Expected Social and Economic Impact and Application of Cloud Computing in Japan

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OECD/ICCP Foresight Forum

Expected Social and Economic Impact and

Application of Cloud Computing in Japan

October 14, 2009

DR. Makoto Yokozawa

Nomura Research Institute

Professor of MOIS Labo., Kyoto University http://www.mois.asia/

BIAC ICCP Vice Chair

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Copyright(C) 2009 Nomura Research Institute, Ltd. All rights reserved.

Vélib’, “a Cloud of Bicycles”

in Paris

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Copyright(C) 2009 Nomura Research Institute, Ltd. All rights reserved.

Focused Issues

Different Styles of Clouds

Cloud Markets in Japan

Issues of Cloud

Computing on Advanced

Networked Society

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Copyright(C) 2009 Nomura Research Institute, Ltd. All rights reserved.

Different styles of Clouds

Cost Benefit by Scale

– Why use Cloud?

Layered Business Model

– Cross Cutting the “Cloud”

– How to Earn Sufficient Scale of Cloud

to be Cost Efficient ?

Roadmaps

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Cross Layer Convergence among Software Industry

Network

Sector-independent Horizontal Cloud

Hardware

Middleware

Application

Solution

Network

Hardware

Middleware

Application

Solution

Vertical Cloud

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Horizontal Cloud and Vertical Cloud

General Use

Industry Use

Inter- Cloud

Platforms

Amazon EC2 Google Apps Salesforce,com Financial Logistics Authentication Platform Payment Platform

Hadoop Contents Delivery

Platform

Windows Cloud

Oracle Cloud

Layers

Horizontal Cloud Vertical

Cloud GPS RFID Sensor NFC HDTV

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Copyright(C) 2009 Nomura Research Institute, Ltd. All rights reserved. -2007 2008 2009 2010 2011 2012 2013 Market

SaaS

Applications

PaaS

HaaS

Cloud Computing Roadmap

SaaS Expansion To BPO Services HR/Finance/BI CRM/SFA Expansion of Paas/Haas Emerging of Paas/Haas

Sector Use of Cloud

More Industry Use PaaS,HaaS SaaSAmazon EC2SAP ▲Google

IBM Blue Cloud

▲Microsoft

Yahoo! SLA

▲Development Tools

Google Gears

How to find the “Best Optimized Sharing of IT functions”

– Horizontal? – Vertical? – Granurality? Horizontal Cloud Ver tical C loud 7

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Copyright(C) 2009 Nomura Research Institute, Ltd. All rights reserved.

Cloud Market in Japan

Overall

– Cloud Computing will be the next innovation in ICT based

Society and IT industry in Japan

– Applications are expected in 1) Anti-Global-Warming, 2)

e-Governments, 3) Energy (Smart Power Grid), 4) Intelligent

Traffic Systems and Other Society-based Information

Systems

Market Forecasts

– Expected market growth to be ~20B USD by 2012 ( ~ 100B

USD Global Market Forecasted)

– Core Cloud Business will be, 1)Data Center, 2)ASP-Saas

Application, 3)Shared Outsourcing and 4)

Server/Storage/Middleware/Network Services

Public Service Clouds for everyone and

Digital ID issues

– The Kasumigaseki Cloud for Ministries and Agencies

– National e-P.O. Box

– Clouds for SMEs

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Copyright(C) 2009 Nomura Research Institute, Ltd. All rights reserved.

Size of the Cloud Computing Market

Forecasted scale of Japanese domestic cloud market

Source: ASPIC

Domestic market will grow to nearly 2 trillion

yen by 2012

■The global cloud computing service market projected to reach approx. ¥10 trillion in value in 2011 (Merrill Lynch estimated)

Reference: Global Internet router market forecast

Global router market expected to triple between 2007 to 2013

Source: RHK forecast, 2008

Data Center Services

Server/Storage/Middleware + Network Shared Use Outsourcing

ASP/SaaS Applications in 100Million Yen

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Copyright(C) 2009 Nomura Research Institute, Ltd. All rights reserved.

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Kasumigaseki Cloud

✔Do not need to maintain each system individually ✔Computer resources can be used as much as needed

Gradually migrate to e-government using cloud computing

technologies

Drastic reduction of administrative costs and elimination of waste

(Drastic reduction of operational costs and developmental costs for government information systems)

Coordination

of data

・・・

Coordination of data Ministry

A Ministry B Ministry C Ministry D

Development of the Kasumigaseki Cloud

S y stem A 1 S y stem A 2 S y stem A 3 S y stem B 1 S y stem B 2 S y stem B 3 S y stem C 1 S y stem C 2 S y stem C 3 S y stem D 1 S y stem D 2 S y stem D 3

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Copyright(C) 2009 Nomura Research Institute, Ltd. All rights reserved.

The National Electronic Post Office Box Plan

■ Procedures completed with one click No need submit documents

■Cost reduction (total for private/public sectors):

・Approx. \100 million for moving

・Approx. \120 million for retirement

Upon request, individuals (or businesses) are provided with a secure, exclusive account (electronic post office box)that can

be used to view and manage personal information (e.g., pension records) in cyberspace and access a wide range of convenient, one-stop government services, achieving the world’s most effective “personal e-government.”

Establish a government CIO

◆To oversee all aspects of e-government

(The US Obama administration has established the position of Chief Technology Officer)

Pension records, etc. checked on paper

Submit documents for employee tax or employment

procedures for each relevant local

government or place of business

National and local governments given equal

to discussion development of a plan for

unified action ◆BPR of administrative procedures (general optimization) Develop shared infrastructures

◆Infrastructure using cloud technologies to be shared by the central and local

governments

Improved convenience

Development of necessary infrastructure

What is the National Electronic Post Office Box Plan?

Numerous administrative procedures

for major life events

Moving house:

・Up to 26 procedures & visits to 7 organizations

・13 documents to be submitted Retirement:

・Up to 10 procedures & visits to 6 organizations

・15 documents to be submitted

■Bulk transmission of employee data

■One-stop processing of income tax filing would reduce costs by approx. ¥170 million

Administrativ e agencies Electronic post office box Pensioner City A City B City C Company A Local government office School etc.

Regional transport bureau

One-stop services

Transparent administration

Burdens on

companies reduced

■Records can be checked at any time

■Eliminating social security/public services notifications would reduce costs by 460 billion yen

Now

Future

Administrative Data Sharing Support

Center

Source: Outline of New Strategies for New Digital Age: Three-Year Emergency Plan (IT Strategic HQ, April 9, 2009)

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Copyright(C) 2009 Nomura Research Institute, Ltd. All rights reserved.

Public-use Cloud Cases in Japan

Kofu-City’s Taxpayers Refunding Management System

Japan Post Office’s Customer’s Inquiry Response

System

Japan Government’s “Eco-POINT” Application System

Force.com

(Platform as a Service)

Usability/Scalability/Security/Productivity/Integrity

UI BusinessLogics Database

CRM

SFA

Kofu City

Japan Post

Eco-Point

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Copyright(C) 2009 Nomura Research Institute, Ltd. All rights reserved.

Maturity Model of Business IT Utilization

Introduction of IT systems

13 Source) METI Japan

Cross-Company Utilization of IT Initial Introduction of IT Intra-Enterprise Utilization of IT Intra-Division Utilization of IT Difficulty in Cross-Division Communication Difficulty in Cross-Company Collaboration Stage 1 Primary usage of IT Stage 2

Partial optimization by IT within each division Stage 3

Partial optimization by IT across a company Stage 4

Total optimization across industry

Productivity Gain by IT usage 70% of companies In Stage1-2 30% of companies In Stage 3 and 4

Cloud Computing

Service for SMEs

Expected

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Issues of Cloud Computing on

Advanced Networked Sciety

(Technology) NGN / Mobile Cloud

(System) Dependable Clouds

(Institutional) Law Systems and Rules

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Copyright(C) 2009 Nomura Research Institute, Ltd. All rights reserved.

SCM 電子

申請

R&D on Secure Cloud Networking Technology

Establish a new market as early as possible to achieve high-security, high-speed

and advanced interoperability between clouds by addressing various issues that

currently exist in today’s cloud market.

User A User B

←Cloud networking environment using virtual servers, etc.

Other company’s cloud

Health care Monitoring

Music distribution Elderly care E-application Security/ Disaster

prevention Medical care Energy control

Home network E-mail Groupware Web conferencing Storage Word processing ERP SFA SCM Finance/

accounting ←Diverse application services

Finance/accounting CRM resourcesHuman Other company’s cloud IP NGN Cloud service interoperability technology Other company’s cloud Other company’s cloud Core network Access network

Intelligent distribution processing technology “Cloud-synch” IP NGN infrastructure technology Develop platform technology for interoperability between clouds

Develop technology for real-time processing via interoperability in a distributed environment

Logistics Transport ation SCM 15 15

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Copyright(C) 2009 Nomura Research Institute, Ltd. All rights reserved.

R&D on Dependable Data Center

and Related Technology

Conduct empirical research and develop various technologies for

the next generation data centers which achieve higher

dependability and security for business uses.

Air conditioning using the open air

Verify dependability, cooling capacity and factors for the stable

operation

UPS with Photovoltaics

Verify energy saving and performance of battery under

photovoltaics

Real time geographically distributed data back up

Verify the load factor of network, usability and security

Visualization and integration of log data of servers

Verify security of user data

Resource balancing technology

Control and re-arrangement of resource

Virtual resource management system

Maximize resource usage while keeping service level

(example)

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Access

Network NetworkEdge NetworkCore Server

Device Administrator

Console

Log and

Monitored data Log andMonitored data Log andMonitored data Log andMonitored data Log andMonitored data

Traceability for Problem Determination

Secure Storage Secure Logging Authentication / Authorization

Monitor/Measurement

Secure Boot Secure Boot Secure Boot

Base feature

Device Network Server

Software System Dependability

and Cloud Computing

“Dependable Cloud”

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Copyright(C) 2009 Nomura Research Institute, Ltd. All rights reserved.

Notes for the Future

Global Rules need to be established

• Relationship between corporate compliance (auditing procedures) and

external storage of data, etc.

• Ownership of intellectual property rights (e.g., data, service, log) on

clouds

• Advance notification of termination (cancellation) of services, return of

data to owners, proof of data deletion

• Need for the establishment of global rules on personal information

protection (e.g., operations based on the relevant use of personal information policy)

Reference:

Interim Report : Strengthening Efforts to Enhance Dependability and Security of Information System Software (May 2009)

– It is very important to enhance the SLA for cloud computing to be fully

utilized in enterprise activities in the future.

– It is important to form a certain social consensus on to what extent

dependability/security is ensured or accountability is fulfilled by the service providers in accordance with the application of cloud computing, while

considering to what extent risks are accepted by the users.

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Notes for the Future

Harmonizing with Domestic Rules

How should we understand the relationship between global rules

and domestic laws, considering that data centers established to

provide cloud services are subject to the laws of the countries in

which they are located?

Other Important Issues

Interoperability

Dependability

Capacity Building (Fix/Wireless Broadband Network)

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