SOURCE
CLOUD
Guide to the impact of cloud computing
on global sourcing of services
November 2012
EXPERTS
COMMENTS
INTERVIEWS
CLOUD DEBATE
EXPERTS
COMMENTS
INTERVIEWS
CLOUD DEBATE
CLOUD
ADOPTION
Copious researches have highlighted that
buyers of cloud pay 30-40 percent more
than their requirements, due to inefficient
management.
By Smriti Sharma
S
uccess of cloud adoption, much like any other service, is a repercussion of impec-cable planning, cost effective imple-mentation efficient management, and employing people with the correct skill set. ‘One size fits all’ is definitely not for cloud. The vari-ous stages encapsulate meticulvari-ously studying the business case, then zeroing upon the application and finally choosing cloud platforms to achieve the target benefits. Expert advice is highly pre-scribed. Solely pining out the appropriate plat-form is not sufficient. For making cloud adop-tion a success it is imperative to comprehend de facto that implementation architectures (both for applications and deployment) could make or break the cost effectiveness of cloud.Copious researches have highlighted that buy-ers of cloud pay 30-40 percent more than their requirements, due to inefficient management. In order to extract full value from cloud adoption, what is needed is an evaluation of investing in vari-ous tools and training the staff, or even outsourc-ing it to a managed service provider.
One of the leaders in this segment, Accenture believes that the combination of BPO services and cloud computing has the potential to yield greater scalability, agility and cost savings for clients—as well as reduced time to bring services online and greater transparency and cost control. For exam-ple, Accenture is working with a global financial services company, providing software-as-a-service to deliver Procure to Pay services through the Ariba
ALL THAT YOU WANTED
TO KNOW ABOUT
Optimizing
application
architectures and
cloud deployment
architectures for
performance is
often neglected
or at best done
using a DIY
approach, which
leads to the
issues later.
MILIND KHIRWADKARassociate vice president, cloud solutions, Symphony Teleca Corp
Network.(The Ariba Network is a collaborative commerce system that delivers the capability for the client’s suppliers to deliver invoices electroni-cally, eliminating the need for paper and eliminat-ing manual processeliminat-ing time and errors.) e-Invoiceliminat-ing is coupled with automated invoice workflow and matching and the end-to-end process is more ro-bust and delivers improved controls, reduced cycle time, and tighter working capital management.
Additionally, Accenture built and piloted the Accenture BPO Navigator—a central portal that provides real time visibility into a client’s business performance, including operational and contrac-tual metrics and analytics that is delivered in their private cloud. Dr Gavin Michael, chief technology officer for BPO, Accenture, explained, “This tool
provides clients with both a snapshot and detailed view of their business performance and the dash-board shows metric thresholds, trends and com-pares data across business unit or country. Through analytics, we can analyze this data to provide insights to aid key business decisions.”
Companies can adopt one of two approaches to Cloud technologies - reactive or pro-active. Explain-ing this further, Milind Khirwadkar, associate vice president, Cloud Solutions, Symphony Teleca Corp. articulated, “The reactive approach entails look-ing at the Cloud to solve cost and agility issues when these start affecting an organization. Under this approach, a serious consideration of Cloud technologies is recommended if 60-70 percent of IT budgets are locked in maintenance, there is a
backlog of development projects and IT budgets are exceeding 1-3percent of revenue.”
He added “Similarly, an ISV with a flat license revenue growth or facing threats from SaaS com-petition would do well to look at cloud platforms (PaaS or IaaS). However, the proactive approach suggests using SaaS/Cloud as a disruption or a game changer, and anytime is a right time to introduce cloud based innovative solutions. There are number of industry examples where cloud has been successfully used to collaborate with custom-ers/suppliers, tap new markets and provide new services. In fact, the true power of cloud lies in the latter approach.”
Services that should be the first ones to move to cloud depends on the state of maturity of an en-terprise in terms of cloud adoption. Dhiman Basu Ray, director & global practice head, cloud and ap-plication transformation business, Happiest Minds Technologies states, “In case it is early days and still not really convinced about the advantages/benefits and probably doing some proof of concepts, then non-core functions like HR, Payroll might be the ones to be moved first. In the process one gets to figure out the actual challenges, benefits and the readiness factors as well.”
“If the state of maturity is higher in terms of Cloud adoption, one should look at a private cloud implementation for core Applications first before moving on to the core Applications on a public or a hybrid model. Private Cloud shields quite a few popular apprehensions about Cloud and this way it just gives enough confidence for all the stake-holders who are supporting the Cloud journey, he added.”
A typical well planned Cloud adoption should not run into issues but some of the key temporary challenges as highlighted by Ray can be in the fol-lowing areas:
Process decommissioning and gap in transition of the Applications/Assets
Data mismatch post transition
Training and knowledge adequacy in the new system especially in the operations
Social backlash as a result of IT role consolida-tion
Increased latency in case of real time transac-tions especially for public Cloud implementa-tions
Watch Out For
Performance and availability are the top cited is-sues apart from security, but fortunately both are addressable. Explaining this further, Khirwadkar enunciated, “Optimizing application architectures and cloud deployment architectures for perform-ance is often neglected or at best done using a DIY approach, which leads to the issues later. Similarly building the most cost effective redundancy and failover mechanisms in cloud deployments can in effect provide availability beyond the uptime guar-antees as promised by the providers. This is a lesser known fact which deters many customers from
Cash flow
optimization is one
of the key business
benefits cloud
provides. This is
generally prefixed
by a transformation
cost, over a period
of 1-2 years,
the operations
optimization is
so impactful that
a break-even is
achieved very soon
and then customers
soon start getting
the benefits of
cloud.
DHIMAN BASU RAY
director & global practice head, cloud and application transformation business, Happiest Minds Technologies
We see the next
generation of
BPO evolving in
the marketplace
where cloud
computing will
become pervasive
in our offerings
and will allow our
clients to realize
increased flexibility,
stronger industry
and analytical
capabilities and
greater economies
of scale through
standardization of
the process and the
technology.
DR GAVIN MICHAEL
chief technology officer for BPO, Accenture migrating mission critical applications to cloud
though it need not be so.”
One relatively unknown issue which surfaces, Khirwadkar further explained, is change in de-velopment processes post migration, especially for software vendors. The release cycles become shorter so agility becomes a de facto engineer-ing process. Non-functional requirements become stringent and hence performance, scalability, availability and security testing practices have to be strengthened. Professional services and sup-port, hitherto performed by partners, become ISVs responsibility and need investments to build these capabilities. Considering all these aspects many companies entrust the transitions to external pro-viders till such time they don’t become equipped to handle these in house.
The Two C’s Cloud and Cost
Every Cloud adoption is generally substanti-ated by a very elaborate business case. There is no denying that cash flow optimization is one of the key business benefits cloud provides. Ray pointed although this is generally prefixed by a transformation cost, but over a period of 1-2 years (depending on the complexity of portfolio), the operations optimization is so impactful that a break-even is achieved very soon and then cus-tomers soon start getting the benefits of Cloud.
The business case is specifically blue printed so as to accurately determine the roadmap which makes commercial sense. The non-commercial in-tangible benefits like process optimization, simpli-fied provisioning leads to efficiency and indirect cost reduction right from day one.
Though there are research reports claiming up to 80% reduction in the TCO. Symphony Teleca has seen up to 40 percent savings being achieved rather consistently in their cloud engagements. Khirwadkar mentioned that the new business value generated through cloud innovations by and large outweigh the cost savings. The ROI and TCO calculators have yet to evolve to capture this accurately.
Two Interesting Cloud Strategies
Accenture
Accenture sees the next generation of BPO evolv-ing in the marketplace where cloud computevolv-ing
will become pervasive in their offerings and will allow their clients to realize increased flexibility, stronger industry and analytical capabilities and greater economies of scale through standardiza-tion of the process and the technology. Their aim is to provide their clients with all of this, delivering business processes as a service – an on-demand, standardized service that provides global support, data protection and the quality delivery for which Accenture BPO is renowned.
In this next generation, their clients will also ben-efit from pay-per-usage and a business outcome-based fee structure, along with the ability to scale up and down services as their businesses demand it.
Symphony
Symphony Teleca’s Cloud Strategy helps clients realize the business value from cloud through a combination of tools, best practices and business models. With no interest in providing our own cloud services, Symphony Teleca provides impartial cloud planning and offers to manage the cloud life cycle till the client realizes expected busi-ness outcomes. Our cloud maturity model helps us in devising an optimal cloud strategy for our clients without over engineering and associated costs. Another important aspect of our strategy is to cross leverage other offerings like mobility and analytics as these converge well with cloud to provide end-to-end solutions.
The Cloud Rx
Milind Khirwadkar, associate vice president, Cloud Solutions, Symphony Teleca Corp.
We recommend buyers to have a clear cloud strategy and roadmap in place on priority. This can be followed by a proof-of-concept to test the assumptions and subsequently action the strategy as necessitated by the business case. This is a long cycle and starting late could hurt. Similarly cloud service providers need to continuously work on top inhibitors to cloud adoption. Our top most asks are more transparent SLAs and addressing the vendor lock-in issue by adopting Open virtualization for-mats as soon as possible.
Dr Gavin Michael, chief technology officer for BPO, Accenture
The cloud is simplifying some aspects of IT, while making others more complex. While some kinds of services are advertised as being as easy as turning on the lights, customers often need more than just raw power. Therefore, the various levels of service needed in the new cloud environment will inevitably result in a kind of shakeout within the outsourcing industry itself, resulting in a range of providers offering alternative value propositions at a variety of price points.
Given the challenges companies face with cloud services such as security, data integrity and service
THOUGH THERE ARE
RESEARCH REPORTS
CLAIMING UP TO 80%
REDUCTION IN THE TCO.
SYMPHONY TELECA
HAS SEEN UP TO 40
PERCENT SAVINGS BEING
ACHIEVED RATHER
CONSISTENTLY IN THEIR
CLOUD ENGAGEMENTS.
THE NEW BUSINESS
VALUE GENERATED
THROUGH CLOUD
INNOVATIONS BY AND
LARGE OUTWEIGH THE
COST SAVINGS. THE ROI
AND TCO CALCULATORS
HAVE YET TO EVOLVE
TO CAPTURE THIS
ACCURATELY
availability, the important integration role played by some outsourcing providers isn’t going away anytime soon. The ability to advise companies on the proper design of their business models based on multiple service providers, and to help them harness the potential innovations arising from the interaction of these providers, will likely usher in a totally new era of outsourcing.
The introduction of the cloud model means that IT departments now have to manage an even more complex, hybrid environment consisting of externally provided cloud services along with their own internal systems and legacy applications. From a business process perspective, integration points between different functions and processes need to be carefully managed, since a utility cloud provider most likely will not have a clear grasp of client’s overall business goals.
Dhiman Basu Ray, director & global prac-tice head, cloud and application transforma-tion business, Happiest Minds Technologies
Recommendations for Cloud Buyers
Look out for a Cloud Services Broker who can
be the single point of contact responsible for aggregation, integration and customisation. Cloud is otherwise a very com-ponentized offering Engage in business outcome based model either based on price or efficiency
Choose the right set of products forming the Cloud stack, arrive at separate benchmarks for Application and infra-structure
Avoid any stickiness in this respect
Although cloud ensures, on-demand scaling, a proper sizing is suggested so that the TCO fol-lows the predicted business case
Most of the providers have consumption based pricing buckets
Adopt SaaS services for non-core functions or functions where data can be easily exported or imported and is only key element in the proc-ess, workflows are pretty standardized Ensure you achieve a shared services model once you have adopted cloud
Recommendations for Service
Providers
Provide an end to end integrated services right from Consulting to Operations
Bring assets and accelerators at every stage of Cloud adoption
Position your offerings with specific industry flavour so the benefits are much more tangible Transformation should be the main theme; Cloud is an agent which helps catalyze the same Integrated Delivery capabilities for Enterprise Mobility, Analytics and Social on Cloud Offer Integrated pricing to customers.
means information stored on a cloud computing service that requires a password or similar infor-mation to access and is attributable to an indi-vidual, which may include allowing a customer of the cloud computing service to have multiple accounts; and
(14) the term `cloud computing service’ means a service that enables convenient, on-demand network access to a shared pool of configurable computing resources (including networks, serv-ers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or interaction by the provider of the service.
Section 3 defines the presumed loss and their value. It reads- Section 1030 of title 18, United States Code, as amended by section 2(a), is amend-ed by adding at the end the following:
(l) If an offense under this section involves a protected computer that is part of a cloud comput-ing service, the value of the loss of the use of the protected computer for purposes of subsection
(a)(4), the value of the information obtained for
purposes of subsection (c)(2)(B)(iii), and the value of the aggregated loss for purposes of subsection (c)(4)(A)(i)(I) shall be the greater
of--(1) the value of the loss of use, information, or aggregated loss to 1 or more persons; or
(2) the product obtained by multiplying the number of cloud computing accounts accessed by $500.
SEC. 5. Annual study and report on internation-al cooperation regarding data privacy, retention, and security and sec. 6. Annual federal information technology and cloud computing procurement forecast. It also provisions that the Administrator shall make each 3-year forecast submitted under subsection (b) available to the public via an Inter-net website.
Eric Goldman, Santa Clara University School of Law, in Forbes article states how the proposed act is nothing more that a way closer to make things more complex. Eric says, the definition of “Cloud Computing Service” is incoherent which sounds more like a vendor’s sales pitch than a basis for criminal prosecution.
Now the question remains, will this act be a way towards moderating technology services around the world. A new way of regulatory exceptionalism, creating rules for subsets of the Internet ecosystem- effort to legislate the Inter-net.
The proposed
Cloud
Computing
Act 2012 is
emphasized
on defining
the Cloud,
presumed
losses and their
values.
AMY KLOBUCHAR
Democrat Senator, Minnesota
