Ready-made Cloud solutions don’t exist
Theo Slaats - Cloud Expo NL - Jaarbeurs Utrecht - December 7th, 2011
Challenges in your journey to the cloud
© 2011 Deloitte The Netherlands
The Cloud is to Computing, what the grid is to electricity
1 Ready-made Cloud solutions don‟t exist - Theo Slaats
In 1879, Edison
invented the light
bulb
About a 100 years ago, companies ceased
generating their own electricity and switched to
using the power grid.
And now...?
Will IT also become
a utility?
© 2011 Deloitte The Netherlands
Yeah, right...?
2 Ready-made Cloud solutions don‟t exist - Theo Slaats
The horse is here to stay but the
automobile is only a novelty – a fad 1903, the president of the Michigan Savings
Bank advising Henry Ford‟s lawyer, Horace
Rackham, not to invest in the Ford Motor Co.
There is no reason anyone would want a
computer in their home 1977, Ken Olson, president, chairman and founder of
Digital Equipment Corp. (DEC)
There’s no way that company exists in a year 2001, Tom Siebel, founder - Siebel CRM Systems [That company is Salesforce.com. Siebel doesn’t exist as a
company anymore. In September 2005 it was bought by Oracle
Corporation]
© 2011 Deloitte The Netherlands
Cloud computing represents a major change in Information Technology
sourcing and services delivery
3 Ready-made Cloud solutions don‟t exist - Theo Slaats
Service Sources:
Public cloud (External)
Hybrid Virtual Private Cloud
Private cloud (Internal)
Business Models:
Cloud Service Subscriber
Cloud Service Broker
Cloud Service Provider
Cloud Service Enabler
Service Types:
Business Process-as-a-Service
Software-as-a-Service
Platform-as-a-Service
Infrastructure-as-a-Service
“Location independent
resource pooling”
“Pay per use”
Cloud computing is based on the
convergence of
Internet technologies,
Virtualization
and
IT standardization
“Ubiquitous network
access”
“On-demand self-
service”
Cloud Computing is not a matter of definitions but a matter of characteristics
“Rapid elasticity”
Strategic and Operational Benefits:
√ Increased Business Agility
√ Reduce the amount of IT capital spending (OpEx vs CapEx)
√ Reallocation of resources
© 2011 Deloitte The Netherlands
Yeah, right!
4 Ready-made Cloud solutions don‟t exist - Theo Slaats
With the cloud, individuals and small
businesses can snap their fingers and
instantly set up enterprise-class services. 2011, Roy Stephan, Director of IT architecture and
engineering - Intelligent Decisions
Cloud computing is empowering, as anyone in any
part of world with internet connection and a credit
card can run and manage applications in the state of
the art global datacenters; companies leveraging
cloud will be able to innovate cheaper and faster. 2010, Jamal Mazhar, founder and CEO - Kaavo
Our industry is going through quite a wave of
innovation and it's being powered by a
phenomenon which is referred to as the cloud. 2010, Steve Ballmer, CEO - Microsoft
© 2011 Deloitte The Netherlands
IT Services will migrate to different cloud computing models at different
times, based on fit, maturity of services providers, availability of technology
5 Ready-made Cloud solutions don‟t exist - Theo Slaats
Mainstream Adoption of Workloads by Service Type
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
Ad
op
tio
n
Future
© 2011 Deloitte The Netherlands
There are significant near term benefits for IT of a 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
6 Ready-made Cloud solutions don‟t exist - Theo Slaats
Enterprises that adopt cloud computing delivery models have the potential to re-
shape their competitive position – and the broader business landscape
© 2011 Deloitte The Netherlands
...but there is a bigger Cloud promise
7 Ready-made Cloud solutions don‟t exist - Theo Slaats
Cloud Computing has the potential to disrupt existing operating models and
business economics. Deep industry knowledge is needed to highlight these
disruptions and guide organizations in reacting to and capitalizing on them.
Cloud Computing
Improve
Product Innovation
Increase
Revenu
Improve
Operational Efficiency
• Accelerate compute intensive product
development
• Reduce up-front investment
• Reduce error rates/risk
• Increase open
innovation/collaboration
• New revenue streams from wrapping
services around products
• New services by mashing information
across ecosystem
• Broader customer relationships,
leading to richer/more profitable
interactions (e.g., analytics)
• More efficient coordination of
disparate supply networks
• Accelerate market penetration
• Faster scalability
• Best-of-breed supply chain
• Reduce risk and lead-time
• Life Sciences & Chemicals (e.g.,
drug and chemical discoveries)
• Oil & Gas, Energy and Mining (e.g.,
site selection modeling
• Manufacturing & Automobiles (e.g.,
farm equipment or automobile
prototyping and technology testing)
• Manufacturing (e.g., insights on
crop productivity by aggregating
data from farm equipment
manufacturers)
• Automobiles (e.g., cars bundled
with services delivered through
Cloud)
• Healthcare (e.g., wellness
programs)
• Financial Services (e.g., create
extended supply chain platform
• Travel & Tourism (e.g., coordinate
complex activities networks)
• Manufacturing (e.g., supply chain
planning)
• Technology (e.g., open innovation
and collaboration)
© 2011 Deloitte The Netherlands
Moving to the cloud is not just migrating some applications
8 Ready-made Cloud solutions don‟t exist - Theo Slaats
What benefits can I
get from leveraging
cloud computing?
How will cloud computing
impact my (IT) organization?
Future
• Everything-as-a-Service
• In-house IT
orchestration
• Flexible costs
dependent on usage
• IT and business
collaborate in harmony
How do I successfully
manage the transition?
Current situation
• Client - Server
• In-house IT department
• Fixed costs, upfront
investments
• Low IT agility
Rather than moving just some application „to the cloud‟. Finding answers to these
questions will be the key to successfully integrate Cloud Computing into your
organisation.
How will cloud computing
impact my IT landscape?
© 2011 Deloitte The Netherlands
Enterprises should understand the unique benefits and the challenges
deploying cloud computing services, and its potential for significant
business advantages
9 Ready-made Cloud solutions don‟t exist - Theo Slaats
Benefits:
Business can assume roles traditionally reserved for IT,
from solution ownership to administration
Users can play an active role in creating new applications
Challenges:
Limited ability to customize some solutions may challenge
cultures accustomed to bespoke solutions
SaaS vendors tend to underplay the investment in process
optimization, change management, integration and data
migration required to realize value
Benefits:
Can reallocate resources to more strategic initiatives and
solutions over maintenance
Simplified and free upgrade process
Challenges:
The transition from a waterfall to an iterative / agile
development lifecycle and the speed of delivery will
challenge traditional IT delivery processes
Need to upgrade skills of staff, particularly around web-
services and web technology
Standards / policies around disaster recovery and security /
privacy as it relates to SaaS vendors will need to be
developed
Benefits:
Costs will be allocated to operational expenses (OPEX)
rather than capital expenses (CAPEX) – enterprises can
allocate more of the CAPEX budget to revenue generating
activities
Unlike on-premise applications, large upfront license fee is
not required
Challenges:
SaaS Contracts are loosely defined with little consistency
amongst vendors– better transparency and structure in the
overall sourcing process is required
Need careful Total Cost of Ownership (TCO) analysis to
truly understand potential savings over longer time horizons
and with larger user bases
Business Organization
IT Organization Finance Organization
Adoption of SaaS and PaaS will
abstract the data center from the
enterprise, resulting in fundamental
changes to the business and IT
organizations, and costs of software
services
© 2011 Deloitte The Netherlands
Cloud Computing has a significant impact on IT Strategy
Cloud offers major benefits of flexibility, cost savings, and improved IT capabilities. To gain
these advantages, enterprises should:
• 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
10 Ready-made Cloud solutions don‟t exist - Theo Slaats
New cloud software is fundamentally different, and improvements to “legacy”
software often require complex software engineering and architecture refactoring.
© 2011 Deloitte The Netherlands
Enterprises should take a comprehensive approach to cloud strategy,
integration, migration, and monitoring, to manage the risks and maximize
benefits of adoption
11 Ready-made Cloud solutions don‟t exist - Theo Slaats
Cloud computing opportunity assessment
Understand the future business needs & capabilities that
need IT enablement
Assessment of application portfolio to select applications
suitable for cloud migration
Impact to regulatory compliance, 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;
migration, and operational transition
© 2011 Deloitte The Netherlands
Enterprises should consider several dimensions when evaluating strategic
options for applications and services to be delivered through cloud
computing
12 Ready-made Cloud solutions don‟t exist - Theo Slaats
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?
Are cloud offerings mature enough for these workloads?
© 2011 Deloitte The Netherlands
To successfully make the transition, enterprises must address key
operational and governance issues during the adoption of cloud computing
services models
13 Ready-made Cloud solutions don‟t exist - Theo Slaats
Data Controls
Back Up and
Disaster Recovery
Vendor “Lock-In”
IT Operations
Security and
Privacy
Audit and
Assurance
Tax and Legal
IT 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 organization structures “ready”?
Alignment with Enterprise Risk and Governance strategy will help organizations
address the operational hurdles to cloud adoption
© 2011 Deloitte The Netherlands
Summary
• Leveraging the cloud for your organisation can have huge benefits by:
‒ Significantly increasing flexibility of IT quickly meeting business requirements.
‒ Saving Cost, reduced CapEx because of pay-per-use or monthly subscriptions.
‒ Pooling resources, flexibility of shifting resources on demand.
However, just migrating applications to the cloud will not be sufficient
• Organisational change lies at the heart of the success of cloud computing.
‒ Create a roadmap to the cloud that fits the organisation‟s needs.
‒ Make this roadmap an integral part of the IT strategy.
‒ Anticipate changes in IT department activities, moving from execution to
orchestration.
‒ Allow the business the flexibility to harness the possibilities of cloud computing on-
demand.
14
Ready-made Cloud solutions do not exist, to harness the full power of cloud
computing, cloud should be regarded as a strategic opportunity.
© 2011 Deloitte The Netherlands
Questions?
15 Ready-made Cloud solutions don‟t exist - Theo Slaats
Theo Slaats Deloitte Consulting BV
Partner Laan van Kronenburg 2
CRM, Social Media, Cloud Computing 1183 AS Amstelveen The Netherlands
Tel: +31 88 2882531 Mobile: +31 6 52672525 [email protected] Member of Deloitte Touche Tohmatsu
@theoslaats
© 2011 Deloitte The Netherlands
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