 Ladies and gentlemen, please welcome Principal Analysts for Forester, James Staten and Charlie Dye. Well, thank you very much. I appreciate you taking up as much room in this massive hall as you possibly can. So we're here to try and put a little dose of reality on top of what's happening in cloud. All of us here, obviously, are already in the cloud or already doing something in the cloud. You wouldn't be at this conference otherwise. If you're here for the Hong Kong Fashion Festival, it's not in this hall. So we're just going to assume that you all are here because you buy into the cloud. So why we say the true state of cloud adoption? Because for every person that's in this room, there's another 20 who are not. Inside of our large enterprises, there's a majority of IT professionals, developer professionals, who are not doing something in the cloud right now. So it's really important that we stay grounded in the fact that we are leading our organizations in new directions, that we are pushing the envelope and pushing our organizations forward, but we have a whole lot of people behind us that we simply can't walk away from. We have to help bring them forward. So we're going to try and give you that reality here in this session today, both here in China as well as around the world overall. So let's start out with sort of the state of the market as it is right now. In the current state of the market, the majority of the use of cloud across multiple companies is public cloud. And it's very much being driven by the business units rather than by central IT. And we'll go into a little bit more depth on this as we go through and each of the points on this state of the union here. Obviously, the biggest investments are in software as a service. We're not seeing nearly as much cloud adoption of the platform side that we've been talking about so much here at this conference, but we'll go into a little bit more of where that's happening and how it's being done. And the majority of the cloud platform applications that we're seeing, just as was mentioned here by Liu Tucker in the panel just a minute ago, is systems of engagement as well as SaaS integrations. Charlie? Yeah. And secondly, if you look into the private cloud, we would say that it's still something that's in progress. Because according to our first search data, around 32% of the Asia-Pacific enterprises have prioritized the virtual private cloud or private cloud into 2013. However, they are really making very slow progress there. And also, a lot of them are just a cloud-watched virtualization. And secondly, we can also see that there are much higher adoption rate for the virtual private cloud rather than the private cloud. Yeah. And that's very much as we talked about a public cloud phenomenon more than a private cloud initiative. The third major thing that's true out there right now is that almost all of these adoptions of cloud are what we would consider to be hybrid. And hybrid is not something that you're going to do in the future once you've got a private cloud up and running. Hybrid is what is happening already right now. And we need to get away from fairly tight definitions about hybrid because they really hold us back from realizing how much of a challenge it is currently and how much we need to deal with it. Hybrid cloud is a cloud service of any kind connected to anything else, running in your data center, running on a public cloud, running in traditional hosting, whatever the case is. The key you have to pay attention to is the integration. The integration may be a simple JDBC connection. The integration might be writing to a database. The integration might be a management challenge that your IT team has to deal with. Whatever the factor is, you have to be asking yourself the key question of, given that I'm already hybrid, am I building the right strategy to deal with this as well as move forward for my organization? Now let's get back to the initial question about cloud adoption. So when we take a look at our surveys, we see, of course, that cloud adoption is going up. It's not going up like a hockey stick. We haven't hit that point in which the market is exploding and suddenly everyone is using these cloud services. It's still a slower progression that is taking place in the market. And your data you're seeing here is centering on the US and Europe. But that's not the only part where we're seeing this. Yeah, and also in addition to that, we believe that for Asia Pacific, our adoption rates are around 12 months behind a global trend. Yeah, and if you notice from our data in the past, Europe is approximately 12 months behind the US in its overall adoption. So that means that we're seeing a definite slow progression and roll around the globe in overall adoption of cloud. One of the reasons, of course, OpenStack is here is because there's so much potential opportunity here, particularly if they can help the Asia Pacific market accelerate through the transition and not stay 12 months behind. Now the data that you're looking at is looking at all sizes of organizations. If we cut the picture so it's just looking at enterprises of 1,000 employees and more, you see a very similar pattern. The data shows that the adoption of technologies by enterprises reflects very much the market, but it's up a bit, which shows that a lot of larger enterprises are actually more aggressive in their use of cloud technologies than small, medium businesses are, and certainly larger and more aggressively than mid-sized. In fact, mid-sized market is actually where we're seeing the slowest adoption of cloud technologies, and I'm happy to have a conversation about why that is in a later point. Charlie, let's talk about Asia again. Yeah, and I think that according to our first data, regarding to those growth of the cloud, China will be a very key engine for the growth. And if you look into the slide, we can see that there are several categories inside. The three categories at the bottom are for the public cloud, which are as path and a sense, and the three categories on top are for the virtual private cloud, which are the virtual dynamic service and dynamic connection service, as well as the cloud-based integration. So for China, we believe that by 2020, the global trend of the cloud services would be around 3.8 billion, in comparison to the global trend, that is around 40 billion. Yeah, so this is quite a more accelerated growth rate, as you can see from what you saw on the previous slides of global adoption. So we're counting on an acceleration to occur. And I think the Chinese government is trying to really push for that as well, Charlie. Yeah, exactly. So if we look into the Chinese government's efforts regarding the cloud strategy, we can see that first, there are around 14 premises have already announced their cloud data center projects. And their investments ranges from the 800 million to 3.2 billion US dollars. And also their initial data center sizes ranges from around 10,000 square meters to 50 square meters. And also, there are around five pilot cities who have announced their real cloud projects, which are Beijing, Shanghai, Shenzhen, Hangzhou, and Wuxi. And each of the city has their own specific focus. For example, for Beijing, there are more focus on IS and the past who are providing the solutions for the medium enterprises. And also for Wuxi, as mentioned in one gentleman this morning, they are focused on the IS and the SAS to provide service for the development and the testing. And the third is regarding the models in between. We have seen that, first, local cloud service companies are doing very proactively to provide service to the end users. And secondly, the government of the local Chinese government, they are trying to give some direct investment there. Also, the telecom operators are working very hard to provide the support for those companies and the government. So they are having a revenue sharing model in between. And last but not the least, local governments are giving some incentives to those parties. For example, they will have much better conditions like the tax or the land or the energy consumption. Yeah, and notice what Charlie talked about in each of these initiatives. Nowhere did you hear him say that they're doing this because they're trying to reduce cost. He mentioned very much these are trying to move the government forward, invest in the businesses in the area, drive up entrepreneurship, make healthcare more efficient. And that reflects very much the motivations that we see when we talk to companies about their use of cloud. The great adoption of cloud is around speed, agility, flexibility, and driving competitive efficiencies. Cost is not in the top. Cost is further down. And most of the time when we talk to IT teams about their desire to build a private cloud, they talk about cost savings. But that's not why the business is driving it forward. So we have to constantly keep that in mind, which of course you've heard a lot today around OpenStack initiatives is around delivering this agility. And that has to be first in our minds as to why we're using the cloud. If we approach it from an ROI perspective, a total cost of ownership perspective, that's the wrong initiative. It doesn't mean that we shouldn't also do that. So that we're investing in the right way with the cloud, but it should not be the driver. The other thing we should pay attention to is what kind of workloads are going out into the cloud. It's fairly easy for us today to say systems of engagement, mobile websites, websites in general, even things that feel like a website, like your corporate intranet, you can see those things reflected here. But look at what's number one. Application integration is number one. That goes back to the point I made before about the hybrid cloud. We're in a hybrid state right now, which means that we are taking SaaS applications and we are building integrations back into the data center. So we're not shielding our systems of record from this movement into the cloud. We're trying to pull them forward by not migrating them and transitioning them into the cloud, but by creating connections to them, which is why you see so much emphasis in the cloud today around the discussions of API integrations and exposure of web services, so that we can make these kind of integrations take place. Yeah, and also in order to develop those applications, we also ask questions toward developers for both cloud developers and non-cloud developers. And it's very interesting to see that the cloud developers would favor the open source technology quite much or much bigger than the non-cloud developers. For example, if you look into some generic platforms like the operating systems, the web servers, or the databases, the adoption rate for the open source technology would be double than the non-cloud developers. And if we even look further into those technologies around the cloud, then the adoption rate would be even much higher, for example, for the SAM tools, for the business applications, or the others. It's very interesting to see that. Yeah, the contrast between the two bar colors you see here, the dark blue and the light blue is really important. We are, of course, the dark blue. We are the ones who are pushing the companies forward, but there are far more developers in the light blue. And notice that near the bottom of this slide have not used open source software. Look how high the bar is for the light blue. So while we think open source is the way to go, they oftentimes don't think that's the case. And that's something we have to keep in mind as we evangelize within our organizations. Yeah, and also that means that our cloud developers would have more open attitude toward technology. Yeah, absolutely. Yeah, so if we take a further look into the open stack trends in China, it's very interesting to see that the awareness of open stack are getting the momentum because of the contribution of the COSAC, which is the China OpenStack User Group. And an ecosystem has already been formalized in China. For example, open stack users include the Sina, the Baidu, the NetEase, the 360 Bi, and the others. And also, the solution builders like Ali Yun or the Tencent are working very proactively to work on their own solutions. In addition, we also have the Unisex stack who are working hard to improve the ease of use of the open stack. And the third one is the service providers who are like the Sina. They have built up their own Sina Weibo platform to provide a social media platform for the services of the customers. And the fourth one is regarding the China Telecom and the China Unicom. Those Telecom operators, especially for China Telecom, they have already have a very official evaluation toward the solution of the open stack. So we will take a further look of their future trend. Yeah. Yeah. And also, why all these people are trying to use the open stack? What's their expectation for the stack? If you look into a slide provided by the data on top of the COSAC, we can see that first open stack is open source. 24% of the people consider that. And also, they think that open stack could provide a great support for their server visualization. And third is that it can be a very good support for the private cloud. So that is the basic support for their business. So you've got the business driving cloud. You've got public cloud use growing like crazy. You've got developers who are building agile systems on open stack technologies and open source technologies driving it out of the organization. They're pushing companies beyond their comfort boundaries. So what do you think is the reaction of the typical IT administrator or CIO who's not really on board with this whole cloud thing yet? Well, looks a lot like this. And why does it look like this? Because he's scared to death of all of these factors. He's responsible for data protection. He's responsible for the SLAs, the compliance, the security, making sure that the company doesn't get sued, making sure they don't get broken into, making sure the data doesn't get taken off-premise. When he sees all of this movement, all of this action to try and leverage this stuff, he really doesn't really know what to do about it. And that's something that we have to be very careful with in bringing along what might be viewed as sort of dinosaurs in our own organizations towards understanding what's going on in the cloud. One of the other important things to pay attention to is since cloud is so heavily driven by the business, it's important to understand the difference between the attitudes of the business and the attitudes of mainline traditional IT. So we compare those two things in the chart that you see here. Now if you look into the dark triangle, that is the responses that are coming from the business for the most part. If you look into the white triangle, that's mostly the responses coming from the IT department. And you can quickly see something that's quite obvious here. The majority of the dots are in the white, which means that the concern that's being articulated here is a higher concern for the IT professional than it is from the business. And if you look frankly at the percentages that are on here, notice that there's really no concern by the business side listed here that's higher than 20% except for one. And that's the only one that they're very high on and so is IT, which is we cannot manage security to our strict standards. So there's some agreement around that, but in terms of all the rest of the IT concerns, the business could care less, which means us in the audience for the most part, the developers are pushing and driving the company forward, we kind of get it. But there's somebody who's scared to death and we have to bring them along. We have to educate them, give them transparency into how we're doing things, show them how we're achieving this in order to make them comfortable and move the whole organization forward. So Forrester highly recommends a maturity model for bringing these people along. And there's two paths that you'll want to take them down, but most importantly is to recognize, are they even ready? So when we look into our surveys about IT operations professionals and are they getting on board with the use of cloud, we can frankly say that we are starting to see more awakening here. So the blue bars show that we have no formal cloud strategy. You can see those going down, which is great to see the year over year. And then those who are actually building a formal cloud strategy is actually going up. Now we're still only talking about 28%. So it's not a huge amount that are even ready at this point. So we still have to keep pushing to make them more focused on this. Now in a similar survey, we also asked another question about whether it was a priority to really focus on a comprehensive strategy for cloud adoption. And that showed us a little bit higher numbers, 34% said this is of high priority, 21% saying it's a critical priority. The critical is probably organizations who are having a significant amount of shadow IT, where organizations and business are going around them all day long. So given that we have some degree of recognition and you do need to look inside your organization to see how much recognition there is, what do you help them do with that information? How do you help them move up a maturity cycle? Well, we always say the maturity cycle actually has two paths. And they're very distinct paths. The most natural path that the IT operations teams are gonna wanna go through is the private cloud path. They're more comfortable having everything stay within the data center. They're more comfortable having all the assets under their control. They believe that private cloud is frankly just an evolution of the virtualization platform that they use right now, which keeps their administrators in place, keeps their tools in place, keeps all the decisions they've made in the past in place. But they don't oftentimes recognize that in order to get to private cloud, they're actually going to have to turn on self-service to the developers. They're going to have to automate to a far higher degree than they're comfortable with today. And they have to start thinking about quotas, showback, and eventually to billing back as the public clouds do right now today. The second path, the public cloud path, this shows four stages. But frankly, I usually say that this really should have 12 steps. Because the first step in recognizing by a central IT department that they have a cloud problem is to recognize they have a cloud problem. They have to recognize that the business is going around them and is using the cloud and that it's not something they can stop from this point forward. It's something they have to embrace, they have to understand, and they have to start taking responsibility for. As they move up this path, this is where we're going to see some big challenges. And we're seeing some recognition of this in Asia Pacific as well, Charlie. Yeah, sure, I do have some figures for you. First one is that, in a specific, there are around 29% of the companies are creating an inventory of their cloud resources. And secondly, there are around 33% of the companies are trying to implement the cloud pilots. And third one is that there are around 24% of the companies have already completed the RI assessment. And the last but not the least, there are around 24% of the companies have already started to build up their own dedicated cloud teams. And also I think that's one reason why a lot of speakers this morning have put the slide regarding the recruitment as last one. Yep, yep, absolutely. And if we take a look at how the business services over the cloud is supported by the OpenStack or by the cloud or the public cloud, we can see that first all of the end users are trying to figure out what is the business benefits for them. So around 33% of them consider that OpenStack will have to make the private cloud or the virtual private cloud solution in order to provide the clients with their business services. And also there are around 28% of the companies, although they don't have any plan, but still they are trying to learn a lot around OpenStack architecture and trying to build up something in the future. And also some of the companies are trying to consider using OpenStack to build the public eye solutions for their customers or the end users. Yep, exactly. And also we will take another look into China. We can see that nearly half of the OpenStack projects are making substantial progress. Around 7% of the companies have already have their production system running in their company. And also another 16% are already very familiar with OpenStack and also having their development in progress. And another 26% are having started to have the testing around OpenStack for their projects. Yep, and we mentioned that a lot of times the IT ops professionals who are viewing this as an extension of the existing play they have are trying to keep the existing vendors in place as well. So when we take a look at internal cloud software or private cloud software, it tells a story that you would expect to look a bit like this. VMware at the top of the list, Microsoft right below that with its Hyper-V and System Center oriented private cloud solution. But if you take a look down the list and you accumulate up all of those solutions or vendor choices out there that are based on OpenStack which is represented here in the dark blue. If you were to actually accumulate all of those, you would see that in fact OpenStack is, if not the top choice, close to being the top choice overall in consideration. And currently right now in China, OpenStack already have a lot of users there and here are four of them. The first one is Huawei who is the leading telecom equipment manufacturer and a service provider. And the second one is the one of the largest outsourcing company, the Pactera. And the third one is the China standard software who is providing the operating system and the OAs software. And also very interesting to see that even in the construction industry, we also have a specific vendor whose name is Glowden who is based their platform on top of the OpenStack. And the other companies who are non-internet companies are trying to follow the global trends and to build up their own solutions. But still we also have seen a lot of issues there regarding OpenStack and the sum of the issues have listed here. So first one is that a lot of people are lack of the professional trainings and also the ease of use of OpenStack is a bit of the problem for them. Yeah. So this is where we need everyone here to help educate those people in their company who are not on board with the OpenStack yet who are still saying that our private cloud is going to be self-service to me the system administrator not you the developer. Help them understand what is different but what is not different about OpenStack. How they need to be thinking about this technology and how they should be applying it to the infrastructure, the resources, the ITIL management tools they have in place today and stop viewing it so much as a potential threat. Because that's really what this ultimately comes down to. So if you want to get cloud right inside your organization you have to work with the traditional infrastructure guys and the non-cloud developers that are out there. There's some simple recommendations to help you get them ready and get them on board. Number one is if you're the empowered leader get with them because they may not proactively get with you to find out how we're actually using cloud. What are the business reasons for using it? More often than not we're going to the cloud because it enables us to do what we're trying to achieve where the internal infrastructure may not. Some of the organizations who have talked in their case studies today have talked about the old environment and this PayPal brought this up as well was about eight weeks to 16 weeks to get a new VM just for test which is ridiculous especially in the world of OpenStack in which you can get test resources within minutes. So we need to help them understand some of the business reasons behind where we're going with the cloud and why we're tapping into these things. And then you need to help IT see how they can actually add value. What is going to be the next thing that you need the IT professionals to do that will actually enable you as a developer as an empowered leader to actually take the next step forward? Yeah and secondly you have to have your business people to see that how you're going to help them regarding their IT strategy because you are not alone in this journey and you have to reach out to some of the companies who have even more cloud experience especially regarding the OpenStack to help you accelerate your adoption on OpenStack and last but not least that especially for the architect for the technology architect you have to think about what is the biggest outcome for your solution you have to support your business strategy with your technology. Yeah and that's going to mean going hybrid earlier than they're comfortable with consuming outside public services when they don't think that they're necessarily going to meet the overall security standards. One of the challenges we see with a lot of IT professionals out there is that they really don't want to use a service that isn't going to meet their highest level of security standards. That's really unrealistic as a lot of the applications we're going to build on the system of engagement side that we're going to put into the cloud or consider putting in the cloud may not touch PCI may not be dealing with personal identifiable information may not be subject to a lot of the security demands that other systems inside of our organization have. So we should not be burdening the cloud bar with meeting all of those standards that may not matter for five or six more years in the future. So the last thing we have to remind our IT department is that the cloud is not a threat to them a threat to their job it's actually an expansion of their existing portfolio and that's really the ultimate view that we have to take and why we say when we talk about the hybrid is now that the hybrid environment is going to look a lot like this at the end of the day. On one side of the board will be things that run inside of your own data center that you're going to spend capital expense dollars on things that you're going to amortize over time that you're going to make sure that you can depreciate within your financial structure and in here you will have a minimum of three environments you'll have a set of physical deployments for older legacy class applications that you simply can't virtualize or it's not financially worth it to touch them at all just leave them running on the mainframe or leave them running on the systems are in today. Then you'll have the static virtualization environment which most companies have today. Those are best for workloads that do not have dynamism to them. They can't scale elastically you can never really turn them off and they don't really change all that often but you can consolidate them and you can get greater efficiencies by running them in that fashion. And then a lot of organizations especially large enterprises will have an internal private cloud hopefully based on OpenStack or something similar that gives the developers the autonomy and delivers the degree of automation that makes it so that CIS admins are not spending nearly as much time in this environment as they are in the other two. Now when you look at this side of the board some people like to make the argument that my internal cloud that's actually more OPEX and that's more flexible OPEX. No it's not. Let's be really clear. If you roll machines into your data center you rack and stack them it doesn't matter what you run on them. You have to amortize and you have to depreciate those physical assets. It's up to you as to how efficiently you use them and that's where cloud can help quite a bit. Now within every organization they already likely have two if not three external environments as well and this is where you're spending your OPEX dollars and as you get closer to the cloud value where you can use a standardized environment that uses a commodity infrastructure that has flexible environments that you can start to get what the CFO is really after which is the ability to change the IT cost based on the business cycles you see in your organization. Most large enterprises have quite a bit in traditional outsourcing where they've taken some of those older legacy assets they don't want to run in their own data center and they've handed them to someone to run in traditional outsourcing mode. Obviously you'll want to minimize that over time as you go forward but again as I said there are some systems that are legacy that are more expensive to do anything with and just let them keep running and minimize them over time. Most large enterprises also have traditional outsourced hosting as well where it is virtualized hosting similar to what software traditionally provides Rackspace provides outside of its public cloud environments where you're renting static virtualization. So think of it as the VMware on the outside versus VMware on the inside. You're again spending OPEX dollars. You're able to reach across multiple geographies. You have significant degree of flexibility in the use of these resources but probably are not going to get the flexibility below a month or below a year depending on your contract type. And then is where all the value of the public cloud comes in. That's where you get the dynamic true economic benefits of being able to put something in the cloud for an hour, scale it on an hourly basis or even down to the minute basis based on the performance of the application and truly deliver on the flexible OPEX. For an IT professional they look at this and they say, wow, this is a lot of different environments I'm now going to have to manage. I thought my life was complex enough as it was. What's ultimately going to make them successful and the earliest they can start on this the better off they'll be is to concentrate on if this is the end game I really only want one way to get in to any of these environments rather than separate decisions being made that end up in things getting populated into these environments that are just a wrong mismatch. Which means you want to have a single decision tree that sits at the top of the organization that allows you to vet workloads that are coming in or provide a simple wizard interface that allows a workload to self-select into what's target it's ultimately going to be delivered into. Then right below that you want to have a workload management solution who can actually take the information provided through the decision tree, package up the application in an automated fashion and drop it into the right environment. And through that workload management you want to be able to enforce your governance, regulatory and compliance needs. So if an application is coming to you and it is going to be PCI you can put the proper security, the proper agents, the proper selection of the environment that it goes into and drop it into the right place. Now if I translate this back into sort of OpenStackSpeak Horizon and the projects inside of OpenStack that center on the user experience are very much going to be the foundations for the decision tree. And then projects like Heat are necessary for implementing the workload automation we're talking about. Which means instead of viewing OpenStack as something you use for the two balls at the end of the chart you can actually think about OpenStack as the foundation for the entire chart. As the basis point for the main entry into these environments, the tracking of the resources, the using of billing mechanisms in order to bill out for this entire environment as we go forward. So the sooner you can get your whole organization and IT specifically, even your ITIL people inside your organization on board with some of the capabilities of OpenStack the sooner you can start to get to an end picture that looks a bit like this. So I know that was a lot to take in. I hope it's been valuable to you and I hope that you'll engage very much here and in China with Forrester on how we can help you and your organizations move forward on this great cloud journey. We're not supposed to take questions in this big forum but Charlie and I'll both be stepping out from behind the stage in a few minutes. Happy to take any of your comments or any of your questions. So with that, thank you very much for both Charlie and myself and I hope the rest of the conference is successful for you. Yep, thanks everyone. Good job. Thank you.