Hi, in this session we'll be talking about Cloud Adoption and compare it to traditional ITO and offshore adoption. Back in 2010, forecasts for the adoption of cloud were positively giddy. Here's just one example showing 9 out of every 10 of the 2,000 IT professionals that they surveyed. And these were from 87 countries, they believed it was likely that cloud would replace on premises by 2015, and that was last year. I think we know whether that's happened or not and listen, it comes from all corners. For example in 2012, the publication Legal IT Professionals, they had a similar forecast and that was with about 450 responses. And what they had forecast is cloud computing will overtake on-premises within the legal services industry in the very very near future. 57% of those surveys predicted it would happen within five years, 81% would said within ten years. So that didn't happen, cloud did not overtake on-premises computing in 2015. It's actually almost impossible to tell exactly where we are today. Depending on which research you read, somewhere between half and nearly 100% are doing something with the cloud, that's about all we can say for certain. For example, if we look at a business research report, they report 50% of large organizations are using the public cloud, that's using it. But when we don't limit the cloud to public, we get figures like 93% are using or experimenting with the cloud in this case that's by RightScale. So many surveys, so many forecasts. One thing they all have in common though is forecasting, exploding growth. Let's look at one in particular. This one is by BetterCloud, there will be a reference in your material. BetterCloud actually aggregates surveys from many sources, like R&R, PW and what not. Now, they actually have actual numbers which is in the first common 2015. So it's great place to start with some actual data and then the rest of it is a forecast. Now a couple of interesting things on this one day predict that two-thirds of large organizations, which they call Enterprises. Will be running entirely on the cloud by 2026. Now that's up from zero in 2015. So that's remarkable growth and if you look at that you can see how that's going to explode over time. So I'll tell you what, you've picked the right MOOC. Now there's two things all survey and forecast have in common. We don't have a lot of measurement consistency between them, so these different definitions of small, medium, large organizations when they are trying to look at units of company size. There's different cloud measurements, public versus private, premises versus off premises. There is one thing that all predictions to have in common and that's that they have already jumped the adoption chasm and they're actually waiting for practise to catch up to the forecast. Let me explain. Here we have Everett Rogers adoption curve which explains how innovation, which is new ideas and technology, how innovation spreads. Now let's start with the innovators. So over in this corner, these are the innovators, that's where it starts. Innovators are the risk takers, grab anything new. They're always going to adopt the latest thing out there. Early adopters which are here, they are more discrete, they wait until beta is over. They're crucial to actually the majority jumping on. Once the early adopters work out the bugs then we have the early majority. And the early majority, they adopt significantly later, when it's pragmatic to do so. The late majority over here, they jump on pretty much late in the game. They're skeptical, they're conservative, and they actually wait till it's old news. Laggards over here have to be dragged actually kicking and screaming to it. So for example, my mother in law and microwave ovens. She doesn't trust microwave ovens, keeps hers in the closet at the end of the house only to be used for emergency defrost situations. I suspect some of you may have some grandmothers doing the same thing with their microwaves. Well back to the curve, you'll notice there is a gap here. This was identified by Geoffrey Moore in 1991 which he calls the chasm. He argues that the enthusiasts which are the innovators. And the visionaries which are the early adopters, they move quickly. And then it stops, adoption stalls. It will either hit the mainstream market or it will die right at the chasm. So an innovation needs to cross the chasm to get the rest of the market. Moving from cool thing to a pragmatic solution. Now traditional IT outsourcing is considered to have jumped the chasm as an innovative practice after Kodak announced a unique contract at that time in which the data center operations were outsourced to IBM and two other vendors in July 1989. This was a watershed event actually for the whole outsourcing industry. Kodak was a leader at the time and its decision to outsource influenced other companies to make a similar decision. This is now known as the Kodak Effect which was coined by Loh and Venkatraman in one of their seminal works in 1992. What they identified is that there was a spike in outsourcing, after Kodak made this announcement, the prominence of the companies involved and their brand names at that time, Kodak, IBM. There's Dek, there's a few others. The size of the contract and the impetus it provided others to consider outsourcing as a real option, which wasn't happening prior to that. So after that, ITO jumped the chasm. Today, ITO is business as usual and only the laggards down here, aren't outsourcing something. So that's where ITO is, very mature. For offshoring to jump the chasm it had to jump the chasm as well. Now what had to happen there is we had the innovators and we had the early adopters. That's an easy market to get, that's not what folks want, they want the majority. So for offshoring to jump the chasm they actually had to address the relationship needs of the client. Traditional ITO is relationship dependent. There's nearly a perfect correlation between the perception of relationship and a perception of success. So good relationship equals success, a bad relationship success will be questioned. So there's actually a recent research actually that showed the perception of the relationship actually had a higher correlation to the view of success than did actual service quality. So it's interesting how important that is. Now once offshore vendors either moved to an onshore, to have onshore account managers or became subcontractors to a domestic vendor, who would then manage the onshore client relationship. Then the early majority came on board and the rest is history. Now we're probably in terms of the off shoring market I put it here. And it's on its way down, okay ITO on its way there. Some aspects of offshoring like development and coding, they're on the late majority. Other aspects in the BPO space, business process outsourcing like legal research is in the early majority, but it's all moving in technical, actually around the curve. Cloud has not jumped. So cloud is here, for legacy organizations. Legacy organizations, organizations that existed prior to the cloud effect, could we actually call that BC? So before Cloud, That's the kind of organizations that this course has been designed for it, that this MOOC has been designed for. New start ups today, if you're going to start a company today, they're born in the cloud. You actually go right to cloud services, so SaaS and the rest of it. So for example, better cloud which I referred to earlier reports at 60% of organizations founded in last years were actually born in the cloud. But right now, legacy firms, we're here, we're at the chasm. The stage where organizations are trialing cloud opportunities, experimenting with things, non core things. But very few legacy organizations have actually moved entirely to the cloud. We know this from some of the statistics, but there's other indicators that shows that it's actually at the chasm waiting to jump. Now one way to know where a market is on the adoption curve is to actually see how it's bought. Right now, today, most of cloud purchases are done by word of mouth. What I mean by that is people are talking to other people that they know and trust. Who are you using? What are you doing on the cloud? There's a reliance on brand names like Amazon, Microsoft, and IBM even though there's for example, in one panel there's 2,000 cloud providers. These brand names are dominating. There's not competitive tenders, because folks are still experimenting, they can't necessarily specify what they want, they want to go on a cloud journey with their vendors. So it's partnering, and alliances, and that sort of stuff. This is exactly how traditional outsourcing was done in the 1990s. Word of mouth references, experimentation. Now it's not that way at all, it's competitive tenders, and boy are they fierce. They can last up to six months and if not longer, and worth millions and millions and millions of dollars. It's always an exciting time to be present at any innovation and cloud is an innovation. It's always exciting to be present at the time of the chasm. I've been fortunate to be through a few chasms, and it's actually my favorite spots. Not just ITO and off shoring, but the personal computer itself. Actually got my bachelor degree the minor was called microcomputing and we have these new little small computers and I was in the first trench. And we taught ourselves basically how to use these little monsters on our projects. The university teachers at the time didn't know how to use them. So it was a minor done through playing and self taught application development and a lot of Mountain Dew. Right now in the cloud you will also be predominately self taught, when you take your organization through its early cloud experiences. You're going to have a lot of resources, like this MOOC and a lot of other stuff, which well, we didn't have way back when. But you will learn the most when you start doing it. You'll be at times thrilled, other times destroyed. You'll have breakthroughs, you'll hit walls. But your standing at the chasm, and you will jump and everyone will jump eventually, but you're going to lead the way.