Cloud Computing 101 SAMPLE

Issue 2

April 28th 2012

www.alanquayle.com/blog

Outline: Part 1: Introduction to Cloud Computing

• Confusion and Cloud-Washing

• Cloud Consolidation

• History

• Vision

• Definitions – focus on NIST

• Cloud computing reference architecture

• Actors, Brokers, Consumers, Auditors,

• Cloud Types: Public, Private, Community and Hybrid

• Orchestration and Management

• Business support, security and privacy

• Cloud Benefits and Issues

• Cloud Misconceptions

• The Open Group Survey 2011

2

Outline: Part 2: Getting into the Details

• Mapping suppliers and technologies in Cloud Computing

• Understanding the economics behind the benefits

• Quantifying the benefits

• Cloud market taxonomy and market size

• CSPs and Cloud Computing

o AT&T, BT, DT, NTT, Orange, SingTel, Verizon

• Mapping the workloads

• SOA and the Cloud

• Cloud Computing in Asia

3

Outline: Part 3: Understanding the Components

• Summary: Web 2.0, SaaS, Utility Computing, Virtualization, SLAs, Autonomic computing, Grid

technology, Web Services, Service Oriented Architectures, Free and Open Source Software

• Deep Dive: Virtualization

o History

o Issues and Trends

o Supplier review: Citrix, IBM, Linux, Microsoft, Novell, Symantec, Oracle, VMWare

• Deep Dive: Data Centers

o History and the drive for efficiency and availability

o Changes and pressures on DC – drive for DC management

o Capex and opex DC costs

o DC economics drives cloud computing

• Deep Dive: Force.com, Google, Microsoft and Amazon

o Force.com

o Google App Engine

o Microsoft Azure

o Amazon Web Services

• Netflix deep dive • AWS walk-through

4

Outline: Part 4: Implementation

• Survey - what workloads others are moving into the cloud

• Summary

o Key points in cloud migration

o Industry : Workload : Cloudability Space

• Project Plan – example from IBM

• Decision Tree for implementing Cloud Computing

o The Open Group decision tree

• Security

o Reviewing SAS70, PCI DSS, ISO27001, NIST, HIPAA, FISMA, CoBIT, Data

Protection Directive, practical aspects

• Architectural Review

• Concluding Remarks

5

Cloud Computing Introduction

6

Outline: Part 1: Introduction

• Confusion and Cloud-Washing

• Cloud Consolidation

• History

• Vision

• Definitions – focus on NIST

• Cloud computing reference architecture

• Actors, Brokers, Consumers, Auditors,

• Cloud Types: Public, Private, Community and Hybrid

• Orchestration and Management

• Business support, security and privacy

• Cloud Benefits and Issues

• Cloud Misconceptions

• The Open Group Survey 2011

7

What is cloud computing?

8

Gartner view: hype cycle

9

10

We Live in Hyped Times! • “Amazon and PSN outages won't halt cloud revolution.” source The Register

• “SURVEY: Future-proofing the cloud.” source Network World

• “Virtualization, cloud computing to dominate Interop.” source Network World

• “Is Your Data Center Ready for Cloud Computing?” source Web Buyers Guide

• “Demystifying the Cloud – A Conversation with Dell’s CIO and CTO!” source Baseline Briefing

• “Cloud-enabled Wi-Fi: Less Dollars, More Sense” source Network World

• “Apple’s new services are expected to include a "digital locker" solution enabling consumers to

store their iTunes music, movie and television libraries on Apple servers for access on multiple

iOS-based devices.” source Fierce Mobile Content.

• “Brocade Unveils CloudPlex cloud architecture, an open framework for building virtualized data

centers, and offered a look at new technologies coming up in the near future to help make such

data centers possible. “ source CRN

• “CenturyLink goes from local to global player with Savvis acquisition.” source Fierce

Free Software Foundation founder Richard Stallman called cloud computing,

“worse than stupidity.”

Bottom-line: If you’re systems are down or you loose customer data its not the Cloud

Provider that suffers / goes out of business – they just issue a credit for the disruption. 11

First Phase of Cloud Consolidation

• Verizon acquired Terremark, a Infrastructure / Platform as a Service (I/PaaS)

provider, for $1.4 billion, to provide IT infrastructure services targeting the

enterprise market.

• Dell spent more than $2 billion in six months acquiring cloud technologies,

including PaaS provider Boomi, and is investing another $1 billion in a group of

global data centers.

• IBM acquired Cast Iron, Boomi’s competitor.

• Time Warner Cable acquired NaviSite.

• CenturyLink acquired Savvis

• Microsoft and Toyota forged a strategic partnership to build a global platform

for Toyota Telematics Services using Windows Azure.

• CA Technologies and Unisys entered into a joint venture that combines CA’s

virtualization and service management products with Unisys’ virtualization and

cloud advisory, planning, design and implementation services.

Likely see further consolidation as Telcos realizes their weaknesses in selling Cloud into enterprise – particularly small medium enterprise 12

Evolution

• Cloud computing has evolved through a number of

phases which include grid and utility computing,

application service provision (ASP), and Software as a

Service (SaaS).

• But the overarching concept of delivering computing

resources through a global network is rooted in the

sixties.

Those Sixties!!!

13

John McCarthy (1927-2011), 1961

“computation may someday be organized as a public utility.”

14

• One of the first milestones for cloud computing was the

arrival of Salesforce.com in 1999, which pioneered the

concept of delivering enterprise applications via a simple

website.

15

• The next development was Amazon Web Services in

2002, which provided a suite of cloud-based services

including storage, computation and even human

intelligence through the Amazon Mechanical Turk.

16

• Then in 2006, Amazon launched its Elastic Compute

cloud (EC2) as a commercial web service that allows

small companies and individuals to rent computers on

which to run their own computer applications.

17

• Another big milestone came in 2009, as Web 2.0 hit its

stride, and Google and others started to offer browser-

based enterprise applications, though services such as

Google Apps.

Purely representational purposes only!

18

• 2009 also saw the advent of Microsoft into the cloud

computing game with its product Windows Azure

• Azure as an operating environment "designed to manage

extremely large pools of computational resources." The simple

explanation is that Microsoft wants customers to run their

Windows-based applications over the Internet using

Microsoft's data centers, with Azure being the system that

organizes resources and handles spikes in demand.

19

• Many IT professionals recognize the benefits cloud

computing offers in terms of increased storage, flexibility

and cost reduction

• Considerations such as security, data privacy, network

performance and economics are likely to lead to a mix of

cloud computing centers both within the company

firewall and outside of it

And Now…….

20

The Dream of Cloud Computing

• Semiconductor Fabs Expensive – Typically > $1 Billion

– Too Much for Most Designers

• Fabs Take Outside Work – Fabs Amortize Cost

– Other Designers Make Chips

• Allowed Explosion of Designs – More Players Afford Rented Fab

• New Datacenters Very Expensive – Only a Few Companies Can

Afford Huge Datacenters

• Utility Computing Datacenter Owners Amortize Costs – Utility Computing Users Get

Advantages of Elasticity

– Datacenter Resources Shared Across Many Users

Utility Computing Integrated Circuit Foundries

But a private cloud doesn’t deliver scale? 21

The NIST Definition of Cloud Computing

o 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. This cloud model promotes availability

and is composed of five essential characteristics, three service models, and four deployment

models.

Characteristics 1. On-demand self-service 2. Broad network access 3. Resource pooling 4. Rapid elasticity 5. Measured service

Service models 1. Cloud Software as a Service (SaaS) 2. Cloud Platform as a Service (PaaS) 3. Cloud Infrastructure as a Service (IaaS)

Deployment models 1. Private cloud 2. Community cloud 3. Public cloud 4. Hybrid cloud

22

Why Now?

From T-Systems, who has delivered SAP dynamic services since 2004 23

NIST 3 Cloud Service Models

• Cloud Software as a Service (SaaS)

o Use provider’s applications over a network

• Cloud Platform as a Service (PaaS)

o Deploy customer-created applications to a cloud

• Cloud Infrastructure as a Service (IaaS)

o Rent processing, storage, network capacity, and other fundamental computing

resources

• To be considered “cloud” they must be deployed on top of cloud

infrastructure that has the key characteristics

24

Service Model Architectures

Cloud Infrastructure

IaaS

PaaS

SaaS

Infrastructure as a Service (IaaS)

Architectures

Platform as a Service (PaaS)

Architectures

Software as a Service

(SaaS)

Architectures

Cloud Infrastructure

SaaS

Cloud Infrastructure

PaaS

SaaS

Cloud Infrastructure

IaaS

PaaS

Cloud Infrastructure

PaaS

Cloud Infrastructure

IaaS

25

NIST Reference Model: Background • The NIST cloud computing definition is widely accepted as a valuable contribution toward providing a

clear understanding of cloud computing technologies and cloud services.

• It provides a simple and unambiguous taxonomy of three service models available to cloud consumers:

cloud software as a service (SaaS), cloud platform as a service (PaaS), and cloud infrastructure as a

service (IaaS).

• It also summarizes four deployment models describing how the computing infrastructure that delivers

these services can be shared: private cloud, community cloud, public cloud, and hybrid cloud.

• Finally, the NIST definition also provides a unifying view of five essential characteristics that all cloud

services exhibit: on-demand self-service, broad network access, resource pooling, rapid elasticity, and

measured service.

• These services and their delivery are at the core of cloud computing. In the cloud computing model, the

primary focus is a more economic method of providing higher quality and faster services at a lower cost

to the users.

• In the traditional IT service delivery model, there is a large emphasis on procuring, maintaining and

operating the necessary hardware and related infrastructure. The cloud computing model enables CIOs,

IT project managers and procurement officials to direct their attention to innovative service creation for

the customers.

26

NIST Reference Model: Background

• The NIST cloud computing reference architecture focuses on the requirements of

“what” cloud services provide, not a “how to” design solution and implementation.

• The reference architecture is intended to facilitate the understanding of the

operational intricacies in cloud computing.

• It does not represent the system architecture of a specific cloud computing system;

instead it is a tool for describing, discussing, and developing a system-specific

architecture using a common framework of reference.

• The design of the NIST cloud computing reference architecture serves the following

objectives:

o to illustrate and understand the various cloud services in the context of an overall cloud

computing conceptual model;

o to provide a technical reference to USG agencies and other consumers to understand, discuss,

categorize and compare cloud services; and

o to facilitate the analysis of candidate standards for security, interoperability, and portability

and reference implementations.

27

NIST Cloud Computing Reference Architecture

• The NIST cloud computing reference architecture defines five major

actors:

o cloud consumer,

o cloud provider,

o cloud carrier,

o cloud auditor and

o cloud broker.

• Each actor is an entity (a person or an organization) that participates in

a transaction or process and/or performs tasks in cloud computing.

• A cloud consumer may request cloud services from a cloud provider

directly or via a cloud broker.

• A cloud auditor conducts independent audits and may contact the

others to collect necessary information.

28

NIST Reference Model

29

Actors in Cloud Computing

30

Cloud Benefits & Issues

31

Benefits

• Shorter provisioning times: The provisioning of servers, applications, and application

environments is far quicker and cheaper to do leading to quicker time-to-market for new

products and services, shorter project timescales, and faster benefit realization.

• Reduced capital outlay: The ability to buy computing resources, whether applications or

infrastructure on a pay-as-you-go basis reduces the need for capital investment in hardware

and software. This in turn may make it easier to finance projects, which can rely upon

revenue generation to finance project outlay far sooner than would otherwise be the case.

The burden of upfront investment and thereafter capital depreciation and the risk of

stranded investments should a project fail is reduced.

• Allows more use of “try before you buy”: The ability to try a new product or service is

enhanced through the use of Cloud Computing services where the investment in trials and

proof-of-concept activities is much reduced. Trialing also reduces the risk of later

implementations.

• Reduces the cost of “one-off” activities: One-off activities which would otherwise be

extremely costly to finance with purchased or traditionally leased computing resources can

be more cheaply provisioned using Cloud Computing; e.g., migration or data

cleansing/conversion activities. 32

Cloud Misconceptions

33

SaaS is not dependent on PaaS which is not dependent on IaaS – They’re independent

• This illustration implies a relationship between IaaS, PaaS, and SaaS and gives rise to the idea that

the three service models are necessarily layered one upon the other. Although both software and

platform services will rely upon some elements of infrastructure (the fundamental “plumbing” of IT;

e.g., servers, network, storage), to infer that all SaaS is founded upon a PaaS and that in turn upon

IaaS is an extrapolation which will not stand closer analysis.

• Were this true, then for the service model and characteristics of Cloud Computing to apply then

each layer would have to be separately deliverable as a service with all the attendant components

allowing metering, account management, billing, self-service, etc.

• In reality, in a given purchase or consumption of Cloud Computing

services, the interaction is with one of these layers. One is either

buying or consuming software, platform, or infrastructure. That the

means by which the provision of this service is achieved is invisible

and of no concern is one of the founding concepts of Cloud

Computing. Although it is tempting to assume that all sellers of SaaS

services have reached extremely high levels of maturity in their

provision of infrastructure, that they employ sophisticated and

highly effective virtualization, for example, may not actually be the

case. At the level of service interaction of a consumer of SaaS it will

not be apparent and nor should it be. 34

The OpenGroup Cloud Computing Survey 2011

35

36

37

38

39

Part 2: Getting into the Details

40

Outline: Part 2: Getting into the Details

• Mapping suppliers and technologies in Cloud Computing

• Understanding the economics behind the benefits

• Quantifying the benefits

• Cloud market taxonomy and market size

• CSPs and Cloud Computing

o AT&T, BT, DT, NTT, Orange, SingTel, Verizon

• Mapping the workloads

• SOA and the Cloud

• Cloud Computing in Asia

41

One More Look at the Cost Model

UserHourscloud × (revenue – Costcloud) ≥

UserHoursdatacenter × (revenue – ) Costdatacenter

Utilization

How Much You Make Per User Hour in a

“Pay as You Go” Cloud

How Much You Make Total in a “Pay

as You Go” Cloud The Compute Cost

of the Work in a Datacenter

But You Pay for the Whole Datacenter Even When It Is

Underutilized!

Have to Increase the Charge for the Work You Do to Make Up for

Underutilization

How Much You Make Total in a Datacenter

Implementation of Your App

Utilization Assumptions Make a Big Difference in the Costs of Cloud

versus Datacenter!

42

43

Cloud-Based Infrastructure

Your Business

More Time to Focus on Your Business

Configuring Your Cloud

Assets

70%

30% 70%

On-Premise Infrastructure

30%

Managing All of the “Undifferentiated Heavy Lifting”

Cloud’s goal: flip this equation

44

Companies have different motivations for leveraging cloud

Risk &

Compliance 34,000-employee

bank deploying a

private cloud from

IBM to centralize

management of

desktops via an

enterprise class data

center rather than at

the user stations,

Gets greater remote

flexibility without

sacrificing control to

improve efficiency.

Employee

Productivity

Enable collaboration

across 300K global

employees as well as its

network of customers,

partners and suppliers.

Saving 30 minutes per

day or 120hr per year

per person.

IBM LotusLive has 18

million users in 99

countries

Analytics &

Security Operations support 9

major commands,

nearly 100 bases, &

700,000 active military

personnel around the

world. Design secure

cloud infrastructure for

defense & intelligence

networks; insights

about cyber attacks,

network, system or

application failures,

while automatically

preventing disruptions.

Time to Value

Creates an

ecosystem for PayPal

3rd Party developers

Reduces developer

effort to deploy a work

environment with

seamless PayPal Test

Sandbox access

45

IBM Cloud Business Model

Current IT

Spend

Strategic Change Capacity

Hardware, labor & power savings reduced annual cost of operation by 83.8%

Hardware Costs ( - 88.7%)

Labor Costs ( - 80.7%)

100%

Deployment (1-time)

Note: 3-Year Depreciation Period with 10% Discount Rate

Hardware Costs (annualized)

Liberated funding for new development, transformation investment or direct saving

Labor Costs (Operations and Maintenance)

Power Costs (88.8%)

Power Costs

Software Costs

Software Costs

New Development

Impact: Reduction of Total Cost of Ownership of

Data Center Infrastructure

Reduced Capital Expenditure

- Improved utilization reduces requirement for

new capital purchases

Reduced Operations Expenditure

- Lower facilities, maintenance, energy, IT

service delivery and labor costs

Additional Benefits

- Reduced risk, less idle time, more efficient

use of energy, acceleration of innovation

projects, enhanced customer service

Business Case Results Annual savings: $3.3M (84%) from $3.9M to $0.6M Payback Period: 73 days Net Present Value (NPV): $7.5M Internal Rate of Return (IRR): 496% Return On Investment (ROI): 1039%

ROI Analysis

Infrastructure Middleware Applications

Private

Cloud

@ In-house

Data Center

Virtual

Private

Cloud

@

Dedicated

Provider

Public

Cloud

@ Global

Provider

Business

Value

Level Of

Sharing

Full Cloud Taxonomy

Business

Processes

PURE

CLOUD

MARKET

EXTENDED

CLOUD

MARKET Infrastructure

Virtualization

Tools

BP

Virtualization

Tools

Dynamic

Infrastructure

Services

Integration-

as-a-Service

IaaS SaaS

PaaS BPaaS

Dynamic

Apps

Services

Dynamic

BPO

Services

Middleware

Virtualization

Tools

Apps

Virtualization

Tools

47

Infrastructure Middleware Applications

Private

Cloud

@ In-house

Data Center

Virtual

Private

Cloud

@

Dedicated

Provider

Public

Cloud

@ Global

Provider

Business

Value

Cloud market size 2012

Business

Processes

Level Of

Sharing

~$15b Market

~$28b Market

~$11b Market

PURE

CLOUD

MARKET

EXTENDED

CLOUD

MARKET

48

Cloud Service

Management

Provisioning

Change

& Config

Availability

& Performance

Service

Desk

Billing

Backup

& Recovery

Security

Master Data

Management

Infrastructure Middleware Applications Business

Value

Cloud market size 2012

Business

Processes

Level Of

Sharing

$8.3b $6.2b $13.2b $300m

$3.1b $300m $3.1b

$500m $12.5b $500m

$4.5b

$1.5b

Infrastructure

Virtualization

Tools

BP

Virtualization

Tools

Dynamic

Infrastructure

Services

Integration-

as-a-Service

IaaS SaaS PaaS

Dynamic

Apps

Services

Dynamic

BPO

Services

Middleware

Virtualization

Tools

Apps

Virtualization

Tools

BPaaS

Private

Cloud

@ In-house

Data Center

Virtual

Private

Cloud

@

Dedicated

Provider

Public

Cloud

@ Global

Provider

Purpose is to demonstrate the roles cloud computing plays and current market size 49

Cloud Services as a % of IT

Worldwide IT Spending by Consumption Model

IT Cloud Services

On-Premise IT

5%

10%

CAGR

26%

4%

44

17

0

100

200

300

400

500

600

2009 2013

Wo

rld

wid

e IT

Sp

end

ing

($

bil

lio

n)

359

416

50

Cloud Services Growth Impact

460.4

433.1

430

435

440

445

450

455

460

465

470

475

480

485

2012 2013

Wo

rld

wid

e I

T S

pe

nd

ing

($

bil

lio

n)

Net new IT growth = $27.3 billion

IT Cloud

IT Cloud Services growth

Traditional IT product growth

27%

73%

Sources of Incremental IT Spending Growth in 2013 Cloud vs. Traditional Products

51

Main topics to be addressed prior adoption of cloud computing paradigm

• Security

• Availability

• Performance

• Interoperability

• Flexibility

• Personalization

• Unit costs

• One time transition costs

• Total cost of ownership

• SLA stipulations

• Liabilities of the provider

• Lock-in risks and implications

It’s the same as any Service Provider Decision: Don’t get locked-in 52

Cloud Computing and Telcos

53

Telcos in the Cloud

• Telcos committed US$11 billion to cloud pursuits in 2011

o Eight out of 10 transactions involve datacenter assets

• Service differentiation remains poor

o 122 new services, 70% mass-market offers, heavy SaaS usage

• Telco strengths are underplayed

o Security and cloud mobility aren’t creating an unfair advantage

• ROI is a long game….

o Cloud services contribute a single-digit percentage of telco revenues today

• Few have solve the problem of enterprise credibility

54

55

56

AT&T

57

Cloud APIs

58

119 Cloud APIs On Programmable-Web

59

Deutsche Telekom

60

T-Systems Cloud Positioning

T-Systems has created significant thought

leadership collateral in the Cloud Computing space. Its positioning of Cloud computing has received broad endorsement, its

Dynamic Enterprise Cloud positioning has won it significant business in

Germany. If offers end to end SLAs,

from the desk top to the data center. While other

operators have struggled to make that end to end offer T-Systems was one of the first

(in Germany anyway.) “In Germany we are the only

provider to offer cloud services with an end to end SLA.” source VP Networks

61

NTT

62

Keane provides extensive IT credentials in SAP and Oracle implementations across many industries as well as across the enterprise application stack. 63

Keane becomes the face of NTT Data America, the solutions group within NTT Data aims to achieve common solutions across regions, though the mobile link remains weak.

64

Intelligroup has extensive SAP and Oracle implementation experience in Pharmaceutical, manufacturing and consumer goods verticals. 65

Value Team is an Italian IT Consultancy, that is also strong in LATAM, again buying IT market share. Deal was announced in April 2011. With this acquisition NTT Data now has solid global coverage.

66

How the NTT Groups Fits Together

Dimension Data focuses on deployment (of communication platforms – Cisco and Microsoft) and maintenance of IT systems. NTT Communications focused on transport services. NTT Data

focused on IT Services. However, in practice there are many overlaps in Europe, Latin America and North America. 67

Orange Business Services

68

Cloud Roadmap

69

OBS Cloud Roadmap

70

71

Verizon Business

72

Everything as a Service Evolution

73

Verizon Buys Terremark

• In January Verizon announced plans to acquire Terremark Worldwide for U.S.$1.4 billion or U.S.$19

per share in cash—an acquisition price that is four times Terremark’s projected 2011 revenue of

U.S.$351 million.

• The acquisition highlights the unique market dynamics of cloud computing. Not since the dot-com

boom has a market seen such explosive growth in startups together with rapid consolidation and

acquisition. It’s a land grab, and Verizon just bought a big chunk.

• In September 2010, Verizon entered into a partnership with Terremark that focused on the SMB

segment. Verizon’s Computing as a Service (CaaS) SMB runs on Terremark’s infrastructure and data

centers, but Terremark also has a strong presence in the large enterprise and federal government

segments.

• The acquisition instantly gives Verizon a stronger position in the enterprise cloud computing market.

• The acquisition is also good news for enterprises, because those that want to adopt cloud computing

services now have more and better options.

• Also in January Hewlett-Packard announced its HP Enterprise Cloud Services-Compute, a service that

expands its offerings and enables it to position hybrid cloud to enterprises.

Verizon’s acquisition of Terremark demonstrated VZB was committed to dominating the Cloud Computing business . In part VZB was struggling with CaaS in gaining broader

market adoption – Terremark solves this issue. 74

Verizon Benefits

• Data center scale and build-out skills.

o Terremark has 567,000 square feet of data center space available as of Q2 2011, with

significant room to grow. More importantly, Terremark knows how to build data centers

that are uniquely able to deliver cloud computing services to enterprises.

• Growth in managed services.

o Fifty percent of Terremark’s business is higher margin managed services, including

enterprise cloud computing services.

• Strong security skill set.

o According to Yankee Group’s Anywhere Enterprise: 2010 U.S. Cloud Computing

FastView Survey, security is still one of the leading barriers to enterprise adoption of

cloud computing (see next slide).

o Coupled with Verizon’s acquisition of CyberTrust, Terremark’s Federal Information

Security Management Act (FISMA)-compliant data centers and best-of-breed cloud

security expertise give Verizon meaningful competitive differentiation.

VZB now has the best security credentials of any cloud based service provider. If it can persuade the broader market of these credentials it has the ability to dominate the global

market. 75

Example CaaS portal 76

CloudSwitch Bought by Verizon in August 2011

77

Why CloudSwitch?

78

Mapping the Workloads Some Practical Discussion

79

Defining the Map

• Start by grouping enterprise applications into classes of

applications.

• Then depending on the lifecycle ( e.g. Test & Development, Staging

or Production) , usage environment and security requirements of a

class of applications, an enterprise architect can define a set of

principles and guidelines to help decide when to use cloud

computing service and what type of service to use.

• Next slide shows an example from an enterprise architect of a well

known global brand.

80

Example of One Enterprises’ Mapping

Class of Enterprise Applications

Test & Development

Staging Production

Business Communications

Virtual Private Cloud

Virtual Private Cloud Private Cloud

CRM (e.g. SAP, Salesforce.com)

Public Cloud Virtual Public Cloud Public Cloud

Applications supporting critical business processes

Public Cloud Virtual Private Cloud Private Cloud

Productivity Improvement

Public Cloud Virtual Private Cloud Public Cloud

Financial Virtual Private Cloud

Virtual Private Cloud

Private Cloud

81

Reality Check: Its not just security

• One of the main barriers to enterprise adoption of cloud computing

service is the effort required to migrate corporate applications from

their internal hosting service to public cloud or virtual private cloud

and vice versa.

• Technology such as Verizon CloudSwitch service is now available to

allow an enterprise user to seamlessly switch applications between

their internal (e.g private cloud ) hosting service and Virtual Private

Cloud or Public Cloud.

• This type of technology should help drive down the barrier to future

user adoption of third party provided cloud computing service.

82

Cloud Migration Reality Check Part 1

• Standalone web applications built specifically for a particular cloud can be rolled out

quickly and relatively easily using templates offered by the cloud provider or software

from third parties.

• But it’s far more complex to run an enterprise application in a preferred public cloud

while staying integrated with the internal environment and its associated services,

processes, tools, and relationships.

• Moving an enterprise application to a cloud takes extensive manual configuration,

complex engineering, and trial and error — with success not always assured.

A whole landscape of specifications for OS versions, storage, networks, and

management tools has to be mapped and modified for an external environment that

is usually unfamiliar to internal IT staff.

• In addition, the applications almost always need to reach back to services and

processes in the data center, setting up a number of integration issues that are not

easily resolved. Thus, migration projects often take weeks or longer, preventing many

companies from even considering cloud deployment.

83

Cloud Migration Reality Check Part 2

• The separate, largely isolated environment imposes management

challenges that don’t occur internally when the application is under

enterprise control.

• These same challenges also apply to new enterprise applications

developed in the cloud since they also require integration with data

center tools, processes, and services.

• Everything from authentication and authorization to internal

databases and basic services has to be managed separately for an

application to run in the cloud.

84

Source of Cloud Migration Delay and Blocking

• 1. Rebuilding the application stack within the cloud

• 2. Setting up the network

• 3. Adding end-to-end security

• 4. Managing the application in a separate environment

85

1. Rebuilding the Application Stack

• The cloud has a model similar to a virtualized data center environment where users or administrators can

provision virtual resources such as CPU, memory, and storage from a pool of physical resources.

• However, the processes used for building, launching, and managing servers in a public cloud are very different

from those used internally.

• Most cloud providers today require you to start from one of their base templates. These templates are customized

for a particular environment, including tools, drivers, agents, or specific configurations for leveraging the available

networking and storage capabilities.

• Even when a provider offers a method for uploading existing application images, the drivers, tools, and

modifications associated with an application must be included for compatibility with the chosen cloud

environment.

• This creates a different starting point and will affect how application stacks are built and maintained.

• Using the cloud requires that these components be rebuilt to match the cloud provider’s environment. Many

applications take advantage of services that exist within a data center, such as DNS or LDAP, that are not available

in the cloud.

• This requires re-architecting the applications that depend on these services, whether duplicating the services

within the cloud, building methods to extend existing services to the cloud, or some combination of the two.

• These differences between the data center and the cloud trigger a chain of integration issues including potential

changes in base operating systems, storage, networking, virtualization, and shared services.

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1. Rebuilding the Application Stack: OS

• The cloud provider will specify operating system versions as well as versions for

related components such as storage and network devices, drivers, and

virtualization tools.

• However, complying with their requirements can be problematic. For example,

in Linux environments, cloud providers require a particular kernel version

which must be matched by any application-specific kernel modules.

• This is particularly difficult when using third-party software since the required

code and/or tools may not be available to allow recompilation.

• The hypervisor version also has to match, as do the drivers and tools which

interact with it. Conflicts may not be easy to resolve — for example, if a cloud

provider is using VMware ESX 3.5, and the enterprise has already moved to ESX

4.0.

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1. Rebuilding the Application Stack: Storage

• Storage and data management challenges in the cloud result from the diverse and often

unfamiliar processes offered by cloud providers.

• Cloud providers define the relationship between servers and storage, and often impose

constraints on everything from allocation size limits to the ways in which storage is

managed. Enterprise customers will also have to adjust to two major storage differences:

ephemeral storage and lack of shared storage.

• Perhaps one of the most disorienting features in the cloud is the use of ephemeral storage,

which means that if you turn off the server, or it has a hard fault, everything on the drive is

lost (data, boot parameters, updates, logs, etc.).

• This type of storage is fine for stateless servers (think web tier servers) which receive the

data they need from another source during operation, but is impossible to use for many

enterprise applications.

• The introduction of this type of storage into your operating environment adds a

management burden since you have to actively avoid using it for things that are important

to you. 88

1. Rebuilding the Application Stack: Storage

• The second major storage difference is the general lack of shared storage in the cloud.

Shared storage is widely used in high availability and redundancy configurations, where if

one server goes down, others pick up the workload because they

• map to the same disk.

• Today’s clouds are unable to map a storage device to more than one server, so shared

storage in the cloud is currently not possible. As a result, high availability must be

achieved through some different and less proven architecture.

• This type of fundamental change highlights a major problem when adapting existing

applications to meet cloud requirements: the need to redesign the application to run

without a “tried and true” solution.

• Further, if the application is developed using third party software (such as Oracle), there

may be no opportunity to “redesign” it. Rather, you would have to select a different

product or manufacturer to get the necessary functionality.

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1. Rebuilding the Application Stack: Replicating Data Centers

• Most enterprise applications work with a range of tools and services such as identity

management, monitoring, and directory services. When applications which rely on

these services are moved into the cloud, or new ones are created there, the

applications become disconnected from the data center, breaking important

relationships and dependencies.

• Therefore these key services and control processes need to be modified, replaced, or

possibly even eliminated to accommodate the cloud provider’s environment.

o Do you create a separate version of internal processes and control systems to run

independently within the cloud?

o Do you implement new services in the cloud with similar capabilities and find a way to tie them

back to the data center?

o Do you simply retool or build the application so it doesn’t depend on those services?

• The usual approach is to engage a professional services firm to assist in porting and

integrating the environment, or the cloud provider may provide similar services as

part of their managed hosting. The typical result is a lot of heavy (and expensive)

lifting in order to make it work.

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SOA and the Cloud Service Oriented Cloud Computing Infrastructure

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Cloud Computing In Asia Frost and Sullivan Analysis

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Part 3: Understanding the Components: Enabling Technologies

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Outline: Part 3: Understanding the Components

• Summary: Web 2.0, SaaS, Utility Computing, Virtualization, SLAs, Autonomic computing, Grid

technology, Web Services, Service Oriented Architectures, Free and Open Source Software

• Deep Dive: Virtualization

o History

o Issues and Trends

o Supplier review: Citrix, IBM, Linux, Microsoft, Novell, Symantec, Oracle, VMWare

• Deep Dive: Data Centers

o History and the drive for efficiency and availability

o Changes and pressures on DC – drive for DC management

o Capex and opex DC costs

o DC economics drives cloud computing

• Deep Dive: Force.com, Google, Microsoft and Amazon

o Force.com

o Google App Engine

o Microsoft Azure

o Amazon Web Services

• Netflix deep dive • AWS walk-through

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Location and Scale: It’s Easier to Ship Data than Power!

• Datacenters Are Popping Up in Surprising Places

o Quincy, WA

• Google, Microsoft, Yahoo!, and Others…

o San Antonio, TX

• Microsoft, US NSA, and Others…

Price per Kilo Watt Hour

Where? Possible Reason Why

3.6 cents Idaho Hydroelectric Power; Not Sent Long Distance

10.0 cents California Electricity Transmitted Long Distance over the Grid; Limited Transmission Lines in the Bay Area; No Coal Fired Electricity Allowed in California.

18.0 cents Hawaii Must Ship Fuel to Generate Electricity

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Data Center Economics – simply scale

Scale is the main driver for cloud computing – its 5-7 times cheaper than doing it in house. This is the fundamental principle of Amazon’s business model. So why focus on a private

cloud when it doesn’t have scale?

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Understanding the Internet Companies

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Mapping the Cloud Development Platform Landscape

Web Centric

Enterprise Centric

Best Effort

High Availability

Adding capabilities Improving Availability

Move into hosted / managed solutions

The challenge for Google and Amazon is can they break out of the ‘geek developer’ into mainstream enterprise, or will Oracle and IBM’s approach of providing integrated web-centric and enterprise-centric solutions be preferred by the buyers of enterprise services? See Oracle and IBM analysis for more details on their approach.

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Amazon Web Services

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AWS Customers: Netflix.com

- More than 9 Billion USD market cap - Migrating 100% on Amazon Web

Services - So far: movie lists, website search,

transcoding, recommendations, etc. - 24 M subscribers, 100k+ DVD titles

"AWS let us focus on innovation"

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AWS Customers: Customers in 190 Countries

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AWS Customers: Asia Pacific customers

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Part 4: Implementation

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Outline: Part 4: Implementation

• Survey - what workloads others are moving into the cloud?

• Summary

o Key points in cloud migration

o Industry : Workload : Cloudability Space

• Project Plan – example from IBM

• Decision Tree for implementing Cloud Computing

o The Open Group decision tree

• Security

o Reviewing SAS70, PCI DSS, ISO27001, NIST, HIPAA, FISMA, CoBIT, Data

Protection Directive, practical aspects

• Architectural Review

• Concluding Remarks

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Survey: Implementing in Your Organization Recent Survey

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Implementing in Your Organization Project Plan

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Workloads ready for cloud computing

• Analytics

– Data mining, text mining or

other analytics

– Data warehouses or data marts

– Transactional databases

• Business services

– Customer relationship

management

(CRM) or sales force automation

– E-mail

– Enterprise resource planning

(ERP) applications

– Industry-specific applications

• Collaboration

– Audio/video/Web conferencing

– Unified communications

– VoIP infrastructure

• Desktop and devices

– Desktop

– Service/help desk

• Development and test

– Development environment

– Test environment

• Infrastructure

– Application servers

– Application streaming

– Business continuity/

disaster recovery

– Data archiving

– Data backup

– Data center network capacity

– Security

– Servers

– Storage

– Training infrastructure

– Wide area network (WAN)

capacity

Source: IBM Market Insights, Cloud Computing Research, July 2009.

Decision Tree for Cloud Computing

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Summary

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Implementing in Your Organization Architecture

126

Concluding Remarks

127

Gartner view: hype cycle

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But it does make sense for some functions within some organizations…. 130

NIST Reference Model

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Elasticity, Risk, and User Incentives Services Will Prefer Utility Computing to a Private Cloud When:

Demand Varies over Time

Provisioning for Peak Leads to Underutilization at Other Times

Pay by the Hour (Even if the Hourly Rate is Higher)

Demand Unknown in Advance

Web Startup May Experience a Huge Spike If It Becomes Popular

Pay as You Go Does Not Require Commitment in Advance

The Value of Cost Associativity

UserHourscloud × (revenue – Costcloud) ≥

UserHoursdatacenter × (revenue – ) Costdatacenter

Utilization 132

Cloud Is Mostly Driven by Money

Economics of Cloud Computing Are Very Attractive to Some Users

Cloud Computing Will Track Cost Changes

Better than In-House

Investment Risks May Be Reduced

Predicting Application Growth Hard

In-House, You Must Provision for Peak

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Cloud-Based Infrastructure

Your Business

More Time to Focus on Your Business

Configuring Your Cloud

Assets

70%

30% 70%

On-Premise Infrastructure

30%

Managing All of the “Undifferentiated Heavy Lifting”

Cloud’s goal: flip this equation

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Benefits

• Shorter provisioning times

• Reduced capital outlay

• Allows more use of “try before you buy”

• Reduces the cost of “one-off” activities

• Costs associated with testing can be reduced

• Reduction in internal data center capacity

• Better architecture and design

• Consolidation and central administration:

• Greener IT

• Resources

• Improved administration and maintenance:

• Better quality services available from Cloud Computing:

• Better security

• Flexibility

• Improved financial control 135

Issues

• IT security and compliance

• Not mature

• Lack of clear definition of components

• Software licensing

• Service delivery clarity

• Calculating costs of service

• Integration

• Green IT

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IBM Cloud Business Model

Current IT

Spend

Strategic Change Capacity

Hardware, labor & power savings reduced annual cost of operation by 83.8%

Hardware Costs ( - 88.7%)

Labor Costs ( - 80.7%)

100%

Deployment (1-time)

Note: 3-Year Depreciation Period with 10% Discount Rate

Hardware Costs (annualized)

Liberated funding for new development, transformation investment or direct saving

Labor Costs (Operations and Maintenance)

Power Costs (88.8%)

Power Costs

Software Costs

Software Costs

New Development

Impact: Reduction of Total Cost of Ownership of

Data Center Infrastructure

Reduced Capital Expenditure

- Improved utilization reduces requirement for

new capital purchases

Reduced Operations Expenditure

- Lower facilities, maintenance, energy, IT

service delivery and labor costs

Additional Benefits

- Reduced risk, less idle time, more efficient

use of energy, acceleration of innovation

projects, enhanced customer service

Business Case Results Annual savings: $3.3M (84%) from $3.9M to $0.6M Payback Period: 73 days Net Present Value (NPV): $7.5M Internal Rate of Return (IRR): 496% Return On Investment (ROI): 1039%

ROI Analysis

Workloads ready for cloud computing

• Analytics

– Data mining, text mining or

other analytics

– Data warehouses or data marts

– Transactional databases

• Business services

– Customer relationship

management

(CRM) or sales force automation

– E-mail

– Enterprise resource planning

(ERP) applications

– Industry-specific applications

• Collaboration

– Audio/video/Web conferencing

– Unified communications

– VoIP infrastructure

• Desktop and devices

– Desktop

– Service/help desk

• Development and test

– Development environment

– Test environment

• Infrastructure

– Application servers

– Application streaming

– Business continuity/

disaster recovery

– Data archiving

– Data backup

– Data center network capacity

– Security

– Servers

– Storage

– Training infrastructure

– Wide area network (WAN)

capacity

Source: IBM Market Insights, Cloud Computing Research, July 2009.

MPLS SLA

Data Center SLA

Mind the SLA Gap!

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Beware Lock-In

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Source of Cloud Migration Delay and Blocking

• 1. Rebuilding the application stack within the cloud

• 2. Setting up the network

• 3. Adding end-to-end security

• 4. Managing the application in a separate environment

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