1

Final R & D Report

Market Presence of Cloud Computing

By
08030247123
Rachit Raman
SSM – Batch (2008-10)
Symbiosis Centre for Information Technology
(A constituent member of SIU Established under section 3 of the UGC Act 1956
vide notification No. F.9-12/2001-U.3 of the Government of India)
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ACKNOWLEDGMENT

The Research on “Market Presence of Cloud Computing” would not have been successful
without the help and support of many people, at different places.

I would like to thank the faculty at SCIT for their immense support and guidance provided at
every step. I would also like to thank my mentors and colleagues for their constant encouragement
and attention throughout my research. This research would not have been completed successfully
without their motivation. Thanks to all.
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Table of Contents

Chapter 1

Introduction………………………………………………………………………………4

1.1 Objective…………………………………………………………………………6
1.2 Scope……………………………………………………………………………..6
1.3 Methodology……………………………………………………………………..6

Chapter 2

Review of Literature……………………………………………………………………..10

Chapter 3

Analysis of Work Done………………………………………………………………….37

3.1 Analysis of Problem under research………………………………………….37

3.2 Alternative Solution and their advantages and Disadvantages………………37

3.3 Proposed Solution……………………………………………………………37

3.4 Possible Applications in the Industry………………………………………..38

Chapter 4

Learnings…………………………………………………………………………………39

4.1 Findings………………………………………………………………………………39

4.2 Recommendations……………………………………………………………………39

4.3 Conclusion……………………………………………………………………………39

Appendix…………………………………………………………………………………40

Refrences…………………………………………………………………………………44
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Chapter 1

Introduction
Cloud-Computing is a broad and ill-defined term, but in essence it amounts to
virtualised third-party hosting. That is, rather than renting part or all of an actual physical
server from a hosting company, you rent a certain amount of server resources. Your server
runs inside a virtual container which can be moved from one physical server to another
without interruption of service. such a container is also capable of spanning multi physical
machines , giving it potentially limitless resources.

A web server has typically 3-tiers to it : the physical infrastructure, the operating
system platform, and the web application software being run. A cloud container may contain
one , two or all of these layers:

 Software
 Platform
 Infrastructure

Platform

Software

Infrastructure

Fig. 1. Overview of Cloud Computing

In brief these are the three options :

 If you want a fully operational server with total control over the operating
system and configuration , you want Infrastructure as a Service (IaaS).
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 If you don’t want any configuration hassles at all, if you just want to upload
your files and leave your website to run, you want Software as a
Service(SaaS).
 For something in between , with a pre-configured operating system but a
reasonable amount of control over the rest of the configuration, Platform as a
Service(PaaS) is for you.

Until the early 1990’s Grid Computing was the buzzword but since 2000’s Cloud
Computing gained momentum and this can be found out from Google Trends which observed
that the popularity of Cloud became more than the Grid Computing in 2000’s , while Cluster
Computing also have been losing its gleam since 2000’s. Today Cloud Computing is the
much hyped amongst Cloud , Grid & Cluster Computing.

Fig.2. Comparison of Grid, Cluster & Cloud Computing according to Google Trends

With the growing industry shifts towards Platform as a service (PaaS) and Software as a
Service (SaaS) there is going to be an increase in the number of Cloud Platforms available.
This is evident from the results shown by Google Trends. The already available Cloud
Platforms available in the market are Amazon Elastic Compute Cloud (EC2), Google App
Engine , Microsoft Live Mesh , Sun’s Sun Grid , GRIDS lab Aneka.

Eyeing an opportunity in the market due to increased demand , researches by Merill

Lynch , Gartner, Avanade, Forrester, Berkley, Salesforce.com , IBM, Sun, Oracle and many
other big names had conducted surveys and has shown increase in the market opportunities
for Cloud Computing. Gartner for instance speculated the Cloud Market to be of $160 Billion
by 2013 which discloses the secret why everyone is eyeing Cloud and big names like
Microsoft, Google , Amazon etc. are already in the market.
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1.1 Objective

It is evident by now, that Cloud Computing is a hot cake in IT industry today, but still
there may be different factors ruling the demand of each, different opportunities for each and
with different values of market captured by each. The primary objective of this research is to
capture the insight about these factors only and do a quantitative analysis of the market
presence of Cloud Computing.

 To analyse the Motivating Factors for Cloud Computing driven IT industry .

 To look at the speculated market, expected growth, possibilities, and competition for
the Companies going with the Cloud Computing.

 To look at the reality of Cloud Computing in the market , i.e; the Market Presence of
Cloud Computing.

1.2 Scope
Since the Cloud Computing is a broad term and is comprises of SaaS, PaaS & IaaS as
we have seen covering all three is not possible therefore to limit the scope of this research the
Scope of the project is limited to the Market Presence of Cloud Computing with focus on
Software as a Service(SaaS) .

 The scope includes the current Market occupied by SaaS, its expected future
market and motivating factors for growth.
 Survey in IT/non-IT Companies those benefit Cloud Computing or are planning to
do so.
 To analyse the Market Presence of Cloud Computing we are taking into concern
only the revenue generated by the Cloud or more specifically SaaS , not what is
consumed by it.

To analyse the Market Presence of Cloud Computing we are also taking into concern
the usage of SaaS based services in different categories of services.We have also excluded
any income generated from consulting services for Cloud Computing implementation.

1.3 Methodology
Primary Methodology:
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Telephone, mail or Internet surveys, one to one communication or by sending

questionnaire to IT people who are currently in the field of Cloud Computing or to those
who are directly responsible for the implementation of Cloud Computing in their company.

Secondary Methodology:

Published related documents , articles and/or electronic sources such as Internet

sources from which speculations can be made related to the research were gathered.

The following questionnaire was designed to gauge the Market Presence of Cloud
Computing to predict its growth and future expectations and other related factors.

1. What role are you in , in your company?

1) CTO / CIO / CEO/ CFO/ CRO /GM / Strategic Level

2) Operational Level
3) Managerial Level
4) IT Consultant
5) Others

2. What Sector / business is your company in ?

1) IT or ITES
2) Production/Manufacturing
3) Telecom/Communications
4) Government
5) Healthcare
6) Media
7) Education
8) Financial Services
9) Services (excluding IT Services)
10) Retail
11) Transportation
12) Wholesale Trade
13) Agriculture, Mining , & Construction
14) Others

3. Are you aware of Cloud Computing and related terms like SaaS , PaaS and IaaS?

1) Yes
2) No

4. Have you already implemented Cloud Computing service like SaaS, IaaS or PaaS?

1) Yes
2) No
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5. Are you looking forward to implement Cloud Computing Service like SaaS?
1) Yes
2) No

6. If you have already implemented SaaS in your company , do you see a decrease in
costs?
1) Yes
2) No

7. How Long has your organization been using SaaS?

1) Less than one year

2) One to less than two years
3) Two to less than three years
4) Three to less than four years
5) Four to less than five years

8. Why is your organization currently using or planning to use SaaS in the next 12
months?

1) Considered most cost-effective from a TCO standpoint than on-premises solution

2) Considered to be easier and/or faster to deploy than on-premises solution
3) Lack of IT resource to implement an on-premises solution
4) Limited capital expense
5) Perceived higher user acceptance than on-premises solution
6) Best alternative for new regional alternative
7) Temporary solution to solve a temporary business need

9. In which form of service are you using planning to use SaaS in your organization?

1) Financial (Accounting)
2) Sales
3) E-mail
4) Expense management
5) Customer Service and Support
6) Marketing Automation
7) Employee Performance Management
8) Supply Chain Planning
9) Recruitment
10) Sourcing and e-Procurement
11) Warehouse Management
12) Employee Self-service
13) Travel booking system
14) Web conferencing
15) Transportation management
16) Talent management
17) E-learning
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10. What are your organization plans for SaaS usage in the future?
1) Reduce current usage
2) Maintain current usage
3) Expand current usage
4) Unsure about the usage plans for the future

11. How is your organization going to use SaaS in the future?

1) As an Alternative (replacement or extension)
2) As a deployed Net-New SaaS Solution
3) As a Temporary Prototype to test a New process or New Application
Functionality
4) As an alternative (replacement or extension) to existing “shelfware” (on-premises
licences that have not been implemented.

12. Is your organization currently transitioning from a current on-premises solution to a

SaaS solution?

1) Yes
2) No

13. Why is your organization currently transitioning from a current on-premises solution
to a SaaS solution?

1) TCO became too high

2) Performance Expectations not met
3) Integration Requirements became too significant
4) Application did not scale well
5) Changing in sourcing strategy
6) Insufficient user adoption
7) others

14. Is your organization currently transitioning from a SaaS solution to an on-premises

solution?
1) Yes
2) No

15. Why is your organization currently transitioning from a SaaS solution to an on-
premises solution?
1) Integration Requirements became too significant
2) Performance Expectations not met
3) Data security requirements increased
4) Change in sourcing strategy
5) TCO became too high
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6) Application did not scale up well

7) SaaS used as a prototype only
8) Insufficient user adoption
9) Others

Chapter 2

Review of Literature
For analysis purpose I have used two approaches –
(1) Primary Research – prepared a questionnaire and sent it to those responsible for
taking critical decisions in their firm .
(2) Secondary Research – conducted a secondary research on research papers
published by various firms and organizations.

The findings which came from the primary research are as follows :

The following questionnaire was designed to gauge the Market Presence of Cloud
Computing to predict its growth and future expectations and other related factors, the reply to
the questionnaire is showed in figures as well as in diagrammatic format.

1. What role are you in , in your company?

1) CTO / CIO / CEO/ CFO/ CRO /GM / Strategic Level

2) Operational Level
3) Managerial Level
4) IT Consultant
5) Others

Reply

Role % of respondents
CTO/ CIO/ CEO / CFO/ CRO / GM / 9
Strategic Level
Operational Level 11
Managerial Level 72
IT Consultant 6
Others 2
Table.1.
Showing the response pictorially in a bar graph , it is in the form shown below :
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% of respondents
Others

IT Consultant

Managerial Level
% of respondents
Operational Level

CTO/ CIO/ CEO / CFO/…

0 20 40 60 80

Fig.3.

2. What Sector / business is your company in ?

1) IT or ITES
2) Production/Manufacturing
3) Telecom/Communications
4) Government
5) Healthcare
6) Media
7) Education
8) Financial Services
9) Services (excluding IT Services)
10) Retail
11) Transportation
12) Wholesale Trade
13) Agriculture, Mining , & Construction
14) Others

Reply

A total of 258 replies came to the question and various sectors to which they follow are
enlisted below.

Sector/ Business Replies

Manufacturing (Discrete) 16
Services(excluding IT Services) 16
Financial Services 14
Retail Trade 11
Manufacturing (Process) 9
Communications 7
Transportation 5
Healthcare Providers 4
Wholesale Trade 4
Government 3
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Education 2
Energy 2
Agriculture, Mining & Construction 2
Government (Federal, National or 1
International)
Utilities 1
Others 4
Table.2.

Replies
Others
Utilities
Government (Federal, National or…
Agriculture, Mining & Construction
Energy
Education
Government
Wholesale Trade
Healthcare Providers Replies
Transportation
Communications
Manufacturing (Process)
Retail Trade
Financial Services
Services(excluding IT Services)
Manufacturing (Discrete)

0 2 4 6 8 10 12 14 16 18

Fig.4

3. Are you aware of Cloud Computing and related terms like SaaS , PaaS and IaaS?

1) Yes
2) No

Reply

In reply to the Question the no. of replies which were positive were and the number of
negative results were the answer came as Yes from 60% of respondents who were
approached.

Reply Respondents (in %)

Yes 60
No 40
Table.3.
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Respondents (in %)
Yes No

40%

60%

Fig.5.

4. Have you already implemented Cloud Computing service like SaaS, IaaS or PaaS?

1) Yes
2) No
Reply

Reply Reply (in %)

Yes 61
No 39
Table.4.

Reply (in %)
Yes No

39%

61%

Fig.6.

5. Are you looking forward to implement Cloud Computing Service like SaaS?
1) Yes
 14

2) No

Reply
Reply Reply(in %)
Yes 84
No 16
Table.5.

Reply(in %)
Yes No

16%

84%

Fig.7.

6. If you have already implemented SaaS in your company , do you see a decrease in
costs?
1) Yes
2) No

Reply

The response to this question came as 2/3rd of respondents, who reportedly were using Cloud
Computing or specifically SaaS in their organization reported that they believe that the costs
are decreased upon implementing the SaaS in the company

Reply Reply ( in %)
Yes 67
No 33
Table.6.
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Reply ( in %)
Yes No

33%

67%

Fig.8.

7. How Long has your organization been using SaaS?

1) Less than one year

2) One to less than two years
3) Two to less than three years
4) Three to less than four years
5) Four to less than five years

Reply

Reply Replies(in %)
Less than one Year 14
One to less than Two Year 25
Two to less than Three Years 20
Three to less than Four Years 11
Four to less than Five Years 6
Five Years or More 24
Table.7.
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Replies(in %)
Less than one Year One to less than Two Year
Two to less than Three Years Three to less than Four Years
Four to less than Five Years Five Years or More

24% 14%

6% 25%
11%
20%

Fig.9.

8. Why is your organization currently using or planning to use SaaS in the next 12
months?

1) Considered most cost-effective from a TCO standpoint than on-premises solution

2) Considered to be easier and/or faster to deploy than on-premises solution
3) Lack of IT resource to implement an on-premises solution
4) Limited capital expense
5) Perceived higher user acceptance than on-premises solution
6) Best alternative for new regional alternative
7) Temporary solution to solve a temporary business need

Reply

Answer to this question came from the 258 respondents who all gave different reasons which
are summarized below.

Reply Replies
Considered More Cost- Effective from a 61
TCO standpoint than On-Premises
solution
Considered to be Easier and/or faster to 57
Deploy than On-Premises solution
Lack of IT resources to implement an 37
On-Premises solution
Limited Capital Expense 34
Perceived Higher user acceptance than 30
On-Premise Solution
Best Alternative for New Regional 28
Deployment
Temporary Solution to solve a 18
Temporary Business Need
 17

Others 4
Table.8.

Replies
Others

Temporary Solution to solve a Temporary…

Best Alternative for New Regional…

Perceived Higher user acceptance than On-…

Limited Capital Expense Replies

Lack of IT resources to implement an On-…

Considered to be Easier and/or faster to…

Considered More Cost- Effective from a…

0 10 20 30 40 50 60 70

Fig.10.

9. In which form of service are you using planning to use SaaS in your organization?

1) Financial (Accounting)
2) Sales
3) E-mail
4) Expense management
5) Customer Service and Support
6) Marketing Automation
7) Employee Performance Management
8) Supply Chain Planning
9) Recruitment
10) Sourcing and e-Procurement
11) Warehouse Management
12) Employee Self-service
13) Travel booking system
14) Web conferencing
15) Transportation management
16) Talent management
17) E-learning

Reply

The reply to this question has been summarized in the table below:

Form of service Currently using Not using but Not Even

Planning to use Planning to use
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in next 12 in next 12
months months
Financial 51 27 22
Accounting
Sales 39 29 32
E-mail 42 24 34
Expense 31 30 39
Management
Customer Service 31 29 40
& Support
Marketing 29 28 43
Automation
Employee 31 27 42
Performance
management
Supply Chain 20 35 45
Planning
Recruitment 21 31 48
Sourcing & e- 32 20 48
Procurement
Warehouse 23 27 50
Management
Employee Self 24 25 51
Service
Travel Booking 26 24 50
System
Web Conferencing 24 22 54
Transportation 20 18 62
Management
Talent 18 20 62
Management
E-learning 15 23 62
Table.9.
 19

E-learning
Talent Management
Transportation Management
Web Conferencing
Travel Booking System
Employee Self Service
Warehouse Management Currently using
Sourcing & e-Procurement
Recruitment Not using but Planning to use in
Supply Chain Planning next 12 months
Employee Performance… Not Even Planning to use in next
Marketing Automation 12 months
Customer Service & Support
Expense Management
E-mail
Sales
Financial Accounting

0 20 40 60 80 100 120

Fig.11.

10. What are your organization plans for SaaS usage in the future?
1) Reduce current usage
2) Maintain current usage
3) Expand current usage
4) Unsure about the usage plans for the future

Reply

Reply Replies(in %)
Reduce Current Usage 4
Maintain Current Usage 42
Expand Current Usage 46
Unsure about Usage Plans for the future 8
Table.10.
 20

Unsure Reduce
about Usage Replies(in %) Current
Plans for the Usage
future 4%
8%

Maintain
Expand Current Current Usage
Usage 42%
46%

Fig.12.

11. How is your organization going to use SaaS in the future?

1) As an Alternative (replacement or extension)
2) As a deployed Net-New SaaS Solution
3) As a Temporary Prototype to test a New process or New Application
Functionality
4) As an alternative (replacement or extension) to existing “shelfware” (on-premises
licences that have not been implemented.

Reply

Answering to this question also , the 258 respondents gave their answers as follows :

Reply Replies
As an alternative(replacement or extension) to an 56
Existing On-Premises Application
As a deployed Net-New SaaS Solution 43
As a temporary prototype to test a new process or new 28
Application functionality
As an alternative(replacement or alternative) to existing 19
“Shelfware” ( n-Premises Licenses that have not been
implemented
Table.11.
 21

Replies

As an alternative(replacement or
alternative) to existing…

As a temporary prototype to test

a new process or new…
Replies
As a deployed Net-New SaaS
Solution

As an alternative(replacement or
extension) to an Existing On-…

0 10 20 30 40 50 60

Fig.13.

12. Is your organization currently transitioning from a current on-premises solution to a

SaaS solution?

1) Yes
2) No

Reply

Reply Replies(in %)
Yes 37
No 63
Table.12.

Replies(in %)

Yes
37%

No
63%

Fig.14.
 22

13. Why is your organization currently transitioning from a current on-premises solution
to a SaaS solution?

1) TCO became too high

2) Performance Expectations not met
3) Integration Requirements became too significant
4) Application did not scale well
5) Changing in sourcing strategy
6) Insufficient user adoption
7) Others

Reply

The reply to this question came from only 256 respondents , who sited various
reasons of transition from on-premise to a SaaS solution.

Reply Respondents
TCO became too high 50
Performance expectations not met 50
Integration requirements became too 48
significant
Application did not scale well 44
Change in sourcing strategy 42
Insufficient user adoption 20
Others 2
Table. 13.

Respondents
Respondents

Others 2

Insufficient user adoption 20

Change in sourcing strategy 42

Application did not scale well 44

Integration requirements became too… 48

Performance expectations not met 50
TCO became too high 50

Fig.15.
14. Is your organization currently transitioning from a SaaS solution to an on-premises
solution?
1) Yes
2) No
 23

Reply

The reply to this question has been summarized as a Pie Graph form, below.

Reply Replies(in %)
Yes 14
No 86
Table.14.

Replies(in %)
Yes No

14%

86%

Fig.16.
15. Why is your organization currently transitioning from a SaaS solution to an on-
premises solution?
1) Integration Requirements became too significant
2) Performance Expectations not met
3) Data security requirements increased
4) Change in sourcing strategy
5) TCO became too high
6) Application did not scale up well
7) SaaS used as a prototype only
8) Insufficient user adoption
9) Others

Reply

Answers to this question were not only single but multiple in many cases, and thus the
Replies have been put in percentage.

Reply Replies(in %)
Integration requirements became too 56
significant
Performance expectations not met 48
 24

Data Security requirements increased 48

Change in sourcing strategy 44
TCO became too high 41
Application did not scale well 41
SaaS used as a Prototype only 41
Insufficient user adoption 30
Others 7
Table.15.

Replies(in %)
Others
Insufficient user adoption
SaaS used as a Prototype only
Application did not scale well
TCO became too high
Replies(in %)
Change in sourcing strategy
Data Security requirements increased
Performance expectations not met
Integration requirements became too…

0 10 20 30 40 50 60

Fig.17.
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The findings which came from the secondary research are stated below:

International Journal of Database Management Systems , Nov.2009 ( IDC )

estimates that roughly 10% of 64 Billion $ was spent on cloud computing applications in
year 2008.

IDC survey on 500 IT decision makers says that I companies are increasingly
“turning to new technologies to cut costs , rather than cutting on technology uptake”

The ROI is estimated to be 3-5 times cheaper than in-house data centres and hosted
applications

In its report published in October 2008, IDC predicted the Worldwide IT Cloud
Spending in 2012 as follows:

Area of expenditure Spending(in %)

Applications 52
Software 18
Application Development 9
Server 8
Storage 13
Table.16.

Fig.18.

The IDC report gave the predictions as :

2008 2012 Growth

Cloud IT Spending $16B $42B 27%
Total IT Spending $383B $494B 7%
 26

Total Non-Cloud $367B $452B 4%

Spending
Cloud / Total Spend 4% 9%
Table.17.

The Tuck School of business at Dartmouth – center for digital strategies says that
the CAGR of world SaaS revenue is going to be 32% from 2006 to 2011

SaaS revenue was 1.6% of $237B worldwide software market in 2006. According
to this report Salesforce.com was market leader in terms of revenue of $451.7 million and
market share of 12.4% . Webex made a collection of $365.0 million and held a marketshare
of 10%. Citrix Online holds the 4th rank with $148.8 milliion and 4.1% marketshare.
Microsoft came 5th with $138.4million and 3.8 marketshare . Salesforce during survey had
2.1 M subscribers , 677M in sub revenues and over 50% share of on-demand CRM

Gartner in its report published in 18th March 2009 as “Forecast : Sizing the
Cloud : Understanding the opportunities in Cloud services” estimated the market to be
$46.4 Billion and estimated the market to be $150.1Billion growing at a CAGR of 26.5%

Gartner in this report estimated the market of Infrastructure as a Service (IaaS ) to

be only 7% of the overall cloud services market.

Gartner in this report says that various segments in which Cloud Computing is
present are :
 Business Process services – payroll , printing , e-commerce
 Application Services – eg. Google Applications
 Information Services – RSS ( Really Simple Syndication)
 Application Infrastructure Services – RAD or rapid Application
Development Platforms
 System Infrastructure Services – Server Operating System , Client OS,
storage
 Management and Security Services – operational management of access,
consumption, delivery and service-level agreements associated with cloud-
based services.

Cloud Services , Worldwide, 2008-2013 ( Billion of Dollars)

2008 2009 2010 2011 20112 2013 CAGR(%)

Business
Process
Services
Cloud Based 28 33 38.9 47.4 59.2 76.9 22.1
Advertising
E-commerce 1.3 1.8 2.5 4 7.2 12 56
Human 7.5 8.9 11.3 14.1 16.2 18 19
Resources
Payment 0.3 0.5 0.75 1 1.9 2.6 54
Processing
Others 1.8 2.4 3.5 4.9 7 9.8 40.3
 27

Business 38.9 46.6 57.0 71.4 91.5 119.3 25.1

Process
Services Total
Applications 5.04 6.52 9.6 11.4 14.6 20.2 32
Total
Application
Infrastructure
Platform 0.05 0.07 0.09 0.13 0.2 0.4 51.6
Infrastructure
Integration 1.47 1.54 1.62 1.7 1.78 1.86 5
Services
Application 1.52 1.61 1.71 1.83 1.98 2.26 8.3
Infrastructure
Total
System
Infrastructure
Compute 0.66 1.17 2.00 3.40 4.90 6.80 59.5
Services
Storage 0.009 0.025 0.084 0.241 0.525 0.750 52.8
Services
Backup 0.30 0.37 0.45 0.55 0.67 0.82 22.3
Services
System 0.96 1.56 2.53 4.19 6.10 8.37 53.8
Infrastructure
Total
Infrastructure 2.6 3.4 5.0 6.0 8.1 10.6 33.5
Total
Cloud 46.4 56.3 70.8 88.8 114.2 150.1 26.5
Services Total
Table.18.
The report says that the largest component of overall cloud based services is cloud
based marketing, holding 60% market in 2008 and is expected to hold 50% market in 2013.

Other business process services are the second largest category, growing to $42
billion by 2013, at 31% CAGR. This include some business some business process utility
revenue, payroll services as well as retail services.

Cloud application services evolving from SaaS offerings are almost twice as large
as market for system infrastructure, and will continue to generate greater revenue through
2013.
 28

Fig.19.

2008 2013
Cloud-Based Advertising 61 52
Applications 11 13
Integration services 3 1
Storage services 0 0
Other business process 23 28
services
Platform infrastructure 0 0
Compute services 1 5
Backup services 1 1
Table.19.

A research report by Wintergreen research says that Salesforce.com holds 78%

shares and NetSuite holds 13% share in CRM cloud based computing.

Report by Wintergreen Research expected the market in 2008 to be $36billion and

is expected to reach $160.2billion by 2015.

Markets according to reports are comprised of search engines , communication

technology, application development without programming, and CRN automation of
process.

The “Worldwide cloud Computing Market Shares, Strategies, and Forecasts ,

2009-2015” forecasts the market to be $36Billion in 2008 and $160.2Billion in 2015. It
also says that Salesforce.com holds 78% market and 13% is being hold by Netsuite. It says
that Cloud computing is expressed as search engine software and software as a
service(SaaS). ERP , CRM and e-commerce companies participate in the market.
 29

According to this report Advertising drives the cloud computing.

According to Merill Lynch research report Cloud Computing is expected to be a
$160Billion market including $95 Billion in business and productivity applications and
another $65Billion in online advertising.

A research “ Global Survey of Cloud Computing” conducted by Avanade group

and published in September 2009 says that economy has a major role in implementing
Cloud Computing , in its report the vast majority – more than 70% of 502 respondents
globally said that the economy has either increased or had no impact on cloud adoption.
In its research Avanade found that companies reporting no plans to adopt cloud computing
declined from 54% to 37% within 9 months.

There was seen an increase of 320% in the rate of respondents with cloud computing
deployment plans or trials in place in 9 months of time.

More than 70% of global companies reporting that the economy has either
helped(13%) or had no effect(58%) on efforts to implement cloud computing.

In the same research , 59% of global of respondents showed a cautious optimism

about IT projects amidst the global recession.

The Avanade research says that less than 5% of the respondents are using Cloud-only
model.

The reason cited for not using Cloud services is security concern.

Those using an on-premises IT systems only had dropped from 61% to 41% in just 9
months of research. In the same interval of 9 months those using a combined approach on a
global level have increased to 54% from 33%.

In the same report by Avanade more than half of respondents reported using SaaS and
in the US that number was 68%.

More than 90% of respondents who were SaaS users said that their company’s
experience with SaaS has been largely successful and 62% of the respondents plans to
increase their SaaS use in the one year.

In another survey on Cloud Computing “2009 Global Survey of Cloud Computing”

the research firm Avanade revealed that global survey of C-level executives and IT decision
makers shows a clear , collective mandate : use technology to cut the cost of doing business.
These decision makers widely recognize a new technology option, Cloud Computing ,as a
viable way to reduce capital expenditure and operational costs.

In this report 60% report that existing Internal IT systems are too expensive.

It is said in this report that 6 out of 10 C-level executives or IT decision makers are
familiar with cloud computing.
 30

71% Business executives and IT decision makers across globe, overwhelmingly agree
that cloud computing is the real deal .

Nearly 2 in 3 IT executives worldwide believe cloud computing reduces up-front costs.

In this report , it is reported that clear majority 61% of companies are not using cloud
computing technologies at this time. And the vast majority 84% of those that currently
depend on internal IT systems have no plans to switch to cloud computing technologies in the
next 12 months.

The report says that only 5% of companies surveyed have adopted cloud computing are using
the technology for their IT needs.

50% of those companies who have adopted cloud computing are using the technology for
business application such as customer relationship management(CRM).

46% of respondents are using cloud computing for data storage.

44% of respondents are using cloud computing for HR services like recruitment management.

Of those companies that use some form of cloud computing , more than a third (36%) are
increasing their use since the economic downturn began in 2008.

Nearly a fourth (23%) of the respondents in this report work in the largest companies with
10,000 employees or more.

Another Research by Avanade, “Global Study: Cloud Computing Adoption Rising

Rapidly Worldwide” , accounted the top 3 reasons what are preventing people to adopt
cloud Computing are

1. Security Concerns
2. No immediate need of implementation
3. Costs

Another survey made by the Avanade group “Global survey : Growing embrace of
Software as a Service” , revealed the usage of SaaS applications by different companies.

Results shows that a majority of respondents are deploying SaaS in customer relationship
management(CRM) and in Business Intelligence(BI) applications.

The complete statistics are given in the table below:

Business Application Percentage of Users

CRM 52
BI 47
Collaboration 47
E-mail 47
Financial System 40
E-Commerce 40
 31

ERP 38
HR 42
Table. 20.

Percentage of Users

ERP
11% HR CRM
12% 15%
BI
13%
E-Commerce
11%
Financial Collaboration
System 13%
E-mail
12%
13%

Fig.20.

While more than 90 percent report their SaaS deployments as successful, more than
half (54 percent) would have done a more rigorous analysis of costs and business benefits
before deploying SaaS‐based applications.

However, of those currently using SaaS, 65 percent say they have generated a
reasonable return on investment from their SaaS deployment. And, more than 62 percent of
respondents report plans to increase their SaaS use in the next year.

Fig.21.
 32

Research by Morgan Stanley shows the contribution of various online activities in

Worldwide Share of Online time

Various Online Activities Percentage of Users

Work, Business & Education 6
Entertainment & Leisure 14
Shopping & Travel 8
Social Connections 16
Communications 22
Others 35
Table.21.

Putting these figures into a pie graph :

Percentage of Users
Work, Business & Education Entertainment & Leisure
Shopping & Travel Social Connections
Communications Others

6%

34% 14%
8%

16%
22%

Fig.22.

The report also states how much share every Online Ad Leader has

Online Ad Leader Percentage of Market Captured

Google 65
Yahoo 22
Microsoft 8
AOL 7
Table.22
 33

Percentage of Market Captured

Google Yahoo Microsoft AOL

8% 7%

21%
64%

Fig.23

Gartner’s Report “ User Survey Analysis: Software as a Service, Enterprise application

Markets, Worldwide, 2008” surveyed and found answers to some key questions regarding
cloud computing

To the question , Why is your organization currently using or planning to use SaaS in the next
12 months? The answer came as.

61 said , they considered more cost-effective from a TCO standpoint than on–premises
solution.

57 said they considered it be be easier and/or faster to deploy than on-premises solution

37 said they considered it due to lack of IT resources to implement an on-premises solution

34 said due to limited capital expense

30 sited Perceived Higher acceptance than On-premises solution

28 said they found it best alternative for new regional deployment

18 said due to temporary solution to solve a temporary business need

And 4 sited other reasons

Gartner in this report found Financial Accounting software to be most popular SaaS
application then came Sales ,and E-mail to be the most popular applications with 51% using
Financial Accounting application uses it as SaaS, 39% of those accessing Sales applications
use it as a SaaS application and 42% people using the Email application uses it as a SaaS.
 34

The reply to the question on whether the Organization Expects to maintain or grow usage of
SaaS came as

46% said they are planning to Expand Current Usage

42% said they will maintain current usage

8% said they are unsure about the usage plans for the future

4% said they would reduce current usage

To find out the factors which will support growth of Cloud Computing the answer to the
question – Why is your organization currently transitioning from a current on-premises
solution to a SaaS solution ?

The reply to the above question came as

50 people said – TCO became too high

50 said – Performance expectations not met

48 said – Integration requirements became too significant

44 said application did not scale well

42 said Change in sourcing strategy

20 said Insufficient user adoption

2 sited other reasons

A report by ZDNet India says :

Adoption rates doubled from 2004 to 2008 , with 21% of small businesses and 31% of
medium-size companies currently using SaaS.

Not only this it enlists the advantage to companies on following the Cloud Computing
Approach
 35

1. Low start-up costs make cloud computing especially attractive to small business and
entrepreneurs.
2. Low cost for sporadic use. Turbo Tax online is free for “standard” taxpayers.
Similarly, some cloud-based business services, such as Google Apps, do not need to
be purchased for one-time or infrequent computing.
3. Ease of management. No need to worry about keeping licenses current or purchasing
additional hardware.
4. Device and location independence. The way you access a cloud could be your
desktop. It could be someone else’s computer. It could be a smart phone.
5. Rapid innovation. Because vendors are able to roll out new features incrementally,
they can respond to user needs more rapidly.

Referring the report “Above the Clouds : A Berkley view of the Cloud Computing” it
enumerates the Top 10 obstacles and opportunities for Cloud Computing

Obstacles :

1. Availability of Service
2. Data lock in
3. Data Confidentiality & Auditability
4. Data Transfer Bottlenecks
5. Performance Unpredictability
6. Scalable Storage
7. Bugs in large-scale distributed systems
8. Scaling quickly
9. Reputation Fate sharing
10. Software Licencing

Opportunities:

1. Use multiple cloud providers to provide business Continuity; use elasticity to defend
against DDOS attacks.
2. Standardize APIs; Make compatible software available to enable surge computing.
3. Deploy Encryption, VLANs, and Firewalls; Accommodate National Laws via
Geographic data storage.
4. FedExing Disks ; Data Backup/Archival; lower WAN Router Costs; Higher
Bandwidth LAN switches.
5. Improved Virtual machine support; Flash Memory; Gang scheduling VMs for HC
apps.
6. Invent Scalable Store.
7. Invent debugger that relies on distributed VMs.
8. Invent Auto-Scaler that relies on Machine Learning; Snapshots to encourage Cloud
Computing Conservationism.
9. Offer reputation-gaurding services like those for e-mail.
10. Pay-for-use licences; bulk use sales.
 36

According to the Salesforce.com report “5 Reasons CIOs are Adopting Cloud Computing
in 2009” are :

1. Delivers faster time to value

2. Requires no up-front capital expense
3. Minimizes operational costs
4. Requires fewer technical resources
5. Simplifies integration
 37

Chapter 3

Analysis of Work Done

3.1 Analysis of Problem under Research

The problem under research can be defined as to find the Market Presence of Cloud
Computing and speculate the possibilities , expected growth , motivating factors for the
growth of Cloud Computing .

Since Cloud Computing can be basically segregated into three areas which are
Infrastructure as a Service ( IaaS ), Platform as a Service ( PaaS ) and Software as a Service
( SaaS ) we will be mainly emphasizing upon Software as a Service or SaaS and we have
restricted our research to this area only.

What the problem basically is to estimate

(1) the spending on SaaS only
(2) and to estimate the spending on various areas of SaaS
(3) to speculate the growth factors / motivating factors
(4) to speculate the future of Cloud Computing

3.2 Alternative Solutions and their advantages and disadvantages

The alternative solution to the Cloud Computing or the SaaS is to use the on-premise
solution or the traditional method , but it has got several advantages and disadvantages, which
are as follows:

Advantages :

1. If on-premise solution already exists, then it is sometimes advantageous not to replace

them, since implementing Cloud Computing and replacing on-premise solution
involves cost.
2. On-premise solutions are more secure, compared to the Cloud Computing solution.

Disadvantages:

1. TCO or the Total Cost of Ownership is reduced with the implementation of Cloud
Computing or the SaaS.
2. Does not have to maintain a IT department to handle the IT needs.
3. Pay-as-you-use or subscription model reduces the cost of use.

3.3 Proposed Solution

The conclusion drawn on the basis of research is that Cloud Computing is a
growing phenomenon today and is expected to rise in future too , it reduces the TCO of the
company. Since this research is in the field of SaaS the result will be only limited to the
area of SaaS. The obvious conclusion drawn on the basis of this research is that the
Advertising business is the most flourishing market and the SaaS market will be growing at
about 25-30% CAGR.
 38

Therefore, it is advisable to venture in the area of Advertising safely whereas other

areas are good too , except Banking.

It is advisable for the small IT companies to adopt Cloud Computing , since it will
be cost-effective to them, and they would be benefitted most, since they would be saving
the cost of IT expenditure which can be spent on other necessary processes, which may
help them grow their business.

3.4 Possible applications in the industry

Possible application of Cloud Computing or more specifically SaaS , is in every
Industry and every sector , but due to the perceived risk of security, it is not advisable to use
it in the Financial Sector involving money transfer and particularly Banking.

Cloud Computing or SaaS is already a huge success in Advertising , E-mail, Social

Networking, CRM , ERP etc. and will continue to grow in coming years. Though no sector or
industry is there which cannot benefit from it and thus it will find its use in every industry
after some point of time.
 39

Chapter 4

Learnings

4.1 Findings
Findings of the research were that Cloud Computing is a growing phenomenon and it
is the only thing which not only survived but also gained momentum in the current economic
downturn and will continue to gain popularity due to its multiple benefits and advantages.
Cloud Computing or SaaS reduces the Total Cost of Ownership and thus has cost benefits.

The industries benefiting it most today are Advertising , E-mail, Social Networking ,
CRM & BI.

The roadblocks to the growth of Cloud Computing are perceived Security risks and
the cost of removing the already implemented on-premise IT system And the advantages of
implementing Cloud Computing or SaaS are the decreased TCO or Total Cost of Ownership,
scalability, ease of adoption.

It thus can be easily said looking at the primary as well as secondary research findings
that path ahead is flourishing for the Cloud Computing or SaaS.

4.2 Recommendations
Though it is advisable to adopt Cloud Computing or SaaS to benefit its advantages but
the industry implementing it must analyse the perceived risks and disadvantages and also
analyse the resulting outcome of implementation and the time period within which it will gain
back its investment.

4.3 Conclusions
Finally the conclusion can be safely drawn from both the methodologies that the way
ahead for the Cloud Computing is quite bright and the graph of growth of Cloud Computing
shows escalations for years.
 40

Appendix

Fig.1. Popularity of Cloud Computing according to Google Trends

Fig.2. Popularity of Grid Computing according to Google Trends

 41

Fig.3. Popularity of Cluster Computing according to Google Trends

Fig.4. Popularity of PaaS according to Google Trends

 42

Fig.5. Popularity of SaaS according to Google Trends

Fig.6. Popularity of IaaS according to Google Trends

 43

Fig.7. Popularity of Virtual Computing according to Google Trends

Fig. 8. Comparison between Virtual, Cloud, Grid & Cluster Computing according to
Google Trends
 44

References:
[1] Gartner “Forecast :Sizing the Cloud; Understanding the opportunities in Cloud
services”, 18March 2009

[2] Gartner “User Survey Analysis: Software as a Service, Enterprise Application

Markets, Worldwide ,2008”, October 2008

[3] International Journal of Database Management Systems , Nov.2009

[4] Wintergreen Research , 24 July 2009

[5] Morgan Stanley, “Tech Trends”, June, 2008

[6] F5 Networks “Cloud Computing Survey 2009”, June-July 2009

[7] “Market – Oriented Cloud Computing: Vision , Hype, and Reality for
Delivering IT Services as Computing Utilities”, by Rajkumar Buyya and Srikumar
Venugopal, GRIDS Laboratory Dept. of Comp.Sc. & SE, University of Melbourne ,
Australia.

[8] Avanade “Global Study : Cloud Computing adoption rising rapidly worldwide;
Canadian respondents in no rush to adopt”, 21st Oct,2009

[9] Avanade “2009 Global Survey of Cloud Computing”, Sept.,2009

[10] Lucid “Cloud computing : a brief summary”, Sept.,2009

[11] Salesforce.com “5 Reasons CIOs are Adopting Cloud Computing in 2009”,

Feb.,2009

[12] Deloitte “Cloud Computing : Forecasting Change”, May, 2009

[13] KPMG “Technology Industry Executive Survey Points to Economic

Recovery”, August, 2009

[14] Google Trends