bi and hybrid it adoption fuel consistent demand for cloud professional services

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T EC H N O LO G Y B U S I N ES S R ES EAR C H , I N C .

BI and hybrid IT adoption fuel consistent demand for cloud professional services Technology Business Research Webinar Series July 30, 2015

TBR

2 TBR Webinar Series | 7.30.15 | www.tbri.com | ©2015 Technology Business Research Inc.

Presenters

Cassandra Mooshian

Cloud and Professional Services Analyst

Email: [email protected]

Twitter: @cmooshian

Allan Krans

Practice Manager, Cloud


Twitter: @AllanKrans

Ramunas Svarcas

Principal Analyst, Professional Services


Twitter: @rjsTBR

mailto:[email protected]




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TBR Cloud Taxonomy Overview

TBR Cloud Definitions

TBR defines cloud computing as the business application of multiple existing technologies. These technologies include grid computing, utility computing, virtualization, automation, services-oriented architectures, multitenancy architectures and Web 2.0. The ultimate goal is to deliver computing power flexibly and dynamically for running applications, storing data and developing software to improve business operations.

Professional & Managed Services

Hybrid Cloud

Public Cloud

Components

Private Cloud

Software Hardware

Public Private

Hosted SaaS, PaaS, IaaS, BPaaS

Hosted SaaS, PaaS, IaaS, BPaaS

Public Private

Non-cloud IT & Services

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TBR Cloud Taxonomy

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TBR Cloud Definitions

Cloud professional and managed services assist customers with the evaluation, implementation and use of cloud services. The professional services include consulting, systems integration, implementation, application development and maintenance, and cloud operations, management and maintenance. These services can be delivered via public, private or hybrid cloud environments.

Consulting Provide strategic and tactical advice in a particular area of expertise for the use of cloud computing services. Consulting includes selection of a cloud environment, planning and design of private clouds as well as cloud brokerage services.

Systems Integration Offer assistance in making diverse components, such as infrastructure (hardware and software) or cloud services, work together in the cloud environment.

Application Development and Maintenance

Software development that encompasses requirements of engineering, design, implementation, testing and maintenance to construct software for cloud computing. Software maintenance concerns all activities needed to keep the system operational after it has been delivered to the user for cloud computing.

Managed Services

The delivery and/or management of public, private and/or hybrid cloud “as a Service” offerings by a third party; managed cloud services include the integration, maintenance, monitoring and management of cloud environments spanning the hardware and software components layers through the individual “as a Service” solutions and can be delivered on-site or remotely. Managed cloud services may include cloud orchestration, security services, and/or service and application cataloguing. Managed private cloud includes offerings that provide physical dedication of cloud resources for end customers, but not virtually dedicated services, which are included in TBR’s public cloud definition. Pricing schemas such as reserved instance pricing do not impact the categorization of cloud services as either public or managed private.

Cloud Professional and Managed Services Definitions

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Research Highlights and Outlook:

Cloud Professional Services

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TBR Position on Market Trends

Cloud professional services vendors embrace enterprises’ struggles with cloud sprawl and turn them into long-term revenue generation

Cloud professional services adoption remains above 80%, and the total market opportunity continues to grow, generating strong revenue growth for leading cloud professional services vendors as cloud environments become more complex. The onslaught of BI solutions, shadow IT, and the integration of cloud and noncloud solutions triggers increasing demand for professional services.

Managed services continues to gain popularity as cloud sprawl necessitates vendor management and support of complex, multivendor cloud environments. Systems integrators (SIs) such as IBM and HP stand out in this segment due to their strong IT management capabilities and robust cloud portfolios.

Traditional cloud professional services leaders such as IBM, Accenture and HP face pressure from ISVs such as Microsoft and SAP as the latter use security software expertise and orchestration capabilities to gain traction and leadership parity with SIs.

Opportunity

Market Overview

Vendor Landscape

Cloud Professional Services Key Takeaways

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BI and shadow IT in the enterprise force IT departments to embrace hybrid cloud and hybrid IT, bringing forth integration challenges


Managed services continues to gain popularity as cloud sprawl necessitates vendor management and support of complex, multivendor cloud environments. SIs such as IBM and HP stand out in this segment due to their strong IT management capabilities and robust cloud portfolios.


Opportunity

Market Overview

Vendor Landscape


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Cloud professional services growth continues at a decelerated rate as the market matures and the need for improved efficiency persists

2015:

$35 billion

2020:

$55 billion

2010:

$5 billion

Downward Pressure: • Budget constraints • Security and data

privacy • IT budget dollars being

allocated to other emerging technologies

Upward Momentum: • Hybrid integration and BI & analytics add

complexity, often necessitating third-party involvement.

• Efficiency gains, both business and IT • Faster implementation and app conversion

Cloud Professional Services Market Forecast

Market Sizing

~NEW~

~NEW~

9% CAGR

48% CAGR

~NEW~

~NEW~

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Professional Services Cloud Market Forecast

Demand for managed services increased drastically over the past 3 years and will continue to do so as cloud environments mature

Market Sizing

$5.4

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Professional services precede cloud services as enterprises seek advisory and integration support in the early stages of each cloud adoption wave

Enterprise Adoption

1. The first step in cloud exploration and designing and

implementing cloud environments is professional services.

2. Public cloud and private cloud purchasing is the logical second step in

building cloud environments.

3. Integration to form hybrid cloud is the last step in building cloud

environments.

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Cloud software and services are viewed as ‘better together’ as vendors educate enterprises on the benefits of hybrid IT

Cloud professional services users’ cloud “as a Service” adoption: Public Cloud: 46% Private Cloud: 51% Hybrid Cloud: 26%

Enterprise Adoption

Cloud professional services adopters

TBR


Early demand for cloud design and build-outs drove continued adoption of ADM and management services globally in recent years Cloud Professional Services Segment Adoption

<- Mature ->

<- Maturing ->

“Design” “Build” “Customize” “Run”

Enterprise Adoption

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Cloud brokerage and orchestration are gaining

mindshare among enterprises as hybrid IT

complexity requires advanced IT skill sets.

Professional services adoption goes hand-in-hand with hybrid and third-party-delivered private cloud adoption

Enterprise Adoption

Public Cloud Adoption

• Shadow IT purchasing

• Fragmented management

• Self-service

Private Cloud Adoption

• IT-driven purchasing

• Traditional management • Professional services

vendor involvement (hosting, management)

Hybrid Adoption

• IT and LOB purchasing

• Modern management • Professional services

vendor involvement (integration, management)

Technology-focused

Adoption

Outcome-based

Adoption

Pendulum of Cloud Adoption

Data ownership and privacy are the

second- and third-biggest concerns of cloud professional

services buyers.

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Vendor Performance

Cloud Professional Services Revenue Growth

Multilines HP and IBM offer end-to-end IT solutions and services, challenging SIs for cloud professional services revenue growth

Despite experiencing recent growth in cloud professional services, Oracle lags behind other multiline vendors in the segment. Making diverse components work together in a cloud environment will continue to be necessary as customers transition to cloud.

Multiline

Software

SI

Telco/Hosting

Consultancy

Undisputed leader

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Vendor Leaderboards

Cloud professional services leaders take vertical approaches with the help of their partner ecosystems to evolve their cloud portfolios

Color Key Multiline Software Systems Integrator Telco/Hosting Consultancy

Professional Services Cloud Leaders

Key Strategies

Rev

en

ue

HP $833M

Build upon strengths in SI, systems management and technology consulting to promote cloud professional services portfolio.

IBM $764M

Utilize IBM’s GBS and GTS expertise and cloud-focused teams to push cloud professional services to market; cross and up-sell cloud with traditional and existing contracts.

Accenture $571M

Rely on consulting expertise, vertical focus areas and key partnerships to help with digital and cloud transformations; capitalize on position as a business consultant with increasing IT consulting expertise.

Year

-to

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ar G

row

th

%

IBM 89%

Combine traditional portfolio and expertise with innovative cloud solutions.

TCS 55%

Use digital transformation focus to help clients migrate to cloud.

T-Systems 39%

Utilize partners to help bring its professional services to the market and generate next-generation cloud engagements.

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Enterprise cloud environments are maturing, with slower additions of net new solutions, bringing managed services to the forefront




Opportunity

Market Overview

Vendor Landscape


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Professional Services Cloud Market Segments

Cloud hosting and management are adopted to combat cloud sprawl, driving strong managed services and SI revenue and growth

Vendor Revenue in Aggregate

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Segment Highlight: Managed Services

HP and IBM vie for growth and revenue top spots in managed services while SI peers such as Accenture and TCS begin to imitate their strategies

Multiline

Software

SI

Telco/Hosting

Consultancy

IBM and HP dominate the managed services market.

Many vendors started to build out their managed services capabilities — all vying for the same deals.

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Managed Cloud Services Leaders

Key Strategies

Rev

en

ue

IBM $283M

Continue to build out cloud professional services portfolio, including brokerage, but lead with consulting.

HP $236M

Leverage status as IT outsourcing leader to upsell managed cloud business.

Accenture $154M

Managed services are increasingly important to Accenture’s overall cloud strategy as it promotes its Accenture Cloud Platform.

Year

-to

-ye

ar G

row

th %

HP 64%

Incorporate hardware and software strengths with Helion and Eucalyptus offerings.

TCS 57%

Use managed services solutions to create and bring to market vertically oriented solutions.

IBM 55%

Tailor cloud portfolio for industries via the value-add managed services layer.

Color Key Multiline Software Systems Integrator Telco/Hosting Consultancy

Managed Cloud Services: Leaderboards

With end-to-end IT services capabilities and growing cloud presence, IBM and HP top leaderboards in managed cloud services

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Opportunity

Market Overview

Vendor Landscape


Though global SIs are perceived as the incumbent leaders in cloud professional services, ISVs are challenging SIs for leadership positions

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As the number of small, niche cloud vendors continues to grow, larger vendors acquire more often to add pointed capabilities quickly

Trend: M&A Activity

Acquisition Focus Areas

Vertical Expansion

Open Source

Big Data and

Analytics

Security

Recent Mergers and Acquisitions Focused on: • Vertical expansion — Vendors

such as IBM, Accenture and CSC are delving deeper into the regulation-ridden government and healthcare sectors with cloud.

• Open source — IBM and Cisco each recently acquired OpenStack-based cloud vendors to capitalize on the recent uptick in enterprise demand for OpenStack.

• Big data and analytics — Microsoft attracts developers to its platforms by acquiring DataZen, while Accenture adds advanced analytics services with Gapso.

• Security — HP and EMC are bolstering cloud security in areas such as data encryption.

Key Recent Cloud Mergers and Acquisitions

HP (Voltage Security), EMC (Cloudlink): Security and encryption

Microsoft (DataZen): Mobile business intelligence and data visualization Accenture (Gapso): Analytics

IBM (Blue Box), Cisco (Piston Cloud): OpenStack

IBM (Explorys, Phytel): Healthcare intelligence Accenture (Agilex), CSC (Autonomic Resources): Public sector

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Trend: Hybrid IT

Incumbent vendors are in front of hybrid IT environments, while most pure plays rely on integration capabilities Vendors’ Hybrid IT Strategies

Vendor Hybrid Strategy

Microsoft Run Azure-developed applications on public cloud, private cloud or on-premises environments.

IBM Leverage broad portfolio spanning public and private cloud as well as SaaS, PaaS, IaaS and professional services to tailor to customer needs.

Salesforce Partner with companies like MuleSoft to launch prebuilt integration connectors between Salesforce and other popular applications.

Google Support OpenStack and Docker to enable Google-built applications to run across environments.

AWS Directly connect over fiber to data centers and enable integrations. The company will lag behind competition.

TBR


Customer purchasing plans indicate accelerating demand for hybrid cloud solutions during 2015

48% 43% 27%

BI SOFTWARE CLOUD DEPLOYMENT ADOPTION

Currently in use:

Plan to purchase in the next year:

Private Cloud

32%

Public Cloud

25%

Hybrid Cloud

42% SOURCE: TBR n = 450

Trend: BI Adoption

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BI and hybrid IT adoption fuel persistent demand for cloud professional services




Opportunity

Market Overview

Vendor Landscape


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Questions?

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Cloud Business Quarterly Research Highlights and Outlook: Contact Information

James McIlroy Vice President of Sales Email: [email protected] Telephone: 603.929.1166

Twitter: @TBRinc SlideShare: www.slideshare.net/TBR_Market_Insight YouTube: www.youtube.com/user/TBRIChannel LinkedIn: www.linkedin.com/company/technology-business-research

Cassandra Mooshian

Cloud and Professional Services Analyst


Twitter: @cmooshian

Allan Krans

Practice Manager, Cloud


Twitter: @AllanKrans

Ramunas Svarcas

Principal Analyst, Professional Services


Twitter: @rjsTBR


https://twitter.com/TBRinc

http://www.slideshare.net/TBR_Market_Insight

http://www.youtube.com/user/TBRIChannel

https://www.linkedin.com/company/technology-business-research









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T EC H N O LO G Y B U S I N ES S R ES EAR C H , I N C .

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