WHITE PAPER The CIO's Dilemma: Maximising the Benefits of Cloud Services In association with: HCL Technologies Infrastructure Services Division (HCL ISD) Raj Mudaliar Doc # AU29011T- March 2011
EXECUTIVE SUMMARY Recent volatility in the global economic environment has created operational challenges for businesses.. Additionally, emerging technologies coupled with the proliferation of devices such as smart phones, media tablets, for example the iPAD, better Internet connectivity, and the fast growing influence of social networking platforms are challenging CIO's to constantly innovate and think afresh their IT strategies.
Cloud computing has emerged as one of the most disruptive service delivery models that will alter the consumption of information security services. Cloud services genuinely offer flexibility, ease of use and faster delivery of services at a significant lower cost of entry. Interest has moved from the 'why' to the 'how?'. How can cloud services be operationalised? What type of cloud solutions should be adopted public / private / hybrid? What workloads can be shifted into the cloud? What should the migration plan look like? How can the virtual infrastructure be managed?. Asia/Pacific Headquarter s: 80 Anson Road, #38-00 Singapore 079907 P.65.6226.03 30
IDC's Asia/Pacific (Excluding Japan) Cloud Computing Survey 2010 indicates, Australia is one of the leading countries in the region for the adoption of cloud services. The survey reveals around 35% of Australian respondents currently use cloud services, 7% are actively researching or testing cloud computing now, and another 15% have plans to use it in the next 6 to 12 months. On the whole, organisations in the Asia/Pacific (excluding Japan) region currently believe that a private cloud environment is more suitable for almost all applications, with the exceptions being VOIP and collaborative applications.
IN THIS WHITE PAPER This IDC white paper discusses the adoption of cloud services across Australia and New Zealand. Based on IDC's current research, the paper provides an overview of cloud computing; key drivers for adoption; major inhibitors; current usage status of cloud services; potential workloads that could be migrated into the cloud; and, a road map for cloud deployment.
SITUATION OVERVIEW In general, business confidence is bullish this year. However, with ever-increasing competition and the need to leverage competitive advantage to grow market share, organisations must look to improve current business processes, enhance productivity, while simultaneously lower costs. Based on IDC's Forecast for Management Survey 2010 (please refer to the Appendix for detailed information on the survey methodology), Figure 1 provides an aggregated view of ANZ respondents' top CIO challenges for 2010 vis-à-vis previous years. Not surprisingly the ranking of 2009 and 2010 priorities are similar – particularly the top 4.
© 2011 IDC
FIGURE 1 Top CIO Challenges in ANZ
Source: IDC Forecast for Management Survey, 2006-2010
Reducing costs: Successful CIOs were those who managed to control or reduce spending, whilst making the most of existing assets through balancing business demand and maximising ICT for efficiency and productivity gains. Recruiting and retaining staff: This is partly related to the retirement of the â€˜baby boomersâ€™, who carry many mainframe skills, and the specialised type of network and virtualisation, IP skills in demand today. Meeting user expectations: Users expect enhanced functionality and better ease of use from their IT assets. This is being driven by the proliferation of devices such as smart phones, media tablets (the iPAD) and the growing influence of social networking sites. Customers today demand a similar experience in their day to day business transactions.
It is imperative for organisations to reconsider the design of their underlying IT architectures in order to enable customers and growing communities to access their services any time anywhere. As a response, organisations are upgrading their infrastructure and networks, whilst continuously improving business processes knowing that the customer can always churn to an alternative provider.
Interestingly, from a business point of view, the number one priority for organisations is to improve infrastructure to increase productivity (Figure 2). Other considerations, like exploiting market conditions efficiently and speed to market have also gained greater importance. Cost cutting is ranked lower in organisational priorities versus this time last year; however it is a still a key concern. .
FIGURE 2 Key Business or Organisational Priorities in ANZ
Source: IDC Forecast for Management Survey, 2010
Cloud Computing: Key drivers / inhibitors Organisations are now realising the value of cloud services. Cloud computing holds the potential to substantially improve IT productivity and over the next five years, IDC expects strong investments in the cloud as a result. At a high level, cloud services can be described simply as consumer and business products, services and solutions delivered and consumed in real-time over the Internet. Some of the main drivers for cloud computing include: Continued shift in funding of IT from a capex to an opex basis: The pay-asyou-use functionality built in cloud based services helps better align with fluctuating business requirements, without necessitating major capital IT investments. Organisations are reviewing their current IT infrastructure with an intent to identify opportunities where they can leverage advantages of a cloud based offering as well as move to an opex model to consume these services.
Growth: Organisations need to be nimble and fast, exploiting growth opportunities as they arise in the market, while having the operations and infrastructure resources at the back end to take advantage of any existing situation. Cloud-based services enable this. Cloud services scale easily, provide the latest technology available (with upgrades) and allow more manageable
version control across the organisation resulting in faster deployment of Go-ToMarket strategies. Trend towards outsourcing: A shortage of skilled IT workers in ANZ and the high costs of managing an internal IT workforce is leading organisations to consider outsourcing. Cloud-based services allow an organisation to outsource internal IT operations and infrastructure to a competent third party. The service provider brings in the required skills, technical competencies and expertise to deliver the services, relieving to a great extent the staffing pressures on the client organisation.
The major inhibitors to cloud services include: Security: Business critical and sensitive information that sits outside of the company remains a sticking point for many organisations. That said, this issue is well known in the vendor community, and they are releasing solutions and services with increased security measures to assuage these concerns. Performance and availability: Organisations are likewise concerned about the ability to access information in the cloud when it is needed. Linked to this, is the ability of the cloud service vendor to provide for any necessary 'surges' in demand, increasing capacity to the organisation without impacting performance.
Adopting Cloud Services: Where are we on the journey? IDC's Asia Pacific (Excluding Japan) Cloud Computing Survey, 2010 indicated that the overall trend in the region to adopt cloud services is positive. The survey was conducted across six countries that included Australia, China, India, Korea, Singapore and Hong Kong. Based on the responses, 24% of organisations in the region are currently using cloud and 6% are actively researching or testing cloud services.
FIGURE 3 Usage of cloud Services and Technologies
n=600 Source: IDC Asia Pacific (Excluding Japan) Cloud Computing Survey, 2010
A further 23% of respondents are planning to use cloud services over the next 12 months. The remaining 47% of organisations in the region have plans to use cloud services at some point after the next 12 months. At the country level, Australia is one of the leaders, with 35% of the respondents currently using cloud services, 7% actively researching or testing cloud computing now, and another 15% planning to use it the next 6 to 12 months. To illustrate this point, the Australian Government, with an estimated ICT spend of $4.3 billion per annum, released a Cloud Computing Strategic Direction paper in January 2011. The main objective of the paper was to develop a pathway for Government agencies to rationalise their ICT asset base and adopt cloud computing where appropriate. Some of the agencies have already commenced small pilots and proofs of concept to evaluate the potential of platform and infrastructure cloud computing.
Expected Application Types in Private and Public Cloud for Private Cloud Users Workloads remain the critical pivot point when deciding on public versus. private cloud deployments. Organisations within the Asia Pacific (excluding Japan) region currently believe a private cloud environment is more suitable for almost all applications, with the exceptions being VOIP and collaborative applications (Figure 4)
FIGURE 4 Expected Application Types in Private and Public Cloud
n=109 for public cloud, n=366 for private cloud Source: IDC Asia/Pacific (Excluding Japan) Cloud Computing Survey, 2010
Organisations are significantly more comfortable utilising a private cloud environment rather than public one for business/transactional applications, IT infrastructure management and storage/storage management.. With regards to workload distribution, organisations are more likely to use the public cloud for applications (CRM, ERM, email and
collaborative), while using the private cloud more for infrastructure. The workload within the private cloud will be more heavily utilised for Web infrastructure, IT infrastructure outsourcing and storage/storage management.
Types of External Vendor Used for Private Cloud Implementation There are a number of service-level issues related to cloud services, which require careful consideration. For example, Business Continuity, Disaster Recovery (BCDR), data security, vendor continuity, among others. The management said services, each with different commercial terms, service levels and pricing models, can be a complex matter. This requires mature vendor-management capabilities in-house.
For Australia, the most common cited external vendor for implementing a private cloud within the organisation (see Figure 5) is an ISP or Telco provider (32%), followed by an infrastructure technology vendor (29%), and systems Integrator or professional services provider (25%).
FIGURE 5 Type of External Vendor Used for Privat e Clou d Implementation in Australia
n=28 Source: IDC Asia Pacific (Excluding Japan) Cloud Computing Survey, 2010
Road Map for Deploying Cloud Services Assessing the suitability of an application for cloud deployment has dimensions beyond technology. Rather than delivering the project with the traditional waterfall approach of Design, Build, Deploy and Run - Cloud Services require a more iterative delivery model, which follows:. (See Figure 6): Readiness Assessment What business benefit are you looking to achieve by using a cloudcomputing model? What are the application characteristics and its demands for elasticity? What set of cloud capabilities are required to achieve the objectives for which the solution is designed? 6
Cloud Strategy Development What does a risk analysis reveal? Can you source the service from the Public Cloud or build a Private Cloud? Implementation and Transformation How will you design, develop, and test the solution? What operational mechanisms are needed to support either public or private solutions? Change Management How will you manage the governance of the solution? How will you pay for it, and are costs satisfactorily predictable? Ongoing Management What will be the ongoing service level management / IT service management criteria for evaluation? What type/nature of structure would be required for Internal Support?
FIGURE 6 Deployment Road Map for Cloud Services
Source: IDC, 2010
HCL ISD's Role in the Cloud HCL Technologies Infrastructure Service Division (HCL ISD) is the fastest growing line of business of HCL Technologies and is part of a $5.7 billion HCL Enterprise. Its scale of Infrastructure operations involves centralised management of globally distributed assets of over $1 million devices across 31 countries resolving over 10 million helpdesk calls per annum. HCL ISD's team of over 15,000 professionalâ€™s service more than 250 infrastructure services customers, including 17 Fortune 100 companies across 9 industries.
HCL has a strong belief in its 'advise to execute' philosophy, where it looks at long term and mature partnerships with its customers. Hence, HCL looks at a cloud journey in an integrated and cohesive fashion whereby the complete life cycle
(assessment, implementation and migration operations) is delivered in an integrated fashion to yield maximum benefits for customers. Cloud management being a major area of focus, HCL has been able to drive innovation across LOBs and develop intellectual property around infrastructure monitoring and management, SaaS (Software as a Service) enablement, private cloud deployment and provisioning, metering and billing and cloud gateways for public clouds.
HCL's strategy focuses on providing two types of cloud services that will assist CIO's to maximise the full benefits from the cloud, primarily in the role of Cloud Enabler and Cloud Provider: Cloud Enabler: As a service integrator through its broad range of offerings including: Cloud Consulting & Assessment services, Cloud implementation & migration and Cloud Management and Operations. Cloud consulting and assessment: HCL’s Cloud Assessment Framework helps customer in mapping their IT landscape, business and cloud requirements into a single perspective. In other words, it helps customers identify the applications or specific IT environment, which can be moved to cloud and to what type of cloud to move to (public / private / hybrid); as well as develop a business case (TCO & ROI plans).
Implementation example: Client is a large product development company. HCL has closely worked with their IT division and has undertaken feasibility analysis for a large set of applications to migrate them on Windows Azure Platform. Cloud implementation and migration: HCL leverages its expertise and experience in areas such as infrastructure virtualisation, data center hosting and migration services to provide implementation and migration of customers from their existing environments to Public / Private / Hybrid cloud. Leveraging its SI strengths, HCL collaborates with its strong partner ecosystem, which includes VMware, Cisco, EMC, HP, BMC, and CA to offer best of breed solutions to its customers.
Implementation example: An international bank employing more than 80,000 people in 72 countries and with presence across multiple geographies. HCL has provided deployment and testing as a service on a Public Cloud (Amazon) for the bank's applications both in production and a nonproduction environment. This has resulted in several advantages, including a 90% reduction in deployment time, higher flexibility, and significant TCO reduction.
Cloud management and operations: For customers who adopt cloud computing models, HCL offers cloud service aggregation services where it provides single throat to choke to ensure 24X7 monitoring and management services for the hybrid and private cloud computing environments. HCL has developed its own IP tools and processes such as MTaaSTM MyCloud for managing cloud environments.
HCL's MTaaS MyCloud is a cloud-based offering that brings flexibility and scale for CIOs to orchestrate their physical, virtual and hybrid infrastructure environment. It helps them both to manage the operations of the cloud (MyCloud Control & Watch) and the service lifecycle. It’s a one-stop solution for managing virtual infrastructure, especially capable of giving visibility into operational and system performance. It is designed and built with features of
high orientation towards iTaaS, and gives quick turnaround on integration with enterprise products such as Remedy ITSM and SAP among others. HCL MTaaSâ„˘ MyCloud is designed to help CIOs industrialise their IT management by creating service management, governance, and performance layers across their IT silos. The industrialisation can then help the CIOs offer services that are elastic and agile to the business needs of their companies.
Implementation example: A large regulated electric delivery business in the U.S. It supplies electricity to approximately 7.5 million consumers. HCL provided a private cloud based enterprise management platform, helping the client to better control, improved quality, have better visibility and unified reporting.
FIGURE 7 HCL MyCloud - Cloud Service Management and Aggregation
Demand & Service Portfolio Mgmt Compliance and risk Mgmt Agile Apps & Service Dev Business Continuity & DR
Service Level Management Contract Management Supplier Management
MyCloud Control & Watch
MyCloud Service Ops Change & Release Configuration & CMS Incident & Problem
MyCloud Secure User access control Federated identity mgmt. DLP
Source: HCL Technologies
Cloud Provider: HCL's cloud service offerings include:
Infrastructure as a Service (IaaS) – IaaS is for selected areas such as computer storage as well as back up and for providing IaaS to its clients from HCL's datacenters across the globe. Platform as a Service (PaaS) – PaaS will include hosting, infrastructure, an integrated development environment, software development kits, testing tools and frameworks and HCL's best practices frameworks and intellectual property (IP) for development and testing. Software as a Service (SaaS) – HCL will play the role of an integrator that provides true business applications in the cloud, which will largely be vertical applications for specific functional areas.
FUTURE OUTLOOK Cloud computing addresses key concerns for enterprise decision makers, providing the ability to synthesise IT assets while sharing resources, lowering costs, standardising IT processes across the enterprise, and providing a more stable pricing model. IDC believes that cloud computing will slowly, but surely, make a large impact on the server market. The outlook for both private and public cloud computing in Australia is positive.
Engineering of a private cloud will likely prove more complex, especially as early adopters realise that much more than virtualisation of resources is needed to deliver the expected ROI. IDC expects major challenges for users as they attempt to standardise services across the enterprise, having to fight users that have become used to custom processes for their own business functions. Without service standardisation, service automation is much more time consuming and thus expensive and makes the goal of self service difficult to achieve.
IDC predicts that in 2011, as enterprises embark on strategic reviews on how to take advantage of the cloud they would require advice around cloud assessment, planning, workload migration, security best practices, governance, and test case procedures. Being able to provide workable reference architecture coupled with an appropriate solution has taken each of the cloud service providers some months to bring to market. It is just the beginning, because with solutions now falling into place, the next step for enterprises is evaluating costs and understanding total cost of ownership (TCO)/return on investment (ROI).
CONCLUSION With any new technology solution, including cloud services, there will be multiple challenges. It's undoubtedly an exciting time. Organisations can select best of breed solutions from a range of service providers. The compelling value proposition of adopting cloud services is that it is easy, fast, flexible, and an organsiation can have a scalable usage at a lower cost. All of these factors make cloud a compelling value proposition for any organisation.
For CIO's to maximise the benefits of cloud services requires careful planning, design, and testing of the appropriate solution. Understanding commercial terms and arrangements, total cost of ownership and physical locations of datacenters are other important aspects that require consideration. All organisations have to adapt and change to keep ahead of its competition. Leveraging technology is key to this process.
APPENDIX METHODOLOGY The Forecast for Management Survey 2010 is an annual IDC study that provides valuable research into the attitudes and intentions towards the use of IT in organisations across Australia and New Zealand (ANZ) markets. Research data for the Forecast for Management Survey 2010 was compiled from written responses to a survey completed by CIOs and IT Managers from March and April 2010. Responses were received from 400 organisations in the private and public sectors across ANZ. Scope The scope of this study encompasses the most important areas of responsibility for ICT management: ICT spending and the economy: including IT budget allocation and spending, the potential impact of the National Broadband Network (NBN) on business, business outlook, purchasing preferences, return on investment (ROI) expectations and more. CIO challenges and priorities: Including CIO challenges, business/organisational priorities, and IT investment priorities for ANZ enterprises. The ICT department and application of IT: Including CIO reporting lines, composition of the IT department, spending on staffing, top skills in demand; as well as the current and future use of different applications such as datacenter consolidation, virtualisation and social networking software. Geographic Segmentation The Forecast for Management Survey 2010 was carried out for organisations in both Australia and New Zealand. For 2010, 60.8% of the respondents were employed by organisations with headquarters located in Australia, with the remaining 39.2% based in New Zealand. Enterprise Size Segmentation The executives responding to this Forecast for Management Survey were asked to indicate the size of their organisation by the number of staff they employed. To reflect industry trends by company size, the responses were combined into three grouping relating to the number of employees in the organisations. These groups are standard IDC definitions of enterprise size: small (1-99 employees), medium (100-499 employees) and large (500+ employees) The ANZ totals for these enterprise categories were: small at 46.5%, medium at 29.7% and large at 23.6%.
Vertical Market Segmentation The executives responding to this Forecast for Management Survey were asked to categorise their businesses by their vertical markets in which they primarily operate. The largest sectors nominated by survey respondents were business services manufacturing, retail and wholesale and government (see Table 3).
T ABLE 1 Responses by Vertical Market Segmentation Vertical Market
Response Rate (%)
Banking, financial markets and Insurance
Communications and media
Retail and wholesale
n=400 Source: IDC Forecast for Management Survey, 2010
Key Attributes of Cloud Computing IDC attributes cloud services with the following characteristics to distinguish cloud services from traditional on-demand services and online services. The key characteristics are as follows: Shared or standard service: built for a market (public), not a single customer Turnkey solution: Integrates all required resources Self-service: ongoing administration, provisioning; but may require some 'onboarding ' support Elastic scaling: dynamic and fine grained Usage-based pricing: supported by service metering Accessible via the Internet/IP: ubiquitous (authorised) network access Standard user interface (UI) technologies: browsers, rich Internet application (RIA) clients and underlying technologies Published service interface/application programming interface (API): for example , Web services APIs These attributes are crucial to maximise the value of cloud services which provides easy, fast, flexible and scalable usage at a lower cost.
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Cloud computing has emerged as one of the most disruptive service delivery models that will alter the consumption of IT security services. C...