Next Generation Datacentre Cycle II Cloud findings

Quocirca carried out two cycles of research in February and November 2011. Part of the research looked at respondents percept ions around cloud computing.
April 2012

For those who thought that cloud computing was now reaching mainstream usage, this new global research across large organisations may serve to reset views. Although there is a degree of positive movement in end user perceptions around how cloud can serve their organisations, there is still a high degree of scepticism and misunderstanding around the use of cloud, especially as a mission critical platform.

Clive Longbottom Quocirca Ltd Tel : +44 118 948 3360 Email: Clive.Longbottom@Quocirca.com

Bob Tarzey Quocirca Ltd Tel: +44 1753 855794 Email: Bob.Tarzey@Quocirca.com

Copyright Quocirca 2012

Next Generation Datacentre Cycle II Cloud findings

Next Generation Datacentre Cycle II Cloud findings

Quocirca carried out two cycles of research in February and November 2011. Part of the research looked at respondents perceptions around cloud computing. Levels of understanding of cloud have risen but not by much The number of respondents implementing a cloud has almost doubled Security is still seen as a big issue but fewer see it as a show-stopper There is a move away from homogeneity at any level towards integrated clouds At a geographic level, the Nordics reign supreme. Russia languishes in a poor last place At a vertical level, telcos led the way. Financial services showed a marked aversion to cloud computing
Conclusions
Although there has been positive movement in perceptions and understanding around cloud computing, a lot more is needed before cloud can really claim to be mainstream technology. Those who have good knowledge of cloud are seeing great benefits; those who remain unconvinced may find themselves left behind by the cloud-savvy competition. While there has been an improvement in the levels of stated understanding around cloud computing, the move has not been as strong as may be expected. Confusion from both users and vendors still seems to be widespread around what cloud actually offers and what it actually is. However, as levels of understanding increase, perceived value goes up too. It is in a vendors best interest to ensure that a common and clear message around cloud computing is put forward in order to drive market adoption. Whereas, in the first cycle of the research, only 12% of respondents had already been involved with the implementation of a cloud platform, this had risen to 21% by the second cycle. The number of respondents stating that any type of cloud has no part in their organisations future IT plans has dropped from 18% to 12%, although those stating that their organisation has no plans for private cloud remains at over 20%. Security in the cloud is a show-stopper or top-of-mind for over one third of respondents. However, an increasing number either see it as only marginally different or no different at all to how they need to approach securing an in-house IT platform. An all-round approach to security of intellectual property allows information to be secure no matter where it is, at rest or in motion. This is a necessity for full cloud computing. Whereas the first research cycle showed that the majority of respondents were looking for homogeneity at either the hardware, operating system or application server level, the second cycle points towards a move to using discrete integration services between different styles of cloud even within a single data centre environment. This may be as organisations realise that different workloads require different capabilities from a platform. Across the board, the Nordic region scored highly in the views expressed about cloud computing, followed by the German-speaking region. The UK, France and Benelux all scored above average. The Middle East was low scoring, as was Ireland, Italy and Iberia. For Russia and the Middle East, the lack of in-geography native language cloud services will have affected the results, as would the lack of wide availability of native language solutions for Italy and Iberia. France and Germany both have emerging in-geography, native language cloud providers. The Nordics and much of Benelux are happy to work with English language cloud service providers. At every point, telcos led the way in their perception and knowledge of cloud computing unsurprising as, for many in this space, cloud computing is part of their service offering. Utilities and media also scored highly; retail was also above average. Below average were healthcare, public sector and financial services. Financial services scored lower and was well down in every category; this seems to point to a fear of cloud computing, rather than a rational worry over any specific concerns. With careful planning, cloud could transform the financial services market just as governments and shareholders are increasing their focus on the performance of companies in the sector.

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Background
Cloud computing defined for the purposes of this research and report as the provision of a highly virtualised technology platform where resources (server CPU capacity, storage volumes and network bandwidth) can be applied in a dynamic and elastic manner has been touted as the next major change in the way computing is provisioned. The majority of IT vendors now have cloud offerings, and the media is full of news items covering how cloud is taking over the world. Although Quocirca agrees that cloud is a potent force in the world of technology, and that it will be a main focus for organisations over the coming years, we also feel that there have been many problems in how cloud has been presented to end user organisations. For example, there are many definitions of what cloud computing covers, from private and public cloud, through the various as a service offerings (platform, infrastructure and software being the major ones, but with security, storage, business processing and many others being mentioned as well) to whether a hosted application or just the use of virtualisation in an external data centre constitutes cloud computing. Issues around data security and performance are also mentioned by end users a lot. Many technologists and business people remember the problems that there were with the application service provider (ASP) model in the late 1990s, and how poor business models and a lack of standardisation caused the vast majority of ASPs to fail. It is too easy to fall into a perception of cloud already being a mainstream technology, being piloted or used as a run time environment. However, any single piece of research carried out on cloud tends to be a snapshot of user perceptions at a single moment in time, and rapidly becomes dated. Therefore, tracking perception changes through time using an index approach gives a means of seeing how perceptions are moving and how fast. By running two cycles of research just 9 months apart, Quocirca has created a view of some high-level aspects of cloud computing that shows just how views are changing around the world. Note that, due to changing the core countries covered, the figures presented throughout this report will not 1 necessarily agree with those shown in the equivalent report covering the first cycle research . In this cycle of the research, there has been a small change in the countries researched. The US has been dropped from the research, while Russia and Ireland have been added. Therefore, the findings for the US have been dropped from the analysis of the first cycle of results, and the findings on Russia and Ireland have not been included in the main analysis of the second cycle so that any comparisons drawn are between like data sets. However, Russia and Ireland have been included in the regional and vertical graphs to provide an up-to-date view of cloud activity there.

Research methodology
The research was conducted using Quocircas standard methodology. A total of 919 interviews were carried out during February 2011 and 949 interviews during November 2011. All interviews were carried out via telephone to reduce the skew associated with open web-based research, where respondents tend to be from the two extremes of agreeing or disagreeing with the subject. Respondent profiles were chosen from a range of commercially available databases and were checked as part of the interview process to ensure that the respondent fell within the agreed profile. Where English is not spoken widely, interviews were carried out in native language to avoid any issues with misunderstanding the questions. All results were quality checked to assure that no skew had been introduced by specific interviewing agents, that no responses were predominantly completed along an average score, and that all responses made sense within the context of the individual and organisation concerned.

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Next Generation Datacentre Cycle II Cloud findings

The results of the research were analysed at an aggregate level and also by region, by vertical and by size of business. Cross correlations were also carried out to see how well responses tallied against each other. For this second cycle of research, the regions covered were as follows: UK 100 interviews Belgium/Netherlands (Benelux) 101 interviews (51/50) Germany/Switzerland (DCH) 98 interviews (68/30) France 100 interviews Spain/Portugal (Iberia) 100 interviews (70/30) Italy 100 interviews Saudi Arabia/UAE (Middle East) 100 interviews (50/50) Denmark/Finland/Norway/Sweden (Nordics) 100 interviews (25/25/25/25) Russia 100 interviews Ireland 50 interviews

Note that the USA was dropped from the second cycle of the research, and Russia and Ireland were added. In order to maintain fidelity in the index, top-level scores throughout this report will compare the 8 common regions where comparisons are drawn. The vertical mix for interviews was as follows: Financial Services 150 interviews Healthcare 137 interviews Media 147 interviews Public Sector 143 interviews Retail 143 interviews Telco 79 interviews Utilities 114 interviews Other 36 interviews

By size, the interviews were as follows: Tier 1 (>$1b revenues) 473 interviews Tier 2 ($100m - $1b revenues) 476 interviews

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Research findings
The first question asked was on a respondents overall understanding of cloud computing. Question: How well do you believe that you understand cloud computing?

Figure 1

There has been an overall improvement in respondents understanding of cloud. The proportion of those stating that they have little understanding has dropped from over 12% to 6%, whereas the number of respondents who have already implemented, or are in the process of implementing, a cloud platform has increased from 12% to over 20%. With one in five respondents already implementing cloud, it is looking like cloud is crossing over from early stage adoption into more mainstream adoption but also looks like it will be a skewed bell curve of implementations before cloud computing is seen to be widespread across different regions and verticals. By according scores to each statement from 0 for a dont know response to 10 for having implemented a cloud platform, an indicative score can be achieved across different aspects of the data. The average score is then taken as a datum, and the countries and verticals can then be compared against this datum. Those with above average scores will therefore have positive scores, and those below the average will have negative scores.

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In Figure 2, the results can be seen by region. Here, the Nordics lead the way, considerably ahead of the Benelux region and Germany/Switzerland. At the bottom lies Russia, well behind the Middle East.

Figure 2

At a vertical level, Figure 3 shows telcos being well ahead of media, with financial services lagging behind with the public sector.

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Next Generation Datacentre Cycle II Cloud findings

Figure 3

Next, respondents were asked for their overall perception of cloud as a technology Question: What is your overall view of cloud computing?

Figure 4

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Next Generation Datacentre Cycle II Cloud findings

Over the period of the two research cycles, there have been two main movements. At the lower end, whereas 17.5% of respondents in cycle I felt that cloud had no place in the future of their organisations IT platform, by cycle II this had fallen to 11.5%. At the top end, the proportion feeling that cloud will be a complete game changer for their organisation has risen from 14% to 22%. However, adding those who say that cloud has no part in their organisations future platform and those who see it as a passing fad, over a quarter of respondents see cloud as being relatively unimportant (and a further 19% do not exactly see it as a major change in how IT can help change the way their organisation works), it is apparent that cloud still has a way to go before it can be regarded as being seen as strategic to many organisations future.

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Next Generation Datacentre Cycle II Cloud findings

There is an unsurprising correlation between the levels of understanding of cloud and the respondents views of cloud (see Figure 5) those who have carried out deeper investigation of the approach have far more positive views than those who have just a passing knowledge of the idea. This is a very marked correlation those who have already implemented a cloud environment score at a level of 9.25 out of 10 on their views of the positive impact of cloud on their organisations, whereas those who are confused score 3.64, and those who have little understanding score 2.35. It is apparent that further education on what cloud is and what it can do for an organisation is required.

Figure 5

At a geographic level (see Figure 6), there is a pretty similar picture to that from the levels of understanding the Nordics lead, with Russia trailing. A similar pattern also emerges when it comes to the views of the vertical sectors (see Figure 7) telcos and media lead the way with financial services trailing. For telcos, cloud is an obvious choice there is a strong need to be able to share available resources to support their business model while driving down costs at many levels (for example, energy usage, real estate, support staff). A highly virtualised, flexible platform gives them the capability to embrace new business models around the provisioning of functions and services to their customers, often through selfservice portals. However, the above also applies to the majority of organisations going forward Quocirca just believes that telcos are ahead of the curve in their adoption of cloud. For financial services, the lack of interest is worrying. Cloud computing can offer a platform where resource sharing can provide better modelling of financial data, better analysis of available data, greater savings against the provisioning and maintenance of the overall platform and better customer satisfaction levels. Also worrying is the view from the public sector the need for shared services across multiple departments within the public sector should be driving interest in the area. However, it is likely that this will need to be driven from the centre as is seen in the UK with the advent of the G-Cloud.

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Next Generation Datacentre Cycle II Cloud findings

Figure 6

Figure 7

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Next Generation Datacentre Cycle II Cloud findings

The next question covered how respondents were looking at cloud adoption. Question: If you are going to adopt cloud, what best matches your plans? There has been little movement between the two cycles. Over 10% state that they do not know what their plans will be, although this has fallen from 13% in cycle I. 19% say that they have no plans to adopt cloud (down from 23%), with the majority looking at some form of private cloud model (49% against 43% in cycle I). 15% state that they will go for public clouds only (up from 14%), with 8% stating that they will go for a hybrid model (up from 7%). From Quocircas point of view, the likely long-term outcome will be hybrid cloud usage, where specific functions and resources are provided from within a private cloud, but mixed with certain functions and services from public clouds; for example, simple mapping of data may be best served by e.g. Google or Bing Maps. It does not make economic sense to try and provision and support such a function internally in a private cloud in the majority of cases.

Figure 8

At the geographic level (see Figure 9), we see a familiar pattern with the Nordics leading and Russia trailing. However, geographies such as Russia and the Middle East have less opportunity to be able to use public cloud services. Quocirca believes that as more in-geography cloud providers start up, this will change. At a vertical level (see Figure 10), the pattern is again familiar. Financial services and the public sectors worries about data security will undoubtedly have counted against any perceived benefits of public cloud usage. However, the careful anonymisation of data or the use of public data only (e.g. the use of post/zip code information rather than customer/citizen names and addresses) would still make usage of public cloud services feasible in many cases and so drive down costs while providing the required resources to deal with workload spikes.

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Next Generation Datacentre Cycle II Cloud findings

Figure 9

Figure 10

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Next Generation Datacentre Cycle II Cloud findings

Next, respondents were asked for their views on cloud security. Question: What are your overall views on cloud security?

Figure 11

Again, at a first look between the two cycles of research, there appears to have not been great movement. However, what movement there is is in the right direction fewer respondents are seeing security as a showstopper, while more are seeing cloud security as being relatively easy to deal with. In cycle I, 42% stated that security would hold them back from adoption or would be top of mind in their decision making criteria. In cycle II, this had dropped to 36%. Those seeing security as being relatively easy to deal with or no different to other IT security needs had increased from 27% to 34%. There is a strong correlation between the levels of cloud understanding and views of cloud security those who have the lowest stated understanding of cloud have the biggest worries about cloud security, while those who have the greatest understanding have the least worries. Quocircas recommendation is to apply security to the information at a highly granular level, using data leak prevention (DLP) tools, digital rights management (DRM) and so on to protect regulated data and intellectual property no matter where it is at any one moment at rest or on the move. This is the only way to ensure control of information for governance, risk and compliance (GRC) purposes regardless of the deployment platform. At a geographic level (see Figure 12), again, there is a pretty similar pattern to the other findings. However, the DCH region is in second place, reflecting its high levels of cloud understanding. At a vertical level (see Figure 13), telcos are well out in the lead again, with financial services well behind. It has to be borne in mind that telcos even those that have moved into the full service provider model are not dealing with masses of highly sensitive information. What is sensitive is the billing information held in their systems, which can be secured relatively easily. For financial services organisations, much of the information they are dealing with is not only security sensitive, but it also has to be made available over the internet (account access and so on). Therefore, it should be no surprise that financial services do have more worries on overall security than a telco would have.

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Next Generation Datacentre Cycle II Cloud findings

Figure 12

Figure 13

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Next Generation Datacentre Cycle II Cloud findings

Respondents were asked for their views on existing cloud platforms. Question: What statement best matches your view on available public cloud platforms? (e.g. Microsoft Azure, Google App Engine, Amazon EC2)?

Figure 14

The view is a mix of people seeing cloud computing as too new in the market for any levels of maturity to be apparent (21%, down from 26%), those seeing a good variation of platforms to choose from (28%, up from 24%) and those who believe that platforms from e.g. Oracle or IBM will emerge and take market share (27%, up from 25%). Surprisingly, few respondents see the current cloud platform market as leading to lock-in on a proprietary platform (7%, down from 10%). Those expecting greater levels of cloud interoperability have grown from 10% to 13%. At a geographic level (see Figure 15), the Nordics and the DCH region lead again, with Russia trailing behind Italy. At the vertical level (see Figure 16), telcos are ahead again, with financial services trailing.

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Next Generation Datacentre Cycle II Cloud findings

Figure 15

Figure 16

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Next Generation Datacentre Cycle II Cloud findings

Lastly, respondents were asked how they would approach building a cloud for their own organisation. Question: What would be your preferred approach to building a private cloud? The levels of those responding that they would not build a cloud remain pretty much the same as before. The number responding that they did not know is relatively high but has dropped from 20% to 13%. For those actually building a cloud infrastructure, the biggest growth has been in those looking to build a single cloud on heterogeneous hardware and operating systems/application servers pulled together via integration. Here, 20% are taking this route, as opposed to 18% in cycle I. The number of respondents looking for homogeneity at the application server level has dropped slightly but remains the preferred overall mechanism. Those looking for a completely homogeneous cloud based on similar hardware, operating systems and application servers has also dropped. This fall in the search for homogeneity may be just based on the desire to reuse existing hardware, operating systems and application servers, or it could be allied to the belief shown in the previous findings that cloud is not proprietary, that it should not lead to lock-in and that standards will evolve that will enable clouds to interoperate in a relatively seamless manner. By taking a heterogeneous approach to cloud, dissimilar workloads can use a mix of different resource pools in order to best serve the workload some see this as the Holy Grail for a cloud platform.

Figure 17

At a geographic level (see Figure 18), the Nordics are well out front again, with Russia trailing. At a vertical level (see Figure 19), telco is well out front again homogeneity is common for many telcos, where workloads are pretty definable and need more of a scale out approach to management. Financial services trail in last again.

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Next Generation Datacentre Cycle II Cloud findings

Figure 18

Figure 19

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Conclusions
The research shows that movement on the understanding of what cloud is and what it can do for an organisation is slow. It is also highly dependent on both geography and vertical, with similar patterns being seen across the research in both areas. This is to be expected, as geographies such as Russia and the Middle East do not yet have much in the way of in-geography, native language services that appeal to organisations. It is apparent that vendors and commentators have not served the markets well, with levels of understanding remaining relatively low, and with the perceptions of those with the least levels of cloud understanding having the lowest perceptions of the promise of cloud and the most worries around areas of concern. With a sharp correlation between those who have carried out in-depth research on cloud or have implemented a cloud platform and the perception of benefits, it would serve vendors well to ensure that simple and effective messaging around cloud is put in place. Once there is greater acceptance, then the vendors can argue over which of them can implement the best instantiation of a particular cloud platform. Financial services is one of the most regulated verticals and, therefore, Quocirca is not overly surprised at the levels of suspicion felt here around how cloud can support them. However, other research carried out by Quocirca has consistently shown how outside of mainframe computing financial services have very low utilisation of technical resources. With rising energy costs and an increased focus on how financial services organisations perform (as shareholders believe that the organisations are under-performing and governments view the scale of profits as being excessive against the amount of money having been pumped into the markets by themselves), it should be apparent that considerable savings can be made through adoption of cloud carefully and with suitable knowledge of how cloud security can work. For the public sector, cloud can really help through the provision of shared services in areas such as payroll, HR, purchasing and citizen services. However, with departmental budgets having been slashed, it is now down to central governments to drive cloud into their plans to gain the cost savings, increased citizen engagement and service response required. Quocirca is a strong believer in cloud, and sees the future as a mix of existing physical servers deployed in-house alongside cloud platforms in private data centres, co-location facilities and with functions being served from public clouds. Quocirca therefore recommends readers to ensure that any decisions that are made over the coming months do not work against such an outcome. Any changes to existing platforms should look at how they will fit into increasing use of virtualisation and cloud platforms within the data centre, and any required new functionality should not automatically be viewed as requiring the installation of new hardware, operating systems and applications inside the data centres under direct control of the organisation, but should be evaluated as to whether the functionality can best be sourced and served from within a public cloud service. With the right approach, cloud will be a game changer. If cloud is adopted wrongly, then it could be a major constraint on the organisation. Therefore, it is necessary for IT influencers to ensure that they have a good working knowledge of what cloud computing really is, what it means at the technology level, and the value that it offers to the business. Only by fully understanding the promise of the platform can the correct pure-play or hybrid model be chosen.

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About Oracle
Oracle provides the worlds most complete, open, and integrated business software and hardware systems, with more than 370,000 customersincluding 100 of the Fortune 100representing a variety of sizes and industries in more than 145 countries around the globe. Oracle's product strategy provides flexibility and choice to our customers across their IT infrastructure. Now, with Sun server, storage, operating system, and virtualisation technology, Oracle is the only vendor able to offer a complete technology stack in which every layer is integrated to work together as a single system. In addition, Oracle's open architecture and multiple operating system options gives our customers unmatched benefits from industry-leading products, including excellent system availability, scalability, energy efficiency, powerful performance, and low total cost of ownership.

REPORT NOTE: This report has been written independently by Quocirca Ltd to provide an overview of the issues facing organisations seeking to maximise the effectiveness of todays dynamic workforce. The report draws on Quocircas extensive knowledge of the technology and business arenas, and provides advice on the approach that organisations should take to create a more effective and efficient environment for future growth.

About Quocirca
Quocirca is a primary research and analysis company specialising in the business impact of information technology and communications (ITC). With world-wide, native language reach, Quocirca provides in-depth insights into the views of buyers and influencers in large, mid-sized and small organisations. Its analyst team is made up of real-world practitioners with first-hand experience of ITC delivery who continuously research and track the industry and its real usage in the markets. Through researching perceptions, Quocirca uncovers the real hurdles to technology adoption the personal and political aspects of an organisations environment and the pressures of the need for demonstrable business value in any implementation. This capability to uncover and report back on the end-user perceptions in the market enables Quocirca to provide advice on the realities of technology adoption, not the promises. Quocirca research is always pragmatic, business orientated and conducted in the context of the bigger picture. ITC has the ability to transform businesses and the processes that drive them, but often fails to do so. Quocircas mission is to help organisations improve their success rate in process enablement through better levels of understanding and the adoption of the correct technologies at the correct time.

Quocirca has a pro-active primary research programme, regularly surveying users, purchasers and resellers of ITC products and services on emerging, evolving and maturing technologies. Over time, Quocirca has built a picture of long term investment trends, providing invaluable information for the whole of the ITC community. Quocirca works with global and local providers of ITC products and services to help them deliver on the promise that ITC holds for business. Quocircas clients include Oracle, Microsoft, IBM, O2, T-Mobile, HP, Xerox, EMC, Symantec and Cisco, along with other large and medium-sized vendors, service providers and more specialist firms. Details of Quocircas work and the services it offers can be found at http://www.quocirca.com Disclaimer: This report has been written independently by Quocirca Ltd. During the preparation of this report, Quocirca has used a number of sources for the information and views provided. Although Quocirca has attempted wherever possible to validate the information received, Quocirca cannot be held responsible for any errors in information received in this manner. Although Quocirca has taken what steps it can to ensure that the information provided in this report is true and reflects real market conditions, Quocirca cannot take any responsibility for the ultimate reliability of the details presented. Therefore, Quocirca expressly disclaims all warranties and claims as to the validity of the data presented here, including any and all consequential losses incurred by any organisation or individual taking any action based on such data and advice. All brand and product names are recognised and acknowledged as trademarks or service marks of their respective holders.