Cloud Computing Discussion

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Deloitte Consulting, LLP

Cloud Computing Discussion

Dave Duden

Director

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Perspectives on Cloud Computing

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What’s in it for me? I’m not in IT, why do I care? Cloud computing

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Cloud computing represents a major change in the way information services are delivered, based on wide use of internet standards and virtualization

Reduce capital spending Reallocate resources

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“Location independent resource pooling”

“Rapid elasticity” “Pay per use”

“Ubiquitous network access” “On-demand self-service”

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Service Type

Business-as-a-Service

Software-as-a-Service

Platform-as-a-Service

Infrastructure-as-a-Service

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Service Source Public cloud (External) Hybrid Virtual Private Cloud

Community Private cloud (Internal)

Service Type

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Service Source Public cloud (External) Hybrid Virtual Private Cloud

Community Private cloud (Internal)

Business Model Cloud Service Subscriber

Cloud Service Broker Cloud Service Provider

Cloud Service Enabler Service Type

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The emergence of cloud computing is a major permanent change to the information services market, is central to the evolution and transformation of business services

 Cloud computing represents a major change in information technology architecture, sourcing and

services delivery, by giving business on-demand access to elastic, shared computing capabilities

 Cloud Computing is changing in how business purchase, deploy, and support IT services, and offers

significant opportunities to expand and enhance their services to customers

 Ongoing IT industry disruptions will result from the deployment of cloud computing as an alternate

sources of supply for products and services

 For enterprises in the information services business -- as well as IT vendors, services providers, and

their suppliers -- cloud computing is the new basis of competition

 Cloud Computing is a disruptive force comparable to emergence client/server architectures 25 years

ago. Enterprises must act to manage risks and taking advantage of emerging services.

 Businesses that cannot establish a position in the market by leveraging cloud computing, may face

increasing competitive pressure from challengers

Enterprises that adopt cloud computing delivery models have the potential to fundamentally re-shape the broader business landscape

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Cloud Computing is defined as multi-tenant, on-demand, scalable, elastic, pay-as-you-go IT applications and services, used to deploy a wide variety of solutions

Cloud Service Types

Service Type Definition Cloud Candidates Sample Vendors

Software-as-a-Service (SaaS)

Customers run finished applications from the cloud service provider on a subscription basis, with no software license, and limited operational control

 CRM

 HR, Payroll

 Finance

 Productivity Apps, email, collaboration

Platform-as-a-Service (PaaS)

Customers load and run software on cloud platforms through a subscription service, without visibility to the underlying server environment.

 Custom Development

 Java, Ruby, and extensions to SaaS environments

Infrastructure-as-a-Service (IaaS)

Customers provision servers, storage, and database services

on cloud infrastructure through a subscription service, with direct operational control.

 Dev and Test Environments

 High compute calculations (e.g., Monte-Carlo scenario analysis)

 Web servers

Hosted Applications Infrastructure Software Operating Systems Virtualization Servers Connectivity Data Centre Ia aS PaaS SaaS

Delivery Model Definition

Public Cloud

 External to a client’s premises

 Infrastructure third-party owned and managed

 Multi-tenant

 Subscription-based

 Scalable and elastic

 Metered by use

 Access via Internet

Virtual Private Cloud

 External to a client’s premise

 Third-party owned and managed

 Multi-tenant (but virtually private)

 Scalable and elastic

 Access via dedicated but private link to public cloud

 Segmented, secured, or compartmentalized for client

Private Cloud

 Usually internal and delivered on client premises (although can be hosted by third-party provider)

 Only used by internal customers

 Scalable but with elasticity constraints

 Access via private link or internal

 Exclusive membership

 Spectrum of control / ownership

Community Cloud  As per private cloud but shared infrastructure resources with “communities” or groups with similar requirements (e.g., industry peers)

Hybrid Cloud  Mix of private and public cloud environments (e.g., data stored in private premises but other infrastructure shared in public cloud)

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Cloud computing has been subjected to significant marketplace confusion. To

demystify cloud computing services, clearly define what cloud is, and what it is not...

…on-demand Clouds can provide an almost immediate _{hardware resources}_{(compute, network and storage) that can be}access to a IT applications and services, platforms, or a pool of_{allocated and provisioned}_on-demand …scalable and

elastic The key characteristic of a cloud service is the ability to compute, memory, and storage resources, and to be able to dynamically provision and de-provision applications,seamlessly scale services (up or down)

…pay-as-you-use Vendor-provided cloud solutions do not require upfront capital investments by the buyer. _{of resources, shifting expenses from CapEx to}_OpEx. Billing is tied to metered use

Cloud is…

Cloud computing offers increased agility through faster time to market, lower upfront IT capital expenditure and the ability to easily scale up / down and reallocate resources Cloud is not…

…simply virtualization

While many cloud solutions, both public and private, leverage virtualized infrastructure resources to deliver functionality, cloud raises the bar by providing on-demand provisioning. Publicly-announced private clouds are essentially an aggressive virtualization program on top of the traditional enterprise IT stack

…just applying SOA principles

Service Oriented Architecture (SOA) is a set of design principles, whereas cloud is a service. Cloud based

services will be defined and enabled through SOA. As such SOA is a prerequisite to reap cloud computing benefits. However, following SOA design principles alone does not guarantee the ability to easily transition to a cloud based solution

…traditional hosting

Cloud and traditional hosting share many characteristics but unlike traditional hosting cloud service is offered

on-demand, is scalable and elastic – a user can have as much or as little of the service as they need and pay for the

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Cloud Computing vendors and services are at the different levels of maturity, and are growing rapidly to meet strong market demand for a variety of emerging services

Cloud Vendors at Different Stages of Maturity

Maturity (dynamic markets require continual reassessment)

Nascent technology pilots Early adopters, growing adoption Stable technology, significant adoption

IaaS SaaS PaaS Force.com Ad op tio n ERP on SaaS Google App Engine Workday RightNow Windows Azure Box.net Force.com NetSuite Microsoft Business Productivity Online Suite (BPOS) Amazon Web Services Gmail / Google Mail Salesforce. com CRM

Service Type Example Vendors

Software-as-a-Service (SaaS)

Productivity and Collaboration

 Microsoft Online Services

 Google Apps

 Zoho.com

 Soonr.com

ERP, HR, Finance and BI

 Oracle PeopleSoft

 Workday

 SAP Business ByDesign

 IBM Analytics

 Cognos via SaaS

Customer Relationship Management

salesforce.com

NetSuite

Oracle (Siebel) On Demand

RightNow.com

Entellium

Platform-as-a-Service (PaaS)

 Force.com

 VMForce (Java PaaS offering joint venture from VMWare and salesforce.com)

 Google App Engine

 Windows Azure

 Pega

 GridGain

 NetSuite SuiteCloud Platform

 Engine Yard - Rails Application Cloud

 Wolf Frameworks

 WorkXpress

 CodeRun

Infrastructure-as-a-Service (IaaS)

 Amazon Web Services (AWS)

 HP

 IBM

 Rackspace

 Mozy

 Terremark

 AT&T Synaptic

 Savvis

 Flexiant – Flexiscale 2.0

 Unisys Secure Cloud Solution

 Verizon Computing as a Service (CaaS)

 GoGrid (previously ServePath)

HP*

IBM*

*IBM and HP initially started as “cloud enablers”, developing hardware and software to deliver cloud; however, they are now moving into the “cloud service provider” space

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IT Services will migrate to different cloud computing models at different times, based on fit, the maturity of services providers, and availability of suitable technology

Today

Websites, Intranet

Rapid App Dev

Productivity Apps

High Performance Computing / Clusters High-End Servers

Storage & Back-Up Standard Servers

Dev & Test Collaboration

Office Productivity

“Standalone” Apps Core ERP

Engineering Apps

New Core Apps _SaaS

IaaS

PaaS

Low High

A

dopt

ion

Mainstream Adoption of Workloads by Service Type Comparing Managed Hosting to Cloud Computing

Managed Hosting Applications

Cloud Applications

“Static & Continuous”

“Dynamic & Bursty”

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IT Services will migrate to different cloud computing models at different times, based on fit, the maturity of services providers, and availability of suitable technology

Websites, Intranet

Rapid App Dev

Productivity Apps

High Performance Computing / Clusters High-End Servers

Storage & Back-Up Standard Servers

Dev & Test Collaboration

Office Productivity

Insurance Apps

Core ERP

Engineering Apps

New Core Apps _SaaS

IaaS

PaaS

Low High

A

dopt

ion

Mainstream Adoption of Workloads by Service Type Comparing Managed Hosting to Cloud Computing

Managed Hosting Applications

Cloud Applications

“Static & Continuous”

“Dynamic & Bursty”

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Enterprises deploying Cloud Computing services must have a comprehensive

strategy for managing a wide variety of key capabilities in a new “cloud savvy” way

Governance

Cloud Computing Strategy Business-IT Alignment

Cloud Service Delivery Strategic Planning and Architecture

Governance Risk Management

Data controls Technology controls Audit and Assurance Backup and DR Vendor “lock-in”

IT Operations Readiness Risk Management

Compliance

Corporate Policies Industry Policies Regulations: －_State －_Federal －_Safety

Compliance

Security & Privacy

Data Segregation, Integrity and Deletion Identity and Access Physical Security Network Security Application Security

Security & Privacy

Legal

Contract Mgmt Service Mgmt e-Discovery

Business Processes Regulatory and Compliance

Legal

Tax

Proactive tax analysis and strategy

Tax alignment Domestic and Local Country Tax Treatment

Tax

Technology

Virtualization

Next-Gen Architecture Infrastructure and Process Standardization Resource Mgmt and Metering

Technology

People

Skills and Talent Culture

Training and Development Organization

People

Service Operations

Service Provisioning Resource Planning Incident Mgmt Technical and Professional Support Claims

Service Operations Product

Development

Pricing /Underwriting Profit vs. Break-even External Cloud Contracts (Hybrid Operations) Platform License & Entitlements

Economics

If using public clouds or hybrid clouds, also consider implications for Sales and Marketing, Underwriting, Billing, Order and Customer Experience

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Potential Cloud-based applications include analytics, leveraging non-traditional data structures to achieve high scale and rapid results

 Datasets used in business can grow very large because they are increasingly being gathered by

ubiquitous information-sensing mobile devices, software logs, cameras, microphones, wireless sensor networks, etc.

 Data analytics workloads are computationally intense. The computing environments needed to

perform analytics can require significant capital investment using traditional approaches, so many enterprises do not incorporating analytics into their business.

 Because it is “horizontally scalable”, cloud computing is well suited to the very large datasets

typically used in analytics applications.

 Horizontal scalability is achieved by adding more computers to a cloud computing architecture,

allows them to achieve aggregate computing power many times greater than traditional systems. A variety of new database technologies is now available to support these “NoSQL” data sets, such as those powering Google, Facebook, Amazon, and others.

 In cloud computing, NoSQL database management systems differ from classic relational database

management systems, and may not require fixed table schemas, avoid join operations and typically scale horizontally.

The combination of horizontally scalable cloud computing architectures and NoSQL database technologies allows for dramatically improved data analysis capabilities.

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Organizations should consider several dimensions when evaluating strategic options for applications and services to be delivered through cloud computing

Cloud Considerations

Regulatory and Compliance

Technology Business and Financials

Operational

Considerations For Building a Cloud Strategy

 _{What are the availability requirements}for this application and can those be met by cloud?

 _{How will support model for this application change}if it is moved to the cloud? Are the potential changes acceptable?

 How will cloud impact my chargeback model for this application? Can I support the new model? Will business accept the changes?  Can cloud meet my business continuity and disaster recovery

requirements for the application?

 Is the vendor limiting interoperability or access to your data?

 Do the workloads exhibit characteristics that can derive real benefits from scalability and elasticity?

 Will the application be built to run on a cloud supported platform (e.g., commodity hardware, supported OS)

 Can the application components be architecturally designed to be suitable for deployment to a cloud based solution?

 _{What design trade-offs will be needed}to make this application cloud-ready?

 Are internal IT architecture and organization structures “ready”?

 Are there any risk management or compliance requirements for this application? Will cloud be able to satisfy those requirements?

 Does the application hold confidential or customer data? Can this data be easily masked in the future?

 Does the application data need to reside within organization? Will we be prohibited from moving data outside of the country?

 Who owns the data? How is it used? Are controls in place?  How is security achieved? What is the level of privacy protection?  Can you meet needs for legal compliance and tax issues?

 What are the anticipated usage patterns for the application and will it be cost effective to move to the cloud?

 What is business sponsor's preference for CapEx vs OpEx?  How will designing for cloud readiness impact my implementation

cost and timelines? Can I achieve overall lower TCO?

 _{Will moving to cloud help me capture new sources of value}for the business?

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Enterprises should take a comprehensive approach to cloud strategy, integration, migration, and monitoring, to manage the risks and maximize benefits of adoption

Cloud Capabilities

Cloud computing opportunity assessment  Assessment of application portfolio to select applications

suitable for cloud migration

 Impact to regulatory compliance, such as SOX and

HIPAA

 Impact to data privacy and protection standards, data

location/segregation standards

 _{Impact to organizations security posture and likelihood of}

increased vulnerabilities

Cloud Computing Strategy

 Evaluate vendor capabilities, mapped to requirements,

with financial benefits

 Assessment of cloud computing providers security

capabilities, control, and monitoring

 _{Assess tax Implications and evaluate strategic}

alternatives

 _{Define cloud computing architecture, migration, and}

operations plan

 Create processes to integrate cloud computing into

security framework

Ongoing monitoring

 _{Periodic security activities for cloud related components to}

evaluate for vulnerabilities

 Conduct review of logs/audit monitoring,

vulnerabilities/controls mitigation/remediation

Implementation of cloud computing  _{Assist in conducting cloud proof of concepts (POC) and}

pilots to mitigate risk

 Assist with installation, configuration, and testing;

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We recommend a structured multi-phased approach to developing a Cloud Computing Strategy for IT services delivery and technology adoption

In-scope activity

Phase I: Cloud

Computing Strategy Phase II: DetailedImplementation Planning

A standard strategic approach to cloud adoption follows the three major Phases and activity steps as shown below:

1. Discovery which works with the key stakeholders and gather the data which will allow the team to understand the current state and identify opportunities

2. Direction Setting and Gap Analysis which builds on the data gathered through discovery, and allows the team to analyze, group, and prioritize along benefits, cost, and value dimensions, including a gap analysis between the current state and future target states of Cloud capabilities

3. Future State Direction completes the strategy, including detailed projects to advance the strategy and improve Cloud capabilities

4. Roadmap with a prioritized high level multi-year Cloud roadmap of major milestones

Phase III: Implementation

Step 1: Discovery Step 2: Opportunity Analysis Step 3: Future State Direction

Infrastructure as a Service (IaaS) Platform as a Service (PaaS) Software as a Service (SaaS)

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During the opportunity analysis, a structured approach as shown below should be taken when reviewing cloud suitability factors for applications and workloads

Workload Attributes

Level 1 Workload Analysis

Potential Cloud

Candidates Applications / Workloads

Targeted for Migration

 Migration Planning

 Testing

 Change Management

 Cutover

Identified App / Workload Filtered App / Workload

Preliminary Assessment  Application Criticality

(business criticality of app)  Application Complexity  Poor Virtualization

Candidate  Utilizes Commodity

Infrastructure

Technical Feasibility

High Network Bandwidth Needs Infrastructure Requirements Shares Environments Shares Software Stack

Utilizes Specialized Infrastructure

Feasible Cloud Candidates

Business Feasibility Internal / External Facing Application

High User Impact

Service Level Requirements Confidential / Customer Data

Proposed Cloud Candidates Input s A nal ysi s O ut put s Level 2

Determine Suitability for Cloud (IaaS Cloud Candidates)

Level 3 Business Case and

Operational Analysis Execution

 Candidate list for cloud

evaluation  List of cloud applications / workloads with high migration potential

 Business Case Analysis (including cost vs. run rate analysis)

 Technical Analysis

 Detailed application and workload migration analysis

 Migration plan

 Realized benefits

In-house / Co-location Candidates Not Technically Feasible Not Business Suitable Detailed Analysis

Business Case Analysis

Detailed Technical Analysis

Operational Analysis

Management Considerations

Migration Not Feasible

Sour

ce  Workload attributes

 Application characteristics  Suitability framework

 Technical reviews with application owners and infrastructure teams  Input from application business owners and SLAs

 TCO Data and Analysis

 Stakeholder Inputs

 Business Case Analysis

 Technical Analysis

Opportunity Analysis In Depth Analysis & Planning

ILLUSTRATIVE

Evaluate Suitability for SaaS and PaaS

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To successfully make the transition, enterprises must address key operational and governance issues during the adoption of cloud computing services models

Data Controls

Back Up and Disaster Recovery Vendor “Lock-In”

IT Operations Security and

Privacy Audit and Assurance Tax and Legal

IT and Business Readiness

Who owns the data? How is it be used? Are controls in place? How is security achieved? What is the level of privacy protection? Are there risk management controls to applications and data? Can you meet needs for legal compliance and tax issues?

Are data backup, retention, and disaster recovery practices sufficient? Is the vendor limiting interoperability or access to your data?

What IT services and applications are best suited for the cloud?

Are internal IT architecture and business organization structures “ready”?

Alignment with Enterprise Risk and Governance strategy will help organizations address

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What are the near term business benefits of comprehensive Cloud Strategy?

M Significantly increased flexibility: reduced time to design, implement, and “go to market” with cloud-based software systems

M Much faster time to develop, test, and deploy packaged software

M “Encapsulating” single-tenant non-cloud software is a fast path to short-term value M Longer-term value in cloud will offer significantly higher benefits, but will require

replatforming and replacement of “legacy” software – and that is a big hurdle

M Cost Savings: reduced CapEx, at a lower amortized cash flow, using subscriptions

M Reduction in total costs of software licenses and ongoing maintenance costs, through use of SaaS subscription models rather than on-site licensed software M Reduced physical infrastructure costs by moving to vendor cloud IaaS: reduced

hardware, networking, data center, facilities, power, etc.

M Positioning for major cloud architecture changes coming in the future:

M By introducing cloud products and services into the complex IT architectures, you will be positioned for the major changes to reap the benefits of cloud

Enterprises that adopt cloud computing delivery models have the potential to re-shape their competitive position – and the broader business landscape

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Our POV: Cloud Computing will have a significant impact on IT Strategy

Cloud offers major benefits of flexibility, cost savings, and improved IT capabilities. To gain these advantages, we recommend that enterprises:

MEstablish new IT application and technology architectural principles and standards which are necessary to reap cloud benefits.

MRevisit current major system architecture and design principles and evaluate fit with cloud suitable design concepts

MUnderstand the timing of major system software architecture changes, and plan for adjustments to enable ‘cloud friendly’ application delivery models

MIdentify new usage models, considering new options for SaaS, IaaS “encapsulation”, mobility apps, and “Big Data” analytics, to enable highly efficient and flexible products and services MQuantify the benefits that cloud will bring to your company, while assessing all affected roles and functions to gauge organizational and business impacts and risks

New cloud software is fundamentally different, and improvements to “legacy” software often require complex software engineering and architecture refactoring.

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What are other large Companies doing at this time

?

M Moving development, testing, and integration of major system systems to cloud Infrastructure as a Service

M For smaller functions and services, deploying cloud systems to replace on-site major system implementations of older “stand-alone” systems ( CO)

M “Decoupling” the major systems stacks using a “best of breed” approach, taking into account new software now available on a SaaS subscription delivery model

M Consolidating major application platforms on to single cloud-based infrastructures, while removing “edge” services to other cloud vendors when possible

M Understanding their major system roadmaps, working with vendors to influence the product direction to map to their customer priorities

M Taking a hard look at their end-to-end IT architectures, to determine their long-range plans for a more fully “cloud-enabled” business architecture and customer services

Many enterprises with large systems are taking the first steps to make their cloud plans “actionable”, to position themselves for strategic advantage

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Contact information Dave Duden

Director

Deloitte Consulting [email protected] +1 860 725 3041

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M About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

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