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© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Page 1 Pinning Down the Cloud September 2009 © Copyright 2009. Yankee Group Research, Inc. All rights reserved. www.yankeegroup.com Pinning Down Cloud Computing Agatha Poon Senior Analyst Camille Mendler Vice President September 29, 2009

Pinning Down Cloud Computing

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“What the hell is cloud computing?” After a year, those infamous words of Oracle CEO Larry Ellison still resonate. The definition of cloud computing is hazy at best, and many companies remain wary of the technology over concerns about infrastructure, security and regulation.Cloud computing has unique potential to save the enterprise cost, reduce complexity and provide highly available service to the end-user or client. With such compelling benefits, companies should look to understand cloud better—what it is, what it isn’t and what it will be. In this webinar, Yankee Group analysts Agatha Poon and Camille Mendler define cloud computing and explore the capabilities and challenges of the technology.

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Page 1: Pinning Down Cloud Computing

© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Page 1Pinning Down the Cloud September 2009© Copyright 2009. Yankee Group Research, Inc. All rights reserved. www.yankeegroup.com

Pinning Down Cloud Computing

Agatha PoonSenior Analyst

Camille Mendler Vice President

September 29, 2009

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© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Page 2Pinning Down the Cloud September 2009

Agenda

• What is cloud computing?

• Who is investing?

• Why it’s immature

• How you need to respond

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© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Page 3Pinning Down the Cloud September 2009

Enterprise IT needs a new operating model

Capacity management is more challenging than ever.

Businesses are striving to execute green initiatives.

Distributed enterprises drive a collaborative culture.

Line-of-business executives want better control over IT.

Speed to market remains a top business priority.

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Poll 1

To connect the dots of many clouds, what should come first?

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Cloud computing may provide an answer

But make no mistake, cloud services are still evolving.

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Cloud computing: Key characteristics

Characteristics Pay as you go

Scalable

Instant provisioning

Virtualized information

Multi-tenanted

Service-level agreements

Dynamically

scalable

virtualized

information

services delivered

on-demand

over the Internet

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Cloud computing: Welcome to another stack

Software as a Service (SaaS)

Platform as a Service (PaaS)

Infrastructure as a Service (IaaS) Se

curi

ty a

nd

Co

mp

lian

ce

Virtualization layer

Pool of computing resources (servers, storage) helps IT and developers to scale computingand storage requirements in real-time on a per-usage basis (e.g., Amazon, GoGrid, AT&T Synaptic Hosting, Verizon Business CaaS, Rackspace)

Middle layer provides key management tools to deploy cloud-based apps and facilitates platform integration (e.g., Force.com, Microsoft’s Azure, LongJump, Elastra, rPath, RightScale).

Application layer offers productivity, collaboration and business applications on a subscription basis (e.g., Salesforce, NetSuite, IBM LotusLive, Google Apps, Workday, SugarCRM).

Further reading: “Pinning Down Cloud,” Aug. 2009

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What’s in it for enterprises?

Top 5 motivations to use Infrastructure as a Service (IaaS)

43%

29%

23%

19%

15%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Ability to access newskills/capabilities

Cost savings on ITstaffing/administration

Disasterrecovery/business

continuity

Capacity management

Cost savings onhardware/infrastructure

Percent of respondents

Source: Yankee Group Anywhere Enterprise--Large: 2009 U.S. Transforming Infrastructure and Transforming Applications Survey, Wave 1-6

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Status check: IT budget is shifting to the cloud

Next 12 months Next 24 months

A third to a half of IT budget spent on cloud services

Source: Yankee Group Anywhere Enterprise: 2009 U.S. Transforming Infrastructure and Transforming Applications Survey, Wave 1-6, Large and SMB

8% of enterprises8% of SMBs

16% of enterprises16% of SMBs

91% of enterprises84% of SMBs

75% of enterprises67% of SMBs

More than half of IT budget spent on cloud services

2% of enterprises7% of SMBs

9% of enterprises17% of SMBs

Less than a third of IT budget spent on cloud services

Note: Numbers are rounded

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No longer hype – but concerns still exist

Source: Yankee Group Anywhere Enterprise--Large: 2009 U.S. Transforming Infrastructure and Transforming Applications Survey, Wave 1-6

0% 10% 20% 30% 40% 50%

Other/don't know

It's no more than marketing hype

Current offerings aren't suitable for myorganization

It's an enabling technology that can drivebusiness transformation and innovation

It's an evolving concept that will take years tomature

Cloud Computing: Enterprise Perceptions

• Top 3 barriers to uptake:• Security (39%)• Reliability (35%)• IT governance (33%)

• Opinion varies by vertical:

• Healthcare is very positive about transformational benefits.

• Manufacturing is most concerned about maturity.

• Finance is most likely to highlight marketing hype.

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Poll 2

From a regulatory standpoint, who do you work with to secure your cloud?

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© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Page 12Pinning Down the Cloud September 2009

The cloud community needs to grow up

Common Tendencies

• Cliquey• Squabbles about service

definitions and standards

• Geek-led• Focuses on tech, not

customers

• Immature• Lacks consistency of

process

Common Failings

• Transparency

• Trust

• Professionalism

Yankee Group’s review of contracts, SLAs and privacy terms of SaaS, IaaS and PaaS providers indicates much work is needed.

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‘As is’: Cloud contractual risk is yours to bear

GoGrid (IaaS) Offers “10,000% SLA” (e.g., failure of 15 minutes will result in 1,500-minute or 25-hour service credit).

The small print: “The maximum credit during a single calendar year, for all Service features combined, is two months' Service fees, regardless of the length of Failure or the number of occurrences.”

Risks involved in using cloud services could outweigh their benefits.

Salesboom (SaaS) CRM and ERP

The small print: “Salesboom.com shall not be liable for […] damages of any kind whatsoever, […] regardless of any party's negligence.”

Boomi AtomSphere (PaaS) Scheduled maintenance is excluded from its 99.99% uptime SLA calculation.

The small print: “Boomi further reserves the right to schedule additional Scheduled Maintenance on an emergency basis on twelve (12) hours’ notice, for not more than eight hours at a time.”

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Sweating the details is important

By what definition? Instance / app or whole cloud uptime SLA?

Compliance to which jurisdiction?

Independent or in-house? Live or periodic?

Who’s responsible for backups? Clue: It’s probably you.

What will it cost? How much time until data is deleted?

Excluded from uptime calculation? What notice is given?

Cash or credit? Is there a payout cap? Deadline to claim?

What limits in scope and payout are asserted?

Maintenance

Penalties

Privacy and data protection

Performancemonitoring

Data backup

Cost of migration

Limitation of liability

Uptime / Availability

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Governance, compliance and risk issues loom

• It’s not about obtaining five 9s in cloud services.

• Not everyone needs this.

• It’s about verifiable assurance.

• Enterprises – particularly large ones – require clarity about exposure to risk.

• Investment will be needed.• Cloud service providers need

to get wise about ICT procurement practices.

Further reading: “Regulation Meets the Cloud,” Sept. 2009

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Securing and monitoring clouds: Who can assist?

Performance Monitoring

Computer AssociatesIBMHyperic CloudStatusInfoVistaKeynote SystemsNimsoftTrustSaaS

IT Infrastructure Optimization

Blue CoatCiscoRiverbed

A crowded landscape of enabling cloud ecosystem vendors

Opportunities exist to secure, test, monitor, federate and orchestrate disparate cloud assets – for enterprises and cloud service providers.

SLA Management

Digital FuelSensible Cloud

Standards

Cloud Computing Interoperability ForumSLA@SOI

Test / Certification

CanonicalPink ElephantRed HatSOASTA

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Trusted intermediaries are needed, not cloud supermarkets

Source: Yankee Group and HP Labs, 2009

• Hot swaps between providers using business rules for cost and performance• A role for telecom operators to be prime contractors for intercloud services?

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Poll 3

Which type of provider is best positioned to be the trusted intermediary for cloud services?

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By default, private clouds may prevail

Source: Yankee Group Anywhere Enterprise--Large: 2009 U.S. Transforming Infrastructure and Transforming Applications Survey, Wave 1-6

• More than half of large enterprises prefer private clouds.

• SMBs are not far behind in preferring private clouds (47%).

• Public clouds attract only 8% of large enterprises, and 20% of SMBs.

Cloud intermediary services could shift preferences

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© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Page 20Pinning Down the Cloud September 2009

Conclusions

• Cloud computing is not hype.

• It’s a logical evolutionary step.

• Investment is rising swiftly.

• But maturity is yet to come.

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Recommendations

To Enterprises

• Walk away: If unsatisfied on service commitments, go elsewhere.

• Negotiate: Ask for better service levels, even if a vendor claims not to provide an SLA.

• Validate: Demand proof, particularly of security, survivability and privacy practices.

• Monitor: Deploy third-party performance monitoring tools/services.

• Diversify: Consider a hybrid public/ private cloud configuration.

To Cloud Service Providers

• Educate: Identify the business as well as operational benefits of your service to customers.

• Be transparent: Reveal processes; focus on security and service levels.

• Build trust: Improve contractual commitments and get certified.

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© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Page 22Pinning Down the Cloud September 2009

Q&A

Did you know? Despite security concerns, 64 percent of large enterprises have already deployed desktop virtualization.

Yankee Group’s Attitude & Behavior Surveys track this data and more.

Sign up for a complimentary snapshot of our most recent results at

http://www.yankeegroup.com/live/survey_data_snapshot.html

Has your organization deployed or does it plan to deploy desktop virtualization?

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© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Page 23Pinning Down the Cloud September 2009

Camille Mendler, Vice President, [email protected] Poon, Senior Analyst, [email protected]

Next Yankee Group webinar:

The Virtual Desktop RevolutionOctober 27, 2009Register at www.yankeegroup.com

Thank you!