Deloitte Consulting, LLP
Cloud Computing Discussion
Dave Duden
Director
June 21, 2011
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Deloitte Perspectives
on Cloud Computing
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Cloud computing represents a major change in the way information services are
delivered, based on wide use of internet standards and virtualization
Service Source
Public cloud (External)
Hybrid Virtual Private CloudCommunity
Private cloud (Internal)
Business Model
Cloud Service Subscriber
Cloud Service Broker
Cloud Service Provider
Cloud Service Enabler
Service Type
Business-as-a-Service
Software-as-a-Service
Platform-as-a-Service
Infrastructure-as-a-Service
“Location independent
resource pooling”
“Rapid elasticity”“Pay per use”
“Ubiquitous network access”
“On-demand self-service”
Reduce capital spending
Reallocate resources
Increase Agility
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The emergence of cloud computing is a major permanent change to the information
services market, is central to the evolution and transformation of IT services
Cloud computing represents a major change in information technology architecture, sourcing and
services delivery, by giving business on-demand access to elastic, shared computing capabilities
Cloud Computing is changing in how business purchase, deploy, and support IT services, and offers
significant opportunities to expand and enhance their services to customers
Ongoing IT industry disruptions will result from the deployment of cloud computing as an alternate
sources of supply for products and services
For enterprises in the information services business -- as well as IT vendors, services providers, and
their suppliers -- cloud computing is the new basis of competition
Cloud Computing is a disruptive force comparable to emergence client/server architectures 25 years
ago. Enterprises must act to manage risks and taking advantage of emerging services.
Businesses that cannot establish a position in the market by leveraging cloud computing, may face
increasing competitive pressure from challengers
Enterprises that adopt cloud computing delivery models have the potential to
fundamentally re-shape the broader business landscape
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Cloud computing has been subjected to significant marketplace confusion. To
demystify cloud computing services, clearly define what cloud is, and what it is not...
…on-demandClouds can provide an almost immediate access to a IT applications and services, platforms, or a pool of hardware
resources (compute, network and storage) that can be allocated and provisioned on-demand
…scalable and
elastic
The key characteristic of a cloud service is the ability to dynamically provision and de-provision applications,
compute, memory, and storage resources, and to be able to seamlessly scale services (up or down)
…pay-as-you-useVendor-provided cloud solutions do not require upfront capital investments by the buyer. Billing is tied to metered use
of resources, shifting expenses from CapEx to OpEx.
Cloud is…
Cloud computing offers increased agility through faster time to market, lower upfront IT
capital expenditure and the ability to easily scale up / down and reallocate resources
Cloud is not…
…simply
virtualization
While many cloud solutions, both public and private, leverage virtualized infrastructure resources to deliver
functionality, cloud raises the bar by providing on-demand provisioning. Publicly-announced private clouds are
essentially an aggressive virtualization program on top of the traditional enterprise IT stack
…just applying
SOA principles
Service Oriented Architecture (SOA) is a set of design principles, whereas cloud is a service. Cloud based services
will be defined and enabled through SOA. As such SOA is a prerequisite to reap cloud computing benefits. However,
following SOA design principles alone does not guarantee the ability to easily transition to a cloud based solution
…traditional
hosting
Cloud and traditional hosting share many characteristics but unlike traditional hosting cloud service is offered on-
demand, is scalable and elastic – a user can have as much or as little of the service as they need and pay for the
resources actually used
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IT Services will migrate to different cloud computing models at different times, based
on fit, the maturity of services providers, and availability of suitable technology
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
Mainstream Adoption of Workloads by Service Type
Comparing Managed Hosting to Cloud Computing
Managed
Hosting
Applications
Cloud
Applications
“Static &
Continuous”
“Dynamic &
Bursty”
Email & Messaging
Voice Systems
Corporate Web Sites
Back-Office Systems
Legacy Applications
Structured Databases
Financial Systems
Software as a Service
Dynamic Applications
High-Compute Processing
Collaboration & Analytics
Test and Development
DR, Backup and Storage
Future
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Enterprises deploying Cloud Computing services must have a comprehensive
strategy for managing a wide variety of key capabilities in a new “cloud savvy” way
Governance
Cloud Computing
Strategy Business-IT
Alignment
Cloud Service
Delivery
Strategic Planning and
Architecture
Governance Risk Management
Data controls
Technology controls
Audit and Assurance
Backup and DR
Vendor “lock-in”
IT Operations
Readiness
Risk Management
Compliance
Corporate Policies
Industry Policies
Regulations:
− State
− Federal
− International
Compliance
Security & Privacy
Data Segregation,
Integrity and Deletion
Identity and Access
Physical Security
Network Security
Application Security
Security & Privacy
Legal
Contract Mgmt
Service Mgmt
e-Discovery
Business Processes
Regulatory and
Compliance
LegalTax
Proactive tax analysis
and strategy
Tax alignment
Domestic and Local
Country Tax
Treatment
Tax
Technology
Virtualization
Next-Gen Architecture
Infrastructure and
Process
Standardization
Resource Mgmt and
Metering
TechnologyPeople
Skills and Talent
Culture
Training and
Development
Organization
People
Service Operations
Service Provisioning
Resource Planning
Incident Mgmt
Technical and
Professional Support
Service Operations Product
Development
Pricing Tiers
Profit vs. Break-even
External Cloud
Contracts (Hybrid
Operations)
Platform License &
Entitlements
Economics
If using public clouds or hybrid clouds, also consider implications for Sales and
Marketing, Underwriting, Billing, Order and Customer Experience
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Potential Cloud-based applications include analytics, leveraging non-traditional data
structures to achieve high scale and rapid results
Datasets used in business can grow very large because they are increasingly being gathered by
ubiquitous information-sensing mobile devices, software logs, cameras, microphones, wireless
sensor networks, etc.
Data analytics workloads are computationally intense. The computing environments needed to
perform analytics can require significant capital investment using traditional approaches, so many
enterprises do not incorporating analytics into their business.
Because it is “horizontally scalable”, cloud computing is well suited to the very large datasets
typically used in analytics applications.
Horizontal scalability is achieved by adding more computers to a cloud computing architecture,
allows them to achieve aggregate computing power many times greater than traditional systems. A
variety of new database technologies is now available to support these “NoSQL” data sets, such as
those powering Google, Facebook, Amazon, and others.
In cloud computing, NoSQL database management systems differ from classic relational database
management systems, and may not require fixed table schemas, avoid join operations and typically
scale horizontally.
The combination of horizontally scalable cloud computing architectures and NoSQL
database technologies allows for dramatically improved data analysis capabilities.
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Approach for Adoption of Cloud Computing
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Enterprises should consider several dimensions when evaluating strategic options
for applications and services to be delivered through cloud computing
Cloud Considerations
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?
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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
Cloud Operational and Governance Issues
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Summary & Discussion
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What are the near term business benefits of 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
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Our POV: Cloud Computing will have a significant impact on IT Strategy
Cloud offers major benefits of flexibility, cost savings, and improved IT capabilities. To gain
these advantages, we recommend that enterprises:
• 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.
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Deloitte thought leadership and insights on cloud computing, developed by our global
subject matter experts
Selection of Deloitte Thought Leadership
Deloitte Thought Leadership on Cloud
Depth Perception: A Dozen
Technology Trends
Shaping Business and IT in
2010
Insights into trends
changing the IT landscape,
including cloud and what
makes it truly revolutionary
Cloud Computing:
Considerations on the
Road to Adoption
Outlines issues which
affect enterprise use of
cloud computing and long-
term adoption approach
Cloud Computing:
A Collection of Working
Papers
Discusses cloud architecture
and implications on moving
existing information
technology platforms to
cloud
Cloud Computing:
Forecasting Change
Overview of cloud
market, key players,
and social networking
drivers
Cloud Computing:
Security, Privacy and
Trust
Insight into challenges
around data security and
privacy challenges in the
cloud
A Balancing Act
What Cloud Computing
means for Business
Assessment of cloud
from a business
perspective, including
existing barriers and
future opportunities
Cloud Computing
Finding Value Beyond
the Hype
Overview of Deloitte
advisory services in
guiding enterprises
around potential
obstacles for cloud
adoption
There is No Cloud
Insight into how
to best leverage
the potential
business benefits
from cloud
2010 Predictions: Cloud
– More Than Hype but
Less than Hyper
Perspective on
immediate and long-
term take up of cloud
and likelihood of
achieving expected
benefits
Fueling Business
Growth through Cloud
Computing Services
Deloitte‟s Enterprise
Value Delivery
methodology for
deploying cloud
Developing the Cloud
Insight into leveraging
force.com Platform-as-
a-Service offering to
maximize
salesforce.com
investments
10 Things a CxO Should
Know About Cloud
Overview of cloud
computing for C-suite
executives, including
cloud‟s origins, benefits,
and challenges
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Contact information
Dave Duden
Director
Deloitte Consulting
+1 860 725 3041
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