Tag: IaaS

Cloud IaaS Versus SaaS: The Fight for Industry Cloud | Blog

A blog I wrote last year discussed the ugly market share war among the three top cloud infrastructure providers – Amazon Web Services (AWS), Microsoft Azure (Azure), and Google Cloud Platform (GCP.) Now we need to talk about how Independent Software Vendors (ISVs) like Oracle, Salesforce, and SAP are changing the battle with their industry-specific clouds.

Cloud IaaS vendors don’t have an industry cloud

The fact is that AWS, Azure, and GCP don’t really have industry clouds. These cloud IaaS vendors enable clients to run business applications and services on top of their cloud platforms, but haven’t built industry-specific application or process capabilities. They acknowledge that their clients want to focus more on building applications than infrastructure, which defeats their positioning in the industry cloud market. The core of what they offer is compute, data, ML/AI, business continuity, and security, and they rely on technology and service partners to build industry-relevant solutions. For example, GCP partnered with Deloitte for cloud-based retail forecasting, and AWS joined with Merck and Accenture for a medicine platform. They are also partnering with core business application vendors such as Cerner and Temenos.

Cloud SaaS providers have an edge

ISVs have continued to expand their industry cloud offerings over the past few years. For example, in 2016 Oracle acquired Textura, a leading provider of construction contracts and payment management cloud services, SAP introduced its manufacturing cloud in 2018, and in 2019 Salesforce launched its CPG and manufacturing clouds. Further, Oracle and SAP have built solutions for specific industries such as retail, healthcare, and banking by focusing on their core capability of ERP, supply chain management, data analytics, and customer experience. And while SFDC is still largely an experience-centric firm, it is now building customer experience, marketing, and services offerings tailored to specific industries.

So, what will happen going forward?

  • Industry cloud will change: Today’s industry clouds are one more way of running a client’s business; however, they are still not business platforms. Going forward, industry clouds will become something like a big IT park where clients, partners, and other third parties come to a common platform to serve customers. It will be as much about data exchange among ecosystem players as it is about closed wall operations. Enterprises in that industry can take advantage of specific features they deem appropriate rather than building their own. And, they will become a “tenant” of the industry cloud vendor’s or ISV’s platform.
  • Cloud vendors will heavily push industry cloud: AWS, Azure, and GCP will push their versions of industry cloud in 2020 and beyond, with strong marketing and commercial campaigns. They’ll likely be tweaking their existing offerings and creating wrappers around their existing services to give them an industry flavor. But, of course, the leading ISVs have already launched their industry clouds and will expand them going forward.
  • Channel push will increase: Both the cloud infrastructure service providers and the ISVs will aggressively push their service partners – especially consulting firms like Accenture, Capgemini, Deloitte, and PwC. The cloud vendors will also push their technology partners to build solutions or “exclusively” migrate applications onto their clouds.
  • Mega acquisitions: Historically, there hasn’t been any major acquisition activity between infrastructure providers and large software companies. But one of the top infrastructure providers might acquire a “horizontal” ISV that’s making inroads into industry clouds, like Salesforce or Workday, rather than buying a vertical industry ISV. Disclaimer: I am not at all suggesting than any such acquisition is in the cards!

So, what should enterprises do?

  • Be flexible: Enterprises need to closely monitor this rapidly evolving market. Though the paths IaaS providers and ISVs take may not meaningfully conflict in the near future, there may be stranger partnerships on the horizon, and enterprises need to be flexible to take advantage of them.
  • Be cautious: Because the cloud vendors’ channel partners are being pushed to sell their industry cloud offerings, enterprises need to fully evaluate them and their relevance to their businesses. Their evaluation should include not only business, technical, and functional, but also licensing rationalization, discount discussions, and talent availability for these platforms.
  • Be open: As the market disrupts and newer leaders and offerings emerge, enterprises need to be open to reevaluating their technology landscape to adopt the best-in-class solution for their businesses. This is as much about an open mindset as it is about internal processes around application development, delivery, and operations. Enterprise processes and people need to be open enough to incorporate newer industry solutions.

What do you think about industry clouds? Please share with me at [email protected].

“Doing Cloud” vs “Thinking Cloud” Separates True Believers in Digital Transformation | Press Release

Enterprises move beyond typical cloud-based delivery model to adopt cloud as disruptive platform for “as-a-service” agenda.

When it comes to the IT mantra “cloud is critical,” some enterprises are true believers and others are not, at least not yet. New research from Everest Group finds that around 86 percent of enterprises consider cloud to be the critical component of digital transformation; however, only 60 percent of enterprises consider cloud services among their “top 3” investment priorities. This discrepancy suggests that “thinking cloud” and “doing cloud” are two very different things and that enterprises are at different maturity levels from a cloud-adoption perspective, especially with respect to driving digital transformation.

Everest Group predicts the cloud services market will grow nearly 25 percent CAGR between 2015 and 2020 as enterprises demand more value from cloud services, insisting on leveraging cloud as the core platform to drive strategic business initiatives. Increasingly, enterprises will be less concerned about the cloud platform or deployment model and its technological superiority, and more concerned about leveraging cloud to drive an “IT-as-a-Service” consumption model that goes beyond provisioning of infrastructure services.

“Cloud is critical for IT-as-a-Service but requires a broader agenda beyond cloud infrastructure. Although nearly 90 percent of cloud deals have an IaaS component, less than half of them can be termed as “transformational”,” said Chirajeet Sengupta, vice president at Everest Group. “Truly successful digital businesses will have to transform applications, infrastructure, and organizational culture to drive growth as well as internal efficiencies. Focusing on just one aspect will result in sub-scale adoption and value loss for the business. Likewise, cloud service providers need to think beyond infrastructure and keep the broader business transformation priorities in mind.”

Other findings in the research:

  • Private cloud deployments will lead growth, given enterprises’ emphasis on hybrid cloud services
  • Around 20 percent of infrastructure global services engagements include cloud-delivered services.
  • In terms of buyer adoption, the retail industry led others, almost doubling its contribution to overall engagements.
  • North America and United Kingdom contributed around 55 percent of cloud engagements.

These research findings are summarized in a set of high-resolution graphics available

Virtustream Acquisition – EMC Spreads Its Hybrid Cloud Wings | Sherpas in Blue Shirts

EMC has taken a significant step forward in its hybrid cloud journey with the announcement of its acquisition of Virtustream in an all-cash transaction of US$1.2 billion. Founded in 2009, Virtustream is estimated to have clocked ~US$ 100 million in revenues last year through its cloud hosting services and management software (xStream) offerings – while cloud IaaS accounted for 60% of this revenue, the remaining 40% came from management software licenses.

The U.S.-based company will eventually become the managed cloud services division within the EMC Federation business. The transaction is expected to close by the third quarter of 2015 and be additive to EMC’s revenues starting 2016.

EMC is well known for its deep pockets. With about 70 acquisitions since 2003, the inorganic route is clearly not new to EMC (to put it mildly). The company has not shied away from flexing its muscles from time-to-time to build capabilities for its mainstay storage business and beyond.

EMC’s “Shift” to Cloud

The emergence of cloud has had a strong impact on EMC’s core storage business, which has been witnessing a sluggish demand over the past few years (the overall Information Storage division of EMC has witnessed a CAGR of ~3% over 2012-14). While EMC has rejigged its focus to cover new storage products, this “strategic tweak” in itself is not expected to arrest EMC’s plummeting revenue growth. Therefore, EMC has put its bet on the “next big thing” in the IT industry – hybrid cloud.

EMC’s association with VMWare and Pivotal has ensured that EMC is no newbie to the cloud; however, the real sign of intent from EMC came with the launch of its Enterprise Hybrid Cloud Solution last year. The launch also coincided with a triplet of cloud acquisitions – Cloudscaling (an OpenStack IaaS solution developer), Maginatics (a cloud-enabled storage provider), and Spanning (a cloud-based application data security provider).

So what does Virtustream bring to the table?

As EMC looks to make a mark in the enterprise cloud market, the Virtustream acquisition offers multiple benefits to EMC:

    1. Expansion of the Enterprise Hybrid Cloud Solution portfolio: EMC’s Enterprise Hybrid Cloud Solution is currently an on-premise private cloud offering that provides cloud-bursting options to VMware vCloud Air and other public cloud services. The addition of Virtustream’s xStream platform provides EMC with capabilities to manage both on-premise and off-premise deployments, thereby offering a truly hybrid cloud setup

      The xStream platform will be leveraged by EMC Federation service provider partners to deliver independent services based upon it

    2. Credible cloud managed services capabilities: Virtustream has witnessed credible success in serving large enterprises with complex cloud deployments and managed services requirements, through partnerships with industry-leading vendors such as SAP (which made a US$40 million investment in Virtustream in 2013), Oracle, and Microsoft. Virtustream has been certified by SAP to offer SAP HANA as-a-service. EMC can leverage Virtustream’s managed service capabilities/experience to serve its own existing clientele as well as prospects

    3. Datacenter footprint: Virtustream brings a credible revenue stream based on its datacenter footprint spanning locations such as the U.S., UK and the Netherlands (catering to key demand markets such as North America and Europe)

    4. Meaningful clientele: Virtustream brings a credible roster of clients including Coca-Cola, Domino Sugar, Heinz, Hess Corporation, and Kawasaki, which will get added to EMC’s kitty (to cross-sell its broader hybrid cloud and storage offerings).

The move to acquire Virtustream seems to be a logical one for EMC (although the revenue multiple of ~12X indicates some level of desperation on EMC’s part, given the ongoing stakeholder unrest). Also, given EMC’s traditional modus operandi of allowing its acquired entities to operate autonomously, we do not expect the acquisition to grossly impact Virtustream’s innovation capabilities (barring potential integration and cultural challenges)

Virtustream’s rationale for being acquired?

The development may have come across as a surprise for many market observers, given that the company was grappling with the idea of going public barely six months ago. While Virtustream was going great guns, the brand recognition of a cloud provider typically plays a huge role when it comes to large enterprises looking for sourcing options. Consequently, hitting the “next level” of growth trajectory potentially becomes a significant challenge for players such as Virtustream (especially with a large enterprise focus).

Therefore, it comes as no surprise that Virtustream’s CEO, Rodney Rogers, claims to have considered multiple suitors over a period of time, before choosing EMC (based on terms offered and a chance to become a part of the EMC Federation).

Does this point to more consolidation in the cloud IaaS market?

The EMC-Virtustream deal has been preceded by multiple notable acquisitions in the cloud market over the past few years (Terremark by Verizon, Savvis by CenturyLink, SoftLayer by IBM, Metacloud by Cisco, and GoGrid by Datapipe). As various players in the enterprise cloud market, be it global IT service providers, telecom providers, or public cloud providers look to gain a stronger foothold, it is hard to bet against other similar acquisitions happening in the near future. The question is which company will be the next one to get gobbled up? CloudSigma? DigitalOcean? Joyent? ProfitBricks? Or even Rackspace? That only time will tell.


Photo credit: EMC

Sales Strategy Shift in the Cloud Services Market | Sherpas in Blue Shirts

The fact that enterprises are making a strategic intent shift to cloud and as-a-service models changes more than the service delivery model. It also changes the value proposition and therefore causes implications for provider’s sales strategies. For starters, the focus turns away from the provider’s capabilities.

Sure, those capabilities are still important. But with the new models the focus shifts to the customer’s needs.

The old strategic intent and value proposition was to achieve cost savings. Providers presented offer-based solutions touting the provider’s services. For example, a provider selling to a potential client in the P&C insurance industry might describe the kind of clients it services and how many clients it has, as follows:

“We have 25 clients in the P&C space with five million policies, 1000 analytics professionals with advanced statistical knowledge. We have 5,000 FTEs in eight offshore, nearshore and onshore locations. And we have a platform-based solution.”

Competition would take place on which provider’s offer is the most compelling to the customer. Typically in an offer-based solution the winning provider would be the firm with the most experience in the industry that targets the customer’s areas at appropriate price points.

But cloud and as-a-service solutions focus on the customer’s needs. This gives providers the opportunity to shift to needs-based messaging, as in the following example for a P&C insurance company:

“P&C insurers are battling high expense ratios, coupled with low interest rates globally. This is putting strains on their finances. Our solution can help you automate underwriting and shorten quote times by up to 60 percent, improve fraud detection by over 40 percent and facilitate early identification for subrogation helping improve overall margins.”

One of the most significant implications of the enterprise shift to the cloud is that focusing on needs-based messaging instead of the provider’s capabilities offer-based messaging will change the brute force product-selling mechanism that has come to define the market as we know it.

7 Things We Learned at Cloud Connect | Gaining Altitude in the Cloud

Originally posted on Leverhawk


It was an interesting week last week at Cloud Connect Silicon Valley. In addition to the keynotes and track sessions, we also saw the release of the summary results of the latest joint Cloud Connect / Everest Group survey on enterprise cloud adoption.  Here are the seven things we took away from the conference, the survey results, and the discussions we had:

  1. The power shift from IT to business is real – one of the key findings from the adoption survey was that outside of dev test environments, disaster recovery (DR) and email / collaboration, business stakeholders are the primary drivers of enterprise cloud adoption. Anecdotal conversations with practitioners and vendors alike reinforced this idea that the cloud is permanently changing buying behaviors in the enterprise.  This is bad news for many of the legacy enterprise IT players, who struggle with transitioning from a CIO-centric sales model to one focused on emerging business buyers.
  2. OpenStack is on a roll – one of the common themes in both the sessions and side conversations is that OpenStack appears to be gaining steam not just with the Foundation members but with enterprises as well.  In fact one leading financial services player we met there has the target of moving half of their production workloads to OpenStack by the end of the year.  We heard countless more examples of deployments that were in fact more than just pilots, and indications that OpenStack is starting to gain serious momentum.
  3. Cloudwashing is contagious – many legacy enterprise IT vendors have a lot to lose as their customer base migrates to the cloud.  It’s probably not surprising that many of them are happy to have their customers mistakenly believe that virtualized environments = private clouds.  As a result we have the unfortunate phenomena of organizations claiming and believing that they’re migrating to private cloud models, when in fact they’re really not.
  4. Cloud infrastructure can create competitive advantage – while applications, analytics and data are commonly seen as the source of IT-enabled competitive differentiation, we heard about how some enterprises are actually seeking cloud infrastructure as potential sources of business advantage.  We heard from one other major financial services firm that the speed and agility benefits being provided by the combination of cloud and open source was in fact creating competitive business advantage in the marketplace.
  5. Shadow IT doesn’t always mean happy customers – a growing trend that we heard a bit about was the “lose / lose” dynamic that was being created in some organizations by shadow IT.  The scenario goes like this: business buyer asks corporate IT for on-demand infrastructure services, with requirements that are perhaps a bit unrealistic.  Unhappy with the response they hear, business buyer instead goes to a public cloud IaaS provider, but quickly realize requirements aren’t met there either, but for different reasons.  The result is one unhappy customer and two unhappy service providers.   While this is the exception not the norm today with shadow IT, it is a trend worth watching.  Note to business buyers:  with freedom comes responsibility, certainly at least to understand your real requirements.
  6. Compliance isn’t stopping adoption – conventional wisdom suggests that highly regulated verticals will be adoption laggards due to security and compliance concerns.  A series of sessions with IT executives at NovartisAmerican Express and Fidelity proves that’s not the case.  While in the most case they’re focus is on private cloud models, the motivation is still around business drivers – providing faster, cheaper and more effective applications and capabilities.  The initiatives they’re driving are global in nature, and far from the ubiquitous proof-of-concepts that everyone seemed to be discussing last year.
  7. The tipping point is near – if it’s not here already, we’re close to the point where cloud becomes accepted as the primary IT delivery model going forward.   The conference survey showed that the majority of enterprises now expect migration to some type of cloud model (public, private hybrid or other) across all major workload types.  This isn’t to say that everything will migrate tomorrow, or that it will make sense to migrate everything to cloud models (it won’t), but it does say that market conversation around whether cloud makes sense for the enterprise may be close to over.

Interested in reading more about how cloud is driving enterprise transformation?  Check out our recent post on how JP Morgan Chase is using PaaS to transform internal application development.  Also read our guide on understanding the Great Tech War being fought across cloud, mobile, digital content and big data.

Photo Credit: Cloud Connect

Cloud Continues to Disrupt – VMware Announced Public IaaS Cloud | Gaining Altitude in the Cloud

After months of rumor and anticipation, VMware, the hypervisor and virtualization giant, finally made public its intent to later this year launch its vCloud® Hybrid Service, a public infrastructure-as–a-service (IaaS) cloud. To date, discussions around this expected announcement have focused on alleged competition from Amazon Web Services (AWS), the anticipated impact on VMware’s relationship with service providers such as Savvis and Terremark, and the company’s rationale behind this move, e.g., turf and client protection, stagnated growth thrust, declining market valuation, and dissatisfaction with its partner network.

Here, Everest Group is broadening the view, looking at how this move is furthering the disruption in the cloud provider landscape, and highlighting the dynamic nature of this space.

The line of demarcation between types of technology providers is increasingly blurring, and in the cloud arena at a dizzying pace. Amazon, the world’s largest online retailer, historically focused on catering to individuals and small and medium businesses, has become one of the biggest challengers to the enterprise infrastructure stalwarts such as IBM and HP. Oracle, the enterprise software and database giant, launched its acquisitions-enabled IaaS offering earlier this year. Although its primary competitor used to be SAP, its move into the cloud space places it in competition with companies such as Salesforce.com, Workday, and NetSuite. Now VMware, traditionally considered a virtualization software provider, is entering the cloud domain in an effort to protect its market share, despite the risk of antagonizing and competing with its own partners.

This rapidly evolving and “foggy” provider landscape leaves buyers confused as their options are constantly changing. In addition to cloud-related concerns such as security and compliance, existing clients must now also worry about whether they should stick with the current provider or switch to a new one. They have to evaluate their key parameters for selecting a cloud service provider, and assess the benefits and pitfalls of making a provider switch.

For example, consider the options facing current VMware plus cloud services clients:

  1. Shift to VMware’s new cloud offering: In this scenario, the buyer will shift to VMware’s new public cloud offering, leaving its old service provider. This option gives the buyer a compelling value proposition – the entire cloud value chain is managed by one provider, and there’s full compatibility between VMware’s public and private clouds. Yet, although VMware becomes the one-stop-shop for all the buyer’s cloud-based needs, it becomes locked in with one single technology and reliance on one single provider. The buyer must also consider whether VMware will be as innovative as other IaaS providers in terms of pricing, service level agreements, termination clauses, technology advancements, etc.
  2. Continue with the existing VMware partner provider: In this option, the buyers continue to procure cloud services from their existing VMware-based cloud partner provider. However, as different cloud service providers (especially AWS, Rackspace, and Terremark) penetrate enterprises and aggressively market their innovations, these clients are increasingly finding it difficult to defend their strategy of continuing with their existing VMware-based cloud partner, as they are perceived as a mere extension of the traditional datacenter model.
  3. Shift to other providers/cloud technologies: VMware’s presence in client’s datacenter is undeniable. However, many buyers are adopting cloud solutions that are different than VMware, and this is threatening VMware’s broad dominance. We believe this trend will continue, as, despite significant investments in VMware for their datacenters, buyers are more than willing to deploy solutions from other cloud providers.

Everest Group nearly a year ago called out this cloud provider choice conundrum, noting that attempts to help the buyer community is actually creating greater confusion. Buyers of cloud services need to be on their highest guard to ensure that, unlike traditional datacenters, they do not end up in a complex labyrinth of technologies that make their environment even worse than what it is today.

PaaS, IaaS and SaaS Providers…Moving Up and Down the Cloud Stack | 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.

Navigating IaaS Pricing | Gaining Altitude in the Cloud

Last year, I wrote here that cloud services were “differentiated commodities.”  The evolution of the Infrastructure-as-a-Service (IaaS) market over the last 18 months continues to reinforce this view.

A recent analysis of an enterprise’s IaaS options for an IT infrastructure workload that is expected to grow ten-fold during the next few years illustrates this observation quite well – and demonstrates the value that enterprises turning to cloud solutions can contemplate.

The graph below shows five pricing alternatives from three cloud providers (all normalized for similar levels of support, etc.). Amazon Web Services (AWS) EC2 standard on demand offer starts out with the highest cost and holds that premium position throughout the volume range over the three-year period projected. Surprisingly, Microsoft Azure’s solution with a one-year commitment comes in at almost half the cost of AWS on-demand and remains very competitive across the volume range. Only Rackspace’s private cloud alternative beats out the Azure one-year solution at higher volumes. Azure pricing without the one-year commitment starts pretty competitive, but escalates rapidly to finish nearly as high as AWS on-demand at the highest projected volumes. If willing to make a longer term commitment, the AWS solution with a three-year commitment scales to a competitive level at higher volumes. (However, I should highlight that AWS has a consistent history of reducing prices relatively frequently – lowering price for its first generation standard instances by 18 percent just a few weeks ago, which could easily make even its on-demand offering quite compelling as it potentially could take advantage of future price cuts.)

IaaS Cost

Enterprises thinking about cloud IaaS solutions shouldn’t miss the point about how pricing behaves with volume. Each of the solutions shown scale much more slowly than volume growth – AWS grows only 2x with a 10x volume increase and the low price Azure one-year only grows 3x with the 10x volume. Workloads for which rapid growth is likely can secure substantial attractive economics. (One might wonder how frequent workloads might show 10x growth over a relatively short period; we are observing a surprising number of new applications (e.g., big data analytics) that consume resources at many times these rates – some would crash under their own weight without a cloud solution that can scale with their explosive demands.)

Decision makers also need to remember that compute virtual machines (VMs) are only a portion of their IaaS bill – storage, IO, and additional services can add up very quickly and provider strategies and choices differ widely across these areas, too.

Business and technology leaders thinking about decisions about their IT infrastructure options must include cloud solutions in their consideration set. Just like the legacy IT world where capital budgeting ran the show, planners in the next generation IT era need to pay close attention to getting the future outlook right. As illustrated by this IaaS analysis, evaluating options at a snapshot in time may lead to choices that leave a pot of gold on the table. Moreover, crafting the solution design to enable flexibility (i.e., low switching costs) in ways that create future options may enable the enterprise to exert leverage to secure even more favorable economics in the future as pricing models and relative price points shift over time.

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