13
thGerman-Japanese Symposium
Osaka, Japan
Impact of Cloud Computing
Different regional approaches, comparable economic effects
Dr. Nikolaus Mohr
Trend – and its general relevance
Cloud Computing and its corresponding business ratio
Market – today and tomorrow
Current global spread of Cloud Computing & growth potential
Adoption – regional differences
Agenda
Adoption – regional differences
Regional differences in cloud approaches & intentions
Economics – in search of efficiency & flexibility
A high-level sample business case for using the cloud
Looking Ahead
Major opportunities as well as known challenges
Key Take-Aways
Major aspects at a glance
Trend – and its general relevance
Despite challenges and risks, Cloud Computing has the potential not
only to cut IT costs dramatically but to transform how we conduct
business in the future.
Concept
Effects
Grid Computing
Virtualization
One computer acting like many
+
Cloud Computing …
lets organizations bypass the expense and bother of buying, installing, operating, maintaining and upgrading the networks and computers found in data centers.
… results in:
Despite its immaturity, Cloud
Computing is already
yielding significant benefits.
It constitutes a major step in the
continuing industrialization of
IT
Impact
Cost Reduction
• Lower infrastructure (capital) costs • Lower maintenance and energy costs
Elasticity / Scalability
• Capacity (when needed) & business agility • Handle un-/expected changes in load
Speed to Market
• Reduction of time to pilot and test projects • Faster availability to customers
High Performance Computing
• “Infinite” computing capacity on demand • Avoid provisioning (and paying) for the peak
Grid Computing
Many computers acting like one
Cloud Computing
collection of network hosted
services accessible from anywhere
… results in:
IT and will play a significant role
in enabling high performance.
Cloud Computing enables
development cycles to shrink
from months and years to days
and weeks, and it helps to
manage peak load demands in
computing.
These benefits suggest why
cloud services likely will make up
a significant part of the
increase in IT spending
growth over the next years.
Trend – and its general relevance
Current Research
• Global survey on Cloud Computing from early
2010
• In total 674 C-level respondents
• More than 20 different industries covered
• Also including government & non-profit sectors
Participants by Level
CIOs, business advisors and other leaders must look beyond the hype
to see what opportunities and challenges lie in the cloud – global
research provides deep insights.
Research Institutes
36 %
5%2% 2% 1%
Chief IT architect or strategist Chairman, president, CEO Academic researcher IT executive
CIO or CTO
Research Institutes
• Accenture Institute for High Performance • Chinese Institute of
Electronics’ Cloud Computing Expert Committee (CIE)
Cloud Computing Research Aspects • Adoption • Spending • Sources • Use • Concerns
• Accelerators & Inhibitors • Variances
55 %
CFO, COO, Chief Strategy Officer
30 % 16 % 54 % US China
Other (Including Australia, Brazil, France, Germany, Japan,
Singapore and UK
Participants by Geography
Source: Accenture Institute for High Performance/Chinese Institute of Electronics Cloud Computing Survey, Nov.-Jan. 2010
Market – Today and Tomorrow
Cloud Usage Growth
Worldwide in billion US$*
Although the adoption of Cloud Computing is slower in some regions
than in others, significant usage and growth rates exist already today.
• In 2009, Gartner estimated the world wide
spending on Cloud Computing to be a 56 billion
dollar market
• The market expects significant growth rates
on a global scale: worldwide 150 b$ until 2013
• Different approaches to Cloud Computing
adoption result in different take up rates per
46
56
150
+223%
* Gartner, Press Release, March 26, 2009
Source: Accenture Institute for High Performance/Chinese Institute of Electronics Cloud Computing Survey, Nov.-Jan. 2010
adoption result in different take up rates per
global region
2013 2009
2008
5
China USA Japan China USA Japan China USA Japan China USA Japan China USA Japan
Software as a service Infrastructure as a service Platform as a service Process as a service Private Cloud Platforms 94% 88% 94% 68% 88% 96% 91% 89% 92% 86% 86% 88% 95% 94% 92% 29% 65% 75% 13% 41% 53% 39% 57% 32% 56% 49% 19% 40% 52% 35% 54% 83% 8% 33% 55% 28% 58% 71% 15% 35% 57% 33% 61% 54% 41%
Cloud Computing’s greatest potential in next
five years
Adoption – regional differences
While China’s unique economic situation and system requires its own
approach, other regions like Japan & the US show a similar picture in
using Cloud Computing.
Regional differences regarding “cloud intentions”
• The US and Japan show a similar behavior, recognizing Cloud Computing as broad enabler for everything from cost saving, flexibility, innovation to expansion.
• China focuses on Cloud Computing to lower cost and flexibility rather than for innovation and expansion. 52% 50% 59% 59% 66% 70% Permanently and significantly lower operating costs Enable speed, flexibility and responsiveness
flexibility rather than for innovation and expansion.
Regional differences regarding “cloud approaches”
• Since the growing availability of commercial cloud services, Cloud Computing has even climbed the US government IT agenda. The 2010 US federal budget states that: “The Federal Government will … ultimately adopting a Cloud Computing business model.” *
• In China, 51% say unclear policies on Cloud Computing are still a major impediment. There is a consensus that the government should be involved in setting standards and regulating the industry. However, 88% are planning to use Cloud Computing in 2 years.
Source: Accenture Institute for High Performance/Chinese Institute of Electronics Cloud Computing Survey, Nov.-Jan. 2010 * FY2010 Federal Budget, Analytical Perspectives, Cross Cutting Programs; www.whitehouse.gov
26% 18% 34% 30% 52% 27% 26% 41% 48% 18% 28% 31% 31%
China USA Japan
operating costs Support product/ service innovation Enable new, innovative processes Improve decision making Expand operations to new markets 6
Sample Business Case
• Global logistics company: handles tens of millions of packages each day
• To prevent fraud: solution detecting duplicate barcodes on the shipments • Requirements: large data volumes and near real-time response
• The table below shows a cost comparison among three different solutions
Economics – in search of efficiency & flexibility
Even a high-level business case can unveil the tremendous potential
of efficiency and flexibility provided by a cloud solution compared to
operating own server solutions.
Scenario On-premise Using Amazon EC2 Buying
* These numbers represent a conservative and simplified estimate since they do not take into account other costs, including but not limited to certain aspects of software licensing and the time lost to setup and testing.
7 Scenario On-premise
approach
Using Amazon EC2 public cloud
Buying
internal cloud Hardware • SUN E25K: 72CPU + 1 TB
memory
• TimesTen In-Memory Database
• 150 virtual servers • 150 servers
Cost Factors • Capital cost = $4-plus million • License cost = $1-plus
million/year
• Power cost = $70,000/year
• Variable cost = $131,000/year • Assuming 24x7x365
• Power cost = 0
• Capital cost = $150,000 • Power cost = $39,000/year
Energy • 40kW/hour + 40kW/hour • n.a. • 45kW/hour
Total Cost*
1st year
5+ mio €
(4+ mio € upfront investment)
0,13 mio €
(0€ upfront investment)
0,19 mio €
Identifying cloud opportunities
Looking Ahead
Just like other technological advances in the past, Cloud Computing
brings major opportunities as well as challenges to the table – both
equally relevant for the future.
Solving the six major challenges
E a s e o f Im p le m e n ta ti o n Easy Business Continuity
(Storage) Batch and Data Intensive Apps Software
Development & Testing
Security
Security is there, but how to obtain official certifications from independent third parties?
Data
Companies still end up using multiple cloud providers – how to consolidate offers on a extremely fragmented market?
E a s e o f Im p le m e n ta ti o n
Value to the Enterprise
Hard Legacy & Testing Peak Load Demands Sensitivity Desktop Productivity High Value Low Value Service Level
Application cloud providers cannot guarantee response times because the data has to travel through the Internet.
Legacy Systems
Many legacy applications are tightly coupled w/ existing IT systems and cannot initially benefit from the cloud
Purchase
Solving problems from moving payment and authorization processes from capital expenditure to operating costs.
Licensing
Calculating enterprise software licenses is difficult enough, and Cloud Computing introduces yet another variable.
While challenges, traditional corporate data centers and on-premise software remain at least in the mid term, Cloud Computing will have a far-reaching impact on enterprise IT and business in large organizations.
Key Take-Aways
Cloud Computing is more than just a major technological step – it has
a huge economical impact and opens up a number of new business
opportunities.
1
A major technological step – enabling highest business performance
Cloud Computing constitutes a major step in the continuing industrialization of IT and will
play a significant role in enabling future high performance businesses.
2
A huge market – expected to grow even stronger in the future
The market was estimated 56 billion dollar in 2009 and is expected to grow significantly
on a global scale (e.g. in some countries it is expected to double in 2 years)
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