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HARNESSING THE CLOUD

Westport, CT Phone: 203-454-3900

Mike WestVice PresidentProgram Director Cloud Research Board ™Saugatuck Technology

Entire contents © 2009 Saugatuck Technology Inc.All rights reserved.

The Evolving Cloudscape

Source: Saugatuck Technology

Beyond Software-as-a-Service: Cloud Computing

Ad

op

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n

Low

High

Wave I: 2001-2006 Cost-Effective

Software Delivery

SaaS 1.0

Early SaaS• Stand-alone Apps• Multi-tenancy• Limited Configurability• Focus on TCO / rapid

deployment

Wave II: 2005-2010Integrated

Business Solutions

Mainstream SaaS• Integrated w/ Business• SaaS Integration Platforms • Business Marketplaces

and SaaS Ecosystems• Customization Capability• Focus on Integration

SaaS 2.0Wave III: 2008-2013Workflow-Enabled

Business Transformation

Ubiquitous SaaS• Focus on Business Transformation• ISV to SaaS Enablement • Server and Application Virtualization• SaaS Development Platforms (PaaS)• Public Cloud Infrastructure (IaaS)• Cloud Collaboration Platforms• Customized, Personalized Workflow

2006 2007 2008 2009 2010 2011 2012 20132004 2005 2014 2015 20162003

Cloud Computing

Post-SaaS• End-to-End Cloud Business

Processes• Intelligent Hubs Linking Platforms• Virtualization on Mobile Devices• Elastic Cloud Infrastructure• Standards for Workload Portability• SLAs for Composite Service

Offerings• Support at Business Process Level

Wave IV: 2011-2016Measured, Monitored, Managed

Business Processes

The focus shifts over time from cost-effective delivery of stand-alone application services (Wave I), to integrated business solutions enabled by web services APIs and ESBs (Wave II), to workflow- and collaboration-enabled business transformation (Wave III), leading to measured, monitored and managed business processes (Wave IV).

By 2012, Cloud Computing will capture at least twenty five percent of IT spending growth.


Harnessing the Cloud

The Boundary-Free Enterprise• Agile Economies• Speed of Response• Mobile Knowledge Workers• Global Organizations• Virtual Integration• Distributed Networks• Mobile Devices• Browsers • …and the Cloud

Chart: 3


The Boundary-Free Enterprise

Chart: 4

20th Century Organization –

“Within Bounds and Borders”

21st Century Organization –

“Boundary-Free and Global”

Economies of Scale Agile Economies

Volume Production Speed of Response

Industrial Plant Workers Mobile Knowledge Workers

Local, Regional, National Global Organizations

Vertical Integration Virtual Integration

Hierarchical Structures Distributed Networks

Planes, Trains and Automobiles Mobile Devices, Browsers and the Cloud


Market Glue: Cloud Taxonomies and Ecosystem Models

• Troy Angrignon’s “Cloud Computing Ecosystem Map v1.0: Standing on the Shoulders of Giants“.

• Peter Laird’s Cloud Taxonomy Map• Michael Sheenan’s 3-Layer Cloud Taxonomy• Alistair Croll’s Migration Taxonomy• James Urquhart and David Berlind’s Whiteboard• And many more…

Disclaimer 1: One thing the following Saugatuck Cloud Ecosystem Model does NOT do is map the relationship of the blogosphere and open source communities to the 5 layers. Examples: Cloudave, Data Portability, InfoQ, and Programmable Web.

Disclaimer 2: The sample vendor lists that follow are far from exhaustive, constantly revised, and frequently out of date, due to new startups, M&A or business failure. Sample vendor lists are meant to be illustrative instances.

Chart: 5

http://www.sandhill.com/opinion/daily_blog.php?id=64

http://www.sandhill.com/opinion/daily_blog.php?id=64


Saugatuck Cloud Ecosystem Model


Hardware, Software, Networking and Services

Software as a Service, Related Services

Cloud Development, SaaS Integration, Services Hubs, e.g., Billing, Security and Mobility,

Related Services

Cloud Infrastructure, e.g., Hosting, Execution and Storage,

Related Services

Business Process Outsourcing,Managed Services,

Business & Information ServicesLevel 4

Level 3

Level 2

Level 1

Level 0Technology Suppliers

Cloud Infrastructure

Cloud Platforms & Hubs

SaaS

BPO & MSPs


Technology Suppliers

Level 0 – Technology Suppliers• Suppliers of hardware, system software and utilities,

data center management software, networking equipment, hardware and software, and associated services. These offerings are the underpinnings of Cloud Computing offerings for both Public and Private Clouds.

• Sample vendors: 3Tera, 10gen, Appistry, Cisco, CohesiveFT, Citrix, Dell, Elastra, Enomaly, Gigaspaces, HP, IBM, InfoQ, Jumpbox, Linxter, Microsoft, Nirvanix, Novell, Orchestr8, Parallels, Red Hat, Rightscale, rPath, Snaplogic, Softex, Oracle/Sun Microsystems, Verio, VMware.

Chart: 7


SaaS

Platforms & Hubs


BPO & MSP Level 4

Level 3

Level 2

Level 1

Level 0

Critical Issues - Innovation, Evolving software and hardware standards for cloud migration and workload portability, Management of workloads in the cloud, Brand building, Channels and Partners.



Chart: 8

Level 1 – Cloud Infrastructure• Cloud-based On-Demand Infrastructure providers

and platforms that host SaaS and other on-demand solutions and provide service offerings to manage infrastructure platforms (collocation); these solutions may rely on partnerships with Level 2 providers, such as Cloud Development (Platform as a Service), SaaS Integration and Services Hubs – e.g., SaaS billing, Cloud-based Security and Mobility-as-a-Service providers – to provide a more complete offering and attract SaaS vendors or ISVs migrating to SaaS.

• Sample vendors: 7Global, Affinity, Amazon, AppNexus, AT&T, Attenda, CanadaWeb, Connectria, Citrix, EMC, GoGrid, Google, Hostways, IBM, iLand, iTricity, Joyent, Layered Technologies, Mediatemple, Microsoft, Mosso (Rackspace), Oracle, Navisite, NetSourcing, Nirvanix, NTT Europe, OpSource, PEER1, Planet Northstar, Qwest, Rackable, SAVVIS, ServePath, Siennax, Terremark, Verizon, Wizmo.


SaaS

Platforms & Hubs


BPO & MSP Level 4

Level 3

Level 2

Level 1

Level 0

Critical Issues - Trust, Evolving software and hardware standards for cloud migration and workload portability, Management of cloud workloads, Billing and payments, Performance and SLAs, Brand building, Partners and Channels


Platforms & Hubs

Chart: 9

Level 2 – Platforms & Hubs• Cloud Development (Platform as a Service), SaaS

Integration, Services Hubs, e.g., billing, administration, aggregation, security and mobility solutions, systems and infrastructure management, data warehousing, data access and analysis, and related professional services.

• Sample vendors: AlertLogic, Antenna Software, Aria, Astadia, Appirio, Bluewolf, Boomi, Business Objects (SAP), Cast Iron, Coghead, Cognos (IBM), Comrange, Conformity, Corda, EnStratus, eVapt, Fiberlink, Force.com, FREEpository, Google, Gnip, Hubspan, Hyperion (Oracle), Informatica, Intalio, IP Applications, IT Factory, Jamcracker, Lotus (IBM), Mashery, MindTouch, Model Metrics, Morph Labs, Okere, Perimeter eSecurity, Pervasive, Prolifiq, Purewire, Qualys, Reflex Security, Serena, Service-now.com, Stratus Security, Symantec, Synchronoss, Vertica, Vindicia, Visual Mining, Webroot, Wolf, Zscaler, Zuora


SaaS

Platforms & Hubs


BPO & MSP Level 4

Level 3

Level 2

Level 1

Level 0

Critical Issues - Trust, Hubs for Identity, Reputation and Assurance; Billing and payments, Performance and SLAs, Standards and interoperability, Brand building, Partners and Channels


SaaS

Chart: 10

Level 3 – SaaS• Software as a Service (Waves I-III) and related

professional services. These are business solutions delivered from the Cloud, typically in a multi-tenant architecture, and billed by subscription, units of consumption, size of enterprise or other metric on a recurring, periodic basis.

• Sample vendors: Athena Health, Apttus, Ariba, Axentis, Birch Street Systems, Blackboard, Cadence, Cisco/Webex, Concur, Constant Contact, Coupa, DealerTrack, DemandTec, Dream Factory, EthicsPoint, Facebook, Google, Intacct, Intuit, Kenexa, Ketera, LivePerson, LoopNet, Lucidera, Mamut, MySpace, NetSuite, Omniture, Plexus Online, Prolifiq Software, RightNow, Riskonnect, Salesforce.com, SuccessFactors, Taleo, Ultimate, Vocus, Workday, Workstream, Xactly, Xora, Yahoo, Zoho


SaaS

Platforms & Hubs


BPO & MSP Level 4

Level 3

Level 2

Level 1

Level 0

Critical Issues - Innovation, Trust, Composite Solutions; Billing and Payments, Performance and SLAs, Standards and Interoperability, Brandbuilding, Partners and Channels


BPO & MSPs

Chart: 11

Level 4 – BPO & MSP• Business Processing Outsourcing (BPO), Managed

Services, Business and Information Services. These services are based upon the specialized expertise of the provider and typically delivered in conjunction with a Cloud-based solution, e.g., SaaS, Mobility as a Service, Cloud-based security, sourcing, data warehousing, etc.

• Sample vendors: AlertLogic, Ariba, AT&T, Cognizant, Dell, EDS (HP), Fiberlink, IBM, Infosys, iTricity, Ketera, Perimeter eSecurity, Reflex Security, Verizon, Wipro and the rest of India, Inc.


SaaS

Platforms & Hubs


BPO & MSP Level 4

Level 3

Level 2

Level 1

Level 0

Critical Issues – Cloud Provider relationships, Customer relationships, Trust, Innovation in Solutions and Delivery Options, Management of Composite Solutions, Performance and Service Level Agreements


“. . . –as-a-Service” Taxonomy


Software as a Service, and Related Services

Cloud Development, SaaS Integration, Services Hubs, e.g.,

Billing, Security, Mobility, and Related Services

Cloud Infrastructure, e.g., Hosting, Execution and

Storage, And Related Services


Business & Information Services

Level 4

Level 3

Level 2

Level 1

Level 0

ITaaSIT-as-a-Service









Level 4

Level 3

Level 2

Level 1

Level 0

IaaSInfrastructure-as-a-Service









Level 4

Level 3

Level 2

Level 1

Level 0

PaaSPlatform-as-a-Service









Level 4

Level 3

Level 2

Level 1

Level 0

SaaSSoftware-as-a-Service


Consider the combinations of IaaS with PaaS and PaaS with SaaS and the stickiness they bring to the customer relationship via the leverage they provide to the customer.


Implementation cost

Availability of cost-effective, responsive tiered user support

Implementation timeframeSolution deployment/usage methods (on premise, hosted and/or

on demand)Availability of implementation resources

Relationship with technology vendorPayment methods (license plus maintenance, usage-based

subscription, etc.)No-obligation trial or pilot program

Relationship with implementer (VAR, system integrator, etc)

Services delivered by brand name vendor

Availability of multi-year pricing incentives

Availability of flexible billing terms

% 10% 20% 30% 40% 50%

43%

30%

26%

25%

23%

20%

18%

17%

16%

16%

15%

14%

Business Drivers

Percent

Se

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ePost-Crash Business Drivers for Cloud Buyers

Saugatuck Insight: Far and away the most important business driver for Cloud buyers is Implementation Cost. Given this global survey was taken 8-10 weeks after the start of the economic collapse (in mid-September 2008), it is not surprising to see this result. At the same time, it is interesting to note that buyers rank the relationship with existing channel / implementation partners and brand name vendors at the low-end of business drivers, along with multi-year pricing incentives and billing flexibility.

Key Drivers• Cost• Support• Speed

Source: Saugatuck Technology Inc., 2009 SaaS Survey (Dec ‘08), N=1788, TOP THREE so results equal more than 100%

Decreasing Loyaltyto Legacy Brandsand Relationships?


Cloud Technology Considerations by Geography

Technology Considerations United States Europe Asia

Robust backup/recovery capabilities 69.8% 61.0% 73.5%

Robust disaster recovery capabilities 67.8% 57.6% 71.8%

Software development platform & tools 51.4% 49.9% 63.5%

Web Services API 49.0% 46.6% 61.7%

SLA compliance data 45.5% 47.8% 59.1%

SOA architecture 40.6% 42.5% 56.0%

Display data on mobile devices 37.7% 46.7% 53.7%

Multi-tenancy based solution 32.4% 42.1% 55.9%

Support for Web 2.0 mashups 37.2% 41.4% 55.0%Update data via mobile devices 34.3% 45.1% 52.4%Appliance form factor 24.9% 41.9% 53.0%

Saugatuck Insight: Notable differences in the key technology considerations driving demand across geographies, especially among Asian executives. Mobile device support is more important in Europe and much more important in Asia than in the United States. Please note the much wider range of responses in US and higher levels for all responses in Asia

Source: Saugatuck Technology Inc., 2009 SaaS Survey (Dec ‘08), N=1788

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Entire contents © 2009 Saugatuck Technology Inc.All rights reserved. Page: 15

Purchase Plans – Collaboration & Social Computing

Please indicate when your company plans to purchase a SaaS solution in each of the following categories:

Source: Saugatuck Technology, Web Survey December 2008, N=1788

Saugatuck Insight: The sweet spot in collaboration and social networking tools is clearly the small and mid-sized market (100-1000 employees), with the 300-500 employee segment particularly promising. It is worth noting that for all sizes, an upside of nearly 20 percent from 2009 to 2011 pertains to all categories of collaboration and social networking tools. However, large enterprises (2,500 employees and above) do not show the same level of interest in these solutions in comparison to smaller enterprises with the exception of Project Management and Business Collaboration, where there is a nearly 20 percent increase from 2009 to 2011.

2009 2011 2009 2011 2009 2011 2009 2011 2009 2011 2009 2011 2009 2011

Email 48.4% 64.8% 54.5% 71.8% 51.3% 72.8% 52.1% 69.3% 47.0% 62.8% 44.9% 59.9% 42.9% 56.5%Web Conferencing 47.7% 66.7% 44.5% 67.6% 45.5% 69.7% 49.0% 69.5% 45.2% 63.6% 53.6% 69.0% 49.3% 63.9%

Calendaring 41.0% 59.4% 46.1% 64.3% 46.8% 72.5% 40.2% 64.1% 40.7% 58.3% 42.1% 57.3% 35.2% 48.9%“Office” Suite 40.9% 61.2% 46.0% 69.0% 42.2% 67.2% 39.2% 61.2% 36.1% 55.6% 34.7% 51.5% 41.7% 58.8%

Project Management 40.8% 62.4% 44.5% 66.1% 40.3% 68.2% 41.6% 66.8% 40.0% 61.9% 43.3% 59.1% 37.7% 56.3%Business Collaboration 39.6% 61.3% 40.4% 62.0% 39.1% 67.0% 43.0% 64.0% 33.2% 60.4% 41.8% 59.4% 39.5% 57.9%

Forums 34.7% 53.5% 34.0% 56.2% 37.7% 61.9% 34.4% 56.3% 31.5% 50.9% 37.8% 54.9% 34.5% 47.1%“Communities” 34.7% 55.0% 36.0% 57.7% 37.8% 62.2% 36.2% 56.9% 31.2% 53.5% 32.7% 56.4% 33.9% 48.9%

Social Networking 33.9% 51.4% 37.9% 55.9% 34.8% 58.8% 35.5% 54.4% 31.9% 50.9% 33.1% 53.0% 31.0% 43.2%Whiteboards 33.0% 53.3% 34.1% 54.8% 36.7% 62.9% 36.2% 58.5% 28.0% 53.1% 38.4% 55.5% 29.2% 44.8%

Blogs 32.9% 50.9% 34.1% 54.6% 37.1% 60.3% 33.7% 52.3% 30.7% 47.4% 31.3% 52.1% 31.1% 44.5%Content Tagging 32.8% 52.9% 35.3% 54.7% 37.7% 63.2% 33.1% 57.2% 29.2% 52.8% 37.6% 54.5% 28.7% 44.4%

Wikis 32.5% 50.6% 33.7% 51.6% 37.6% 56.8% 30.5% 52.5% 29.0% 47.9% 32.5% 54.2% 31.9% 45.9%

Over 5000All Sizes 100-300 300-500 500 to 1000 1000 to 2500 2500 to 5000> 60 %52 - 60 %44 - 52 %36 - 44 %< 36 %


SaaS and Core Business Systems

Between 2009 and 2012, at least 40 percent of upper mid- to large-enterprises will seriously evaluate SaaS-based “core” financial solutions, as well as broader operational systems and requirements (e.g., order management, procurement, ERP, HR).


Low

Key catalysts that will drive mid-to-largeenterprises to migrate to SaaS-basedfinancial systems (“Core” and “Non-Core”)• Dramatically lower costs• Simplification of the upgrade / release

management process• Powerful integration tools (apps / data)• Advances in SaaS application customization

capabilities to support personalized workflows

• Easier access to next-gen technology and architectural advances

High

2006 2007 2008 2009 2010 2011 2012 20132003 2004 2005 2014

Broad SaaSAdoption

Curve

“Upper-Mid” to“Large” Enterprise

EarlyAdoption

Early Mainstream Adoption

Mainstream Adoption

SaaS “Tipping-Point”(General Market)

Adoption of SaaSfor “Core” and “Non-

Core” Financial Systems /Operational Processes

“Small” to “Mid” Enterprise

Adoption of SaaSfor Collaboration,Self-Service, CRM

and SFA


Worldwide Buying Preferences – Channel Options

Page: 17

Source: Saugatuck Technology, Web Survey December 2008, N=1788

Saugatuck Insight: Channel strategy must be tailored to geography. The US ranked “direct from provider” highest; Europe and Asia ranked “IT consultancy” highest. IT consultancy channel is ranked highest overall due to ranking in Europe and Asia. Note also the much higher preference for “Business consultancy” in Europe and Asia. “Local/Regional VAR or system integrator” is most popular in Asia.

United States

Europe

Asia

% 10% 20% 30% 40% 50% 60%

Other (please specify)

Online Business/Services Market-placeBusiness Consultancy (e.g., accounting firm)

Managed/Hosted Services Provider

Local/Regional VAR or System Integrator

Industry-specific VAR or System Integrator

Direct from SaaS Solu-tion Provider

IT Consultancy

Se

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e

Lead

ing

Reg

iona

l Pre

fere

nce


Industry Buying Preferences – Channel Options

Chart: 18

Manufacturing

Technology

BusinessServices

Healthcare & Pharmamaceutical

Retail

Public Services & Education

Financial Services

Transportation & Energy

% 20% 40% 60%

Channel Preferences, By Industry

Other (please specify)

Online Business/Services Marketplace

Business Consultancy (e.g., accounting firm)

Managed/Hosted Services Provider

Local/Regional VAR or System Integrator

Industry-specific VAR or System Integrator

Direct from SaaS Solution Provider

IT Consultancy


Channels and Partners in the Cloud: Monetization

• Who owns the customer? • What is the best way to

compensate channel partners?

• Is the partner paid a commission for managing a customer that the vendor owns?

• Or does the partner own the customer and pay a revenue share?

• Can the partner up sell its own offerings and keep it all?

Chart: 19


SaaS

Platforms & Hubs


BPO & MSP Level 4

Level 3

Level 2

Level 1

Level 0

Saugatuck Insight: Billing and payment systems are the key to monetization of cloud businesses. Without a sufficiently complete and flexible solution for billing and payments, the cloud provider will be constrained to realize the opportunities the market presents. Support for channels and partners with complete flexibility will be essential. This is not a DIY project. Find a cloud-based hub that provides these services and do not waste your resources reinventing the wheel. You can buy them cheap.


Transformation Effects of Cloud Solutions

Chart: 20

SaaS ProvidersSaaS ProvidersEvolving

Cloud Providers

Enable

Require

• Revenue Expansion • Shift from Capex to Opex• Quicker Time to Market• Lower Cost of Operations• Increased Profits• Virtual Value Chains• Distributed Organizations• Cloud-based Startups

Transforming

Business

Organizations

High Impact

• Innovative Solutions• Mature Functionality• Integration Capability• Cross Solution Workflow• Development Platforms• Composite Solutions• High Availability 5 9’s• Transparency, SLAs• Backup & Recovery • Trusted Providers

Enterprise-Ready

Wave IWave II Wave III Wave IV

SaaS

Cloud The 4 Waves

2009 2011 2013 2015200720052003


The Evolving Cloudscape


Beyond Software-as-a-Service: Cloud Computing

Ad

op

tio

n

Low

High

Wave I: 2001-2006 Cost-Effective

Software Delivery

SaaS 1.0

Early SaaS Adoption• Stand-alone Apps• Multi-tenancy• Limited Configurability• Focus on TCO / rapid

deployment

Wave II: 2005-2010Integrated

Business Solutions

Mainstream SaaS Adoption• Integrated w/ Business• SaaS Integration Platforms • Business Marketplaces

and SaaS Ecosystems• Customization Capability• Focus on Integration

SaaS 2.0Wave III: 2008-2013Workflow-Enabled

Business Transformation

Ubiquitous SaaS Adoption• Focus on Business Transformation• ISV to SaaS Enablement • Server and Application Virtualization• SaaS Development Platforms (PaaS)• Public Cloud Infrastructure (IaaS)• Cloud Collaboration Platforms• Customized, Personalized Workflow

2006 2007 2008 2009 2010 2011 2012 20132004 2005 2014 2015 20162003

Cloud Computing

Post-SaaS Adoption• End-to-End Cloud Business

Processes• Intelligent Hubs Linking Platforms• Virtualization on Mobile Devices• Elastic Cloud Infrastructure• Standards for Workload Portability• SLAs for Composite Service

Offerings• Support at Business Process Level

Wave IV: 2011-2016Measured, Monitored, Managed

Business Processes

The focus shifts over time from cost-effective delivery of stand-alone application services (Wave I), to integrated business solutions enabled by web services APIs and ESBs (Wave II), to workflow- and collaboration-enabled business transformation (Wave III), leading to measured, monitored and managed business processes (Wave IV).

By 2012, Cloud Computing will capture at least twenty five percent of IT spending growth.


Saugatuck‘s Cloud Research Board ™

Cloud Research Board – Saugatuck‘s Cloud Research Board ™ is a broad-based community of interest focusing on Cloud Computing in all of its aspects. Membership in the Saugatuck Cloud Research Board ™ is open both to vendors and end-users, who share an interest in this evolving phenomenon.

• You can register at www.saugatech.com/crbsignup.htm using valid and verifiable business contact info.

• Members will be part of a special research panel for the purpose of survey research and interviews – with a commitment to participate in 4-6 web surveys and / or short telephone-based interviews per year. In return, Cloud Research Board ™ members will have early access to special research program insights from various Cloud Research Board ™ initiatives.

• In addition, members are automatically registered to receive Saugatuck’s weekly Research Alerts.

• Members are eligible for special incentive pricing programs for Saugatuck’s subscription research offering, Continuous Research Service (CRS).

• Members will have full access and posting rights to Saugatuck Technology blogs (TBA – mid-2009).

• Members may also apply to be considered for membership in the Saugatuck Cloud Council ™.

Chart: 22

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• • •

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