Cisco CloudWatch Summer 2011

Cisco CloudWatch Summer 2011

Cisco CloudWatch Summer 2011 Table of Contents 3

Executive Summary

5

Cloud Watching

7

Blurred Boundaries

8

Beyond Cost Control to Collaboration

10 Call for Cloud Industry Standards 12 Moving Forward with Cloud Computing 14 Conclusion

Executive Summary Cloud computing is one of the most hotly debated topics in technology and business circles today. Media stories focus interchangeably on the explosive growth of Cloud offsetting this against security concerns that are seen to be thwarting its potential. 2011 can be viewed as the year that Cloud comes of age – the year that the hype begins to dissipate and companies evaluate what Cloud can really do for their businesses, balancing risk against value and putting in place implementation plans where appropriate.

agenda, yet only making tentative steps towards fullscale adoption. Companies in different sectors are seen to be at different points along the path to Cloud adoption – finance and service providers more readily adopting Cloud with retail organisations the least advanced in terms of Cloud adoption. Various factors are seen to be impeding Cloud growth, not least the absence of Cloud industry standards which the majority of respondents would welcome.

Figure A: Sample breakdown – Industry sector

Finance/Banking

Service Providers

50 interviews

50 interviews

Some highlights of the research include: Against this backdrop, Cisco commissioned Loudhouse, an independent market research consultancy, to conduct a comprehensive telephone survey amongst 250 IT decision makers in large UK companies across five key sectors about their current attitudes and approaches to Cloud computing, with a particular focus on Cloud growing pains and the factors impacting Cloud growth at a sector level. The five sectors included in the research are Government, retail, healthcare, finance and service providers (including telecoms operators / carriers, media and broadcast companies) . The Cisco CloudWatch Report finds companies at a Cloud tipping point – fully aware of the benefits of Cloud and increasingly putting it on the strategic

Cloud Watching l Cloud is on the IT agenda for just over half of all companies (52%) but is only considered critical by 7% of organisations l 52% would welcome support from vendors in helping them develop Cloud strategy l Where Cloud is on the IT agenda, 74% are planning to invest in the next 12 months l Currently an average of 7% of all IT applications / services are in the Cloud, with companies looking to increase this to 23% over the next 2 years l Web conferencing (72%), video conferencing (71%) and unified communications (68%) are the areas generating the highest levels of interest – showing that collaboration is very much on the agenda.

Healthcare

Government

Retail

50 interviews

50 interviews

50 interviews

Figure B: Sample breakdown – company size

22%

57%

1000-4999 (22%)

21% 5000-9999 (21%) 10000+ employees (57%)

Cisco Cloud Watch: Summer 2011

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Blurred boundaries l Less than half (46%) see a clear distinction between Cloud computing and managed services with 61% saying that the distinction is not always made clear by vendors l 69% claim to understand the difference between different Cloud deployment models, 31% don’t l In five years time, 47% think private Clouds will be the dominant Cloud model in their sector, 20% say hybrid Cloud models, 9% public Cloud, 7% community Cloud and 17% are not sure

Call for Cloud industry standards l 95% see common industry standards for Cloud as important or critical – 66% say critical l 86% would welcome the development of a set of standards or guidelines for Cloud computing l The consequences of having NO industry standards for Cloud is just one of the reasons preventing organisations from adopting Cloud in the first place (69%), alongside worries about a lack of compliance (69%), supplier lock in (68%) and issues associated with “Cloudwashing” (65%)

Beyond cost control to collaboration l The key benefits of Cloud computing over and above keeping IT in house or using managed services are seen to be easier maintenance (67%), automatic updates (64%), rapid deployment / speed to market (61%) and improved collaboration / communication (60%) – all ahead of reducing costs which comes in at #5 (57%) l Cloud is considered to be able to drive positive change in many aspects of business, most notably communication / collaboration (80%), IT provisioning and procurement (75%) and efficiency / productivity (74%).

Moving forward with Cloud l Security and privacy concerns (76%) are viewed as the key barriers to wider adoption of Cloud, followed by concerns about the location of data (64%) and difficulties of integration with in-house IT (62%) or other hosted services (60%) l Three quarters (75%) think security concerns are justified and well founded, whilst 25% think they are misrepresented or over-emphasised l Businesses see responsibility for Cloud security (56%) along with responsibility for new Cloud business models/ innovative ways of working (44%) as shared between end user organisations, Cloud service providers and application providers.

The Cisco CloudWatch Report shows that Cloud computing is on the IT agenda for 2011 for more than half of companies. Higher levels of Cloud adoption industry-wide and within specific organisations are being thwarted by a number of factors, most notably a lack of Cloud industry standards.

The Cisco CloudWatch Report shows that Cloud computing is on the IT agenda for 2011 for more than half of companies. Higher levels of Cloud adoption industry-wide and within specific organisations are being thwarted by a number of factors, most notably a lack of Cloud industry standards. Whilst improved collaboration is a clear benefit of Cloud computing, it is collaboration within the industry that is considered to hold the key to mass adoption and greater realisation of Cloud benefits whether this is in terms of collaboratively developing industry standards, securing data or developing innovative ways of working with Cloud.

Methodology overview The Cisco CloudWatch Report was conducted by Loudhouse, an independent marketing research consultancy based in London. The IT decision makers in UK businesses with more than 1000 employees in five key sectors – Government, Retail, Healthcare, Finance and Service Providers. The research was conducted in June 2011.


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Cloud Watching Cloud computing is undoubtedly one of the most exciting developments in IT in recent years. Despite the hype, figures around the absolute deployment of Cloud are very difficult to establish. The Cisco CloudWatch Report seeks to establish the extent to which Cloud computing is now embedded within IT strategy and the relative adoption levels of Cloud for different applications / services.

Figure 1: Strategic importance of Cloud computing Trailblazers

Laggards

100%

Figure 1 shows the extent to which Cloud computing is considered to play a part in current IT strategy. Overall, 52% of organisations consider that Cloud computing has a role in IT strategy, although only 7% would currently see it as critical, underpinning much of their activity. There is variation by sector in the extent to which Cloud is a strategic imperative – ranging from 70% in finance companies, 59% amongst service providers to 40% in the retail sector. Amongst those where Cloud is on the IT agenda, 74% are planning on investing in Cloud computing in the next 12 months.

30%

80% 48%

41%

50%

58%

32%

40%

25%

24%

26% 26%

20%

0%

7%

On average, organisations have of all IT applications and services in the Cloud.

13% amongst service providers. Organisations are looking to increase this to 23%

Increasing to

60%

60%

21%

32%

7%

6%

All

Finance

14%

22% 18%

16% 12%

8%

Service Government Providers

14% Healthcare

Cloud has no part in our IT strategy

Cloud is a significant part of our IT strategy

Cloud plays a small part in our IT strategy

Cloud is critical to our IT strategy, underpinning much of our activity

8% Retail

overall in two years time.


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Figure 2 shows where the most activity and enthusiasm for Cloud computing resides. No single application / service emerges as having attracted the most investment – with web conferencing (13%), video conferencing (12%) and unified communications (12%) level pegging as far as current investment is concerned. Web conferencing and video conferencing also look poised for healthy Cloud growth over the next 12 months with 24% and 25% planning to invest respectively. At the other end of the spectrum, payroll is the area where the highest proportion of companies categorically state that they will not be investing (48%). Whilst there are evident moves towards unified communications as an area for cloud investment, it is interesting that voice services and VoIP in their own right show encouraging levels of Cloud interest, despite only 7% having already invested. Voice is now as much a candidate for Cloud as data with much vendor activity in this area and the uptake of these services will certainly be interesting to monitor as Cloud further matures.

Figure 2: Cloud investment by application/service

Web conferencing

13% 12%

Video conferencing Voice services/VoiP

7% 9%

Supply chain

8%

Business intelligence

5

Payroll/finance

38% 35%

28%

25%

34%

29%

41% 19%

14%

38% 36%

13%

3

41%

14%

8%

39%

13%

11%

CRM

6

Desktop applications

9%

20%

Email hosting

9%

20%

15% 15%

40% 34% 42% 40% 44%

31%

HR

32%

24%

13%

Back up

ERP

19%

12%

Unified communications

48% 35%

33%

39% 46%

35% 33%

36% 38%

Already invested Plans to invest in next 12 months

48%

Would potentially invest Will not invest

of companies categorically state that they will not be investing in payroll via Cloud. PSN Preparedness Cisco Cloud Watch: Survey: Summer Spring 2011

Page Page66

Blurred Boundaries Whilst there is much hype around Cloud computing, there is also much confusion. With a lack of industry standards, multiple deployment models and flavours of Cloud computing abound. Figure 3 shows the extent to which IT decision makers are able to effectively discern between different IT delivery models.

Figure 3: Cloud blur Clear distinction between cloud computing and managed services?

Less than half of respondents (46%) see a clear distinction between Cloud computing and managed services, with the majority considering the line between the two to be a blurry one. Although Cloud services are by definition “externally managed” that is where the similarity ends – the commercial models are very different with risk and capital expenditure lying with the provider where Cloud is concerned. The problem appears to be made worse by a general lack of transparency in the industry, with 61% of respondents saying that the distinction between Cloud and managed service agreements is not always made clear by vendors – so-called “Cloudwashing” apparently a very real issue. When it comes to discerning the differences between the various Cloud deployment models, there is less confusion. Over two-thirds of IT decision makers (69%) claim to understand the differences. Looking ahead to the next five years, IT decision makers were asked what they believe will be the dominant Cloud model in their industry sector. Figure 4 shows that overall private Clouds are forecast to be the primary model (47%) and this holds true for each of the five separate industry sectors. Hybrid Clouds are the second most popular choice, mentioned by 1 in 5 (20%) of respondents, and particularly popular amongst retail (28%) and service provider (26%) organisations. Public (9%) and community Clouds (7%) are deemed less likely choices. Interestingly, private Clouds do not represent Cloud in its purest sense because whilst they do overcome some security concerns there are compromises involved in terms of cost savings and scalability. Cloud preferences are likely to fluctuate further as the market continues to mature and customers are better able to discriminate between the various choices available to them.

Understand distinction between different cloud deployment models?

9%

19% 22% 46%

69%

Yes No

35%

Don’t know

Figure 4: Likely dominent Cloud in 5 years 9%

All Healthcare

10%

Finance

4

20% 7% 58%

14%

56% 10% 4

Retail

6

Government

8%

Service providers

47%

46% 46% 16%

30%

26%

28% 8% 22% 26% 2

Public cloud

Community cloud

Private cloud

Don’t know

17% 14% 4

6

12% 18% 26%

Hybrid cloud


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Beyond Cost Control to Collaboration Cost savings are widely known to be the primary driver for adopting Cloud services, with promises of reduced capital outlay. The Cisco CloudWatch Report seeks to explore the benefits of Cloud computing over and above keeping IT in house or using managed services, particularly interesting given the blurred boundaries between Cloud computing and managed services.

Figure 5 shows that although reduced costs are mentioned by 57% of IT decision makers, other benefits are more frequently cited. These include easier maintenance (67%), automatic updates (64%), rapid deployment / speed to market (61%) and improved collaboration and communication (60%). Despite well-documented security concerns around Cloud computing, it is interesting that more than 1 in 4 IT decision makers (27%)

Figure 5: Benefits of using Cloud computing over and above keeping IT in house or using managed services

see that Cloud actually offers improved security over in-house IT or managed services. Cloud computing can perhaps be viewed as an over-arching philosophy comprising many different solutions and an alternative way of thinking about how IT services are delivered within the organisation. Figure 6 shows the extent to which

Figure 6: Cloud as an enabler of change/transformation Collaboration/ communication

Easier maintenance

67%

Automatic updates

64%

Rapid deployment/speed to market

61%

Improved collaboration/ communication

60%

Reduced costs

57%

Better control of costs

52%

Improved service to our customers

48%

Increased responsiveness to needs of business/scalability

46%

Flexibility to change suppliers

45%

Increased responsiveness to needs of business/scalability

44%

Flexibility to change suppliers

27%

Other

38%

42%

16% 4

Efficiency/productivity 30%

44%

20%

47%

20% 5

More positive change

6

IT provisioning and procurement 28%

Can bring about significant positive change

Service response levels and SLAs

2%

28%

36%

Can bring about some positive change

25% 11%

Approach to cost management 26%

41%

Will not change this aspect of the business

24% 8%

Role of IT department 25%

29%

24%

22%

Will bring about negative change

IT policies and processes 20%

35%

32%

12%

Security and privacy 12%

24%

28%

36%

Less positive change


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Cloud is considered to bring about real change and transformation across the business. The key areas where Cloud is felt to deliver positive change are collaboration and communication (80%), IT provisioning and procurement (75%) as well as in efficiency and productivity (74%). Cloud delivery models are bringing new collaboration tools within the reach of everyone within organisations and it is clear that organisations are recognising the potential impact this will have on communication across the business. On the flipside there are concerns that Cloud may negatively impact the IT department, voiced by 1 in 5 (22%) respondents. Indeed, the fact that a similar proportion (23%) say that business departments within their organisation have used Cloud services without informing or involving the IT department suggests that Cloud is indeed changing traditional routes of IT procurement and putting more power into the hands of users. How the role of the IT department evolves as Cloud becomes more widely deployed in organisations remains to be seen.


Page 9

Call for Cloud Industry Standards While the move to Cloud is undoubtedly positive in terms of providing a flexible, ondemand model of technology provision, if Cloud vendors turn out to have processes that are sub-standard, some very real concerns are raised.

11% of Cloud industry standards Figure 7: Importance

5%

Figure 7 shows the level of importance that IT decision makers attribute to Cloud industry standards. Overall 95% see these as either important or critical – with 66% considering these to be critical, increasing to 72% amongst healthcare respondents. Although some would argue that the Cloud industry is too young to warrant industry standards as they can be seen as an impediment to innovation and overly bureaucratic, it seems that the arguments in favour of industry standards are more compelling to potential Cloud customers. Indeed, Figure 8 shows what IT decision makers believe are the consequences of having no industry Cloud standards. At the most basic level they are seen to prevent organisations from adopting Cloud in the first place (69%) whilst 57% see this as a barrier to Cloud rollout within organisations. Other consequences are worries about both a lack of compliance (69%) and supplier lock in (68%) and Cloudwashing, whereby vendors re-label products as Cloud or oversell benefits is also a very real concern (65%). Collectively the industry needs to prove that Cloud is a safe, reliable and attractive proposition and a resolution to the industry standards debate is much needed. 86% of IT decision makers say they would welcome the development of a set of standards or guidelines for Cloud computing.

29% 66%

Critical Important Not particularly important

Figure 8: Consequences of not having Cloud industry standards Prevent organisations from adopting cloud in first place

69%

Worries about lack of compliance

69%

Worries about getting locked into supplier contracts

68%

Cloudwashing – vendors relabelling products as cloud/overselling benefits

60%

Lack of objective info to base cloud buying decisions Lack of flexibility re: moving data between clouds Prevent organisations from rolling out cloud deployments

58%

Unfair competition in market/ nothing to hold vendors to account

52%

Hinders global interoperability

52%

56% 55%


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86%

of IT decision makers say they would welcome the development of a set of standards or guidelines for Cloud computing.


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Moving Forward with Cloud Computing Security remains a key sticking point with Cloud, not helped by the absence of industry standards. Indeed, three quarters (76%) consider security and privacy concerns to be a barrier to the wider adoption of Cloud within their industry sector, as shown in Figure 9. As more and more information on individuals and companies is placed in the Cloud, so security becomes a more pressing concern. Figure 9 also shows that other issues are hindering the adoption of Cloud. These include concerns around the location of data (64%) which clearly has synergy with security and privacy worries. A similar proportion voice concerns around integration, whether with in-house IT (62%) or other hosted services (60%), both evidence of a maturing industry where the realities of implementation are being felt.

Figure 9: Barriers to wider industry adoption of cloud

Security and privacy concerns

76%

Concernd about location of data

64%

Difficulties integrating with in-house IT Difficulties integrating with other hosted services

62%

Compliance concerns

58%

Concerns about supplier lock-in

56%

Cultural/organisational resistance Service quality/performance concerns

55%

Technology/service immaturity

52%

Doubts about investment/cost savings/ROI

51%

Service model/SLA limitations

50%

Concerns about cost/charing models

50%

Lack of industry standards

48%

Lack of heterogeneous management platform

30%

60%

52%

Other

1%


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As companies increasingly adopt Cloud technologies, so a number of other issues as differences between Cloud and traditional IT vendors become clearer. Figure 10 explores the balance of power in the relationship between customer and Cloud provider in various areas ranging from ownership of data, security and innovation. Only half of IT decision makers (51%) recognise that they still own their data even if it sits in the Cloud, with 28% seeing this as being the responsibility of the Cloud service provider. It is notable, however, that where security or Cloud innovation are concerned, there is widespread support for these being shared responsibility (56% and 44% respectively) – suggesting that collaboration at an industry level is very much the way forward if Cloud is to reach its full potential.

Figure 10: Responsibility for Cloud computing 51%

Ownership/authority over data stored in the cloud New cloud business models/ innovative ways of working with cloud Cloud security

13%

19%

6% 9%

25%

29%

28% 8%

13%

44%

56%

End user organisation Cloud service provider Application provider Share responsibility


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Conclusion

The Cloud is everywhere. Everyone in the technology community is talking about it, and trying to capitalise on it. Most connected consumers are using some sort of Cloud service, whether they know it or not. And most businesses are looking at it as a way of provisioning at least some of their IT capability, either using public Cloud services or via their own internal, private Clouds. So its importance and significance is not in doubt; and it’s hardly surprising that it is not without controversy.

go wrong, and it is not surprising that some businesses are reticent to move their application estates into the Cloud.

Widely hailed as a revolution in how companies procure and use technology, concrete figures around absolute deployment levels are hard to find. Much of the reason for this lies in the fact that there is a lack of consensus around what Cloud computing actually is on the part of customers which is compounded by vendors who, in some cases, are not making the distinction between Cloud and managed services clear.

Cloud looks set to change the landscape of technology provision in companies over the coming years but until there is better collaboration within the industry to address issues of standards, security and innovation, customer reticence will remain.

Add to this a lack of industry standards which give vendors further free rein to re-label services as Cloud and zero accountability should things

Instead, the current picture is one of definite customer interest in Cloud, particularly around the potential for improving collaboration but cautious toe-dipping into Cloud rather than company-wide deployment. Areas such as web conferencing, video conferencing and unified communications appear to be creating the highest levels of interest, with healthy levels of growth forecast over the coming year – other applications, such as payroll look set to be later candidates for Cloud – only likely to considered once Cloud confidence increases.

Ian Foddering Chief Technology Officer and Technical Director, Cisco UK and Ireland


Page 14

Cloud looks set to change the landscape of technology provision in companies over the coming years but until there is better collaboration within the industry to address issues of standards, security and innovation, customer reticence will remain. Ian Foddering Chief Technology Officer and Technical Director, Cisco UK and Ireland

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