MT108 On the Edge of Eminence:When Will Services Transform the System?

© 2016 by The Enterprise Strategy Group, Inc.
On the edge of eminence
When will services transform the system?
Steve Duplessie, Founder and Principal Analyst, Enterprise Strategy Group
Session MT108

Agenda
• ESG overview
• Peer-based spending insights for 2016
• Insights by tech segment (trends, skills, peer data, and
vendor questions)
• Q&A

Enterprise Strategy Group is an IT analyst, research,
validation, and strategy firm that provides market intelligence
and actionable insight to the global IT community
ESG helps clients achieve business results through a comprehensive portfolio
of research and advisory services, consulting, and custom content solutions

2016 Peer-based insights
4

Criteria when selecting a data center infrastructure vendor
14%
15%
21%
22%
24%
32%
35%
48%
59%
Existing relationship with vendor
Pre-qualified solutions / reference…
Reduction in capital expenditures
Ability to leverage existing staff skills
Reduction in operational expenditures
Ease of Management
Total cost of ownership
Product features/functionality
Service, support & ease of…
What do you considerto be the mostimportantcriteria to your organization whenit comes to
selecting a data centerinfrastructure vendor?Consider infrastructureto encompassdata center
solutions suchas storagesystems,computing/servers,networking,etc. (N=201)

Key technology vendor/solution selection criteria
12%
17%
17%
17%
20%
22%
23%
24%
26%
26%
35%
37%
42%
43%
Pre-qualified solutions/reference architectures
Vendor’s ability to offer multiple deployment models (e.g., on-premises…
Size/financial stability of vendor
Vendor’s ability to offer multiple components of the technology “stack”…
Reputation/brand of vendor
Industry-specific expertise
Ease of ongoing management
Ease of initial implementation
Vendor service and support
Price
Total cost of ownership (TCO) inclusive of capital costs, operational costs,…
What would you considerto be the mostimportantcriteria to your organization whenit comes to
selecting a technologyvendor/solution?(N=601)

Key storage vendor/solution selection criteria
10%
12%
14%
14%
15%
15%
16%
20%
26%
27%
28%
30%
32%
Pre-qualified solutions / reference…
Reduction in capital expenditures
Certified support for a specific application
Size/financial stability of vendor
Industry-specific expertise
Reduction in operational expenditures
Ease of management
Ease of implementation
Total cost of ownership (TCO)
Service and support
What would you considerto be the mostimportantcriteria to your organization whenit comes to
selecting a storagevendor/solution? (N=373)

Top-10 2016 IT priorities
18%
19%
20%
20%
20%
20%
21%
22%
23%
37%
Business continuity/disaster recovery programs
Improving collaboration capabilities
Desktop virtualization
Increasing use of server virtualization
Major application deployments or upgrades
Improving data backup and recovery
Data integration
Managing data growth
Business intelligence/data analytics initiatives
Cybersecurity initiatives
What are your top-10 mostimportantIT priorities over the next12 months.

2015-2016 spending change, by technology
39%
47%
51%
52%
52%
52%
56%
60%
63%
70%
72%
47%
38%
36%
33%
36%
38%
34%
32%
28%
22%
21%
14%
15%
13%
15%
11%
10%
10%
8%
8%
8%
6%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Databases (N=233)
Server infrastructure (N=297)
Enterprise mobility (N=210)
Storage infrastructure (N=240)
Network infrastructure (N=272)
Business applications, middleware, etc. (N=233)
Data protection (N=250)
Virtualization/private cloud infrastructure…
Business intelligence, analytics, and/or big data…
Cybersecurity (i.e., information security) (N=299)
Cloud computing services (N=271)
2016 spending will increase 2016 spending will stay flat 2016 spending will decrease
To the best of your knowledge,to whatextentwill your organization’s 2016 IT spendingfor
each technology listedbelow changerelative to 2015?

2016 IT spending change by industry
38%
46%
53%
58%
62%
62%
63%
63%
67%
70%
42%
49%
34%
34%
24%
34%
30%
34%
28%
30%
19%
5%
13%
8%
15%
3%
7%
3%
5%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Government (Federal, N=26)
Government (State & Local,…
Retail/Wholesale (N=32)
Communications & Media…
Education (N=34)
Manufacturing (N=122)
Transportation & Logistics…
Financial (N=159)
Business Services (N=39)
Health Care (N=61)
2015 to 2016 IT spending change, by industry
2016 IT spending will increase 2016 IT spending will stay flat 2016 IT spending will decrease

Business initiatives driving IT spending in 2016
18%
19%
20%
20%
20%
22%
27%
32%
38%
43%
Research and development
Increased use of social media technology for marketing, customer…
Improved internal collaboration capabilities
Business growth via mergers, acquisitions, or organic expansion
Developing strategies to ensure we interact with our customers on their…
Providing our employees with the mobile devices and applications they…
Ensuring regulatory compliance
Improved data analytics for real-time business intelligence and customer…
Reducing costs
Increasing cybersecurity
Which of the following business initiatives do you believe will drive the mosttechnology
spending in your organizationover the next12 months? (N=633)

2016 cost containment measures
10%
13%
18%
18%
20%
22%
23%
27%
30%
32%
None of the above
Cancel projects
Reduce headcount
Postpone projects
Reduce number of vendors we work with
Freeze hiring
Increase IT outsourcing
Renegotiate contracts
Purchase new technologies with improved ROI
Increase use of cloud computing services as alternative to in-house…
Which of the following measures – if any – is your organization taking to reduce or
otherwise contain IT expenditures overthe next12 months? (N=633)

AD&D, Big Data and IoT
13

Apps, data, and IoT - trends
• PaaS growth
Enabling widespread immediate accessto AD&D tools and services
• Application development pipeline
Wellconceived DevOps strategies are accelerating mode 2 application development
• Big Data & BI closing the gap
Advanced analytics and machine learning embedding behind familiar tools to facilitate
developers,data scientists and architects
• Data platforms are changing
Hadoop and data lakes are impacting data warehouses (now landing and
pre-processing)
• Leading organizations focusing on IoT through organizational
innovation
Alignment of data journey from OT through IT

We already haveIoT
initiatives underway,
19%
We are developing
IoTinitiatives and will
launch them in the
next 12 months, 27%
We are developing IoT
initiatives and will launch
them in the next 24
months or later, 12%
We are currently
considering IoT
initiatives, 21%
We have no plans for
IoTinitiatives at this
time, 20%
Don’tknow, 1%
How would you characterize your organization’s Internet-of-Things (IoT)
initiatives? (N=633)
Apps, data, and IoT - peer data
58% have
developed IoT
initiatives
already, or are
in the process
of launching
them in the
next 24
months.

39% say it will help provide
better and differentiated
customer service
38% say it will help
them develop new
products and services
45% say it will help
them become more
operationally efficient
26% say it will enable them
to create entirely new
business models
How would you best characterize the anticipated impactof IoT on your organization?

PaaS importance
0% 10% 20% 30% 40% 50% 60%
Don't Know
We will be experimenting with PaaS
We will be using PaaS for non-critical
workloads
We will be using PaaS for some
mission-critical workloads
PaaS will be critical to our IT needs
Over the next2 years,how do you expectplatform-as-a-serviceto be factoredinto the IT needs of
your organization? (N=244)

PaaS benefits
0% 10% 20% 30% 40% 50% 60%
Don't Know
PaaS services are cost effective
PaaS enables us to do AD&D…
PaaS has helped improve…
PaaS gives us a wide range of…
We are able to innovate faster
PaaS enabled us to reduce our…
PaaS allows us to scale more…
Which of the following benefits has yourorganization experienced sinceusing yourprimaryPaaS?
(N=179)

PaaS deployment models in use
0% 10% 20% 30% 40% 50%
Hybrid PaaS
Private PaaS
Public PaaS
In Use 2016
In Use 2014
Which PaaS modelis your organization currentlyusing?
(N=179 in 2016 and N=227 in 2014)

• Hadoop adoption: 20% in production, 37% very interested
• Spark adoption: 16% in production, 47% very interested
• Hadoop as alternative to data warehouse: 36% as complement, 26%
as replacement
• 95% believe open source is important, 40% will combine open with
proprietary
• Up to 43% considering cloud for databases, data warehouse, analytics,
and BI
Peer directionsfor big data and analytics

• How can you help us build analytics into our business activities?
• Can you offer strategic approach to skills development?
• Do you offer a maturity model approach to transform IT
process/culture?
• How many times have you successfully done this elsewhere?
Apps, data, and IoT - questions

Cybersecurity
22

Cybersecurity - trends
• Threat Landscape: Ransomware is an epidemic (in Healthcare
recently)
• Attack Surface Area: Hybrid and Shadow IT are expanding the
perimeter from the network to transient users, apps, and workloads
• Security Controls:
– Advances in machine learning is improving endpoint security
efficacy
– Contextual analytics via endpoint, network, user, app, cloud
and threat telemetry is enabling threat hunting
– Federate IAM, SSO, and MFA is more critical than ever

Cybersecurity - skills
Business Skills:
• Agile software development literacy so that security is included early in
the dev cycle
• Grounding in IT-as-a-service to negotiate with vendors on
utility/consumption-based pricing
Technical Skills:
• API literacy for the inclusion of security in DevOps (SecDevOps)
• Bad actor attack campaign behavior aware for internal situation
awareness

Cybersecurity - skills
9%
14%
14%
15%
20%
23%
26%
27%
28%
33%
We don’t haveany cybersecurity…
Endpoint security specialists
Application security specialists
Identity and access management
Security operations
Security engineering
Data security specialists
Security analytics
Network security specialists
Cloud security specialists
46% of organizations
have a “problematic
shortage of
cybersecurity skills”
Which areas ofcybersecurity wouldyou say that your organizationhas the biggestskills
deficiency?(N=299)

Cybersecurity - peer data
80% of organizations say on-premise security more mature than cloud
indicating a cloud adoption readiness gap
73% of organizations state it is difficult to recruit cybersecurity professionals
52% of organizations state that storing sensitive data in
the cloud is their top cloud security concern
65% of organizations are aware of the use of Shadow IT app even when
may have approval policies and risk vetting methodologies
74% of organizations abandon traditional solutions for securing their
organization’s use of the cloud

Cybersecurity - questions
You will have to address information
security In the new world?
Upfront, in design – not just after the fact.
Are you ready?

Infrastructure
28

Infrastructure - trends
• Cloud Service Orientation: Business are placing an emphasis on truly combining
private and public cloud resources, yet different workloads, data types and access
patterns impact storage costs differently (note: internally ‘clouds’ can manifest as
[hyper]converged systems).
• All-Flash Storage/Data Center: In the first half of 2016, multiple AFA suppliers have
released high density / massive capacity flash storage systems targeted at scale-out
file environments, hence expanding the economic reach of flash storage (but hybrid
infrastructures – as opposed to storage systems – will remain dominant)
• Software-defined Data Center: the number of storage-as-software players is
steadily increasing, with a variety of solutions ranging across multiple data types,
protocols and varying between open source and proprietary (94% of Storage
Leaders committed to SDS)
• Persistent memory ( e.g. NVDIMMs, 3D XPoint): The storage industry is at the
forefront of a new era of persistent memory technologies which could dramatically
impact data center architectures.

Infrastructure - skills
• Hybrid Cloud Skills: Differences – as well as spikes - in workload patterns and data
access can dramatically impact the cost infrastructure, so new skills are required to
model access by workload to make on- versus off-premises decisions, or enable IT to
leverage the cloud on an as-needed flexible basis
• More generalist, less specialist: Convergence means that the need for lots of sub
specialty experts in IT is reduced. In a hyperconverged, software-defined infrastructure
there is less/no need for storage and SAN administrators – the stack is virtualized and
done at an aggregate software level, rather than managing discrete hardware
components.
• IT as a Business Utility Decision: These new approaches mean IT consumption can
finally be determined by business needs and outcomes, rather than simply being an
operational plan. This changes the emphasis of IT management from “doing” to “getting”.

Infrastructure - peer data
• Cloud: The #1 IT initiative that will impact storage spending is using cloud
storage to source capacity instead of deploying on premisesinfrastructure.
(37%)
• Flash Storage: Non-performancerelated flash storage purchase rational led
performanceby a rate of 3 to 1 ( i.e. more people deploying flashfor reasons
other than performancealone)
• Software-DefinedStorage: 94% of IT storage decisionmakers identified their
organization as either committed to SDS as a long-term strategy (68%)or
conceptually interested (26%)

Infrastructure - peer data
• Hybrid IT: 60% of IT organizations migrate VMs, applications, and
data between their on-premises private clouds and public cloud
environments
• Convergedsystems: Most mature foron premises cloud delivery
model,with 88% of IT decisionmakers having deployed (32%)or
planning to deployconverged systems (eg.:EMC VxBlockor NetApp
FlexPod)
• Hyper-convergedsystems: IT decisionmakers have deployed
(15%) or plan to deploy (70%) these types of systems

How do you get from where you are to
where you need to go,
SYSTEMICALLY?
You don’t do it alone.
Infrastructure transformation

Enterprise mobility

What are the important technology trends in mobility?
• Monolithic applications will be replaced with micro-services
Applications will be designed and maintained as compilation of services stitched together with API calls
creating numerous benefits for developers and users. IT organizations will be faced with monitoring and
securing the API traffic.
• Email communication will transition into social business interactions
Team collaboration and interaction (written, voice and video) will take place of email as business
process and workflows adapt to modern generation applications.
• Voice input and augmented reality will drive how employees (and customers) interact
with apps & devices
Applications will leverage the coherency of voice recognition and AI to create a personal and productive
experiences for users. The experience will be further be enhanced with an augment reality view that
places the users closer to a real life experience.
• Machine learning will augment business and customer insight
Cloud based consumption models will provide access to statistical pattern recognition and machine
learning for business to obtain productivity, security and overall user experience improvements.

Summary
36

Modernizing service and support
• You can’t modernize the data center/technologies without modernizing
service and support
• Architect predictive and proactive service and support for YOUR
internal customers
• Think perpetual analytics to optimize the services YOU Provide
• Get help. Don’t transform alone. Or you may never get there.

Questions?
What do you think?
Your to-do’s:
1. Visit us at Services in the Expo
2. Learn more at
www.dell.com/ITLifecycleServices
Steve.duplessie@esg-global.com
@stevedupe
Thanks!
ENTER

MT108 On the Edge of Eminence:When Will Services Transform the System?

MT108 On the Edge of Eminence:When Will Services Transform the System?

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