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next generation IT

Five Mistakes that Enterprise Cloud Service Providers are Making | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

A wide array of players is aggressively attacking the enterprise cloud infrastructure services market. The competitive landscape includes providers from a variety of backgrounds, including hosting companies such as Rackspace, GoGrid, and Tier3; telcos such as AT&T, Verizon, Telstra, and BT; and legacy enterprise IT service providers such as IBM, HP, CSC, and Dell. They’re all pursuing the same prize – providing CIOs of large enterprises a range of cloud-enabled, next generation infrastructure platforms, from managed or hosted private clouds to public cloud IaaS.

Although the market opportunity is undeniably large and growing, the problem is that many IT services players are not achieving their revenue and growth aspirations for enterprise cloud services. They’re finding it difficult to migrate existing customers to cloud platforms, expand cloud adoption beyond limited use cases, and use cloud services to win new customer logos. Why is growth falling short of expectations? While not exhaustive, following is a set of five issues and mistakes Everest Group commonly sees in the service provider community:

  1. Underestimating Amazon: Enterprise providers almost universally discount Amazon AWS as not being “enterprise ready.” This is despite the fact that AWS is now forecasted to generate nearly US$4 billion in 2013 revenue and that enterprise customers will be driving a significant part of this revenue. While AWS enterprise use cases today are focused primarily on dev / test environments, web apps, and websites, AWS has recently rolled out a variety of enterprise offerings. These include everything from Redshift and data pipeline services targeting business intelligence (BI) and data warehousing, to vertical specific clouds including GovCloud and FinQloud. In fact, this iterative, incremental approach is part of its strategy for attacking the enterprise, with many competitors running the risk of becoming the proverbial “boiled frog.” The reality is, many service providers need to think hard about whether they are going to be able to compete in the enterprise public cloud IaaS space. Using AWS instead of continuing to invest in a native public cloud IaaS offering may be a better strategy for many of them over time.

  2. Neglecting change management:  While providers expect customers to make the cloud paradigm shift, many haven’t done so internally. Instead, a “build it and they will come” mentality tends to be pervasive. The expectation is that once the offers hit the market, customers will be clamoring to get on board. Unfortunately, experience is showing that’s not the case. Customers need help understanding the benefits, risks, and costs of cloud models, and where they make sense. Although helping customers understand the implications of cloud models is critical, many providers have dramatically underinvested in vital areas such as sales training. Too often, sales and marketing groups position and message cloud services in a legacy paradigm, which isn’t connecting with customers. While many providers are frustrated that sales teams aren’t making cloud quotas, they need to take a step back to make sure their go-to market teams are positioned and trained for success. To achieve sales effectiveness, they need to structurally change their incentive mechanism, account strategy, and planning exercises.

  3. Selling sole-source:  many providers are selling next generation infrastructure platforms – the ability to provide customers anything from dedicated or managed hosting to public cloud services. The problem is that’s not how enterprise customers are buying cloud today. They’re seeking to use the flexibility of the model to deploy specific use cases, and different use cases may require different platforms. Too many providers are trying to sell the “big bang,” sole source IT transformation story and telling CIOs they can provide all of their next generation platform needs. While there are CIOs driving cloud-enabled IT transformation, there aren’t enough of these opportunities yet to support the number of providers chasing them. In fact, many providers would likely be better off selling incremental or even transformational stories to business buyers.

  4. Omitting SaaS and PaaS: Cloud infrastructure service providers have little incentive to migrate customers to public cloud SaaS offerings such as Salesforce.com or Workday. For many customers, migrating legacy apps to SaaS models will be the right answer. Many enterprise cloud service providers conveniently omit this lever from their transformation story and lose customer credibility as a result. The fact is these providers need a better answer for SaaS migration and integration. Moreover, very few cloud IaaS providers are investing in creating an effective PaaS strategy. Enterprise buyers require flexible platforms hosted in an agile infrastructure environment to develop applications for the future. Service provider transformation stories need to closely integrate application development platforms with a cohesive IaaS offering.

  5. Failing to differentiate:  Many vendors position themselves as providing managed services that make cloud models ”enterprise ready.” The problem is that every other vendor is saying the exact same thing. Enterprise cloud service providers need to think harder about what their distinctive customer value proposition really is. Too many providers are trying to sell horizontal cloud technology platforms with little thought given to customers’ unique business drivers and how cloud can be used to drive business transformation. But there are plenty of potential opportunities to differentiate by vertical, use case, geography, target community, and other dimensions.

While all of these issues are fixable, they also are non-trivial. The good news for the provider community is that no one has truly yet cracked the code on enterprise and cloud infrastructure services.

PaaS, IaaS and SaaS Providers…Moving Up and Down the Cloud Stack | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

As the market for cloud services expands, the providers at each level of the stack are realizing various opportunities beyond their core solutions. They are also realizing that scale is absolutely critical for the success of cloud services. As a result, they’re starting to enter each others’ domain. Let’s take a look.

Platform-as-a-Service (PaaS) Providers

Large PaaS providers such as Microsoft and Google are moving down the stack to create Infrastructure-as-a-Service (IaaS) offerings. This may indicate not only that standalone PaaS is a difficult business to scale but also that IaaS is required to create a broader cloud footprint and higher degree of acceptance, as evidenced by Amazon’s runaway success with AWS. At the current stage of cloud adoption, PaaS may appear to be too futuristic, and many organizations may be unwilling to bet on it for the long term. Therefore, it makes sense for PaaS providers to offer IaaS solutions to their clients.

Most PaaS providers, and their respective platforms – think CloudBees, dotCloud, Salesforce.com’s Force.com and Heroku, Google Apps Engine, IBM SmartCloud Application Services, Iron Foundry Web Fabric, LongJump, Microsoft Windows Azure, Morphlabs, OutSystems, RedHat OpenShift, and VMware CloudFoundry – have preferred programming languages, e.g., .Net for Microsoft Windows Azure, Java for CloudBees, Python for Google Apps, and Ruby for EngineYards. These preferences bind clients to a specific platform offering, as they believe that a PaaS solution typically works best with its preferred or native language. However, to scale their business and appeal to a broader set of application developers, these providers are beginning to widely support multiple programming technologies.

Infrastructure-as-a-Service (IaaS) Providers

IaaS providers are desperately claiming agnosticism in running any application on their infrastructure. They believe as their offerings are pure infrastructure, developers are free to choose any programming mechanism and build applications. However, they also realize that the developer community finds value in a PaaS solution as it reduces their burden of handling various time consuming, nitty-gritty application development tasks. Therefore, many IaaS providers are moving up the stack and creating PaaS solutions on top of their infrastructure offerings, in partnership with leading cloud platform providers such as Iron Foundry or LongJump.

Indeed, many cloud infrastructure players are also partnering with cloud database companies and calling themselves PaaS providers. They are unable to decide whether they truly want to embrace the cloud or just rehash their existing offerings and cloud-wash them with marketing buzz. Regardless, their attempts are to at least make some noise around IaaS, SaaS, and PaaS and position themselves as “integrated” cloud providers.

Software-as-a-Service (SaaS) Providers

Large SaaS providers, such as Salesforce.com and NetSuite, have created their own versions of PaaS, and Workday partnered with Force.com to offer customers a platform on which to customize its solution. These moves not only allow extension of these companies’ basic offerings and integration with other applications; they are smart strategies to convert clients to their platforms. Therefore, these PaaS solutions end up being the “relationship builder” between a technology provider and the client.

Clearly, IaaS providers are realizing that cloud infrastructure is a low-profit, commoditized business and that they must move up the value chain. PaaS providers understand that they need to scale their offerings and that may require them to enter the IaaS market either organically or through partnerships. And SaaS players are already creating PaaS solutions to provide value added services.

The reality is…not all cloud service providers will be able to endure, and many will get consolidated or go belly up. The survivors, who aspire to be big, will be those that offer services across different cloud layers, either through in-house offerings or partnerships.

Cloud and Outsourcing, an Alliance for a Newer Evolution | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

Originally published on Global Services


In most cases, leveraging cloud delivery models, be it in application, infrastructure, or platforms, implies being served end-to-end by an external vendor unlike the typical “do-it-yourself” products. Therefore, in a way, the cloud is driving the IT consumption towards an “external vendor” model, which is also a type of outsourcing.

Most of the discussions around cloud’s impact on outsourcing services take a monolithic view of the industry. The focus is to take an extreme position, such as “outsourcing is dead”, or perform a very broad analysis based on the evolving role of CIOs, changing demand in enterprise IT, cloud eating into traditional sourcing, etc. This makes for good reading but is not necessarily a thoughtful analysis of the real impact. The need of the hour is to drill down into each type of global sourcing service and analyze the impact of cloud delivery models.

To analyze the impact of cloud delivery models on globally-sourced services, one needs to understand both of these in the right context. For IT outsourcing and the impact of cloud, there is a need to differentiate between the type of services delivered such as application development, application implementation, application maintenance, “keep the lights on” infrastructure services, service-level driven managed services, and transformational services. Cloud delivery models will have a spectrum and not a binary impact on this market. Different services, providers, business models, and investments will see different opportunities and challenges.

One major “non-technology” challenge from cloud models is the shifting of budgets from a typical IT department to businesses. Everest Group and Cloud Connect Enterprise Cloud Adoption Survey indicate an increasing role for business users in deciding IT spending. As outsourcing providers have access generally to IT and procurement departments, they will witness significant challenges to penetrate the business side of a buyer in accessing “business IT” budget. Moreover, enterprise IT shops that have so far not outsourced, may directly leverage a cloud service, reducing the potential role of an outsourcing provider. To pre-empt this, the provider may need to offer integrated cloud and outsourcing services.

The relevance of cloud models should also be seen from newer or existing investments the buyers make in enterprise IT. For transforming the existing investments (e.g., ERP, CRM, other business applications, and infrastructure) to the cloud, it is difficult to believe that typical global sourcing buyers will prefer any other vendor over the enterprise-class providers. For example, if they have to transform ERP platforms to a cloud infrastructure, they would generally prefer a renowned enterprise class ERP and cloud service provider over a pure-play cloud hosting provider.

Read more on Global Services

5 Things We Learned At Cloud Connect | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

Even though email, smart phones and iPads are great virtual communications devices, nothing beats the value you can gain from face-to-face time with your peers and other industry thought leaders. If you weren’t fortunate enough to attend the Cloud Connect conference in Chicago earlier this month, we’ve captured some of the highlights of and insights from the discussions during the Organizational Readiness track (which we were privileged to lead) for you:

  1. Change management comes to the fore – executive sponsorship and early successes are keys success factors for driving cloud-enabled transformation. While “top-down” CIO-driven programs are helpful in shifting culture and mindset, “bottom-up” adoption and innovation is also required to demonstrate the value of cloud models to skeptics. In many cases, new cloud initiatives need to be incubated and protected from the enterprise to provide freedom for experimentation. This kernel of wisdom was a result of our very interactive session with Matt O’Keefe (Morningstar), Keith Shinn (Fidelity) and Dave Roberts (ServiceMesh) about the hard choices in enterprise cloud adoption. Watch Dave in this video for tips on ensuring a successful cloud deployment in.

  2. “Shadow IT” isn’t a dirty phrase – corporate IT needs to focus its limited resources and time on the objectives and initiatives that are deemed to be highest priority. In many organizations this means focusing only on applications and infrastructure considered to be “mission-critical.” As an unfortunate result, many projects requested by the business fail to make the cut. Thus, it’s understandable if the business decides to “end-run” IT and go to the cloud. The cloud can give enterprises additional scale with limited IT budget and go deeper in the project stack. In fact, in many cases CIOs actually encourage their business counterparts to go to external cloud service providers. The key to success, however, according to Bates Turpen (formerly InterContinental Hotels Group) and David Falck (salesforce.com), is that IT leaders , help internal customers self-provision without losing control and help business users ask the “right” questions of potential cloud vendors.

  3. Culture changes within IT – not only is cloud reshaping the relationship between business and IT, it’s also starting to restructure the IT organization itself. The dev ops revolution is shifting IT from a CIO-driven model to a developer-driven decision-making model around infrastructure. Developers are making their own frontline choices around platforms and service providers that are then being aggregated up by managers, a distinct break from legacy models where platforms and infrastructure are mandated by the CIO. Also, as user experience becomes an integral part of a product, CIOs need to encourage their developers to think like a user and empower them to build a product from beginning to end. Watch Lauren Cooney (Cisco) talk more about the dev ops movement.

  4. Different clouds for different folks – common enterprise concerns around cloud continue to center around security, compliance, performance and vendor lock-in. We asked the experts on our “Current Thinking in Addressing Persistent Cloud Challenges” panel, Paul Burns (Neovise) and Troy Angrignon (Cloudscaling), how to best address these questions. Their answer was : “It depends” (which is a much better answer than the vendor community could deliver just a few years ago). Options across public and private, and enterprise virtualization and elastic infrastructure clouds, provide new answers to these issues for both legacy and new applications, but also must be carefully evaluated.

  5. Adoption is about innovation – in conjunction with the Chicago conference, we conducted a joint survey with Cloud Connect on enterprise cloud adoption patterns. While most service providers think enterprises are migrating to the cloud for total cost of ownership (TCO) reasons, agility, innovation and flexibility are actually the drivers. Thus, there’s a glaringly apparent  disconnect between vendors that are focused on selling next generation infrastructure to IT, and businesses that want cloud platforms to drive top line revenue. Download the complimentary survey results.

If you attended Cloud Connect, our readers would enjoy hearing what you took away from the conference sessions, as well as your concerns, issues and successes on cloud adoption within your enterprise, so feel free to share away!

Video: Lauren Cooney Explains Why Your Dev Team Just Became the CIO at Cloud Connect Chicago | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

Lauren Cooney, Senior Director, Software Market & Developer Strategy at Cisco, explains the new cloud computing world order. The consumerization of IT is changing the CIO’s perspectives, and user experience is ascending as a top priority. Lauren talks about empowering the developers and create a better product and better user experience.

Follow Lauren on Twitter @lcooney.

Lauren was a speaker in the New World Order: Your Dev Team Just Became the CIO session — part of the Organizational Readiness track at Cloud Connect Chicago, which Everest Group’s Scott Bils chaired. For more Organizational Readiness resources, visit www.everestgrp.com/ccevent.

Video: Dave Roberts Talks about Enterprise Cloud Adoption at Cloud Connect Chicago 2012 | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

Dave Roberts, SVP of Strategy and Evangelism at Service Mesh, talks about balancing an open and closed cloud infrastructure and provides tips on ensuring your cloud project succeed.

Follow Dave on Twitter @sandhillstrat.

Dave was a speaker in the Hard Choices in Enterprise Cloud Adoption session – part of the Organizational Readiness track at Cloud Connect Chicago, which Everest Group’s Scott Bils chaired. For more Organizational Readiness resources, visit www.everestgrp.com/ccevent.

Picture This: a 360° Visual Depiction of Current Cloud Adoption Trends | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

Download the Enterprise Cloud Adoption Survey Results


We wrote in a blog last week about the top messages that emerged from the extensive enterprise cloud adoption survey we conducted earlier this year in partnership with Cloud Connect. To ensure we’ve “got the backs” of our readers who tend to be right-brained and thus more attuned to images and visual thinking, the following shows the key findings we reaped from the responses of the 346 buyers, providers and advisors who participated in the survey.

Enterprise Cloud Adoption Infographic

Click to expand

As you see:

  •  Cloud adoption is expanding beyond “low hanging fruit” like email and custom applications to include disaster recovery, storage and archiving, and business intelligence and analytics to support Big Data initiatives
  • Buyers’ opinion of the Cloud is extremely positive, with highest satisfaction in ability to create flexible infrastructure, and they have exceptionally high expectations of future benefits
  • Enterprises are increasingly viewing Cloud as an enabler of top line growth, i.e., to reduce time to market for applications, solutions and products, yet providers continue to sell with a cost reduction value proposition

To gain more insights on these and other key findings, you can download the survey summary report, and/or join me at the Cloud Connect Chicago conference on September 12, when I’ll be discussing the survey results in detail. Use code EVERESTGRP to receive 25% off conference passes or claim a free expo pass. For now, up and away on the Cloud!

Top 5 Takeaways from the Enterprise Cloud Adoption Survey | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

The enterprise cloud adoption survey jointly conducted by Everest Group and Cloud Connect in mid 2012 shows very interesting trends. Unlike other surveys, this effort includes all the cloud market participants such as cloud providers, buyers, third-party advisors, consulting firms, and cloud enablers. This ensures a 360o view of the market.

The survey summary report is now available and can be downloaded here.

The top five messages emerging out of this survey effort are:

  1. Buyers are willing to transform their infrastructure and business application landscape leveraging cloud models. The growing need for data intensive applications, quicker time to market, flexible infrastructure, and data management is driving this transformation. The survey indicates that over 85% of enterprise buyers have already deployed or plan to deploy cloud-based infrastructure solutions.

  2. Buyers and providers of cloud services need to find a common ground on understanding challenges in cloud adoption. Though security and integration challenges top the list, the buyers believe that their management is more than willing to deploy cloud solutions whereas providers see lack of management buy-in from the buyers as an important barrier.

  3. There is a disconnect between what the buyers hold valuable and what the providers believe is important in cloud adoption. Adopters believe that cloud model enables them to improve top line by increasing productivity and reducing the time to market. Moreover, reduction of total cost of ownership does not drive their cloud adoption whereas providers see it as the most important factor.

  4. Cloud delivery models are significantly impacting the traditional IT buying centers. The survey shows that a considerable portion of IT budget is increasingly getting allocated to the businesses. Moreover, individual business leaders (including C-level executives) have more say in cloud decisions over IT, procurement, or the finance team.

  5. Overall, the sentiments of buyers of cloud services remain very positive. Most of them met their objective, especially from cloud infrastructure solutions. The survey reveals that ~65% of buyers met their objectives from cloud deployment and ~90% decision makers believe that their cloud adoption will increase in the future.

The survey shows that though currently a large part of cloud adoption is driven by industry-agnostic offering, there is a considerable demand for industry specific solutions. We believe that industry flavors will become prominent once a critical mass of cloud adoption is achieved.

Though the survey showed disconnect between the perspective of buyers and providers in cloud adoption, it also revealed common ground on various aspects. For example, in key decision criteria for cloud evaluation, both the buyers and providers believe that security, contract terms and SLAs, fair pricing, and tenure of the provider are important parameter. We believe these common grounds are good for the industry and development of the cloud market as it aligns the expectations of various market participants and should help in creating relevant cloud services.

Overall the enterprise cloud adoption survey shows that despite all the challenges, confusion, barriers, and other issues, market participants are upbeat about cloud adoption. The buyers are quite satisfied with the outcome of cloud adoption within their enterprise IT set-up. Not only is this positive for the industry, but it also establishes the fact that, unlike other hyped-up trends, cloud delivery models are here to stay.

I will be speaking more about the survey results at Cloud Connect Chicago on September 12. We also have an excellent speaker lineup for the Organizational Readiness track, including thoughts leaders from Cisco, InterContinental Hotels Group, salesforce.com, Morningstar, Fidelity, Neovise and Cloudscaling. Read my blog from earlier this month for a sneak preview of the track sessions. Use code EVERESTGRP to receive 25% off conference passes or claim a free expo pass. I look forward to seeing you at Cloud Connect!

Gain the Insights You Need for Next Generation IT Success: the Organizational Readiness Track at the Cloud Connect Conference | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

This blog originally appeared on Cloud Connect Blog. Read the original post.


GE’s Jack Welch once stated, “Change before you have to.” While it’s certainly sage advice, with virtually everything in the cloud computing world evolving so rapidly – the offerings, the providers, the implementation strategies, and the buyers, who these days are most typically business users rather than IT – it’s dauntingly difficult to decide what, how, when and with whom to change.

Yet, following in the footsteps of the highly successful, inaugural Organizational Readiness track at the Cloud Connect conference in February 2012, the sessions at the September 11-12 event in Chicago are all designed to cut through the clutter, and provide deep insights on the organizational issues that are threatening to thwart cloud-oriented next generation IT success.

In “New World Order: Your Dev Team Just Became the CIO” session, industry analyst Vanessa Alvarez and Cisco’s Laura Cooney will discuss the emergence of developers as decision makers, what organizations are doing to adjust to this revolution, the technologies to look at, and pitfalls to avoid.

With budgets increasingly migrating to “shadow” IT driven by business users, it is more critical than ever for CIOs to understand how to serve and enable this new buyer group in a next generation IT environment. During the “Tough Questions You Need to Ask” session, business users who have driven major cloud initiatives will provide answers to questions CIOs may be afraid to ask.

The panel session “Hard Choices in Enterprise Cloud Adoption” will feature three 15-minute drill-down presentations that provide insight into the major choices and decisions organizations face around:

  • Open versus Closed Cloud Infrastructures, and the pros and cons of each
  • Forklift versus Greenfield, and how to determine if you should first focus on moving existing applications to a virtualized environment, or deploy a new infrastructure for greenfield applications
  • Now versus Later, to help CIOs evaluate whether they should accelerate or put a hold on their enterprises’ move to the cloud

“Current Thinking in Addressing Persistent Cloud Challenges” will examine Security and Compliance, Performance, Vendor Management and Lock-In issues, and provide practical, real-world examples of how panelists’ and other organizations are creatively addressing them.

If you haven’t yet registered for Cloud Connect, I hope you’ll visit the conference registration page and sign up today. Use code EVERESTGRP to receive 25% off conference passes or claim a free expo pass. You’ll unquestionably gain strategic, tactical and actionable insights on how to shine much needed light into all things cloud. As Chair of the Organizational Readiness track, I look forward to seeing you in Chicago in September!

Download the Enterprise Cloud Adoption Survey Results.

Cloud Connect and Everest Group Launch Global Enterprise Cloud Adoption Tracking Survey | Gaining Altitude in the Cloud

By | Gaining Altitude in the Cloud

Download the Enterprise Cloud Adoption Survey Results.

The market conversation around enterprise adoption of private, public and hybrid cloud models has been surprisingly light on facts. Data, surveys and analysis tend to focus either on predicting overall market sizes for cloud services (which often strain credulity of even the most ardent cloud supporter), or on high level surveys around planned cloud adoption and perceived issues.  While interesting from a broad market perspective, they provide little insight for IT executives facing hard choices around cloud migration. Decision makers are faced with little hard data on the use cases that are actually being implemented in the enterprises and the value that they’re generating.  This gap creates challenges not just for enterprise CIOs but also for cloud service providers and consultants.

Enterprise Cloud Adoption SurveyIn conjunction with Cloud Connect and UBM TechWeb, Everest Group is excited to announce a new tracking survey focused on better understanding where the “rubber is hitting the road” with enterprise cloud adoption. Targeted at enterprises and vendors alike, our Enterprise Cloud Adoption Survey will focus on identifying global enterprise cloud adoption trends and patterns and where enterprises are seeing value today from the cloud. Our survey will help readers gain visibility and insight into questions such as:

  • What are the use cases that are driving adoption of SaaS, PaaS, IaaS and private cloud?
  • How are cloud adoption patterns and uses cases are differing by vertical? By geography?
  • What cloud infrastructure models are most frequently being deployed (private, public, hybrid)?
  • What cloud management platforms are gaining traction in the enterprise? Where are open source options (OpenStack, CloudStack) being adopted?
  • How does the value being delivered by cloud deployments compare to expectations?

We think some of the more interesting insights will come from seeing how these responses change and trend over time. Our goal is not to provide just a one-time shapshot of adoption, but to conduct an ongoing survey several times a year to surface key trends and patterns. The results from our first joint survey will be announced in conjunction with Cloud Connect Chicago, to be held September 10-13 at the Hyatt Regency O’Hare.