New cloud and next generation IT models are starting to deliver global enterprises disruptive improvements in cost and performance. Unfortunately, many organizations that have outsourced parts of their IT environment have been unable to capture these benefits. In this webinar, learn: How next generation IT models can reduce infrastructure costs by 30+% over ITO solutions, how cloud solutions can be leveraged even when an ITO solution is in place, The myths around ITO contractual constraints to cloud migration Why your ITO vendor may not be incented to migrate you to the cloud, new approaches for IT vendor governance and management in cloud environments, and how to develop a migration strategy and roadmap in preparation for ITO end-of-term

1. ITO, Cloud and Next
Generation Outsourcing
October 20, 2011

2. Today’s Webinar is brought to you by Everest Group
Today’s Webinar
ITO, Cloud and Next Generation Outsourcing
Synopsis:
New cloud and next generation IT models are starting to deliver global enterprises disruptive improvements in cost
and performance. Unfortunately, many organizations that have outsourced parts of their IT environment have been
unable to capture these benefits. In this webinar, learn:
 How next generation IT models can reduce infrastructure costs by 30+% over ITO solutions
 How cloud solutions can be leveraged even when an ITO solution is in place
 The myths around ITO contractual constraints to cloud migration
 Why your ITO vendor may not be incented to migrate you to the cloud
 New approaches for IT vendor governance and management in cloud environments
About Everest Group
 How to develop a migration strategy and roadmap in preparation for ITO end-of-term
Everest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation
for helping Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office
business services. With a fact-based approach driving outcomes, Everest Group counsels organizations with
complex challenges related to the use and delivery of global services in their pursuits to balance short-term needs
with long-term goals. Through its practical consulting, original research and industry resource services, Everest
Group helps clients maximize value from delivery strategies, talent and sourcing models, technologies and
management approaches. Established in 1991, Everest Group serves users of global services, providers of services,
country organizations and private equity firms, in six continents across all industry categories. For more information,
please visit www.everestgrp.com and research.everestgrp.com.
For more information, contact Mark Williamson at mark.williamson@everestgrp.com
Proprietary & Confidential. © 2011, Everest Global, Inc. 2

3. Introductions
Scott Bils
Partner, Next Generation IT
Practice Leader
Everest Group
scott.bils@everestgrp.com
Marvin Newell
Partner, Strategy Practice Leader
Everest Group
marvin.newell@everestgrp.com
Proprietary & Confidential. © 2011, Everest Global, Inc. 3

4. Agenda
How The Cloud Delivers Enterprise Class Value
ITO and Cloud Migration – Myth vs Reality
Enterprise Cloud Roadmap – Implementation
Proprietary & Confidential. © 2011, Everest Global, Inc. 4

5. Enterprise Cloud Infrastructure Economics
Improving utilization and eliminating excess capacity are the key to realizing cost
efficiencies from cloud infrastructure models
3
Eliminate  Eliminate spend
Excess Capacity on unused ‘peak’
capacity
Private Cloud
Server Utilization
2Move ‘Peak’
 Shift peak loads to
Load to Public
public cloud(s)
 Leverage on-demand
‘pay-as-you-go’ flexibility
1Keep ‘Base’
 Shift loads to fill valleys (where
Load in Private
possible)
 Maximize private cloud
utilization
Proprietary & Confidential. © 2011, Everest Global, Inc. 5

6. Cloud Infrastructure Services Impact
Infrastructure delivery based on the cloud has the potential to unlock extraordinary
workload-level economics and flexibility benefits
Enterprise Workload Cost by Platform1 • Hybrid models can drive truly
$ / GHz hrs, Indexed vs Dedicated ‘disruptive’ economics
• Applicable at individual workload
100 and portfolio level
• Dynamic bursting not required to
capture initial benefits
65
60-65 ‘Peak’ Load
Public Cloud
• Shift ‘spike’ compute hours
to public cloud
25 • Pay only for consumption
‘Base’ Load
Virtualized/ Public Private Cloud
Dedicated Hybrid • Keep ‘base’ compute
Physical Private Cloud Cloud Model hours in private cloud
Server 7% 18% N/A 40% • Maximize utilization
Utilization: (service provider)
1 Assumes average workload mix and profile; 15% of total peak workload hours shifted to public cloud in an on-demand model; does not include application migration costs
Source: Everest Group Cloud Value Assessment Model
Proprietary & Confidential. © 2011, Everest Global, Inc. 6

7. Value Creation Potential
Next Generation IT services can deliver value to customers at an enterprise level that
will drive disruptive adoption impact in the market
Alternative IT Infrastructure Solutions CLIENT EXAMPLE
 Only ~25% of compute
Cost Index hours moved to hybrid
private / public models
 40% of workloads
Baseline
remained dedicated
Traditional delivery models
Outsourcing
Procurement  Public cloud concerns
not applicable to
Next private / dedicated
Generation models
IT Services
Solution  Workload placement
critical to unlocking
economics
Notes: Baseline and Traditional Outsourcing Procurement based on actual client projections and executed service provider contract, including
transition costs
Next Generation IT Services Solution estimates potential from executing roadmap of Next Generation IT initiatives to implement private
cloud and hybrid private/public cloud solution over 4 years, including projected migration costs
Proprietary & Confidential. © 2011, Everest Global, Inc. 7

8. Agenda
How The Cloud Delivers Enterprise Class Value
ITO and Cloud Migration – Myth vs Reality
Enterprise Cloud Roadmap – Implementation
Proprietary & Confidential. © 2011, Everest Global, Inc. 8

9. Why Are Enterprises Slow to Pursue the Opportunity?
Several common misperceptions are preventing ITO clients from moving
quickly to capture value from cloud economics
’We Still
Have an ITO Deal’
Perceived Contractual
Constraints
‘Our ITO Vendor ‘The Cloud
Will Get Us There’ Isn’t Ready Yet’
Perceived Incentive Perceived Market
Alignment Immaturity
Proprietary & Confidential. © 2011, Everest Global, Inc. 9

10. Issue 1 - Perceived Contractual Constraints
Many believe that their current ITO contracts severely limit their ability to
move quickly to cloud solutions
Solution Constraints – The Myths
• Contractual terms prevent the adoption of alternative solutions
• Performance needs can not be met through cloud platforms
• Regulatory requirements can not be met through cloud solutions
Common Perceptions - Examples
 Exclusivity – “contract limits services that can be contracted to other providers”
 Revenue commitment (floor) – “minimums preclude moving workloads”
 Performance guarantee – “service levels cannot be met by cloud solutions”
 Regulatory compliance – “regulations cannot be satisfied by cloud solutions”
 Warranties – “can’t cleanly separate scope for cloud services”
Proprietary & Confidential. © 2011, Everest Global, Inc. 10

11. Issue 1 - Perceived Contractual Constraints (cont’d)
Based on a review of multiple deals, most outsourcing agreements do not
prevent the introduction of cloud solutions into the enterprise IT portfolio
Solution Constraints – The Reality
• Contractual terms prevent the adoption of alternative solutions
• Performance needs can not be met through cloud platforms
• Regulatory requirements can not be met through cloud solutions
Typical Contract Reality
 Exclusivity  Not present; tower termination
 Revenue commitment (floor)  Demand exceeds floor
 Performance guarantee  Engineered outcomes
 Regulatory compliance  Vertically-oriented clouds
 Warranties  Scope / change management
Proprietary & Confidential. © 2011, Everest Global, Inc. 11

12. Issue 2 – Are You Truly Aligned With Your Vendor?
Significant disincentives exist for many legacy ITO vendors to migrate their
customers to cloud and next generation IT platforms
• Many ITO vendors face 30-40+%
Financial
revenue ‘hit’ on client cloud
Disincentives
migration
Causes of Vendor
Misalignment
• Lack of cloud delivery platforms
Platform
and technologies across private,
Gaps public and hybrid models
• Shortages or absence of key
Skill
cloud solutioning and
Gaps architecting capabilities
Proprietary & Confidential. © 2011, Everest Global, Inc. 12

13. Issue 2 – How Quickly Will They Get You There?
Anecdotal evidence of misaligned incentives among vendors offering both
traditional ITO and cloud services is not hard to find
“SAP can’t be delivered as a “We’re seeing ~33% less revenue
hosted, private cloud on cloud ITO clients – this is
service…” creating a lot of internal
- Sales rep, major IT services vendor resistance to move our clients”
- Sales Engineer, leading IT services
“Yes, we can provide you vendor
SAP in a cloud
environment!”
- Same sales rep, one week later
“Names have been
changed to protect
the innocent !!!”
“We have found that cloud
“All our sales team knows is
solutions cannot economically
revenue – until we change our compete with our data center
comp plans, they’ll never drive to solutions"
cloud solutions”
- From IT services vendor client presentation
- Executive, leading IT services vendor
Proprietary & Confidential. © 2011, Everest Global, Inc. 13

14. Issue 2 – Most Enterprises Don’t Have Time to Wait
Enterprises face pressure to respond to extreme market demands for
efficiency and flexibility
Demand for Efficiency Demand for Flexibility
Increasing Pace of
Increasing Value Focus
Innovation
 Ongoing budget pressure  “Consumerization” of IT
 Demand for business value  Device proliferation
 Vendor pricing  Compressed cycle time
 Security and regulatory  Strategic focus
compliance
Drive to Improve Utilization Need for Responsiveness
 High cost “single-tenant”  Rapid volume growth; high
models variability; explosion of data /
 Underutilization of Extreme complexity
dedicated hardware Demands on  Anytime / anywhere access
 Suboptimal skill mixes IT and Business  Speed / on-demand service
 Underachievement of  Configurability
Functions
economies of scale
Proprietary & Confidential. © 2011, Everest Global, Inc. 14

15. Issue 3 – Perceived Market Immaturity
Cloud solutions are being deployed across a variety of enterprise use cases
ILLUSTRATIVE
Improved
Efficiencies /
Wave I – Migration
Utilization
DR/ Extending Low Risk Costs
BCP Use Cases
‘Spiky’ LOB Low
applications Medium
Web
High
sites
Backup/
ERP archive Test / ‘Big Data’/
development analytics
Virtual
desktop Email
Transactional HCM
applications Wave II –
Driving Value Collaboration
SCM Marketing
Wave III – applications CRM
Attacking the Core
Adoption New Business
Driver Capabilities
Proprietary & Confidential. © 2011, Everest Global, Inc. 15

16. Agenda
How The Cloud Delivers Enterprise Class Value
ITO and Cloud Migration – Myth vs Reality
Enterprise Cloud Roadmap – Implementation
Proprietary & Confidential. © 2011, Everest Global, Inc. 16

17. Enterprise Cloud Roadmap
Developing an overall cloud migration strategy that optimizes enterprise economics
requires a portfolio-based approach
Workload Workload Portfolio
Migration Opportunities Analysis
Enterprise Cloud
Roadmap
Portfolio
Utilization
Analysis
Dependency
+ Assessment
 Overall 3-5 +year
Workload Utilization Dynamics cloud migration
roadmap
 Supporting business
Migration case and plan
Economics
Current Traffic
text text text text text text text
Proprietary & Confidential. © 2011, Everest Global, Inc. 17

18. Next Generation ITO Solutions
Enterprise will operate a “mixed” environment to maximize value by aligning
infrastructure needs with distinct solutions
Next Generation IT
Open | Integrated | Secure
Dedicated Private Cloud Public Cloud SaaS
 Hosting services  Cloud appliances/  Open source  LOB and selected
 Next Generation data hosting services compute and storage mission critical
centers  Next Generation services applications
 High-density servers data centers  vCloud, Azure-based  Integration services
 RIMO  Virtual architectures IaaS / PaaS solutions  RIMO
 RIMO  RIMO
 Hybrid Delivery Models 
Note: RIMO = Remote Infrastructure Management Outsourcing
Proprietary & Confidential. © 2011, Everest Global, Inc. 18

19. Developing an Enterprise Cloud Roadmap
The approach for developing an Enterprise Cloud Roadmap requires rigorous, fact-
based problem-solving focused on actionable business results
Objectives Assess the business case and build a strategic roadmap for IT transformation driven by
cloud-based IT services, including identification of opportunities to:
 Portfolio-based priority for workload migration to the cloud
 Improve non-migrated workloads and infrastructure
 Leverage remote infrastructure management
Clarify goals and Identify portfolio Define future state Design roadmap
objectives opportunities IT environment for transformation
Potential of Next Data Collection Detailed Analysis Business case
Generation IT
Workshop
Transformation Application Mapping to Future Migration
Workshops Rationalization State IT Environment Recommendations
Total
Saving
s%
Opportunity Scenario Testing Migration Roadmap
Identification
Proprietary & Confidential. © 2011, Everest Global, Inc. 19

20. Q&A
 Attendees will receive an email enabling them to download today’s webinar presentation as well as access
a recorded audio version
 For advice on Next Generation IT, please contact:
– Scott Bils, scott.bils@everestgrp.com
– Marvin Newell, marvin.newell@everestgrp.com
 For background information on Everest Group, please visit:
– www.everestgrp.com
– research.everestgrp.com
 Thank you for attending today
To ask a question during the Q&A session
 Click the question mark (Q&A) button located on the floating tool bar in the bottom right of your screen.
This will open the Q&A Panel
 Be sure to keep the default set to “Send to All Panelists”
 Then, type your question in the rectangular field at the bottom of the Q&A box and click the send button to
submit
Proprietary & Confidential. © 2011, Everest Global, Inc. 20

21. Related Content
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 Amazon Web Services Profile
 Rackspace Profile
 Windows Azure Profile
Upcoming Webinars
Save the Date: Market Vista Q3 2011
 Tuesday, November 8, 9 a.m. CDT
 Registration details coming soon;
 Visit our Webinars page for most up-to-date information
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