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2009 CLOUD COMPUTING TRENDS REPORT February 2009
Table Of Contents
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The Survey •
Hosting.com proactively engages with clients and prospects to effectively understand their business goals to build solutions that are both client relevant and applicable. A core component of Hosting.com’s client engagement strategy is the use of surveying tools.
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The Cloud Computing Trends Survey was launched on December 17, 2008 and respondents had until January 23, 2009 to respond.
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The survey was conducted and hosted electronically. The survey asked approximately 11 questions and took between 6 and 10 minutes to complete.
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In sharing the results, Hosting.com will provide general demographic information about respondents and the companies they represent; however, Hosting.com will not reveal the specific identity of any respondent or company.
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Geographically – Dispersed Infrastructure 644 Respondents C‐level Executives and Business Decision Makers Over 40% were CXOs, President, Owner or Vice President Industries All major industries represented including Financial Services, Retail, Social Networking, Healthcare, Manufacturing, IT Service Providers, Marketing and Advertising, Non Profits and City Governments. Number of employees 69% had fewer than 100 employees 11% had greater than 1,000 employees Annual Revenues Ranged from less than $1M to over $100B 64% are less than $10M 13% are greater than $100M 4
Executive Summary This Cloud Computing Trends Report introduces new data into the cloud marketplace. This survey provided insight into the expectations small, medium and large businesses have of cloud computing, their intended uses, reasons for adopting, and expected time‐frames for implementing cloud‐based solutions. Surprisingly, this e‐book reveals that there is little difference between how larger companies and small businesses will utilize Cloud Computing . Specifically: • The driving factors for adopting cloud services are nearly the same for all company sizes. • Business size plays no role in how quickly cloud technologies will be adopted. • Executive leadership in small businesses list cloud computing as a priority at the same rate as executives with large companies. • Small businesses are likely to receive a greater amount of IT Services from a cloud platform. • Increased education on cloud benefits, solutions and design is needed for businesses of all sizes. As cloud providers continue to create cloud‐based solutions that provide reduced costs, scalability, improved service level agreements, increased flexibility and overall performance they must keep in mind a new force in cloud computing that will demand immediate, measurable results – small businesses.. 2009 is slated to be a banner year for cloud computing providers and solutions. Until now, the expected primary source for increased revenues was large companies, specifically for test and development environments. However, over the past several months decreased revenues and operating budgets have driven small businesses to explore and implement production cloud environments.
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Familiarity with Hosting Which services does your company currently receive from a hosting provider? Multiple selections were allowed
72%
Web Hosting 54%
Email Hosting 32%
Database Hosting
30%
Application Hosting Online Storage
21%
This intended purpose of this question was to establish the respondents’ familiarity with hosted services and extending IT functions to an external provider. 90% of respondents currently use a hosting provider in some capacity. 6
Cloud Computing Defined When you hear the term “cloud‐computing,” what definition first comes to mind? 47% 19% 9% 13% 12%
Fundamental change in how technology services are provided A tool, if delivered properly, that can provide instant value to my company A tool that might work for another company Another buzzword – all hype Never heard of it Answered Either Fundamental Change or Instant Value 250+ Employees = 82%
1‐49 Employees = 62%
Analysis: Two‐thirds of the respondents believe Cloud Computing will have a major impact on the IT industry. Contrastingly, 22% were familiar with the term but did not believe it would provide value to their company. The chart above illustrates that larger companies view the cloud more positively; primarily, due to their familiarity with cloud computing solutions. Less than 1% of respondents from companies with 250+ employees were unsure how they would define cloud computing. Most service providers, vendors and software manufacturers have adjusted their service offerings for the booming trend toward Cloud Computing ‐ they must keep the 62% of small businesses in mind when developing these solutions. 7
REDUCED COSTS DRIVING CONSUMERS
TO ENGAGE CLOUD COMPUTING
To the best of your knowledge, please select the three most important factors that will drive companies to invest in cloud computing. After selecting the three, please place them in order of importance. Ranked Number 1
Ranked in Top 3
Cost Savings
34%
65%
Uptime/High Availability
17%
46%
Performance
12%
43%
Consumption‐based Pricing
12%
33%
Scalability
7%
40%
Flexibility
6%
41%
Rapid Deployment
5%
24%
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REDUCED COSTS DRIVING CONSUMERS Company‐size did not alter the expectations that our respondents have of cloud‐ computing solutions. The three most important factors driving consumers to invest in Cloud Computing are nearly the same for all businesses. Likewise, the two least important factors when stacked against the other drivers listed on page 8 were exactly the same. Top 3
2 Least
250+ Employees
1. 2. 3.
Reduced Costs Uptime Scalability
1. 2.
Rapid Deployment Consumption‐based Pricing
50‐249 Employees
1. 2. 3.
Reduced Costs Uptime Scalability
1. 2.
Consumption‐based Pricing Rapid Deployment
1‐49 Employees
1. 2. 3.
Reduced Costs Uptime Performance
1. 2.
Rapid Deployment Consumption‐based Pricing
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Cloud Computing Drivers The most important factors driving businesses of all sizes to implement Cloud Computing solutions are the same factors that have prompted companies to outsource IT services for years – lower costs, better performance and agility. Reduced cost is not only a benefit, but from this data appears to be an expectation that providers must work diligently to provide Cloud Computing consumers. Virtualization has enabled many service providers to offer shared platforms at a fraction of the cost of comparable physical platforms. The ability to scale across an enterprise or provider’s network means the cost savings can be substantial. The current US economic woes will only drive more businesses to consider and adopt Cloud Computing solutions. The Cloud Computing model offers a cost effective means for organizations to acquire and utilize IT. Cloud Computing promises reduced capital IT expenditures and less capacity management and planning resulting in significant cost savings. Businesses will inherently expect service providers to guarantee Service Level Agreements (SLAs) and Uptime, and continuously improve their agility, performance and scalability. A Cloud Computing infrastructure provides these higher levels of solution availability and scalability ensuring the reliability expectations.
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Cloud Computing Obstacles To your best knowledge, what are the top three obstacles Cloud Computing providers must overcome? Multiple selections were allowed. 64%
58% 40%
39%
30%
27%
21%
21%
Analysis: Consistently, Security is a top concern (including recent surveys by Third Brigade, InformationWeek, and CIO Research) and understandably so. All businesses spend countless hours and investments to protect their valuable data assets. 11
CLOUD COMPUTING OBSTACLES Large companies expect higher levels of Security and Control.
250+ Employees
Security
Control
75%
45%
58% of all others
38% of all others
Due to their size, larger companies are more frequently the targets of malicious data attacks and have a greater need to protect their assets due to compliancy and regulatory requirements. Types of Cloud Computing solutions they will pursue include: R&D projects, quick promotions, online collaboration, partner integration, social networking , new business ventures (Forrester).
Analysis: Security for companies of all sizes will become less of a concern due to advances in virtualized technologies that have produced increased security options to meet any organizations business demands. Recent developments, especially those by VMware have made shared virtual cloud environments as secure as single‐tenant environments. 12
EXECUTIVE ORDERS Has Cloud Computing been identified as a priority by your organization’s executive leadership? ALL RESPONDENTS 24% ‐ YES 61% ‐ NO 15% ‐ UNSURE
% Answering Yes 250+ Employees
25%
50‐249 Employees
23%
1‐49 Employees
24%
Analysis: As companies continue to recognize the monetary and technology benefits of Cloud Computing, the number of executives identifying Cloud Computing as a priority will increase. Factors such as the adoption of Software‐as‐a‐Service (SaaS), Virtualization and access to broadband and wireless networks provide mobile workforces with new approaches for delivering and receiving business applications. Again, there is no difference between small and larger companies. 13
TIMING How quickly do you think Cloud Computing and its benefits will evovle to have an impact on your company? 33% ‐ NEXT 12 MONTHS 17% ‐ NEXT 24 MONTHS 36% ‐ UNSURE 5% ‐ NEVER Next 12 Months
Unsure
250+ Employees
33%
27%
50‐249 Employees
31%
25%
1‐49 Employees
34%
40%
Analysis: Significant market opportunity exists for cloud providers within small businesses. 34% of small business respondents believe Cloud Computing will evolve to impact their business in the next 12 months. 40% were unsure, which service providers can use as an opportunity to effectively engage, educate and build solutions that provide tangible benefits for small businesses. 14
IT Services in the Cloud Over the next 12 months, what percentage of your IT services do you estimate will be delivered from a cloud platform? Survey Results: 6% More Than 75% 8% 51‐75% 12% 26‐50% 23% 10‐25% 39% 1‐9% 12% No Intention of Using
26% of all respondents will have greater than 25% of their IT services deployed in a cloud platform.
Analysis: Compared to a September 2008 study by InformationWeek, the likelihood of organizations to deliver their IT services on a Cloud platform have doubled (13% responded that greater than 25% of their IT services would be in the Cloud) indicating that Cloud Computing is trending upward. An appealing aspect of Cloud Computing is little knowledge is required to set up, configure and maintain the technology and the supporting infrastructure.
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WEB APPLICATIONS BEST‐SUITED FOR CLOUD COMPUTING To your best knowledge, what two solutions are best‐suited for a Cloud Computing environment? 70% 41% 37% 20%
Web Applications Database Server Application Server Testing/Development
7% File/Print Server 7% Traditional IT 7% Other (Popular write‐ins: Media, File, Storage, Email)
Hosting Web Applications was the most popular solution for all companies. The two most popular based on company size were: 2 Most Popular 250+ Employees
1. Web Applications 2. Application Server
50‐249 Employees
1. Web Applications 2. Application Server
1‐49 Employees
1. Web Applications 2. Database Server 16
WAYS TO PAY Select the manner in which you would most prefer to pay for Cloud Computing services?
Unsure
34%
Month‐to‐Month, No Contracts, Charged on Usage
32%
Annual Contract, Based on Resource Needs and Bursting
Month‐to‐Month, No Contracts, Base Fee Plus Resource Bursting
18%
16%
Analysis: There was a large difference between how small companies wanted to pay for cloud computing services when compared with larger companies. 32% of companies with 250+ employees preferred annual contracts compared to 13% of companies with 1‐49 employees. For unpredictable businesses, paying for services used is alluring; until, the first bill with multiple overages and unexpected costs is received. Unsure responses were evenly distributed between all company sizes. 17
EDUCATION NEEDED AND WANTED The survey data convincingly illustrates the need of continued education of the uses and benefits of Cloud Computing. Examples demonstrating this need include: 25% Define Cloud Computing as a buzzword or have not heard of it. 36% Are Unsure of when Cloud Computing will impact their business 12% Have no intention of using Cloud Computing 39% Foresee 1‐9% of their IT services being in the Cloud in 2009
How Respondents Prefer to Learn More About Cloud Computing: 49% 42%
Read Articles and White Papers Test it Myself
29% Webinars 21% Discussions with Providers
Analysis: Across all industries and all company sizes there is a significant number of individuals interested in Cloud Computing that have not been presented with compelling or relevant information regarding Cloud Computing. The willingness of those that are familiar with Cloud Computing to adopt it combined with the large number of companies that are still seeking information and have not formed a conclusive opinion signals a strong market opportunity. Innovative providers that develop client‐driven solutions will continue to shape the Cloud Computing landscape. 18
FURTHER ANALYSIS Thank you for your interest in the Cloud Computing Trends Report. To schedule a personalized, in‐depth analysis for your organization, please email Aaron Hollobaugh to schedule an appointment. Hosting.com and IT Business Edge will be launching a Cloud Computing White Paper at the end of March. The White Paper will provide in‐depth analysis of Cloud Computing’s practical business benefits. Hosting.com will be coordinating webinars to share this information with interested parties in March & April. All individuals that download the eBook will be invited to attend. Visit www.Hosting.com/cloud for more information about Cloud Computing Solutions provided by Hosting.com and to participate in the Cloud Enterprise Beta (90 days of complimentary Cloud Computing Hosting).
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ABOUT HOSTING.COM Hosting.com provides enterprise colocation, cloud computing, dedicated hosting, managed hosting, disaster recovery, and business continuance services to a global customer base demanding a high level of security, reliability, and responsiveness. Hosting.com monitors, manages, and enhances the Web‐based platforms of Web 2.0 companies, software as a service (SaaS) providers, content distribution networks (CDN), and medium to large enterprises whose Web presence is crucial and high availability mandatory. Hosting.com currently operates SAS 70 Type II certified datacenters in Irvine, CA; Louisville, KY; Newark, DE; San Francisco, CA; and is opening a datacenter in Denver, CO in September 2009. All Hosting.com products and services are supported by 24x7x365 live expert technical support through toll‐free telephone, email, and online chat.
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Sources • Cloud Computing Survey: IT Leaders See Big Promise, Have Big Security Questions (October 21, 2008). CIO Research. • Cloud Computing Survey (September 2008). Information Week. • Cloud Computing Security. Third Brigade.
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Denver
Irvine
Louisville
Newark
San Francisco
2009 CLOUD COMPUTING TRENDS REPORT February 2009