cloud computing and roi

© 2009 IBM Corporation

IBM

Cloud Computing

The Importance of Service Management in Managing Cloud Based Services

What Drives the ROI?

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IBM


Agenda

Pressures on IT today

Cloud Computing lowers costs improves ROI

Service Management is the key to cost savings

Options for service management enabled cloud delivery

Summary

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Pressures on IT today…

Conflicting demands in your business; users want resources, executives want innovation and the CFO wants lower costs

Concerns about your organization's ability to meet demand

Inability to complete critical projects on time because skilled personnel are performing mundane manual tasks

Need for flexibility in the IT infrastructure to respond to dynamically changing condition

…Many IT managers are exploring cloud computing to address these critical challenges

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IBM

© 2009 IBM Corporation4

…and cloud computing accelerates cost reduction benefit

Cloud computing is a new service consumption and delivery model inspired by consumer Internet services.

On-demand self-service

Ubiquitous network access

Location independent resource pooling

Rapid elasticity

Cloud Computing

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Major factors driving cloud economics

On demand self service

Virtualization of Hardware

Automated management

Multiple standard workloads per

system

Lowers labor costs by automating routine tasks

Improves productivity by delivering services faster

Drives lower capital requirements

Improves hardware utilization

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Cloud computing drives down costs

Traditional Infrastructure

• x86 servers – one application per server• 10% average hardware utilization rate• Manual operations & maintenance

Internal Private Cloud

• x86 servers – full virtualization • 50% average hardware utilization rate• Service management platform

versus

Can reduce IT labor cost by 50% in configuration, operations, management and monitoringCan improve capital utilization by 75%, significantly reducing license costsReduce provisioning cycle times from weeks to minutes Can reduce end user IT support costs by up to 40%

Internal Private Cloud drives cost savings

(IBM projections based on customer work)

Scale

Unit cost


Enterprise Cloud

Large enterprises can significantly reduce costs for some workloads compared with traditional IT

Why…

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IBM


Service management enables cloud cost savings

A large portion of the cloud savings are associated with labor reductions derived though process automation enabled by a

service management system

Differentiated Business Services

VisibilityVisibilityVisibility ControlControlControl AutomationAutomationAutomation

IBM Service ManagementIBM Service ManagementIBM Service Management

VisibilityVisibilityVisibility ControlControlControl AutomationAutomationAutomation

IBM Service ManagementIBM Service ManagementIBM Service Management

Business Objectives

Manage Risk Reduce CostImprove Service

Business Objectives

Manage Risk Reduce CostImprove Service

Business Processes

IT Assets Business Assets

IT Processes

People InformationBusiness Indicators IT Indicators

Business Processes

IT Assets Business Assets

IT Processes

People InformationBusiness Indicators IT Indicators

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Year 1 Savings by Category

Provisioning Cost38%

Sys. Admin. Cost40%

Software -3%

Testing Productivity

4%

Hardware 15%

4.85 $1,313,958.33$6,172,325.64

469.75%156.58%

Estimated ROI over 3 yearsEstimated avg. annual ROI

Payback Period (months)

Net Present Value (NPV) Total Initial Investment for Test Cloud

ROI analysis example- Banking (large # of servers)

= Service Management driven savings

Cumulative Cost Comparison -- With and without Cloud

$0.00

$5,000,000.00

$10,000,000.00

$15,000,000.00

$20,000,000.00

$25,000,000.00

$30,000,000.00

TransformationPoint

Year-1 Year-2 Year-3

Cum

ulat

ive

Expe

nses

Current IT Model Accumulated Costs Test Cloud Model Accumulated Costs

ROI projections from IBM Research Study 2009

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IBM


12.18 $294,583.33$669,678.84

227.33%75.78%




Year 1 Saving by Category


34%

Sys. Admin. 32%

Software -1%

Hardware 29%

Provisioning 4%

ROI analysis example- Manufacturing (SO account - small)




$0.00$200,000.00$400,000.00$600,000.00$800,000.00

$1,000,000.00$1,200,000.00$1,400,000.00$1,600,000.00$1,800,000.00$2,000,000.00

TransformationPoint


Cum

ulat

ive

Expe

nses


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Year 1 Saving by Category

Sys. Admin. Cost42%Provisioning

Cost22%


25%

Hardware 10%

Software 1%

6.82 $302,958.33$935,880.13

308.91%102.97%




ROI analysis example- Banking (medium # of servers)



$0.00$500,000.00

$1,000,000.00$1,500,000.00$2,000,000.00$2,500,000.00$3,000,000.00$3,500,000.00$4,000,000.00$4,500,000.00$5,000,000.00

TransformationPoint


Cum

ulat

ive

Expe

nses



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IBM


Service Management- the key to unlocking cloud savings

A service management system provides the visibility, control and automation needed for efficient cloud delivery in both public and private implementations:

Simplify user interaction with ITUser friendly self-service interface accelerates time to valueService catalog enables standards which drive consistent service delivery

Provisioning enables policies to lower costAutomated provisioning and de-provisioning speeds service delivery Provisioning policies allow release and reuse of assets

Increase system administrator productivityMove from management silos to a service management system

On average, 81%* of Cloud payback is driven by labor savings enabled by service management

*Average of the three studies referenced in this presentation which are based on IBM Research study 2009

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IBM


Service Management: Self-service portal and service catalog

…Improves customer satisfaction by accelerating service delivery

Allows end users to use IT services without being an expert in IT

Users can see what resources are

available, request the services they need,

when they need them, for the time they need them

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IBM


Deliver Services Faster using Automated WorkflowsWait time for services decreased by an average 98%*

Traditional InfrastructureFill out paper request

Call IT daily to check status

Hope hardware is available

Provisioning is manual and inconsistent

Cloud with service mgt.Automated with self serve portal

Track workflow status online

Services when you need them

Provisioning is automated with implemented standards

Fill out required forms Request/track services online*Based on IBM Research study 2009

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IBM


Service Management: Service catalog drives standards

Lack of standards leads to problems… here is a real life client example

A Critical new application is being developed

The Developer looks for system resources and finds old out-of-date development environment

During production deployment, IT discovers the application won’t run in the current production OS

To meet project demands, the out-of-date environment configuration is put in production to satisfy the critical business need

Versus:

The Service Catalog contains standardized images and environments that are automatically updated

The Developer gets a “production standard”environment when needed with an outstanding user experience via the self serve portal

…standard services avoids unexpected problems

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…Speeds delivery of services via easy-to-use provisioning

Service Management: Automated provisioning

Library of scenarios available for common provisioning tasks

Resources can be made available in minutes versus

weeks

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IBM


Provision systems faster, with lower cost and consistent qualityLowers provisioning cost by an average 51%*


Experts deploy and configure

Many error prone steps to execute

Long lead time required

Cloud with Service Management

Automation does the work

Provisioned consistently every time

Available when customer needs it

Manually configure systems Automation does the work

*Based on IBM Research study 2009

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IBM


Service Management: Leverage automated provisioning to set policy

Have policies for provisioning new images

Policy action: Before existing image is provisioned always check and apply new patches

Instead of having resources sit idle for months

Policy action: At end of scheduled time:

Take image of environment to allow for recreation

De-provision resource and return to pool

…consistent policies improves service quality and reduces costs

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IBM


Stay on top of changing conditions to control service quality and expenses…Average administration and support costs reduced 40%*

Measure the performance and availability of critical virtual server resources, correlate business events and understand the impact of problems on the business

Examine how power is consumed across entire data center (IT infrastructure and facilities), and model opportunities to conserve power & save money using the ability of the cloud to move workloads

Analyze costs, budget, plan, track, allocate and invoice by department, user and many additional criteria

Centralized Identity and Access Control policies provides fast and affordable adherence to security compliance

*Based on IBM Research study 2009

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Move from silos to service management system


Not proactive to problems

No integrated view of security

Debate charges with business units, guess at utilization

Cloud computing with service management

Integrated management with automated remediation

Manage security end to end

Bill, plan & budget based on actual usage data

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IBM


Getting started with cloud service management

Tivoli Service Automation Manager (introduced in November 2008)Powered by Tivoli process automation engine and associated products. Services for customization are also available upon request

IBM CloudBurst (introduced in May 2009)

A purpose built service delivery platform that leverages the same software components in the Tivoli

Service Automation Manager, including a service management

system as well as integrated purpose built workflows

Rapidly deploy a turn-key test environment with little to no customization

Leverage existing hardwareinvestments and build a customized solution

The choice is yours…

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IBM


Service management software to deploy and manage IT infrastructure components for client production platforms and provide end users with

direct access to cloud computing resources

IBM Tivoli Service Automation Manager

Customer Benefits

Improved Innovation – Dramatically improve business value and IT’s effect on time-to-market by enabling production workloads to rapidly and accurately be deployed on multiple platforms when and where they are needed.

Decrease operational expenses –Gain productivity increases in IT labor costs through user centric self-service

Service Subscription

Service Delivery

Service Activation

Service Design

Service Operations

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IBM


Integrated service management offering with network, servers, storage, quickstart services, and financing as an integrated

offering for client test platforms

IBM CloudBurst

Designed from IBM client engagements

Customer Benefits

Improved time to value-Quickly deliver a private cloud using a preloaded and integrated system

Improved innovation- Dramatically improve business value and IT’seffect on time-to-market by delivering services faster

Decrease capital expenses –Maximize capital usage and reduce added capital expense.

Reduce complexity and risk- With automation and standardization the human error factor is minimized.

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IBM


FutureAvailable

IBM has a broad set of cloud offerings

Smart Business on the IBM Cloud

Smart Business Cloud

Smart Business Systems

Standardized services on the IBM Cloud

Pre-integrated, workload optimized systems

Private cloud services, behind your firewall, built and/or

managed by IBM

Smart Business Development & Test

on the IBM Cloud

Smart Business Desktop on the IBM

Cloud; Smart Business Self

Enablement Portal

Smart Business for SMB (backed by the IBM cloud)

IBM CloudBurstw/Quickstart Svces

Analytics Collaboration Development and Test

Desktop and Devices

Infrastructure (compute /

storage)

BusinessServices

BPM Blueworks (design tools GER

from MBPS

Smart Analytics System

Powered by Infosphere

Smart Analytics Accelerator

Powered by InfosphereSmart Business Desktop Cloud

Smart Business TestCloud

Scale out File Services

IBM CloudBurstw/Quickstart Svces

Information Protection Services; Computing

on DemandLotusLive

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IBM


Why Cloud with IBM…

IBM Capabilities Deep business, technical architecture and infrastructure expertise Proven tools, assessments and workshops Best practices from client interactions Experiences from our own IBM transformation The broadest systems, storage, software and services cloud portfolio in the industry Proven IBM Service ManagementFinancing optionsBusiness partners

IBM Worldwide ResourcesExecutive Briefing CentersProof of Concepts and Benchmark CentersCloud Computing CentersIBM Research

http://www.ibm.com/ibm/cloud/

cloud computing and roi

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