Exploring potential of ng cost of infrastructure m skilton sept 23 2014 v1

Warwick Business School Copyright 2014 Mark Skilton

Professor Mark Skilton

Professor of Practice in Information Systems and Management

[email protected]

23 September 2014, Ovum Next Generation Infrastructure Forum 2014http://nextgeninfrastructure.com/

mailto:[email protected]

Warwick Business School

Agenda

Are you providing the right types of business services to the business?

Commodification of infrastructure and how to optimize the cost of infrastructure

Moving beyond thin provisioning and dynamic pricing mechanisms

Looking at the Capex and Opex budget and the impact of different approaches to service delivery

Copyright 2014 Mark Skilton


What is the problem, opportunity space ?

Illustration

Capex

Opex ?

Charge

Advertizement

RelationshipValue & Worth

Recovery?

New investment

Maintenance

Legacy modernization

Heritage ?



Physical Economy, Digital Economy and role of digital ecosystems



The digital Enterprise



Vertical and Horizontal Value Chain integration

Consumer electronics vertical value chainEnergy Industry vertical value chainFilm Media vertical value chain

Examples

ExamplesAutomotive parts horizontal value chainPublishing horizontal value chainRetail horizontal value chainICT commodity hosted value chain

(embedded telematics)



Value Network Ecosystems

Examples

2 sided Market platforms

Financial services payments 2-sided platformsCitizen services two-sided platformsEducation online course 2-sided platformsCustomer support call center 2-sided platformsPackaging logistics 2-sided platforms ICT integration hosted 2-sided platforms

Multi-sided Market platforms

Healthcare multi-sided platforms• Patient care monitoring• Translation researchAutomotive multi-sided platforms• Connected car infotainment • Logistics VMI News and entertainment media multisided marketICT hosted broker multi-sided platforms

Examples


Technological investments enabling value networksDigital Enterprise relation to Value Network Ecosystem





What are your Strategic value proposition choices ?

Close coupledEmbedded (Telematics <->big data) ?Market capture

General scalable ?Technology insertion ?Technology cannibalization ?Managing the boundaries ? (Public, private, hybrid..?)

Market Enterprise ecosystem enabler ?CommunitizationServicization


Cost of integration (incl source& service management)Cost of securityBusiness Model Monetization mechanisms


B2B, B2C, C2… is not Value Networks

SocialValueNetworks

“DOVES”DigitalOperating ValueNetworks

A commercial charging mechanism

B2B, B2C, B2G, G2C, C2C,….x2x



One ecosystem view…

Technology in the supply chain ecosystem cluster



Its driving a digital enterprise technology constituency

At least 7 technological ecosystems….



Commodification of Infrastructure


Cost of

Acquisition

Cost of

Migration/

Disconnection

Cost Of

Running

“Future

Proofing”

Upgrades and patches

Future enhancements and features

Technology refresh

Value –added services

DR, BC service strategies

Selection of platform provider

Selection of instance

Selection of subscription and

usage

Data migration to environment

Software porting to environment

Development and testing validation

Security authentication of external

service use

Staff training

Governance of usage compliance

Fixed data services costs increase with

the increase in the network traffic

Electrical energy use

Staff support

Maintenance

Additional CostsLower Costs

Spend on services increases

as a result of access to new software and

hardware capabilities. These include:


Capex and Opex delivery models


Public

Cloud

Private

Cloud

Hybrid

Cloud

“Mixed”

CatalogManagement

User InterfaceSelection

Cloud Services

Selection & Acquisition

Platform & Location

DeploymentOptions

Data Transfer, Migration

Cloud Operations& DR

Transformation & Cloud Usage

Imp

lem

ent

Req

uir

em

ents

Op

era

te

Performance Management

Security Management

Strategy

End to End

Performance Largely

provider

managed

Provider

Managed

Consumer

ResponsibilityProvider

Responsibility

Audit

Responsibility

End to End

Assessment

Consumer

Managed

Consumer

Managed

Vendor tool

dependencies

Vendor tool

dependencies

Consumer/

country

legislation

dependencies

Provider

Managed

Some

consumer

responsibility

Provider

Managed

Some

consumer

choice

Some

consumer

choice

Sys admin

and consumer

catalog mixed

Some

user policy

control to

burst to hybrid

May have

element of

CoLoc /

partner / broker

optionsSome policy

choices for

hybrid partners

Some policy

choices hybrid

capacity and

load balancing

Capacity Planning

Provider

Managed

TC

O

Roles and responsibilities of consumers and providers change depending on the type of deployment model. Example


Cost analysis in comparing different deployment options – example scenarios Total Cost of Ownership comparison is a key process

for consumers in Infrastructure environment selection and management.

Scenario 1: Managing Infrastructure Usage Growth in Data Traffic Communications Data Volume Sensitivity Scenario

Infrastructure services can become very expensive if the selected pricing mechanism and the demand change significantly from the original capacity forecast

Scenario 2: Managing Infrastructure Usage Growth in Compute and/or Storage - Storage and compute Data Volume Sensitivity Scenario

Cost options selected may change the basis of TCO comparison. These kinds of cost analyses may miss the overall business model costs and growth.For example, hybrid infrastructure may be able to optimize extra computer and storage capacity options but what cost of hybrid management? Can Privacy data be premium charged for public access etc.. ? Is thuis a true business case ?


illustrative

illustrative


Monetization mechanisms

Secure Operating Platform

Dynamic PricingThin Provisioning


Capacity Mechanisms for Managing Asset Utilization Automated Elastic Provisioning and

De-provisioning mechanisms

Value of PrivacyModularity Generativity

Vertical WorkloadSolutions

Horizontal Workload Solutions

Capacity Value of assets drivenrecovery of costs

Price (Value of time)drivenrecovery of costs

Agency value drivenrecovery of costs

NEW BUSINESSMODELS Looking at the overall

Business strategic costs and value, and of theInfrastructure needs


Old world versus new world monetization

OperationalMonetizationStrategies

Operating demand and supply, bundlingcapabilities

Market channel,business processand supply chaincapabilities

Capital funding,contract, IPmethodscapabilities

Ts & CsMonetizationStrategies

GrowthMonetizationStrategies

CommunityMonetizationStrategies

ChannelMonetizationStrategies

Industry StandardizationMonetizationStrategies

Community identity, feedbackConnectionscapabilities

Structureof channelsto markets,Channel mixCapabilities

Access specialization,reward, consistencyand interoperability

NEWECONOMY

OLDECONOMY

This is the “radius effect”Of monetization

It is the value of spatial connections and its contextual content

relevance

These monetization strategiesare levers that pull or push

inside your own company as ways to generate revenue and

profitability.“Network effects” may be

advantageous if designed and business model ran correctly

Platforms are good at these



Conclusions The Digital Enterprise is about value network

ecosystems

Competition is moving to the ecosystem

Selling capacity annuity is a dying method….

Moving towards agency annuity selling

Traditional provisioning not added value – its commoditized…..

Create your Enterprise Value platforms to direct (ecosystem) traffic and usage volume => revenue flows based on capacity/headcount returns



Thank you


New Book 2015


Profile

Mark Skilton has held senior global Director Positions in Information Technology in internal and external consulting internationally inmany industries and organizations.

He has over 30 years' experience in a wide variety of customer facing and provider solutions strategies, consulting to board level inoperating model transformations and value creation. He has direct experience of digital strategy solutions to market launch in socialmedia, mobile web apps, big data, content management, eMarketing at BskyB where is served as head of new media systems workingdirectly with the Marketing and sales organizations.

Mark has held International standards body chair positions with The Open Group and is currently a member of the ISO JC38 distributedcomputing standards for distributed computing. He also currently consults to companies with eSupplychain and digital operating modeltransformation challenges including Content to purchase (C2P) for a international consumer goods company; Smart city strategies for anumber of UK cities; eHealth solutions for a multi-national medical and health products research and development organization; co-presence and digital branding for a global financial services payments company; design of hospitality immersive customer servicestrategies with a global Hotel chain and various logistics and lean strategies using digital technologies for automotive and transportdelivery and embedded systems engineering companies. He is also supporting a next generation data hub platform, “The hub of allthings” HAT a research and development program with UK universities including Warwick, Cambridge university and industry partnersincluding Intel.

Mark has an extensive record of accomplishment in direct strategy and delivery engagements of digital technologies, and enterprisestrategies including big data, social media, and digital infrastructure transformation.

He has spoken internationally on digital technology strategy appearing regularly in the international press including recently on SkyNewsand quoted in major digital news and tech industry sites including the BBC, Die Welt, TheStreet, CRN, CIO.com, and many others. He isan accomplished published author of books and guideline papers on Architecture practitioner standards and currently writing a book onbuilding the Digital Enterprise – a guide to digital workspaces, for Palgrave Macmillan international series on the Digital Economy.

He is a graduate of Sheffield and Cambridge University and Warwick Business School where he is currently a part-time Professor ofPractice in Information Systems Management Group at Warwick Business School His teaching and research includes consulting bestpractice, CIO excellence and digital strategies.


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Exploring potential of ng cost of infrastructure m skilton sept 23 2014 v1