20111206 Cloud Expo Nl Jaarbeurs 7 Dec

Ready-made Cloud solutions don’t exist

Theo Slaats - Cloud Expo NL - Jaarbeurs Utrecht - December 7th, 2011

Challenges in your journey to the cloud

© 2011 Deloitte The Netherlands

The Cloud is to Computing, what the grid is to electricity

1 Ready-made Cloud solutions don‟t exist - Theo Slaats

In 1879, Edison

invented the light

bulb

About a 100 years ago, companies ceased

generating their own electricity and switched to

using the power grid.

And now...?

Will IT also become

a utility?


Yeah, right...?


The horse is here to stay but the

automobile is only a novelty – a fad 1903, the president of the Michigan Savings

Bank advising Henry Ford‟s lawyer, Horace

Rackham, not to invest in the Ford Motor Co.

There is no reason anyone would want a

computer in their home 1977, Ken Olson, president, chairman and founder of

Digital Equipment Corp. (DEC)

There’s no way that company exists in a year 2001, Tom Siebel, founder - Siebel CRM Systems [That company is Salesforce.com. Siebel doesn’t exist as a

company anymore. In September 2005 it was bought by Oracle

Corporation]


Cloud computing represents a major change in Information Technology

sourcing and services delivery


Service Sources:

Public cloud (External)

Hybrid Virtual Private Cloud

Private cloud (Internal)

Business Models:

Cloud Service Subscriber

Cloud Service Broker

Cloud Service Provider

Cloud Service Enabler

Service Types:

Business Process-as-a-Service

Software-as-a-Service

Platform-as-a-Service

Infrastructure-as-a-Service

“Location independent

resource pooling”

“Pay per use”

Cloud computing is based on the

convergence of

Internet technologies,

Virtualization

and

IT standardization

“Ubiquitous network

access”

“On-demand self-

service”

Cloud Computing is not a matter of definitions but a matter of characteristics

“Rapid elasticity”

Strategic and Operational Benefits:

√ Increased Business Agility

√ Reduce the amount of IT capital spending (OpEx vs CapEx)

√ Reallocation of resources


Yeah, right!


With the cloud, individuals and small

businesses can snap their fingers and

instantly set up enterprise-class services. 2011, Roy Stephan, Director of IT architecture and

engineering - Intelligent Decisions

Cloud computing is empowering, as anyone in any

part of world with internet connection and a credit

card can run and manage applications in the state of

the art global datacenters; companies leveraging

cloud will be able to innovate cheaper and faster. 2010, Jamal Mazhar, founder and CEO - Kaavo

Our industry is going through quite a wave of

innovation and it's being powered by a

phenomenon which is referred to as the cloud. 2010, Steve Ballmer, CEO - Microsoft


IT Services will migrate to different cloud computing models at different

times, based on fit, maturity of services providers, availability of technology


Mainstream Adoption of Workloads by Service Type

Today

Websites, Intranet

Rapid App Dev

Productivity Apps

High Performance

Computing / Clusters

High-End Servers

Storage & Back-Up

Standard Servers

Dev & Test

Collaboration

Office Productivity

“Standalone” Apps

Core ERP

Engineering Apps

New Core Apps SaaS

IaaS

PaaS

Low

High

Ad

op

tio

n

Future


There are significant near term benefits for IT of a comprehensive

Cloud Strategy...

• Significantly increased flexibility: reduced time to design, implement, and “go to

market” with cloud-based software systems

• Much faster time to develop, test, and deploy packaged software

• “Encapsulating” single-tenant non-cloud software is a fast path to short-term value

• Longer-term value in cloud will offer significantly higher benefits, but will require

replatforming and replacement of “legacy” software – and that is a big hurdle

• Cost Savings: reduced CapEx, at a lower amortized cash flow, using subscriptions

• Reduction in total costs of software licenses and ongoing maintenance costs,

through use of SaaS subscription models rather than on-site licensed software

• Reduced physical infrastructure costs by moving to vendor cloud IaaS: reduced

hardware, networking, data center, facilities, power, etc.

• Positioning for major cloud architecture changes coming in the future:

• By introducing cloud products and services into the complex IT architectures, you

will be positioned for the major changes to reap the benefits of cloud


Enterprises that adopt cloud computing delivery models have the potential to re-

shape their competitive position – and the broader business landscape


...but there is a bigger Cloud promise


Cloud Computing has the potential to disrupt existing operating models and

business economics. Deep industry knowledge is needed to highlight these

disruptions and guide organizations in reacting to and capitalizing on them.

Cloud Computing

Improve

Product Innovation

Increase

Revenu

Improve

Operational Efficiency

• Accelerate compute intensive product

development

• Reduce up-front investment

• Reduce error rates/risk

• Increase open

innovation/collaboration

• New revenue streams from wrapping

services around products

• New services by mashing information

across ecosystem

• Broader customer relationships,

leading to richer/more profitable

interactions (e.g., analytics)

• More efficient coordination of

disparate supply networks

• Accelerate market penetration

• Faster scalability

• Best-of-breed supply chain

• Reduce risk and lead-time

• Life Sciences & Chemicals (e.g.,

drug and chemical discoveries)

• Oil & Gas, Energy and Mining (e.g.,

site selection modeling

• Manufacturing & Automobiles (e.g.,

farm equipment or automobile

prototyping and technology testing)

• Manufacturing (e.g., insights on

crop productivity by aggregating

data from farm equipment

manufacturers)

• Automobiles (e.g., cars bundled

with services delivered through

Cloud)

• Healthcare (e.g., wellness

programs)

• Financial Services (e.g., create

extended supply chain platform

• Travel & Tourism (e.g., coordinate

complex activities networks)

• Manufacturing (e.g., supply chain

planning)

• Technology (e.g., open innovation

and collaboration)


Moving to the cloud is not just migrating some applications


What benefits can I

get from leveraging

cloud computing?

How will cloud computing

impact my (IT) organization?

Future

• Everything-as-a-Service

• In-house IT

orchestration

• Flexible costs

dependent on usage

• IT and business

collaborate in harmony

How do I successfully

manage the transition?

Current situation

• Client - Server

• In-house IT department

• Fixed costs, upfront

investments

• Low IT agility

Rather than moving just some application „to the cloud‟. Finding answers to these

questions will be the key to successfully integrate Cloud Computing into your

organisation.

How will cloud computing

impact my IT landscape?


Enterprises should understand the unique benefits and the challenges

deploying cloud computing services, and its potential for significant

business advantages


Benefits:

Business can assume roles traditionally reserved for IT,

from solution ownership to administration

Users can play an active role in creating new applications

Challenges:

Limited ability to customize some solutions may challenge

cultures accustomed to bespoke solutions

SaaS vendors tend to underplay the investment in process

optimization, change management, integration and data

migration required to realize value

Benefits:

Can reallocate resources to more strategic initiatives and

solutions over maintenance

Simplified and free upgrade process

Challenges:

The transition from a waterfall to an iterative / agile

development lifecycle and the speed of delivery will

challenge traditional IT delivery processes

Need to upgrade skills of staff, particularly around web-

services and web technology

Standards / policies around disaster recovery and security /

privacy as it relates to SaaS vendors will need to be

developed

Benefits:

Costs will be allocated to operational expenses (OPEX)

rather than capital expenses (CAPEX) – enterprises can

allocate more of the CAPEX budget to revenue generating

activities

Unlike on-premise applications, large upfront license fee is

not required

Challenges:

SaaS Contracts are loosely defined with little consistency

amongst vendors– better transparency and structure in the

overall sourcing process is required

Need careful Total Cost of Ownership (TCO) analysis to

truly understand potential savings over longer time horizons

and with larger user bases

Business Organization

IT Organization Finance Organization

Adoption of SaaS and PaaS will

abstract the data center from the

enterprise, resulting in fundamental

changes to the business and IT

organizations, and costs of software

services


Cloud Computing has a significant impact on IT Strategy

Cloud offers major benefits of flexibility, cost savings, and improved IT capabilities. To gain

these advantages, enterprises should:

• Establish new IT application and technology architectural principles and standards which

are necessary to reap cloud benefits.

• Revisit current major system architecture and design principles and evaluate fit with

cloud suitable design concepts

• Understand the timing of major system software architecture changes, and plan for

adjustments to enable „cloud friendly‟ application delivery models

• Identify new usage models, considering new options for SaaS, IaaS “encapsulation”,

mobility apps, and “Big Data” analytics, to enable highly efficient and flexible products

and services

• Quantify the benefits that cloud will bring to your company, while assessing all affected

roles and functions to gauge organizational and business impacts and risks


New cloud software is fundamentally different, and improvements to “legacy”

software often require complex software engineering and architecture refactoring.


Enterprises should take a comprehensive approach to cloud strategy,

integration, migration, and monitoring, to manage the risks and maximize

benefits of adoption


Cloud computing opportunity assessment

Understand the future business needs & capabilities that

need IT enablement

Assessment of application portfolio to select applications

suitable for cloud migration

Impact to regulatory compliance, data privacy and

protection standards, data location/segregation standards

Impact to organizations security posture and likelihood of

increased vulnerabilities

Cloud Computing Strategy

Evaluate vendor capabilities, mapped to requirements,

with financial benefits

Assessment of cloud computing providers security

capabilities, control, and monitoring

Assess tax Implications and evaluate strategic

alternatives

Define cloud computing architecture, migration, and

operations plan

Create processes to integrate cloud computing into

security framework

Ongoing monitoring

Periodic security activities for cloud related components to

evaluate for vulnerabilities

Conduct review of logs/audit monitoring,

vulnerabilities/controls mitigation/remediation

Implementation of cloud computing

Assist in conducting cloud proof of concepts (POC) and

pilots to mitigate risk

Assist with installation, configuration, and testing;

migration, and operational transition


Enterprises should consider several dimensions when evaluating strategic

options for applications and services to be delivered through cloud

computing


Regulatory and Compliance

Technology Business and Financials

Operational

Considerations For Building a Cloud Strategy

What are the availability requirements for this

application and can those be met by cloud?

How will support model for this application change if it

is moved to the cloud? Are the potential changes

acceptable?

How will cloud impact my chargeback model for this

application? Can I support the new model? Will

business accept the changes?

Can cloud meet my business continuity and disaster

recovery requirements for the application?

Is the vendor limiting interoperability or access to your

data?

Do the workloads exhibit characteristics that can derive

real benefits from scalability and elasticity?

Will the application be built to run on a cloud supported

platform (e.g., commodity hardware, supported OS)

Can the application components be architecturally

designed to be suitable for deployment to a cloud

based solution?

What design trade-offs will be needed to make this

application cloud-ready?

Are internal IT architecture and organization structures

“ready”?

Are there any risk management or compliance

requirements for this application? Will cloud be able to

satisfy those requirements?

Does the application hold confidential or customer data?

Can this data be easily masked in the future?

Does the application data need to reside within

organization? Will we be prohibited from moving data

outside of the country?

Who owns the data? How is it used? Are controls in place?

How is security achieved? What is the level of privacy

protection?

Can you meet needs for legal compliance and tax issues?

What are the anticipated usage patterns for the application

and will it be cost effective to move to the cloud?

What is business sponsor's preference for CapEx vs

OpEx?

How will designing for cloud readiness impact my

implementation cost and timelines? Can I achieve

overall lower TCO?

Will moving to cloud help me capture new sources of

value for the business?

Are cloud offerings mature enough for these workloads?


To successfully make the transition, enterprises must address key

operational and governance issues during the adoption of cloud computing

services models


Data Controls

Back Up and

Disaster Recovery

Vendor “Lock-In”

IT Operations

Security and

Privacy

Audit and

Assurance

Tax and Legal

IT Readiness

Who owns the data? How is it be used? Are controls in place?

How is security achieved? What is the level of privacy protection?

Are there risk management controls to applications and data?

Can you meet needs for legal compliance and tax issues?

Are data backup, retention, and disaster recovery practices sufficient?

Is the vendor limiting interoperability or access to your data?

What IT services and applications are best suited for the cloud?

Are internal IT architecture and organization structures “ready”?

Alignment with Enterprise Risk and Governance strategy will help organizations

address the operational hurdles to cloud adoption


Summary

• Leveraging the cloud for your organisation can have huge benefits by:

‒ Significantly increasing flexibility of IT quickly meeting business requirements.

‒ Saving Cost, reduced CapEx because of pay-per-use or monthly subscriptions.

‒ Pooling resources, flexibility of shifting resources on demand.

However, just migrating applications to the cloud will not be sufficient

• Organisational change lies at the heart of the success of cloud computing.

‒ Create a roadmap to the cloud that fits the organisation‟s needs.

‒ Make this roadmap an integral part of the IT strategy.

‒ Anticipate changes in IT department activities, moving from execution to

orchestration.

‒ Allow the business the flexibility to harness the possibilities of cloud computing on-

demand.

14

Ready-made Cloud solutions do not exist, to harness the full power of cloud

computing, cloud should be regarded as a strategic opportunity.


Questions?


Theo Slaats Deloitte Consulting BV

Partner Laan van Kronenburg 2

CRM, Social Media, Cloud Computing 1183 AS Amstelveen The Netherlands

Tel: +31 88 2882531 Mobile: +31 6 52672525 [email protected] Member of Deloitte Touche Tohmatsu

@theoslaats

mailto:[email protected]




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