Is Cloud Computing Right for You?

Is Cloud Computing

Right for

You?

A technical,

functional and economic

overview

InstaCompute Whitepaper

3. Introduction

4. Business drivers for migrating IT services to the cloud

5. Technical and functional considerations

7. The economics of IaaS

7. Comparing the costs of in-house servers/data

centre build out to IaaS

8. The cost savings achieved with utilizing IaaS

9. Using IaaS from Tata Communications

10. Conclusion

10. Endnotes

IaaS reflects a new business model of automation through the internet and outsourcing of IT resources that dramatically reduces provisioning time and costs. Many companies already utilize an external data centre and/or virtualization technologies, so you may be familiar with outsourcing IT services such as infrastructure and with the efficient multi-tenant platforms created through the use of server virtualization; IaaS just represents the next step in using virtualization to efficiently, quickly and cost-effectively deliver outsourced infrastructure. The IaaS business model offers two additional competitive advantages: access to more powerful IT resources through the public cloud and outsourcing non-critical IT functions, which frees internal operations and support staff to focus on developing core business and IT innovations, instead of managing internal resources.

Introduction

Many leading businesses today are leveraging the cloud to obtain the IT infrastructure needed for application development, test sandboxes and pre-production staging, as well as migrating production applications from on-premise data centres. Accessing servers, storage and networking infrastructure on-demand through the cloud is known as Infrastructure as a Service (IaaS). With IaaS, IT infrastructure is hosted at a service provider's central data centre and accessible from anywhere through a browser-based user interface. It is deployed in a multi-tenant architecture creating virtual servers in the data centre, where the service provider manages the hardware procurement, provisioning and capacity, offering flexible infrastructure to you on a consumption basis. IaaS offers a variety of benefits for IT and business managers alike. Most computers, and especially servers, are not used to capacity, tying up valuable human and financial resources on underutilized, inefficient assets. In other cases, current capacity may be inadequate to meet changing demand, requiring long equipment procurement intervals, provisioning headaches and high capital expenditure to augment it. This lack of agility and efficiency can be detrimental to your business, creating a competitive disadvantage. IaaS helps businesses overcome these challenges. Utilizing IT infrastructure immediately on demand, paying only for what is needed when it is needed, and scaling IT resources up or down based on current business needs are the main benefits gained from IaaS.

To reduce IT spending Quick Implementation of new IT services and/or business processes Agility/Faster time to market - Enterprises can avoid the step of initial infrastructure procurement and set up For Effective utilization of IT resources Improve IT operation Pay as you use model - Pricing based on the actual usage of the servers On-demand elastic infrastructure - Sudden spikes due to business growth Functionality additions or promotions can be easily addressed with

Improve the overall business operating environment Reduced Cost of Ownership Implementation of IT services and/or business processes in near future Access to latest version of application De-risk Investments I wanted to effectively use our IT infrastructure

A Corporate Mandate

Reduction In IT spend / Quick implementation of new IT services are key triggers

to use Cloud for lass users

Source CMR All Figures are in Percentage

67 47 43 43 43 37 37 37 33 20 17 13 13 10

A 2011 Cyber Media Research study of the cloud market showed the top five motivations for businesses to use IaaS. As shown in the graph below, cost savings ranks at the top of the list. (Figure 1.)

Figure 1. Companies consider utilizing Infrastructure as a Service for many reasons, but reducing IT costs is the biggest driver.

But a savings analysis comparing the costs of using IaaS against the direct costs of infrastructure ownership and management needs to be the first step in migrating to the cloud. A solid analysis of Total Cost of Ownership (TCO) must include a careful review of the expenses for both the traditional IT model and IaaS including the costs of internally-owned infrastructure such as hardware, data redundancy and security, power, supply chain management, and IT personnel costs. This paper aims to aid in your TCO analysis by providing economic considerations associated with IaaS, but first we will discuss the technical and functional considerations you should review to determine whether or not IaaS is right for your business, given your application and workload characteristics.

Business drivers for migrating

IT services to the cloud

Use Cases for IaaS

The unique characteristics of Infrastructure as a Service are well suited to these specific use cases:

 Companies conducting software testing and development benefit from IaaS because individual departments can access servers immediately, and costs can be tracked and charged back to specific teams, which provides more visibility into what IT services actually cost on a user or project basis. The lower-cost, pay-per-use model means that test/dev teams can experiment without having to justify IT ROI. In addition, the self-provisioning nature of IaaS reduces project life cycle and time to market and allows teams to quickly get the resources needed to identify defects and troubleshoot more efficiently

 Web application hosting companies that experience variable workload bursts use IaaS

because resources can be scaled up or down immediately, reducing idle time and inefficiency while also maintaining consistent service delivery to meet increased end-user demand

 Companies conducting parallel processing and compute-intensive activities, such as modelling and simulation, can use IaaS to spin up hundreds of virtual servers, known as "virtual machines" (VMs) simultaneously at low cost with no investment and then de-provision as needed. As a result, work is accomplished more quickly and at a lower cost

 New business initiatives that focus on flexible growth rather than fixed infrastructure can benefit from IaaS. This includes web-oriented providers such as gaming companies, mobile app developers, and ISVs/ SaaS providers that benefit by realizing operations and support cost savings, while getting the infrastructure management expertise of an experienced service provider. These use cases often have variable spikes in traffic due to sales demos, marketing microsites, or gaming applications

In addition, IaaS can be used for backup and disaster recovery, as it creates a secondary location to create a server, load it with applications and data, and keep it idle until the primary data centre experiences an outage, in which case the IaaS virtual machine can be started , putting company operations immediately back on track. Companies no longer need to invest in massive IT infrastructure for backup and disaster recovery; in fact, this investment can prove a liability as management costs rise and technology becomes obsolete.

With IaaS, high infrastructure costs,

particularly up-front capital expenses,

are no longer a limiting factor for

companies competing in today's

marketplace.

Technical and functional

considerations

In order to determine which types of applications and workloads are best suited for IaaS, a company should also analyse security and compliance issues. Generally, workloads that are not heavily regulated nor require integration with on-premise security services (such as enterprise identity management solutions) are better suited to the public cloud than more regulation-driven workloads. Also, if your application is subject to legal compliance that requires you to keep storage and processing of data in your home country, you will want to be sure to select an IaaS service provider that offers the service from a data centre located in your home country. Technical and functional issues should also be weighed in the cloud migration decision. Least mission-critical functions should migrate to the cloud first, unless you are able to appropriately build the redundant architecture required for more mission-critical applications. Also, a workload is a strong candidate for the cloud when existing resource management and configuration tools can be used and when support contracts for hardware, software, and network resources can be eliminated.

Another step in the migration decision is to identify all the applications (payroll, CRM, billing, customer-facing web applications, etc.) and their dependencies on other business components and services. The best candidates for the cloud initially are applications with the fewest dependencies on other on-premise components, internal processes, specific network topologies, or legacy storage interfaces. Other applications best suited to early cloud migration include those with under-utilized assets, that have an immediate need to scale up or down, that have architectural flexibility, that require global scale, or that are used by outside partners or customers.

The best candidates for the cloud initially

are applications with the fewest dependencies

on other on-premise components,

internal processes, specific network

topologies, or legacy storage interfaces.

Using the cloud for IT infrastructure services follows different economic principles than the traditional IT model. Provisioning IT resources on demand proves more efficient than the traditional model of forecasting and investing in future IT capital. The immediate provisioning of resources provided by IaaS cloud computing enables businesses to speed products and services to market and to make decisions quickly to respond to changing business needs. In addition, large cloud providers achieve economies of scale by distributing costs over multiple companies/users, reducing your IT operating expenditure. In addition, IaaS eliminates the capital expenditure you would normally have in a traditional IT model.

Comparing the costs of in-house servers/data

centre build out to IaaS

In order to determine if IaaS will reduce a company's costs, several factors must be considered. IaaS is generally more efficient and less costly for most customers. Highly efficient data cloud centres consume less power and space, saving customers money as compared with the costs of running internal data centres. The service level agreements of experienced IaaS providers typically mean more uptime than what can be supported in house. With IaaS, companies obtain as much compute capacity and storage as required, on demand, without having to worry about underused or not enough capacity. IaaS providers have carrier-grade security mechanisms in place to protect the infrastructure, which would be costly to provide in house. In addition, IaaS providers have business grade tools and controls to enable better control and governance. Staff requirements should also be included in the equation. One of the benefits of outsourcing infrastructure is that fewer internal staff members are required to manage it.

One way to evaluate the cost savings of IaaS is to look at the expenses of the alternative building a data centre and maintaining in-house servers.

The capital expenses include:

 Network (connectivity costs, router/switching costs, firewalls) and other network

security costs

 Compute (servers, operating systems, license costs for operating systems, etc.)

 Storage

 Data centre build out (square footage, construction costs, security and protection, infrastructure software costs)

The operating expenses include

 Labour costs

 Power and cooling

 Other costs (monitoring and maintenance, downtime costs)

 Data transport costs

A detailed itemization of these costs typically points to significant cost savings for companies tapping into IaaS, rather than building a data centre and maintaining adequate servers.

The Economics of

IaaS

IaaS providers create great efficiencies by pooling resources using virtualization. This efficiency results in significant cost savings to you as a subscriber of cloud services. To demonstrate the costs associated with utilizing cloud-based infrastructure, consider the infrastructure needs of a sample customer a mobile media company providing content to consumers. (See Figure 2) Demand for content varies with peaks during special events that require high-burst capacity. As a result, IT resources must be procured quickly to accommodate peaks in demand. The company also requires the ability to scale back during low-demand periods. Under the old IT model, the deployment time frame to increase capacity is four to five weeks. The infrastructure related costs are 36,905.80 USD per month in hard disks, servers, and data centre space using RAID-5 with hot spares and two separate storage clusters. (The company must buy 1.4TB of raw disk to store an actual 500GB.) Under the IaaS model using InstaCompute, the deployment time frame to increase capacity is four to five minutes. The infrastructure-related cost is 11,071.74 USD per month for the same computing capacity. The savings with InstaCompute is 25,834.06 USD per month. Customers pay for services by the hour, rather than investing in infrastructure to meet business needs. IT resources can be scaled up or back immediately to accommodate changing workloads. Highly efficient cloud data centres consume less power and require less space, thus saving customers the costs associated with self-managed data centres. The IaaS model proves far less costly than the data centre model.

Figure 2. A mobile media company can save approximately 25,834 USD per month utilizing IaaS, rather than building in-house infrastructure.

The cost savings achieved

with utilizing IaaS

Build infrastructure in-house (old IT model)

 Deployment time frame to

increase capacity: 4-5 weeks

 Infrastructure related costs:

36,905.80 USD per month in hard disks, servers and DC space using RAID-5 with hot spares 2 separate storage clusters.

 Must buy 1.4TB of raw disk to

store an actual 500GB

Option #1: Do It Yourself

InstaCompute (new IT model)

 Deployment time frame to

increase capacity: 4-5 minutes

 Infrastructure related costs:

11,071.74 USD per month for same computing capacity

Option #2: IaaS

25,834.06 USD per month

Plus, the customer has

maintained its expected revenue by keeping up with fluctuating demand and kept its customer satisfied

Based on actual IaaS customer experience.

Saving with InstaCompute

To help businesses gain control over fluctuating IT requirements, Tata Communications developed InstaCompute an on-demand, flexible, cost-effective IaaS solution that lets you instantly create and scale virtual servers while saving on hardware and traditional hosting costs. With InstaCompute, you'll gain pay-per-use access to processing power and cloud storage in minutes, while managing IT cloud projects and users on time and on budget.

Tapping into virtualized infrastructure typically generates significant cost savings for businesses. Yet, not all IaaS providers are the same. Outsourcing critical infrastructure should only be trusted to an experienced provider. Tata Communications is a trusted provider for a variety of reasons

 Industry leadership: InstaCompute was named a niche player in Gartner's Magic

2

Quadrant for Public Cloud IaaS . The Magic Quadrant categorises providers on criteria that include ability to execute and completeness of vision . Niche players are typically new entrants to the market and are often cited as excellent providers for the use cases in which they specialise. This is the first time that Gartner has issued a global Magic Quadrant for public cloud IaaS. InstaCompute is the only Asia-based service provider that received this accolade

 Value leadership: InstaCompute delivers the most compute power per dollar of cost versus the leading competitive cloud service providers, according to CloudHarmony.com,

3 an independent site that rates the performance of cloud providers

 Robust spend controls and project governance capabilities: InstaCompute employs a hierarchical account management system that allows users to create multiple projects and configure user access according to business needs and policies for security and cost control. Cost management is integrated into the service portal and includes configurable spend limits on a per-project and per-user basis, and the ability to configure spending alerts.

 Security: InstaCompute offers business grade firewalls and secure IP VPN tunnelling options that limit unauthorised access to customer data, and user/project controls built into the web portal that allow the master user to oversee access and permissions for security and cost control. In addition, MPLS customers are provided upon request with no-charge MPLS VPN connections to the InstaCompute platform for added security over the network connection. Also, our operations and data centres are built and managed to the highest security standards.

 Free tools and features: Firewalls, basic load balancers, public IP addresses, and

inbound data transfer services are provided at no additional cost.

 Local data within global cloud network: Allows you to keep IT resources in your home country, dramatically reducing latency for end users and promoting legal compliance of data processing and storage. This also provides the ability to contract in local or global currencies, and provides local support 24/7.

 Flexible pricing and billing: Pricing and billing is available in multiple currencies, with the option of selecting from multiple billing methods, such as corporate PO and credit card purchases.

Using IaaS from

 Our 99.95% service level agreement (SLA) is evaluated monthly, rather than annually

 Customer support is provided at no additional charge on a 24/7 basis

 InstaCompute is deployed in PoPs right on the global Internet and MPLS backbone for the

lowest latencies for your end users

 As a global network service provider and hosting company combined, Tata Communications

provides business customers with an extensive portfolio of hosting and network services to compliment InstaCompute, including Managed Hosting, Managed Security, and Network/Connectivity Services. These services are delivered from Tata Communications world-class data centres built and operated using industry best practices to standards including ISO 20000, 27001, SAS 70 Type 2, and TIA 942

 Tata Communications is one of the world's largest providers of international

telecommunications and Internet services, and one of the world's most respected and innovative brands. The Tata Group has a 150-year heritage and legacy of trust in delivering service excellence to small, medium, and large businesses across the world

Other Features

Conclusion

There are numerous economic benefits that a company gains by tapping into the cloud for servers, storage, and networking components. Companies realize those benefits by reducing costs and by enabling IT staff to focus on developing business innovations, rather than maintaining status quo. The economics of IaaS means that companies of all sizes must evaluate whether this most recent IT innovation would be of benefit. In many cases, not tapping into the cloud for infrastructure services may hinder a company's growth.

Endnotes

1 Triggers to Use Cloud Computing, an IaaS users study conducted by Cyber Media Research of the

cloud market in India, 2011

2 Magic Quadrant for Public Cloud IaaS, Gartner Research, 2011.

www.gartner.com/technology/it-initiatives/magic-quadrant-public-cloud-iaas.jsp

For more information about Tata Communications InstaCompute

visitwww.instacompute.com and try InstaCompute today.

InstaCompute

Whitepaper

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About Tata Communications

Tata Communications is a leading global provider of a new world of communications. With a leadership position in emerging markets, Tata Communications leverages its advanced solutions capabilities and domain expertise across its global and pan-India network to deliver managed solutions to multi-national

worldwide.

Tata Communications' depth and breadth of reach in emerging markets includes leadership in Indian enterprise data services, leadership in global international voice, and strategic investments in operators in South Africa (Neotel), Sri Lanka

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