (IaaS), platorm-as-a-service (PaaS), and SaaS
providers handle their business nearly anonymously like a telco, without really knowing their
customers and their specic requirements. Te margin per subscription is relatively small and
under permanent competitive pressure, and the prot potential is driven by a huge volume o
subscribers and a ast market consolidation. Tis public cloud business is only a sustainable
business model i a provider remains ocused on volume and does not ollow the demand o its
largest customers to oer more customized solutions or even a licensed soware version with
exactly the same unctionality to run on-premise. As an example, salesorce.com does not oer a
licensed soware release o its customer relationship management (CRM) product to run on-
premise because the speed o deployment would be slower than a subscription in the public cloud.
Te private cloud is a licensed tools and consulting market. When a company puts a privatecloud in place, the engagement model between the I and business side within the companychanges. Te I department is not a cost center anymore; it is a service provider that is nanced
by operational expenditure contributions rom the various business units. Forrester sees a new
generation o tools evolving, helping the CIO deliver internally owned inrastructure in the style
o a cloud. So the private cloud market includes virtualization tools, I management soware,
and middleware platorms with multitenancy capabilities. Tus, these segments are aggregations
o parts o traditional licensed enterprise soware markets, plus consulting services that help
corporate data centers undertake a cloud transormation.
Te hosted (virtual private) cloud is an I services market with customer intimacy.In the middle between public clouds and private clouds, hosted (virtual private) cloudservices combine the economy o scale o an external provider with some knowledge o and
customization or an individual enterprise customer. An I outsourcing or hosting provider can
become a virtual private cloud provider i it retains customer intimacy by understanding the
customers core business. Hosted (virtual private) inrastructure should appear like an internal
data center resource while being provided by an external source.10 Ideally, these oerings are a
total service model, and the end customer does not buy any soware license or real hardware
besides network connectivity.
Te business model o a hosted (virtual private) cloud provider is attractive or I outsourcing and
hosting companies i they ocus on a limited number o very large customers rather than a mass oanonymous customers that make up the public cloud market. As examples, Fujitsu Services, IBM,
Siemens I Solutions and Services, and -Systems are transorming parts o their traditional
outsourcing business into this style. Te portolio o such providers also includes cloud/legacy
integration services, such as creating access to the corporate identity management system.
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2. Cod Proiders Wi Create new Egagemet Modes With Eterprise Cstomers
Both vendors and users will create undamentally new ways o engaging with each other when
buying and selling cloud services:
Cloud provider diversity replaces single-vendor sourcing or users. In precloud times, usercompanies tried to consolidate suppliers to a minimum number o hardware and soware
vendors; the cloud, however, will bring greater supplier diversity. For example, many enterprises
ollow a single vendor sourcing strategy and ask or all business application requirements rom
their preerred enterprise resource planning (ERP) vendors rst. However, when a company is
considering a CRM application as a subscription out o the cloud, Forrester has seen that the
existing vendor is not even invited or the request or proposal (RFP) process, as the traditional
vendor does not represent a visionary disruption to the existing soware deployment model.
Instead o the ormer vendor consolidation approach, I users are starting to embrace cloud
orchestration, combining logic rom internal systems with a CRM or business intelligence (BI)application in the public cloud, or instance.
Vendors ocus on standardization o applications and platorms, not customization.Cloudcomputing signicantly disrupts vendors practices as well. In the past, business applications
vendors successully tailored their oerings to all kinds o customer requirements. Tey added
more customization options to standard products at the request o a ew o their largest customers.
Te results were complex implementation projects and unpredictable behavior rom badly
congured application packages. In contrast to this, the most successul cloud vendors are those
that convince even the most infuential customers to live with standardized application logic. o
reach a high SaaS market share, a vendor actually must notlisten to customers or some time. For
example, salesorce.com basically rejects extensions to its packaged application; instead, it has
established a standardized platorm where customers or independent soware vendors (ISVs) can
develop extensions. Tis keeps the core CRM application on a high-growth, mainstream path.
Some vendors will separate their cloud and legacy businesses. Most traditional ERP vendorsthat tried to deliver a SaaS alternative realized painully that SaaS is a totally dierent business
model. Te cloud style o soware vendor strategy is so dierent rom the existing corporate
culture that it will be easier to spin o the SaaS business in a totally separate business entity.
While this will slow the transormation o traditional soware vendors into the cloud, we
predict a ast transormation o traditional outsourcing and hosting providers. Tey will manage
to standardize portions o their oering into a hosted (virtual private) cloud delivery model.But again, most traditional hosting companies will stay out o or struggle with a public cloud
inrastructure oering.
3. Cod Market Segmets Draw user Spedig rom Existig ICT Markets
Te revenues or the various cloud computing market segments will not appear as new money
in the tech industry! Most cloud categories will gain their market size purely by displacing user
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spending on existing markets. Some are mixing contributions rom cannibalization and net new
buying potential, but we have not identied any cloud market that raises only new market volumes.
Inrastructure-as-a-service oerings, or example, will replace, in many cases, a users real hardware
spending on non-mission-critical servers. Hardware or development and testing purposes isalready shiing to the IaaS alternative. Obviously, the utilization o the hardware beneath the IaaS
oerings at the cloud provider is ar higher than individual development machines. So, as this
portion o hardware spending shis to cloud services, it will shrink by perhaps 30% at the same time.
THE ICT InDuSTRy In THE ClOuD ERA
Cloud computing represents both a signicant threat and opportunity or IC vendors. Strategists
must contemplate the threat o current revenues shrinking and shiing away to new cloud providers
and the opportunity to develop disruptive business models that can capture some o those shiing
revenues. Cloud computing will have a proound eect on how I unctionality will be delivered,
priced, and consumed. Te paradigm shi will be a undamental change in the direction o
I investments as computer buyers become computing subscribers, shiing away rom capital
expenditures on technology products (hardware and soware) toward I investments being made
through operating expense budgets or services.
The Short Term: Cod Acceerates The Shit To Serices
Over the next two to three years, cloud computing will:
Frame a services-centric industry ecosystem. Although companies will continue to invest inI products and technologies, they will increasingly do so in the context o services. Enterprises
will increasingly rely on external services providers to acilitate the respective solutions basedon their superior shared service delivery architectures as well as their partnerships with other
leading technology vendors. As a result, we will see the emergence o a new services-centric tech
industry ecosystem where large service providers act as aggregators and deliverers o multiple
computing and application technologies as well as business process unctions.
Alter the nancial and sales business models o product vendors. Services-centric ecosystemswill shi the underlying nancial business models o most tech vendors. Given customers ocus
on liquidity, tech providers will be orced to move away rom producing xed capital goods
to making circulating capital available in the context o their ongoing services. While this will
have a massive impact on the vendors balance sheets, it will also require a signicant changein their sales and go-to-market approach. Te ocus will have to move rom a culture and sales
incentives built around one-time product sales to a culture and corporate governance that
embrace long-term customer relationships and trust.
Expose the tech industry to more cyclical spending patterns.While cloud computing inthe short term will open new revenue growth opportunities or dierent vendors within the
ecosystem, in the long term, the revenue fow will be subject to strong cyclical changes in
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customers buying patterns. With the shi rom products to services, corporate and consumer
tech spending will much more explicitly mirror the ebbs and fows o the underlying business
cycles. In order or vendors to maintain growth through these cycles, strategists will adjust their
portolios, emphasizing up-cycle themes like speed and fexibility in good times and down-cyclebuying themes such as cost reduction and eciency in not-so-good times.
Serve growing I demands with shrinking I spend. Businesses and consumers willincreasingly depend on data volume, quality, and ubiquity in the coming decades. However,
we expect the on-premise deployment o soware in corporate data centers and on personal
devices to decrease in the ace o mounting cost and complexity. How to resolve this seeming
paradox? With cloud computing, where provider-hosted oerings will gradually replace data
volume and compute power in corporate data centers and on personal devices.
The Medim Term: BPO Serices Moe To The Cod
Te outsourcing o people-centric services has taken place or many years under the label o
business process outsourcing (BPO), a multibillion-dollar business annually. raditional BPO is
not cloud computing, however, as contracts typically run or ve or even 10 years, which is the
opposite o the elastic pay-per-use consumption model that characterizes cloud services. So we do
not include traditional BPO service in the inormation and business process pillar o our cloud
computing taxonomy. However, we expect new categories o cloud services to emerge over time,
based on a combination o human-resource-based services with cloud-style delivery models. We
predict these new services will create enormous elasticity in volume at a compelling price point or
each o the three levels o resource sharing:
Business-process-as-a-service (BPaaS) in the public cloud. One example o a business process ina highly shared mode is event marketing and management services provided by a company called
Meeting Expectations. It provides everything rom the I system or online registration to the
payment process to the sta who manages the on-site acility at an event. Whats remarkable is that
a customer has no contract beyond a single event, and the provider oers its business service to
everybody publicly. Tis provides higher business value with human involvement than just a
business process management (BPM) soware system running in a public cloud environment.
raditional BPO services will gradually shif to dynamic BPO services. Similar to traditionalapplication outsourcing, which will shi gradually to dynamic application services, Forrester
predicts an evolution rom traditional BPO services into dynamic BPO services. While stillkeeping some customer intimacy, the dynamic BPO service will dierentiate itsel with cloud-
style characteristics. One example is a BPO-style outsourced HR department, which might
move a customers entire HR department, including sta and I systems, to an external provider.
A dynamic BPO service would give customers the option to move some but not all processes
into the cloud and to keep some sta inside the company. Customers could request additional
business process volumes (including sta) in a sel-service style rom the provider with
fexibility similar to what we see between private and public I inrastructure.
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Future shared services centers will embrace internal private cloud engagement models.Tein-house alternative to BPO is also not new. It is a shared service center that consolidates, or
example, all HR departments o all business units o a larger corporation into one corporate
acility. Tis type o shared services center used to be one physical location in many cases,
but it can also be a virtual shared services center. Te important dierentiator is the way
the shared business services are charged to the business units. I, in addition to the people-
centric eorts, the total cost o I systems are charged in a transparent pay-per-use model
(with the shared services center basically making the same evolutionary step into a business
process virtualization), than the pure data center has transormed rom a virtualized hardware
landscape into an internal private cloud approach.
The log Term: CodDeried Bsiess Modes Emerge
And in the longer term, we see the potential or new, cloud-derived business models, including:
Te intercompany or collaborative cloud. Precloud soware applications and business modelstypically ocused on one business step, such as trading (buying and selling) goods. Hence, most
nancial soware packages are strictly structured in accounts receivable and accounts payable.
As such transactional accounting is not a real dierentiator or a trading company, it might
source this rom a cloud-based service. Once a number o the trading companys suppliers and
customers use the same cloud-based system, we envision a totally new generation o nancial
soware that is based on a trading chain volume, ocusing on value add and margins based
on a commonly shared network o transactional inormation. A single transaction record
would simply appear on the accounts receivable report in one subscriber company and on the
accounts payable record on another subscriber to the same SaaS application. Such an approach
would dramatically decrease manual eorts and stimulate dierent business models or
trading companies. Similar to this sharing o transactional data, the sharing o master data and
metadata, such as spare part specications on purchasing marketplaces, or quality assurance
data and risk management data would be possible in a collaborative cloud.11
Te cloud broker. In the same way that a travel agent represents multiple airlines, we expectthat once many comparable providers o standardized cloud services are on the market,
potential subscribers would ask a broker to recommend the service that best ts the companys
requirements.
Te cloud-legacy application integrator.Te distributed location o data and business logicembodied in a hybrid ederation o cloud computing and traditional computing will be a hugechallenge to middleware soware stacks and their providers. Forrester calls this challenge cloud
orchestration and the corresponding consulting services cloud/legacy integration.12
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2010, Forrester Reserch, ic. Reprodcto ProhtedJ 6, 2010
The Evoto O Cod Comptg Mrkets
For Vedor Strteg Proessos
14
R E C O M M E n D a T i O n S
ClOuD COMPuTInG WIll STIMulATE A MAjOR SHIT O THE IT ECOSySTEM
Forrester recet deted or mjor ceters o grvt the crret tech dstr: pckged
sess ppctos, mddewre d dtse sotwre, hrdwre, d iT servces.13 Whe
vedors were stsed to p oe or two o these some ers go, the recet cqstos o S
Orce, EDS HP, d mer o others re pshg ths pctre to ew eve o
cosodto d ew ce o power. Eve rther dow the rod, cod comptg w hve
sgct mpct o the ce g. Hrdwre d the two sotwre csses decrese
mportce, d sht to servces-cetrc modes w go og wth the cod comptg tred.
Gve ths dsrptve dstr cotet, vedor strtegsts shod:
Target the appropriate segmet o the cod market. Forresters cod comptgtoom s comprehesve csscto o cod servces d toos. Vedor strtegstsshod se ths to derstd d compre the pcomg oergs o prters d
compettors mppg ther crret portoo to the toom. Mrketg mgers c
det whch res o ther crret portoo re ste or cod messgg t d
whch portoo eemets do ot show o the cod chrcterstcs d shod ot e
cod-tgged.
Seect the middeware battefed care. Mddewre vedors c tr to host ther PStechoog stck o ther ow, s Mcrosot s dog hostg Wdows azre. However,
ths dmges prtershps wth otsorcg provders tht ke to cotrte the ve o
hostg o ther ow. The cod rstrctre sotwre mrket c st e sotwre toos
mrket. i cotrst, Orce, or empe, rees o prtershps to host ts jst-ched PSoerg. Prters m e pesed ot to ce other compettor t w chege the
provder o the PS techoog wth mttet d mgemet efcec reqremets.
i smer mddewre vedors ether host ther PS oerg or provde PS stck to
hostg prter, the shod t est mpemet sophstcted cod/egc tegrto
cptes to st compettve.
Aticipate a shrikig ERP impemetatio market. Trdto depoed ERP sstemsreqred hrdwre vestmet ddto to the sotwre cese. The mpemetto d
cstomzto o sess ogc ws s costg project o two to or tmes the sze
o the t cese cost. Wth SS, the hgher eve o stdrdzto d ster dopto
cce w press the mpemetto dow to rto o ot 0.5 tmes the mpemettocost compred wth three-er sscrpto vome. Cever sstems tegrtors (Sis) mst
strt to trsorm ther dstr kowedge rom costg, d-rte-ocsed oerg
to more pckged pproch. Some re strtg to oer dstr-specc dd-os
srrodg pckges SS ppctos ke Sesorce CRM.
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2010, Forrester Reserch, ic. Reprodcto Prohted J 6, 2010
The Evoto O Cod Comptg Mrkets
For Vedor Strteg Proessos
15
Shit hardware saes rom eterprises to cod serice proiders. The server hrdwresod to ed sers s der the ggest prce pressre o . ad the competto rom the
cod s ct trgg dgeros: Cstomers w ot egotte or some stdrd
86 server; the w smp stop ssg RFPs d sorce some portos o ther workod
reqremets rom the cod. Thereore, hrdwre vedors w ot see ther compettors
wg these des. The corporte dt ceter hrdwre mrket w smp ever
recover rom the ecoomc dowtr o 2008 to 2009. Hrdwre vedors eed to det
ew che pproch or the cresg vomes reqred cod provders. new
prtershps wth vrtzto too d PS techoog stck vedors w hep ee ths
ew css o hrdwre ses.
Iest i hostig portoio maagemet, messagig, ad positioig. The provsogo hostg cptes s der vse prce pressre the emergg cod er. athogh
m cstomers trst ther crret hostg provder d ve the og-term retoshp,
the w ook t prce-edg iS oergs d chege ther trdto provder o ths
ss. Hostg provders hve to vest revsed go-to-mrket pproch, sttg cer
where the ocs d where the do ot. The hve to edcte ther cstomers og
Forresters cod comptg toom d prevet them rom comprg ppes d
orges. Eterprse-css servces c ret the cstomer dvtge the dd ve o
top o iS oergs rom pc cod compettor, s Cpgem s dog wth ve-dd
pproch o top o amzos Estc Compte Cod (EC2).14
EnDnOTES
1 Forrester introduced the concept o Smart Computing in December o 2009. See the December 4, 2009,
Smart Computing Drives Te New Era O I Growth report.
2 Forresters denition o cloud computing is very close to the widely used denition o the National Institute
o Standards and echnology (NIS). However, the ocus is clearly on the level o standardization and
the consumption models. See the September 9, 2009, Best Practices: Inrastructure-As-A-Service (IaaS)
report.
3 Forrester is currently exploring in multiple reports the I-to-B shi or CIOs. However, we predicted
this challenge earlier or vendors that have to prepare their positioning in time to address the shied
expectations o buyers. For the initial introduction o the impact to vendor positioning, see the January 16,
2008, Introducing Forresters Vendor Positioning Review report.
4 In Forresters Enterprise And SMB Soware Survey, North America And Europe, Q4 2009, we askedrespondents rom 1,007 enterprises with 1,000 or more employees the ollowing question: How important
are the ollowing soware initiatives in supporting your rms current business goals? Tirty-one percent
o the respondents said that increasing the use o soware-as-a-service (SaaS) or other cloud services
was a very high or high priority. Sixty-eight percent o the same group said that they will consolidate or
rationalize enterprise applications. Virtualization technologies are signicantly helpul to achieving this
goal. See the February 12, 2010, Te State O Enterprise Soware And Emerging rends: 2010 report.
http://www.forrester.com/go?docid=55157&src=57232pdfhttp://www.forrester.com/go?docid=48378&src=57232pdfhttp://www.forrester.com/go?docid=43785&src=57232pdfhttp://www.forrester.com/go?docid=55802&src=57232pdfhttp://www.forrester.com/go?docid=55802&src=57232pdfhttp://www.forrester.com/go?docid=43785&src=57232pdfhttp://www.forrester.com/go?docid=48378&src=57232pdfhttp://www.forrester.com/go?docid=55157&src=57232pdf8/8/2019 Evolution of Cloud Computing Markets[1]
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2010, Forrester Reserch, ic. Reprodcto ProhtedJ 6, 2010
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5 Forrester denes digital natives as individuals who were born in the late 1990s, having been raised in a
world in which Internet and mobile were commonplace. See the April 26, 2007, European Mobile Youth
Consumer Survey, 2007 report.
6 Forrester predicts that consumer expectations will change. Work- and private-lie related applications and
data should be accessible together rom a single mobile device or desktop or any other device. See the July 6,
2009, Te Personal Cloud report.
7 For Forresters introduction to the danger o cloud washing, see the July 24, 2009, How o Message Cloud
Oerings And Not Get Lost In Te Fog report. For a description o the challenge to an initial version o
Forresters cloud taxonomy, see the July 30, 2009, Yet Another Cloud report.
8 For a detailed analysis o the platorm-as-a-service (PaaS) market size and a maturity model o the soware-
as-a-service (SaaS) market, see the July 13, 2009 Platorm-As-A-Service Market Sizing report, and see the
August 14, 2008 Forresters SaaS Maturity Model report.
9 Scenario planning is a relatively old strategy tool. However, its not easy to apply it to current vendor
strategy challenges successully. For best practices, see the January 26, 2010, Scenario Planning Successully
Applied report.
10 echnically, a server o a virtual private cloud appears, or example, within a corporate data center with
an IP number o the data center, and with knowledge o user identities rom the corporate LDAP or AD
repository. Tis might require some virtual private network (VPN) and manual conguration eorts or the
rst subscription o this kind o virtual inrastructure. However, it should not impede the elasticity and sel-
service mentality o the nal business model.
11 For an initial discussion o collaborative cloud business models, visit Holger Kiskers blog post on the topic.
Source: Holger Kisker, Te Rise O Te Collaborative Cloud, Holger Kiskers Blog, September 10, 2009
(http://blogs.orrester.com/holger_kisker/09-09-10-rise_collaborative_cloud).
12 For Forresters introduction o the concept o cloud/legacy integration and cloud orchestration, see the
December 30, 2009, Market Overview: Te Middleware Soware Market, 2009 report.
13 Forrester identied the business applications, middleware soware, I services, and the hardware business
as the our major centers o todays I industry. See the April 22, 2009, Oracles Sun Acquisition Is A Game
Changer report.
14 Source: Capgemini Makes Cloud Computing or the Enterprise a Reality with Amazon Web Services,
Capgemini press release, November 18, 2008 (http://www.us.capgemini.com/services/serv_pressrelease.
asp?ServID=6&ID=718).
http://www.forrester.com/go?docid=52820&src=57232pdfhttp://www.forrester.com/go?docid=52820&src=57232pdfhttp://www.forrester.com/go?docid=54839&src=57232pdfhttp://www.forrester.com/go?docid=45074&src=57232pdfhttp://www.forrester.com/go?docid=45074&src=57232pdfhttp://www.forrester.com/go?docid=54907&src=57232pdfhttp://www.forrester.com/go?docid=47483&src=57232pdfhttp://www.forrester.com/go?docid=46817&src=57232pdfhttp://www.forrester.com/go?docid=56031&src=57232pdfhttp://www.forrester.com/go?docid=56031&src=57232pdfhttp://www.forrester.com/go?docid=47591&src=57232pdfhttp://www.forrester.com/go?docid=54504&src=57232pdfhttp://www.forrester.com/go?docid=54504&src=57232pdfhttp://www.forrester.com/go?docid=54504&src=57232pdfhttp://www.forrester.com/go?docid=54504&src=57232pdfhttp://www.forrester.com/go?docid=47591&src=57232pdfhttp://www.forrester.com/go?docid=56031&src=57232pdfhttp://www.forrester.com/go?docid=56031&src=57232pdfhttp://www.forrester.com/go?docid=46817&src=57232pdfhttp://www.forrester.com/go?docid=47483&src=57232pdfhttp://www.forrester.com/go?docid=54907&src=57232pdfhttp://www.forrester.com/go?docid=45074&src=57232pdfhttp://www.forrester.com/go?docid=45074&src=57232pdfhttp://www.forrester.com/go?docid=54839&src=57232pdfhttp://www.forrester.com/go?docid=52820&src=57232pdfhttp://www.forrester.com/go?docid=52820&src=57232pdf8/8/2019 Evolution of Cloud Computing Markets[1]
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