Cloud Computing Discussion

Dave Duden Director

Deloitte Consulting, LLP

June 21, 2011

Deloitte Perspectives on 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
Service Type

On-demand self-service Pay per use Rapid elasticity

Business-as-a-Service

Software-as-a-Service Platform-as-a-Service

Infrastructure-as-a-Service

Increase Agility Reduce capital spending Reallocate resources

Service Source
Public cloud (External) Hybrid Virtual Private Cloud Community Private cloud (Internal)

Business Model
Cloud Service Subscriber

Location independent resource pooling

Cloud Service Broker

Ubiquitous network access

Cloud Service Provider Cloud Service Enabler

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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 IT 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 has been subjected to significant marketplace confusion. To demystify cloud computing services, clearly define what cloud is, and what it is not...
Cloud is
on-demand
Clouds can provide an almost immediate access to a IT applications and services, platforms, or a pool of hardware resources (compute, network and storage) that can be allocated and provisioned on-demand

scalable and elastic

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

pay-as-you-use

Vendor-provided cloud solutions do not require upfront capital investments by the buyer. Billing is tied to metered use of resources, shifting expenses from CapEx to OpEx.

Cloud is not
simply virtualization just applying SOA principles traditional hosting
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 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 Cloud and traditional hosting share many characteristics but unlike traditional hosting cloud service is offered ondemand, is scalable and elastic a user can have as much or as little of the service as they need and pay for the resources actually used

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
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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
Comparing Managed Hosting to Cloud Computing Managed Hosting Applications

Email & Messaging Voice Systems Corporate Web Sites Back-Office Systems
Software as a Service Dynamic Applications High-Compute Processing

Legacy Applications Structured Databases Financial Systems

Static & Continuous

Cloud Applications

Collaboration & Analytics Test and Development DR, Backup and Storage

Dynamic & Bursty

Mainstream Adoption of Workloads by Service Type

High Engineering Apps New Core Apps

SaaS

Core ERP Adoption Standalone Apps High-End Servers Office Productivity Storage & Back-Up Collaboration Dev & Test Websites, Intranet Today Future Standard Servers Productivity Apps High Performance Computing / Clusters

IaaS

PaaS

Rapid App Dev

Low

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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

Service Operations Service Operations

Service Provisioning Resource Planning Incident Mgmt Technical and Professional Support

Product Economics Development

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

Compliance Compliance
Corporate Policies Industry Policies Regulations: State Federal International

Tax Tax
Proactive tax analysis and strategy Tax alignment Domestic and Local Country Tax Treatment

Legal Legal
Contract Mgmt Service Mgmt e-Discovery Business Processes Regulatory and Compliance

Governance Governance
Cloud Computing Strategy Business-IT Alignment Cloud Service Delivery Strategic Planning and Architecture

Risk Management Risk Management

Data controls Technology controls Audit and Assurance Backup and DR Vendor lock-in IT Operations Readiness

Security & Privacy Security & Privacy

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

People People
Skills and Talent Culture Training and Development Organization

Technology Technology
Virtualization Next-Gen Architecture Infrastructure and Process Standardization Resource Mgmt and Metering

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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Approach for Adoption of Cloud Computing

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Cloud Considerations

Enterprises should consider several dimensions when evaluating strategic options for applications and services to be delivered through cloud computing
Considerations For Building a Cloud Strategy

Technology
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 cloudready?

Business and Financials

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?

Are internal IT architecture and organization structures ready?

Are cloud offerings mature enough for these workloads?

Operational
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?

Regulatory and Compliance

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?

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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
Cloud Operational and Governance Issues

Data Controls Security and Privacy Audit and Assurance

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?

Tax and Legal

Back Up and Disaster Recovery Vendor Lock-In

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?

IT Operations

What IT services and applications are best suited for the cloud? Are internal IT architecture and organization structures ready?

IT Readiness

Alignment with Enterprise Risk and Governance strategy will help organizations address the operational hurdles to cloud adoption
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Summary & Discussion

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

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

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

Encapsulating single-tenant non-cloud software is a fast path to short-term value 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

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

Reduction in total costs of software licenses and ongoing maintenance costs, through use of SaaS subscription models rather than on-site licensed software Reduced physical infrastructure costs by moving to vendor cloud IaaS: reduced hardware, networking, data center, facilities, power, etc.

Positioning for major cloud architecture changes coming in the future:

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 reshape 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:

Establish new IT application and technology architectural principles and standards which are necessary to reap cloud benefits.
Revisit current major system architecture and design principles and evaluate fit with cloud suitable design concepts Understand the timing of major system software architecture changes, and plan for adjustments to enable cloud friendly application delivery models Identify 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 Quantify 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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Deloitte Thought Leadership on Cloud

Deloitte thought leadership and insights on cloud computing, developed by our global subject matter experts
Selection of Deloitte Thought Leadership

10 Things a CxO Should Know About Cloud Overview of cloud computing for C-suite executives, including clouds origins, benefits, and challenges

Cloud Computing: A Collection of Working Papers Discusses cloud architecture and implications on moving existing information technology platforms to cloud

Cloud Computing: Forecasting Change Overview of cloud market, key players, and social networking drivers

Fueling Business Growth through Cloud Computing Services Deloittes Enterprise Value Delivery methodology for deploying cloud

Developing the Cloud Insight into leveraging force.com Platform-asa-Service offering to maximize salesforce.com investments

Cloud Computing: Security, Privacy and Trust Insight into challenges around data security and privacy challenges in the cloud

Depth Perception: A Dozen Technology Trends Shaping Business and IT in 2010 Insights into trends changing the IT landscape, including cloud and what makes it truly revolutionary

A Balancing Act What Cloud Computing means for Business

Cloud Computing Finding Value Beyond the Hype

Overview of Deloitte advisory services in guiding enterprises around potential obstacles for cloud adoption

There is No Cloud Insight into how to best leverage the potential business benefits from cloud

2010 Predictions: Cloud More Than Hype but Less than Hyper Perspective on immediate and longterm take up of cloud and likelihood of achieving expected benefits

Cloud Computing: Considerations on the Road to Adoption Outlines issues which affect enterprise use of cloud computing and longterm adoption approach

Assessment of cloud from a business perspective, including existing barriers and future opportunities

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Contact information

Dave Duden Director Deloitte Consulting dduden@deloitte.com +1 860 725 3041

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Copyright 2010 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu

Copyright 2011 Deloitte Development LLC. All rights reserved.