This Week in Cloud Computing
The Sourcing Advisor’s View
Tony Greenberg, Chairman
March 16, 2010
Confidential © 2010 RampRate™ Slide 1
Summary
RampRate is a Sourcing Advisor
• Guides large buyers through IT services purchases
• Maintains clearinghouse of transaction and analyst data (the SPY
Index™)
• Has over 50 top brands as customers
Cloud Fills Gap In Overall Hosting Spectrum
• Evolution, not revolution
• Key characteristics: virtualized scale; usage-based pricing; but
customer choice of platform and software
Large Enterprise Customers Still Skeptical
• Cost is transparent, but risk is not
• I/O, not processing speed or storage volume, is the scarce resource
• Buyer assumptions need to change, but no one is there to guide them
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About RampRate
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Sourcing Advisors for IT Infrastructure
RampRate Services
Market Procurement
Benchmarks Services
Enables For
Lifecycle Planning &
Management Analysis
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RampRate SPY Index™
Service Provider Intelligence Index (SPY Index™)
tracks the IT Services market worldwide
Fast, accurate sourcing and benchmarks
• Unparalleled database of market intelligence
• IT services tracked by vendor, metro, price,
service level, term, customer size, etc.
Street-level intelligence , global view
• 350+ vendors indexed worldwide
• 160+ metro regions
• Real-time service availability
Over 1 Million data points in active use
• $900M+ sourced in last 3 years
• $3.0B+ benchmarked in last 5 years
• Hundreds of deals completed
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Representative Customers
Media/Broadcast Finance
High-Tech Gaming Publishing
Internet/E-Commerce Other
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The Context for Cloud: Filling Gap
in Broad Range of Services
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Cloud is One Stop on Hosting Continuum
Legend
Trends towards buyer / user control / action Mixed Trends towards service operator control / action
Wholesale Co- Managed Virtualized Shared
Cloud
Hosting Attribute* Data Center location Hosting Hosting Hosting Compute PaaS SaaS
Redundancy /
Client Vendor Vendor Vendor Vendor Vendor Vendor Vendor
Resiliency Design
Server Management Client Client Vendor Vendor Vendor Vendor Vendor Vendor
Server Access Direct Direct Direct Virtual Virtual Virtual Virtual Virtual
Client or Client or
Server Ownership Client Client
Vendor Vendor
Vendor Vendor Vendor Vendor
Provisioning Manual Manual Manual Manual Auto Auto Auto Auto
Unit of Purchase KW; SqFt Rack Server Instance Instance Usage Usage Usage
Scalability Limitation Power Server Server Server Server Virtual Virtual Virtual
Run-Time Service Client or Client or Client or Client or
Client Client Vendor Vendor
Choice Vendor Vendor Vendor Vendor
Dev. Platform Choice Client Client Client Client Client Client Vendor Vendor
Application Choice Client Client Client Client Client Client Client Vendor
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Other Relevant Attributes for Buyers
Wholesal
Hosting Attribute e Data Co- Managed Virtualized Shared Cloud
Center location Hosting Hosting Hosting Compute PaaS SaaS
Fit for Large Very Very
Customers Strong Strong
Strong Strong Weak Medium Weak Medium
Fit for Medium Very Very Very
Customers
Weak
Strong Strong Strong
Weak Strong Strong Strong
Fit for Small
None Medium Strong Strong
Very Very Very Very
Customers Strong Strong Strong Strong
Technology Maturity Mature Mature Evolving Recent Mature Recent Recent Mature
Typical Commitment 5-10
1-3 years 2-5 years 2-5 years
1 month 1 hour - 1 1 month 1 month - 2
Duration years - 2 years month - 2 years years
Legend: Level of Desirability to Customers
Very Weak Weak Medium Strong Very Strong
Definitions
• Fit to buyer size – likelihood that buyer of target size will find value in this offering
• Technology maturity – how long has approach been on the market
• Contract term – typical contract durations expected at sign-up
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The Buyer Perspective: Enterprise
Readiness
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Real-life Buyer Outcomes
• Buyers who need cloud most are often wary and skeptical
• Top-down cloud / virtualization is compromised on the front lines
• Actual pilots rarely evolve into significant part of infrastructure
RR Client Why Cloud? Why Not Cloud? Outcome
Major EU Unpredictable scale, Burned by shared Vanilla managed
mobile content expedite fees, DR, resources in past; hosting; stalled in
provider overprovisioning SLAs, DB throughput deployment
Top 10 Online 2x traffic during Direct revenue impact Advanced RIM;
Retailer seasonal peaks in of outages; need still skeptical of
Nov / Dec custom services cloud
Search / Blank slate for EU Not confident enough <5% of project
Advertising expansion to entrust whole work on cloud
Network footprint to cloud platform
Investment Wasted CPU cycles, Lack of operational Built cloud. Users
Bank top-down cloud / readiness carved dedicated
virtualization push servers from it
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Cloud Storage and Compute Pricing
Cloud Storage Cloud Compute Capacity
• Longer track record in SPY index • Based on publicly disclosed pricing
• Offered by broad cross-section of managed • RampRate customers still cautious about
services / hosting vendors large-scale deals
• Shared clouds used mostly for high-latency • Most cloud services also charge for transit
/ low-throughput uses such as archiving
• Some private utility services offer high-end
storage as well (notable in EU data below)
Market Pricing: Cloud Storage (GB / Month) Market Pricing: Cloud Server Instance (Hour)
$1.00 $0.90
$0.90 $0.80
$0.80 $0.70
$0.70 $0.60
$0.60
$0.50
$0.50
$0.40
$0.40
$0.30 $0.30
$0.15
$0.22
$0.25
$0.44
$0.50
$0.87
$0.11
$0.16
$0.31
$0.32
$0.74
$0.76
$0.20 $0.20
N/A
N/A
N/A
N/A
N/A
N/A
$0.10 $0.10
$0.00 $0.00
25th Percentile 50th Percentile 75th Percentile 25th Percentile 50th Percentile 75th Percentile
North America Europe Asia North America Europe Asia
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The Seller Perspective: New
Service from Old Building Blocks
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Cloud Builder Challenges
Transparency / Standardization vs. Customization
• Amazon’s transparency makes it default choice for building business case, but
larger customers expect bulk discounts and custom SLAs
Unknown Interdependencies
• Recent finance disasters misperceived housing and stocks as diversified
• Are cloud services diversified enough against a “run on the bank” in the case of
major financial turmoil or global media event?
Squeeze Pennies From Every CPU Cycle
• Optimizing for cheap power has been default path
• Optimizing for network proximity & I/O and holistic cost tradeoff modeling is next
Differentiate After Hype Dies Down
• How is this really different from a mainframe? A CDN? Can any provider lead the
market through Gartner’s “trough of disillusionment”
Build or Hand Off Upstream and Downstream
• Traditional hosting and SaaS will survive next to cloud. Can they work together?
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Top 5 Ways to Entice the Enterprise Buyer
Migration-Friendly Charge: Make First Step Cheaper
• Charging for data transfer in/out discourages partial migration
Standardize Compute Units
• Make offers cross-comparable to each other by sharing standard
nomenclature
Handhold Users Through Migration
• Overlay professional services to ease transition
Craft SLAs Comparable to Mainstream Hosting
• Uptime, latency, response time, root cause analysis
Manage I/O and Latency Bottlenecks
• Allow users to see and control latencies within and outside cloud
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