Application Delivery via Hybrid Clouds

8/3/2019 Application Delivery via Hybrid Clouds

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Perspective on application deliveryin private and public clouds

Joint Project TechAlpha Partners

August 17, 2009


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Scope of this report on the future of application delivery inprivate and public clouds detailed view

Softwareas a Service

(SaaS)

Infrastructureas a Service(IaaS)

Profile of end customer demand for running businessapplications in hybrid (i.e., private) and external (i.e., public)clouds

Assessment of IT service provider cloud strategies to deliverhybrid deployments

- Focus on Wipro, Infosys, IBM, Accenture, Unisys, Perot

Systems, EDS, Telefnica Review of management software vendor capabilities to enable

hybrid application delivery

- Focus on Microsoft, BMC, HP, VMware and emerging players

Platform

as aS

ervice(PaaS)

Evaluation of the technical and commercial merits of competingplatforms for corporate and ISV application developers

- Focus on Oracle, Salesforce, Workday, Netsuite, Intuit,Microsoft and IBM

Focus in scope

Out of scope

70%

25%

5% Evaluation only to the extent that their application strategyinfluences their PaaS strategy


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Contents

Key takeaways

Cloud scenarios and implications fortechnology industry economics

Profile of end customer demand for runningbusiness applications in internal and external

clouds

Assessment of IT service provider cloudstrategies

Review of enabling technologies forapplication delivery from a cloud

Evaluation of competing businessapplications platforms (PaaS)


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How cloud computing is impacting market dynamics

* In case of SAP - R/3 and current generation productsSource: TechAlphainterviews and analysis

New

Existing

Customers

Legacy* Next Gen

Vendor solutions

Enables different delivery models(virtual appliances, efficienthosting/managed services) forcurrent-gen products that promisedramatically lower TCO and rapidTTV (mimicking SaaS).

Enables customers to achieve drasticTCO reduction in existinglandscapes testing, development &(some) productive systems

Over time cloud-relevant TCO, TTVimprovements lowers the barrier forcustomers to replace current-gensystems with next-gen systems, but nomajor impact in the next 5-7 years

SaaS likely to continue to expand footprintand penetration in large enterprise

PaaS - key to enabling mega ISVs toleverage ecosystem to fill gaps, verticalniches ; will rapidly enable corporatedevelopers to deploy internally or externally

(Public) IaaS limited adoption forenterprise class applications. But Iaas likelyto become the defacto standard for behind

the firewall deployments


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Summary recommendations for SAP

Source: TechAlpha interviews and analysis

New

Existing

Customers

Legacy Next Gen

Vendor solutions

Explore different delivery models for

current-gen products1. OP virtual appliances with or

without remote management2. Hosted SAP with fewer degrees

of freedom for configuration(vendor X OD offering)

Should be possible without major

re-architecture of current products

Offer pre-packaged bundle of vendormgmt tools and best practices to helpcustomers migrate their currentdeployments to a cloud-likedeployment jointly with SI vendorsand cloud ISVs

Should be possible without major re-architecture of current products

N/A

SaaS not a focus for this exercise. Vendor

X already has a well defined strategy.

PaaS enable partner ISVs to fill in cracks,vertical edges with consistent platformacross LE OD, ByD

IaaS - attempt to influence managementstandards (via DMTF or others) but be

prepared to live with non-standard world


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Vendor X has a great opportunity to drive the expansion of its product footprintwithin existing customers with current products that are functionally verycompetitive with more modern architectures by driving down prohibitive TCO/TTV 25K installed base stuck on Product X plus those on earlier releases of face crowd out

of budget for new software plus Oracle surround strategy 20-40% TCO savings possible via new deployment and management techniques

MarketDynamics

Provide best practices for customers trying to move to T-Systems classadmin and opex benchmarks - running customer OP and SPs running OP or

private OD and managing multiple instancesby leveraging improvedmanagement products (ACC, Soln Mngr) and processes (i.e. ITIL-like), not by re-architecting Start with your mess for less typical of SP industry Standardize hardware infrastructure, make admin tasks repeatable and automated As much as possible, change the management model from managing discrete elements

of the stack to remotely automating performance, availability, security, and change &

problem management Improve Adaptive Computing Controller, Solution Manager to add more

Product X awareness to IT management tools (HP, BMC, IBM, CA, Microsoft) andeventual data center OS, for example application-level high availability- Help IT mgt vendors integrate ACCs OS and storage virtualization to their IaaS mgt

tools- IT mgt products, data center OS can be enabled to control SAP server mobility/

scalability to meet SLAs, mass operations for maintenance/Enhancement Packs,

monitoring

Implication

Recommendations for SAP:legacy products, existing customers



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All of the recommendations from preceding page, plus:

Enable management of internal enterprise (IaaS) using virtual appliances New way to develop, distribute, deploy, manage software: pre-built, pre-configured, ready to

run application packaged to run on an optimized OS- Pre-tested best practice configurations relieve need for- Extensive app / middleware / DBMS / patch / driver compatibility testing- Testing deployment scenarios such as high availability (HA)

Solution Manager and ACC should be able to feed application management data to datacenter OS to enable dynamic provisioning via appliances, elastic resource consumption, andmetering. Simplify ACC, Solution Manager integration with custom SP management toolswhich represent their differentiation

Provide SAP-hosted solution featuring virtual appliances followed by bestpractices for SPs to manage multiple hosted or customer-based instances

by leveraging new management products and processes, not by re-architecting Offer SAP products with few degrees of freedom for configuration knobs vs. customization to

enable more automated management As much as possible, change the management model from managing discrete elements of the

stack to remotely automating performance, availability, security, and change & problemmanagement

Recommendations for SAP:legacy products, new customers

Source: TechAlphainterviews and analysis

MarketDynamics

Implication

SAP has a great opportunity to drive greater market share of current productsthat are functionally mature against competitors with more modern architectures bydriving down prohibitive SAP on-premise TCO/TTV 20-40% TCO savings possible (like prior page) via new deployment and management

techniques Lower TCO and faster TTV would make SAP more competitive with current Oracle ability to

deploy on premise or remotely as well as their surrounding products


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Despite noise, market still nascent. Success will be either1. Based on JEE/Spring, Windows .NET or LAMP optional extensions for storage at

cloud scale built-in app aware instrumentation for service provider.

2. Integrated to edge of SaaS app - Salesforce.com, Workday, NetSuite, eventuallyOracle and SAP to exchange data such as recruiting with HCM

o Traditional frameworks JEE/Spring, .NET, LAMP will hire all/mostmanagement overhead of IaaS

o With Spring, VMware is one of4 contendors with Microsoft, Oracle, IBM

Limitations technical and business model SaaS platforms unlikely to be mainstream for general purpose apps:

NetSuite, SalesForce, Workday only getting edge apps (i.e. recruiting) orintegration with existing apps

Oracle highly likely only to support edge apps for starters in Fusion suite becauseof API backward compatibility overhead

Standalone PaaS platforms run by SPs built JEE/Spring, .NET, LAMP more likely: ISVs resisting giving up future control of their platform over concerns about

performance, availability, security Though if they do, it will be to build on security, regulatory compliance, geodistribution (HA, latency) benefits that come with choice of SP

Build one lightweight platformbut across both LE OD and ByD in order to avoidconfusing or fragmenting ecosystem and slowing adoption consider Vmware/Spring Fill in the cracks apps for LE and vertical edges for SME Investigate offering data synchronization with master data objects as a service for

SaaS products but appliance may be necessary for on-premise products

Recommendations for Vendor X:next generation products implications of PaaS

Implication


MarketDynamics


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SAP customers as IaaS consumers: infrastructure should appear as a pool ofservices (compute, storage, network) to applications - standards wars mayfragment the infrastructure IaaS will be another hardware abstraction like an OS that needs to be designed for, tested,

and certified, but now across servers, storage, networks, with both local and remotedeployment options

Without mature management specification standards (performance, availability, security),SAP will have to code to new management tools for each IaaS platform (i.e. Amazon,Microsoft Azure plus System Center, VMware-based, big 4, etc)

Virtual appliances with richer management specifications will be able to package certifiedconfigurations for full lifecycle management (develop, package/distribute, deploy, manage,retire), support both OP and OD, and make OP software TCO more competitive with OD

SAP should try to influence manageability standards for customers andSPsrunning on IaaS to reduce development requirements but be prepared forheterogeneity Work with standards bodies (i.e. DMTF) to accelerate maturation of such standards as Open

VirtualizationFormatvirtual appliances and System Virtualization Management However, higher level standards needed for administrators to specify application ServiceLevel Agreements (SLAs)such as performance, availability, security, etc.

Be prepared to build monitoring and management of these SLAs for combination of eachdata center OS or management tool (from the big 4 or MSFT) and infrastructurestack vendor (IBM, HP, Dell, Cisco, Oracle )

Recommendations for SAP:next generation products implications of IaaS

Implication


MarketDynamics


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Contents

Key takeaways for SAP


Profile of end customer demand for runningbusiness applications in internal and external

clouds


Review of enabling technologies forapplication delivery from a cloud



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Questions answered in this chapter:Cloud scenarios and industry economics

?


What are likely scenarios for application delivery from internal and external cloudsin 2014? In particular,What are strategic control points?To what extent will private and public clouds converge?

What are the implications for Vendor X? Opportunities and threats acrossProduct portfolio?Ecosystem partnering?

How might customer budgets and vendor profit pools shift acrossBusiness applications?

Business service management?Infrastructure management?Infrastructure?IT services?


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Chapter summary:Cloud scenarios and industry economics

!

* Described in more detail in the chapter Evaluation of competing business applications platforms (PaaS)Source: TechAlpha interviews and analysis

There are three potential strategic control points related to application delivery from internal andexternal clouds. In decreasing order of probability for 2014, these are: Unified Computing System that reduces customer opex by integrating HW (servers, storage and

networking) around virtual machines (VMs) to manage lifecycle, thus providing unprecedentedintegration across software and hardware from app to spindle (90% probability)

Infrastructure-as-a-Service thruvirtualization of business critical applications enables simplerprovisioning, elastic capacity, metering (80% probability)

PaaS likely to be ISVs building core app on JEE/Spring/.NET OP/OD with edge integration with SaaS-

based PaaS (SAP, Oracle, Workday, SFDC). Few, if any, will build solely on SaaS-based platform (70%) Data Center Operating System that enables business apps to be run at much lower operating cost,

with increased flexibility (e.g., performance, availability, security), across internal and external clouds,without endangering QoS (40% probability)

Each control point has implications for Vendor X product and partnering strategy. In decreasingorder of relevance:

Platform-as-a-Service: Vendor X can focus on edge apps first Non-SaaS-based PaaS: JEE/Spring/.NET likely to be widespread as anchor OP/OD of deployment for

edge apps SaaS-based PaaS edge apps are only viable approach to extend anchor to OD edge: SAP ISV ecosystem

unlikely to defect to competing PaaS platforms by 2014 unless SaaS competitor makes big inroads intoinstalled base

Oracle only potential vendor that could support green field apps in next several years, though APIcompatibility constraints make that unlikely


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Chapter summary (contd):Cloud scenarios and industry economics

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* OP = on premise. OD = on demand.Source: TechAlpha interviews and analysis

Data Center Operating System: holds the promise of reduced TCO for the R/3 installed base.Immature products from big 4 (CA, HP, IBM, BMC) may stall wholesale adoption though Hybrid OP/OD* deployments of apps and management systems will become mainstream by 2014.

Challenges to realizing the promised TCO reductions though include heterogeneity in the enterprise andthe fractured nature of existing systems management tools

If Microsoft succeedswith an end-to-end solution that slowly gets traction even in Linux and to alesser extent Unix environments, Vendor X might have to step up its efforts to optimize Vendor Xfor hybrid delivery in Systems Center OP and Azure OD environments

If no vendor succeedswith an end-to-end solution, Vendor X might need to further evolve AdaptiveComputing Controller and NetWeaver Solution Manager to ensure Vendor X workloads can takefull advantage of provisioning, performance, availability, security automation

Unified Computing System: Oracles optimized on-premise stack, from app to spindle, ifwell executed, may reflect unfavorably on Vendor X TCO We believe unified computing will be widely adopted for newly deployed apps and capacity expansions in

the enterprise. Legacy apps though do not migrate except as required by hardware refreshes. ServiceProviders have their own version of UCS: the 40 foot container

Vendor X should ensure new OP apps work well in unified environments (e.g., workload mobility withQoS), especially in conjunction with management systems (e.g. self-service provisioning, elastic capacity,metering/chargeback) . Much of that will be handled at the Data Center OS laaS level but Vendor X willhave to instrument systems for it

We expect the OEM infrastructure landscape though to further consolidate around integrated majors(HP, IBM, Dell, Cisco + EMC?), which implies a new set of best practices


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Potential strategic control points for 2014

Market` Control point Prob. Rationale / Comments

BusinessAppsSaaS, PaaS, OP

packaged &custom apps

Platform-as-a-Service thatwould find broadendorsement by businessapplications developers

70% No vendor is anywhere close to this today Technically, Workday is possibly closest, though with a design

point that is limited to apps using the same master objects, andhas hardly any commercial traction even for its own ERP module

Commercially, none has gotten real traction with sizable ISVs Windows Azure and Google App Engine are the dark horses in this

race, though real traction will not be evident for 3+ years (the lengthof an ISV development cycle)

BusinessServiceMgt.Middleware,systems mgt.

Data Center OperatingSystem that enablesbusiness apps to be run atmuch lower operating cost,with increased flexibility (e.g.,

workload mobility,scalability), across internaland external clouds, withoutendangering QoS (e.g.,availability, security,performance)

40% Lack of a proven data center operating system as described ispossibly the biggest hurdle for moving business critical workloadsinto even internal clouds

External clouds have even further to go, lacking key securityfunctionality

Technical hurdles for vendors are considerable Microsoft is best positioned, if it can integrate and evolve its various

relevant assets (notably System Center) HP and BMC are also contenders VMware is part of a solution but lacks app-awareness

Infra-structureMgt.Virtualization

Unified ComputingSystem that reducescustomer opex in favor ofcapex by offering

unprecedented levels ofintegration, flexibility andscalability across servers,storage and networking

80-90% Vendors are incented to capture more customer capex by reducingever-increasing operational complexity . Technical hurdles forvendors seem only moderate

The vast majority of enterprises will retain significant IT in-house

yet are eventually faced with IT talent shortages Unified computing will appeal once competing solutions becomeavailable (2010) and TCO claims become credible (2012+)

Oracles ability to offer optimized on-premise stack from app tomiddleware to integrated hardware, if well executed, may reflectunfavorably on Vendor X TCO

Infra-structureServers,storage,networking

IT servicesDev. &integr.,IT operationsoutsourcing

None N/A Market is highly fragmented overall Sub-markets that may experience high concentration notably IaaS

are scale-driven commodity markets that are not strategic toVendor X

Note: Prob. = Probability that the control point materializes by 2014 in the form describedSource: TechAlpha interviews and analysis


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Scenarios relevant to application delivery from internaland external clouds for 2014 (1/3)

Trend Scenario and description Prob. Implications for Vendor X

Platform-as-a-Service Driver: ISV focusing

R&D on customerinnovation

Obstacle: Platform andbusiness model lock-in;predatory practices byPaaS vendor; uncertaintyover platform evolution

PaaS traction limited to niche ISVs,SaaS extensions and custom apps

Common to these use cases is thedeveloper expectation of insufficient

volume to justify development fromscratch

PaaS held back by parent vendor SaaSstruggling in the core; benefits of suiteprevail

Development and integration shopssuffer only moderately, have time toadjust to PaaS threats

80% ISV ecosystem not defecting toPaaS, by and large

Largely business as usual with SIs VMware/Spring one of the more

modern platforms Required: On-demand needs to be

a deployment option for all newVendor X edge apps

Required: TCO-reducinginnovation for R3 installed base, as

Workday and to a lesser extent NetSuite will make inroads into R3and A1/B1 customer base,respectively

PaaS broadly endorsed by businessapps ISVs and corporatedevelopers

Even several ISVs with $100m+ inrevenue are building some future

solutions on top of the 4-5 predominantplatforms Most establishedSIs suffer, unable

to transition to an IP-based productmodel, unwilling to follow thestructurally lower economics of PaaS /platform-based development &integration, and possibly unable to findsufficient new high complexity custom

work (which now gets programmed on

PaaS)

20% Vendor X has the opportunity todirect SIs towards TCO innovationon the R3 installed base

VMware/Spring one of the moremodern platforms

Required: a platform of your own,partnering is not enough Required: On-demand needs to be

a deployment option for all newVendor X apps, both edge and core



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Trend Scenario and description Prob.

Implications for Vendor

XData Center OperatingSystem Driver: enable business

critical apps to takeadvantage of internal andexternal clouds (e.g., loweropex, more flexibility)

Obstacle: vendors stitch

together point solutions,lack incentive to cooperatefor fear of being managed

by another vendor

Microsoft succeedswith an end-to-end solution that slowly getstraction even in Linux and to alesser extent Unix environments

HP and BMC (acquired by Cisco in2011) offer credible alternatives

50% Required: Need to partner moreclosely with 2-3 of these likely

winners

No vendor really succeedswithan end-to-end solution, blaming

increasing complexity and lack ofcooperation

50% Required: Need to adapt ACC andSolution Manager to next gen DC

realities

Full Virtualization in x86 Driver: consolidation,

business continuity,foundation for automation

Obstacle: comfort withHA, DR and security for

business critical apps

Business apps productiondeployments widely virtualized,anything but the main data base asthe default

VMware and MSFT both hold about45% share, though VMware

maintains lead in business criticalenvironments

Unix continues to lose share ofdeployments

80% Required: Dual partnering track,acknowledging greater role ofMSFT

Desired: Continued activeengagement to address barriers toSAP virtualization

Virtualization fails to penetratetier 1 workloads

VMware maintains the lead with 40%share, MSFT struggles to catch up,newer virtualization platforms

proliferate

20% Required: Monitor if the situationis likely to change



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Trend Scenario and description Prob.

Implications for

Vendor XUnified ComputingSystem Driver: lowering

operational complexity Obstacle: at present

(2009), only Cisco has asolution

Unified computing and unifiedconverged networking widely adoptedfor newly deployed apps and capacityexpansions, notably in developed markets,leading to meaningful reduction in customeropex, shifting spending mix back to capex

Existing applications though do not migrateto UCS, except as required by hardware

refreshes Vendor landscape further consolidatesaround integrated majors (e.g., Ciscoacquires EMC, IBM acquires NetApp before2014)

80% Required: An answer toOracle TCO claims enabled byapp-to-spindle integration.

Vendor X will have to workharder to bring down opex

Required: Ensure Vendor Xon premise solutions play wellin unified environments (e.g.,

workload mobility withoutendangering QoS)

Unified computing and unifiedconverged networking adoption verylimited

20% Largely business as usual

Infrastructure-as-a-

Service Driver: costreductions, capexavoidance, time tomarket

Obstacle: comfort withHA, DR and security for

business critical apps

Legacy IT outsourcers will make the

transition to shared hosting, but only afew of those will have the IP to run best inclass TCO and push up the stack from IaaS.Some cloud hosters with fresh IP will do

well, but for most it will be a low marginbusiness. Can customers differentiate whohas the IP?

80% Required: Embrace those

handful of service providersthat run Vendor X from thecloud, perhaps enabling co-innovation while the Vendor Xproduct set is still in processof being made cloud-ready

Legacy IT outsourcers are in no rush,wield substantial account control, IP andTCO differences not game deciding

20% Largely business as usual



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Likely economic impact of eachtrend on relevant vendors by 2014

TrendClass /Players

ProfitImpact Rationale / Comments

Platform-as-a-Service Oracle So far has only been an arms supplier to SaaS and PaaS vendors Fusion apps expected to run both OD and OP

Microsoft Azure on-demand, complementing Systems Center on premise, are important strategicbets as the traditional Windows fused to every box franchise comes under threat.Margins lower than traditional Windows though

If Azure is well executed, likely to be embraced by large .NET ecosystem

SFDC Trying to be a universal platform but lacking in master data objects, not a good systemof record, and a predatory partner

NetSuite Partner business model particularly challenged: PS and edge app development

Workday Rich platform; desire and some track record attracting edge appsIntuit PaaS could play important role to re-enter international markets

Intuit Partner Platform resource starved, scaled back to 30-40 employees Impression that Intuit is slow to embrace new business models. For instance, 90% of

customers have less than 10 employees, hence an ideal early adopter demographic forSaaS in principle. However, concerns about security of online tax and accounting dataare holding back adoption

SIs Worst affected are those based primarily on back-end labor cost arbitrage, sinceplatforming reduces the need for low-level coding

Least affected are those with customer-facing product development expertise

Data CenterOperatingSystem

Microsoft Azure on-demand, complementing Systems Center on premise, are important strategicbets as the traditional Windows fused to every box franchise comes under threat

If executed well, could extend server OS dominance into next gen internal / externaldata center

Just announced support for heterogeneous environments (Unix, Linux) for its SystemsCenter product line

IBM, HP,BMC, CA

Management product lines fractured, result of acquisitions Uncertain whether they can assemble a solution that really addresses the opportunity.

Currently far behind, may slow enterprise cloud adoption

Very favorableModerately favorableUncertainModerately unfavorable

Very unfavorable

Note: Profit impact measures how well each (class of) vendor is positioned to participate in the profits associatedwith each trend. Color coding does not reflect size of profit pools for each trend

Likelyeconomicimpact:


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Likely economic impact of each trendon relevant vendors by 2014 (contd)

Note: Profit impact measures how well each (class of) vendor is positioned to participate in the profits associatedwith each trend. Color coding does not reflect size of profit pools for each trend


Very favorableModerately favorableUncertainModerately unfavorable

Very unfavorable

Likelyeconomicimpact:

TrendClass /Players

ProfitImpact Rationale / Comments

FullVirtual-ization inx86

Microsoft Q4 2009 release of next gen Hyper-V offering, part of Windows Server, in conjunctionwith Systems Center Virtual Machine Manager, largely neutralize the economic threatfrom VMwares early lead

VMware Cloud OS unlikely to gain traction with large service providers, though initial reactionmoderately favorable. Continuing lead with enterprises / Vendor X relevantvirtualization environments

Citrix Lost the battle for server virtualization, which will make it even more difficult to win theupcoming battle for desktop virtualization

Unified

ComputingSystem

Integrated

majors(IBM, HP,Dell, Cisco,Oracle)

Mega-vendors such as HP, IBM, Cisco + EMC, Sun + Oracle, or potentially Dell + TBD

are hoping to justify high margins on a fully integrated solution that promises scale-out,ease of management and lower customer opex. Unprecedented integration across previously siloed storage, compute and networking

resources may counter commoditization of point products

Pure plays Pure plays like EMC, NetApp, Juniper will be forced into tighter alliances or mergers asunified computing and converged networking take off

Infra-structure-as-a-Service

IaaS pureplays(AWS,Zetta, etc.)

Sustainable profitability will depend on minimum efficient scale (e.g., even AmazonWeb Services at $75m revenue run rate not breaking even until $200-250m),developing the IP to run best in class TCO, and crucially ability to move up theadministrative stack and become application-aware

Legacy IToutsourcers

Transition to shared hosting temporarily helps profitability, until competed away astable-stakes

Overall, account control in the enterprise incl. longer term contracts should affordtemporary protection

Best positioned are those few who develop the IP to run best in class TCO and push upthe stack from IaaS


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Contents

Key takeaways for Vendor X


Profile of end customer demand forrunning business applications in

internal and external clouds


Review of enabling technologies for

application delivery from a cloud



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21Source: TechAlpha interviews and analysis

Questions answered in this chapter:Demand for running apps in clouds

? How does cloud change the application buying and delivery motion?

Stages of adoption and target use cases?Business case and TCO?Barriers to Vendor X-relevant adoption?Impact on customer organization?


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We predict widespread use of internal clouds in parallel with external clouds (i.e.,hybrids). External clouds will specialize in classes of use cases (e.g., low cost, highsecurity, industry compliance) The current wave of applications migrating to the cloud are those least demanding in terms of

quality of service, service level agreements and business criticality Large enterprises particularly in financial services are deploying internal clouds to reduce

costs and increase flexibility. As cloud technology standards are more widely adopted,organizations will federate their internal clouds with external clouds

Most IT services providers we interviewed believe that (parts of) Vendor X should eventually berun from the cloud, though did not see that as a priority in the short term

Big pockets of legacy applications running exotic OS flavors will not move to cloud environmentsanytime soon, since that would require re-platforming / application re-writes

We believe the market for on-premise software delivery may have peaked, with cloud-based delivery of applications becoming much more prevalent Both service providers and product vendors are working on enabling QoS for cloud delivery of

more demanding applications, such as SAP and Oracle DBMS, who today depend on tightly fusingthe hardware, operating system, middleware, and application to deliver on QoS commitments

Commercial pressure and technical maturity have created robust virtual infrastructure optionsoffering a real alternative to physical-only infrastructure models. Anecdotal evidence that moreand more SAP application and presentation servers are being virtualized

IT services providers are establish licensing arrangements and building the orchestration so as tosupport core business processes as a service. We believe this trend will continue and have a majorimpact on traditional ERP software vendors


Chapter summary: Customer demand Stages of adoption

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Wave

Examples

Comments Lower-cost highavailability, disasterrecovery, fault tolerance

Less disruptive plannedmaintenance, migrationsand upgrades

Application scale-out toaccommodate fluctuating

demand

Consolidation of multipleinstances onto a singlephysical server (less likelyfor Vendor X)

Rapid deployment of newservices

A use case that is seen as viable todayis to deliver parts of Vendor X withedge characteristics from anenterprise cloud

Virtualize just some Vendor Xpresentation and light-weightapplication servers but leave outheavy-weight application servers,

satellite database servers, and themaster database server

Modules that might be suitable includeCRM, HCM, Data Analytics

Organizations within an industry orbusiness network will begin to shareinfrastructure and may share non coreapplications

Specific clouds in public sector,financial services, retail/SCM

Eventually, cloud will enablecustomers to access businessprocesses as a service,drawing on componentsprovided by Vendor X andother ISVs

Challenges withtransactional apps may start

to be addressed, e.g., highdata transfer rates, latencysensitive, tightly integrated

with other apps, stateful,subject to compliance, not

based on modern SOAarchitectures

There might be use casesspecific to Frictionless

Commerce

IT opex Edge applications Core applications

Infrastructureworkloads, applicationtesting and development

Cross-enterprise collaborationand integration, batchworkloads

Transactional apps, highend Unix apps

1 2 3


Chapter summary: Customer demand Target use cases!


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With cloud, expectations for the role of the CIO will change from a focus onoperational excellence in IT delivery to orchestrating alignment of internal andexternal resource pools with business needs CIOs will spend more time defining capabilities that can deliver business value (incl.

innovation), and selecting, monitoring and managing multiple vendors Standard implementations for multiple customers will increase customer

willingness to use an out-of-the-box solution vs. expensive, time consuming

customized solutions Service providers will offer standardized solutions to multiple clients based on cloud

technology (virtualization, web services, SaaS, SOA), blurring the line between IT andbusiness process outsourcing

Organizations will becoming increasingly comfortable with hybrid on-demand / on-premisedeployments for their corporate applications

One of the biggest barriers will be resistance from IT staffwho will want clouds tofail since their silo would be losing power . Other barriers, notably security and end-to-endsystems management tools, are slowly being addressed

For now, internal clouds will drive further talent specialization and talentupgrades rather than integration of functional silos Specialization of labor will continue, with a new higher cost labor pool emerging dedicated

to virtualization and cloud, and silos collaborating more closely Anecdotal evidence from companies that tried to merge their functional IT silos has not

been encouraging


Chapter summary: Customer demand Barriers and organizational impact!


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Emerging private cloud stackEmerging private cloud stack Defining functionality Defining functionality

Server

Storage

Network

Definition of a private cloud for business apps: servicemanagement on top of a virtualized,managed infrastructure

Business apps-ready IaaS Service Management enables business

apps to be run at much lower operatingcost, with increased flexibility(e.g., workload mobility, scalability),across internal and external clouds,

without endangering QoS(e.g., availability, security, performance)

Service Management (sometimes calleda Data Center Operating System)provides metadata on the businessrelevance of a workload

Infrastructure Managementacross virtualized servers, storage, networks

Service

Packaged apps(OD / OP)

Custom apps(OD / OP)

Platform-as-a-Service (PaaS)

Service Management

On Premise

PerformancePerformance AvailabilityAvailability SecuritySecurity

Server

Storage

Network

Off Premise

Infrastructure-as-a-Service Self-service provisioning, governed by

pre-determined approval workflow Scale up / scale down on demand, incl.

optimized placement of workloadsagainst resources

Utility chargeback or metering



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Definition of a private cloud for business apps:Detail on defining functionality for IaaS

Self-service provisioning Cloud computing is about providing services to any authorized user,

anywhere, from any device. For this reason, cloud computing must be built on a service-orientedarchitecture and deployed with industry best practices for service management . A self-service portalthat allows users to request infrastructure and applications from an online catalog with a focus onease of use. A highly standardized environment with common software stacks and operationalpolicies facilitates simultaneous service deployment and upgrades for all users, no matter wherethey reside

Scale up / scale down on demand through a shared, highly scalable, networked infrastructure Standardized, highly efficient, shared, virtualized compute resources (servers, storage, network,data, middleware, application and business processes) can be rapidly scaled up and down withelasticity through automated workload management in a secure way to deliver high-quality servicewithout interruption. Request-driven service management relies on systems that enable capacity,provisioning and other IT service management decisions to be made dynamically, without humanintervention or increased administrative costs. It can also dynamically move and optimize workloadsand data across the shared infrastructure as well as add resources to scale with very little, if any,intervention by the cloud service provider personnel. Resources are returned to the cloudenvironment and immediately made available to others when no longer needed.

Utility chargeback or metering is possible because usage is tracked via the automatedprovisioning and service delivery engine



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Enterprise IT strategy alternatives with respect to cloud

Higher utilization

Fast response once internal cloud isdeployed, within capacity constraints

Minimally disruptive to adopt App compatibility Not dis-intermediating internal IT Choice of physical infrastructure

Full corporate control Security on-premise, dedicated facilities Roll-out of chargeback as appropriate

Problems with alternatives Lock-in to proprietary platforms Commodity focused offerings Rewrite of apps required

Private cloud Public cloud

Heterogeneity drives complexity drives cost Lack of expertise to leverage patchwork of

automation solutions for lower TCO Interoperability with public clouds not

ready

Driver

Obstacle No track record and disclosure ondata protection and compliance

Insufficient commitment tobusiness app-grade SLAs

Lack of standards to ensurecompatibility across clouds

Server software licensing

Capex avoidance

Fast time to value Not bound by central IT Little management overhead for

simply, standardized workloads

Alternatives:

Develop yourown internalcloud

Have a systemsintegratordesign and buildone for you

Buy a cloud in abox once themajor

virtualization

vendors areready

Alternatives

Not all business apps in use by companies can be transferred into a cloud Standard workload or service description not widely accepted, i.e.,

language to express management requirements such as security and SLAs Few public clouds are based on the same infrastructure as private clouds Many other technical restrictions derived from a world where applications

are written to assume end-to-end sole control of the underlying stack



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COST

Aroadmap for application delivery from private clouds

AutomationService

ManagementSpecialization

Fully virtualizeserver, storage

and networkresources toenable flexibility,scalability,standardizationand consolidation

Fully automateprovisioning,

configurationand compliancemanagement of

virtual softwareand profiles

Implementrobust ITIL-

based servicemanagementthroughautomation.

Serve users andworkloads with

varying needs(e.g., highsecurity, highperformance)

A server/storage farm

populatedwith bothscale-up andscale-outservers

Provide self-service access to

application andinfrastructureservices


BUSINESS VALUE

Virtualization &Standardization


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30Degree of Optimization for OperationsSource: Cloud Seven Clear Business Models by Timothy Chou

Business case Cloud architectures can dramaticallyreduce cost of IT operations and application delivery

OperationsCost$/User/Mo.

Traditional ERPOn Premise$500-1,500

ERP Single TenantOn Demand$50-150

CRM Multi-TenantOn Demand$10

Drivers of cost decline Automation / systems

management (20-40%) Application architecture Lightweight edge vs.

heavyweight core app Private clouds democratize

access to operations-basedprice/ performanceimprovements as IT operationsfinally rides the cost curve

Documents

Application Delivery via Hybrid Clouds