VMware Cloud Index 2013: Survey data shows Australian IT departments must act fast or risk uncertain future

42 percent of Respondents Say IT is Bypassed when Sourcing Technology and Business Applications

SYDNEY, 22 October 2013 – VMware Inc. (NYSE: VMW), the global leader in virtualization and cloud infrastructure, today at its annual vForum conference in Australia announced the findings of the VMware Cloud Index 2013 study. Conducted by Forrester Consulting and now in its fourth year, the VMware Cloud Index 2013 revealed a concerning trend of IT marginalization in Australia due to a perceived lack of alignment with the business. A summary of the VMware Cloud Index 2013 findings in Australia can be downloaded at http://www.vforum-aus.com/.

Specifically, 42 percent of survey respondents said business units often go around IT in order to source technology or business applications directly, illustrating that IT may be overlooked if it is deemed unresponsive or too slow. Additionally, 73 percent of Australian respondents agreed that IT organisations must start provisioning services to businesses in a faster and more cost-effective way, or risk being marginalised.

On the other end, 67 percent said they view IT as an enabler for change and a source of business value to the organisation, while 38 percent believe the credibility and influence of the CIO is increasing. However, the perception of IT’s level of importance and influence appears to be mixed among business decision makers and IT decision makers. Only 31 percent of business decision makers said that the CIO’s credibility and influence is increasing and just 39 percent of IT decision makers agreed with this sentiment.

The survey questioned 268 respondents in Australia across multiple vertical sectors. The survey was also conducted throughout Asia-Pacific, across 2,785 IT and business decision-makers in total surveyed.

WAKE UP CALL FOR CIOs AND IT MANAGERS
The study also indicated that the perception of the CIO’s influence is lower amongst business leaders compared to IT decision makers. When asked who made or is likely to make the final purchase decision for cloud computing in the organization, 55 percent of IT decision makers said the CIO. However, only 44 percent of business decision makers said the CIO.

Business decision makers also have a higher expectation of IT departments to drive the business compared to the expectations that IT decision makers have on IT. For example, the survey data showed that one of the top three ranked business initiatives for organisations in Australia during the next 12 months is lowering the firm’s overall operating costs. 80 percent of business decision makers ranked this as a priority or a high priority. However, only 63 percent of IT decision makers ranked this as a priority or a high priority.

Another area where there is a difference is with growing overall company revenue and/or expanding into new markets. Again, 80 percent of business decision makers list this as a priority or high priority whereas only 55 percent or IT decision makers believe this is a priority.

“Australian IT departments have enjoyed tremendous respect and admiration from the business during the past several years and now the trust is being tested as we enter the new era of IT,” said Duncan Bennet, Managing Director of VMware Australia and New Zealand. “VMware is leading companies into the new era, with a software-defined approach that will move businesses from the client server era to the mobile cloud era of computing.”

PRIVATE, HYBRID & PUBLIC CLOUD
This year’s VMware Cloud Index also showed Australian organisations are favouring private or a combination of private and public (hybrid) cloud solutions over public cloud offerings. 36 percent of respondents indicated that in 2013 and 2014 they are more likely to focus investments in time, money, and skills around private clouds while 34 percent are looking to invest in hybrid cloud. Only 14 percent are keen to invest in public cloud offerings.

Furthermore, when asked about the drivers of considering private cloud, 44 percent said to improve IT operational efficiency and budget performance and 42 percent said to provide faster access to data and analytics to improve business decisions. The figures for hybrid cloud were 34 percent and 22 percent, respectively; and lower again for public cloud offerings (9 percent and 11 percent).

A private cloud approach also proved dominant in delivering mobility strategies (38 percent) and powering an as-a-service strategy (37 percent).

An interesting observation is how closely aligned the private and hybrid cloud approaches are when addressing requirements like; Maintaining SLAs with less funds or fewer IT resources (private: 33 percent, hybrid: 31 percent); Improving IT agility and responsiveness to business demands (private: 34 percent, hybrid: 35 percent); and formalising or improving disaster recovery and business continuity (private: 39 percent, hybrid: 38 percent).

Across the spectrum of all requirements asked, public cloud was the least favoured approach to delivering these outcomes (ranging from 8 percent to 15 percent). This in mind, growth in the VMware powered service provider community would suggest that having a common, consistent and proven platform between private and public clouds eases the migration of existing workloads into these environments.

“With virtualization pervasive in Australia, cloud uptake has increased rapidly in recent years and many companies are realising the benefits, as well as challenges, different cloud environments can bring,” said Duncan Bennet, Managing Director of VMware Australia and New Zealand. “Private cloud and hybrid cloud brings a robust approach to security, for organisations that are concerned about the safety of their data and the reliability of their cloud services.”

THE SOFTWARE-DEFINED DATA CENTER
According to the VMware Cloud Index studies that started in 2010, Cloud adoption has been increasing in Australia during the past several years. Compared to 2012, for example, respondents that have adopted or have plans to adopt cloud or ‘as-a-service’ approaches increased from 78 percent last year to 79 percent in 2013.

The importance of cloud computing to drive business transformation is also increasing. When asked to rate the relevance of cloud computing and as-a-service approaches to the organization, 51 percent of business decision makers said cloud or ‘as-a-service’ approaches are a “top priority for (their) organization and significantly impacts business transformation.” However, only 30 percent of IT decision makers agreed.

Furthermore, when asked to rate the level of significance and impact of a software-defined approach to implement and manage datacentre resources such as servers, storage, networks over the next 2-3 years, 54 percent said significant or highly significant.

“It’s clear that a software-defined approach is disrupting the marketplace, providing tremendous opportunity and growth prospects for both IT departments and the ecosystem in general to add value to organizations and grow businesses,” said Michael Barnes, Vice President & Research Director, Forrester Consulting.

“The software-defined data center is the IT architecture for the mobile cloud era, and can help IT realign and help drive business transformation in Australia,” Bennet said. “During the past 12 months, we have created an ideal architecture for private, hybrid and public clouds where compute, network and storage infrastructure is fully virtualized and the control of this data centre is automated by software.”

NETWORK VIRTUALIZATION
The majority of survey respondents (65 percent) also flagged meeting networking performance within their IT organisation as a high priority with 57 percent eager to deliver a flexible and agile networking platform for their businesses during the next 12 months.

“As a core component of the software-defined data center, network virtualization will deliver a new network operational model that can improve agility and advance data center economics,” Bennet said. “The software-defined data center can address IT's critical needs, while empowering organisations to build infrastructure that is simple and efficient.”

About the VMware Cloud Index
The VMware Cloud Index 2013 is an Asia-Pacific-wide study conducted by Forrester Consulting. Now in its 4th annual edition, the 2013 survey surveyed 2,785 senior IT practitioners across the region in 12 countries (Australia, China, Hong Kong, India, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand, and Vietnam. The survey was conducted in July 2013.

About VMware

VMware is the leader in virtualization and cloud infrastructure solutions that enable businesses to thrive in the Cloud Era. Customers rely on VMware to help them transform the way they build, deliver and consume information technology (IT) resources in a manner that is evolutionary and based on their specific needs. With 2012 revenues of $4.61 billion, VMware has more than 500,000 customers and 55,000 partners. The company is headquartered in Silicon Valley with offices throughout the world and can be found online at: www.vmware.com

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Forward-Looking Statements

This press release contains forward-looking statements including, among other things, statements regarding IT trends including plans for APJ enterprises to adopt cloud computing and expand spending, the role of VMware products in the expansion of cloud computing in APJ and their potential benefits to customers. These forward-looking statements are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to (i) adverse changes in general economic or market conditions; (ii) priorities, delays or reductions in information technology spending; (iii) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into the virtualization and cloud computing markets, and new product and marketing initiatives by our competitors; (iv) our customers’ ability to develop, and to transition to, new products and computing strategies such as cloud computing and desktop virtualization; (v) the uncertainty of customer acceptance of emerging technology; (vi) rapid technological and market changes in virtualization software and platforms for cloud and desktop computing; (vii) changes to product development timelines; (viii) VMware’s ability to protect its proprietary technology; and (ix) VMware’s ability to attract and retain highly qualified employees.. These forward looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, including our most recent reports on Form 10-K and Form 10-Q and current reports on Form 8-K that we may file from time to time, which could cause actual results to vary from expectations. VMware assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.

Media Contacts:

Samantha Forrest

Senior Communications Manager, VMware Australia & New Zealand

sforrest@vmware.com

+61 2 9293 5916 Office