Thematic Research: Cloud Computing (2020)

Thematic Research: Technology GDTMT-TR-S271

Cloud Computing 2 June 2020

The growing dominance of the cloud

Cloud computing's importance has grown significantly in recent years. It has enabled the use of shared IT infrastructure and services to create a flexible, scalable, and on-demand IT environment. The cloud is now the dominant model for delivering and maintaining enterprise IT resources, including hardware (e.g., compute, storage, and networking), software (e.g., database, analytics, and enterprise resource planning), and platforms and tools for application developers.

Cloud computing provides users with an approach to consuming IT that is significantly more flexible, resource-efficient, and cost-effective compared to traditional IT. Cloud-based IT resources can be delivered privately, for use by one or a specific group of enterprises, or publicly, where IT resources are accessed according to multi-tenancy principles. Hybrid cloud environments, which combine the use of both public and private cloud, are becoming increasingly popular among enterprises that aim to enjoy the benefits of both. The widespread move to home-working necessitated by COVID-19 would have brought businesses to a grinding halt had investments in cloud not been made over the last 10 years. That investment now has the potential to transform the way some businesses operate.

Leaders, laggards, and disruptors

Enterprise cloud spending falls into three categories: cloud infrastructure, cloud services, and cloud professional services. Each of these three categories has its own set of leaders, laggards, and disruptors.

Cloud infrastructure

Leaders: VMware, Hewlett Packard Enterprise (HPE), IBM, Red Hat, Dell EMC, Oracle.

Laggards: Lenovo, Hitachi Vantara, Fujitsu, NetApp.

Disruptors: Amazon Web Services (AWS), Microsoft Azure, Rackspace, Google, Alibaba Cloud.

Cloud services

Leaders: AWS, Microsoft Azure, IBM, Salesforce.

Laggards: Oracle, Google, SAP, Rackspace.

Disruptors: Alibaba Cloud, HPE, Dell EMC.

Cloud professional services

Leaders: Accenture, Cognizant, IBM, Infosys, Wipro, Tata Consultancy Services (TCS).

Laggards: DXC Technology, Atos.

Disruptors: Capgemini, HCL Technologies, Rackspace.

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Contents

| PLAYERS | |----------------------------------------| | The cloud computing stack | | Cloud professional services | | TECHNOLOGY BRIEFING | | Defining cloud computing | | Business benefits of cloud computing | | Deployment models | | TRENDS | | Technology trends | | Macroeconomic trends | | Regulatory trends | | INDUSTRY ANALYSIS | | Market size and growth forecasts | | Mergers and acquisitions | | VALUE CHAIN | | Cloud services (IaaS and PaaS) | | Cloud services (SaaS) | | Cloud professional services model | | COMPANIES | | Public companies | | Private companies | | SECTOR SCORECARDS | | Cloud services | | Who's who | | Thematic screen | | Valuation screen | | Risk screen |

Players

The traditional IT stack is shifting to the cloud computing stack. The graphic below shows some of the IT industry's incumbents alongside some of the cloud disruptors, categorized by their position in the cloud computing value chain.

Who are the leading players in cloud computing and where do they sit in the value chain?

| Direction of travel | | | | | |-------------------------------------|-------------------------------------------|-------------------------------------------|-------------------------|-----| | The past | The future | | | | | Traditional IT stack | Incumbents | Cloud disruptors | Cloud computing stack | | | Adobe | Citrix | Salesforce | Paylocity | | | Cerner | Intuit | Oracle (NetSuite) | Cornerstone OnDemand | | | IBM | McKesson | Workday | ServiceNow | | | Oracle | Microsoft | Zoho | LogMeIn | | | Sage | SAP | Adobe | Veeva Systems | | | Software AG | Temenos | Splunk | Shopify | | | Ellie Mae | Medidata | Software as a service (SaaS) | | | | Applications Database | IBM | SAP | AWS | | | Oracle | Microsoft | Microsoft Azure Google Cloud | | | | Microsoft | Apple | Salesforce | | | | Unix | Linux | Platform as a service (PaaS) | | | | Operating system | VMware | IBM (Red Hat) | | | | Microsoft | Nutanix | | | | | Citrix | Oracle | AWS | | | | HPE | Inspur | Microsoft Azure | | | | Dell EMC | Cisco | Google Cloud IBM Cloud | | | | HPE | Pure Storage | Alibaba | | | | Dell EMC | NetApp | HPE Pointnext Dell Flex on Demand | | | | Cisco | Huawei | | | | | Alcatel-Lucent | Juniper | | | | | HPE | Ericsson | | | | | Virtualization Servers | Infrastructure as a service (IaaS) | | | | | Storage | | | | | | Networking Traditional IT services | Cloud professional services | | | | | IBM | DXC Technology | Jamcracker | IngramMicro (CloudBlue) | | | Accenture | Wipro | Wipro (Appirio) | IBM | | | TCS | HCL | AppDirect | Accenture | | | Informatica | NTT | Flexera (Rightscale)Salesforce (MuleSoft) | | | | Cognizant | Infosys | OpenText (Liaison) Mirantis | | | | Atos | TCS | | | | | IT consulting | Cloud brokerage | | | | | Systems integration | Cloud integration Managed cloud services | | | | | Business process outsourcing | Cognizant | Conduent | BT | NTT | | ADP | TCS | CenturyLink | Orange | | | Teleperformance | DXC Technology | SingTel | Rackspace | | | Source: GlobalData | | | | |

The cloud computing stack The market for cloud infrastructure is diverse and includes traditional full-stack infrastructure vendors such as VMware, IBM, Oracle, Dell EMC, Cisco, and HPE. These companies offer enterprises the entire suite of hardware and software components for building and operating a cloud environment, including the server, storage, and networking infrastructure, virtualization technology, and management software. In addition to offering enterprises the requisite technologies for building a private cloud environment, many of these large infrastructure vendors also offer turnkey private cloud solutions that are designed to help enterprise customers get up and running with a private cloud solution quickly and with relative ease. OpenStack continues to be an attractive technology option for enterprises considering private cloud deployment because of the cost-savings it offers over proprietary solutions, and its ability to help enterprises avoid vendor lock-in. Vendors offering OpenStack software distributions include Canonical, Huawei, Inspur, Mirantis, and Red Hat. Some vendors, including Oracle, IBM, and Rackspace, offer managed private cloud solutions that allow customers to offload much of the responsibility for managing their cloud platform. In addition to managing a private cloud on behalf of their customers, some vendors, including IBM and Rackspace, can host the cloud environment for their customers, either within their own data center or a third-party facility. Hosted private clouds appeal to enterprises that require a dedicated, private cloud environment, but which have no requirement to keep the cloud infrastructure and the supported data and workloads on-premise behind their firewall.

Many providers of private cloud solutions promote their ability to support hybrid cloud deployment and integration by enabling the management of an enterprises' private cloud to be extended to one or more public clouds. All of the largest public cloud providers now have at least one solution with which they are targeting hybrid cloud demand. Some of these solutions, including VMware Cloud on AWS, and Azure VMware Solutions, are offered via strategic partnerships with a single infrastructure vendor. Other hybrid cloud solutions, including Microsoft's Azure Stack and Google Anthos, are delivered via partnerships with multiple infrastructure vendors (e.g., Cisco, Dell EMC, HPE, Huawei, and Lenovo). Oracle's Cloud at Customer allows customers to maintain an almost identical version of Oracle's public cloud on-premises behind their firewall while integrating that environment with the Oracle public cloud. In addition to providers of private and hybrid cloud solutions, the market for cloud infrastructure includes IT vendors that specialize in a specific part of the cloud stack (e.g., security, networking, monitoring, or analytics). For example, Flexera (which acquired RightScale in 2018) and Scalr both offer specialist solutions for managing multi-cloud environments and the interplay between private and public clouds. Specific capabilities include the ability to monitor and analyze cloud resource use within an organization, cost analysis, and departmental chargeback, and the ability to monitor the performance of an application within a specific cloud environment.

Infrastructure as a service (IaaS)

The global cloud services market is a complex, multi-layered, and quickly evolving sector populated by a disparate mix of providers offering a cross-section of IaaS, PaaS, and SaaS solutions. Some of the most dominant providers deliver solutions at all layers of the cloud stack (e.g., Microsoft Azure, AWS, IBM) while others specialize in one segment. On the IaaS front, a small handful of providers dominate the landscape. AWS, a provider that essentially made the market by selling excess compute and storage capacity from its flagship ecommerce business, has continued to expand rapidly in the public space as the clear leader of the IaaS segment (that also offers PaaS and SaaS solutions). Microsoft has parlayed its ubiquitous enterprise presence in productivity solutions into an expansive role as not only one of the most important SaaS suppliers but one of the big three IaaS providers. Google and Alibaba are also key contenders, both expanding their respective international footprints and extending their portfolios to appeal to enterprise prospects. At the time of writing, Google has 22 regions and over 140 edge locations. Alibaba has added a new cloud region in London two years after opening one in Frankfurt. Alibaba has been slower to grow its US presence, although the company says it is on track to expand into the key market.

There is also a big role for solution providers to play in providing supporting architecture design, application reengineering, migration, and post-deployment support services. A range of system integrators (SIs) and providers with backgrounds in traditional hosting and managed IT services partner with many of the top cloud service providers to assist clients in digital transformation projects, in which transitioning critical application workloads to the cloud is an essential element.

Telco and SIs still need to sort out their competitive differentiation, since both sets of providers are partnering heavily with many of the same application providers (SAP, Oracle, Salesforce), public cloud companies (AWS, Microsoft), and hardware vendors, and both bring certain strengths in service and support. Several telcos are partnering with Huawei on OpenStack-based public cloud platforms, while others (including most SI competitors) are instead offering customers premium access to AWS or Microsoft platforms (or, in the case Vodafone and SingTel, Alibaba's public cloud).

Most competitors are developing their hybrid and managed multi-cloud capabilities across data centers, on-premises, and public cloud environments. Some, like BT, have developed platforms that support the management of IT and cloud-based services for enterprises to use as their internal service providers, or in business-to-business-to-business (B2B2B) situations. With Microsoft Azure Stack and other hybrid solutions from VMware and AWS driving awareness of the benefits of hybrid cloud, all cloud and hosting providers are working to integrate those capabilities into their portfolios.

Despite their incumbency, many traditional IT infrastructure vendors, including HPE and Dell EMC, are now offering cloud-based, IT-as-a-service options alongside traditional IT solutions. This puts them in an interesting position of being both incumbent IT vendors and cloud-based disruptors for IaaS, PaaS, and SaaS.

Platform as a service (PaaS)

On the PaaS front, traditional application platforms providers dominate the landscape. Microsoft Azure is one of the industry's pioneering offerings targeting enterprises, supporting a comprehensive cloud model, including IaaS capabilities. Microsoft's billions of dollars of annual investment in Azure paid off when the company repositioned itself as a cloud-first and mobile-first company. Microsoft took the path to cloud-enable its core development technologies, including BizTalk and Visual Studio development tools, in support of hybrid cloud capabilities, while building out new services, including mobile and Internet of Things (IoT), as part of Azure. Red Hat OpenShift also had an early lead in the PaaS space, using its prominence in the Linux space, via Red Hat Enterprise Linux (RHEL), to attract its operations support systems (OSS) customers to its rudimentary app-hosting PaaS, which transformed to a containers as a service offering. Now in its fourth version, OpenShift represents a tightly-integrated stack spanning RHEL OS to OpenShift to better address operations' need for automation (e.g., self-management) and an autonomous platform. Following its acquisition of Red Hat, IBM is well-positioned to meet customers' OSS needs via OpenShift, alongside its cognitive app development, integration, and app management solutions, including IBM Cloud Private's hybrid cloud management capabilities. Much of Amazon's PaaS success, including artificial intelligence (AI), microservices, and serverless, comes from its roots bringing storage and