The big opportunity: Application Innovation

Many of the competitive differentiators within organizations (e.g. supply chain, distribution model,customer data, operations, R&D, etc.) have been optimized by IT investments over many years. Thatorganic growth pattern has led to tremendous value in the enterprise – and IT services companies thriveby providing their customers a strategic advantage over their competition through IT investment. Butmany...

Many of the competitive differentiators within organizations (e.g. supply chain, distribution model,
customer data, operations, R&D, etc.) have been optimized by IT investments over many years. That
organic growth pattern has led to tremendous value in the enterprise – and IT services companies thrive
by providing their customers a strategic advantage over their competition through IT investment. But
many of these assets sit behind a corporate firewall, may be regulated, and are very proprietary. For
these assets, participation in the cloud computing revolution remains elusive. All the while, new startups without these assets accelerate their businesses quickly.

An IDC study of CIOs finds that 57% of CIOs are going to be “focused on delivering business innovation
to increase revenues, margins, and new products” over the next three years. In turn, only 9% planned to
maintain its “focus on maintenance and operations to manage costs and risks”. Companies are
moving forward with a digital transformation strategy, using technology to develop new products and
bring new revenue into the business. As the realization of the disruption of the cloud has spread from the server room to the board room, businesses and technologists alike are looking for how cloud innovation, can be used to modernize existing investments so that they can continue to provide a strategic advantage to their company.

Azure Stack is an extension of Azure that enables partners to deliver the power of the cloud computing
paradigm across their customer’s assets. With Azure Stack, partners can help their customers unlock the agility that comes from the cloud and application modernization, regardless of where that application runs so that they can focus IT resources on delivering business value through innovation rather than simply managing costs and risks for heritage systems.
IDC forecasts that worldwide public cloud services revenue (i.e. SaaS, PaaS, and IaaS) will reach $195B
USD by 2020, a 20.4% CAGR: almost six times the rate of overall IT spending growth. Large and very
large companies will be the primary driver of worldwide public cloud services with spending of more
than $80 billion in 2019. 40% of the total will come from companies with >500 employees. Large and
very large companies are the customers who are looking to incorporate Azure Stack into their overall
innovation strategy.
As the cloud moves from an early, exploratory phase, to the mainstream, customer expectations of IT
supplier’s capabilities are being reshaped by the ease and availability of the cloud. Accordingly, the
explosion of new technologies and solutions has been accompanied by restructuring and rethinking of
business models throughout the ecosystem.

Azure Stack_Satechnologies
Opportunity with Azure Stack

Azure Stack extends the Azure platform on-premises and introduces more optionality for innovation and more opportunity to those who embrace it. Partners can look to grow their businesses starting with what they do today, and expanding into complementary areas. There are three key areas of opportunity, as follows:

Build applications and services to deploy to both Azure and Azure Stack

Azure provides a flexible platform that is built for builders. Whether using Microsoft or open source
technologies, ISVs can build using the tools they want to. Once applications are built, they can increase
adoption by making their solution available through the Azure Marketplace on Azure Stack.
As an extension of the Azure software platform, the goal with Azure Stack is to enable the customers to
build applications on any Azure cloud. Many customers prefer to work directly with the ISV ecosystem
when creating custom solutions. With Azure Stack, Microsoft is extending the Azure promise of
profitability, innovation and market reach for ISVs.

• Profitability: By developing to a single platform, Azure Stack introduces operational efficiencies,
lowered risks, predictable costs, and easy scalability so that ISVs can capture new business and focus
on high speed to market.
• Innovation: By shipping a consistent application platform, ISVs can more easily adopt and
incorporate the tremendous value of Azure PaaS into their design points – knowing that they can
still run their applications outside of Microsoft’s datacenters when needed.
• Market Reach: Azure Stack is an extension of Azure and that includes programmatic
investments, such as the Azure Marketplace and Azure Certified. With a consistent cloud platform,
certified applications syndicated through the Azure Marketplace can be delivered to any Microsoft
Enterprise customer or hosting partner running Azure Stack.

Offer managed cloud services across Azure and Azure Stack
Hybrid applications can solve problems in new ways. Imagine a single application that is distributed
across clouds, but works the same way in each cloud. Azure Stack helps unlock new opportunities for
customers who need a hybrid solution. For managed service providers, extending the operational
context of solutions from Microsoft’s data-centers to the location that best suits a customer’s unique
requirements is a critical component of attracting and retaining new customers. Azure Stack can be
factored into solution designs for innovative customers. Regulatory, latency, and other requirements can be refactored with Azure Stack to build new solutions or modernize existing applications, such as
creating a cloud-based front end for a legacy system that keeps data in a regulated environment.

Plan, customize, and operate Azure Stack in on-premises datacenters
Every Azure Stack cloud is an opportunity for planning deployment of the system, customization of the
capabilities, and operational activities required for managing the lifecycle of the cloud.

• Planning: Prior to any deployment of Azure Stack, there is an opportunity to perform feasibility studies,
evaluate if Azure Stack is the right fit for customers as part of the customer’s overall objectives. Based
on the workloads that are going to be run, determining the right size and configuration of the Azure
Stack integrated system(s) that will be required. Prior to fulfillment by an Azure Stack hardware
partner, customers will need help preparing the environment (e.g. networking configuration) or
even acting as the overall project manager for the deployment.

• Integration and Customization: Once an Azure Stack is deployed by a hardware partner, Azure Stack
has several key customization and integration activities that will need to be engaged in a traditional
project manor. Based on the workloads to be run, additional Azure Services, such as App Service can

be added to Azure Stack. Additionally, populating the Azure Marketplace on Azure Stack will need to
happen. As a new system, Azure Stack will need to be integrated into Dev/Ops processes and tools
(such as VSTS) as well as existing IT systems (such as monitoring and chargeback).

• Operations: Once Azure Stack is up and running, a more annuity based opportunity for managing
the live-site for workloads and day-to-day operations (such as backup and tenant management).
Additionally, operational partners can work to manage support on behalf of customers with
Microsoft and the hardware partner providing the integrated system.

What Azure Stack means for existing partner businesses

Azure already has been leading the way in helping partners transform their businesses as cloud
continues to mature. In the context of Azure Stack, another key evolution moment is introduced for
partners.

Independent Software Vendors (ISVs)
Cloud services have changed the way that developers think about how they build their applications and how they take them to market. Azure enables several different business models for companies with a
software development focus. At a high level, ISVs can use the Azure Marketplace to reach customers of
their software. Azure Stack extends this reach to hosters and enterprise datacenters. Additionally, many
ISVs are transitioning to a SaaS model for their business. For customers that have unique requirements,
an ISV can invest in their SaaS architecture on Azure, knowing they can distribute it to Azure Stack
deployments, where it could be run by the ISV, and SI/MSP, or the customer themselves.

Managed Service Providers (MSPs)
Many hosters already provide tools, apps, and services to make customers productive but
fundamentally, their willingness to assume the burden of the capital expenditure on hardware, and
facilities is their first line of value presented to customers. With the emergence of cloud and the
continuing commoditization of hardware, hosters are transforming to MSPs to take the expertise that
ran hardware and facilities into the front line of value – building and managing Azure solutions. Azure
Stack enables Azure solutions to be run in existing facilities. For example, an MSP in regulated
geography can provide a complete solution to a customer with a requirement to keep some data in that geography when needed and some in Azure when appropriate. In this way, an MSP can unify their skillset being developed for creating and running Azure solutions with the continued investment in their
existing facilities.

System Integrators (SIs)
Like hosters, many Sis is transitioning to an MSP model – building solutions for customers in Azure. That
said, they also have a long history of delivering value to their customers by deploying and troubleshooting key infrastructure pieces in on-premises datacenters.
In the world of hybrid cloud with Azure Stack, a key additional opportunity for SIs can be summarized
by plan, customize and operate Azure Stack (as described in the previous section). Every Azure Stack cloud is an opportunity for an SI to lead and influence the deployment of the system, customization of the
capabilities, and operational activities for the customer. For SIs willing to also be CSP, they can be
involved in software transactions and be better placed for help planning Azure Stack services for their
customer.

Azure Stack is a co-engineered, integrated system from select hardware partners. The Azure Stack
software and hardware deployment are done by hardware partners when the system is delivered. As
described in the previous section under “planning”, SIs can still participate in the infrastructure layer,
but it requires collaboration with the hardware partners. With Azure Stack, the SI community’s biggest
business opportunities reside at a higher altitude than hardware infrastructure integration.

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