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Driving adoption of Project BlueSky in the Retail

Industry: A Vertical Market Approach


Cloud Computing Market Analysis

AARK Group
Rachel Chamberland, Alex Diaz,
Amanda Lui & Kevin Satre

May 4th , 2011


Agenda
Provide recommendations on most attractive industry verticals which will allow the client to double its
cloud computing revenue over the next decade
Situation Analysis

Retail Industry Vertical Analysis

Retail Industry & Cloud Computing Opportunities

Strategic Positioning Recommendation

Financial Analysis

Risks & Challenges to Implementation

Strategic Roadmap & Timeline

Q&A
AARK Group

Adoption of technology only occurs if it adds value to business processes

Cloud computing based applications have steadily gained acceptance over the past few years
The Situation and are poised to become an integral part of the future.

Offers scalability, cost efficiency, customization, and flexibility. Users pay only for amount used,
Benefits of Cloud reducing the need for substantial capital expenditure to meet just a single period’s demand.
Computing

Some major hurdles hinder the adoption of cloud technology: security concerns and the need to
Challenges integrate with existing architecture. In essence, though the cloud holds much potential, moving to the
cloud is not necessarily better in every situation.

2011 Deloitte UW Case Challenge Presentation Template.ppt


Drive adoption of Project BlueSky within the retail industry by offering more than just computing
power, but support and customized cloud recommendations as well

Project BlueSky
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AARK Group

Analysis: retail industry & cloud computing is not a matter of “if”, but “when”

Industry Potential Current Cloud Applications Potential Cost Savings


Retail industry driven by constantly Huge need for additional computing Huge cost savings due to retail’s highly
changing customer demands, tastes, and power for analytics, product and service variable nature.
preferences—profitability is contingent innovation. Needed for core business.
upon meeting demand.  Typically using antiquated legacy
 Used to run web sites, mobile apps, systems
 $4 trillion in revenue, steady growth
social media platforms
 Enormous potential savings in storing
 Studies show retailers are more
 Product and service innovation and maintaining data
interested in adopting cloud services
 Analysis of customer, operational,
R&D data

Risks Cost of Migration Needs of Retailers

Retail demand highly dependent upon The basis of the retail industry has been
Retailers typically using antiquated
contingent upon anticipating and fulfilling
economy. Concerns with security of data. systems already in need of upgrading: customer needs. Need agility and speed to
looking for low cost opportunities. get products and services to market.
Industry manages large amounts of
data  Struggles with efficiency highlighted Changing need: With the economic
during economic recession: emphasis recession, customers have become more
on becoming leaner cautious about spending. Also have higher
expectations about service: whether it be
faster and more efficient, or more

2011 Deloitte UW Case Challenge Presentation Template.ppt


personalized

Cloud computing offers the low costs,


Source: “Industry Profile: Retail Sector.” 21 Mar. 2011: n. pag. First Research. Web. 30 Apr. 2011; “Retail IT speed and flexibility needed
Spending to Exceed $20B.” ABIresearch (2010): n. pag. Web. 2 May 2011.

Project BlueSky
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AARK Group

Problems faced by the retail industry and BlueSky’s PaaS solutions

Transaction Flexibility Changing Customer Preference


Often experiences single high volume days. Meeting a single Industry is driven by customer and demographic trends: must
period’s demand typically requires large capital investments, identify customer preferences and provide sufficient supply for
which are then under used during the rest of the year. demand. Gather customer data and behavior to guide decision-
making.
With cloud computing, retailers can temporarily scale
transaction capacity without being locked into their Increased computing power allows companies to process
expensive capital investment. and analyze data quickly, thus providing greater agility in
adjusting supply to match the customer demand.

Inventory Shortages & Markdowns High Customer Service Expectations


Improper identification of consumer preference trends lead to Expectations of customer service have risen across the past few
incorrect merchandise ordering decisions, forcing retailers into years. Customers are expecting better, personalized service.
either a shortage or markdowns. Both situations are major Retailers have found that personalizing a customer’s experience
sources of cost for the retail industry. cultivates a stronger likelihood for repeat business: storing
customer data has allowed retailers to more easily personalize a
Inexpensive additional computing power allows companies customer’s experience.
to increase their speed and agility to market for new
products and services. Massive amounts of data storage are accessible in the
cloud, and companies are able to devote more resources to

2011 Deloitte UW Case Challenge Presentation Template.ppt


customer service rather than managing data/server costs.

Source: “Industry Profile: Retail Sector.” 21 Mar. 2011: n. pag. First Research. Web. 30 Apr. 2011.

Project BlueSky
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AARK Group

Differentiate by ensuring BlueSky’s services are more than just a commodity

Positioning Plan

Differentiation

Diagnose customer needs and offer specific


cloud solutions and recommendations.
Additional support available for follow-up and
guidance if needed

Price Promotion Place


Advertise to retail
Create offers and Educate decision
vertical, but tailor
prices comparable to makers on cloud
message to individual
major competitors computing
retail segments

Free Trials Rates Workshops Advertisements Org Partnerships Representation


Free amount of Option to establish Send BlueSky
Advertisements of Partners such as
monthly usage & cost ceiling, rates Offer online classes representatives to
BlueSky’s Iaas & Association for
features, standard charged if user in cloud computing offer Paas services
Paas, emphasize Retail Technology
rates charged if surpasses free & BlueSky to existing clients;
service support Standards
over threshold monthly allocation gain referrals

2011 Deloitte UW Case Challenge Presentation Template.ppt


Project BlueSky
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AARK Group

Projected NPV of $6.61B, begin earning operating profits in 2013

Market Share Growth

By entering into the retail market, BlueSky will increase its PaaS
market share by 15% over the next ten years.

 The PaaS market is projected to surpass $15 billion by 2016

 IT spending in retail is expected to exceed $20 billion by 2014

 The importance of technical innovation in the face of


customer demand will make cloud computing a priority in IT
spending

Operating Income
After the first two years of operating losses, 2013 will see a
positive net income and profits will continue to rise.

BlueSky revenue is projected to increase over the ten years as


the PaaS market grows

A high initial capital investment is necessary to set up data


centers across the country

2011 Deloitte UW Case Challenge Presentation Template.ppt


Project BlueSky
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AARK Group

Risks and challenges that may hinder BlueSky’s adoption

Economic Downturn Control and Security Consumer Confidence


The economic downturn can reduce Two major concerns of cloud computing Recent events concerning the failure of
willingness of industry to invest in new that have resonated across all industries major cloud computing service providers
projects. are control and security. have significantly shaken consumer
confidence in the security and reliability of
 Has reduced consumer spending and Back-up servers in different physical cloud computing.
retail revenues available for investment locations will minimize potential effect of
 Recommend encrypting data
 Higher interest rates and greater difficulty server failure
obtain financing could make it more  Emphasize that unlike traditional
Continuously monitoring the status of
difficult to fund cloud transition physical servers, cloud applications
the servers, much like Amazon’s
need redundant virtual resources:
 Mitigate by emphasizing potential cost CloudWatch, will prevent hacking before
“design for failure”
savings it occurs

Competitors Regulation User Based Pitfalls


In order to compete with other large Government regulation and standardization Due to lack of training and guidance,
players in the market BlueSky must are necessary to inspire consumer improper development of PaaS applications
differentiate itself. confidence and sustain long term adoption. can tarnish customer experience.

The PaaS market is not yet saturated,  Establishment of security regulations and  Proper application development can help
but as the market expands more players certification will help mitigate the users avoid these pitfalls
will enter, driving down prices concerns about cloud computing
 Mitigate by offering training and support
 Lack of industry standards may created —teach users how to properly develop
Wide availability of cloud computing

2011 Deloitte UW Case Challenge Presentation Template.ppt


difficulties transferring data between their applications
power could cause PaaS to become
cloud providers
commoditized, instigating a price war

Source: Harris, Jeanne G. and Alter, Allan E. “Cloudrise: Rewards and Risks at the Dawn of Cloud Computing.”
Accenture. Nov 2010; York, Joel. “To Cloud or Not to Cloud in Financial Services.” Cloud Ave. 17 Sep. 2010.

Project BlueSky
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AARK Group

Timeline to implementation of BlueSky in the retail industry

BlueSky PaaS Offering Timeline


Major Goals & Strategic Promotion Plan
1 2 3 4 5 6 7 8 9 10
General Awareness
 Classes providing general education about
cloud computing
 Product reviews in trade magazines,
Association for Retail Technology Standards
 Press releases

Introduction of Product: Customer Trial


 Online classes and tutorials introducing
customer to BlueSky
 Comprehensive trials for existing customers
 Basic free trials for general public

Targeted Segment Advertising


 Small: reach out through social media
 Medium: send representatives to IT managers
 Large: reach out to IT decision makers

Customer Adoption

2011 Deloitte UW Case Challenge Presentation Template.ppt


 Feedback outlets (i.e. focus groups, surveys)
 Periodic evaluation & adjustment of product

Evaluation Points

Project BlueSky
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Questions?
AARK Group

Appendix

Analysis Implementation Financials

Evaluation Criteria Proposed Project BlueSky Usage Rates Financial Analysis


– Net Income and NPV
Potential Cloud Computing Verticals Proposed Project BlueSky Free Trial Offer
– Forecast of PaaS Market
– Retail
Differentiation Strategy: offering services & support
– Operating Income
– Automotive
– Sensitivity Analysis
– Financial Services
– Government
– Health Services

etail Industry Vertical Analysis


– Retail Vertical: Sub-sections and Functions
– Basic core functions
– Top to Bottom Needs
– Attitude towards cloud computing
AARK Group

Evaluative analysis of potential cloud computing industry verticals

Industries with Most Cloud Computing Potential


Weight Financial Services Automotive High Tech & Government Health Services Retail
Communications

Cost Savings 35% 3.0 2.9 3.4 3.5 2.7 2.9

Long-term cloud 15% 2.0 2.4 1.5 2.7 1.6 4.1


growth

Cost of 15% 2.8 3.1 1.4 2.2 2.0 2.1


migration

Varied usage 10% 1.7 2.6 3.2 3.2 2.7 4.8


demand

Data control 10% 1.5 2.1 2.1 1.3 1.1 2.0

Market 5% 2.7 1.8 0.3 0.3 0.9 3.2


saturation

Improved 5% 4.2 3.0 2.9 3.4 2.8 3.1


productivity

Openness to 5% 3.6 3.2 3.5 3.4 1.9 3.7


cloud services

2011 Deloitte UW Case Challenge Presentation Template.ppt


TOTAL 100% 2.84 2.71 2.49 2.77 2.15 3.13

Source: Harris, Jeanne G. and Alter, Allan E. “Cloudrise: Rewards and Risks at the Dawn of Cloud Computing.”
Accenture. Nov 2010.

Project BlueSky
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AARK Group

Retail vertical industry analysis: cloud computing is not a matter of “if”, but “when”

Industry Potential Current Cloud Applications Potential Cost Savings


Retail industry driven by constantly changing Huge need for additional computing power Huge cost savings due to retail’s highly
customer demands, tastes, and preferences for analytics, product and service variable nature.
—profitability is contingent upon meeting innovation. Needed for core business.
demand.  No longer need to pay for additional
 4 in 10 companies see greatest potential hardware to meet just a single day’s
 Large pool of resources:
in improved decision making forecasted demand
– $4 trillion in revenue, steady growth
– Expected to spend $20 billion in technology  Used to run web sites, mobile apps,  Enormous potential savings from
by 2014 social media platforms storing and maintaining data
 Over 1 million outlets in U.S. alone  Product and service innovation
 Typically using antiquated legacy
 Studies show retailers are more  Analysis customer, operational, R&D systems
interested in adopting cloud services data

Risks Cost of Migration Importance of Data Security


Retail industry demand is highly Retailers typically using antiquated Industry manages large amounts of data
dependent upon the economy. Consumer systems already in need of upgrading: from: customers, products, stores, sales,
spending drastically decreases during looking for low cost opportunities. supply chain, marketing, etc.
times of economic distress.
 Struggles with efficiency highlighted  With quantity of data being gathered
 However, US retail sales rose 8% in during economic recession: emphasis (i.e. store credit cards, loyalty
the first 3 months of 2011 on becoming leaner programs), need to ensure that data is
secure and that customers can entrust
 Retail industry expected to be slower

2011 Deloitte UW Case Challenge Presentation Template.ppt


their information to retailers
to adopt cloud computing

Source: “Industry Profile: Retail Sector.” 21 Mar. 2011: n. pag. First Research. Web. 30 Apr. 2011; “Retail IT
Spending to Exceed $20B.” ABIresearch (2010): n. pag. Web. 2 May 2011.

Project BlueSky
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AARK Group

Automotive vertical industry analysis


High cost savings and improved efficiency, but costs of migration, integration, security too high to
immediately move to cloud
Industry Potential Current Cloud Applications Potential Cost Savings
Automotive OEMs need agility, reach, Cloud applications used primarily to build Automotive OEMs still heavily reliant on
collaborative capacity. private sites. Also being used to link traditional ERP-systems for management
consumers to vehicles. processes and applications.
 Market power and revenues shifting to
emerging markets (i.e. China, India);  3 key fields of application:  Need low cost opportunities to upgrade
need to capitalize on changes in 1. Integration into vehicle capabilities, decrease operating costs
markets, customers and competition 2. Community clouds for supply chain
coordination  Industry runs a lot of analytics: high
 U.S. annual car sales: 13.2 million, 3. SAP operations cost of servers, software licenses,
expected to rise to 15 million by 2020 maintenance, data center space,
electricity, IT support
 China annual car sales: 8.6 million,
expected to triple to 30.2 million by
2020
Risks Cost of Migration Importance of Data Security
The greatest hurdles to cloud adoption in Automotive industry heavily relies upon its Automotive companies and customers
the automotive industry are security and existing system for analytics, supply chain need assurance that their data is safe.
data privacy. management, etc.
 Access to extremely private customer
 Major concerns about losing physical  High integration costs: existing legacy information (i.e. salary, financial data,
control and access to data: automotive systems will require a lot of custom insurance information, etc)
industry built around reputation development to integrate with the cloud

2011 Deloitte UW Case Challenge Presentation Template.ppt


 Intangibles: still major concerns of risks,
 Currently experiencing major loss of
hesitation to write off current IT
sales due to recession
investments

Source: Hoffman, Daniela. “Up in the air: cloud computing and the auto industry.” automotiveIT. 24 Nov. 2010.
Web. 3 May 2011; Mentuccia, Luca. “Six Questions Every Automotive Executive Should Ask About Cloud
Computing.” Accenture. 2010. Web. 3 May 2011.

Project BlueSky
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AARK Group

Financial services vertical analysis


Strong potential and movement of general data, still major doubts about security, performance,
reliability
Industry Potential Current Cloud Applications Potential Cost Savings
Adopting cloud computing faster than any Already widely used throughout financial Major benefit from being able to scale up
other industry. Eager for agility, flexibility, services industry: primarily for analysis, analytics or transaction capacity without
scalability. scalability. heavy investment into physical servers.

 Lack of specific government  Analytics  Often random peaks of demand that


regulations must be met: from spikes in trading
 Additional transaction capacity volume, credit card purchases
 Highly saturated market
 Platforms for standardized, efficient  72% of financial services executives
business processes surveyed say that cloud enables
processes otherwise not cost-effective
or feasible

Risks Cost of Migration Importance of Data Security


Many risks to consider: financial service Any data or system moved to cloud Protection of customer, transactional
institutions dependent upon reliability. typically has a high degree of integration financial information is crucial to the
with other applications. institution’s reputation.
 Financial risk, regulatory risk, security
risk, performance risk, etc.  Custom coding will likely be required to  Culture of keeping data close: lack of
integrate new cloud applications with visibility typically associated with lack
 Potential loss of information when custom applications of security
accessing data across applications

2011 Deloitte UW Case Challenge Presentation Template.ppt


 Will need to build in data sensitivity
 Dependence upon constant, seamless tags and appropriate security
connection to cloud—cannot afford to
experience outages
Source: Harris, Jeanne G. and Alter, Allan E. “Cloudrise: Rewards and Risks at the Dawn of Cloud Computing.”
Accenture. Nov 2010; York, Joel. “To Cloud or Not to Cloud in Financial Services.” Cloud Ave. 17 Sep. 2010.

Project BlueSky
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AARK Group

Government vertical analysis


Strong movement to the cloud, but intense competition and complex migration process

Industry Potential Current Cloud Applications Potential Cost Savings


Budgetary pressures on U.S. government Primarily used to help federal government Many redundant data centers that the
has driven agencies to look into low cost agencies reduce the cost, complexity, risk U.S. government is looking to
alternatives. and time associated with modernizing consolidate.
legacy software applications.
 U.S. plans to consolidate many of its  U.S. General Services Administration
websites, data centers and processes  Cloud-based email is most common switch to cloud-based email estimated
– Systems valued at $20 billion may move application to save $15 million over five years
to cloud
 Collaboration tools
 Government mandate that certain
agencies migrate services to cloud
within next 2.5 years

Risks Cost of Migration Importance of Data Security


Complicated bureaucratic processes and Government agencies often complex and Government data and information is
regulations. High value information target highly integrated with other agencies. highly confidential. Protection of both
for hackers. citizen and government data is essential.
 Difficult to isolate singular applications
 Complex legacy system requires costly to move to the cloud, or integrate with  Hesitation about relinquishing physical
redesign for cloud interlinked government applications possession and control over data

 Struggle with inter/intra agency politics  Potential difficulties: must adhere to  Very high security needed, especially
FISMA, ensure that they are following for sensitive material

2011 Deloitte UW Case Challenge Presentation Template.ppt


 Microsoft, Amazon & Google already government regulations
intensely battling over government  Need to ensure that cloud storage is
contracts appropriate for level of security (i.e.
Source: “Google nips Microsoft as government agencies move to the cloud.” 7 Dec. 2010. Reuters. Web. 4 May
2011; Jamrisko, Michelle. “U.S. CIO Kundra Says Government is Shutting 137 Data Centers.” 27 Apr. 2011.
region/country of data center location)
Bloomberg. Web. 4 May 2011; Davies, Gwil, et al. “Six questions every government executive should ask about
cloud computing.” 2010. Accenture. Web. 4 May 2011.

Project BlueSky
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AARK Group

Health Services Vertical Analysis


Greatest potential, but strong movement to cloud not likely within next 10 years

Industry Potential Current Cloud Applications Potential Cost Savings


Significant process and care of quality Limited usage in diagnostics, transfer of Savings in data storage, IT support,
benefits. Existing desire for electronic information between hospitals. coordination between record transfers.
records system.
 Sharing of radiology files at UC Sand  Massive amounts of data storage:
 Consumer-oriented cloud applications Diego Health System patient history, appointments, lab
likely to be well-received, useful results, etc.
 Top cloud usages:
 Need to improve collaboration across – Data storage and analysis  Eliminates potential file redundancy
organizations
– Backing up data  Lowers high capital & operating costs
 Movement towards electronic health – Storing & archiving large files
records system  Analysis needed for huge quantities of
– Analyzing data for R&D
data

Risks Cost of Migration Importance of Data Security


Industry is most conscious of data Industry leaders need to adopt before High level of data security needed:
security, privacy, confidentiality. costs of migration are justified: greatest medical records are considered one of
benefit is integration across institutions. the most sensitive types of information.
 78% of executives concerned / very
concerned about these issues  Costs of migrating to the cloud not only  Lack of trust that cloud technology can
include recoding legacy systems, but provide adequate data protection
converting physical records to

2011 Deloitte UW Case Challenge Presentation Template.ppt


electronic  Questions regarding legality of moving
patient information to cloud

Source: Harris, Jeanne G. and Alter, Allan E. “Cloudrise: Rewards and Risks at the Dawn of Cloud Computing.”
Accenture. Nov 2010; York, Joel. “To Cloud or Not to Cloud in Financial Services.” Cloud Ave. 17 Sep. 2010.

Project BlueSky
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AARK Group

Retail Vertical: Sub-sections and Functions

Retail Capability Map


Customer Fulfillment Merchandising Supply Chain Corporate Services

Physical store buy / sell Assortment planning BI / analytics Financial management

Store planning / layouts Allocations Logistics (warehouse management) Tax reporting

Staffing management Buying Vendor-managed inventory Regulatory / compliance

Customer engagement Pricing management Inventory management IT

Sales (physical & online) Marketing HR

Inventory management Market research PR & investor

Vendor management

2011 Deloitte UW Case Challenge Presentation Template.ppt


Source: Fenwick, Nigel, et al. “Industry Innovation: Retail.” 28 July 2010: 3. Forrester. Web. 2 May 2011.

Project BlueSky
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AARK Group

Core Functions of Retail Business

2011 Deloitte UW Case Challenge Presentation Template.ppt


Source: Mojica, Michael, et al. “Six Questions Every Retail Executive Should Ask About Cloud Computing.”
2010. Accenture. Web. 3 May 2011.

Project BlueSky
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AARK Group

Retail Industry: Top to Bottom Needs

Customer Fulfillment Merchandising


In retail, pleasing customers is the number one priority. Cloud In order to provide their customers with the best products and
computing lets retailers engage and communicate with their services retailers must be able to store and analyze information
customers. about the most current styles and trends.

 Store customer information and communication on the cloud  Scalable space to accommodate seasonal sales data without
spending a fortune on servers
 Create a space for customers to interact with the company
 Quick process and analysis to help meet customer demand
 Host promotions without spending more on servers
 Trend analysis can guide price management to maximize
profit

Supply Chain Corporate Services


Supply chain interaction can make or break a retailer. Improving Cloud computing frees up corporate labor and capital and allows
inventory management and streamlining supply chain the company to focus on core business.
communication can save the company time and money.
 Only pay for the space needed instead of making high fixed
 Just-in-Time management will reduce excess inventory, payment for servers
shortages and storage cost
 Services provided by PaaS reduces the responsibilities of the
 Open communication between retailers and manufacturers IT department
will help both make more accurate forecasts

2011 Deloitte UW Case Challenge Presentation Template.ppt


Project BlueSky
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AARK Group

Retail Industry Attitude Towards Cloud Computing

2011 Deloitte UW Case Challenge Presentation Template.ppt


Source: “Cloud Infrastructure-As-A-Service: Interest and Adoption By Industry.” Forrester Research, Inc., May
2009.

Project BlueSky
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AARK Group

Competitively Pricing Project BlueSky’s Usage Rates


Cloud Computing Industry Usage Rates
Project Blue Sky Google App Engine Amazon Web Services Microsoft Windows Azure

$10 per user, per month $8 per user, per month Standard On-Demand Instances Compute (instances)

 Max $2,000/month  max $1,000 / month  [Windows] S: $0.12 / hr. L: $0.48 / hr. XL:  XS: $0.05 / hr. S: $0.12 / hr. M: $0.24 / hr.
$0.96 / hr. L: $0.48 / hr. XL: $0.96 / hr.

 [Linux/UNIX] S: $0.085 / hr. L: $0.34 / hr.


XL: $0.68 / hr.

Outgoing Bandwidth: $0.12 / GB Outgoing Bandwidth: $0.12 / GB Data Transfer Data Transfers

Incoming Bandwidth: $0.10 / GB Incoming Bandwidth: $0.10 / GB  $0.10 / GB in. $0.00 for first GB / month.  $0.10 / GB in. $0.15 / GB out.
$0.15 / GB / month.

CPU Time CPU Time Elastic Load Balancing Virtual Network: free during CTP

 $0.10 / CPU hour  $0.10 / CPU hour  $0.025 / Elastic Load Balancer- hour (or
partial hour)

Stored Data Stored Data Amazon S3 (Storage) Storage

 $0.15 / GB / month  $0.15 / GB / month  $0.14 / GB  $0.15 / GB / month

 $0.01 / 10K storage transactions

High Replication Storage High Replication Storage Amazon Route 53 (zone hosting) Access Control

 $0.45 / GB / month  $0.45 / GB / month  $1.00 / hosted zone  $1.99 / 100K transactions

Recipients Emailed Recipients Emailed CloudFront (Content Delivery) Content Delivery Network

2011 Deloitte UW Case Challenge Presentation Template.ppt


$0.0001 / recipient $0.0001 / recipient  $0.150 / GB out  $0.15 / GB

 $0.01 / 10K transactions

Source: “Google App Engine.” Google App Engine.


Google, n.d. Web. 1 May 2011; “AWS Free Usage
Always On AWS Premium Support
Tier.” Amazon Web Services. Amazon, n.d. Web. 1
May 2011; “Free* Windows Azure Platform Trial.” $0.30 / daily Bronze: $49 / month. Silver: > $100. Gold: >
Windows Azure. Microsoft, n.d. Web. 1 May 2011 $400. Platinum: > $15K
Project BlueSky
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AARK Group

Project BlueSky Free Trial Offer


Cloud Computing Industry Free Trial Offers
Project Blue Sky Google App Engine (per month) Amazon Web Services (per month) Microsoft Windows Azure

750 hrs of compute instances 500 MB of storage 750 hrs of Amazon EC2 Linux Micro 750 hrs of XS compute instance
Instance usage
25 hrs of S compute instance
 613 MB of memory

1 GB BlueSky database storage 5 million page views 25 Amazon SimpleDB Machine hrs 1 GB Web Edition database
 1 GB of storage

10 GB of storage 5 GB Amazon S3 standard storage 20 GB of storage


 30K total storage transactions  20K Get Requests, 2K Put Requests  50K storage transactions

Data Transfers 750 hrs of Elastic Load Balancer 100K Access Control transactions
 20 GB transfers in  15 GB data processing

 20 GB transfers out

Text line 10 Amazon Cloudwatch alarms 2 service bus connections

 Bullet

Premium Support 10 GB of Amazon Elastic Block 128 MB cache


Storage
 Free one-on-one support for usage >
$200 / month  1 million I/Os, 1 GB snapshot storage, 10K
snapshot Get Requests, 1K snapshot Put
 Free general access to BlueSky help
Requests

2011 Deloitte UW Case Challenge Presentation Template.ppt


consultants

Data Transfers Data Transfers


Source: “Google App Engine.” Google App Engine. Google, n.d. Web. 1 May 2011; “AWS Free Usage Tier.” 15 GB transfers in  20 GB transfers in
Amazon Web Services. Amazon, n.d. Web. 1 May 2011; “Free* Windows Azure Platform Trial.” Windows Azure.
Microsoft, n.d. Web. 1 May 2011 15 GB transfers out  20 GB transfers out

Project BlueSky
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AARK Group

Basis of Differentiation Plan: Offer Support and Services

Diagnose Cloud Needs Recommendations Development Support Implementation Support

Have interested clients complete Recommend most helpful cloud Provide recommendations for Support for developers who may
a survey in order to determine solutions, PaaS tools and most optimal application need assistance making
their specific, individual needs. components, etc. development strategies. transition to cloud.

Example: Example: Example: Example:

 Size of application(s)  Sample code  Virtual resource redundancy  Community forums

 Development needed to  Toolkits for application  “Design for failure” model  Free access to BlueSky IT
transition to cloud consultant (via online help)
 Public data sets  Establish cost ceilings
 Integration needs  One-on-one support if
 Tutorials, videos, workshops  Tutorials, workshops monthly usage > $100
 Pattern of usage demand

Differentiate by Pairing Commodity with Service


Cloud computing’s motto has been, “In the cloud, anything is possible.” Cloud service
providers often offer a wide array of abstract pieces that developers can choose from to
help develop their cloud applications. However, as cloud computing is a relatively new
technology, developers may struggle to determine which tools and components are best

2011 Deloitte UW Case Challenge Presentation Template.ppt


for their purpose. BlueSky will offer developers a starting point and support for
application development based upon their specific needs.

Project BlueSky
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AARK Group

Basis for evaluation criteria weights

Assumption
Lack of any of these major factors will decrease the

2011 Deloitte UW Case Challenge Presentation Template.ppt


likelihood of cloud-computing adoption.

Source: Harris, Jeanne G. and Alter, Allan E. “Cloudrise: Rewards and Risks at the Dawn of Cloud Computing.”
Accenture Research Report. 2010 Nov.

Project BlueSky
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AARK Group

Financial Analysis: Net Income and NPV

Projected Financials

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Total PaaSRevenue Forecast 2.13 4.86 8.90 11.82 13.76 15.18 16.74 18.24 19.71 21.14 22.43

Comparny X PaaSRevenue 0.43 1.04 2.04 2.90 3.61 4.26 4.93 5.63 6.36 7.07 7.77

BlueSky revenue 0.00 0.07 0.26 0.53 0.86 1.22 1.58 1.98 2.41 2.84 3.29
Costs (2.50) (0.40) (0.42) (0.45) (0.48) (0.50) (0.54) (0.57) (0.60) (0.64) (0.68)

NI (2.50) (0.33) (0.17) 0.08 0.38 0.72 1.05 1.41 1.81 2.21 2.61

NPV ($2.50) ($0.32) ($0.15) $0.07 $0.32 $0.59 $0.83 $1.07 $1.33 $1.55 $1.76
Cumulative NPV ($2.50) ($2.82) ($2.97) ($2.90) ($2.58) ($1.99) ($1.16) ($0.09) $1.24 $2.79 $4.55

Source: “Platform-As-A-Service Market Sizing.” Forrester Research, Inc., July 2009.


"Dell to invest $1 billion in data centers." 7 Apr. 2011. Associated Press. 4 May 2011.
“Maximize Your Energy Savings From Server Virtualization With Three Process Improvements.” Forrester Research, Inc. August 2010.

2011 Deloitte UW Case Challenge Presentation Template.ppt


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AARK Group

Forecast of PaaS Market

Forecast: Global PaaS Spending By Segment Projected BlueSky PaaS Revenue

Assumption

2011 Deloitte UW Case Challenge Presentation Template.ppt


As a major player we currently hold approximately 20% of
the PaaS market as a whole (using SalesForce’s
Force.com as an approximate equivalent).

Source: “Platform-As-A-Service Market Sizing.” Forrester Research, Inc., July 2009.

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Operating Income, Revenues & Expenses

Projected PaaS Revenue

Source: “Platform-As-A-Service Market Sizing.” Forrester Research, Inc., July 2009.

2011 Deloitte UW Case Challenge Presentation Template.ppt


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Sensitivity Analysis: Comparison of NPV

Projected PaaS Revenue with 7% Growth


2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
BlueSky revenue 0.00 0.07 0.26 0.53 0.86 1.22 1.58 1.98 2.41 2.84 3.29
Costs (2.50) (0.40) (0.42) (0.45) (0.48) (0.50) (0.54) (0.57) (0.60) (0.64) (0.68)
NI (2.50) (0.33) (0.17) 0.08 0.38 0.72 1.05 1.41 1.81 2.21 2.61
NPV ($2.50) ($0.32) ($0.15) $0.07 $0.32 $0.59 $0.83 $1.07 $1.33 $1.55 $1.76
Cumulative NPV ($2.50) ($2.82) ($2.97) ($2.90) ($2.58) ($1.99) ($1.16) ($0.09) $1.24 $2.79 $4.55

Projected PaaS Revenue with 6% Growth


2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
BlueSky revenue 0.00 0.06 0.22 0.45 0.72 1.03 1.37 1.74 2.16 2.57 3.00
Costs (2.50) (0.40) (0.42) (0.45) (0.48) (0.50) (0.54) (0.57) (0.60) (0.64) (0.68)
NI (2.50) (0.34) (0.20) 0.00 0.25 0.52 0.83 1.18 1.56 1.93 2.32
NPV ($2.50) ($0.33) ($0.19) $0.00 $0.21 $0.43 $0.66 $0.89 $1.14 $1.36 $1.57
Cumulative NPV ($2.50) ($2.83) ($3.02) ($3.02) ($2.81) ($2.38) ($1.72) ($0.82) $0.32 $1.67 $3.24

Projected PaaS Revenue with 5% Growth

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
BlueSky revenue 0.00 0.05 0.18 0.37 0.59 0.84 1.16 1.52 1.92 2.31 2.72
Costs (2.50) (0.40) (0.42) (0.45) (0.48) (0.50) (0.54) (0.57) (0.60) (0.64) (0.68)
NI (2.50) (0.35) (0.24) (0.08) 0.12 0.33 0.62 0.95 1.32 1.67 2.04
NPV ($2.50) ($0.34) ($0.22) ($0.07) $0.10 $0.27 $0.49 $0.72 $0.96 $1.18 $1.38

2011 Deloitte UW Case Challenge Presentation Template.ppt


Cumulative NPV ($2.50) ($2.84) ($3.06) ($3.13) ($3.03) ($2.76) ($2.26) ($1.54) ($0.58) $0.60 $1.98

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2011 Deloitte UW Case Challenge Presentation Template.ppt
Copyright © 2010 Deloitte Development LLC. All rights reserved.

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