Informal Buyers Of IaaS Cloud Computing Are Driving The Market, Not Formal IT Buyers – Vendor Strategists Need Two Strategies

Frank Gillett

Cloud infrastructure-as-a-service (IaaS) is a hot market. Amazon Web Services, now five years old, drives a lot of attention and customer volume, but the vendor strategists at enterprise-facing providers such as IBM, HP, AT&T and Verizon have been building and delivering IaaS offerings. As I’ve studied the market, I’ve heard wildly different types of requirements from buyers and quite a range of offerings from service providers. Yet much of the industry dialogue is about one central idea of what IaaS is – think that’s wrong headed. I found that there were really two buyer types: 1) informal buyers outside of the IT operations/data center manager organizations, such as engineers, scientists, marketing executives, and developers, and 2) formal buyers, the IT operations and data center managers responsible for operating applications and maintaining infrastructure.

With this idea in mind, I set out to test the views of IT infrastructure buyers in the Forrsights Hardware Survey, Q3 2010 and learned that:

  • After 2+ years of cloud hype, only 6% of enterprises IT infrastructure respondents report using IaaS, with another 7% planning to implement by Q3, 2012. After flat adoption from 2008 to 2009, this represents an approximate doubling from 2009, off a very small base.
  • Almost two thirds of IT infrastructure buyers themselves don’t believe they are the primary buyer of cloud IaaS! We asked them which groups in their company are using or most interested in cloud IaaS. Only 36% of IT infrastructure buyers listed themselves, while 7% didn’t know. The rest, 58% said that IT developers, Web site owners, business unit owners of batch compute intensive apps, and other business unit developers were more interested in using IaaS than themselves.
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The Consumerization Of IT Proceeds Unevenly, From Growth In Tablets To Anemic BYOPC Adoption

Frank Gillett

Tablets are a red hot topic since the launch of Apple’s iPad more than a year ago. Tablets are the most visible aspect of a broader topic on the minds of vendor strategists – the consumerization of IT. Consumerization is defined variously as using personal devices for work, pay-per-use payment models, spending personal money for work-related cloud services, and employee self-provisioning of IT capacity outside the oversight of IT. In our annual Forrsights Hardware Survey, Q3 2010, we asked IT infrastructure buyers responsible for supporting end user computing about a variety of topics related to consumerization of IT and learned that:

  • The IT organizations in 26% of enterprises (firms with 1000 employees or more) were planning to implement or had implemented general purpose touchscreen tablets such as the Apple iPad. Of that total, 4% reported they’d already implemented, and 17% were already piloting by Q3, 2010, approximately 6 months after the launch of this brand new category. SMBs, firms with 999 employees or less, were lower at 18% planning or implemented.
  • Only 2% of firms, large and small, reported implementing or piloting bring-your-own-PC models, despite several years of hype among the desktop virtualization software vendors about this model. We expect this PC deployment model to grow, but it’s not a broad trend yet.
  • Firms are using more consumer-style Web applications on PCs, with 84% firms increasing their use of Web applications. But they’re not abandoning locally installed applications. 55% of firms are increasing or staying the same on their use of installed applications, while only 4% are seriously reducing use.
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Are Businesses Missing The Benefits Of Collaboration Technology?

TJ Keitt

Last night I had the pleasure of attending a customer case study session hosted by Cisco. Representatives from two clients -- SmithAmundsen (a law firm) and Republic Services (a waste management company) -- discussed how they were deploying Cisco unified communication and collaboration technology within their businesses. While the two speakers presented compelling stories about the need for collaboration within business, what caught my attention was where their companies received value. The constant refrain was these technologies saved money on travel, office space and IT expenditures. This isn't a new story: last year at Cisco's Collaboration Summit, Vid Byanna of Accenture mentioned that travel cost reduction was a big driver for his firm adopting desktop video technology for its remote workforce. Nor is this a Cisco-specific story: I recently published a report that shows the majority of content and collaboration professionals say travel reductions is the #1 benefit of collaboration software. But does it teach us the right lesson about the value of collaboration software?

In general, when we think about finding ways to let employees come together in groups to do work, we assume some type of business benefit: faster problem resolution, more innovative ideas and quicker time to market are a few examples. So why, in a business world where 42% of the workforce is mobile, do just 19% and 9% of content and collaboration professionals see improved innovation and faster time to market, respectively, as outcomes of using collaboration software? I have a couple of ideas that I'll be testing in my research going forward. I think this disconnect springs from one of three places:

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Oracle Says No To Itanium – Embarrassment For Intel, Big Problem For HP

Richard Fichera

Oracle announced today that it is going to cease development for Itanium across its product line, stating that itbelieved, after consultation with Intel management, that x86 was Intel’s strategic platform. Intel of course responded with a press release that specifically stated that there were at least two additional Itanium products in active development – Poulsen (which has seen its initial specifications, if not availability, announced), and Kittson, of which little is known.

This is a huge move, and one that seems like a kick carefully aimed at the you know what’s of HP’s Itanium-based server business, which competes directly with Oracle’s SPARC-based Unix servers. If Oracle stays the course in the face of what will certainly be immense pressure from HP, mild censure from Intel, and consternation on the part of many large customers, the consequences are pretty obvious:

  • Intel loses prestige, credibility for Itanium, and a potential drop-off of business from its only large Itanium customer. Nonetheless, the majority of Intel’s server business is x86, and it will, in the end, suffer only a token loss of revenue. Intel’s response to this move by Oracle will be muted – public defense of Itanium, but no fireworks.
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Losing Patience And Token Information

Andras Cser

As we speak to companies worldwide, many express their frustration with the cost and complexity of physical tokens. Our staple response is: "Oh yes, these solutions are hard to integrate and operate, but they provide the extra level of security required in an enterprise environment." However, today’s RSA SecureID breach goes against our typical advice and demonstrates that even the most hardened solution is vulnerable to insider threats – as it appears that the information leaked by (or social-engineered out of?) an RSA insider caused the security hole.

This situation draws attention to two basic themes that we are consistently hearing about:

  1.  Monitor your employees' activities and behavior patterns; and
  2. Use lighter-weight authentication such as adaptive and risk-based authentication.

Both topics are areas we plan to discuss in greater depth this year. Please stay tuned for more reports from us on these topics!

The Planning, Preparation, And Players In Cloud-Based Email

Christopher Voce

Companies of all industries and sizes are considering, planning for, and implementing cloud-based solutions in their infrastructure. One of the first questions that comes up is: “Where do we start?” Email is one — if not the first — significant resource that is cited. Why? It’s a relatively discrete piece of infrastructure where many companies can realize typical cloud benefits like upfront infrastructure cost avoidance, an easier route to being on the latest platform, and the opportunity to offload responsibility to a domain specialist. And then there’s ongoing operational costs: Infrastructure and operations pros, along with their business peers, look at what it costs to run email themselves and compare that with the cost of the provider and struggle to see how they can match provider economics.

Another question that often comes up is: “How real is this trend?” When was the last time you saw vendors like Microsoft, IBM, Google, AT&T, Verizon, Cisco, and Oracle sink billions into the same market? Organizations large and small, like GlaxoSmithKline, Manpower, Panasonic, the US General Services Administration, and a host of others, have made moves to the cloud. That’s a lot of major players and customers, and that’s a good indicator that this isn’t a fad.

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KPMG-Equaterra highlights Outsourcing Advisor Consolidation

Bill Martorelli

KPMG’s recent acquisition of Equaterra signals some new dynamics in the market for outsourcing advisory services. The acquisition creates an intriguing combination of capabilities encompassing high-level consulting services for tax, supply chain management and IT strategy with Equaterra’s proven outsourcing transaction strengths. Moreover, it confirms a mini-wave of industry consolidation following TPI parent company’s Information Services Group (ISG) acquiring long-time benchmarking specialist Compass (more recently, ISG acquired public sector specialist STA Consulting).  

The mini-wave of consolidation may seem paradoxical given that growth has returned to the outsourcing marketplace. Forrester believes the overall market for such services will grow 7.1% to $254B this year. If the outsourcing market is again growing, why are the winds of industry consolidation blowing? Although the opportunity is broadening, large mega-deals that firms like TPI and Equaterra grew to prominence on are getting scarcer and scarcer. Moreover, clients are taking a more holistic view of outsourcing alongside evaluating shared services and other organizational dynamics, creating the need for a broader value proposition extending beyond transactional services. Although many outsourcing advisory firms have gone down this path with strategy and research services, the KPMG-Equaterra combination creates an unusually strong combination. KPMG, which heretofore had lagged principal competitors PwC and Deloitte in the scale of its outsourcing advisory service, should benefit substantially from the addition of Equaterra’s resources and capabilities.

Please vote in our Unfair Licensing Policies survey

Duncan Jones

As promised in a previous blog post: Which Software Licensing Policy Is The Unfairest Of Them All? , we've launched a survey to find out what sourcing and vendor management professionals think about some common software licensing policies.  This isn't about bashing powerful software companies, but about building a consensus behind a campaign to bring software licensing rules up to date - i.e. protection of innocent buyers, rather than regime change.  I've narrowed an initial list of 30 questionable policies down to this Foul Fifteen of candidates for the (un)coveted "Unfairest" award:

1.       Double charging for external users

2.       Prohibiting or overcharging for anonymous users

3.       Maintenance on shelfware

4.       Counting cores instead of processors

5.       Counting all processors in a server, even if partitioned

6.       Upfront license purchase only, not phased in line with project milestones

7.       Maintenance repricing

8.       Insisting on purchase of all licenses before implementation starts

9.       Product enhancements packaged as new SKU’s

10.   Licensing by deployment, even if unused

11.   Charging for use of modules that customers cannot control or track

12.   Retaining right to change licensing policies at any time

13.   Multiplexing – definition is unclear or too wide

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Japan's Troubles Raise A Red Flag But Don't (Yet) Alter Our Global Tech Market Outlook

Andrew Bartels

With Japan's triple hit of earthquake, tsunami, and nuclear power plant dominating newspaper headlines and TV news, I have gotten some questions from clients about the impact of the disaster on the overall tech market.  In general, I think the effects of these disasters on the total 2011 outlook will be small -- at worst, they will hurt tech market growth in Q2 2011 while strengthening growth in Q3 and Q4.  However, that outlook assumes that the problems at the Fukushima Dai-ichi nuclear complex improve or don't worsen.  If that situation turns into a Chernobyl-type disaster that causes permanent evacuations from a multi-mile radius around the plant and possible shutdowns of other nuclear power plants, the impacts on the Japanese economy and on the Japanese tech industry -- not to mention for the people of Japan -- would be very negative, and cause a downward adjustment in our tech market forecast.

The potential impacts of the Japanese disasters show up on both the tech supply side and on the tech demand side, so let's look at both angles. 

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Mobile Cloud Services Present New Vendor Opportunities

Michele Pelino

Enterprises of all sizes are challenged with supporting a wide range of mobile devices and applications. In addition, empowered employees are circumventing the IT organization by purchasing their own mobile devices and downloading applications used for work from mobile app stores sponsored by mobile device manufacturers. Adding to this complexity are the accelerated mobile device release and application update timelines, which often occur in a matter of months, not years. Mobile cloud services are emerging as a method for the corporate IT department to address these challenges, while still maintaining control of the firm’s mobile device and application environment.

Cloud services have been available in a traditional software and hardware arena for the past few years. However, now vendors and service providers in the mobility ecosystem are offering new types of mobile cloud services to help firms simplify and manage the complex mobility landscape. The key characteristics today’s mobile cloud services include:

  • Standardized, on-demand mobile services delivered in a public or private cloud environment. Today’s mobile cloud services tend to focus on helping firms deliver mobile applications. However, mobile cloud service deployment will evolve over time to include other services such as storage, security billing, governance, and reporting capabilities.
  • Mobile cloud services are delivered in an “as a service” manner, and promise to deliver operational savings by only requiring firms to pay for the software, platform, and infrastructure resources used. The software as a service “SaaS” delivery model is commonly used to distribute mobile applications, and infrastructure as a service components include mobile network and storage which can be incorporated into public clouds or private clouds.
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