Sand Hill Group conducted forty in-depth interviews and surveyed more than 500 IT executives and to obtain a clear picture of the cloud computing initiatives, strategies and best practices taking hold in enterprises today. "Leaders in the Cloud" delivers unparalleled insight into customer perceptions of cloud computing, current and planned cloud initiatives, adoption drivers, business and technological benefits and challenges, strategies for deployment and best practices for success. The findings look closely at experiences with all types of cloud service models - SaaS, IaaS, and PaaS - and deployment models - public, private, community and hybrid clouds. The Enterprise Digital Report delivers the research findings via first-hand CIO quotes and more than a dozen charts and figures, and six use cases of specific cloud projects. The study identifies a complete list of the business benefits associated with cloud computing, and presents "Take Action Now" implications for both enterprise customers and cloud vendors. The Enterprise Digital Report includes an additional chapter on the unique market for federal government clouds, six additional cloud use cases and several additional pages of unedited customer comments about cloud computing. The license also includes a copy of the data file with quantitative findings from a survey of more than 500 IT executives about their cloud computing experiences.

1. Leaders In The Cloud
Identifying the Business Value of Cloud Computing
for Customers and Vendors

2. About Sand Hill Group
The business strategy destination for enterprise
software executives
Investment and Advice Publishing Research
• Provider of • SandHill.com Web • Producer of strategic
investments and site reports about key
management advice • Software Pulse enterprise software
to emerging electronic newsletter industry
enterprise delivered to over trends which aim to
technology leaders 12,500 executives provide executives
each week with meaningful,
actionable insight
into the critical issues
they face
2

3. About the authors
M.R. Rangaswami, Sand Hill Group, LLC, co-founder
• Held Global VP Marketing positions at Oracle and Baan
• Strategic advisor to fast growth companies
• Profiled on the front page of the Wall Street Journal
• Named to Forbes “Midas 100” list as one of the most
influential investors in technolog
3

4. About the authors
Kamesh Pemmaraju. Leading Cloud Research at Sand Hill Group
• Held Global VP Engineering/Director Quality at Pegasystems, Solidworks,
Apani Networks
• Brought to market leading technology products in Enterprise BPM,
3D-CAD systems, Enterprise Security, High Transaction Websites,
and Embedded Real-time
• Consulted at GE, GM, Siemens, Sun, Visa International, NASD,
4 Motorola on technology, security, and quality issues

5. Industry-leading advisory board
Tony Redshaw, CIO
Daru Darukhwala, CTO
JP Rangaswami, Chief Scientist
James Barrese, VP Systems and Architecture
Michael Abbot, SVP Applications Software and Service
Gary S, Washington, Office of OMB
5

6. Survey of 511 IT execs with McKinsey and TechWeb
Title/Position Percent of Respondents
Board Member/CEO 14%
CIO/CTO 13%
Other C-level executive 6%
Senior IT executive 18%
Other senior executive 10%
IT manager 7%
Other manager 6%
Staff 6%
Consultant 15%
Other 5%
6

7. 40 confidential interviews with cloud leaders
Sector Companies Executives
Healthcare 1 1
Insurance and Financial Services 3 4
Publishing and Media 3 3
Telecom 1 2
Federal Government 3 6
Technology 4 4
Business and Software Services 3 3
Software Vendors 8 8
Electronics 1 1
Manufacturing 2 2
Energy 1 6
Total 30 40
7

8. Cloud Feels Like 1997 for the Internet
High
2010
2000
Cloud
1990 Network Computing
Computing
Client/Server
Complexity
1970 Computing
Mainframes
with
1960 terminals
Single Back to mainframes?
Computer
Low
Centralized Time Distributed

9. NIST Definition Well Accepted
Hybrid Clouds
Deployment
Models Private Community
Public Cloud
Cloud Cloud
Service Software as a Platform as a Infrastructure as a
Models Service (SaaS) Service (PaaS) Service (IaaS)
On Demand Self-Service
Essential
Broad Network Access Rapid Elasticity
Characteristics
Resource Pooling Measured Service
Massive Scale Resilient Computing
Common Homogeneity Geographic Distribution
Characteristics Virtualization Service Orientation
Low Cost Software Advanced Security
Source: NIST

10. But Controversies Abound….
Is private cloud a cloud?
Is virtualization a cloud
initiative?
Is SaaS app a cloud app?
10

11. Cloud Reality is Catching The Hype
Some SMB’s have 80% of services in the cloud
Watching and Learning 53%
Implementing Pilot projects for Experimenting… 52%
Implementing and deploying non-critical… 33%
Deploying mission-critical applications 18%
No plans 3%
Don’t know 2%
0% 10% 20% 30% 40% 50% 60%
“Compared to what we were doing before, the cloud is a
giant bed of roses.” – CIO, business services company
11

12. Agility: #1 driver for the move to the cloud
Business agility 49%
Cost efficiency 46%
Leverage core competencies and free IT… 22%
Disaster recovery and business continuity 13%
Part of a Green initiative 3%
Don’t know 1%
0% 10% 20% 30% 40% 50% 60%
“We were halfway through the project and the business decided
to dramatically change the requirements of the system. We were
able to respond much more quickly than the original on-premise
team would have delivered.” – CIO Business Services Company
12

13. Which cloud models are winning and why?
80%
70% Currently
70%
In 3 Years
60% 56%
50%
40%
30%
24%
18% 20%
20%
12%
10%
0%
SaaS IaaS PaaS
13

14. CIO perspective on various cloud types
60%
54% Currently
50%
44% in 3 Years
43%
40% 36%
35%
30% 28%
20%
20%
13%
10%
0%
Private Public Community Hybrid
“I don’t think [the public/private cloud issue]
is really an ‘either/or’ question. It’s a combination.”
– CIO, software company
14

15. Cloud investments expected to increase
Today In Three Years
3% 7% - 30%
IT Budget spend on Cloud IT Budget expected spend on cloud
“Today we’ve got 95 percent of applications running internally
and 5 percent externally. In five years, that ratio will be 80
percent internal and 20 percent external.” – CIO, Fortune 500
financial company
15

16. Workloads in the cloud
Innovation, skunk-
work projects, new Backup, Disaster
development, QA, Recovery,
Load testing Redundancy
Collaboration, CRM, Characteristics: Spiky
HR, Office traffic patterns, self-
Productivity, ERP, and contained,
Business Analytics virtualizable, scalable
(SaaS) architecture

17. Small, large companies have
different concerns
Large Small and Midsize
Enterprises Businesses
Implementing pilot projects 62% 46%
Watching and learning 38% 49%
Implementing and deploying 35% 34%
noncritical applications
Deploying mission-critical 12% 25%
applications
No plans 6% 4%
Don’t know 0% 1%
“I firmly believe that my data is safer in [the cloud vendor’s]
hands than it is in mine” – SMB CIO
17

18. Several customer concerns, but responsibility
is shifting to the vendors
How will we
How do we
Does it make manage the cultural
interoperate with
economic sense? change and fear of
our existing “stuff”?
job loss?
How will we Once we’re in, how
Do I have re-write
handle security do we get out?
everything?
and compliance? (portability)
How will we handle Is it mature, Do we need new
legal matters? reliable, and stable? skills?

19. Implications for customers
• Embrace change: start with
experiments and pilots now “I think a lot of
– Experience cloud business benefits companies in more
first hand in a low-risk environment traditional, mature
• Think „Cloud = Outsourcing 2.0‟ industries like ours are
– Innovate on “core” and outsource missing out on a lot of
“context”
opportunities to take
– Leverage cloud to enable real-time
decision making and collaboration advantage of what the
across the supply-chain cloud has to offer.” –
• Change IT skill sets CIO manufacturing
– Business requirements, vendor company
management, system architecture,
new cloud platform skills
19

20. More Information, Assistance, and Offers
• Opinion Editorial on SandHill.com
– http://sandhill.com/opinion/editorial.php?id=296
• Weekly Blog on cloud trends, vendors, customers,
people, and solutions
– http://sandhill.com/opinion/daily_blog.php?id=71
• Purchase Digital Enterprise License of research:
Unlimited Internal Use:
– http://sandhill.com/research/reports.php?id=3
• Additional Go-to-market and lead generation:
– Customer webinars and events
– Co-branded whitepapers, podcasts, and marketing collateral
– Sales enablement and briefing sessions
20

21. Sample Research Customers
21