Driving adoption of Project BlueSky in the Retail Industry: A Vertical Market Approach

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May 4
th
, 2011

Cloud Computing Market Analysis

Driving adoption of Project BlueSky in the Retail
Industry: A Vertical Market Approach

Agenda

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


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

-

3

-

Project BlueSky

UWCC_SamplePresentation3.pptx

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 and
are poised to become an
integral part of the future.


Offers scalability, cost efficiency, customization, and flexibility. Users
pay

only for amount used
,
reducing the need for substantial capital expenditure to meet just a single period’s demand.


Some
major

hurdles

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


The Situation

Benefits of Cloud
Computing

Challenges

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

-

4

-

Project BlueSky

UWCC_SamplePresentation3.pptx

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

Huge need for additional computing
power for analytics, product and service
innovation. Needed for core business.


Used to run web sites, mobile apps,
social media platforms


Product and service innovation


Analysis of customer, operational, R&D
data

Huge cost savings due to retail’s highly
variable nature.


Typically using antiquated legacy
systems


Enormous potential savings in storing
and maintaining data

The basis of the retail industry has been
contingent

upon anticipating and fulfilling
customer needs. Need agility and speed
to get products and services to market.


Changing need
: With the economic
recession, customers have become
more cautious about spending. Also
have higher expectations about
service: whether it be faster and more
efficient, or more personalized


Cloud computing offers the low
costs, speed and flexibility needed

Industry Potential

Current Cloud Applications

Potential Cost Savings

Risks

Cost of Migration

Needs of Retailers

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.

Retail demand highly dependent upon
economy. Concerns with
security of data.


Industry
manages large amounts of
data

Retailers typically using antiquated
systems already in need of upgrading:
looking for low cost opportunities.


Struggles with efficiency highlighted
during economic recession: emphasis
on becoming leaner


Retail industry driven by constantly
changing customer demands, tastes, and
preferences

profitability is contingent
upon meeting demand.


$4 trillion in revenue, steady growth


Studies show retailers are more
interested in adopting cloud services

AARK Group

-

5

-

Project BlueSky

UWCC_SamplePresentation3.pptx

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

Industry is driven by customer and demographic trends: must
identify customer preferences and provide sufficient supply for
demand. Gather customer data and behavior to guide decision
-
making.


Increased computing power allows companies to process
and analyze data quickly, thus providing greater agility in
adjusting supply to match the customer demand.

Improper identification of consumer preference trends lead to
incorrect merchandise ordering decisions, forcing retailers into
either a shortage or markdowns. Both situations are major
sources of cost for the retail industry.


Inexpensive additional computing power allows companies
to increase their speed and agility to market for new
products and services.

Expectations of customer service have risen across the past few
years. Customers are expecting better, personalized service.
Retailers have found that personalizing a customer’s experience
cultivates a stronger likelihood for repeat business: storing
customer data has allowed retailers to more easily personalize a
customer’s experience.


Massive amounts of data storage are accessible in the
cloud, and companies are able to devote more resources to
customer service rather than managing data/server costs.


Inventory Shortages & Markdowns

High Customer Service Expectations

Transaction Flexibility

Changing Customer Preference

Often experiences single high volume days. Meeting a single
period’s demand typically requires large capital investments,
which are then under used during the rest of the year.


With cloud computing, retailers can temporarily scale
transaction capacity without being locked into their
expensive capital investment.

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

AARK Group

-

6

-

Project BlueSky

UWCC_SamplePresentation3.pptx

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

Diagnose customer needs and offer specific
cloud solutions and recommendations.
Additional support available for follow
-
up and
guidance if needed

Differentiation

Create offers and
prices comparable to
major competitors


Price

Educate decision
makers on cloud
computing


Promotion

Advertise to retail
vertical, but tailor
message to individual
retail segments

Place

Free amount of
monthly usage &
features, standard
rates charged if
over threshold

Free Trials

Option to establish
cost ceiling, rates
charged if user
surpasses free
monthly allocation

Rates

Offer online classes
in cloud computing
& BlueSky

Workshops

Advertisements of
BlueSky’s Iaas &
Paas, emphasize
service support

Advertisements

Partners such as
Association for
Retail Technology
Standards

Org Partnerships

Send BlueSky
representatives to
offer Paas services
to existing clients;
gain referrals

Representation

Positioning Plan

AARK Group

-

7

-

Project BlueSky

UWCC_SamplePresentation3.pptx

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

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



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




Source:

Source:

Market Share Growth

Operating Income

(3)
(2)
(1)
0
1
2
3
4
Net Income (Billions)

Year

BlueSky Net Income

($4)
($2)
$0
$2
$4
$6
$8
Billions

Year

Cumulative NPV

AARK Group

-

8

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Risks and challenges that may hinder BlueSky’s adoption

The economic downturn can reduce
willingness of industry to invest in new
projects.


Has reduced consumer spending and
retail revenues available for investment


Higher interest rates and greater
difficulty obtain financing could make it
more difficult to fund cloud transition


Mitigate by emphasizing potential cost
savings


Two major concerns of cloud computing
that have resonated across all industries
are control and
security.


Back
-
up servers in different physical
locations will minimize potential effect
of server failure


Continuously monitoring the
status of
the servers, much like Amazon’s
CloudWatch
,
will
prevent hacking
before it
occurs


Recent events concerning the failure of
major cloud computing service providers
have significantly shaken consumer
confidence in the security and reliability of
cloud computing.


Recommend encrypting data


Emphasize that unlike traditional
physical servers, cloud applications
need redundant virtual resources:
“design for failure”


In order to compete with other large
players in the market
BlueSky

must
differentiate itself.


The
PaaS

market is not yet saturated,
but as
the market expands more
players will
enter, driving down
prices


Wide availability of cloud computing
power could cause
PaaS

to become
commoditized, instigating a price war


Government regulation and
standardization are necessary to inspire
consumer confidence and sustain long
term adoption.


Establishment of security regulations
and certification will help mitigate the
concerns about cloud computing


Lack of industry standards may created
difficulties transferring data between
cloud providers



Due to lack of training and guidance,
improper development of PaaS
applications can tarnish customer
experience.


Proper application development can
help users avoid these pitfalls


Mitigate by offering training and
support

teach users how to properly
develop their applications



Economic Downturn

Control and Security

Consumer Confidence

Regulation

User Based Pitfalls

Competitors

AARK Group

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.

-

9

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Timeline to implementation of BlueSky in the retail industry

Major Goals & Strategic Promotion Plan

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


Feedback outlets (i.e. focus groups, surveys)


Periodic evaluation & adjustment of product



Evaluation Points

10

9

8

7

6

5

4

3

2

1

BlueSky PaaS Offering Timeline

AARK Group

Questions?

Appendix

Proposed Project BlueSky Usage
Rates

Proposed Project BlueSky Free Trial
Offer

Differentiation Strategy: offering
services & support

Evaluation Criteria

Potential Cloud Computing Verticals


Retail


Automotive


Financial Services


Government


Health Services

Retail Industry Vertical Analysis


Retail Vertical: Sub
-
sections and
Functions


Basic core functions


Top to Bottom Needs


Attitude towards cloud computing



Financial Analysis


Net Income and NPV


Forecast of PaaS Market


Operating Income


Sensitivity Analysis

Analysis

Implementation

Financials

AARK Group

-

12

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Evaluative analysis of potential cloud computing industry verticals

Weight

Financial Services

Automotive

High Tech &
Communications

Government

Health
Services

Retail

Cost Savings

35%

3.0

2.9

3.4

3.5

2.7

2.9

Long
-
term
cloud growth

15%

2.0

2.4

1.5

2.7

1.6

4.1

Cost of
migration

15%

2.8

3.1

1.4

2.2

2.0

2.1

Varied usage
demand

10%

1.7

2.6

3.2

3.2

2.7

4.8

Data control

10%

1.5

2.1

2.1

1.3

1.1

2.0

Market
saturation

5%

2.7

1.8

0.3

0.3

0.9

3.2

Improved
productivity

5%

4.2

3.0

2.9

3.4

2.8

3.1

Openness to
cloud services

5%

3.6

3.2

3.5

3.4

1.9

3.7

TOTAL

100%

2.84

2.71

2.49

2.77

2.15

3.13

Industries with Most Cloud Computing Potential

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

AARK Group

-

13

-

Project BlueSky

UWCC_SamplePresentation3.pptx

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

Retail industry driven by constantly
changing customer demands, tastes, and
preferences

profitability is contingent
upon meeting demand.


Large pool of resources:


$4 trillion in revenue, steady growth


Expected to spend $20 billion in
technology by 2014


Over 1 million outlets in U.S. alone


Studies show retailers are more
interested in adopting cloud services

Huge need for additional computing
power for analytics, product and service
innovation. Needed for core business.


4 in 10 companies see greatest
potential in improved decision making


Used to run web sites, mobile apps,
social media platforms


Product and service innovation


Analysis customer, operational, R&D
data

Huge cost savings due to retail’s highly
variable nature.


No longer need to pay for additional
hardware to meet just a single day’s
forecasted demand


Enormous potential savings from
storing and maintaining data


Typically using antiquated legacy
systems

Retail industry demand is highly
dependent upon the economy. Consumer
spending drastically decreases during
times of economic distress.


However, US retail sales rose 8% in
the first 3 months of 2011


Retail industry expected to be slower to
adopt cloud computing


Retailers typically using antiquated
systems already in need of upgrading:
looking for low cost opportunities.


Struggles with efficiency highlighted
during economic recession: emphasis
on becoming leaner


Industry manages large amounts of data
from: customers, products, stores, sales,
supply chain, marketing, etc.


With quantity of data being gathered
(i.e. store credit cards, loyalty
programs), need to ensure that data is
secure and that customers can entrust
their information to retailers

Industry Potential

Current Cloud Applications

Potential Cost Savings

Risks

Cost of Migration

Importance of Data Security

AARK Group

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.

-

14

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Automotive vertical industry analysis

Automotive OEMs need agility, reach,
collaborative capacity.


Market power and revenues shifting to
emerging markets (i.e. China, India);
need to capitalize on changes in
markets, customers and competition


U.S. annual car sales: 13.2 million,
expected to rise to 15 million by 2020


China annual car sales: 8.6 million,
expected to triple to 30.2 million by 2020

Cloud applications used primarily to build
private sites. Also being used to link
consumers to vehicles.


3 key fields of application:

1. Integration into vehicle

2. Community clouds for supply chain


coordination

3. SAP operations


Automotive OEMs still heavily reliant on
traditional ERP
-
systems for management
processes and applications.


Need low cost opportunities to upgrade
capabilities, decrease operating costs


Industry runs a lot of analytics: high
cost of servers, software licenses,
maintenance, data center space,
electricity, IT support

The greatest hurdles to cloud adoption in
the automotive industry are security and
data privacy.


Major concerns about losing physical
control and access to data: automotive
industry built around reputation


Currently experiencing major loss of
sales due to recession

Automotive industry heavily relies upon its
existing system for analytics, supply chain
management, etc.


High integration costs: existing legacy
systems will require a lot of custom
development to integrate with the cloud


Intangibles: still major concerns of
risks, hesitation to write off current IT
investments


Automotive companies and customers
need assurance that their data is safe.


Access to extremely private customer
information (i.e. salary, financial data,
insurance information, etc)



Industry Potential

Current Cloud Applications

Potential Cost Savings

Risks

Cost of Migration

Importance of Data Security

AARK Group

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.

High cost savings and improved efficiency, but costs of migration, integration, security too high to
immediately move to cloud

-

15

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Financial services vertical analysis

Adopting cloud computing faster than any
other industry. Eager for agility, flexibility,
scalability.


Lack of specific government
regulations


Highly saturated market

Already widely used throughout financial
services industry: primarily for analysis,
scalability.


Analytics


Additional transaction capacity


Platforms for standardized, efficient
business processes

Major benefit from being able to scale up
analytics or transaction capacity without
heavy investment into physical servers.


Often random peaks of demand that
must be met: from spikes in trading
volume, credit card purchases


72% of financial services executives
surveyed say that cloud enables
processes otherwise not cost
-
effective
or feasible

Many risks to consider: financial service
institutions dependent upon reliability.


Financial risk, regulatory risk, security
risk, performance risk, etc.


Potential loss of information when
accessing data across applications


Dependence upon constant, seamless
connection to cloud

cannot afford to
experience outages


Any data or system moved to cloud
typically has a high degree of integration
with other applications.


Custom coding will likely be required to
integrate new cloud applications with
custom applications

Protection of customer, transactional
financial information is crucial to the
institution’s reputation.


Culture of keeping data close: lack of
visibility typically associated with lack
of security


Will need to build in data sensitivity
tags and appropriate security

Industry Potential

Current Cloud Applications

Potential Cost Savings

Risks

Cost of Migration

Importance of Data Security

AARK Group

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.

Strong potential and movement of general data, still major doubts about security, performance, reliability

-

16

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Government vertical analysis

Budgetary pressures on U.S. government
has driven agencies to look into low cost
alternatives.


U.S. plans to consolidate many of its
websites, data centers and processes


Systems valued at $20 billion may move
to cloud


Government mandate that certain
agencies migrate services to cloud
within next 2.5 years


Primarily used to help federal government
agencies reduce the cost, complexity, risk
and time associated with modernizing
legacy software applications.


Cloud
-
based email is most common
application


Collaboration tools

Many redundant data centers that the
U.S. government is looking to consolidate.


U.S. General Services Administration
switch to cloud
-
based email estimated
to save $15 million over five years


Complicated bureaucratic processes and
regulations. High value information target
for hackers.


Complex legacy system requires costly
redesign for cloud


Struggle with inter/intra agency politics


Microsoft, Amazon & Google already
intensely battling over government
contracts

Government agencies often complex and
highly integrated with other agencies.


Difficult to isolate singular applications
to move to the cloud, or integrate with
interlinked government applications


Potential difficulties: must adhere to
FISMA, ensure that they are following
government regulations

Government data and information is
highly confidential. Protection of both
citizen and government data is essential.


Hesitation about relinquishing physical
possession and control over data


Very high security needed, especially
for sensitive material


Need to ensure that cloud storage is
appropriate for level of security (i.e.
region/country of data center location)

Industry Potential

Current Cloud Applications

Potential Cost Savings

Risks

Cost of Migration

Importance of Data Security

AARK Group

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.
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.

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

-

17

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Health Services Vertical Analysis

Significant process and care of quality
benefits. Existing desire for electronic
records system.


Consumer
-
oriented cloud applications
likely to be well
-
received, useful


Need to improve collaboration across
organizations


Movement towards electronic health
records system

Limited usage in diagnostics, transfer of
information between hospitals.


Sharing of radiology files at UC Sand
Diego Health System


Top cloud usages:


Data storage and analysis


Backing up data


Storing & archiving large files


Analyzing data for R&D

Savings in data storage, IT support,
coordination between record transfers.


Massive amounts of data storage:
patient history, appointments, lab
results, etc.


Eliminates potential file redundancy


Lowers high capital & operating costs


Analysis needed for huge quantities of
data

Industry is most conscious of data
security, privacy, confidentiality.


78% of executives concerned / very
concerned about these issues


Industry leaders need to adopt before
costs of migration are justified: greatest
benefit is integration across institutions.


Costs of migrating to the cloud not only
include recoding legacy systems, but
converting physical records to
electronic

High level of data security needed:
medical records are considered one of the
most sensitive types of information.


Lack of trust that cloud technology can
provide adequate data protection


Questions regarding legality of moving
patient information to cloud

Industry Potential

Current Cloud Applications

Potential Cost Savings

Risks

Cost of Migration

Importance of Data Security

AARK Group

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.

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

-

18

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Retail Vertical: Sub
-
sections and Functions

AARK Group

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

Retail Capability Map

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

-

19

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Core Functions of Retail Business

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

AARK Group

-

20

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Retail Industry: Top to Bottom Needs

In order to provide their customers with the best products and
services retailers must be able to store and analyze information
about the most current styles and trends.


Scalable space to accommodate seasonal sales data without
spending a fortune on servers


Quick process and analysis to help meet customer demand


Trend analysis can guide price management to maximize
profit


Supply chain interaction can make or break a retailer. Improving
inventory management and streamlining supply chain
communication can save the company time and money.


Just
-
in
-
Time management will reduce excess inventory,
shortages and storage cost


Open communication between retailers and manufacturers
will help both make more accurate forecasts


Cloud computing frees up corporate labor and capital and allows
the company to focus on core business.


Only pay for the space needed instead of making high fixed
payment for servers


Services provided by PaaS reduces the responsibilities of the
IT department


Supply Chain

Corporate Services

Customer Fulfillment

Merchandising

AARK Group

In retail, pleasing customers is the number one priority. Cloud
computing lets retailers engage and communicate with their
customers.


Store customer information and communication on the cloud


Create a space for customers to interact with the company


Host promotions without spending more on servers


-

21

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Retail Industry Attitude Towards Cloud Computing

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

AARK Group

-

22

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Competitively Pricing Project BlueSky’s Usage Rates

AARK Group

Project Blue Sky

Google App Engine

Amazon Web Services

Microsoft Windows Azure

$10 per user, per month


Max $2,000/month

$8 per user, per month


max $1,000 / month

Standard On
-
Demand Instances


[Windows] S: $0.12 / hr. L: $0.48 / hr.
XL: $0.96 / hr.


[Linux/UNIX] S: $0.085 / hr. L: $0.34 /
hr. XL: $0.68 / hr.

Compute (instances)


XS: $0.05 / hr. S: $0.12 / hr. M: $0.24 /
hr. L: $0.48 / hr. XL: $0.96 / hr.

Outgoing Bandwidth: $0.12 / GB

Incoming Bandwidth: $0.10 / GB

Outgoing Bandwidth: $0.12 / GB

Incoming Bandwidth: $0.10 / GB

Data Transfer


$0.10 / GB in. $0.00 for first GB /
month. $0.15 / GB / month
.

Data Transfers


$0.10 / GB in. $0.15 / GB out.

CPU Time


$0.10 / CPU hour

CPU Time


$0.10 / CPU hour

Elastic Load Balancing


$0.025 / Elastic Load Balancer
-

hour
(or partial hour)

Virtual Network: free during CTP

Stored Data


$0.15 / GB / month

Stored Data


$0.15 / GB / month

Amazon S3 (Storage)


$0.14 / GB

Storage


$0.15 / GB / month


$0.01 / 10K storage transactions

High Replication Storage


$0.45 / GB / month

High Replication Storage


$0.45 / GB / month

Amazon Route 53 (zone hosting)


$1.00 /
hosted zone

Access Control


$1.99 / 100K transactions

Recipients Emailed


$0.0001 / recipient

Recipients Emailed


$0.0001 / recipient

CloudFront

(Content Delivery)


$0.150 / GB out

Content Delivery Network


$0.15 / GB


$0.01 / 10K transactions


Always On


$0.30 / daily

AWS Premium Support


Bronze: $49 / month. Silver: > $100.
Gold: > $400. Platinum: > $15K

Cloud Computing Industry Usage Rates

Source: “Google App Engine.”
Google App Engine
.
Google, n.d. Web. 1 May 2011; “AWS Free Usage
Tier.”
Amazon Web Services.

Amazon, n.d. Web. 1
May 2011; “Free* Windows Azure Platform Trial.”
Windows Azure
. Microsoft, n.d. Web. 1 May 2011

-

23

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Project BlueSky Free Trial Offer

AARK Group

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 Instance usage


613 MB of memory

750
hrs

of XS compute instance

25
hrs

of S compute instance

1 GB
BlueSky

database storage

5 million page views

25 Amazon
SimpleDB

Machine
hrs


1 GB of storage

1 GB Web Edition database


10 GB of storage


30K total storage transactions

5 GB Amazon S3 standard storage


20K Get Requests, 2K Put Requests

20 GB of storage


50K storage transactions

Data Transfers


20 GB transfers in


20 GB transfers out

750
hrs

of Elastic Load Balancer


15 GB data processing

100K Access Control transactions


Text line


Bullet

10 Amazon
Cloudwatch

alarms

2 service bus connections


Premium Support


Free one
-
on
-
one support for usage >
$200 / month


Free general access to
BlueSky

help
consultants

10 GB of Amazon Elastic Block
Storage


1 million I/
Os
, 1 GB snapshot storage,
10K snapshot Get Requests, 1K
snapshot Put Requests

128 MB cache




Data Transfers


15 GB transfers in


15 GB transfers out

Data Transfers


20 GB transfers in


20 GB transfers out

Cloud Computing Industry Free Trial Offers

Source: “Google App Engine.”
Google App Engine
. Google, n.d. Web. 1 May 2011; “AWS Free Usage Tier.”
Amazon Web Services.

Amazon, n.d. Web. 1 May 2011; “Free* Windows Azure Platform Trial.”
Windows
Azure
. Microsoft, n.d. Web. 1 May 2011

-

24

-

Project BlueSky

UWCC_SamplePresentation3.pptx

AARK Group

Basis of Differentiation Plan: Offer Support and Services

Have interested clients complete
a survey in order to determine
their specific, individual needs.

Example
:


Size of application(s)


Development needed to
transition to cloud


Integration needs


Pattern of usage demand


Recommend most helpful cloud
solutions, PaaS tools and
components, etc.

Example
:


Sample code


Toolkits for application


Public data sets


Tutorials, videos, workshops

Provide recommendations for
most optimal application
development strategies.

Example
:


Virtual resource redundancy


“Design for failure” model


Establish cost ceilings


Tutorials, workshops

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
for their purpose.
BlueSky

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

Support for developers who may
need assistance making
transition to cloud.

Example
:


Community forums


Free access to BlueSky IT
consultant (via online help)


One
-
on
-
one support if
monthly usage > $100

Diagnose Cloud Needs

Recommendations

Development Support

Implementation
Support

Differentiate by Pairing Commodity with Service

-

25

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Basis for evaluation criteria weights

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

Assumption

Lack of any of these major factors will decrease the
likelihood of cloud
-
computing adoption.

AARK Group

-

26

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Financial Analysis: Net Income and NPV

AARK Group

Projected Financials

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
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Total PaaS Revenue 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 PaaS Revenue
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
-

27

-

Project BlueSky

UWCC_SamplePresentation3.pptx

AARK Group

Forecast of PaaS Market

Forecast: Global PaaS Spending By Segment

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


Assumption

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).

Projected BlueSky PaaS Revenue

-

28

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Operating Income, Revenues & Expenses

AARK Group

Projected PaaS Revenue

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

(2.50)

(0.40)

(0.42)

(0.45)

(0.48)

(0.50)

(0.54)

(0.57)

(0.60)

(0.64)

(0.68)

0.00

0.08

0.30

0.61

0.99

1.42

1.81

2.22

2.68

3.13

3.59

$Billions

Year

BlueSky Revenue & Expenses

Expenses
BlueSky revenue
(3)
(2)
(1)
0
1
2
3
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Net Income (Billions)

Year

BlueSky Net Income

-

29

-

Project BlueSky

UWCC_SamplePresentation3.pptx

Sensitivity Analysis: Comparison of NPV

AARK Group

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
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 6% 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
Cumulative NPV
($2.50)
($2.84)
($3.06)
($3.13)
($3.03)
($2.76)
($2.26)
($1.54)
($0.58)
$0.60
$1.98
Projected PaaS Revenue with 5% Growth