The Myths and Magic of Cloud Computing and How it is Revolutionizing the World

The Myths and Magic of Cloud Computing and

How it is Revolutionizing the World

Jay Roy

Chief Executive Officer

“Practical Intelligence for Ensuring Profitability” IMA DFW - Fall 2011 | Dallas, TX

Cloud Computing Confusion at its Best…

vs.

What is Cloud Computing? – Learning Objectives

1.

What is It and why has it suddenly become popular?

2.

Why should our company move to the cloud?

3.

As a financial or IT professional, why should I care about it?

4.

What should I fear about the cloud and what are my risks?

5.

What technical things do I need to know about it?

6.

How can I add value to my organization using the cloud?

7.

How do I use this as another tool in my tool box?

Poll Question

Do you think cloud computing is

all hype about another technology

fad OR really here to stay?

Poll Question 1

4

Table of Contents …

What Is Cloud Computing? – Basic Primer, Jargon and Technical details 7 The Myths (and Potential Downsides) of Cloud Computing 25 The Magic (and Potential Benefits) of Cloud Computing 29

The Implications of the Cloud 35

How the Cloud is Revolutionizing the World of the Finance Executive 39 How You can Add Value to Your Organization Using the Cloud 42

Examples of Cloud Computing in Daily Life 47

Conclusion and Key Takeaways 51

Poll Question

Do you care if your personal health

information is being stored at a

on-site premise or in the clouds?

Poll Question 2

Poll Question

Do you care if your organization

’

_s

information (accounts receivable)

is being stored at a on-site premise

or in the clouds?

Poll Question 3

What is Cloud Computing? – Basic Primer, Jargon and

Technical Details

What is “the Cloud”?

Ø The term “cloud” is used as a metaphor for the Internet representing infrastructure Ø Originally, a cloud drawing was used to depict a telephone network; Currently it is used to depict the infrastructure as the Internet on computer network diagrams

What is Cloud Computing? - Primer

“

_{Cloud computing is the delivery of computing}

as a service rather than a product, whereby

shared resources, software, and information

are provided to computers and other devices

as a utility (like the electricity grid) over a

network (typically the Internet).

”

“

A standardized IT capability (services, software,

or infrastructure) delivered via Internet

technologies in a pay-per-use, self-service way

”

What is Cloud Computing? - Primer

Ø

Cloud Computing (“CC”) is a broad term for delivering hosted services

over the Internet by service providers

Ø

Cloud computing has a few unique characteristics which separates it

from traditional hosting:

Ø

Services are sold on a unit basis (e.g. per minute/hour) – similar to

buying services from a utility (pay for what you use)

Ø

Services can be purchased on an on-demand or as-needed basis and

scalable to adjust to customer needs

Ø

Services are offered and fully managed by a third-party

What is Cloud Computing? – A Snapshot of Configurations

What is Cloud Computing? - Primer

Ø

Cloud Computing has 3 main categories of service delivery:

Ø

Software-as-a-Services (SaaS)

Ø

Platform-as-a-Service (PaaS)

Ø

Infrastructure-as-a-Service (IaaS)

What is Cloud Computing? - SaaS

Software-as-a-Service:

A software (service) delivery model

in which business applications and their data are hosted by a

Cloud Provider in a cloud and accessed by users through a

thin client (web browser).

Examples: Google Mail or Salesforce.com

Example of SaaS – Salesforce.com

What is Cloud Computing? - PaaS

Platform-as-a-Service:

A service delivery model in which a

Cloud Provider allows customers to rent virtualized servers and

associated services for running existing applications or

developing and testing new ones.

Examples: Google Apps Engine or Force.com

Example of PaaS – Google Apps Engine

What is Cloud Computing? - IaaS

Infrastructure-as-a-Service:

A provisioning model in which

Cloud Provider supplies all of the infrastructure including,

offering the customer the ability to deploy and run software,

including OSs and applications. The Cloud Provider owns the

equipment and is responsible for maintaining and operating it.

Examples: Rackspace, Amazon Web Services

Example of IaaS – Amazon Web Services

19

Why has the Cloud suddenly become so popular?

Shared Services Services-based Economy Outsourcing Rising Licensing Costs Increased Computing Speeds Cheap Pervasive Broadband Weak Economy Shrinking IT Budgets

Robust Apps & User Interfaces

Critical Mass

Distributed Computing

20

What is Cloud Computing? – Types of Clouds

Ø

Cloud Computing has only one Internet but three deployment

methods:

Ø  Private – “Single tenant” – it is cloud infrastructure operated solely for a single

organization (i.e. you), whether managed internally or by a third-party and hosted internally or externally. (e.g. Your Company Cloud)

Ø  Public – “Many tenant” – An offering from a service provider to many clients

who share the cloud processing power concurrently. The service provider’s public cloud clients share applications, processing power and data storage space communally. Client data are commingled, but segregation is provided through the use of metatags

Ø  Hybrid – “Many tenant” is cloud infrastructure composed of two or more

clouds, private or public, that remain unique entities but are bound together by standardized technology that enables data and application portability

21

What is Cloud Computing? – Types of Clouds

Ø

Other Cloud Computing deployment methods:

Ø  Virtual Private Cloud – is a private cloud existing within a shared or

public cloud (e.g. Amazon Web Services)

Ø  Community Clouds – A private-public cloud with users having a common

connection or affiliation, such as a trade association, the same industry or a common locality. The community cloud business model allows a CSP to provide cloud tools and applications specific to the needs of the

community. When the community is in a PaaS cloud, the SOA applets can be specific to communal requirements, e.g., business-process-specific, industry-specific. (e.g. )

22

What is Cloud Computing? – Attributes Defining Clouds

23

What is Cloud Computing? – A Visual of a Private Cloud

Internet

Your Enterprise

Data Center

24

Quick Comparison between Private vs. Public Clouds

Public Cloud Private Cloud

•  Hosted at Service Provider Site •  Supports Multiple Customers

•  Often utilizes shared infrastructure •  Supports connectivity over the Internet •  Suited for information that is not sensitive •  Can be cheaper than private cloud

Public Cloud Private Cloud

•  Hosted at an Enterprise or Service Provider Site

•  Supports only one Customer

•  Does not utilize shared infrastructure •  Supports connectivity over private network or the Internet

•  Suited for information that is sensitive and demands high security

25

26

The Myths (and Potential Downsides) of Cloud Computing

Are the following Myths or Truth?

1.

CC can t handle my environment s security & privacy requirements

2.

Migrating our work environment to the Cloud is just too hard

3.

CC is too expensive and or potential savings is too good to be true

4.

CC is an IT project & has no real business value

5.

CC does not integrate well with on-premise or other clouds solutions

All of these concerns have some level of validity but …

27

Debunking Myth 1

Cloud Computing can t handle my security and privacy requirements

Facts

Ø  50% or more of traditional security breaches are perpetrated by internal personnel

Ø  Not all cloud solutions are equally secure or insecure (reason for hybrids)

Ø  Some security risks are very real and some are perceived

Overcoming the Myths – Your responsibility

Ø  Perform a security analysis

Ø  Use encryption technologies

28

Debunking Myth 2

Migrating our work environment to the Cloud is just too hard

Facts

Ø  The decision regarding which applications, infrastructure and data to migrate will

be one of the biggest technological hurdles not to mention latency and interoperability Ø  Not all cloud provider do migration well, migration is still your responsibility

Ø  Integration points are opportunities for failure – missing links (UI, data, functional)

Overcoming the Myths – Your responsibility

Ø  There are many ways to migrate: virtual machines, web-interfaces or porting to a

cloud platform but figure out how you will do this and by whom Ø  Have your own migration plan and very solid back up plan

29

30

The Magic and Benefits of Cloud Computing

Are the following Magic or just Illusions?

1.

Cloud computing will provide dramatic savings in IT costs

2.

Our organization will be able to execute strategies faster

3.

Cloud computing will free up internal resources for strategic tasks

4.

Cloud Computing will enhance performance and stability

31

The Magic of Cloud Computing – Lucky Rabbit's Foot

Cloud Computing will provide dramatic savings in IT costs

Facts

Ø  Cost Savings are as good as your projected usage. Minimum costs and hidden

charges need to be considered.

Ø  Need to consider intangible costs of moving infrastructure and people s time

Ø  Need to consider how you are going to save on what IT costs (hardware, software,

etc.)

Validating the Magic – Your responsibility

Ø  Due diligence through adequate planning and up front discussions with cloud

provider is necessary to realize benefits.

32

Accounting for IT Investments using Cloud Economics

33

Accounting for IT Investments using Cloud Economics

34

Accounting for IT Investments using Cloud Economics

35

36

Poll Question

Do you think the average business

person cares if his business

information is in the clouds?

37

The Implications of Cloud Computing – Who Cares?

Yeah!

Whatever!?!

Some CIOs And

IT Geeks

General Business Person Or Hip 20 Something

Conversations @ Work

38

The Implications of the Cloud

Ø  To Cloud or Not to Cloud – Dealing with fear or lagging behind the curve

Ø  Organization structure and legal boundaries

Ø  Strategy and competitive advantage considerations

Ø  Talent and People aspects

Ø  Cost considerations including Service Level Agreements SLAs,

Ø  Trusted vendors? – Standards to fall back on?

Ø  Security, risks and business continuity considerations (What-if there is a breach?)

39

How the Cloud is Revolutionizing the World of the

Finance Executive

40

CC is Revolutionizing the World of the Finance Executive

CC impacts us in a variety of ways …

Ø  Decision making about how the organization delivers its products and services to

internal customers will change

Ø  The focus of Auditing and Accounting will move to the digital era

Ø  Business Models will be in flux especially in the area of variable and overhead costs

Ø  Risk & Reputation Management will take precedence in the short-term

Ø  Talent & Knowledge – The CC Department?

Ø  Success Metrics – Its working! Really?

Ø  Outsource or Not Outsource – Impacts on you and your customers

41

CC is Revolutionizing the World of the Finance Executive

Ø

Ø  The Financial Executive will shift focus to a monitoring and benchmarking focus

Ø  The finance function will be scrutinizing the value of internal IT resources and costs

versus outsourcing IT activities from the cloud.

Ø  The finance team will be responsible for negotiating subscription fees instead of

license fees

Ø  Cloud providers will have to justify and quantify their value in terms of security,

compliance, service levels, compared to the marketplace

Ø  Finance department will be monitoring: subscription fees/per-user fees, resource

42

43

How You can Add Value to your Organization

Educational Perspective

Ø  Educate your personnel of what the cloud is – Host a “Lunch & Learn” for your

team to understand the technical, administrative, value-adds/detracts details Ø  Research specific cloud offerings specifically to your industry or niche –

Remember Caveat emptor – Buyer beware – Not all cloud services are equal Ø  Understand the contractual arrangements i.e. Service Level Agreement ( SLA )

and identify the gotchas for people involved with purchasing the service

Ø  Understand how your IT audit function will audit the Cloud – Review the latest

requirements from ISACA

Ø  If considering cloud adoption, understand and develop a road map for

44

How You can Add Value to your Organization

Administrative/Contractual Perspective

Ø  Perform a Risk and Cost/Benefit Analyses on Cloud Computing for your

situation

Ø  Understand the contractual arrangements i.e. Service Level Agreement ( SLA )

and identify the gotchas for people involved with purchasing the service

Ø  Assist in the development of the project plan to migrate to cloud if you own the

financial applications

Ø  Improve your budget - Stop paying for services that you may use for free

Ø  Find out what your recourse would be if cloud computing isn t for you – i.e.

what things do you own (e.g. data, applications, etc.) and how to move off from that cloud provider

45

How You can Add Value to your Organization

Security and Technological Perspective

Ø  Review and update your IT governance and IT change management processes

with new cloud policies and practices into your Sox and compliance requirements Ø  Perform and hire capable professionals to advise, develop and test cloud security

regardless of the delivery model you utilized

Ø  Incorporate potential cloud failures into your business continuity and disaster

recovery planning requirements

Ø  Keep abreast of changes through governance committees including cloud

computing issues and identify a resource for providing regular briefings

Ø  Attend security and technological conferences, webinars and user groups to

ensure your business and IT personnel are competent in this domain

Ø  Get familiar about costs to maintain an appropriate level of security – see it as an

46

How You can Add Value to your Organization

Business Process and Internal Controls Perspective

Ø  Understand how your business processes will change and affect financial reporting

Ø  Understand how your IT audit function will audit the Cloud – Review the latest

requirements from ISACA

Ø  Identify and incorporate into your Enterprise Risk Assessments the new risks

resulting from using cloud computing

47

48

Case Study: The New Start-Up (Cloud Computing Start-Up)

49

50

51

Case Study: Business Intelligence (BI) in the Clouds

Challenges Predictive Dashboards had to Overcome: Ø  Choosing an infrastructure provider was challenging

Ø  Understanding the jargon, technologies and the varied offerings was overwhelming

Ø  Defining the minimum and appropriate standards was vexing

Actions Taken:

Ø  Talked to as many providers and other SaaS-based Cloud Providers to make sense of

and compared the offerings and figured out the Do’s and Don’ts

Ø  Punted on the standards issue and felt we could wait a while but ensured ourselves

the minimum amount of security Results:

Ø  Learned not only the technology issues and but also the business issues of the cloud

52

53

Conclusion & Key Takeaways

Takeaway: Cloud computing is not without risk. Do your due

diligence. Unforeseen disasters may await you including security breaches, cost overruns, technological challenges, privacy issues, etc.

Conclusion: Cloud computing has the potential for

revolutionizing the ways businesses and individuals operate. However, be a skeptic! At its core, CC is another outsourcing mechanism and must be monitored. Don t forget, it’s still your responsibility.

Takeaway: Cloud Computing has many positives but the

learning curve can be steep both technologically and

administratively. The benefits can far outweigh risks. There are huge opportunities and potential for financial

professionals to add value to this area and to your organization

54

Poll Question

Now, do you think cloud computing

is Myth or Magic?

55

Sources, References, and Trademarks

Ø  Forrester Research, Inc. – Talking to your CFO About Cloud Computing

Ø  ISACA – IT Control Objectives

The Myths and Magic of Cloud Computing and

How it is Revolutionizing the World

Jay Roy, Chief Strategy Officer

www.PredictiveDashboards.com Jay.Roy@PredictiveDashboards.com

T: 214-621-7612