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2011 Impact of Cloud on Enterprise Organization - PoV Executive Overview R1.1 Alex Shahidi August, 15 2011

Cloud Organizational impact, Emerging trends

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2011

Impact of Cloud on Enterprise Organization - PoV

Executive Overview R1.1 Alex Shahidi August, 15 2011

 §  Ability  to  shi+  to    service  provider  mindset  and  structure  is  directly  propor6onal  to  maturity  of  IT  service  

management  in  an  organiza6on.  This  means  realis6c  service  level  measurements  against  stated  targets  and  true  cost  of  delivering  it.  This  cost  is  o+en  poorly  defined,  understood  or  measured.  

§  Well  defined  demarca6on  of  provider  and  consumer  allows  for  clear  defini6on  of  responsibili6es.  Cloud  providers  sell  to  consumers  and  that  is  a  different  rela6onship  than  exists  in  IT  today.  

§   The  real  promise  of  cloud  compu6ng  lies  in  developing  new  markets  and  services.  This  requires  process,  flow,  promo6on  tracking,  response  management,  and  a  slew  of  other  ac6vity  on  the  fly  that  in  turn  require  providers  to  ever  more  flexibly  and  expediently  enable  changes  in  workloads  ,  types,  QoS,  and  physical  and  virtual  resources.  Managing  this  mode  of  interac6on  at  the  speed  of  internet  requires  structurally  new,  more  agile  teams  and  forma6ons  than  what  today’s  enterprise  IT  is  used  to.  

§  This  new  team  and  organiza6on  structure  is  already  challenging  many.  Some  will  be  significantly  disrupted.  Most  will  need  substan6al  help  naviga6ng  this  complexity  and  morphing.  

§  Most  IT  ini6a6ves  tend  to  target  current  pain  points  or  new  func6ons  but  to  effec6vely  leverage  cloud  a  larger  strategic  view  is  crucial  to  success.  Enterprise  IT  should  adopt  this  approach  in  offering  services  to  the  business.  

§  Business  needs  to  respond  to  customers  and  providers  need  to  understand  both  paMerns  to  deliver  the  right  plaNorm  and  tools  to  facilitate  demand-­‐response  

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Paralleling  cloud  technology  

Evolution of IT organization to demand-response delivery model

1-­‐  Enterprise  infrastructure  architecture  and  applica6on  design  that  is  6ghtly  coupled  

•  What  does  a  cloud  infrastructure  look  like  and  why  it  is  so  different  •  Why  applica6ons  must  func6on  independent  of  the  infrastructure  plaNorm  •  Transi6on  from  virtual  to    Cloud  can  leverage  many  exis6ng  assets  

2-­‐Systems  management,  capacity,  work  flow  that  is  sta6c  (or  semi-­‐sta6c),  containerized  and  is  build  on  top  of  exis6ng  infrastructure  and  applica6on  constraints  and  limita6ons  

•  How  to  separate  applica6ons  from  infrastructure  and  key  decision  factors  •  Leveraging  integra6on  point  services  (intelligent  API  management),  and  key  decision  factors  •  Can  current  enterprise  middleware  deliver  the  abstrac6on  necessary  for  separa6on?  

3-­‐Enterprise  IT  organiza6on  that  is  formed  around  technology  and  applica6on  silos  

•  Applica6on  silos  evolved  with  containerized  apps.  Virtual  apps  are  distributed  &  data  store  driven.  •  Infrastructure  silos  evolved  along  an  IT  Push  model,  by  architecture  &  design,  that  creates  areas  of  

control.  Cloud  applica6ons  are  demand  driven  and  interconnected  across  physical  boundaries  •  With  transi6on  to  cloud  tradi6onal  control  is  exchanged  for  speed  and  agility  •  This  organiza6onal  shi+  may  parallel  architecture  of  cloud.  Loosely  coupled  parts  in  a  DC  centric  

supply/demand  driven  approach  

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Opportuni5es  to  unleash  new  efficiencies,  services  &  business  models  by    cloud  face  three  major  hurdles  

Challenges of cloud for Enterprise

 New  models  and  capabili5es  of  cloud  should  determine  structure  of  suppor5ng  and  managing  organiza5on    

§  A  change  in  business  decision  or  process  should  not  impose  changes  within  infrastructure  and  plaNorm  (and  vice  versa).  As  such  that  decision  chain  prominent  in  most  organiza6ons  should  be  untangled  

§  Technology  plaNorm  becomes  the  DC  that  may  be  internally  operated,  or  outsourced  in  exchange  for  a  fully  managed  plaNorm.  

§  The  business  plaNorm  may  be  outsourced,  depending  on  complexity  and  scale.  But  it  is  a  value  add  ac6vity  that  itself  is  o+en  a  business  asset  

§  Business  management  plaNorm  is  the  apex  of  enterprise’s  business  model  support  capability.  This  is  essen6ally  driven  by  analy6cs,  market  intel  and  emerging  social  enterprise  plaNorms  such  as  data.com  

§  The  informa6on  value  chain  and  its  key  segments  define  the  organiza6on  and  skill  sets  that  own  or  support  it.  As  data  is  released  from  the  confines  of  infra  and  app  dependencies  to  flow  where  demand  pulls  it,  defining  and  designing  the  structure  and  architecture  of  that  demand  becomes  the  core  around  which  a  cloud  IT  organiza6on  is  built.  

§  It  invariably  requires  a  resource  shi+,  the  speed  of  which  is  a  func6on  of  an  organiza6on’s  roadmap,  risk  assessment  and  priority  

§  The  challenge  is  to  minimize  disrup6on  without  compromising  on  target  state  and  6melines  

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Unwinding  business  from  IT  

Cloud optimized organization

Lack  of  well  defined  risk  factors  and  key  decision  points  are  not  conducive  to  big  decision  making  §  Organiza6onal  impact:  from  Capex  to  Opex  driven  by  accurate  cost  analysis  to  establish  full  delivery  cost  ,  to  

speed  and  size  of  shi+  or  strategic  sequence  of  implementa6on,  changing  roles  and  6tles,    and  net  impact  on  boMom  line  need  evalua6on  and  assessment  for  a  successful  transi6on  

§  TCO:  despite  common  assump6on  of  savings  with  cloud,  there  is  not  sufficient  data  on  overall  TCO  .  Newcomer  cloud  startups  hardly  provide  a  baseline  or  equal  comparison  for  classic  enterprises  in  terms  of  size,  complexity  and  risk.    Public  and  private  cloud  comparisons  also  lack  sufficient    detail  for  ABC  (ac6vity  based  cost  accoun6ng)  or  other  applicable  methods  that  can  provide  reliable  cost  per  unit  at  enterprise  scale  

§  How  fast:  Not  only  this  is  linked  to  organiza6onal  readiness  and  impact  assessment,  but  also  an  understanding  of  the  delta  between  enterprise  current  state  and  target  state.    This  needs  an  assessment  of  addi6onal  features,  func6ons  and  capabili6es  that  public  cloud  (Google  apps,  AWS…)  or  cloud-­‐in-­‐a-­‐box  solu6ons  lack  because  at  the  core  they  are  purpose  built  DC’s  and  reaching  target  state  on  them  takes  6me,  resources  and  poses  risks  to  manage  including  plaNorm  specific  limita6ons,  licensing  models  and  scenarios,  applica6on  and  infra  varia6ons,  standardiza6on,  SLA  and  contract  management…  

§  The  business  case  for  using  u6lity  compu6ng  for  specific  enterprises  and  ver6cals.    And  regardless  of  who/where  IT  is  run,  uncertain6es  need  clarity  against    the  level  of  defined  risk  thresholds  

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Challenges  of  unknown  and  undefined    

Level  of  IT  maturity  drives  speed  of  cloud  adop5on  

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     Enterprise  adop5on  of  cloud  requires  a  concerted  due  diligence  and  planning  to  understand  delta  between  current  and  target  state  to  define  transi5on  methodology  and  target  architecture  

 

Navigating uncertainty

Opportunity  to  counter  risks:    §  Ever  larger  data  volumes  (Big  Data  )  coupled  with  intelligent  analy6cs  can  combine  to  provide  valuable  

strategic  and  opera6onal  informa6on  from  structured  and  ad  hoc  data..  §  Virtualiza6on  has  been  adopted  to  gain  consolida6on;  and  o+en  stagnant  around  20%  range  due  ton  6ght  

coupling  of  apps  and  infrastructure.  This  barrier  mi6gates  gains  in  workload  op6miza6on  and  consolida6on,  and  efficient  cloud  adop6on  

§  This  virtual  barrier  drives  inefficiencies  that  o+en  offset    gains  in  server  consolida6on  and  complicate  cloud  adop6on  

§  API  management  that  is  mostly  sta6c  or  yet  to  be  sufficiently  dynamic  and  interac6ve  (intelligent)  §  Tools  and  so+ware  from  ERPs,  ISVs  and  third  par6es  that  topically  address  some  of  these  concerns,  cannot  

overcome  inability  of  server  centric  virtualiza6on  to  dynamically  and  elas6cally  respond    to  the  stack  that  sits  above  it  

§  New  business  models,  delivery  mechanisms,  elas6city  and  service  offerings  that  cloud  enables,  create  significant  compe66ve  opportuni6es;  and  considera6ons  to  counter  threats,  some6mes  existen6al,  for  enterprises  of  significant  size  

§  Cloud  has  already  claimed  several  casual6es  ranging  from  online  video  entertainment,  to  retail  and  gaming.  The  pace  of  this  shi+  is  only  accelera6ng  

More  than  opera5onal  dilemmas  for  the  C  suite  

Motivating factors for Cloud adoption

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Cloud  is  cheap;  public  cloud  is  even  cheaper  §  There  is  liMle,  if  any,  generally  available  enterprise  class  detailed  ABC  (ac6vity  based  cos6ng)  type  or  other  

methods  that  clearly  lay  out  the  cost  of  various  cloud  op6ons  and  permuta6ons  §  Many  enterprise  applica6ons  are  not  available  as  cloud  based  and  when  they  become  available  the  cost  models  

and  TCOs  are  far  from  known  or  proven,  in  par6cular  for  larger  more  complex  enterprises.  These  variables  impact  many  components  ranging  from  performance  to  licensing  costs  including  virtualiza6on  

§  Formula6ng  new  consumable  services  and  capabili6es  along  with  experimenta6on  and  tes6ng  can  be  accomplished  rather  inexpensively  and  much  faster  via  a  cloud.  This  is  inherently  valuable  to  business.  Procurement,  licensing  and  related  costs  of  doing  this  in  house  along  with  resource  and  management  costs  are  reason  enough  to  leverage  a  cloud  solu6on,  but  cloud  does  not  address  costs  beyond  procurement  and  provisioning  and  brings  concerns  about  various  exposures  that  must  be  planned  and  designed  for  

§  Cloud  has  lowered  barrier  to  entry;  in  terms  of  cost,  quality,  sophis6ca6on  and  then  scaling.  This  is  a  significant  risk  to  established  enterprises  par6cularly  when  offerings  and  services  are  not  ‘tangible’  goods  

§  The  net  value  of  cloud  is  in  transforming  an  enterprise  to  a  nimble,  responsive,  fast  thinking  en6ty  able  to  redefine  and  morph  its  services  in  intelligent,  elas6c  and  right-­‐sized  manner.  The  most  challenging  part  is  gehng  it  right  based  on  architecture,  structure  and  organiza6on  impact.  This  is  not  something  to  be  gained  on  the  cheap.  But  given  all  the  new  possibili6es  and  unpredictable  nature  of  global  business  make  this  a  cri6cal  strategic  investment  for  any  enterprise.  All  the  promised  cost  efficiencies    and  gains  of  cloud  can  be  realized  by  puhng  in  place  the  right  enabling  architecture  first  

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Facts  vs.  hype  and  theory  

Cloud costs less?

As  infrastructure  becomes  more  intelligent  and  analy6cs  enable  beMer  understanding  of  data,  organiza6ons:  § Shi+  focus  even  further  to  higher  value  ac6vity  and  closer  to  business  § Understand  themselves  beMer  § (Re)structure  themselves  beMer  § be  more  responsive  to  their  dynamic  opera6ng  environment  § Manage  through  intelligent  and  Open  API’s  that  facilitate  service  consump6on  § Mobile  First  § Emergence  of  Security    Proper  design  and  implementa6on  of  intelligent  plaNorms  enables  transi6on  or  organiza6ons  from  product  centric  to  service  centric.  This  cloud  driven  and  enabled  transi6on  can  help  extract  significant  knowledge  even  from  exis6ng  data;  to  release  value  currently  trapped  inside  constrained  plaNorms  &  data  models.  

Drive  data  driven  organiza5ons  

Intelligent Platforms

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