Cloud Computing in the enterprise: Not if, but when … Dbriefs Technology Executives series presents: Cloud Computing in the enterprise: Not if, but when and how? John Hagel, Director,

The Dbriefs Technology Executives series presents:

Cloud Computing in the enterprise: Not if, but when and how?

John Hagel, Director, Deloitte Consulting LLP

Chris Weitz, Director, Deloitte Consulting LLP

October 1, 2009

Copyright © 2009 Deloitte Development LLC. All rights reserved.

Agenda

Cloud Computing in the enterprise

Impact on IT industry and supply chain

Waves of Cloud Computing evolution

Cloud architectures and next generation enterprises

Question and Answers

Cloud Computing is a paradigm of computing in which dynamically

scalable and often virtualized computing resources are provided as

a service over the internet.


Poll #1

How do you expect Cloud Computing to affect enterprise IT?

• No real short-term impact, it’s overhyped

• Good for consumers and startups, but not sure about others

• Will be useful for certain kinds enterprise services

• Will be a transformative technology in the long term

• Too soon to tell


Cloud Computing and enterprise IT services


Cloud Computing is currently described using commonly accepted definitions

Cloud Computing services are said to include five major

qualities

• On-demand self-service

• Ubiquitous network access

• Location independent resource pooling

• Rapid elasticity

• Pay per use

Cloud Computing service types

Software-as-a-

ServiceOn-demand use of software over the internet or private networks

Platform-as-a-

Service

Tools and environments to build and operate cloud

applications and services

Infrastructure-as-a-

Service

Compute, storage, network, and operations resources as a service

from the cloud

1


Cloud Computing delivery models vary by ownership and control of information

Cloud Computing is delivered and used in different ways, with

public, private, and hybrid combinations

Public cloud

(external)

Virtualized computing services used by multiple customers,

accessed across the Internet or a private network

Private cloud

(internal)

Virtualized environments used internally by an enterprise, and

controlled within the enterprise.

Hybrid cloudA mixed environment with both public and private cloud services;

includes “virtual private clouds”

Community

cloud

Community clouds are used across organizations, allowing for

collaboration among a community of interest

2


Economic pressures are driving enterprises to adopt

Cloud Computing IT consumption models

Cloud Computing presents a number of significant benefit

opportunities for enterprise:

• Reduce amounts of IT capital equipment spending‒ Pay-as-you-go model reduces capital expenditures

‒ Costs are treated as operating expense,

‒ Lower costs, reduced hardware purchases

• Increased flexibility, greater agility‒ Allows greater flexibility and less time to complete projects

‒ Accelerated time to benefits

• Reallocation of staff resources‒ Move staff from IT to other activities

‒ Focus on “core” vs. “non-core” activities

3


Enterprises adopting Cloud Computing services will follow a typical path adoption

Software as a Service is the most mature and widely adopted

service category. Other service types will follow a similar path.

Enterprise adoption path of cloud computing

Internalization

Ad

op

tio

n

High

UnawareLow

Awareness

Understanding

Positive Perception

Adoption

Institutionalization

IaaS

PaaS

SaaS

Time

4


As Cloud Computing grows, vendors expand and improve their services offerings

Analysts are projecting continued growth and increased

enterprise adoption of Cloud Computing in the future.

• Demand growth‒ Enterprises are moving to cloud services out of economic necessity

‒ Analysts predict that revenue worldwide for companies providing cloud

services will surpass $56 billion in 2009, a 21% increase from 2008,

and the market will reach $150 billion by 2013*

• Supply growth‒ IT product and service providers are shifting toward cloud models

‒ Vendors are competing to establish enterprise dominance

*Gartner Forecast: Sizing the Cloud; Understanding the Opportunities in Cloud Services, 18 March 2009

5


Poll #2

The potential benefits of Cloud Computing most important to

my organization are:

• Project agility and quick time to market

• Ability to quickly scale up and scale down resources

• Resource management, staffing allocation and expertise

• Financial benefits, reduced capital expenditures

• Don’t know/not applicable


What are enterprises doing with Cloud Computing?

Enterprises are currently gaining experience and ramping up

Cloud Computing in a wide variety of ways:

• Single-function SaaS offerings, such as CRM, sales force

automation, human resources management, and

email/productivity apps

• Development, testing, and public-facing web sites

• Dynamic provisioning environments to achieve variable

capacity on demand

• External collaboration environments using Community Clouds

• Private & public cloud hybrids

6


Cloud Computing adoption will map to the maturity of the vendor capabilities

Cloud Computing adoption depends on vendors’ readiness to

provide enterprise-class performance, reliability, and resiliency

Ad

op

tio

n

Google

App

Engine

Gmail

Salesforce CRM

Virtual

Private

Clouds

Oracle

On Demand

Microsoft Hosted

E-mail

Hosted

VMware Actively watch and

conduct limited

tests

Pilot projects &

business case

development

Consider broad

implementation

Nascent technology Early adopters Stable technology

Amazon Web

Services

Mozy

Force.com

Netsuite

IaaS

SaaS

PaaS

Rightnow

Workday

Illustrative snapshot: Dynamic markets

require continual re-assessment

Rackspace

Terremark

7


Operations considerations for Cloud Computing

Cloud Computing promises to transform IT operations, but we

believe enterprises need to prepare for the changes

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

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

Audit & assurance Are there risk management controls to applications and data?

Tax and legal Can you meet needs for legal compliance and tax issues?

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

Vendor “lock-in” Is the vendor limiting interoperability or access to your data?

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

IT readiness Are internal IT architecture and organization structures “ready”?

8

Alignment with Enterprise Risk and Governance strategy will help

organizations identify and address the key hurdles to successful adoption


Poll #3

What is the largest consideration for adoption of Cloud

Computing in your organization?

• Data controls and ownership, audit and assurance

• Backup, DR, & retention

• Security and privacy

• Vendor “lock-in” and interoperability



Prepare for Cloud Computing by looking at options from the

perspectives of economics, technical feasibility, and risk.

Risk & ControlTechnical

Feasibility

Economic

Return

What should enterprises consider doing to prepare for Cloud Computing?

IT Services

Portfolio

Economic Fit

Transition Cost

Benefit Analysis

Architecture Readiness

Vendor Capability

Migration Complexity

Data Control Governance

Vendor Compliance

Security & Privacy

Greatest Value in

Shortest Time

Cloud Strategy

Replace

Extend

Consolidate

10987654321

9

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Enterprises are starting with targeted projects with a “building

block” approach for adoption of Cloud Computing services:

Enterprise Cloud Computing adoption tactics

Starting smallStart experimenting with non-critical applications and services, such as test,

development, or research

Learning from

partners

Leverage lessons from Cloud Computing use cases from partners and

others in similar industry groups

Customizing cloud

services

Let the cloud vendors know your specific requirements, and request

customization and specific services characteristics

Building new

private clouds

Learn from the cloud vendors to build virtualized elastic cloud environments

on the internal IT infrastructure

Expanding with

hybrid clouds

Expand private clouds in the datacenter to integrate with public clouds to

develop optimum hybrid models

10


Cloud Evolution and Maturity in the Enterprise

Exponential benefits are available for those who overcome the

major hurdles associated with the Cloud’s maturity curve

Innovation

Focused

“Built to Order” IT

Private Clouds, SaaS

Application-Based, Non-core or discrete functions

Cost, Flexibility,

Time-to-Value

Security, Pricing Models, Vendor Lock-In & SLAs

Standardized

“Built to Run” IT

Hybrid Clouds, PaaS, IaaS

Services-Oriented, Core & non-core business functions

Service Management, Agility

Governance, Policy Mgmt, Data/Service Decoupling

Dynamic

“Self-Configured” IT

Cloud “Ecosystems”

Federated/Distributed Services Mgmt, Dynamic Resource

Allocation

Collaboration, Differentiation

Architectural Transformation, Vendor Standards

Cloud Offerings

Capabilities

Business Drivers

Challenges

Efficiency

Effectiveness

11

Copyright © 2009 Deloitte Development LLC. All rights reserved. 2

Impact on the IT industry and supply chain


Cloud Computing is impacting traditional IT Industry procurement models for the enterprise

IT industry disruptions are encouraged by cloud computing:

• The economics of Cloud Computing helps enterprises move

from traditional products to more affordable services

• Cloud Computing services are rapidly evolving in areas of

existing IT capabilities

• Cloud Computing providers are moving to develop the

capabilities required to serve core IT needs of enterprises

• Enterprises are procuring Cloud Computing services which

align with their operations risk tolerance, marking the

“threshold for acceptance”

12


Cloud Computing effect on the IT industry

As Cloud Computing evolves, it will put great pressure on

incumbents and current leaders of the IT industry.

• As enterprise IT infrastructure and applications become

available as cloud computing, traditional IT solutions will

retreat to narrower niches

• IT industry incumbents that cannot establish a Cloud

Computing presence risk being pushed into shrinking “pre-

cloud” sectors

• New players in the IT industry will emerge, displacing many of

the traditional leaders

• Within a few years, the IT industry structure may be

significantly transformed, both the concentration of sectors

and the industry leaders

13


Cloud Computing also presents opportunities for new business models in the IT industry

• Enterprise IT services can become a commodity resource

which can be resold from enterprises to third parties

• Enterprises can create arbitrage opportunities on excess IT

capacity and operational services

• Cloud-based consortiums can combine and partition off idle

enterprise IT capacity across multiple suppliers

• Brokers and aggregators will offer “two-way” markets for

Cloud Computing resources among enterprises

14


Poll #4

In your enterprise, which area of IT offer the greatest potential

for optimization using Cloud Computing?

• IT Servers and Storage

• Software for Office Productivity Applications

• Enterprise Software (ERP)

• IT Outsourcing and Technology Services



Cloud architectures and next generation enterprises



Cloud adoption will be shaped by two key elements

Capability of

existing premise

based platforms

to meet business

needs

Low

High

Differentiated value of cloud providers

Low High

15


Cloud Computing will create four waves of disruption

New delivery

models

Addressing unmet

needs of business

ecosystems

Disintegration of

vertical Cloud

Computing stacks

Disruption of other

industries

16


Contrasting architectures

In-Out Out-In

Control One control pointAutonomous

entities

Resources HeterogeneousHeterogeneous

squared

TransactionsFine grained

Short-lived

Coarse grained

Long-lived

Outlook Optimistic Pessimistic

17


Migration from an enterprise-centric operating model to

an ecosystem-centric one requires a fundamental IT

architectural shift

“INSIDE-OUT” Architecture for

scalable efficiency

“OUTSIDE-IN” Architecture for

scalable learning and collaboration

From Enterprise … … to Ecosystem

18


Datacenter

infrastructure

and network

Service grid

management

Business

application

services

SLA

A distributed architecture is required before web services

technology can be broadly deployed to support enterprise and

ecosystem activities

Service

grid

Application Services

In Wave 3, the distributed services architecture

will evolve into true Service GridsP

olic

y

19


Evolving industry structure

Business as a

service (BAAS)

Software as a

service (SAAS)

Platform as a

service (PAAS)

Infrastructure as a

service (IAAS)

Varies

Fragmented

Horizontal

Concentration

APAAS

EPAAS

Vertical

Concentration

Horizontal

Concentration

20


Questions and Answers


Join us November 5th at 2 PM ET

as our Technology and Human

Resource Executives series

presents:

Technology and People:

Understanding the Workplace of

Tomorrow


Contact info

John Hagel

Director, Center for Edge Innovation

Deloitte Consulting LLP

[email protected]

+1 408 704 2778

Chris Weitz

Director, Technology Strategy and Architecture

Deloitte Consulting LLP

[email protected]

+1 408 315 6289

21

mailto:[email protected]

mailto:[email protected]


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Documents

Cloud Computing in the enterprise: Not if, but when … Dbriefs Technology Executives series presents: Cloud Computing in the enterprise: Not if, but when and how? John Hagel, Director,