IT Portfolio Management in gthe World of Shared Services

& Cloud Computing & Cloud Computing

Babak Hosseinzadeh / CTO / New Bridge Strategy

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Overview

Background InformationQ i k O i f Cl d C iQuick Overview of Cloud ComputingIT Portfolio Management - Definition & ContextImpact of Cloud Computing on IT Portfolio Managementp p g gSummary

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A quick review in the enterpriseenterprise…

Decentralized Computing

exity Centralized

Computing

Com

ple

CentralizedComputing

Computing(shared services,

shared infrastructure…)

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31970 2005

1970 20051970 2005Focus on “Data Processing” IT-led business innovation & transformationThe role of IT in the organization was simple Increasing demands, expectations, and business reliance on IT

usin

ess

Few standalone apps in select departments Different types of solutions throughout the enterpriseA few internal users mostly in the same location

Internal users in different locations & geos, work arrangements, habits… + external interactions over different channels

Bu Users had limited IT skills The business community is increasingly IT savvy

Business operation used to be 9 – 5 (M-F) 24x7 connectivity, availability, and reliabilityControlled & predictable workload Less controlled & unpredictable workloadSystem availability & reliability requirements Service Level Objectives are much more complex and impact were simple and only impacted the enterprise the value chain

y

Small set of vendors Different types of vendors and solutionsSimple technology stack Complex technology stacks A few low level languages and tools Different high level languages, multiple tools (i.e. CASE,

Tech

nolo

gy

g g g g g p (SLDC repositories, sophisticated compilers, interpreters…)

Simpler solution approach, architecture, and implementation

“Enterprise Architecture”, multiple layers, distributed computing, exponential data growth, OO, SOA, EDA, Grid…

A few IT roles Multiple new roles, titles, and specialized skills

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4

Central development with in-sourced resources Distributed development teams & hybrid sourcing modelsIT operation & management used to be simple IT operation and management is much more complicated

Since 2005, New Models of IT S i & C tiSourcing & Computing…

"Service“Service Oriented ArchitectureService Oriented InfrastructureService Oriented IntegrationService Oriented EnterpriseS i O i d E

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Service Oriented Economy...

Common Questions

What is Cloud Computing?H i i ?How mature is it?How is it used in my industry?What are the specific opportunities for my business? p pp yConversely, is it a threat to my business?What is the adoption roadmap?What are the key issues & risks?What are the key issues & risks?What is the business impact?What are the key metrics and best practices?…

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What is Cloud Computing?p g

A pool of highly scalable, abstracted infrastructure, capable of hosting end-customer applications, that is

• Scalable, abstracted infrastructure

billed by consumption.

A style of computing where massively scalable IT-related f ti d i f ti id d " i " i

• Hosting environment• Utility-based billing

• Style of computingfunctions and information are provided "as a service" using Internet technologies, potentially to multiple external customers.

• Massively scalable• “Shared services”• Internet accessible

Cloud Computing an emerging IT development, deployment and delivery model, that enables Cloud Services. • IT development,

deployment, & delivery

Cloud Services: Consumer and Business products, services and solutions that are delivered and consumed in real-time over the Internet

p y , ymodel

• Dynamic provisioning• Cloud Services

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Cloud Computing ModelSolutionSolution

Business Capability

ControlFlexibility

Customization

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Cloud Computing Vendor LandscapeLandscape

Note: Sample list of vendors

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Note: Sample list of vendors

Cloud Computing Responsibility Matrix

Infrastructure Hosting Provider

IaaS PaaS SaaS

Data Center Management

Hosting provider has the overall responsibility. Customers may negotiate

Subscriber has no idea… IaaSprovider abstracts the infrastructure

Subscriber has no idea… PaaSprovider abstracts the infrastructure

Subscriber has no idea… SaaS provider abstracts the infrastructureCustomers may negotiate

location.infrastructure. infrastructure. infrastructure.

InfrastructureOperation & Management

Hosting Provider has the overall responsibility. Customers may negotiate specific terms.

IaaS provider handles the physical infrastructure, but the subscriber is responsible for image creation, operation and management.

(1) PaaS may run its own infrastructure(2) PaaS may partner with an IaaSprovider

(1) SaaS may run its own infrastructure or partner(2) SaaS may offer its own PaaSor partner

In both cases, it is abstracted from the subscriber.

In both cases, it is abstracted from the subscriber.

InfrastructureConfiguration / Customization

Hosting Provider offers a pre-defined menu, but customers have the option pay for customization

Subscriber creates virtual images and manages the configuration & customization

PaaS provider offers somecapabilities for application configuration & deployment

N/A - There is typically no infrastructure customization

customization

Infrastructure Support

Hosting Provider offers basic support. Additional support can be negotiated.

Typically, infrastructure support is provided through forums. Premium support can be obtained, but Subscribers ultimately handle infrastructure support.

N/A – PaaS provider offers support for PaaS typicallythrough forums.

N/A - There is typically no infrastructure customization

Application Development

N/A – Customer is responsible. N/A – Subscriber is responsible N/A – Subscriber is responsible SaaS provider offers the solution

Application Customization

N/A – Customer is responsible. N/A – Subscriber is responsible N/A – Subscriber is responsible SaaS provider offers some customization capabilities. 3rd

parties offer services.

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p

Application Maintenance

N/A – Customer is responsible. N/A – Subscriber is responsible N/A – Subscriber is responsible SaaS provider handles maintenance for all subscribers

Application Support

N/A – Customer is responsible. N/A – Subscriber is responsible N/A – Subscriber is responsible Typically forums

Sample IT Bill from Amazon

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IT Portfolio Management

An IT management practiceSmart IT investments and financial management decisionsSmart IT investments and financial management decisionsCovers the entire IT lifecycle (select, build, deploy, monitor, optimize)Builds on existing methods (i.e. TCO, ROI, NPV)Leverages existing frameworks (i.e. Val-IT, COBIT, ITIL)Leverages existing frameworks (i.e. Val IT, COBIT, ITIL)Integrates with other IT management practices (i.e. Asset Management,Project Portfolio Management, Application Portfolio Management,Service Portfolio Management)g )Objective:

Better visibility and management of IT investmentsManaging IT investments holistically as a set of related portfoliosdirectly aligned with business objectivesContinuous optimization of IT investments to maximize value &create new opportunities

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IT Portfolio Management Context

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Note: In EA, above Application domain, we are talking about SOA services not ITIL…

Why Should You Care?

IT has been under financial scrutiny for the last decade. According toanalyst surveys, majority of business users are unhappy with IT costs, thelength of time it takes to get anything done, etc and demand better value.Since the recession, there were significant cutbacks in IT budget. IT isexpected to do the same (or more) with existing financial resources.

i i i b i i l l hBusiness is putting more pressure on IT by requesting service levels thatare hard to maintain (i.e. 99.99% availability…). The old “throw morehardware at it” isn’t financially feasible.In some mature companies IT is deep in innovation value chain It isIn some mature companies, IT is deep in innovation value chain. It isnecessary to have a better level of financial visibility (and predictability)to make sound IT investment decisions.In some companies the reporting structure has changed The CIO isIn some companies, the reporting structure has changed. The CIO isreporting to the CFO. There is higher expectation to manage “IT as abusiness”.Overall, LoB executives expect better IT financial transparency &

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, p p yreporting.

Typical Barriers to Portfolio ManagementManagement

AwarenessSkillSkillsToolingIT Governance MaturityyOrganizational CultureManagement Support

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Business Value Disciplines

Strategic Focus IT-Enabled Value

O ti l E ll Effi iOperational Excellence • Efficiency • Automation • Integration • Agility

Customer Intimacy • Integration (360˚ customer view) • Customer relationship management• Predicting customer needs• Agility• …

Product/Service Leadership • IT/Business innovation • Service Delivery• Service ProvisioningService Provisioning• …

Source: The Discipline of Market Leaders - Michael Treacy & Fred Wiersema

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IT Portfolio Management by Investment TypeInvestment Type

Source: IT Governance: How Top Performers Manage IT Decision Rights for Superior Results

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p g g pPeter Weill & Jeanne W. Ross – USED WITH PERMISSION.

Impact of Cloud Computing on IT Portfolio ManagementPortfolio Management

Domain Impact of Cloud ComputingFinancialManagement

• Subscription billing – This alone will provide a significant improvement into financial visibility and transparency to the enterprise . (N.B. Many offer up-to-the-minute usage information.)Management p ( y p g )• Financial evaluation – It is much easier to evaluate the costs (i.e. TCO) of a Cloud based solution than an enterprise solution, as majority of the variables associated with indirect costs (which are often difficult to fully capture & calculate) no longer exist• Financial reporting – CC drives down the costs & efforts of capturing financial metrics• IT budget planning – CC should simplify IT budget planning in most enterprises – There are some considerations that management needs to pay attention here.• IT charge-back – CC can reduce the efforts in charge-backs but the benefit varies from enterprise to enterprise due to theIT charge back CC can reduce the efforts in charge backs, but the benefit varies from enterprise to enterprise due to the unique requirements

Project Portfolio Management

• Project Funding – It is much faster to start a Cloud-based project, because the costs can be determined quickly and the costs are substantially lower than the traditional methods• Project Initiation :

Wi h CC i i d ff i• With CC, access to compute resources is instantaneous and very cost effective• For IaaS & PaaS, majority of the software is already pre-loaded. For SaaS, the solution is already out there, but it may need customization / integration. So, in general, ramp-up is much faster than the traditional model.

• Project Tracking/Reporting – CC providers, by virtue of their business model, the provide many up-to-the-minute reports available, so it makes it easier for PMs to manage the projects.

Service Portfolio • P tf li A l i & T ki CC billi k it t t k d l d i d t d h ’ i th hService Portfolio Management

• Portfolio Analysis & Tracking – CC billing makes it easy to track deployed services, understand who’s using them, how often they are used, and calculate the average costs. Also, CC providers offer operational metrics which helps measure SLAs for internal users. These are all huge benefits that remove operational issue at many organizations

Application Portfolio Management

• The same benefits from Service Portfolio Management apply here.

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Asset Management • The same benefits from Service Portfolio Management apply here.• In addition, CC removes the hassles associated with asset audit, renewal, configuration, distribution, etc….

Vendor/Contract Management

• Vendor management / Contract negotiations are substantially facilitated in Cloud Computing.

Summary

IT Portfolio Management is a process with touchpoints fromid i i lid i i l iidea inception validation post implementationIT Portfolio Management provides financial visibility andtransparency. This is essential for value creation.p y

Cloud Computing brings positive change in many differentaspects to the enterprise It enables business to experimentaspects to the enterprise. It enables business to experimentwith different ideas quickly, and cost-effectively.Cloud Computing is inherently fast and metrics-oriented.C i l f db k d l i &Capturing results, feedback, and analytics are super easy &fast.

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