Unlocking the Cloud

How cloud platforms help companies compete in a changing global marketplace

January 2014

Build a better platform, and you will have a decided advantage over the competition.

—Mark Bonchek and Sangeet Paul Choundary in a January 2013 blog post for Harvard Business Review

The Platform Imperative

What is a cloud platform?

A cloud platform, sometimes known as

Platform-as-a-Service, is a system that delivers easy-to-deploy infrastructure to help develop applications.

The pre-built infrastructure reduces the time needed to

make applications ready for use (e.g., server

administration, managing OS patches).

In this way, cloud platforms maximize developers’ time

and allow them to work solely on coding innovative

applications.

Survey Profile

We conducted a survey of 200 senior business and IT executives across several

industries.

Survey profile: Title

25%

13%

19%

14%

30%

What is your job title?

CEO

CIO

IT Infrastructure Manager

Business Unit head

Other (Includes COO, Chief Innovation Officer, Chief Ar-chitects, EVP/SVPs, and Developers)

Survey profile: Country

18Canada

25Mexico

32USA

25Brazil

25UK 20

Germany

5Saudi Arabia

6Australia

7Japan12

China25

India

The survey spanned 11 countries.

Survey profile: Industry and Size

25%

7%

28%

28%

13%

What is your firm's industry segment?

Banking

Capital Markets

Consumer Products

Retail

Telecommunications

19%

18%

14%

28%

10%

12%

What is your firm’s annual revenue (US$) for the most recently completed

fiscal year?

$25 million - $99 million

$100 million - $499 million

$500 million - $999 million

$1 billion - $4.9 bil-lion

$5 billion - $9.9 bil-lion

Over $10 billion

Research Output:Four papers based on survey results and executive interviews

Paper 1: Unlocking the Cloud

“We are witnessing a major shift in the way computers and IT are used.”

—Feargal O’Sullivan, Head of Sales—Americas, NYSE

Technologies

This paper provides an overview of the shifting cloud landscape, including case studies and an analysis of how leading companies use cloud platforms.

Paper 2: Unleashing the Cloud

“Mobile is going to take over in the next couple of years, and companies will have to pay attention to that fact.”

—Shawndra Hill, operations and information management professor at University of

Pennsylvania’s Wharton School

This paper looks at the ways cloud platforms support mobile applications and strategies to improve customer experience, worker capabilities, and bottom-line results.

Paper 3: Protecting the Cloud

“The question isn’t whether to be in the cloud—this is inevitable. It’s how to build the best security possible into a cloud environment.”

—Roger MacFarlaine, VP of Technology and Systems at

Mövenpick Hotels & Resorts Management

This paper shows how firms are meeting this challenge—one that dwarfs any of the other challenges of cloud computing, such as regulatory compliance, the fragmentation of information, and data migration problems.

Paper 4: Connecting the Cloud

“[Using cloud networks,] we are able to use the cloud to manage infrastructure and human capital far more effectively.”

—Lincoln Wallen, Chief Technology Officer at

DreamWorks Animation SKG

This paper examines the shifting cloud landscape and its impact on business.

Who are the cloud leaders?

Cloud leaders are the 16% of survey respondents with the most sophisticated strategies in adopting cloud platforms and managing cloud risks.

These leaders are:

More bullish on cloud’s potential to drive revenue and cut costs.

More likely to prioritize virtual collaboration as a goal of mobile strategy, to have a BYOD policy, to have launched a managed service offering, and to use a cloud-based mobile app platform in production.

More concerned with operational risk than with IP/security risk.

Unlocking the Cloud

Paper 1: Key findings

1. Investment in cloud is booming.

2. Businesses are using cloud platforms across a growing range of functions.

3. Benefits of cloud adoption already are clear, and bigger payoffs are expected in the next 3 years.

Growing investment in the cloud

56% of respondents plan to invest heavily in cloud platforms over the next 3 years.

Only 4% have no plans to invest in cloud platforms.

-10%%

10%20%30%40%50%60%

52%

34%

6% 8%

57%

31%

9%3%

How would you describe your company's planned investment in cloud computing over the

next three years?

APJ Others

No function is primarily cloud-based at this time…

HR Purchasing Finance Marketing Sales Supply Chain Innovation/R&D0%

10%

20%

30%

40%

50%

60%

70%

2%

12%14%

26%

12%

20% 20%

15%

23%25%

27% 27%

20%

26%

To what extent are key business functions using cloud plat-forms today?

APJ Others

…but widespread adoption is expected in the next 3 years.

Most businesses plan to double cloud-based processes in their functional areas over the next three years. Marketing, sales, and innovation/R&D will see the largest increases.

HR Purchasing Finance Marketing Sales Supply Chain Innovation/R&D0%

10%

20%

30%

40%

50%

60%

70%

34%

40%38%

58%

52%56% 56%

47% 48% 48%

63%

55%

47%

60%

To what extent will key business functions be using cloud platforms in 3 years?

APJ Others

How the cloud pays off

New business opportunities are proliferating in the cloud, and new markets are being tapped.

54% of respondents have developed new products via cloud.

41% have developed new lines of business.

58% collaborate with partners to create new products, and 54% build/host applications for business collaboration.

Developed new

products

54% APJ

54% Others

Developed new lines

of business

46% APJ

39% Others

Entered new

markets

26% APJ

41% Others

Has your company developed new services and lines of business or tapped new markets via the cloud?

Unleashing the Cloud: Putting Mobility to Work

Paper 2: Key findings

1. Businesses are actively deploying mobile services.

2. Employees use mobile applications to connect to real-time data and internal systems.

3. Firms are using mobile applications to strengthen customer service strategies.

Developing mobile services

Firms are taking active steps to deploy mobile applications. 61% of respondents have developed cloud-based mobile offerings. Other approaches include:

47% of respondents have launched managed service offerings.

53% have replaced on-premise systems.

40% have changed pricing.

Mobile strategy empowers workers

Companies are providing employees 24/7 mobile access to internal systems and real-time data.

53% of respondents provide workers with mobile devices.

44% have deployed at least one mobile app.

Cloud leaders are more likely to have deployed a mobile app and have a BYOD policy.

0%

10%

20%

30%

40%

50%

60%

50%

56%

40%

56%

42%

30%

18%

54%52%

40%

37%

44%

17%18%

What steps have you taken to give employees 24/7 mobile access to internal systems and real-time

data, both internal and customer-facing?

APJ Others

A customer focus

31% of respondents say customer service is the centerpiece of their mobile strategy, more than any other category. Objectives for customer-based mobile strategy include:

Real-time customer service (67%)

Faster response times (59%)

Customer retention (47%)

Brand loyalty (43%)

31%

23%

14%

14%

7%

8%

5%

What is your primary area of focus regard-ing your mobile cloud strategy?

Customers

Internal productivity

Virtual collaboration

Fast time to value for business

Workflows

Business continuity

Business partnersMobile strategy goals

Real-time customer service

Faster response times

Customer retention

Increased brand loyalty

Increased revenue

Bringing customers into bricks-and-mortar stores

0% 10% 20% 30% 40% 50% 60% 70%

67%

59%

47%

43%

33%

8%

Mobile strategy goals

Protecting the Cloud:Understanding Security & Risk

Paper 3: Key findings

1. Firms consider security the biggest challenge of adopting cloud platforms.

2. Cloud leaders assess risk differently.

3. To manage risk, businesses are taking steps to control access management and perform regular security audits.

Security breaches are a key concern

65% of respondents cite security as a major challenge to the use of cloud business networks. Other challenges include:

Consistency of data across applications and job roles (54%)

IP protection (50%)

Technology presents its own challenges, such as:

Proprietary interfaces (36%)

Lack of end-to-end monitoring (33%)

66% of APJ respondents consider security a major concern, and 38% say that ensuring it is their biggest

challenge.

Executives want to secure corporate data

Security of corporate data is by far the top concern in every region but EMEA, where strong regulation may help alleviate fears.

54% North America

56% Latin America

32% EMEA

52% APJ

Leaders assess risk differently

80% of respondents rate Data security/IP risk as a “top 3” concern. Among cloud leaders, this figure drops to 65%.

Regulatory risk (75%)

Top 3 concerns among cloud

leaders:

Business continuity risk (56%)

Brand risk (78%)0%

20%

40%

60%

80%

100%

82%78%

86% 86%

80% 80%

59%62%

78%76% 77%

75%

With regard to your company's adoption of cloud computing, to what extent are you

concerned about the following risks?APJ Others

APJ leads in key security measures

We have embedded traditional/onsite protections in cloud applications

We use identity and access management

We have deployed user tracking

We perform regular security audits

We collaborate with cloud partners on security strategy and implementation

We have engaged third-party security partners

0% 20% 40% 60% 80%

48%

58%

53%

53%

34%

17%

56%

70%

54%

62%

44%

14%

What steps have you taken to deal with security risks in the cloud?

APJ Others

Connecting the Cloud:The Rewards of Integrated Platforms

Paper 4: Key findings

1. Integrating platforms offers the highest return on investment for cloud adopters.

2. Firms are building their own business networks and participating in networks set up by partners and technology providers.

3. In pursuit of integration, firms are building teams dedicated to cloud integration and purchasing integration tools.

The future will be integrated

The IT rewards offered by cloud computing are only incremental gains compared with those promised by the merger of disparate clouds, whether operated by different groups within the same company or by external business partners.

Joining together

building their own business networks

(74%)

participating in networks set up by

partners (54%)

participating in networks set up by

technology providers (50%)

APJ respondents are…

-

Pursuing integration

We have a dedicated team that is focused on cloud integration

We have purchased integration tools

We use integration-service providers

We only work with cloud-based service providers with built-in connectivity to other cloud-based services

We have outsourced integration to 3rd party vendors

0% 20% 40% 60% 80%

62%

64%

62%

26%

22%

53%

56%

49%

25%

9%

How does your firm ensure integration in the cloud, both of its own on-premise applications and those from partners

and third parties? APJ Others

Conclusions

What it takes to design a successful cloud platform strategy

Build vendor networks. Rather than taking a one-off approach, select a vendor as a core cloud provider.

Centralize controls to understand how systems and data are being used and to square vendors’ claims with TOS agreements.

Rely on KPIs. Common yardsticks include availability, workload compared to utilization, SLA response error rates, and revenue efficiencies.

Build a pool of IT talent that matches cloud requirements. Clouds present challenges different from traditional server-client environments.

The way forward

Embrace the opportunities afforded by cloud networks.

Organizations that achieve the best results engage in substantial planning when they select providers and build a platform.

Cloud platforms represent a different—and far more efficient—way to collect, manage, store, share, and use data.

Successful organizations acknowledge the changes needed in IT and enterprise culture.

Organizations that take a holistic approach are more likely to achieve a competitive advantage than those that take a piecemeal approach.

Ultimate benefits

In the end, an integrated cloud network results in a more flexible, agile, and cost-effective IT department. It builds a solid foundation for the digital enterprise and unleashes business and IT gains that would not have been imaginable only a few years ago.

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