MajorProject_AnilSharma

Anil Kumar Sharma (2007SMN7080)

DMS, IITD

5/7/2010 1

� Abstract

� Introduction

� Literature review

� Research Objective

� Design & Methodology◦ Problem Identification

◦ Selection of experts

◦ Administration of Questionnaire

◦ Survey Analysis

� Findings◦ The Strategic Benefits of Cloud Computing

◦ What to expect: Associated risks and challenges

◦ Strategic dimensions for Telecom/Network service providers entering into cloud computing market.

◦ Telecom/ Network provider’s competitive advantages

◦ Strategic enablers for IT service providers

� Conclusion

� References

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� A paradigm shift is taking place in the IT industry. Whereas customers who wanted to support their business processes with IT used to face having to buy all the necessary hardware, operating systems and other components and decide on a software platform, there is now the realistic vision of obtaining the functionality they require under a pure leasing model where they merely pay for what they use. IT will be delivered as a service in future. delivered as a service in future.

� The purpose of this research is to find strategic dimensions and recommendations for Network & IT service providers to enter into cloud computing market. This research is conducted based on some publications & case study analysis, and survey with some senior people in industry, both from demand and supply side, and using IT industry experience.

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� Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. service provider interaction.

� This cloud model promotes availability and is composed of five essential characteristics,characteristics,characteristics,characteristics, three service modelsservice modelsservice modelsservice models, and four deployment modelsdeployment modelsdeployment modelsdeployment models.

(Definition by NISTDefinition by NISTDefinition by NISTDefinition by NIST-National Institute of standards and Technology)

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� For all the reasons, it is easy to see why cloud computing is an attractive potential service offering for any business looking to enhance IT resources while controlling costs. However, it should be noted that along with the benefits come security and risk concerns that must be considered.

� Cloud computing service and deployment model◦ Cloud computing Service Models

◦ Cloud Computing Deployment Models

◦ Cloud computing essential characteristics◦ Cloud computing essential characteristics(SourceSourceSourceSource: Publication by ISACA on “Cloud Computing –Business benefits and security issues”-year 2009)

� Many major IT outsourcing service providers are investing heavily to lay the groundwork for this potentially disruptive market shift.

� From Merrill Lynch, which is estimating the cloud computing market to reach $160 billion by 2011.The estimate includes $95 billion in business and productivity applications.

� Earlier this year, Gartner pegged the market at $150 billion by 2013.

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� Cloud computing Service ModelsCloud computing Service ModelsCloud computing Service ModelsCloud computing Service Models

Service ModelService ModelService ModelService Model Definition Definition Definition Definition To be consideredTo be consideredTo be consideredTo be considered

Infrastructure as a service (IaaS)

Capability to provision processing storage, networks and other basic computing resources. It offers customers the ability to deploy and run arbitrary software, which may include operating systems and applications. IaaS puts these IT operations in the hands of third party.

Options to minimize the impacts if the cloud provide has a service interruption.

party.

Platform as a service (PaaS)

Capability to deploy onto the cloud infrastructure customer-created or acquired applications created using the programming languages and tools supported by the provider

-Availability-Confidentiality-Privacy and legal liability in the event of a security breach (as databases housing sensitive information will now be hosted offsite)-Data ownership-Concerns around e-discovery

Software as a service (SaaS)

Capability to use the provider’s applications running on the cloud infrastructure. The applications are accessible from various client devices through a thin client interface such as a web browser.

-Who owns the applications?-Where do the applications reside?

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� Cloud computing Deployment ModelsCloud computing Deployment ModelsCloud computing Deployment ModelsCloud computing Deployment ModelsDescription of Deployment Description of Deployment Description of Deployment Description of Deployment ModelModelModelModel

Description of Deployment Description of Deployment Description of Deployment Description of Deployment ModelModelModelModel

To be consideredTo be consideredTo be consideredTo be considered

Private Cloud -Operated solely for an organization-May be managed by the organization or a third party-May exist on-premise or off-premise

-Cloud services with minimum risk

-May not provide the scalability and agility

of public cloud services

Community Cloud -Shared by several organizations-Supports a specific community that has shared mission or interest-May be managed by the

-Same as private cloud, plus:-Data may be shared with the data of competitors

-May be managed by the organizations ora third party

Public Cloud -Made available to the general public or a large industry group-Owned by an organization selling cloud services

-Same as community cloud, plus:

-Data may be stored in unknown locations

and may not be easily retrievable.

Hybrid Cloud A composition of two or more clouds (private, community or public) that remain unique entities but are bound together by standardized or proprietary technology that enables data and application portability (e.g. cloud bursting for load balancing between clouds)

-Aggregate risk of merging different deployment models-Classification and labeling of data will be beneficial to the security manager to ensure that data are assigned to the correct cloud type.

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� Cloud computing essential characteristicsCloud computing essential characteristicsCloud computing essential characteristicsCloud computing essential characteristics

CharacteristicsCharacteristicsCharacteristicsCharacteristics DefinitionDefinitionDefinitionDefinition

On-demand self service

The cloud provider should have the ability to automatically provision computing capabilities, such as server and network storage, as needed without requiring human interaction with each service’s provider.

Broad network access

According to NIST, the cloud network should be accessible anywhere, by almost any device (e.g. smart phone, laptop, mobile devices, PDA)

Resource pooling The provider’s computing resources are pooled to serve multiple customers using a multitenant model, with different physical and virtual

Resource poolingcustomers using a multitenant model, with different physical and virtual resources dynamically assigned reassigned according to demand.

Rapid elasticity Capabilities can be rapidly and elastically provisioned, in many cases

automatically, to scale out quickly and rapidly released to scale in

quickly. To the customer, the capabilities available for provisioning often

appear to be unlimited and can be purchased in any quantity at any time.

Measured service Cloud systems automatically control and optimize resource use by leveraging a meeting capability (e.g. storage, processing, bandwidth and active user accounts). Resource usage can be monitored, controlled and reported, providing transparency for both the provider and customer of the utilized service.

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� The research objective is to find strategic dimensions and recommendations for Network and IT service providers to enter into this market.

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� Delphi technique Delphi technique Delphi technique Delphi technique is used to capture the experts opinion on different parameters related to customers expectations on services and benefits using a web based survey followed a discussions. Also, some related technical articles and industry practices are referred.

� Problem IdentificationProblem IdentificationProblem IdentificationProblem Identification� To identify the strategic dimensions for Cloud Computing market.

� Selection of expertsSelection of expertsSelection of expertsSelection of experts� Selected people belong to different communities including both Providers and Business users.Selected people belong to different communities including both Providers and Business users.

� Administration of questionnaireAdministration of questionnaireAdministration of questionnaireAdministration of questionnaire� A survey is created using 3C's Model 3C's Model 3C's Model 3C's Model of Ohmae for strategic look needed for success factor of this business model.

� The Corporation

� The Customer

� The Competitors

� The survey URL isThe survey URL isThe survey URL isThe survey URL ishttp://www.surveymonkey.com/s.aspx?sm=ZVHVL7T40PD4UkrrYioCqg_3d_3d

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� Up to what extent you think as cloud will be a successful model including for big enterprise (rate 1 to 5, where 1 is least and 5 is most)

◦ 77%

� Do you think that it will be a good opportunity for Network service providers (like orange) to enter into this market or expand? (rate 1 to 5, where 1 is least and 5 is most)to 5, where 1 is least and 5 is most)

◦ 78%

� Do you think that it will be a good opportunity for IT service providers (like IBM, HP, TCS etc..) to enter into this market or expand ?(rate 1 to 5, where 1 is least and 5 is most)

◦ 82%

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45

100

90.9

36.4

9.1

63.6

72.7

72.7

63.6

36.4

Remove economic/expertise barriers impeding to …

Avoiding capital expenditure in hardware, software, …

Flexibility and scalability of IT resources

Increasing computing capacity and business …

Diversification of IT systems

Local and global optimisation of IT infrastructure …

Business Continuity and Disaster recovery capabilities

Assessing the feasibility and profitability of new …

Adding redundancy to increase availability and …

Controlling marginal profit and marginal costs

Series1

•What are the reasons behind your possible engagement in the Cloud computing area if you

need to take decision for moving your company's IT on cloud?

72.7

63.3

81.8

45.5

9.1

0 10 20 30 40 50 60 70 80 90

Individual software packages (SaaS)

Complete operating system and software …

Just infrastructure services such as storage, …

Security services in the cloud

Other (please specify)

Series1

45

0 20 40 60 80 100 120

Remove economic/expertise barriers impeding to …

•Which “layer” of the Cloud would you be most likely to approach?

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◦ What are your main concerns in your approach to Cloud Computing?

45.5

18.2

27.3

18.2

36.4

72.7

Lack of liability of providers in case of …

Inconsistency between trans national laws …

Unclear scheme in the pay per use approach

Uncontrolled variable cost

Cost and difficulty of migration to the cloud …

Intra-clouds (vendor lock-in) migration

27.3

27.3

54.5

81.8

9.1

45.5

45.5

0 10 20 30 40 50 60 70 80 90

Privacy

Availability of services and/or data

Integrity of services and/or data

Confidentiality of corporate data

Repudiation

Loss of control of services and/or data

Lack of liability of providers in case of …

Series1

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� Majority of experts (78%) feels that this business model is not limited to SMBs which may go to cloud because of lack of IT infrastructure and expertise, but big enterprises will also use this model starting from different components and the overall transition will be done in phased manner.

� Majority (80%) think that Existing Network and IT service provider can look forward for providing this business using their existing capabilities.

� Top reasons for selection cloud service are ◦ Avoiding capital expenditure in hardware, software, IT support, Information ◦ Avoiding capital expenditure in hardware, software, IT support, Information Security by outsourcing infrastructure/platforms/services.

◦ Flexibility and scalability of IT resources.

◦ Assessing the feasibility and profitability of new services (i.e. by developing business cases into the Cloud).

◦ Business Continuity and Disaster recovery capabilities

� The demand of services like Infrastructure as Service (IaaS) 82% and Software as Service (SaaS) 73% is more.

� However, there are some concerns on using this service primarily for security reasons where “Confidentiality of data” is the major concern by 82% population.

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The Strategic Benefits of Cloud ComputingThe Strategic Benefits of Cloud ComputingThe Strategic Benefits of Cloud ComputingThe Strategic Benefits of Cloud Computing� Cost containment Cost containment Cost containment Cost containment

The cloud offers enterprises the option of scalability without the serious commitments required for the infrastructure purchase and maintenance. There is little to no upfront capital with cloud services. Services and storage are available on demand and are priced as a pay-as-you-go service. Additionally, the cloud model could assist with cost savings in term of wasted resources.

� Immediacy Immediacy Immediacy Immediacy Many early adopters of cloud computing have cited the ability to Many early adopters of cloud computing have cited the ability to provision and utilize a service in a single day. This compares to traditional IT projects that may require weeks or months to order, configure and operationalize the necessary resources. This has a fundamental impact on the agility of a business and the reduction of costs associated with time delays.

� Availability Availability Availability Availability Cloud providers have the infrastructure and bandwidth to accommodate business requirements for high speed access, storage and applications. As these providers often have redundant paths, the opportunity for load balancing exists to ensure that systems are not overloaded and services delayed.

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� ScalabilityScalabilityScalabilityScalabilityWith unconsidered capacity, cloud services offer increased flexibility and scalability for evolving IT needs. Provisioning the implementation is done on demand, allowing for traffic spikes and reducing the time to implement new services.

� Efficiency Efficiency Efficiency Efficiency Reallocating information management operational activities to the cloud offers businesses a unique opportunity to focus efforts on innovation and research and development. This allows for business and product growth and may be even more beneficial than the innovation and research and development. This allows for business and product growth and may be even more beneficial than the financial advantages offered by the cloud.

� Resiliency Resiliency Resiliency Resiliency Cloud providers have mirrored solutions that can be utilized in a disaster scenario as well as for load-balancing traffic. Whether there is a natural disaster requiring a site in a different geographic area or just heavy traffic, cloud providers say they will have the resiliency and capacity to ensure sustainability through an unexpected event.

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Associated risks and challengesAssociated risks and challengesAssociated risks and challengesAssociated risks and challenges� Security is the biggest concern.Security is the biggest concern.Security is the biggest concern.Security is the biggest concern.

In cloud computing, server, network, and storage are provided to the enterprise as a service. In turn, data is delivered to the cloud. Whether it’s private customer information, business data, intellectual property, trade secrets, or legal documents, IT leaders are understandably sensitive for an organization.

� Availability and reliability must meet enterprise expectationsAvailability and reliability must meet enterprise expectationsAvailability and reliability must meet enterprise expectationsAvailability and reliability must meet enterprise expectations.IT systems that support key enterprise applications need to be stable, reliable, and highly available. Theoretically, on-demand computing should offer a high degree of reliability since the cloud distributes compute, network, and storage functions across a substantially larger pool of physical and virtual resources, making it more tolerant of individual hardware failures.

� Control of environments in the cloud is a concernControl of environments in the cloud is a concernControl of environments in the cloud is a concernControl of environments in the cloud is a concern.By their very nature, cloud computing service models involve transferring some control to a trusted service provider. If certain areas of functionality are deemed so essential that they must remain in-house under the direct control of IT, then other considerations may have to take a back seat.

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-Value based positioning(quality, performance &

Image)-Product, brand elements and price positioning are

highly standardizedPioneering strategy helps to differentiate from

Strong corporate values

Trust with

Elements of existing marketing strategy for other

services

Existence of similar

transnational customers

Competitors like Web market

leaders (Amazon & Google)

Critical Internal Factors Critical External Factors

Typical elements of a standardization strategy

of cloud market

to differentiate from competition

(SLAs and platform independence)

-High end segments are natural target market-Add-on service and as

an entry

Trust with Customers and operational

capabilities (SLA)

Balancing of profitability and

risk considerations

Google)

Prospects of integrating with existing services

Focus on cost reduction and

energy saving by corporate-Adaptation of non core elements

(Packaging of offerings, sales promotion-B2B)

-Creative selection (product/service mix, advertising –B2B)

Area of mechanism adaption

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� Clouds will increase network traffic and utilization and thus transport revenues. In physically delivering cloud-based services, telecom carriers have an opportunity to extract two revenue streams from the same function.

Telecom/ Network provider’s competitive advantagesTelecom/ Network provider’s competitive advantagesTelecom/ Network provider’s competitive advantagesTelecom/ Network provider’s competitive advantages� Trusted relationshipsTrusted relationshipsTrusted relationshipsTrusted relationships

� Existing association with enterprises with capabilities like 24x7 operation.

� Reliable operations that scaleReliable operations that scaleReliable operations that scaleReliable operations that scale� Existing certification process and engineered to provide � Existing certification process and engineered to provide 99.999% service availability

� Service level agreements (SLAs) with real impact Service level agreements (SLAs) with real impact Service level agreements (SLAs) with real impact Service level agreements (SLAs) with real impact � Meaningful SLAs and clear matrices.

� Vendor independenceVendor independenceVendor independenceVendor independence� Existing infrastructure components, easy to integrate with other IT systems

� Global presence and market commitment Global presence and market commitment Global presence and market commitment Global presence and market commitment � Global customer base and reach to cover global market with ease.

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� Strategic enablers for IT service providers Strategic enablers for IT service providers Strategic enablers for IT service providers Strategic enablers for IT service providers � The value proposition of cloud computingThe value proposition of cloud computingThe value proposition of cloud computingThe value proposition of cloud computing

� By enhancing the existing IT infra management and hosting model.

� WebWebWebWeb----based applications promote IT independencebased applications promote IT independencebased applications promote IT independencebased applications promote IT independence� Promoting web based applications as solution to serve globally positioned customers of organization.

� Growing managed services market produces revenue.Growing managed services market produces revenue.Growing managed services market produces revenue.Growing managed services market produces revenue.By promoting their capability of being end to end solution � By promoting their capability of being end to end solution provider to enterprise users.

� Increasing carriers' data center efficiency and operationsIncreasing carriers' data center efficiency and operationsIncreasing carriers' data center efficiency and operationsIncreasing carriers' data center efficiency and operations� By reducing no. of servers, storage, applications platforms using technology like virtualization.

� Differentiating service providers from the packDifferentiating service providers from the packDifferentiating service providers from the packDifferentiating service providers from the pack� Using approach like pay-as-use for end to end service, instead of different units for different IT services.

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� The research outcome indicates the benefits of cloud computing for business and challenges for service providers.

� Moving to a cloud-based platform poses challengeschallengeschallengeschallenges and concerns for service providers. Dealing with standards, standards, standards, standards, security, performance, data compliance security, performance, data compliance security, performance, data compliance security, performance, data compliance aligned with procedures and operationsoperationsoperationsoperations, and availability availability availability availability issues are just a few of the organizational and technical challenges they'll have to address to make cloud computing a true value proposition.

� Service providers can leverageleverageleverageleverage their reputationsreputationsreputationsreputations and solid performances to offer reliable, comprehensive and secure cloud services. Most importantly, service providers can show cloud services. Most importantly, service providers can show valuevaluevaluevalue by strongly emphasizing that cloud computing allows enterprises to focusfocusfocusfocus on other aspects of their businesses aspects of their businesses aspects of their businesses aspects of their businesses without having to concentrate resources on IT, server updates, and maintenance issues -- a win-win service offering for both service providers and their customers.

� And last but certainly not least, by ensuring the value of value of value of value of services delivered services delivered services delivered services delivered via cloud computing, service providers not only deliver business valuebusiness valuebusiness valuebusiness value to their users but increase and extend their sustainabilitysustainabilitysustainabilitysustainability.

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� Cloud services core to the strategyFirms like Dell and IBM are extremely focused on the impending disruptive change that the growth of the cloud services market will cause. These firms, IBM in particular, are also the most aggressive in generating and protecting cloud-related intellectual property.

� Aggressive strategy for cloud services growthFirms like Accenture, HP, and Wipro are aggressive to have a few more existing clients than firms that are still developing cloud services as a broad commercial offering that supplement traditional outsourced services.

� Managed growth into cloud servicesManaged growth into cloud servicesFirms like Atos Origin, CSC, and Siemens IT Solutions and Services, and TCS all offer some cloud services and have intent to grow their offerings for enterprise clients. These firms are treating cloud more as a key service add-on to their existing portfolios.

� Cloud service alliance partnerCapgemini is taking a focused position as the consultant and service integrator in place to plan, sell, implement, and manage the cloud services developed by other firms like Amazon, Google and Symantec.

(Source: (Source: (Source: (Source: Market Overview Of Cloud Service Strategies From Global IT Providers from - by Paul Roehrig, For Sourcing & Vendor Management Professionals-June 2009)

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� Draft NIST Working Definition of Cloud Computing v15, http://csrc.nist.gov/groups/SNS/

� Cloud-computing/cloud-def-v15.doc� Publication by ISACA on “Cloud Computing –Business benefits and security issues”-year 2009

� Cloud Computing – A Classification, Business Models, and Research Directions,

� Business & Information Systems Engineering 5 | 2009� www.alcatel-lucent.com – Strategic discussions� www.alcatel-lucent.com – Strategic discussions� Paper on “Building theories from case study research” by Eisenhardt, Kathleen M.

� Academy of Management. The Academy of Management Review; Oct 1989; 14, 4; ABI/INFORM Global

� Market Overview Of Cloud Service Strategies From Global IT Providers from - by Paul Roehrig, For Sourcing & Vendor Management Professionals-June 2009

� Cloud Computing – Business Models, Value Creation Dynamics and Advantages for Customers Siemens IT Solutions and ServicesIT Solutions and ServicesIT Solutions and ServicesIT Solutions and Services

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