The Cloud Value Chain Exposed – Takeaways for Network Service Providers
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The Cloud Value Chain Exposed – Takeaways for Network Service Providers
- 1. The Cloud Value Chain Exposed Takeaways for Network Service Providers Internet Business Solutions Group March 2012 Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 1
- 2. Cisco Internet Business Solutions Group - Introduction Cisco IBSG Established in 1998, we use strategy consulting skills to help Cisco customers capitalize on the promise of IP Wouter Belmans Uwe Lambrette Globally distributed Joined IBSG 2007, Joined 2008, team with in-depth previously with Bain previously with Booz local knowledge & Co and Sun Micro & Co. Strong vertical focus, Cloud and Initial Focus on SP practice Data Centre expert, Outsourcing Models Results: Shareholder Service Provider Business Models for value impact Business Models for Service Providers in Cloud, Market Cloud – leads IBSGs Dynamics Virtual Cloud Team wbelmans@cisco.com ulambret@cisco.com Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 2
- 3. Early Adoption Dynamics open the door to Enterprise Cloud Computing Early Adoption Simple Business Dynamics – Led by… Process Application Bottlenecks Development Next Gen Workplace Agile Infrastructure Desktop, UC&C, Requirements Office Apps Web Presence Big Data & Simulations Launch, Campaign, Market Improve Data Analysis IT Efficiency Manage Workloads & Regain Control over IT CIO led Transformational Source: Cisco IBSG Hypothesis 2011 Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 3
- 4. Industry Value Chain Complex Variety of Cloud Delivery Models IT infrastructure Systems Application Presentation / Facility infrastructure development / Application Access ODM / SC OEM software deployment Cloud enablers IDE (JBoss), Applications (BMC, Red Hat, databases, web, (Microsoft, SAP, Joyent, Vmware) app servers Oracle, others) SaaS End user (Enterprise) PaaS SaaS IaaS SaaS Hosted AM Synaptic Hosting Dynamic Computing Colo IaaS PaaS Source: Cisco IBSG 2011; Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 4
- 5. Industry Value Chain Cloud will Disrupt on Six Battlefields IT infrastructure Systems Application 1. SaaSinfrastructure will Further Disrupt the /ISV Landscape Presentation / Facility development Application Access ODM / SC OEM software deployment Mobile Access Accelerates SaaS Adoption Cloud enablers IDE (JBoss), Applications (BMC, Red Hat, databases, web, (Microsoft, SAP, Joyent, Vmware) app servers Oracle, others) 2. Development Platforms at the Core of the Cloud SaaS End user PaaS is Winning Hearts of Web Developers (Enterprise) PaaS SaaS 3. IaaS: Web Grade vs. Enterprise Grade IaaS SaaS Battle Rages across Hosted & Internal IaaS Hosted AM Synaptic Hosting Dynamic Computing 4. Facility & Infra Trends: Often Forgotten Fundamentals Colo IaaS PaaS Mega Exchanges & On-Net Clouds 5. Commercial Services Everybody wants to be a Cloud Broker 6. Professional Services Will move to Services with Higher Value Add Source: Cisco IBSG 2011; Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 5
- 6. 1 SaaS will Further Disrupt ISV Landscape Mobile Access Accelerates SaaS Adoption IT infrastructure Systems Application Presentation / Facility infrastructure development / Application ODM / SC OEM Access software deployment SaaS Disruptive in 25% of S/W Markets Tablets Will Accelerate Adoption Previous Tablets change mobile the rules limitations Notebook Ease of use complexities Visually Small screens appealing Previous tablet Comprehensive offerings failed development platform “Mobile will become the new platform for business intelligence.” Howard Dresner, Dresner Advisory Services Source: Forrester Source: OCO Business Analytics – OCO and Mobile BI “When we assess new SaaS applications, our first and most important filter is mobility. My end users demand application access from mobile devices.” CTO of IT, Large Car Manufacturer Source: Cisco IBSG 2011; Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 6
- 7. 2 Dev Platforms at the Core of the Cloud PaaS is Winning Hearts of Web Developers IT infrastructure Systems Application Presentation / Facility infrastructure development / Application ODM / SC OEM Access software deployment Reducing Lock-In / Inertia Automate Application Deployment PaaS Lock-In Effect Decreasing PaaS Convincing Developers CAGR (08-12) $300 216% 1. Simplification of ISS app Leading PaaS services (revenue estimate $M) $250 migration $200 Automation $150 $100 2. Emergence of $50 cross-data center PaaS $0 2008 2010 2012 (est.) 3. Open PaaS on AWS Force.com Windows Azure Google App Engine Lock-In “PaaS will be the most strategically important market The industry will group around PaaS platforms hosted segment for cloud computing.” across multiple Data Centers (SP and enterprise). Bank of America Merril Lynch Source: Cisco IBSG 2011; Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 7
- 8. 3 IaaS: Web Grade vs. Enterprise Grade Battle Rages across Hosted & Internal IaaS IT infrastructure Systems Application Presentation / Facility infrastructure development / Application ODM / SC OEM Access software deployment Internal Enterprise-grade cloud Enterprise-grade IaaS Enterprise-grade (Virtual) private cloud Contract VMware Commercial ITSM SAN / NAS IaaS-type / architecture Web-grade Credit card Xen / KVM Open Source Internal DAS commodity cloud Public IaaS Internal IaaS model / Hosted (Owned & managed ownership (Owned & managed in house) by third-party) Source: Cisco IBSG 2011, IDC, Tier 1; Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 8
- 9. 3 IaaS: Web Grade vs. Enterprise Grade Enterprise Grade in Pursuit of Web Grade IaaS IT infrastructure Systems Application Presentation / Facility infrastructure development / Application ODM / SC OEM Access software deployment Internal Enterprise-grade Enterprise-grade IaaS 2 Enterprise Grade Cloud will attract increasingly cloud (Virtual) private cloud critical workloads 3 2 3 Internal 1 commodity cloud Public IaaS 3 Standardization of IaaS Platforms will 1 Maturing IaaS Enablement Platforms accelerate enable Hybrid Cloud Computing cloud entry of 30k+ Web Hosting companies Open source Investments: $21M raising funds $26M has momentum $85M Deploy workloads across Acquisitions internal and public cloud drive standards Note: *Forrester definitions do not map 1-to-1 to our Public and Internal Cloud definition – Private Cloud only includes Infrastructure Virtualization Software Source: Cisco IBSG 2011; Morgan Stanley 2011 – Cloud Computing Takes Off; IDC 2010; Forrester 2011 – Sizing the Cloud Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 9
- 10. 4 Facility and IT Infrastructure Trends Facility Strategies: On-Net & Mega Exchange IT infrastructure Systems Application Presentation / Facility infrastructure development / Application ODM / SC OEM Access software deployment DC facility + exchange providers Network service providers Mega On-Net bring cloud DCs closer together Battleground provide cloud resources on their WANs and closer to the end user exchange Cloud with end-to-end management and SLAs 20-25 cloud hubs emerging globally Integrated value proposition (WAN / DC) Enterprise DC close to cloud DC and to end-users End-to-end SLAs with “one throat to choke” Connect cloud DC to any private network service Easy integration of internal enterprise DC with cloud (Enterprises can choose network vendor) Scale / Ecosystem Integration Equinix hub example Optus example Source: Cisco IBSG 2011, Equinix, Optus Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 10
- 11. 5 IT Sales Channels will be Disrupted Everybody wants to be a Cloud Broker IT infrastructure Systems Application Presentation / Facility infrastructure development / Application ODM / SC OEM Access software deployment Commercial Activities Simple brokerage …will enable brokers …and see software platforms… from many backgrounds… fast adoption T-Suite Catalog Telco myBusiness Self service Billing SaaS vendors Reporting Appexchange “By 2014, 35% of IaaS consumed Exchanges worldwide will be delivered Cloud Marketplace Above features plus: IT distributors as an embedded feature of Infrastructure CLOUDSolv resource exchange cloud service brokerages.” Cloud “on-boarders” MultiCloud Marketplace Gartner, 2010 Above features plus: Mobile app stores B2B App Store Business process enablement Enterprises IT Vending Machine Source: Cisco IBSG Note: Indicative Source: Cisco IBSG Source: Cisco IBSG 2011, Morgan Stanley 2011 – Cloud Computing Takes Off, Gartner Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 11
- 12. 6 Professional Services Will Move to Services with Higher Value-Add IT infrastructure Systems Application Presentation / Facility infrastructure development / Application ODM / SC OEM Access software deployment Professional Services Professional IT services will move toward higher value-add services Business Ops. process Business process design / Business process services consulting transformation services management Risk / compliance Security services Enterprise architecture design Systems Standard / transformation integration BPO App App App integration development management IT strategy App testing services App hosting IT consulting services Implement / Consult / Plan Architect / Plan Run / Manage Integrate Short-term positive, Positive Negative Neutral long-term negative “It takes a lot of expertise to be successful with vertical workloads. We aim to become the cloud provider of choice for energy companies, because we know the industry and we know Smart Grid.” CTO, Large Manufacturer Source: IT Services Taxonomy from Forrester, Assumptions about impact by IBSG 2011; Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 12
- 13. Main Takeaways / Discussion For Network Service Providers Network Service Providers have different ways of attacking the Cloud Market NSP GTM Approach Main Takeaways from The Cloud Value Chain Exposed Telco-Centric SaaS Mobile access accelerates SaaS Adoption incl. Comms, Collaboration, Security, VDI Focus on quality to differentiate against “over-the-top” plays Cloud Aggregation & Brokerage Use commercial brokerage platforms to launch quickly linked to Telco-centric Managed Svcs Use unique NSP assets (QoS, channels, Telco, Billing) Commodity Infrastructure Services Standardization will drive Hybrid Cloud: don’t be niche with Platform-as-a-Service Support Build PaaS partnerships to attract developers Build or acquire IT Services & Sales capabilities Enterprise Grade Infra Services with Provide tools to enable developers Developer Enablement Differentiate through end-to-end WAN-IT: “On-Net Cloud” Vertical Business Process Svcs Consider partnerships with SI’s with platform ready for BPaaS Embedding communications can add value: “CEBP” Network as a Service Unclear monetization models, the market opportunity is hard to size Enrich network to better serve cloud Focus on standards across geographies Source: Cisco IBSG 2011 Cisco IBSG © 2012 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Internet Business Solutions Group 13
- 14. Thank you. Additional Resources IBSG Whitepaper: The Cloud Value Chain Exposed http://csc0.ly/clpdf IBSG SP Cisco Web Page with Whitepaper and Cloud Insights http://csc0.ly/ibsgsp Cisco Cloud Pages http://csc0.ly/clo
Editor's Notes
- Adoption DynamicsSimple Bus Process: Managed (App) Hosting => SaaS applications (HR, Fin, …) to reduce unit cost and improve mobilityDevelopment:SOA => Public & Private I/PaaS to improve speed, cost of developmentWeb:Web Hosting (incl. e-comm)=> Use Public IaaS / PaaS to drive elastic web presenceNext Gen Workplace: Desktop Mgmt & Comms => Use VDI, UC&C, SaaS Desktop Appsto improve functionality, security & costBig Data & Sim:Enterprise Grid => Public IaaS Platformsto dynamically deploy algorithmsIT Efficiency – CIO: IT Mgmt & Automation => Private Cloud + Classify applications into cloud migration pathFinancial – CFO: IT Outsourcing => Impose on-demand sales paradigms on IT vendors – while retaining control over IT
- Approach of Value Chain Not only looking at cloud computing through the lens of the IPS stack (IaaS, PaaS, SaaS)Analyze the wide range of roles cloud providers play in the end-to-end cloud value chain.Activities from left to right: Infrastructure – Facility – Systems Infra SW (OS, Virtualizationà – Apps Dev & Deploy (App Servers) – Application – Presentation / AccessExamples: PaaS Providers: Deliver services to end-users and SaaS providers alike. Can either be customers of IaaS providers or run their own IT infrastructures. IaaS player Offering SaaS enablement, for example, has a different value proposition from a IaaS player that serves enterprises directly. Can use own facility and network or take advantage of colocation centersAdvantages of approach of taking into account this complexity Generate more insights about the role of cloud computing in the IT value chain Allows participants to better understand their unique position when drafting GTM strategies
- Approach of Value Chain Not only looking at cloud computing through the lens of the IPS stack (IaaS, PaaS, SaaS)Analyze the wide range of roles cloud providers play in the end-to-end cloud value chain.Activities from left to right: Infrastructure – Facility – Systems Infra SW (OS, Virtualizationà – Apps Dev & Deploy (App Servers) – Application – Presentation / AccessExamples: PaaS Providers: Deliver services to end-users and SaaS providers alike. Can either be customers of IaaS providers or run their own IT infrastructures. IaaS player Offering SaaS enablement, for example, has a different value proposition from a IaaS player that serves enterprises directly. Can use own facility and network or take advantage of colocation centersAdvantages of approach of taking into account this complexity Generate more insights about the role of cloud computing in the IT value chain Allows participants to better understand their unique position when drafting GTM strategies
- Incumbents being disrupted by new playersIncumbents: slowed by cannibalization Newcomers: BTE is reduced (cost down through IaaS / PaaS, new channels through brokers)Today SaaS is Disruptive in ~25% of the Software MarketUsual suspects: CRM, HR, Fin Mgmt, CollaborationMobile Access will Accelerate SaaS Adoption in new Application Segments Second Wave of Consumerization: Mobile Apps in Personal Life => Mobile Apps at work Previously, mobile access to applications was limited, mainly by small screens Mobile application access accelerated through introduction of Tablets Key Challenge for CIO: Delivering Apps to any device Adapt SW to mobile platforms (RIM, iOS, Android) and form factors is difficult / time consuming => often done poorly in-house SaaS eases the adaptation of Apps for Mobile: many SaaS apps come with mobile SaaS is being accelerated by the need for mobile access Graph Right: Correlation between % Mobile workers & No SaaS ImplementationsQuote – Mobility key factor in SaaS choiceImportant for NSP: SaaS players / ISV’s are big users of I/PaaS Enabling Mobility (incl. QoS) is key for SaaS providers and users Obviously, one of the next battlefields will be UC&C
- Idea of on-demand development and runtime environments not new Developers key decision makers from the beginning. Advantages obvious: automation of activities like scaling, resource allocation, data management, and failover Until now, PaaS has been the “little brother” in the IPS stack Lock-In generally mentioned as main inhibitor Over the past year, a lot of activity to reduce the lock-in concern: Update Azure SDK to simplify Internet information services (IIS) application migration.Leading PaaS platforms can be run across multiple hosted and internal DC’s Fujitsu offers Microsoft Azure across public and private cloudsCloud Foundry which is an open source solution that can run in any DC.Open-PaaS paradigm of RightScale automates development, but transparent to usersOver the past year, trend of more PaaS importance clear: Fast growth of the main PaaS platforms—Windows Azure, Google App Engine, and Force.com. Significant investment activity in PaaS startups. In 2011 aloneCloudBees $10.MStanding Cloud $3MDotCloud $10MAppFog $8MImportant for NSP: Understand developer requirements Look for PaaS partnerships
- Battle Rages across Hosted & Internal IaaSSomewhat arbitrary Split: Vertical Axis Web Grade (Credit Card, Opensource Hypervisor / Automation, DAS, Commodity) Enterprise Grade (Contract, vmware, Commercial ITSM, SAN / NAS, High-EndBoth these approaches get implemented across Internal and Hosted IaaS (Horizontal Axis)Examples: Public IaaS: Amazon / GoGrid (automated web hosting functions) Enterprise Grade IaaS: Savvis, Terremark (Virtual) Private Cloud – beyond web hosting Internal Enterprise Grade: Mosanto (built internal cloud on BMC software stack) Internal Commodity Cloud: Bechtel (SaaS paradigm, in own DC)Early Adoption (current state) Hosted: Web Grade (Public IaaS) has taken an early start (at least 4 x bigger) Internal: generally stick to Enterprise Grade
- Our expectation is that Infrastructure Services are on a fast growth trajectory. A couple of key dynamics will underpin this growth.Take the Graph back, and look at a couple of dynamics that will shape the market1. Cloud Enable 30+ Web Hosting Companies (Current Analysis) Web Hosting market very fragmented (10k’s no cloud) Increasing maturity of cloud enablers: makes it easy to implement Open Source (openstack) Investments (nimbula, eucalyptus in 2011) Acquisitions (Citrix Cloud.com, DidataOpsource)2. Enterprise Grade Cloud attract increasingly critical workloads Double dynamic: (a) increasingly critical workloads; (b) increasingly quality Public Cloud => Will enterprises pay premium for enterprise grade ? IDC vs. Forrester: very different conclusions IBSG expects enterprise grade to continue strong growth: SLA’s top of CIO mind Technology Investments (Cisco acquired Tidal, Newscale, Linesider = CloudVerse) Telco Acquisitions (VzB Terremark, Centurylink Savvis, DidataOpsource)3. Standardization of IaaS Platforms enables Hybrid Cloud Leading Platforms becoming de-facto standards (AWS, Cloud.Com, Joyent, CIAC, Eucalyptus) Making it easier to manage workloads across internal and hosted Commodity Example: Zynga Cloud (online gaming platform) built on AWS, Cloud. Com, Rightscale Enterprise Grade: driven by on-site managed services (F4B)Important for NSP: Web-Grade & Enterprise Grade are different GTM strategies / segments Both will be important – e.g. Savvis CTO: “Don’t go play with Amazon” Be ready to drive hybrid cloud: manage workloads across internal and public DC’s
- With extensive CloudBuild-Out: the role of MTDCs (“colocation”) & WANs is changing. (people look to reduce facility cost and improve application delivery)In this environment, two cloud facility implementation strategies are emerging: (1) the mega exchanges, which provides network choice (2) on-net cloud, with end-to-end value propositionThese approaches often compete for the same business .Mega Exchanges Network exchanges (e.g., Equinix) double as multi-tenant DCs (MTDCs) Obvious benefit of sharing the cost of DC facilities Choice: interconnect cloud providers with any private network providerBring cloud DCs and enterprise DCs (that use these facilities) closer together. According to Equinix / TelX: network effect - bring together eco-systems (e.g., finance, media) Probably: larger enterprises, play cross-border and cross-NSP, will benefit: pricing power On-Net Cloud Bundles and integrates cloud services with Ethernet and IP-VPN networks(Many SPs and enterprises are very receptive, see previous research papers) Guarantees on performance, availability and security with “one-throat-to-choke.”APM and Layer 2 domains across WANs and DCs, easing resource mgmt across DC / Cloud resources across hosted and internal DCs. Probably: network-centric workloads (e.g., UC), and for SMBs / Mid-Market Enterprises that appreciate ease Important for NSP’s: “On-Net Cloud” is a valuable strategy But users will look for real value add vs. network choice
- COMMERCIAL ACTIVITIES AND PROFESSIONAL SERVICESEverybody wants to be a brokerShift from classic resale to cloud brokerage Cloud Brokerage is creating Market place: bring buyer + seller of cloud services together together A lot of software enablers coming on the market: listed a couple Generally focus on SaaS Brokerage – with Catalogue, Self Service, Billing, Reporting - But increasingly value add Lowering Barriers to Entry for potential Cloud Brokers => A lot of candidates: “Everybody wants to be a cloud broker” Just this week: Deutsche Telecom launched their platform I also need to add governments (UK has launched an AppStore) Expected to get fast adoption – Scale is key to attract customers and providers. But not sure who has the best position to attract the needed scale.Important for NSP: Store is important, to pull the cloud value proposition together Expect a low margin business (IT distribution typically is)Use commercial brokerage platforms to launch quicklyNeed to differentiate through unique NSP assets: QoS, channels, Telco, Billing
- Notes on Slide Creation:This needs a review – the right graph does not contribute to the end-to-end story---------------------Professional Services: An important hurdle to private cloud computingCreating hurdles for Private CloudLarge part of TCO for Private CloudIncreases the cost difference of Private vs. PublicPS TransformationFocus on interconnection of pre-defined modules (no creation of modules)Less invasive interactions/