January 2018, IDC #AP43493617

Vendor Spotlight

Transforming Enterprise IT in the Digital World

Sponsored by: Tata Communications

Sharyathi Nagesh Rajnish Arora

January 2018

IDC OPINION

Digital Transformation (DX) Is Changing the Way You Do Business

Digital transformation is becoming pervasive, impacting businesses across regions and industries.

Businesses are being reinvented. The old way of doing business is no longer relevant in the current

scenario, where each process and transaction is digitally impacted. IDC predicts the worldwide

spending on DX technologies, led by 3rd Platform technologies, to expand at a compound annual

growth rate (CAGR) of 16.8% through 2019 to more than US$2.1 trillion. For most of the past 50 years,

business leaders viewed financial capital as their most valuable resource; with DX, we have entered

an economy whose most important value is characterized by a different resource. Now, value is often

generated by information, and data is being created at an unprecedented rate. From 2013 to 2020, the

amount of data will grow tenfold to 44ZB. The number of internet-connected points reached 15 billion

in 2016, and IDC predicts an increase to 80 billion connected points by 2025. By every measure,

global digital transformation is already at an inflection point characterized by acceleration and scale.

This unparalleled data growth requires newer revenue/compensation models, such as digital payments

and cryptocurrencies. Digital payments alone have increased by 1,000% over the last two years and

are likely to make cash ATMs irrelevant in the coming years. In just three years, mobile payment

applications, such as Alipay, WeChat, and UnionPay, have completely replaced cash as a payment

option in urban centers of China. The changing payment scenario is driving the way 3rd Platform

technologies are being leveraged for easier accessibility and scalability.

Almost 100% of IT spending growth and more than 60% of enterprise IT budgets in 2017 will be

influenced by 3rd Platform technologies and solutions, which include social, mobility, cloud, and

analytics. By 2020, IDC predicts this spending to increase to 80% of the IT budget. The disruptive

impact of digital technologies and the transformation they bring is being felt across organizations and

industries. The emergence of the "digital economy" inherently requires a highly dynamic and

bandwidth-intensive model. While most of the IT managers are still focused on efficiency and

optimization, business leaders and line-of-business (LOB) managers are looking at profound business

transformation.

DX Enterprise Benchmarks for All

Differentiating an enterprise's performance in the digital world requires benchmarking itself on DX

pillars that include leadership, omni-experience, information, operating model, and worksource. These

are the cornerstone of a digitally fit organization. IDC believes that this digital transformation will be

multifaceted and influenced profoundly by these five pillars.

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Infrastructure Is the Linchpin of Digital Transformation

IDC measures the organizational DX maturity in the digital transformation journey and categorizes

them under five phases: ad hoc, opportunistic, repeatable, managed, and optimized. 60% of the

businesses are still in the early phases of adoption — ad hoc and opportunistic. The primary

challenges businesses are facing are with operational model transformation and information

transformation, which IDC calls as the foundational pillars or dimensions. Consider the example of a

large global ecommerce player with billions of dollars of business which crashed on the event of festive

sales. The traditional IT architectures are not able to handle the flood of data and explosion of queries

on their IT infrastructure.

Digitally fit organizations need to revamp their IT platforms to enable innovation. Business

transformation is a multifaceted mission requiring "business to run as usual" while supporting DX

initiatives. IT must ensure that the current production environments are supported on cloud for

continuous operation while imbibing the 3rd Platform technologies necessary for the enterprise to

transform digitally, not to mention security, which provides a blanket layer covering all aspects of IT.

An ideal mix, in that case, is a result of both public and private cloud solutions, which include the

quality of service (QoS), user experience, and security of an on-premise infrastructure with the

scalability of a public cloud.

As digital transformation moves toward the hybrid IT world, it requires attention from the extended

ecosystem of an enterprise, beyond the IT operations staff. Leaders must take a hard look at

themselves and their teams and assess whether they have the "right stuff" to hone and synthesize all

the ingredients of infrastructure transformation. This includes the following:

▪ A collective assessment of on-premise and off-premise tiers, along with economic, health,

performance, and utilization analytics of each tier;

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▪ Flexible composable compute and storage resource pools for the current generation and next-

generation apps, irrespective of the premise, that measure consumption on the "pay per use"

model; and

▪ A comprehensive and scalable "infrastructure as code" API toolkit that enables methodologies,

such as DevOps, across the entire organization and, thus, shift the focus from managing

infrastructure to accelerating application delivery.

Hybrid IT is one of the fastest-growing enterprise IT architectures today with a wide range of user

acceptance. IDC's hybrid cloud forecast for the 2017–2020 period predicts that while public cloud data

services will grow at a robust 38.5%, the traditional/on-premise data services are expected to grow at

15.9%. With the rapid adoption, hybrid cloud has become the most critical theme in a customer's

datacenter transformation journey.

IT owners identify datacenter transformation as an imperative in the DX journey, highlighting it as one

of the top enterprise IT priority areas for DX adoption. Enterprises across the industry consider network

and datacenter transformation and end-to-end cybersecurity as key priorities in their digital

transformation journeys. Finding the right skill sets, governance and compliance, and deciding on the

application deployment architecture (on-premise/off-premise) are some of the other key priorities in

deploying an IT infrastructure of the future.

Source: IDC APEJ Business and IT Service End-User Survey 2017

For datacenter transformation, IT leaders must have an appropriate enterprise infrastructure strategy

and architecture in place, which has cloud, software-defined architecture, and integrated infrastructure,

with security as the overarching element. While cloud and software-defined architecture brings in

flexibility, provisioning, scalability, and manageability aspects, integrated on-premise infrastructure

provides control and centralization on some of the critical workloads. The ideal architectural approach

is hybrid cloud, which has both on-premise and off-premise offerings.

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SITUATION OVERVIEW

Digital technology is driving the way we live life today. Ubiquitous connectivity has provided access to

every individual, everything, at any time. User experience is changing with the new interactive

interfaces, as "compute" begins to be embedded in every technology. Digital transformation includes a

comprehensive scrutiny and reinvention of business models, processes, approaches to service,

employee enablement, and even product offerings.

Enterprises need to rethink how to move away from the traditional methods and look at IT "as a

service" being an underlining way to transform their IT departments into more agile, efficient, and

service-oriented organizations. Cloud computing is a cornerstone in this process. An automation-

enabled approach can help drive digital transformation to the changing business needs, such as:

▪ Explosion of IoT devices as key business enablers;

▪ Unprecedented growth of data that can be collected and stored and are available for use;

▪ Advanced analytics providing never-seen-before opportunities; and

▪ Security needs, especially as data flows freely between the edge, the core, and the cloud.

IT transformation has been tied to the important aspects of performance, including revenue, business

agility, and the strategic application of technology. Enterprises undergoing IT transformation need to

rethink the what, how, and why of the technology enabling it. Cloud is a key enabler of this

transformation because of its potential for improving responsiveness, time to value, and efficiency of

the budgetary spend.

Adopting Cloud Enables IT Transformation

Cloud, both on-premise and off-premise, plays a pivotal role in the business and IT transformation that

enterprises are going through as part of digital transformation. By 2018, at least 40% of IT spending

will be cloud-based, which will reach over 50% of all IT infrastructure, software, services, and

technology spending by 2020. According to IDC's 2017 CloudView Survey, the top drivers for adopting

cloud include improving agility, security, and standardization of the IT infrastructure. Cloud brings

unique advantages to organizations, including improving time to market at fraction of cost and effort,

and helps in building an agile organization that reacts faster to business changes.

Given those specific advantages of cloud, enterprises must think about workloads that will benefit

most, moving to cloud, while keeping the rest on on-premise traditional deployment. The best way to

think about it is to look at the characteristics of the workloads. Enterprises must keep in mind that not

all workloads will necessarily derive the full benefits of cloud, and some workloads need to be kept in a

more controlled environment for security, governance, and reliability reasons. This ensures that the

future of IT infrastructure will be hybrid cloud that includes public cloud, on-premise private cloud, and

managed hosted services.

Enterprises looking to move their workloads to cloud need to evaluate multiple parameters, keeping in

mind the current health of their IT. There is not one cloud architecture that is best for all types of

workloads. From a cost optimization perspective, applications with unpredictable or changing workload

sizes are likely to be better candidates for the public cloud architecture. Applications with predictable

and relatively consistent workload sizes are good candidates for the private cloud architecture.

However, IT buyers should be aware that expectations for cost savings with private cloud tend to

exceed the actual savings realized. IT buyers should look to other benefits, such as speed of

provisioning or better availability of tools, when considering private cloud IaaS as an option. A hybrid

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cloud solution has the potential to provide the best architecture for various workloads while still

maintaining a single point of control.

IT owners need to weigh multiple factors before making decisions that are right for their organizations

and infrastructure. One solution approach is to look at the granularity of workloads — consider various

workloads under your control and their dependencies before taking a call on cloud migration. Cloud

migration should follow a thorough research on decision matrices and priorities. IDC recommends

looking at holistic decision considerations that go beyond technical or financial parameters. Key

considerations for any cloud journey that must be accessed include:

Additionally, cloud adoption depends on business demands, such as the need to provide new services,

expansion to new geographies, and the need to support new initiatives that require accessing IT

infrastructure for readiness. Most of the IT decisions will be radical and disruptive requiring future-

proofing of the IT infrastructure, and only a strong buy-in from the management will make this

transformation possible.

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Each of these parameters must be taken into consideration before deciding the move to off-premise,

managed hosting, or on-premise platforms. For moving workloads to cloud, the level of enterprise

comfort also depends on factors such as industry, region, and cloud maturity. In more mature markets,

organizational willingness to adopt cloud will be more profound than in markets where cloud adoption

is in a nascent stage.

A correct mix of private and public cloud will drive the optimal ratio of workloads being moved, thereby

providing the scalability of an off-premise solution and security of an on-premise one. Going ahead,

multicloud and hybrid cloud environments become more prevalent and the de facto platform of the

future. Hybrid cloud provides the best of both public and private cloud while eliminating or mitigating

their disadvantages. A successful hybrid cloud strategy encompasses the following:

While Hardware Innovation Is Important, Software Intelligence Brings Differentiation

While the critical nature of hardware in IT infrastructure is evident, the importance of software and

associated services cannot be ignored. According to IDC's 2017 IT Infrastructure Survey, the top IT

priorities include modernizing the traditional core business with a software-defined solution approach

and investing in automation and system management tools. Under pressures of digital transformation,

cloud skills gaps, and doing more with less, IT managers need to provide a higher value proposition

without increasing the cost or management complexity. All this will be feasible when compute

virtualization, software-defined storage (SDS), software-defined networking (SDN), and software-

defined WAN (SD-WAN) are leveraged to build a dynamic IT infrastructure.

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Digital transformation will be one of the key drivers for SD-WAN adoption. A forecast from IDC

estimates that worldwide SD-WAN infrastructure and services revenues will see a CAGR of 69.6% and

reach US$8.05 billion by 2021. SD-WAN helps in increasing network utilization and supports

distributed operations for end-to-end network. Another factor driving the growth of SD-WAN is the

continued adoption of public cloud-based software-as-a-service (SaaS) applications. The adoption of

SaaS for business-critical applications disrupts the traditional models of WAN deployments-led MPLS.

SD-WAN is increasingly leveraged to provide dynamic connectivity, network bandwidth optimization,

and path selection in a policy-driven, centrally managed network architecture ideal for the DX journey.

As the organization faces data deluge amplified by transformations, such as DX, the underlying IT

infrastructure is becoming highly compartmentalized, distributed, and heterogeneous. While optimizing

the investment is a seminal cause, simplifying the management and improving the performance and

automation are equally critical. IT managers understand that SDS can be a key solution in such a

scenario; IDC's 2017 IT Infrastructure Survey highlights investment in SDS as one of the key priorities

for IT managers.

Organizations need to adopt software-defined infrastructure capabilities to see the full scope of

datacenter transformational benefits. Software layers bring dynamism to the underlying IT

infrastructure and support quick provisioning while simplifying management.

IT Management: Tying Up the Loose Ends

It is critical for organizations to define their decision matrix and develop clarity around a cloud road

map. Once the strategy and long-term vision is clear, the next logical step is execution of that

organizational vision. It appears that this is where most of the organizations are faltering.

The challenge organizations are facing is primarily around the availability of skill sets. IDC's 2017 IT

Infrastructure Survey identifies downtime caused by system failure and human error as the top 2

challenges CIOs and IT managers face in their datacenter management. The top IT priority of IT

managers is to invest in automation and system management tools to minimize human errors.

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The adoption of managed hybrid cloud is an ideal consideration under these circumstances. While

hybrid cloud provides a simplified framework for automation and management, managed services fill in

with core service capabilities required for the operationalization of the hybrid cloud platform. Benefits

to organizations go beyond filling just skill gaps, and cloud will enable rapid development cycles and

faster GTM to enterprise customers. Today, DevOps is a great platform to reduce the development

cycle, perform quick prototyping, and deploy the production environment faster. Even here, the key

challenge for adoption is the lack of available skill sets. When these platforms are offered as services,

many organizations can experience the benefits and adopt widely. With the operational maturity of

enterprises, they can spend more of their time and energy on developing new products and services

rather than on the mundane tasks of day-to-day operations.

IDC recommends organizations on the transformation journey to:

▪ Assess their capabilities and maturity in the operating model;

▪ Enable a dialogue among business and technology executives about their goals and actions

related to digital transformation initiatives and operating model implications;

▪ Identify the areas of the operating model capability that require strengthening and decide the

approach to them: insourcing or outsourcing; and

▪ Establish standards for pursuing operating model digital transformation initiatives.

This transformative journey of organizations cannot be made in isolation. Organizations need to

leverage the skill sets, products, and services available in the ecosystem. They need a partner that not

only helps define a long-term vision, products, and services but drives business transformation with

them.

Tata Communications Overview

Tata Communications is part of the wider Tata Group, which has products and services in over 150

countries and an annual revenue of US$103.51 billion. Tata Group has over 610,000 employees with

operations in over 100 countries. Tata Communications, previously called VSNL, was founded in 1986

to provide telecommunications solutions and services. Today, Tata Communications has over 45

datacenters worldwide and over 13 global cloud locations and owns 24% of worldwide internet routes.

With its strong background in telecommunications and colocation, the company has diversified over

time to provide value-added services across hosting, cloud, and managed services.

Tata Communications Offerings in Hybrid IT

Tata Communications provides a complete spectrum of hybrid cloud solutions. At the core of these

offerings are public and private cloud and managed hosting services. On top of this, its smart hybrid

cloud offering provides management simplicity and security assurance. The consolidated management

framework is built on a highly reliable OpenStack framework that supports open standard APIs and

provides flexibility and agility to manage the underlying services. Additionally, the framework helps in

service cataloging and selection as well as security management across cloud and hosting services to

build an agile infrastructure that best suits the business. This framework provides a comprehensive

end-to-end solution to enterprises looking at adopting a hybrid cloud deployment. With the existing

strength of the organization in colocation and network backbone, this complements very well in

building an optimized solution for the customer.

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Tata Communications Smart Hybrid Cloud Offering

IZO Private Cloud: It is a private cloud platform built on an OpenStack framework that provides

advanced automation and orchestration capabilities. A single management pane provides visibility into

network, compute, and storage. With the complete visibility and provided control, users can build a

truly integrated hybrid cloud platform. The private cloud offering comes in two flavors: dedicated

private cloud (DPC) and virtual private cloud (VPC). DPC is ideal for customers who want a single

tenant architecture with physical isolation of compute, storage, and networking. DPC can be highly

customized and, if required, can provide an option to scale to a VPC platform. VPC is ideal for

customers who are looking for on-demand scalability with flexible time commitments and multitenant

architecture.

IZO Cloud Storage: It is an integrated solution that is always available, highly durable, and fully secure,

delivered across multiple global locations. Pay for the "data you store" model is supported by a

dedicated 24/7 team with best-in-class service-level agreements (SLAs) that supports an enterprise-

grade storage platform.

Managed Services for Public Cloud: Hybrid cloud brings borderless growth and higher productivity.

Yet, making the switch to hybrid can be challenging to enterprise customers. Tata Communications

offers managed services on Microsoft Azure and AWS and becomes a one-stop shop. Services

include professional and design consultancy services in the initial phase of the customer journey, lift-

and-shift support with migration and deployment services and monitoring and management services

with performance dashboard, integrated incident management system, and periodic resource

assessment post deployment.

Managed Security Services: Tata Communications offers a wide range of managed security solutions

that include network security, advanced threat prevention (ATP), application security, and DDoS

detection and mitigation services. The security services are backed by global SLAs, round-the-clock

monitoring, and threat management and analysis services to protect businesses from external and

internal threats. Additionally, the security framework is integrated with identity managed frameworks to

ensure that the right information is available to the right people at the right time.

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Tata Communications Value-Added Offerings

Tata Communications' managed service for Big Data: Enterprises are already capturing and storing

the data that could fuel their growth, if managed efficiently and effectively. Managed services for Big

Data will help enterprises tackle the data deluge by consolidating data from all sources, both on-

premise and cloud-based, into a centralized Big Data platform offered by Tata Communications, which

is an enterprise-class and modular service offered globally in a shared and dedicated model for

enterprises to choose as per their needs.

Container as a service (CaaS): It is the next step in the hybrid cloud evolution. For enterprises that are

looking for a development platform, CaaS is a great value proposition. CaaS offers an ultra-agile

infrastructure with much-needed control to revolutionize software delivery and DevOps adoption. This

improves the efficiency of application developers while managing business risk for IT administrators.

Business Results and Case Studies

A Leading Aviation Solution Provider

A leading aviation solution provider approached Tata Communications to rearchitect its IT

infrastructure, thereby becoming completely independent of its parent company. Until then, the parent

company provided and managed the IT infrastructure, which was used by the customer to deliver its

services. All of the customer's global clients were served from the parent company's datacenters

located in Dubai. Tata Communications had to redesign the IT infrastructure to:

▪ Distribute the IT infrastructure globally to get it closer to the customers;

▪ Improve the efficiency of the IT infrastructure by adopting virtualization and cloud;

▪ Provide an end-to-end datacenter, security, cloud, and management solution; and

▪ Deploy a geographically distributed managed disaster recovery (DR) setup.

Tata Communications undertook a consultative approach customizing a solution to scale for the future

and migrated more than 400 servers and 150TB of data from Dubai to the United Kingdom and the

United States with zero downtime and provided periodic reviews for seamless and inclusive delivery

experience.

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A Global Business Process Outsourcing (BPO) Service Provider

Another customer, a leading global BPO service provider focused on customer experience

management, approached Tata Communications to provide a long-term data archiving solution for

meeting compliance requirements. The customer's localized infrastructure could no longer meet the

ever-growing data storage needs. It was time-consuming for the IT team to manage 10 separate

platforms, each requiring separate licensing, maintenance, and backup. It created challenges with data

availability and management. Tata Communications proposed a solution based on:

▪ IZO Cloud Storage, an integrated storage platform that is highly reliable, 24/7/365 available

with secured access;

▪ A common internet file system (CIFS) that enables voice recordings to be shared and archived

on cloud;

▪ Full management of virtual firewalls to secure gateways and networks; and

▪ Point-to-point connectivity.

FUTURE OUTLOOK

The Future of IT Is Hybrid

While "cloud-first" is a long-term strategy for enterprises, "cloud-also" will be the strategy for the near

term. Offering any cloud services to enterprises with legacy applications requires providing "lift-and-

shift" services for their workloads from on-premise datacenters to off-premise ones. Deploying such an

approach requires participation across the ecosystem, involving hosting providers, service providers,

and IT vendors.

Hybrid cloud with off-premise/on-premise private and public cloud offerings will rule the enterprise IT

architecture in the near future. Considering the gap in skill set within enterprises and the need for

consultancy services in this journey, systems integrators/service providers will play a key role.

Managed hosting providers are also building deep skills around hybrid cloud and providing customized

offerings to position themselves as differentiated players in the space.

Evaluating the Right Technology Partner

There will be a scarcity of skill sets and automation tools for cloud migration, even as cloud platforms

get better and more capable. Enterprises that have existing infrastructure investments and intend to

reuse them with their cloud platforms will face major skill gaps. A reliable systems integrator can be of

immense value in this transformation journey. The choice of a right partner depends on enterprises'

choice of cloud and its migration plans related to the legacy applications.

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To successfully deploy a hybrid IT environment, enterprises need a provider that can deliver the full

range of cloud capabilities. Organizations interested in having a hybrid IT environment managed by a

single provider, with a single management, monitoring, and orchestration framework, might want to

look at providers with a hosting and colocation heritage that are upskilling to provide these capabilities.

Considerations for Executives

The promises of the transformation and platforms are enticing, but corporate executives know too well

the potential for problems along the way. Before they commit substantial amounts of money and time

— and run the risk of degrading employee productivity — executives are asking hard questions, such

as:

▪ How do I transform my business through infrastructure transformation?

▪ What is the underlying financial model? Where will I find significant savings?

▪ What should my migration plan include?

▪ How do I operate in the new world? Which IT processes will have to change?

▪ What KPIs give the best indication of organization operation and health?

▪ What is the impact on security and compliance?

▪ What are the plans around business continuity/disaster recovery?

About IDC

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