Free: Hybrid Cloud Clipper 2019

HYBRID CLOUD

© 2019

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INSTRUCTIONS FOR USING THE CLIPPER RESEARCH

1. The objective of this Clipper Research document is to familiarize our Advisors (and intended readers) with the market landscape on topics which are gaining traction / interest within our clients and/or the market in general

2. This Clipper document is not a WGroup IP or Point of View – all the contents is sourced from secondary sources in the public domain and is referenced adequately. Therefore, it is not to be distributed or marketed broadly. However, WGroup advisors can exercise discretion in sharing the document, or parts of it, along with clear source references in 101 client settings

3. This Clipper document is not to be referenced for customized solution or best- practices. It is only designed to orient thinking on these topics and is not a substitute for having experienced resources wrestle with client specificities in engagements

4. Feedback, positive or negative, from the reader with regards to the content, layout, format etc. is greatly appreciated and will help hone subsequent research practice

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CLIPPER RESEARCH RELEASE SCHEDULE FOR 2019

Topics

Release Date

Topics

Release Date

January 18

SD-WAN

July 12

Digital Twins

Public Cloud

February 1

Blockchain

July 26

Clipper research will be released on a minimum of two Fridays a month

Hybrid Cloud

February 15

Quantum Computing

August 9

Cloud Governance

February 22

Augmented & Virtual Reality

August 23

BPO Market Trends (F&A and Procurement)

March 8

Internet of Things

September 6

Automation and A.I.

March 22

5G

September 20

Agile and DevOps

April 5

Edge Computing

October 4

SaaS ERP

April 19

Data Regulation and Privacy

October 18

Org Design and Models (Plan Build Run)

Natural Language

November 1

May 3

Biometrics

November 15

Applications Database (Back office + Verticals)

May 17

Customer Experience

November 29

Enterprise Architecture

May 31

Unified Communications

June 14

Digital Transformation

June 28

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TABLE OF CONTENTS

1

Introduction to Hybrid Cloud • Hybrid Cloud 101 • Industry Applications and Challenges • Advantages and Disadvantages • Key Considerations Before Adopting Hybrid Cloud • Hybrid Cloud vs. On-Premises Cost Comparison

2

Market Trends •

Overview: Present and Future

Supply-side Trends

Buy-side Trends

3 Managing Hybrid Cloud Implementation & Best Practices • Key Aspects to Consider • Implementation Guide • Summary

4

Best Cloud Accounting Solutions

5

Case Studies of Hybrid Cloud Rollouts

6

Webinars

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Introduction to Hybrid Cloud

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HYBRID CLOUD IN A NUTSHELL

Hybrid Cloud Explained

Characteristics of a Hybrid Cloud

• Hybrid Cloud 101: Hybrid cloud is a cloud service utilizing a combination of public cloud, private cloud or dedicated hosting to perform distinct functions in an organization. In the last clipper, we explained that public cloud is a shared resource; private cloud, in turn, is used exclusively by one organization. Private cloud can be physically located at an organization’s on-site datacenter, or it can be hosted by a third-party service provider. The infrastructure is always maintained on a private network, and it is dedicated solely to the organization. • In a hybrid cloud, data and applications can move between private and public clouds for greater flexibility and more deployment options. For instance, organizations can use public cloud for high-volume, lower- security needs such as web-based email; private cloud (or other on- premise infrastructure) for sensitive, business-critical operations such as financial reporting. Cloud-bursting is also an option for hybrid cloud adopters. This is when a function runs in the private cloud until there is a demand spike, at which point the organization can “burst through” to the public cloud to tap into additional computing resources. • Today, organizations build virtual private clouds for numerous reasons; to handle dynamic scaling requirements, to run workloads at lower costs, and to run workloads for limited time periods. The resources operate in public cloud but linked back to resources in the organization’s private cloud channel through VPN or other private connections. In essence, workloads ran where it made the most sense, but with visibility back to their private clouds. The user leverages resources whichever way they see fit, and use it orchestrate and provide services to their business based on a multitude of criteria (cost, location, performance, or availability).

A practical hybrid cloud solution should have five general characteristics :

1. Legacy Application Architectures: Hybrid cloud architecture should enable a business to continue leveraging legacy application architecture principles and preserve their previous investments. 2. Large Scale Cloud Consumption: Hybrid cloud provides efficiency gains for large scale cloud customers. Suppose if a business is running large scale applications in a public cloud without any dedicated resources, there is a point in scale (it could range from a few large cloud servers to many small cloud servers) where the cost of running the same amount of compute resources on a dedicated private cloud becomes more cost effective than public cloud. 3. Performance Optimization: Hybrid cloud solutions have the flexibility to design its resource requirements to match the application’s specific needs, be it high vCPU to small memory footprints or vice versa. 4. Security Requirements: When a multi-tenant solution is not acceptable, due to the data customers manage or the clientele they serve, hybrid cloud provides the ability to segregate their most sensitive workloads onto a dedicated environment, and also allow the monitoring of traffic as it traverses the dedicated environment to a public cloud environment, if any. 5. Corporate Policy, Compliance, and SLAs: Hybrid cloud architecture plays a major role in helping to bridge the gap in cloud adoption for large enterprises that are still refining their cloud policy. Many organization meet their needs by leveraging traditional dedicated network architectures coupled with highly available firewalls, load balancers, and security appliances tied directly into public cloud resources.

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WHY HYBRID CLOUD MATTERS

• Hybrid cloud has the opportunity to provide the best of both public and private cloud while eliminating or mitigating their disadvantages. A hybrid cloud architecture can offer a high level of security, control, performance, and compliance while maintaining flexibility. Businesses deploying new workloads to the cloud most commonly list ease of use, management, and performance among their top decision criteria. The use of a turnkey hybrid cloud provider can overcome challenges with internal expertise and the restrictions of a single cloud solution. 1. Enables a highly cost-effective, rapidly responsive and elastic IT, better aligned with the business needs in order to support two speed IT: A hybrid cloud can be designed for dynamic consumption, interconnection, orchestration, and control of all types of cloud services. Hybrid cloud enables a more responsive and elastic IT that is able to quickly respond to the demands and needs of both steady speed systems of record and fast speed systems of engagement. Workloads are enabled through programmable IT through open infrastructure APIs and composable infrastructure services. 2. Provides a portfolio of business and IT services that leverage the best capabilities of cloud service providers, enabling flexibility in what can be built and where it can be deployed: Using cloud services provides new tools and data for innovation. Businesses no longer need to be constrained by what they have available on-premises. In essence, the catalog of services that they have at their disposal increases dramatically. 3. Enables the business to innovate faster while leveraging existing systems and capabilities: Simply put, it comes down to time and money. The ability to compose services from both on-premise and off-premise (i.e., hybrid) is a key enabler to increase speed to market and to reduce costs. • Three key value points of hybrid cloud computing are:

Table Comparison

Public Cloud

Private Cloud

Hybrid Cloud

Criterion

Importance of Cost Advantages Beyond Year 2

Low

High

High

Importance of Security and Control Over Data

Low

High

High

Importance of Having a Broad Set of Services

High

Low

High

Divestiture of Data Center Operations as an Objective

Usage Volume Over Next 5 Years

Varies

Predictable Predictable

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COMMON INDUSTRY APPLICATIONS OF HYBRID CLOUD

Disaster Recovery: Setting up an independent environment for disaster recovery or business continuity purposes can be a very costly proposition – especially if the solution is exclusively on-premise. Using a hybrid cloud setup, where the on-premises datacenter fails over to a public cloud service in the case of an emergency, is much more affordable. Plus, it can give enterprises access to IT resources in a geographic location far enough away from their primary site that they are unlikely to be affected by the same disaster events.

Regulatory Requirements for Data Archiving: Many organizations are adopting cloud services to archive historical data, as it is more cost- efficient rather than to maintain its own storage, especially when the information is not leveraged for big data analytics and is solely being archived for storage purposes. In other cases, security or governance issues force organizations into using a private cloud on top of an established public cloud platform for storing sensitive data.

Cloud-bursting: Some firms run their applications on a private cloud until demand for resources reaches a certain level, at which point the load would transition over to a public cloud service. For cloud-bursting to be practical, organizations need secure, low-latency network connections between private and public clouds. Housing a private cloud in close physical proximity to a public cloud helps reduce latency issues.

DevOps Application Development: Organizations that have embraced DevOps and Agile methodologies are looking for ways to speed up the development process for their IT teams. Development generally starts from the public cloud, but once the applications are ready to deploy, many organizations choose to move them back to an on-premises data center, typically for data governance or cost reasons. The hybrid cloud model makes it possible for the organization to meet its needs for speed and flexibility in development, as well as its needs for stability, easy management, security, and low costs in production.

Specialty Hardware: In some cases, organizations can't get the hardware or infrastructure that a particular application needs from a public cloud provider. For example, if the workload needs a virtual machine (VM) with 24GB of RAM and just two CPUs, a public cloud provider will most likely offer the biggest instance type it has available, which may not be cost effective for the organization.

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COMMON CHALLENGES FACED WHEN ADOPTING HYBRID CLOUD

Skills and Expertise: Having people with the skills to architect, implement, and manage cloud systems are in high demand and distinct from the existing IT operation teams. Keeping up with the pace from leading cloud vendors costs time and money. This challenge is multiplied when enterprises adopt multiple cloud solutions, not to mention the integration of big data and IoT into the cloud platform. All of these are highly specialized and require a new skillset to take full advantage of cloud.

Workload Migration and Integration: Workloads come in all shapes and sizes. Legacy and in-house applications which aren’t built to run on cloud platforms are better suited in traditional datacenters or in private clouds; whereas R&D and prototype applications are ideal for the public cloud, since these workloads can be spun up and torn down quickly as required. In addition, integration into an on-premise infrastructure presents compatibility challenges. Understanding the patterns and tools required to move workloads is demanding, even to the most seasoned cloud technicians. Deciding which application is suitable for which platform is a constant challenge for all businesses during the migration period.

Security and Compliance: Data and systems will need to be compliant with industry-specific regulations, government policies, and internal protocols no matter where they operate; the controls, governance, and measures that needs to be in place is often overlooked. Compliance cannot be seen as a one-off activity but organizations need to continuously ensure its integrity.

Network Performance: With more data and applications than ever moving to the cloud, organizations must continue to maintain the network performance needed to run these intensive systems on top of a high CX score. Selecting the right solution that is able to accommodate the organization’s business-fit, API, and cloud policy is never an easy task.

Data Fragmentation and Geography: Different workloads sometimes exist in different clouds. Keeping track of the data and adhering to data sovereignty rules is a complex affair, and may start to erode the advantage of cloud as well as opening up new risks for the business. This challenge of fragmentation will only grow with time as data volume grows exponentially each year.

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ADVANTAGES AND DISADVANTAGES OF HYBRID CLOUD

Advantages

Disadvantages

1. Integration: Integration contains 2 distinct disadvantages: risk and additional costs. Firstly, compatibility across infrastructure can prove to be a major risk when building a hybrid cloud; with dual levels of infrastructure, a private cloud that the company controls, and a public one that the company doesn’t, chances are that they will be running different stacks. Additional expertise might be required to ensure a smooth migration to a hybrid cloud solution, thus escalating deployment timeframe. In addition, escalating costs in network connectivity, application modification, monitoring and synchronization tools, as well as in-house training can ultimately cause hybrid cloud integration to be incomplete indefinitely, and it is further complicated by the growing demand for integration with multiple clouds to offer a greater range of public cloud options and eliminate public cloud vendor lock-in. 2. Additional Security Compliance: Hybrid clouds must be monitored for security issues, such as uniform user authentication and access (identity management), and antimalware postures. In a hybrid environment, however, there are lesser understood vulnerabilities to consider. For example, some API traffic exchanges between private and public clouds might not be encrypted by default, and this requires an additional investment in encryption.

1. Network Optimization: Hybrid cloud solution allows organizations to shift heavy lifting of the network off-premises and—in the process—improves the availability, scalability and reliability of the connection by leveraging the provider’s network investment. 2. Business Agility: By utilizing a hybrid cloud solution in times of heavy usage, the organization can experience fewer outages and less downtime. For developing and testing new applications, hybrid cloud also offers an attractive hosting option, buying time until a decision is eventually made as to where to host it permanently. 3. Development & Testing: Development and testing workloads can potentially be highly elastic, and the number of reiterations varies widely based on the development phase. Placing these workloads on the hosted cloud allows organizations to scale capacity to match demand and pay only for what is used. 4. Planned Demand Hike: When demand can be estimated in advance—such as new product launches, holidays, peak season, and so forth—organizations have time to plan and execute, and most applications can be scaled. Similar to developing and testing, scaling the workload to a hosted cloud enables tailoring the hardware to the problem being solved and paying for what is needed when it’s used, turning a large capex into a smaller opex.

WHICH ORGANIZATIONS SHOULD BE CONSIDERING HYBRID CLOUD? • For organizations who have invested capital into IT infrastructure, the desire to maximize this investment will no doubt be a priority. In the case of hybrid cloud, the general approach is to keep some key services running locally, and move e-mail to a public platform such as Microsoft Office 365. Organizations should also start using a private platform for testing and development of new services, which gives greater flexibility and reduces the need for further capital investment. This approach is increasingly common and provides a steady transition of IT services into cloud computing. • For organizations still unsure of its path, they should take their time to select a few applications and workloads to get its feet wet in hybrid cloud. Once the process is familiarized, organizations can learn from their experiences and migrate additional workloads as they feel more comfortable and confident.

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KEY CONSIDERATIONS BEFORE ADOPTING HYBRID CLOUD

Organizational Readiness

Ensure that relevant stakeholders within the organization understand the implications of the cloud model for their functions and have plans in place to push through the relevant cultural, technical and procedural change.

Organizations will likely implement an ever increasing number of cloud services, across a variety of service and deployment models; they should have a clear and consistent approach to the management of cloud services. For example, some of Service Integration and Application Management (SIAM) capability to enforce commonality and standardisation where possible.

Cohesive and Consistent Approach

Businesses should clarify if its application can scale accordingly with its hybrid cloud solution, and can the associated workloads be shifted to providers with the lowest spot costs, and whether a proper disaster recovery plan is in place. They should also identify the types of data that may be required to be stored or processed, and note any regulatory or legislative requirements on the data or the service concerned.

Data, Service, and Application Evaluation

Identify the security controls that the business needs to be able to protect the confidentiality, integrity, and availability of the data and services to be hosted in the cloud; specify which of those controls are mandatory and which may be waived as part of an informed risk balance case. This security wrap must be informed by a comprehensive risk assessment of the services and data in scope.

Security Implementation

The defined level of services should be specific and measurable in each area (clear SLAs, mean time between failures and repairs, costs). This allows the quality of service (QoS) to be benchmarked and, if stipulated by the agreement, rewarded or penalized accordingly. For example, organizations should map the required security controls on to the proposed cloud services and identify where there are gaps in capability – or where the provider may offer services that allow an alternative approach to securing the data or service to be delivered.

Cloud Service Evaluation

Identify where responsibility sits for delivery of the various capabilities (technology and process) – whether it is for the provider or the data owner. It is a common to find gaps in delivery responsibilities during implementation, and it is usually far more cost-effective to document hand-over points before providers offer a standardized service.

Document Responsibility

Conduct due diligence activities with respect to the service provider, and review the standard terms and conditions offered by the cloud provider and consider any additional clauses that may be available. Issues to consider include regulatory and legislative compliance, data location and jurisdiction, and exit.

Service Provider Evaluation

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CLOUD ECONOMICS

Intel’s comparison model was evaluated in a holistic way. IT finance, engineering, and cloud project managers joined forces to develop a model that looked at business needs (capacity), the flexibility benefits of a hybrid solution, and the cost of outsourcing to meet projected virtual machine demand over three years. This model accounts for a variety of valuation factors, including business velocity requirements, cloud interoperability, automation, monitoring, and security. According to Intel, while the model to the left is a reasonable assessment of cloud computing cost; in reality, hybrid cloud cost savings may vary, depending on the rate of cost-efficiency improvements in both public and private cloud offerings. In fact, as cloud hosting costs are decreasing rapidly, coupled with training efficiencies and open source solutions, the actual savings could even be higher.

Hybrid Cloud Cost Performance

The table below shows IDC’s research on business improvements after 3 years of employing a turnkey hybrid cloud solution.

Business Metric

High Performers Low Performers

• The above diagram was made by Intel to illustrate a hybrid cloud solution’s cost performance. The orange line represents the cumulative investment that would be required for a 100% outsourced cloud solution. The black line represents the growth in demand for VMs. The green and blue bars represent a hybrid cloud solution. Therefore, the gap between the 100% outsourced line (orange) and the top of the hybrid bars represents the potential cost savings associated with a hybrid model.

Revenue

37.9%

7.9%

Profit

41.5%

7.8%

Customer Satisfaction

38.3%

8.3%

Revenue from New Products

42.5%

8.2%

Customer Acquisition

36.1%

8.2%

Source: Intel, Cloud Computing Cost: Saving with a Hybrid Model

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Market Trends

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HYBRID CLOUD: WORLDWIDE MARKET OVERVIEW

MARKET FORECAST AND ANALYSIS

• North America is expected to hold the largest share of the hybrid cloud market from 2018 to 2023, due to the increased cloud enablement activities and growing trends in the cloud marketplace. Regulations, such as Health Insurance Portability and Accountability Act (HIPAA), Payment Card Industry Data Security Standard (PCI DSS), and Sarbanes–Oxley Act (SOX), govern the North American industrial environment. These factors would eventually propel the demand for hybrid cloud, due to advantages, such as cloud governance, security, and compliance. The US and Canada are expected to contribute significantly to the growth of the hybrid cloud market in North America. APAC is expected to offer potential growth opportunities to the hybrid cloud market during the forecast period. • The major factors that are expected to drive the growth of the hybrid cloud market include the growing demand from organizations for agile, scalable, and cost-efficient computing; rising need of standards for interoperability between cloud services and existing systems; increasing demand to avoid vendor lock-in; and growing number of digital services and their applications. The growing need for more computational power and rapidly increasing adoption rate of the hybrid cloud are expected to open new avenues for the market.

Worldwide Hybrid Cloud Revenue Forecast (Billions of U.S. Dollars)

Base Year: 2018, CAGR: 17.0% US$ billions

120

100

80

60

97.7

83.5

40

71.4

61

52.2

44.6

20

0

2018 2019 2020 2021 2022 2023

Source: Markets and Markets, 2018

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CLOUD COMPUTING: MARKET DRIVERS FOR ADOPTION

MARKET FORECAST AND ANALYSIS

• RightScale’s cloud survey of 997 IT leaders found that around 81% of its respondents adopt a multi-cloud strategy. However, enterprises with a hybrid strategy (combining public and private clouds) fell from 58% in 2017 to 51% in 2018, while organizations with a strategy of multiple public clouds or multiple private clouds grew slightly. • On average, organizations leverage almost 5 clouds in their IT spend. Respondents typically run applications in 3.1 clouds, and experiment with 1.7 clouds for a total of 4.8 clouds. Among those using public cloud solutions, the average is approximately 2.7. Among those using private cloud solutions, the average is approximately 3.0. • Among organizations, the central IT team is typically tasked with assembling a hybrid portfolio of “supported” clouds. This year, many more organizations see public cloud as their top priority, up from 29% in 2017 to 38% in 2018. Hybrid cloud still leads the to-do list, but has decreased as a top priority, declining from 50% in 2017 to 45% in 2018.

Hybrid Cloud, 51%

5%

5%

81%

Multiple Private, 10% Multiple Public, 21%

9%

Single Public Single Private No Plans

Multi-Cloud

Source: RightScale, State of the Cloud Report , 2018

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MARKET OVERVIEW: FUTURE INDUSTRY TRENDS

For IoT to deliver real business value (e.g., improve customer experience), organizations understand that they have to stop thinking about it as simply a collection of connected sensors and devices. Market leaders focused on business outcomes from the start of the project have begun to see real value as a result of their efforts, and other players are catching up.

Customer Experience (CX) and IoT

As more businesses shift to a ‘digital front end’, revenue-generating digital assets demand fundamental changes in organizational operating models. Running a digital business with platform-based services differs from traditional operating models. Businesses that operate platforms need to make significant upfront investments to build their platforms – before they receive any revenue. In the platform economy, sales cycles can be longer and generate less upfront fees. Organizations therefore need to think about how they manage cash flow fluctuations and how they remunerate their sales force.

Understanding of the Platform Economy

Moving forward, more vertical cloud solutions will be put on the market. Smaller cloud providers are looking for ways to differentiate from the hyperscalers. They’ve realized that they need to find new ways to drive scale and grow market share via a deep vertical focus. In the year ahead, it is expected to see smaller players investing significantly in industry-specific compliance regimes for different verticals to build credibility.

Verticalized Hybrid Cloud Solutions

Organisations that appoint service providers to take on the management of their hybrid, multiple, dispersed, and potentially unrelated IT platforms, will expect them to enable a security posture that spans the entire platform. Service providers are expected to offer robust security measures that cover on-premise and cloud-based assets, the network, and applications ─ all built into an intelligent security core.

Higher Expectation for CSPs

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SUPPLY-SIDE TRENDS: VENDOR LANDSCAPE

PROS 1. Implementation and management support for clients second-to-none. 2. Robust updates maintain its market leader status; almost all software vendors are present on AWS. 3. Enterprise-ready features and compliant solutions. CONS 1. Extensive features may require substantial expertise to operate. 2. Enterprise-level support is a separate purchase; pricier.

Magic Quadrant on Vendor Performance

PROS 1. Cost-effective and flexible pricing. 2. Strength in PaaS; especially easy to integrate for firms operating existing Microsoft products.

CONS 1. Does not have best-in-class reliability. Outages have led to disaster recovery recommendations at the outset.

PROS 1. Big data and analytics application development able to leverage on Google’s core strength. 2. Open-source ecosystems with emphasis on mobility.

CONS 1. Rigid in pricing and negotiations. 2. Inferior support compared to AWS and Microsoft.

Full Report: Gartner Magic Quadrant for Cloud Infrastructure, April 2018

Click Here

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SUPPLY-SIDE TRENDS: PLATFORM MARKET SHARE

MARKET FORECAST AND ANALYSIS

• According to IDC’s latest forecast (2018), total spending on IT infrastructure products (server, enterprise storage, and Ethernet switches) for deployment in cloud environments is expected to total $46.5 billion in 2017 with year-over-year growth of 20.9%. Public cloud datacenters will account for the majority of this spending at 65.3%, growing at the fastest annual rate of 26.2%. Off-premises private cloud environments will represent 13% of cloud IT infrastructure spending, growing at 12.7% year over year. On-premises private clouds will account for 62.6% of spending on private cloud IT infrastructure and will grow 11.5% year over year in 2017. • Worldwide spending on traditional, non-cloud, IT infrastructure is expected to decline by 2.6% in 2017 but nevertheless will account for the majority, 57.2%, of total end user spending on IT infrastructure products across the three product segments, down from 62.4% in 2016. This represents a faster share loss than in the previous three years. The growing share of cloud environments in overall spending on IT infrastructure is common across all regions. • In cloud IT environments, spending in all three technology segments is forecast to grow by double-digits in 2017. Ethernet switches and compute platforms will be the fastest growing at 22.2% and 22.1%, respectively, while spending on storage platforms will grow 19.2%. Investments in all three technologies will increase across all cloud deployment models – public cloud, private cloud off-premises, and private cloud on-premises.

Current and Planned Usage of Cloud vs. Traditional On-Premise

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

2015 2016 2017 2018 2019 2020 2021

Traditional Datacenter

Private Cloud Public Cloud

Source: IDC, 2018

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SUPPLY-SIDE TRENDS: On-Premises Cloud Infrastructure

One of the essential benefits of cloud services is that vendors typically house all of the hardware in their own datacenters. Cloud services are provided over the internet, and clients typically do not need to have any physical hardware on-site, or load software onto on-premises workstations. Instead, they subscribe to cloud services through the internet, and all of the server activity takes place on the vendor's site. This leads to a number of essential cloud benefits like scalability, on-demand services and elasticity. However, in some cases, there may be situations where clients subscribing to cloud services may keep some hardware or data on-site. The part of the infrastructure that is housed at the client’s business would be called on-premises cloud infrastructure. For example, certain types of more frequently accessed data could reside inside the client’s network, although major services and data sets are provisioned in the cloud. There are a large number of ways that on-premises cloud infrastructure could work, but on the whole, this is an unusual type of setup, because of the attractive benefits of sourcing services from off-site vendors.

On-premises cloud infrastructure is a term related to cloud computing, which seems to contradict a central principle of cloud services, namely, that cloud services are typically provided off-site as a fundamental part of cloud technology design. On-premises cloud infrastructure would be hardware that is related to cloud services or activities, that is nonetheless located on-site at the client’s physical business location.

Source: Technopedia, On-Premises Cloud Infrastructure

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SUPPLY-SIDE TRENDS: INTELLIGENT CLOUD

The general idea of intelligent cloud is that the cloud technologies and applications on the market today will eventually be able to think smarter and have more information. For example, a cloud service that now exists as a simple delivery device could be outfitted with recommendation engines, web crawlers, and other elements to give it more of an A.I. design. Another aspect of intelligence in the cloud has to do with multi-device functionality. In this sense, some intelligent cloud applications are like the “watch it anywhere” technology of big telecom companies. That is, multiple devices will share data in real time, and all of it will be funnelled into the cloud, where smart management brings that cloud intelligence to the consumer. The term “intelligent cloud” is often paired with the terms like “intelligent edge” – this combination of terms is the idea that data can sit on the edge of a device oriented toward the cloud, and that by bouncing it back and forth between the device and the cloud, new intelligence models emerge. Look for the intelligent cloud to progress into a broader context as individual companies continue to define their services in relation to it.

Intelligent Cloud refers to new cloud applications built with artificial intelligence or enhanced functionality in mind.

Businesses across all industries want more from their cloud than what they are getting today. Organizations want the ability to gain greater insights with prescriptive and cognitive analytics. In short, everyone wants to get to the orchestration layer of the maturity model, but many are stuck at a lower station, using just descriptive data to plan future strategies. The future of enterprise cloud computing is expected to deliver prescriptive and cognitive intelligence.

Source: Technopedia, Intelligent Cloud

PAGE 20

SUPPLY-SIDE TRENDS: NETWORK ATTACHED STORAGE

Organizations looking for the best, reliable data storage methods, which can be managed and controlled with their established network systems, often choose network attached storage. NAS allows organizations and home computer networks to store and retrieve data in bulk amounts for an affordable price. The following three components play an important role in NAS: 1. NAS Protocol: NAS severs are fully supported by the network file system and common interface file system. NASs also support different kinds of network protocols including SCP and File Transfer Protocol (FTP). However, over TCP/IP, communication can be done more efficiently and reliably. The initial purpose of NAS design was only file sharing over UNIX across a LAN. NAS also strongly supports HTTP. So users/clients can easily download the stuff directly from the Web if NAS is connected to the Internet. 2. NAS Connections: Different mediums are used for establishing connections with NAS servers, including: Ethernet, fiber optics and wireless mediums with 802.11 standards. 3. NAS Drives: Any technology can be used for this purpose, but SCSI is used by default. ATA disks, optical discs and magnetic media are also supported by NAS.

Network Attached Storage (NAS) is a dedicated server, also referred to as an appliance, used for file storage and sharing. NAS is a hard drive attached to a network, used for storage and accessed through an assigned network address.

NAS acts as a server for file sharing but does not allow other services (like emails or authentication). It allows the addition of more storage space to available networks even when the system is shutdown during maintenance. Essentially it is a complete system designed for heavy network systems, which may be processing millions of transactions per minute. NAS provides a widely supported storage system for any organization requiring a reliable network system.

Source: Technopedia, Network Attached Storage

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SUPPLY-SIDE TRENDS: MICROSERVICES

IDC has outlined a generational shift in IT patterns called the First, Second and Third platforms. The First Platform is made up of mainframe, mini computers with terminals as the user interface. The Second Platform saw the introduction of PCs, LANs, client-server architecture, and the Internet, with PCs as the main user interface devices. The Third Platform, cloud native, is the domain of mobile, cloud, big data and social. The majority of user interactions there take place through mobile devices. Each succeeding platform makes different architectural choices to meet the challenges of scaling and reliability models. 1. The First Platform has custom hardware and software; it uses a centralized software architecture and scales vertically to serve thousands of apps and millions of users. 2. The Second Platform is based on enterprise hardware and software. Client-server software architecture and vertical scaling are used to serve tens of thousands of apps and hundreds of millions of users. 3. The Third Platform employs distributed software over horizontally scaling commodity hardware, the distributed nature of which enables linear scaling to serve millions of apps and billions of users.

Microservices are an architectural approach to creating cloud applications, where each application is built as a set of services. Each service runs in its own processes and communicates through Application Programming Interfaces (API).

The use of microservices in apps can be structured in many different ways. Within the application, a microservice does one defined job – for example, authenticating users, generating a particular data model or creating a particular report. The idea is that these microservices, which are often language-agnostic, can fit into any type of app and communicate or cooperate with each other to achieve the overall goal. Microservices may, for example, share information through HTTP protocol. In a way, microservices are similar to individual functions in a code base, in that they provide a decentralized way to look at computing tasks within that overall app model. A microservices-based architecture promotes an “API First” approach, decoupling APIs from their implementations for more agile development. It also works well for the continuous delivery software development process.

Source: Technopedia, Microservices Source: IBM , What are Microservices

PAGE 22

BUY-SIDE TRENDS: CLOUD MARKET SURVEY

Cloud Model Preference by Industry

Workload Breakdown by Company Size

% Large Enterprise Workloads in Cloud

Education

26%

54%

19%

Engineering

30%

55%

15%

Finance

26%

56%

18%

Public Cloud

23%

Government

29%

54%

17%

32%

Private Cloud

Healthcare

26%

50%

24%

Non Cloud

Insurance

18%

73%

9%

45%

Manufacturing

19%

65%

16%

Media &…

17%

58%

25%

% SMEs Workloads in Cloud

Retail & Logistics

21%

66%

13%

Hospitality

16%

56%

28%

Software &…

20%

59%

21%

20%

Public Cloud

Telecoms

27%

50%

23%

48%

Private Cloud

Utilities

18%

62%

20%

32%

Non Cloud

Private Cloud

Hybrid

Public Cloud

* Large Enterprises are companies with >1,000 employees; SMEs are companies with <1,000 employees.

Source: McAfee, Cloud Security Report , 2017

PAGE 23

BUY-SIDE TRENDS: CLOUD MARKET SURVEY

Cloud Model Preference by IT Infrastructure

Forecasted CAGR of IT Infrastructure 2016 – 2021

Other Consumer Applications

4%

96%

29%

Other Consumer Applications

Search

100%

26%

Search

Social Networking

100%

37%

Social Networking

1%

Video Streaming

99%

36%

Video Streaming

ERP & Business Processes

16%

60%

24%

32%

ERP & Business Processes

Database/Analytics/IoT

18%

42%

40%

31%

Database/Analytics/IoT

Collaboration Tool

11%

30%

59%

33%

Collaboration Tool

Compute

8%

28%

64%

28%

Compute

On-premise

Private Cloud

Public Cloud

Source: Cisco, Global Cloud Index , 2018

PAGE 24

BUY-SIDE TRENDS: CLOUD MARKET SURVEY

Cloud Model Preference by IT Applications

Top Growing Cloud Services

Back-office Enterprise Applications

53%

18%

29%

75%*

Serverless Computing

Batch Computing Applications

68%

14%

18%

36%*

Container Services

Cloud-native Applications

11%

23%

66%

26%*

Collaborative Applications

35%

18%

47%

DBaaS SQL

Customer-facing Enterprise Applications

53%

26%

21%

22%*

DBaaS NoSQL

E-business Hosting

18%

43%

39%

21%*

DRaaS

Test and Development of Applications

42%

27%

31%

* Growth rate from 2017 to 2018

Private Cloud Hybrid External Public Cloud and SaaS

Source: 451 Research, 2018 Source: RightScale, State of the Cloud Report , 2018

PAGE 25

BUY-SIDE TRENDS: HYBRID CLOUD MARKET SURVEY

Change in Cloud Model Preference by Year

Forecast of % of Workloads Run/Will Run from each Cloud Model

95%

96%

89%

92%

95%

93%

89%

88%

75%

77%

71%

71%

2018, 37%

2020, 27%

On-premise

72%

67%

63%

58%

Public Cloud

2018, 31%

2020, 41%

2018, 19%

2020, 20%

Private Cloud

2018, 18%

2020, 22%

Hybrid Cloud

Public

Private

Hybrid

Any Cloud

2015

2016

2017

2018

Source: RightScale, State of the Cloud Report , 2018

PAGE 26

BUY-SIDE TRENDS: CLOUD* MARKET SURVEY

Computing Infrastructure by % and Cloud Models Adopted

Top Priority for Enterprise Central IT

Next 18 months

2018

50%

45%

14%

9%

39%

38%

31%

16%

29%

22%

52%

27%

23%

23%

33%

10%

9%

10%

9%

8%

PaaS

IaaS

PaaS

IaaS

SaaS

Non-cloud

SaaS

Non-cloud

Leverage Hybrid Cloud

Use Public Cloud Build Private Cloud

Use Hosted Private Cloud

2016

2017

2018

* The survey viewed cloud services as a whole.

Source: IDG, Cloud Computing Study , 2018 Source: RightScale, State of the Cloud Report , 2018

PAGE 27

BUY-SIDE TRENDS: CLOUD* MARKET SURVEY

11 Hybrid Cloud Benefits Noted By Cloud Adopters

Improve Speed of Deployment of Applications and Services

52%

Reduce Costs Through Competitive Cloud Pricing

37%

Enhance Overall Business Agility

35%

Provide Choice While Keeping Control and Security

28%

Improve Compliance Obligations (Data Sovereignty, etc)

26%

Enable Applications/Workloads to Interoperate

25%

Improve CX and Meet Business Demands

21%

Improve Consistency of Security Policies and Better Risk Management

21%

Increase Competitive Differentiation

21%

Enhance Ability to Innovate

17%

Avoid Vendor Lock-in and Achieve Cloud Independence

16%

* The survey viewed cloud services as a whole.

Source: 451 Research, 2018

PAGE 28

BUY-SIDE TRENDS: CLOUD* MARKET SURVEY

Top 8 Cloud Challenges Emphasized by Cloud Adopters

Security

29%

48%

Managing Cloud Spend

21%

55%

Lack of Resources/Expertise

27%

46%

Governance

25%

46%

Compliance

21%

47%

Managing Multiple Clouds

22%

41%

Performance

14%

41%

Building a Private Cloud

20%

33%

Significant Challenge Moderate Challenge

* The survey viewed cloud services as a whole.

Source: IDG, Cloud Computing Study , 2018

PAGE 29

BUY-SIDE TRENDS: CLOUD* MARKET SURVEY

Top 10 Cloud Benefits Emphasized by Cloud Adopters

Improving the speed of IT service delivery

71%

Greater flexiblity to react to changing market conditions

63%

Enabling business continuity

58%

Improving customer support or services

57%

Lower total cost of ownership

51%

Replacing legacy systems

39%

Savings on CAPEX

38%

Reducing resource waste

35%

Need for real-time information

32%

Faster return on investment

24%

* The survey viewed cloud services as a whole.

Source: IDG, Cloud Computing Study , 2018

PAGE 30

BUY-SIDE TRENDS: INFLUENCING FACTORS BY INDUSTRY TO ADOPT CLOUD*

BFSI

Healthcare

Manufacturing

Retail

Education

1. New ways to

1. Centralization of health records.

1. Supporting production process.

1. Reducing costs of goods and services 2. Helping new business lines grow.

1. Education for remote or low- income population. 2. Better access for higher education.

make payments.

2. Lowering

2. Supporting

banking costs.

preventative care.

2. Better supply chain

3. Banking for

management.

remote or low- income population.

3. Care for remote or low-income population.

3. Enabling design and prototyping.

3. Increasing

access to retail.

4. New ways of saving.

4. Supporting

4. Streamline

4. Making shopping more convenient.

remote diagnosis and treatment.

inventory, orders, and distribution.

5. New ways of lending.

* The survey viewed cloud services as a whole.

Source: The Economist, Adoption of Cloud Computing in Five Industries, 2017

PAGE 31

CHALLENGES IN ADOPTING CLOUD

BUY-SIDE TRENDS: CLOUD* SURVEY ON ORGANIZATIONS

Every organization faces challenges when moving their business to the cloud, as shifting in-house infrastructure to an external computing environment is not an easy task – especially for large multinationals. Nonetheless, it is crucial to understand these challenges:

Considers cloud a central point of their IT strategy moving forward

90%

Lack of a defined strategy and business objective delaying migration timeline.

Plan to move new or additional services to the cloud

88%

Single cloud vendor lock-in without contract optimization.

Improper cost-benefit analysis resulting in higher-than-expected costs.

Prefer storing data on the cloud compared to on-premise

70%

Cloud architecture incompatible with existing in-house skillsets.

Connecting legacy systems with cloud.

Expects their cloud budget to increase in the next year

48%

While cloud is undoubtedly a central part of IT’s future, organizations embarking on a cloud migration journey should map out their requirements and objectives beforehand, conduct a comprehensive cost analysis, develop a realistic migration roadmap, and identify the business cost of downtime.

* The survey viewed cloud services as a whole.

Source: Gartner, 2017 Source: Forbes, 13 Biggest Challenges When Moving to the Cloud , 2017 Source: SoftWebSolutions, 4 Major Cloud Migrating Challenges & Solutions Every CIO Must Know , 2018

PAGE 32

Managing Hybrid Cloud Implementation

PAGE 33

KEY IMPLEMENTATION CONSIDERATIONS (PAGE 1 OF 3)

The implementation of a hybrid cloud combines at least one public cloud and one private cloud into a single system. This decision to deploy a hybrid cloud solution brings along various challenges concerning integration, implementation and migration.

The following are five aspects that organizations should consider before deploying cloud services (details in next slide) to meet their business needs:

Organizations that lack a high-level cloud strategy risk wasted investment and failure. Exploiting cloud successfully and safely requires multiple domains to coordinate and develop a business-driven decision framework and best practice IT operational models.

1. Review Previous Cloud Model Experiences

2. Shortlist Vendors Based on Skills & Resources

3. Seamless Transition from In-House IT to the Cloud

4. Factoring Cloud Environment Capacity

5. Availability of Comprehensive User Access Control

PAGE 34

KEY IMPLEMENTATION CONSIDERATIONS (PAGE 2 OF 3)

Before an organization moves to the hybrid cloud architecture, it is crucial to get in touch with a few other organizations which have already switched to a similar model. Examining the experiences of other businesses that have implemented the hybrid cloud can help plan implementation and migration better, while making the transition smoother. They can learn about different price structures (including any hidden charges), actual uptime percentage, service level agreements and real-time support. Offered by the service providers. More importantly, companies can understand any potential security issues, post implementation of a hybrid cloud. Companies need to analyze whether they have the requisite skills and personnel to handle the challenges posed by the implementation of hybrid cloud services. Based on the skills available at a company’s disposal, it may want to handle the cloud environment on its own or get support from external cloud specialists. For small companies, it may not be possible to develop the expertise internally due to budget and resource constraints. As the cloud platform would most likely involve adoption of a pay-as-you-go model, businesses need to weigh the cost of cloud services that can be used. The most important decision would be the selection of a hybrid cloud service provider. To make the appropriate choice, organizations need to be sure about their objectives. If they plan to save costs and manpower, the correct choice would be a cloud vendor that manages servers as well as software for all operations and applications. Another parameter to be considered by organizations is whether they wish to build their own private cloud space or lease this space from a service provider like Amazon, Microsoft and Google. For an enterprise handling a cloud environment for the first time, it may be better to start with non-sensitive data hosted on a private cloud by the service provider. Once the service provider is selected, the next important step involves transitioning the company’s in- house IT infrastructure to private cloud architecture for smooth integration with the hosted cloud. The internal architecture needs to be converted into a sophisticated cloud platform that could easily incorporate cloud-computing technologies like on-demand scalability, self-service solutions and centrally managed system. The new cloud environment needs to be optimally responsive for quick data access with reduced latency. By using effective data routing methods for application delivery, response times could be decreased significantly, fulfilling the purpose of a hybrid cloud to control data within different environments. Once the IT network of a company is shifted to a large integrated cloud environment, it is more likely to use a different set of technologies, services, and applications. The chosen service provider has to undertake careful planning before the switch to ensure no compatibility or legacy issues crop up in a completely new cloud environment.

Aspects to consider:

Review Previous Cloud Model Experiences

Shortlist Vendors Based on Skills & Resources

Seamless Transition from In- House IT to the Cloud

Factoring Cloud Environment Capacity

Availability of Comprehensive User Access Control

Source: Cloudwards, How to Implement Hybrid Cloud Successfully, 2018

PAGE 35

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