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IDC Worldwide IT Cloud Services Taxonomy, 2012http://goo.gl/Que0E

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INDUSTRY DEVELOPMENTS AND MODELS IDC's Worldwide IT Cloud Services Taxonomy, 2012Frank Gens Richard L. Villars Tim Grieser Laura DuBois Gard Little Rona Shuchat Chris Morris Margaret Adam Chris Ingle Nigel Wallis Mette Ahorlu Robert P. Mahowald Stephen D. Drake Mary Johnston Turner Matthew Eastwood Melanie Posey Satoshi Matsumoto Vladimr Kroa David Bradshaw Ricardo Villate Stephen Minton

www.idc.com

F.508.935.4015

IDC OPINIONThe IT cloud services market continues to grow and evolve at an astonishing rate. New offerings come to market regularly, often defining new functional segments and new deployment options. This study updates IDC's cloud services definition and deployment models. It also updates IDC's taxonomy of the IT cloud services market. According to IDC's definition, a cloud service must be a shared, multitenant service; packaged as an integrated solution; available through self-service; provide elastic resource provisioning; feature pricing that scales up and down with usage; leverage standard networks and clients; and be "open" for integration and enhancement through published application programming interfaces (APIs). IDC defines a variety of emerging cloud service deployment models, including public cloud services, and an expanding range of private cloud service deployment options, including dedicated private cloud (DPC) and virtual private cloud (VPC) services. In this study, we share IDC's high-level functional taxonomy of IT cloud services, which we have enhanced and extended in the following ways: U.S. National Institute of Standards and Technology's (NIST's) three broad cloud service categories software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS) have been added as a new top layer to IDC's IT cloud services taxonomy. IDC's previous IT cloud services taxonomy has been "plugged in" below the NIST model, providing clients with much deeper levels of cloud services market definitions heretofore lacking in the simple NIST framework. Network and client functionalities, delivered as cloud services, have been added to the taxonomy. IDC's application development and deployment (AD&D) cloud services segment has been renamed (as PaaS) and revamped to reflect how cloud services are changing that important part of the market. A new PaaS category cloud application platforms, focusing on the strategic integrated PaaS segment that includes Microsoft's Azure, salesforce.com's Force.com, and other platforms has been defined.

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Filing Information: March 2012, IDC #233396, Volume: 1 Cloud Services: Global Overview: Industry Developments and Models

TABLE OF CONTENTSP In This Study 1

Methodology ............................................................................................................................................. 1 S i t u a t i o n O ve r vi ew 1

What's New in IDC's IT Cloud Services Taxonomy? ................................................................................ 2 What Are "Cloud Services?" ..................................................................................................................... 2 Eight Cloud Services Key Attributes .................................................................................................. 3 Comparison with NIST's Cloud Computing Definition........................................................................ 7 Cloud Services Deployment Models ......................................................................................................... 8 More Detail on Public and Private Cloud Service Deployment Models.............................................. 8 Private Cloud Services Key Attributes (Points of Note) ..................................................................... 10 IT Cloud Services Taxonomy: Key IT Cloud Services Categories ............................................................ 12 Our Starting Point for Cloud Services Segmentation IDC's Functional IT Market Taxonomy ....... 12 Important Changes for IDC's 2012 IT Cloud Services Taxonomy ..................................................... 13 Definitions of the IT Cloud Services Segments.................................................................................. 16 Future Outlook Essential Guidance Learn More 17 17 19

Related Research ..................................................................................................................................... 19

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LIST OF TABLESP 1 2 IDC's New IT Cloud Services Taxonomy, 2012 ........................................................................... 14 IDC's Old IT Cloud Services Taxonomy, 20082011 ................................................................... 14

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LIST OF FIGURESP 1 2 Cloud Services Key Attributes...................................................................................................... 3 Cloud Services Deployment Models ............................................................................................ 10

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IN THIS STUDYThe IT cloud services market continues to grow and evolve at an astonishing rate. New offerings come to market regularly, often defining new functional segments and new deployment options. This study updates IDC's definition of cloud services and the various cloud services deployment models. It also updates and expands IDC's taxonomy of the IT cloud services market.

MethodologyIDC developed its first cloud services definition in 2008 (blogs.idc.com/ie/?p=190), and while we have continued to refine and evolve our definitions (blogs.idc.com/ie/?p=422) you'll notice that our core definitional and taxonomic principles have remained the same. For this update to our cloud services definitions and taxonomy, we held extensive discussions among IDC's global offices, sharing the latest observations and analysis regarding cloud service providers' (cloud SPs') latest offerings and business/service models, relevant technology/product trends, the activities of standards groups, and IT customers' buying and usage trends. Because market definitions and taxonomies should be crafted to be as durable as possible, while still being adaptable to important market changes, IDC's analyst team invested many person-hours exploring what the IT and cloud markets will look like over the next 510 years rather than creating a simple map of the current market.

SITUATION OVERVIEWThe cloud services market continues to expand and evolve. Vendors with a great variety of legacy products and services, management strategies, and experience are entering the cloud services market, disrupting, diversifying and, sometimes, complicating formerly well-understood market dynamics. In addition, users' understanding and expectations about cloud services vary widely and are influenced both by their growing cloud experiences on the consumer Web and by workplace IT consumption habits built over the past 40 years. To improve our market analysis and forecasting and help the market move toward a common framework, IDC continues to evolve our IT market taxonomies on a regular basis. There are substantial changes in the cloud services taxonomy from the previous edition published in Worldwide and Regional Public IT Cloud Services 2011 2015 Forecast (IDC #228485, June 2011).

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What's New in IDC's IT Cloud Services Taxonomy?IDC's most recent IT cloud services definitions and taxonomy information were published in Worldwide and Regional Public IT Cloud Services 20112015 Forecast (IDC #228485, June 2011). In this more comprehensive taxonomy document, there are a number of enhancements to the definitions and taxonomy. Among these are: Adoption of the three NIST IT cloud services categories SaaS, PaaS, and IaaS as the top level of our taxonomy. The addition of a new top level in IDC's IT cloud services taxonomy is based on the widely used U.S. National Institute of Standards and Technology cloud services categories: infrastructure as a service, platform as a service, and software as a service. We've created formal alignment of IDC's primary IT cloud services markets (e.g., applications, application development and deployment, system infrastructure software [SIS], servers, and basic storage) with these three top-level NIST categories. Expanded primary market categories. This new taxonomy expands the number of primary IT cloud services beyond the original five, adding networks (network functionality delivered as cloud services) and clients. "Other" SaaS, PaaS, and IaaS categories. To accommodate new and compound solutions, we have added three "other" categories at the IaaS, PaaS, and SaaS levels. The new categories accommodate new and/or complex cloud services offerings beyond those that are cloud versions of simple primary market product offerings. Expanded cloud deployment models. In our previous taxonomy, we defined just three (public, private, and hybrid) cloud deployment models. In this study, we expand our definitions to include several different private cloud deployment models. More detailed explanations of these changes are presented in the IT Cloud Services Taxonomy: Key Cloud Services Categories section of this document.

What Are "Cloud Services?"Cloud services are fundamentally about an alternative solution composition, delivery, and consumption model one that can be applied to IT industry offerings but also, much more broadly, to offerings from many other industries, including entertainment, energy, financial services, health, manufacturing, retail, and transportation as well as the government and education sectors. The cloud model goes well beyond prior online delivery approaches combining efficient use of multitenant (shared) resources, radically simplified "solution" packaging, self-service provisioning, highly elastic and granular scaling, flexible pricing, and broad leverage of Internet-standard technologies to make offerings dramatically easier and generally cheaper to consume.

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At a high and overly simplistic level, cloud services can be described simply and informally as: Consumer and business products, services, and solutions delivered and consumed in real time over a network (most often, the Internet) But this simple description is not sufficient to describe and capture the unique value that the cloud model brings, and how it differs from traditional on-demand services and online services.

Eight Cloud Services Key AttributesIDC defines cloud services more formally through a checklist of key attributes that an offering must manifest to end users of the service (see Figure 1). Cloud services, as defined by IDC, require support of all of these eight attributes.

FIGURE 1Cloud Services Key Attributes

Source: IDC, 2012

These attributes apply to all cloud services in all public and private cloud service deployment models although the specifics of how each attribute applies may vary slightly among these deployment models. The sections that follow provide a more detailed explanation of what we mean for each of these attributes. The final three cloud service attributes ubiquitous (authorized) network access, standard UI technologies, and published service interface/API are related to the same thing: leveraging the power of de jure and de facto Internet standards to reduce costs, increase reach, and maximize interoperability and combinatorial value creation.

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Shared, Standard Service

This is the most fundamental attribute of a cloud service, an attribute that is shared with a wide variety of previous-generation online services, and the one that differentiates cloud services from many traditional customer-unique outsourced or hosted offerings. Cloud services are shared, standard services built for a market, not for a specific customer. These services present themselves to users as "multitenant" offerings, although our definition focused on the customer-facing aspects of cloud services leaves room for service providers to use a variety of underlying deployment and architectural options. "Standard" does not mean that services do not offer customers the ability to create a "personalized" version of the service, however. Cloud services typically offer a wide range of built-in configuration options that allow customers to personalize the service; the key difference with traditional systems is that cloud services personalization is based on choosing among commonly available, "engineered in" options rather than making customer-specific "hacks" to the code. The shared service model offers customers and suppliers both enormous operating efficiencies and upgrade/enhancement velocity. In a private cloud deployment, the IT department can be viewed as the cloud service "vendor" offering a standard service within a single enterprise or across an extended enterprise.Solution Packaged

One of the most obvious user benefits of the cloud service model is that it is presented as an all-in, "turnkey" solution: the customer can access the offering without the need to own, manage, or understand any underlying resources required to support the offering. The cloud service provider bears that burden, offloading it from the customer, making it much simpler and faster to adopt for customers. One important implication of cloud services being technologically "easy" is that many line-of-business (LOB) organizations without IT skills have been able to purchase and leverage cloud services directly.Self-Service

Cloud services allow customers' self-service capabilities for service provisioning and administration. In the IT cloud services world, the range of self-service capability varies widely up and down the stack: in the infrastructure-as-a-service area (e.g., cloud storage, cloud servers), "click to buy" provisioning is widely available today, whereas much of the SaaS and PaaS community lags here. While most SaaS and PaaS vendors provide a lot of self-service administration, there is little click-to-buy provisioning simplicity and speed; some onboarding and more complex customization functions typically require human intervention from the provider's staff.

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IDC believes we'll see SaaS and PaaS vendors evolve in this area, providing more automation around self-service provisioning. Customer self-service is a key tool for providing greater operating efficiency, deployment speed, and customer satisfaction.Elastic Resource Scaling

Rapid and flexible expansion (and contraction) of service usage is among the major benefits of cloud services for users. Because the cloud services model allows users to quickly access and utilize the services they require, when they require them, they can greatly speed up systems' implementation/deployment. Cloud services' dynamic provisioning (and de-provisioning) capability including the ability to access resources in finer-grained increments also dramatically reduces the need for costly overprovisioning. In addition, this characteristic substantially reduces user burden to come up with demand plans for resources (CPU, storage, network bandwidth, and support staff), which is a major challenge for organizations and typically drives companies to greatly overprovision IT. Like self-service, the way elastic scaling is manifested varies by the type of cloud service offering. As for infrastructure-related services, such as server instances (virtual machines) and storage, service expansion/reduction is possible on a very detailed level such as the number of server instances, storage capacity, and data transfer volume. On the other hand, contracts in the application field are based on the number of users (accounts), but optionally contracts may not necessarily be defined for individual accounts but for the entire user group. In addition, there are cases in which a certain time is required to activate changes in service contracts in the SaaS and PaaS worlds, although such changes can be reflected dynamically (instantly) in the IaaS world. Still even for SaaS and PaaS the time required to change cloud services flexibly is much shorter than the time required to change traditional IT systems. This is because upgrading traditional (noncloud) offerings typically requires additional resources such as underlying infrastructure and/or middleware components to also be upgraded, and for noncloud systems, these upgrades require significant manual effort. On the other hand, cloud services are designed and deployed to promptly realize resource reallocation, and the ability to respond quickly to changes is quite high. When resources need to be reduced in on-premise services, doing so is often more difficult to execute since spending on facilities and equipment is already on the balance sheet and spending on personnel is not able to be rapidly reduced (or redeployed).Elastic, Use-Based Pricing

Customers want services not only scaled to need but also priced to use, whether that's in proportion to usage, the number of users, transactions, screen views, or some other consumption metric. As a convenience to some customers, providers may mask this pricing granularity with long-term, fixed-price agreements, but to meet the cloud service definition suppliers must design their offering so they have the capability to do fine-grained metering and pricing for customers that need these services. In a private cloud setting, some IT shops may take advantage of the finegrained metering to support more detailed, usage-based chargebacks.

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Ubiquitous (Authorized) Network Access

This attribute means that cloud services are designed to leverage the most ubiquitous public network on the planet. For public clouds, this is a no-brainer: it means services must be accessible to (authorized) users that have access to the Internet. The core benefit to both the service provider and the customers is broad, simple, and low-cost access. Obviously, this doesn't mean that a public cloud service is unsecured and unreliable; rather, it means that the service provider (and customers) leverages security and quality-of-service (QoS)/availability mechanisms that are Internet based (SSL, IP VPN, CDNs, etc.) and take advantage of the huge marketplace of security and QoS offerings that are building up around the public Internet. For most private clouds, this attribute will still be a key one, especially where employees are mobile, but we do see a model emerging for very secure private clouds where access is restricted only through private IP networks. We are already also seeing use cases where public cloud SPs offer customers with high-bandwidth and/or security needs the ability to access the public cloud via private lines one example of what will be many "mashups" of public and private cloud services.Standard UI Technologies

To clarify, we're talking here about the client and underlying technologies, not the visual layout of elements on the screen (or a device). Cloud services should not require any special heavyweight client environment (unlike the client/server world). Like the network access attribute mentioned previously, this attribute is about leveraging Internet-related de jure and de facto standards and technologies that are widely deployed and typically service/application independent to give cloud SPs and their customers maximum reach and access to leading-edge innovation at a very low cost. In the case of client technologies, we are talking about Web browsers, as well as supporting technologies such as Ajax (asynchronous JavaScript, Dynamic HTML, and XML), Flash, HTML, JavaScript, and SVG. Other service/application-independent clients such as AIR and Silverlight that sit outside the browser but leverage the same de jure and de facto standard technologies could also fit the bill as they become widely deployed on users' devices. We are including de facto standards, so this attribute obviously has some degree of subjectivity to it. The core thought behind this attribute is this: SPs should leave the client choice for users as "open" as possible, for their own, and customers', benefit. IDC believes that service users, not SPs, should have the right to choose client environments. Such an option will promote development and diversification of client environments and eventually generate substantial benefits to cloud SPs and users.Published Service Interface/API

The ability to combine services with each other, and to integrate them with traditional, on-premise systems, is the foundation for being able to rapidly create and, importantly, allow others to create new solutions and value, and therefore a core element of modern cloud services.

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Published cloud service APIs transform online services from "islands" to highleverage building blocks within large innovation communities and marketplaces. It's already obvious that cloud SPs that do not offer open/published, programmatic interfaces and thus fail to develop large ecosystems of solution developers around their services will simply not be competitive. These APIs, and the ecosystems around them, will be the foundation for expanding suppliers' market power. In our view, this is the brightest red line that separates firstgeneration online Internet offerings and cloud services. It's no surprise that the firstgeneration Internet businesses that have become cloud leaders Amazon, Google, and eBay were among the first of the first-generation online/ecommerce providers to open up their services with APIs and recruit huge developer communities. In the IT industry, many SaaS/PaaS providers and a fast-growing number of IaaS providers have published service APIs (SOAP, REST, etc.) that allow customers and other vendors to access functionality within their offering; some expose a minimal number of controls, while others publish many. But it's hard to imagine any successful cloud services vendor not providing a way for its offerings to be leveraged for greater value by customers, and by its own ecosystems. These APIs and the ecosystems around them will be the foundation for expanding suppliers' market power. The successful cloud SPs will have APIs in some form as the market matures, while "walled gardens" will have a hard time being competitive in the cloud services space think "AOL versus the Internet."

Comparison with NIST's Cloud Computing DefinitionCurrently, market players often reference the U.S. National Institute of Standards and Technology cloud computing taxonomy. NIST's definition of cloud computing is based on service delivery/consumption model. There are many similarities between NIST's "essential characteristics" of cloud computing and IDC's eight attributes. The five essential characteristics of cloud computing as defined by NIST are: On-demand self-service Broad network access Resource pooling Rapid elasticity Measured service The only major point of difference between NIST's and IDC's characteristics/attributes is that IDC deems "published service/API" to be an essential characteristic of cloud services.

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Cloud Services Deployment ModelsAt the highest level, the two types of deployment models for cloud services are public and private: Public cloud services are shared among unrelated enterprises and consumers; open to a largely unrestricted universe of potential users; and designed for a market, not a single enterprise. Private cloud services are shared within a single enterprise or an extended enterprise with restrictions on access and level of resource dedication and defined/controlled by the enterprise (and beyond the control available in public cloud offerings); can be onsite or offsite; and can be managed by a third-party or in-house staff. In private cloud that is managed by in-house staff, "vendors (cloud SPs)" are equivalent to the IT departments/shared service departments within enterprises/groups. In this utilization model, where standardized services are jointly used within the enterprise/group, business departments, offices, and employees are the "service users." Two other often-discussed cloud service deployment model terms are hybrid cloud and community cloud: Hybrid cloud: The term "hybrid cloud services" is used to describe the consolidated coordination/management of multiple cloud services. Hybrid cloud services include "public/public," "public/private," and "private/private" combinations. IDC does not classify collaborations between cloud services and non-as-a-service IT as hybrid cloud services. Community cloud: A "community cloud" is a multi-enterprise cloud service that's been commissioned by, and is controlled by, a group of named enterprises (not a market, or class, of enterprises). A community cloud is a type of private cloud in that it's being built not for "a market" but for a specific, named group of enterprises that have shared needs, control/specify the functionality of the services, and share the cost burden. Alternatively, if a cloud service has been developed by a third-party service provider for a specialized community of interest (e.g., local governments) but is not owned in part by the customers/community, and the customers don't have direct control over specifying what the service looks like (at least not more control than big customers have over, say, IBM or HP offering plans), and the SP is free to market to other prospects with similar needs, then the cloud service would be a type of public cloud or VPC (e.g., one designed for enterprises in a specific industry). In short, the categorization of a multi-enterprise cloud service depends on who owns and controls what the service looks like and who can join it. If it's a named group of enterprises/customers, it's a community/private cloud. If it's the SP, it's a vertical/specialized public or VPC offering.

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More Detail on Public and Private Cloud Service Deployment ModelsSince the publication of Worldwide and Regional Public IT Cloud Services 20112015 Forecast (IDC #228485, June 2011), we have developed more granular definitions of cloud service deployment models, identifying several deployments within the private cloud category. These models along with the public cloud deployment model are shown in Figure 2. The two models on the left side of Figure 2 refer to two deployment models that describe customer-owned private clouds in which the enterprise's IT department can be viewed as an internal cloud service provider: Self-run private cloud. A self-run private cloud is a cloud service that an enterprise owns and operates itself. The enterprise may have acquired the hardware and software components required to build a private cloud and assembled it (or had a systems integrator do so). Alternatively, the enterprise may have acquired a pre-integrated private cloud system/appliance. The commercial opportunities around a self-built cloud are to sell the required hardware, software, and/or professional services. These "self-run private cloud" opportunities are not counted in our IT cloud services forecasts but are counted as use-case/workload segmentations of our hardware, software, and professional services forecasts (i.e., hardware, software, and professional services sold to support the development/operation of a customer's own private cloud). Managed private cloud. A managed private cloud is an enterprise-owned cloud service that is operated by a third-party services firm. This is a less common model and parallels traditional onsite managed services arrangements in which the customer uses third-party staff to operate its traditional on-premise IT environment. Focusing on the three third-party hosted offerings on the right side of Figure 2 that is, the models provided on a service provider's site, and the models IDC counts in our IT cloud services forecasts we've defined: Public cloud services. Public cloud services are shared among unrelated customers and open to a largely unrestricted universe of potential users. Public cloud services are designed for a market not a single enterprise. The other two hosted cloud service models in Figure 2 describe distinct hosted private cloud service deployment models emerging in the market today: Dedicated private cloud service. DPC service is provided on dedicated/isolated physical resources to a single enterprise or an extended enterprise. DPC examples include Amazon EC2 Dedicated Instances, SAVVIS Symphony Dedicated, and RackSpace Cloud: Private Edition. Virtual private cloud service. VPC service is a premium version of a public cloud service, with tiered options for greater privacy/security and customer control (e.g., VPN or private network access, firewall and IPS/IDS between guest VMs and the Internet, and root access to guest VMs). Physical resources are not dedicated to a single customer allowing the SP and the customer to benefit

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from public cloud economics. VPC examples include Amazon EC2 Virtual Private Cloud (excluding Dedicated Instances), SAVVIS Symphony VPDC, and IBM SmartCloud Enterprise+. From a forecasting standpoint, VPCs are considered a subset of IDC's public IT cloud services forecast; look for future IDC forecasts to identify what portion of public cloud demand is for VPCs. Over the next several years, we expect a steady market swing toward VPCs, as well as a new generation of DPCs that use sophisticated resource management to deliver dedicated resources from a highly efficient multitenant platform. This will be driven by SPs becoming even more sophisticated in offering greater privacy, management, and service-level options on top of their highly efficient shared cloud services offerings and customers becoming more comfortable with multitenant environments. One example of the new generation of DPCs is Amazon's Dedicated Instances, which through sophisticated scheduling software allows customers to have a guarantee of dedicated physical resources yet is delivered on Amazon's shared EC2 infrastructure. Once a customer terminates a dedicated instance, the resources are released into the common EC2 pool; when the customer returns, its dedicated instance will likely be set up on an entirely different set of EC2 resources. This example shows why the lower bars in Figure 2 are overlapped for the use case of dedicated resources delivered on what is a multitenant delivery platform.

FIGURE 2Cloud Services Deployment Models

Source: IDC, 2012

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Private Cloud Services Key Attributes (Points of Note)We mentioned previously that the eight cloud service attributes apply to both public and private cloud services in other words, a cloud is a cloud. But there are some nuanced differences in how some of the attributes are applied or interpreted in private cloud environments. The first important distinction is that with a private cloud service that is served up by an internal IT group, it's important to note that the IT group is the "service provider" and the enterprise users are the "customers." In assessing whether a private cloud service is actually a cloud, the important perspective is "what does the end user see/experience?" not what the IT staff delivering the cloud service sees under the covers. If end users are seeing a shared service they access through a portal and that allows them some control over configuration options, provides visibility of usage, and is quickly able to scale up and down in both capacity and costs (if there is a chargeback scheme) then it can be considered a cloud. The IT department as the SP in this use case may be provisioning the cloud with fixed resources (even though they're presented as virtually "unlimited" to the end user) and may themselves have a fixed cost for resources that support the cloud service delivery, but if the end user's experience is of a "cloud" (all eight attributes), then IDC would consider the private offering a cloud service. The following summarize some nuances in the interpretation of key attributes of private and public cloud services: Shared, standard service: In a private cloud, the multiple "tenants" sharing the cloud service are typically not across multiple enterprises but different constituencies within a single enterprise. Solution packaged: Same as public cloud services the services are presented and consumed as integrated offerings, without the need for users to assemble, or be concerned with, underlying resources/components. Self-service: Same as public cloud services, services allow customers selfservice capabilities for service provisioning and administration. Elastic resource scaling: Similar to public cloud services, and as noted previously, even though the IT department delivering the cloud service (the internal "SP") may have fixed resources and costs under the covers of its cloud service delivery, if the end users of the private cloud service are presented the service as a scalable offering, it meets the elastic scaling criterion. Elastic, use-based pricing: Similar to public cloud services, the SP is able to present usage detail to users. But for private cloud services delivered by internal IT organizations, use-based "pricing" is not a requirement because many organizations don't use chargeback as a funding process. Ubiquitous (authorized) network access: As in the case of the "standard UI technologies" requirement, the principle here is that cloud services do not require their own dedicated networks (just as they don't require dedicated client software or hardware). For practical purposes, the vast majority of private clouds are built

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to be accessible over the public Internet for the simple reason that for many employees, that is the primary network they have access to and use (authorized) accessibility over the Internet makes the private cloud more valuable for most enterprises. Standard UI technologies: Same as public cloud services the main issue is that the service does not require a "heavyweight" dedicated client. Published service interface/API: In the case of private clouds, service interfaces and API do not need to be widely published inside and outside the company. However, the service interface/API can be easily leveraged by users (IT administrators) within IT departments. And we expect, over time, to see more private clouds that are "behind the firewall" implementations of public cloud services, and share those services' APIs making it easier for them to be integrated in hybrid cloud environments.

IT Cloud Services Taxonomy: Key IT Cloud Services CategoriesThus far, we've focused on describing what a cloud service is and what the most common deployment options are. In this section, we describe IDC's taxonomy of IT cloud services offerings that is, just what categories of IT cloud services are available (and what does IDC size and forecast), and how do these categories relate to one another?

Our Starting Point for Cloud Services Segmentation IDC's Functional IT Market TaxonomyAs noted previously, IDC's most recent IT cloud services taxonomy information was published in Worldwide and Regional Public IT Cloud Services 20112015 Forecast (IDC #228485, June 2011). In that document, we noted that over the past several years, we've used IDC's IT products' (hardware and software) functional taxonomy to segment the IT cloud services market. We've chosen this approach as a starting point for naming and functionally categorizing IT cloud services rather than using the widely cited, but not very granular, three-layer model described by the U.S. National Institute of Standards and Technology for the following reasons: The IDC IT product taxonomy robustly describes the vast majority of IT functionality customers invest in, with hundreds of markets and submarkets named, defined, and related to one another. This taxonomy is by far the most widely adopted model by IT vendors, customers, and investors for describing and analyzing the IT marketplace. Using this existing functional taxonomy to describe IT cloud services helps vendors and customers make the important connection between offering categories they know well and invest in and the emergence of cloud service versions of those offerings.

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This greatly facilitates the sizing and forecasting of the many cloud services submarkets below the primary market level. Indeed, IDC analyst teams have already started the process of sizing the secondary cloud services markets below the five primary services discussed in this study. Examples of these more granular secondary market forecasts include: Worldwide Public Platform as a Service 20112015 Forecast (IDC #232215, forthcoming) Worldwide Public Cloud Application Platforms 20112015 Forecast (IDC #232171, January 2012) Worldwide SaaS CRM Applications 20112015 Forecast and 2010 Vendor Shares (IDC #232230, December 2011) Worldwide IT Project and Portfolio Management SaaS 20112015 Forecast and 2010 Vendor Shares: SaaS Drives IT PPM Adoption (IDC #232271, December 2011) Worldwide Cloud Security 20112015 Forecast: A Comprehensive Look at the Cloud/Security Ecosystem (IDC #230389, December 2011) Worldwide Storage in the Cloud 20112015 Forecast: The Expanding Role of Public Cloud Storage Services (IDC #232115, December 2011) Worldwide Software as a Service 20112015 Forecast and 2010 Vendor Shares (IDC #229440, August 2011) Worldwide Cloud Testing and ASQ Software as a Service 20112015 Forecast and 2010 Vendor Shares: Testing Emerges from and for the Cloud to Drive Business Agility (IDC #229671, August 2011) Worldwide System Management Software as a Service 20112015 Forecast and 2010 Vendor Shares (IDC #229286, July 2011)

Important Changes for IDC's 2012 IT Cloud Services TaxonomyFor 2012, we have made some important changes and enhancements, on top of IDC's traditional IT functional taxonomy foundation, to create a new IT cloud services taxonomy. Table 1 shows the new taxonomy, which is followed for the purposes of comparison by the old taxonomy (see Table 2).

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TABLE 1IDC's New IT Cloud Services Taxonomy, 2012IDC Top Level SaaS Primary Market Applications Secondary Markets Collaborative apps, content apps, CRM, ERM, SCM, ops and manufacturing apps, and engineering apps System and network management, security, and advanced storage

System infrastructure software (SIS) "Other" SaaS

For new/emerging SaaS functional offerings not otherwise covered within the traditional applications and SIS functional categories Cloud testing, database as a service, integration as a service, cloud application platform, data analysis and access, content management, app server middleware, and other AD&D For new/emerging PaaS offerings not otherwise covered within the traditional AD&D functional categories

PaaS

AD&D

"Other" PaaS

IaaS

Basic storage Server Network Client "Other" IaaS For new/emerging IaaS functional offerings not otherwise covered within the traditional functional infrastructure categories

Source: IDC, 2012

TABLE 2IDC's Old IT Cloud Services Taxonomy, 20082011Informal NIST Alignment SaaS

Primary Market Applications

Secondary Markets Collaborative apps, content apps, CRM, ERM, SCM, ops and manufacturing apps, and engineering apps Structured data management, app development, quality and life-cycle tools, app server middleware, integration and process automation middleware, data access/analysis/delivery, and other AD&D System and network management, security, and advanced storage

PaaS

Application development and deployment System infrastructure software Basic storage Server

IaaS

Source: IDC, 2012

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The key enhancements we've brought into the 2012 taxonomy are as follows: Adoption of the three NIST IT cloud services categories SaaS, PaaS, and IaaS as our top level. The addition of a new top level in IDC's IT cloud services taxonomy is based on the widely used U.S. National Institute of Standards and Technology cloud services categories: infrastructure as a service, platform as a service, and software as a service. We've created formal alignment of IDC's primary IT cloud services markets (e.g., applications, application development and deployment, system infrastructure software, servers, and basic storage) with these three top-level NIST categories. The NIST scheme has the advantage of being simple and widely used. On the other hand, there is sparse detail about which underlying market segments fit within each of these three categories, so we've made some adjustments to IDC's former cloud taxonomy to accommodate the adoption of NIST at the top level: "SaaS" segment redefined as apps and SIS offerings delivered as cloud services. We are adopting NIST's narrower definition of SaaS, which focuses just on applications and excludes AD&D cloud services. Within this application-focused SaaS definition, we are also including all SIS software segments delivered as cloud services since most can be considered applications aimed at IT professionals; the ones that can't such as operating systems and hypervisors are not counted as distinct cloud services since they are bundled with infrastructure cloud services. Important: IDC's traditional "SaaS" market renamed as "cloud software." With the adoption of the NIST definition of SaaS, we've relabeled IDC's traditional "SaaS" market which covers all packaged software functionality (applications, AD&D, and SIS) delivered as cloud services as "cloud software." AD&D cloud services fully aligned with PaaS and revamped. In IDC's updated taxonomy, we have chosen to align all of the application development and deployment cloud services with the NIST "platform as a service" category. Thus IDC's "PaaS" includes the functionality of all AD&D secondary markets delivered as cloud services, including cloud testing, database as a service (DBaaS), integration as a service, and other AD&D cloud services (e.g., BI, content management, and app server middleware). We have also expanded the PaaS secondary markets to include an important emerging category cloud application platforms, which are "integrated PaaS" offerings such as Microsoft's Azure, salesforce.com's Force.com, and Google's App Engine. Some in the market think of this narrower group of integrated PaaS offerings as "PaaS" it's important to note our distinction: we consider PaaS to include not just the integrated platforms but also component technologies (e.g., development tools, DBaaS, and application servers) sold as standalone cloud services. This is consistent with the principle that the top-level NIST taxonomy must be collectively exhaustive and mutually exclusive.

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Expanded primary market categories. This new taxonomy expands the number of primary IT cloud services beyond the original five, adding networks (network functionality delivered as cloud services) and clients. "Other" SaaS, PaaS, and IaaS categories to accommodate new and compound solutions. We have added three "other" categories at the IaaS, PaaS, and SaaS levels to accommodate cloud services offerings beyond those that are cloud versions of simple primary market product offerings. Such offerings could include complex/compound solutions that integrate the functionality of multiple point solutions (such as cloud application platforms) and entirely new offerings that were not previously offered in prior delivery models and are now possible through the cloud model. Over time, as these "other" offerings become better defined, and larger, we will pull them out of "other" into their own categories (as we have with CAP).

Definitions of the IT Cloud Services SegmentsBecause IDC considers cloud services as a delivery and consumption model that can be applied to virtually all traditional consumer and business product and service offerings, our cloud services taxonomic approach has been to start with a foundation of existing IT functional markets delivered as cloud services. What this approach means is that the functional definition (with inclusions/exclusions) of each cloud services segment (refer back to Table 1) is essentially the same as the functional definition found in IDC's traditional IT products taxonomies but delivered as cloud services. For example, the functional description of the applications cloud services segment (refer back to Table 1) is the same as that for packaged applications described in IDC's Software Taxonomy, 2011 (IDC #228020, July 2011) but delivered as cloud services. And the underlying secondary cloud services segments are functionally the same as those within the traditional applications market (collaborative, content, CRM, ERM, etc.) delivered as cloud services. Accordingly, for more detail about the functional descriptions of each of our cloud services segments, refer to the following IDC documents: For more detail on the application and system infrastructure software primary markets and secondary markets, see IDC's Software Taxonomy, 2011 (IDC #228020, July 2011). As noted previously, the AD&D cloud services segment was renamed platform as a service and the secondary taxonomy "tuned" to reflect the emergence and adoption of cloud services in this segment. For more detail on the PaaS primary and secondary market segment definitions, inclusions, and exclusions, see Worldwide Public Platform as a Service 20112015 Forecast (IDC #232215, February 2012). Servers and basic storage include all server capacity and raw storage capacity, respectively, delivered as cloud services. Storage-related cloud services that are above and beyond raw storage including backup, archiving, continuity, and

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data synchronization are classified as advanced storage and categorized under system infrastructure software cloud services (a submarket of SaaS). For more detail on the storage and advanced storage cloud services taxonomy, see IDC's Worldwide Storage and the Cloud Taxonomy, 2011 (IDC #228309, May 2011). The network and client cloud services segments are newly added to IDC's IaaS cloud services category. For this document, we are simply and broadly defining these as network functionality and client functionality, respectively, delivered as cloud services. These segments will be defined in more detail in 1H12 as part of IDC's expanded cloud services forecast process. As noted previously, the "other" SaaS, "other" PaaS, and "other" IaaS cloud services segments are to accommodate cloud services offerings beyond those that are cloud versions of simple primary market product offerings. Such offerings could include complex/compound solutions that integrate the functionality of multiple point solutions (such as cloud application platforms) and entirely new offerings that were not previously offered in prior delivery models and are now possible through the cloud model. Over time, as these "other" offerings become better defined, and larger, we will pull them out of "other" into their own categories (as we have with CAP).

FUTURE OUTLOOKAs noted, cloud services should be viewed as a delivery/consumption model that may, and will, be applied to most traditional IT functional segments. But the new taxonomy (refer back to Figure 1) is certainly not static. We expect wholly new cloud offering categories to certainly emerge and IDC will expand its cloud services categories to incorporate functional offerings that fall outside of, or represent new combinations of, our current IT taxonomy. But currently, the bulk of customer IT cloud services buying can be tied directly to existing functional IT offering categories. It is important to note, however, that while we generally use traditional IT product markets naming (e.g., applications and systems infrastructure software) to describe functionally similar cloud offerings, cloud versions of these offerings are fundamentally different from the traditional offerings they mimic: IT cloud services include all required supporting IT resources under the covers (i.e., they are online versions of what used to be called turnkey systems). They are different from traditional IT products in that they combine characteristics of both traditional IT product and services delivery models.

ESSENTIAL GUIDANCECreating definitions and taxonomies around a market as rapidly emerging and evolving as IT cloud services is challenging. But the core cloud services principles that we identified in 2008 have held up very well and have kept our definitions and taxonomy (and the forecasts built around them) from shifting much in the past four years.

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These core principles that continue to inform our definitions, taxonomies, and forecasts are: Don't "reinvent the wheel" by creating new functional markets where ones already exist. Cloud services are a new delivery/consumption model that can be applied to all existing functional offerings as well as enable entirely new offerings. It makes absolutely no sense to reinvent new functional categories and names for existing functionalities delivered through the cloud model; in fact, it makes it harder to analyze the cannibalization effect: the shift of spending for a functional capability across different delivery models. New categories and names should, of course, be created when there are truly new functional offerings created. Pay attention to all eight cloud service attributes. Cloud services are about all eight of the cloud attributes we identified in 2008 including the often overlooked but absolutely essential API requirement. The hallmark of the "cloud services era" will undoubtedly be the emergence of huge innovator ecosystems (and millions of new solutions) around those APIs. In the end, the innovation that results from the "open API" principle of cloud services will be even more important than the economic benefits of the "shared" and "scalable" principles. Acknowledge that cloud services are about what the customer buys, not how the SP delivers it. Cloud services should be described by the attributes customers experience, not by the implementation choices made under the covers. That's why our eight attributes focus on things the customer sees and experiences and don't mention implementation details like "virtualization." This takes us out of the religious wars over what the best implementation architectures and technologies are. Those choices are important, of course they are likely to determine who the winning suppliers are (and would be factored, for example, in an IDC MarketScape vendor assessment) but they don't belong in the definition of an offering category like "cloud services." The definition should be about what's delivered to a customer, not how it's delivered. Count the money where it's spent, and only count real cloud services. Cloud services spending forecasts should account only for cloud services for example, if customers are buying cloud server capacity on which to run a traditional business application, we count their cloud server payment in the cloud server category; we don't count their application payments to their ISV in cloud applications since the application itself isn't a cloud service and only in the cloud services category in which customers perceive they are buying for example, when customers pay for a CRM cloud service, we count those payments in the CRM cloud services category; we don't spread their payment across CRM and the infrastructure services the cloud SP may need to buy to support their CRM cloud offering. The good news is that it's very likely that these principles will remain valid for quite a while. But the obvious challenge is that the cloud services market continues to evolve in significant ways, almost daily. We will continue to monitor the market and look for how these principles and the definitions and taxonomy that are built on them need to change to adapt to the changing realities of this fast-moving market.

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LEARN MORERelated Research Worldwide Public Platform as a Service 20112015 Forecast (IDC #232215, Forthcoming) Worldwide Public Cloud Application Platforms 20112015 Forecast (IDC #232171, January 2012) Japan Cloud Services 20112015 Forecast Update (IDC #JP1972808T, December 2011) Worldwide SaaS CRM Applications 20112015 Forecast and 2010 Vendor Shares (IDC #232230, December 2011) Worldwide Storage in the Cloud 20112015 Forecast: The Expanding Role of Public Cloud Storage Services (IDC #232115, December 2011) Worldwide IT Project and Portfolio Management SaaS 20112015 Forecast and 2010 Vendor Shares: SaaS Drives IT PPM Adoption (IDC #232271, December 2011) Worldwide Cloud Security 20112015 Forecast: A Comprehensive Look at the Cloud/Security Ecosystem (IDC #230389, December 2011) Hungary Cloud Services Market 20112015 Forecast and 2010 Competitive Analysis (IDC #CEMA17873, November 2011) Croatia Cloud Services Market 20112015 Forecast and 2010 Competitive Analysis (IDC #CEMA17723, November 2011) European Public Cloud Forecast Update (IDC #SP52T, November 2011) Poland Cloud Services Market 20112015 Forecast and 2010 Competitive Analysis (IDC #CEMA17721, November 2011) Russia Cloud Services Market 20112015 Forecast and 2010 Competitive Analysis (IDC #CEMA17640, October 2011) Slovenia Cloud Services Market 20112015 Forecast and 2010 Competitive Analysis (IDC #CEMA17566, September 2011) Worldwide Software as a Service 20112015 Forecast and 2010 Vendor Shares (IDC #229440, August 2011) Worldwide Cloud Testing and ASQ Software as a Service 20112015 Forecast and 2010 Vendor Shares: Testing Emerges from and for the Cloud to Drive Business Agility (IDC #229671, August 2011) Worldwide System Management Software as a Service 20112015 Forecast and 2010 Vendor Shares (IDC #229286, July 2011)

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IDC's Software Taxonomy, 2011 (IDC #228020, July 2011) Worldwide and Regional Public IT Cloud Services 20112015 Forecast (IDC #228485, June 2011) Asia/Pacific (Excluding Japan) 20112015 Cloud Services Forecast (IDC #AP6684407T, June 2011) Canadian Public IT Cloud Services: 20112015 Forecast Overview (IDC #CA2CCS11, June 2011 IDC's Worldwide Storage and the Cloud Taxonomy, 2011 (IDC #228309, May 2011) Romania Cloud Services Market 20112015 Forecast and 2010 Competitive Analysis (IDC #CEMA17725, December 2010) Defining "Cloud Services" and "Cloud Computing," blogs.idc.com/ie/?p=190 "Defining 'Cloud Services' an IDC update," blogs.idc.com/ie/?p=422

SynopsisThis IDC study discusses the IT cloud services market, which continues to grow and evolve at an astonishing rate. New offerings come to market regularly, often defining new functional segments and new deployment options. This study updates IDC's definition of cloud services and the various cloud services deployment models. It also updates and expands IDC's taxonomy of the IT cloud services market. "This study provides the fourth update of IDC's cloud services taxonomy since 2008," according to IDC SVP and Chief Analyst Frank Gens. "Clients will be glad to know we've maintained strong continuity with our prior taxonomies. But we've also made some major enhancements, including incorporating the widely used NIST taxonomy, adding important categories such as network and client cloud services, and adding a new, strategically important segment called cloud application platforms that defines integrated PaaS platforms such as Google's App Engine, Microsoft's Azure, and salesforce.com's Force.com."

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Copyright NoticeThis IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit www.idc.com to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit www.idc.com/offices. Please contact the IDC Hotline at 800.343.4952, ext. 7988 (or +1.508.988.7988) or [email protected] for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2012 IDC. Reproduction is forbidden unless authorized. All rights reserved.

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