HOW BIG IS THE CLOUD? #apc2010 @philgoldie PHILIP GOLDIE, Director, Server & Tools OSCAR TRIMBOLI, Director, Information Worker LINUS LAI, Associate Director, IDC @oscartr

…how big is the opportunity? …where is the opportunity? …how do I capture the opportunity?

The Cloud and You: New Delivery Models Bring New Opportunities Linus Lai IDC Australia

Agenda Shifting Business Goals Impact Technology Goals The Cloud: What’s It All About, & Why Should I care? Leveraging Cloud Computing To Benefit Your Organization

Shifting Business Goals Impact Technology Goals The Cloud: What’s It All About, & Why Should I care? Leveraging Cloud Computing To Benefit Your Organization

The “New Normal” Q. Prioritize the following business goals as they relate to your organization by allocating 100 points among them. The more points you allocate, the more important the business goal. Business priorities are quickly returning to pre-recession status Refocusing on “doing the right thing” again, not the least expensive For customers For shareholders For competitive advantage Efficiency still matters, but not if it impacts business performance Availability Flexibility Lets start by talking about this “new normal” IDC has tracked senior business and IT executive sentiments and priorities for a number of years. Many of our ongoing surveys pose the question shown above, that is – allocate 100 points across your top priority business goals. Pre-global economic melt-down we generally saw cost control, customer satisfaction and revenue growth as fairly equal top priorities. However, in late 2008 through mid 2009, it was another story as priorities around cost reduction squeezed out most other priorities. As of January 2010, we started to see the pendulum swing back to a more traditional balanced distribution that rates customer satisfaction almost equally with cost cutting, and also displays a renewed emphasis on quality, increasing market share and time to market. Source: IDC Server Virtualization MCS 2007, 2008, 2009; IDC Datacenter and Cloud Survey 2010

Recovery and Transformation Key Market Transformations Telecom – fiber, 3G/4G wireless, converged IP delivery, new distribution models IT – market expansion through disruptive Cloud model, driving re-architecture of vendor models, offerings, identities Ascendance of mobile devices – and apps – challenging primacy of the PC Shift of customer “design point” toward SMB/consumer, emerging markets In particular as the recovery takes hold we are seeing structural transformation across a wide range of information and communications industries – and these are changes that have ramifications for virtually every industry and business. In telecommunications, it's about the aggressive evolution the industry's been on for the past several years: the shift to fiber landlines, higher-speed wireless broadband, converged IP delivery platforms, expansion of new distribution models and expansion into more value-added services. E.g the cloud. 90-95% of regional/local telcos will be launching some form of cloud service In IT, the biggest transformations are around the disruptive emergence of the cloud services model — a model that is both market expanding and challenging. The cloud-driven transformation of the IT market is necessitating the restructuring of vendors' offerings, market footprints, and business models. It is also driving private data centers to become leaner, meaner and more efficient For telecommunications and IT, it's also about the ascendance of mobile devices, not only as access devices but as software and solution platforms, challenging — for the first time in over two decades — the primacy of the PC. It's also about the changing face of the customer, especially in the enterprise markets — with the "design point" for the market continuing to shift from large enterprises in developed markets to small and medium-sized enterprises in high-growth emerging markets. And it's about the growing impact of consumers on the entire market. Taken together, this emergence of a highly connected, service centric, mobile, on demand consumer oriented world is beginning to reshape the way that businesses interact with their customers via social media and mobile interfaces as much as it is changing the way providers of many types of products and services differentiate their offerings – using value-add, information rich services and relationships to deliver value and it is providing a wide range of new vectors on which to base new product and service development

The Cloud: What’s All About, & Why Should I care? Shifting Business Goals Impact Technology Goals The Cloud: What’s All About, & Why Should I care? Leveraging Cloud Computing To Benefit Your Organization

What is Cloud Computing Today? The Future Cloud services are consumer and business products, services and solutions delivered and consumed in real-time over the Internet They have the following key attributes Shared Self-service Elastic Usage-based pricing High Security Cloud High Availability Cloud Multi Purpose Clouds Today Test & Dev Cloud HPC Cloud Comms Cloud Low Cost Cloud

Cloud Market Will Win More of Australia ICT Spend Proportion of total 9.4% AUD million Cloud services will not replace traditional delivery models in all situations Though cloud is not a large part of the overall spend, it’s growing much faster This rapid growth is attractive & causing new entrants to emerge, and non-traditional IT vendors to pay attention The age of influence for the product vendors is waning 22.5% 5.5% CAGR growth to 2014 * DC spend is categorised by server/storage hardware and software 2009 IDC Directions

Uncertainty About Cloud is Dissolving In 12 months, cynicism about cloud computing has nearly disappeared Clear that cloud computing alternatives will be considered for application upgrade and replacement Source: IDC Cloud Computing Survey, April 2010 (N=600 in Aust, Korea, India, S’pore, PRC & HK)

Customer Focus on Private Clouds 2011 will be a big year for "private clouds"…: Why? Continued concerns about cloud security, availability and performance Ongoing drive to maximize return on existing IT assets 2010 has been a big year for the announcement of "private cloud" offerings from virtually all major IT suppliers Clouds typically package infrastructure, platforms and applications together so… Private cloud announcements will drive many strategic partnerships, joint ventures and acquisitions/mergers.

Workloads in the Cloud - Australia

Not All Applications are Suitable Readiness Factor Low High Where to Start? Storage as a Service Backup/Restore Solutions Information archival Data intensive workloads Established packaged offerings e-mail Collaboration Batch processing Pre-production systems Software development Test Sensitive data Employee Information Medical Records 3rd party software which: Does not have a virtualization or Cloud aware licensing strategy Chargeback or utilization not enabled Requires Mass Customization High auditability & accountability Subject to Sarbanes-Oxley IFRS JSOX 15 15

Mapping the Journey: Private Cloud Adoption Rates A workload focus allows a cloud strategy to be built Consider the Cloud as an extension of your sourcing strategy, not a technology Building IT services in the Cloud is a long journey, comprised of many steps Honest appraisal may reveal that enterprises cannot complete the journey on your own Selective use of public cloud services, external private clouds and cloud appliances along with existing delivery models will become the norm by 2015

Leveraging Cloud Computing To Benefit Your Organization Shifting Business Goals Impact Technology Goals The Cloud: What’s All About, & Why Should I care? Leveraging Cloud Computing To Benefit Your Organization

Impact of the Cloud The Channel Viewpoint Do you view cloud computing as: The majority of channels view the cloud as an interesting emerging model – and realize that it is redefining the channel ecosystem and their business model. Importantly, 1 in 2 see it as an opportunity. Source: IDC PartnerConnect Quick Poll (April 2010)

The Move Towards Services Impact of the Cloud Do you currently/plan to offer cloud computing professional or consulting services? Cloud is a highly consultative engagement with high professional services attach and it promotes channel transition to services oriented business model. Source: IDC PartnerConnect Quick Poll (April 2010)

Channel Partners in Asia/Pacific IDC Partner Segmentation Model

Private Cloud Implications What Activities will End-Users struggle with? Understanding if current Architecture (Infrastructure and Applications) is ready for Private/Hybrid Cloud Migrating to a Cloud Architecture Securing Converged IT Department Skill Sets Defining Provisioning Policies when Migrating to Private Cloud Defining Policies for Deploying Workloads in a Hybrid Environment Charging Line of Business for Virtual Assets

Cloud Implications Opportunities Require a New Mix of Skill Sets Readiness Assessment Services Datacenter Assessments Security Assessments Application Virtualization Assessments Cloud Strategy Development Cloud Roadmap Development Infrastructure Virtualization Strategy and Architecture Application Sourcing Strategies Implementation & Transformation Services Infrastructure Virtualization Migration Services Application Virtualization Services Automation Service Integration Security and BCDR Change Management Policy Definition Governance Billing Support Multi Vendor Support

Potential Go-to-Market Model Blended Consulting & Integration Services Access to Vendor/Partner Developed Knowledge Base A number of product (h/w & s/w) vendors are building out consulting capabilities to get their brand in front of the CIO However, the right skills are in short supply, so partners can and will play an important role Go-to-market conflict needs to mitigated and customer demand will be critical Sub-contracted Partners Vendor Service Delivery Full Service Enabled Partners Vendor Account Management Customer

Adapt or Vanish: Hosting and Managed Infrastructure Services Both hosting and managed infrastructure services remain viable business models, However, it will be essential to transition delivery models to use cloud computing The profitability of managed infrastructure offerings will rapidly erode as new players enter the market with cloud-based models The hosting business is being transformed by cloud computing, new entrants can offer attractive new services and the market continues to evolve. Cloud impacts the economics of model of hosting in key ways: more difficult capacity management and potentially lower returns on invested capital; challenges in analyzing deal profitability and a shift in how to achieve good margins in managed hosting; uncertain software licensing costs; and increased unpredictability of revenue. Service providers must determine how to meet the new technical and business challenges, identify the products that can be sold now, market successfully to early adopters, and create a foundation for future products and mainstream adoption. New offerings are emerging to compete with traditional hosting services, eg: utility hosting, virtual data center hosting, cloud hosting, and platform as a service (PaaS). The initial challenges of cloud evolution are centered on installation and provisioning. These are business challenges, not just technical challenges, requiring process and system integration across the service provider organization. The early adopters of cloud infrastructure services are existing hosting customers, Web 2.0 startups, research organizations and Type "A" enterprises. Mainstream adoption will require decreasing the real and perceived risks of moving operations into the cloud. Recommendations Focus on fully automating sales quotes and provisioning, and driving down quote and installation times. Immediately offer utility hosting. Even if you are not prepared to offer a virtualized platform, you must offer flexible pricing, or you will be at a severe competitive disadvantage. If you do not have virtualization expertise, consider acquiring a small provider of cloud hosting services with strong engineering expertise and tools for managing a shared, virtualized platform. Include complementary network services that enhance remotely hosted services, such as WAN optimization or an application delivery network. 2009 IDC Directions

Channel Partners in Asia/Pacific IDC Partner Segmentation Model

Potential Go-to-Market Model Partnering to Deliver Applications via the Cloud Locally Delivered Software as a Service Cloud Datacenter Providers, Telcos, Larger SIs with Cloud Datacenter Resources Local ISVs Provision of a Virtualized Infrastructure for Delivery along with Customer Billing Capabilities International ISVs (e.g. SAP) Platform as a Service Players (e.g. Force.com and Azure) Internationally Delivered Software as a Service Provision of a Plug and Play Cloud Infrastructure along with a Development Platform With Traditional On-Premise Licensing

Channel Partners in Asia/Pacific IDC Partner Segmentation Model

Three Market Models for Reselling a Public Cloud Service… Q. How would you prefer to be compensated for reselling the cloud service from a cloud provider? Referral One time referral fee paid to reseller and distributor Annuity A.k.a. pass through; recurring revenue May include renewals May include tiered programs (basic, gold, platinum, etc.) White label Allows partner to resell cloud service under their own brand name Partner can add cloud capabilities to their other solutions and service offerings Pass through business model; partner gets X% gross margin Service delivered by cloud provider on cloud provider’s infrastructure Partner does first level support Simple Referral fees are less popular, but not out of the question Source: IDC PartnerConnect Quick Poll (April 2010)

Positioning Cloud Resale for Your Partners Pros Cons Ease of doing business Low partner investment and risk Not an annuity, no recurring revenue Partner less visible in customer’s cloud planning Process intensive in two-tier model Referral Program Well understood business model Annuity type recurring revenue Partner maintains customer relationship Cloud provider must manage for channel conflict Low margin business Will cloud providers see value of distributors Traditional VAR/ Reseller Program Quick entry into cloud provider market Easy to integrate cloud offerings into other partner solutions Partner owns the cloud brand Partner assumes more risk Tech support model complex White Label Program

Essential Guidance for Partners Questions to be Addressed Private Cloud: Have you got the right in-house skills? Are vendors providing incentives & training for partners to develop specific skill-sets for the private cloud? Are you able to leverage any productized professional services through from vendors to address private cloud type of requirements? Do you have reasonable GTM conflict sufficiently addressed from vendors as you build out your own consulting capabilities? Public Cloud: How are you drafting commercial agreements with particular focus on SLAs? How are you communicating your value proposition over going direct to the vendor to your customers? What training and education are you receiving on the public cloud? What about new consulting and integration skill-sets? Are you involved in testing new partner programs to resell public cloud services?

Questions? If you have additional questions, please contact me at: Linus Lai llai@idc.com +612 9925 2274  

$AUD 1,622m CAGR 5.3% $AUD 70m CAGR 31.3% $AUD 274m CAGR 15% SaaS $AUD 1,622m CAGR 5.3% $AUD 70m CAGR 31.3% $AUD 274m CAGR 15% PaaS $AUD 1,445m CAGR 7.5% $AUD 121m CAGR 58% $AUD 128m CAGR 36% DEFINTIONS All dollars expressed in AUD for 2010 and Cumulative Annual Growth References 2014 IDC Source Worldwide and Regional Public IT Cloud Services 2010-2014 Forecast IDC #223549 June 2010 IDC Source Australia Cloud Services 2010-2014 Forecast Analysis IDC # #AU2577407S July 2010 CAGR% Exchange Rate AUD/USD 0.90 IDC definition Secondary Market Segments and SaaS, PaaS, Iaas taxomony AaaS = SaaS Collaborative Applications, Content Applications, Enterprise Resource Management Applications, Supply Chain Management Applications, Operations & Manufacturing Applications, Engineering Applications, Customer Relationship Management Applications, Application Management, Hosted Application Management PaaS Application Development Software, Application Server Middleware, Data Access, Analysis, and Delivery, Information & Data Management, Integration & Process Automation Middleware, Other Application Dev and Deployment, Quality & Life-Cycle Tools, Enterprise Portals IaaS System and Network Management Software, Security Software, Storage Software, System Software, Servers, Storage, Networks, Clients, Hosted Infrastructure Services IaaS $AUD 1,350m CAGR 6.2% $AUD 97m CAGR 44% $AUD 54m CAGR 30% SOURCE: IDC ON PREMISE HOSTED PUBLIC

Wednesday September 1 Title Time Room Presenters Microsoft Cloud Strategy 101 9:45 Arena 1B Gianpaolo Carraro Influence of the Cloud on the Channel: How can Partners prepare themselves? 11:00 Room 8 Ted Keating (Cloud Consultant) Successful Selling in the Cloud (Part 1) 12:00 Steve Iatropoulos & Partners Cloudy With A Chance Of Virtualisation Jason Jacobs & Phillip Duff Successful Selling in the Cloud: Winning with BPOS (Part 2) 13:45 Brian Holder & Partners Microsoft Dynamics CRM 2011 & the Cloud 14:45 Room 7 Ross Dembecki & Craig Steere How to Sell in the Cloud with Telstra Stephen Pech (Telstra) & Partners Cloud Services Partner Panel: Partner perspectives and best practices 16:00 Kathryn Saducas, Chris Sharp & Partner Panel Promote the upcoming cloud sessions if relevant as a call to action

Thursday September 2 Title Time Room Presenters Microsoft Technology Vision for Hosting and Service Providers 8:45 Room 8 Phil Meyer Enabling Private Clouds 9:45 Phil Meyer & Phil Goldie Creating a residual income on-premise and in the cloud Arena 1A Brad Clarke Deploying BPOS in Customer Environments 11:00 Steve Iatropoulos, Vajira Weerakesera & Nick Beaugeard (HubOne) Managing risk and security in the cloud: an overview of Microsoft best practice 12:00 Stuart Strathdee Private Cloud For The Public Sector 13:45 Room 5 Greg Stone, Philip Goldie Land the Cloud Sale and delight your Customers Renee Gamble, Craig Martyn, Yvette Sutton, Phil Meyer & Kathryn Saducas Executive Panel – Q&A with Tracey Fellows and other Microsoft executives 14:45 Arena 1B Tracey Fellows, Evan Williams, Gianpaolo Carraro, Gary Cox, George Stavrakakis Promote the upcoming cloud sessions if relevant as a call to action

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