the cloud -what it means to the phoenix data center community

The Cloud - What it Means to the Phoenix Data Center Community

Copyright © 2016 Deloitte Consulting LLP. All rights reserved. 2

• About Us

• Cloud Fundamentals

• Cloud Trends

• Impacts to the Local Data Center Community

• Closing and Q&A

Contents

3

About Us


DeWayne and Matthew from Deloitte’s Technology Strategy & Architecture groupIntroductions

Matthew Leybold

Matthew is a Senior Manager in Deloitte’s Technology Strategy & Architecture practice. He is a leader with Deloitte’s Cloud & Infrastructure service offering, and maintains a focus in Infrastructure Transformation, Data Center and Cloud Migration, and IT Business Management.

Matthew's most recent delivery engagements include a data center rationalization program for a global investment bank, Cloud Strategy for a Top 5 US Bank, and a private cloud sourcing strategy and design for a Top 3 global telecommunications and media provider.

DeWayne Holmes

DeWayne is a Specialist Leader in Deloitte Consulting’s Technology Strategy & Architecture Practice. He brings more than 25 years of experience focusing on architecture and design for global data center, cloud/infrastructure and IT operating model strategies to enable business transformations.

His specific skills and experiences include IT and Cloud strategy and assessments, IT architecture design and consolidation strategies, IT integration and carve-out to support M&A, program and project management, systems architecture & networking, test & verification and quality assurance. He has successfully delivered these services to both Fortune 500 and Public Sector clients.


Our practice helps clients deliver infrastructure transformations to enable business strategies

Deloitte’s Cloud and Infrastructure Consulting Practice

We advise, design and implement hybrid cloud visions, strategies, roadmaps and architectures that incorporate a range of different cloud service delivery models

Cloud Enablement

Network & Communication

We architect, design and deliver transformational programs to increase the flexibility and reduce the cost of an enterprise’s networks

Operating Model & Autonomics

We advise on the development of next generation operating models by combining agile delivery with the power of cognitive IT to increase the speed, quality, and consistency of IT services provided to the business

Infrastructure Modernization

We select, design, optimize and transform infrastructure and Data Center facilities including Software Define Data center implementations, DR planning and strategy, and large-scale migration optimizations

Workspace & Collaboration

We develop and implement strategies for workplace services that optimize end user experience –increasing productivity and decreasing cost and administration effort

6

Cloud Fundamentals


Cloud Computing is disrupting enterprise operating models

Cloud computing Cloud computing is a new service delivery model for infrastructure capacity (facilities, compute, storage, network, etc.), that is changing the face of the Data Center hosting industry. Co-location and Managed Service Providers (MSPs) are augmenting their service offering and operating constructs to better serve enterprise demands for cloud computing services.

Cloud is impacting the way hosting providers delivery service

Think about…..

What is Cloud Computing?

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


Primary Drivers for Cloud Adoption

Gain greater flexibility on architecture and sourcing, scale up and down as needed, maximize efficiency, accelerate time to value, reduce time to start up and complete projects

Increased Business AgilityShift focus from asset ownership to servicesTap into private sector innovationEncourages entrepreneurial cultureBetter linked to emerging technologies

Innovation

Use of “pay-as-you-go” model instead purchase/leaseMove IT costs from CAPEX to OPEX

Reduce IT capital spendingAs routine processes are automated through Cloud, resources can be re-positioned to higher value-add activities

Reallocation of resources

Data center providers will need to provide their customers standardized product sets, faster delivery, and a focus on service oriented delivery


Key Characteristics of a Cloud Platform

Dynamic On-Demand Provisioning. The ability to add capability and capacity as rapidly as business requires

Scalable React quickly to increased business demand, acquisitions, or new business models without large CapEx expenditures and increased long run-off periods

Multi-Business Cloud computing delivers shared capacity across business lines, reducing duplicate environments

Self-Service Creating environments, enhancing capabilities, adding capacity with less labor and reduced lead times

Flexible Pricing Recapture capacity and spend for use in other areas as business demands fluctuates

Digital-Based Architecture Cloud architectures are based on virtualized environments defined by their use not by hardware

Customers will continue to consume a larger percentage of IT services through automated provisioning and self service capabilities


Cloud offerings allow for hosting applications on standardized, highly automated hardware, that allows us to leverage cloud economics, compared to traditional stand alone servers and storage

Different Types of Offerings

Public Hybrid Private

Application Middleware and Mgmt

Application Host and Run

Applications

Facilities / Monitoring / Support

Networking

Servers / Storage

Virtualization

Services

Off-premisesor external

On-premisesor internal

Integrated public & private

service

Operating System

Software-as-a-Service

Platform-as-a-Service

Infrastructure-as-a-Service

Software that provides a specific built-for-purpose business service to the client

Ready-to-use scalable. integrated app & data hosting

Horizontally scalable compute, storage and networking delivered to an application on-demand

Data center providers will need to continue to focus on delivering Infrastructure Services, supporting connectivity with Public Cloud providers, and offering additional value added services


Cloud services are now tailored to specific internal business functions. Leveraging these services allows the customer to focus on inexpensive, efficient alternatives

The Cloud Marketplace is Rapidly Evolving

SaaS PaaS

CRM Marketing Demand Generation Human Resources Finance & Accounting Content Management

Enterprise Social Media Marketing Analytics Retail & E-Commerce Collaboration Business Intelligence

Vertical

Information Technology

IaaS

IaaS ProvidersPaaS Providers

Service Providers

Data center providers need to continuously understand and evaluate the cloud landscape in order to understand key integration points, complementary providers, and competition


Providers in each area remain fragmented, but leading research firms demonstrate a consensus around certain leading vendors

Cloud Provider Market Share

MicrosoftMkt Share: 10%‏

IBMMkt Share: 3.4%‏

Service NowMkt Share: 3%‏

OracleMkt Share: 2.0%‏

GoogleMkt Share: 1.9 %

PaaS

FY15: $3.8BFY19: $7.3B

CAGR: 17.4%

SalesforceMkt Share: 24%‏

AmazonMkt Share: 16.8%‏

OthersMkt Share: 36.0%‏

IaaS

FY15: $32.8BFY19: $54.3BCAGR: 13.4%

Private IaaS1

Mkt Share: 37.2%‏Led by VMware, IBM, HP, and Redhat

AWSMkt Share: 17.1%‏

MicrosoftMkt Share: 10.2%‏


OthersMkt Share: 22.5%‏

GoogleMkt Share: 3.6%‏


Rackspace% Mkt Share: 2.4‏

SaaS

FY15: $31.6BFY19: $63.1BCAGR: 18.9%

Salesforce :Mkt Share‏

10.8%

Others2

Mkt Share: 56.6%‏

SAPMkt Share: 4.9%‏

AdobeMkt Share: 6.1%‏

MicrosoftMkt Share: 7.9%‏

CiscoMkt Share: 1.7%‏


CitrixMkt Share: 1.4%‏


WorkdayMkt Share: 1.7%‏

Athena HealthMkt Share: 1.7%‏

ServiceNowMkt Share: 1.4%‏

PaaS: Integration middleware & Database PaaS: Application Key:

SaaS: CRM SaaS: Productivity Applications ( Office, Content Mgt., Collaboration Communication)SaaS: ERP SaaS: Business Process as a Service

SAP’s forecasting to have ~75% of total revenue coming from cloud by 20205

EUC emerging (Office 365 holds ~25% of market with 300% YoY growth; Google Apps for Work holds 22.8% market)6

In emerging Private PaaS, Pivotal Cloud Foundry has booked ~$40 million in software sales in less than a year, making it fastest growing open source product ever (Apprenda has ~$8M)7

AWS significant in Public IaaS market 69% YoY growth; 28.5% profit margins8

Microsoft, showing triple digit YoY growth of 140%, has independence restrictions9

Private IaaS supporting OpenStack standards with VMware and IBM leading

*CAGR = Compound Average Growth Rate

13

Cloud Trends


Spend shows that cloud infrastructure services are most directly impacting data center providers but also presenting an opportunity to capture growing private/hybrid cloud spend

IT Spending Shifting Towards Cloud

PaaS is emerging as a critical enabler of

Agile/Lean and Application

Rationalization

AppDevDBMS

App Runtime& Middleware

$3.8B2

2015 Spend

BusinessIntelligence

$2.5B64% 30.80%

11.46%

18.17%

13.46%

0% 5% 10% 15% 20% 25% 30% 35%

PaaS SpecificCAGR (2014-2019)2

Database Mgmt Systems‏

AppDev‏

Middleware‏

BI‏

Cloud Only

SaaS abstracts the full technology

stack so customers can leverage

applications on demand

CRM

BI

ERP

Web &Collab

Other

$12.5B40%

35.30%

15.60%

20.90%

11.40%

0% 10% 20% 30% 40%

SaaS SpecificCAGR (2014-2019)2

Web/Collab‏

BI‏

CRM‏

ERP‏$31B2

2015 SpendCloud Only

IaaS changes the way vendors

consume facilitiesand infrastructure

capacity

$98B4

2015 Spend

Traditional IT‏Private‏Cloud

Public‏Cloud

InfrastructureCAGR (2014-2019)4

Traditional IT-1.65%‏

16.69%

13.81%

-5% 0% 5% 10% 15% 20%

Private Cloud‏

Public Cloud‏

$67.1B67%

$32.9B 33%

Growing demand to productize industry and functional solutions to fill-in gaps

Increased demand for enterprise integration as clients adopt multiple solutions

Cloud AppDev (CAD) on PaaS represents a major opportunity to capture

Growth in big-name SaaS into public PaaS (e.g. Force.com, ServiceNow)

Clients trending towards turn-key private PaaS offerings (e.g. Pivotal, Apprenda)

Spend on transitional capabilities from legacy to cloud significant

Public / Hybrid IaaS requires significant spend on multi-layer security architecture


Spending on cloud computing infrastructure and platforms will grow at a 30% CAGR from 2013 through 2018 compared with 5% growth for the overall enterprise IT

Cloud Computing is trending toward Hybrid Operating Models

Cloud Adoption Hybrid is the Path Forward

82% (up from 74% in ’14) of enterprises have a multi-cloud strategy Hybrid cloud is the choice for most enterprises

TextPublic Cloud Only

30% 58% 5%

Public and Private

Private Cloud Only

Public –88%

Private – 63%

93% of respondents are using cloud

3%

Single private

Single public

Multi-cloud

No plans

55%

13%14%

Hybrid cloud

Multiple public

Multiple private

Enterprise Cloud Strategy 1000+ Employees

AWS Continues Its Public Cloud Domination, but Azure Makes Inroads Private Cloud Stalls in 2015, VMware remains in the lead overall

2%

5%

5%

5%

8%

9%

11%

12%

57%

5%

8%

10%

16%

13%

13%

9%

17%

17%

6%

7%

8%

13%

10%

13%

9%

12%

7%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

HP Helion Public Cloud

IBM SoftLayer

Vmware vCloud Air

Google IaaS

Google App Engine

Azure PaaS

Rackspace Public Cloud

Azure IaaS

AWS

RunningExperimentingPlan to use

Public cloud usage – Percentage of respondents running applications Private cloud usage 2015 vs 2014 – Percentage of respondents running applications

0%

6%

11%

12%

12%

31%

7%

8%

10%

13%

13%

33%

0% 5% 10% 15% 20% 25% 30% 35%

Microsoft Azure Pack

Citrix CloudStack

Microsoft System Center

OpenStack

Vmware vCloud Suite

Vmware vSphere

2015

2014

Public Cloud Applications Private Cloud Applications

16

Impacts to the Local Data Center Community


The enterprise adoption of cloud requires changes to the service delivery model of Data Center hosting providers

What is the impact of Cloud to Data Center Operators and Hosting Providers?

• Shift from Legacy Infrastructure “Towers” to Converged Infrastructure Platforms – Vblock, Flexpod, Microsoft CPS, etc.

• New Infrastructure Standards for Greenfield Facilities Builds – e.g. Open Compute Project, Uptime Institute

• Hosting Vendors Enabling Private Cloud – significant adoption of private cloud, especially in highly regulated industries (Financial Services, Life Sciences and Healthcare)

• Enterprise Embrace of Hybrid Cloud – key on-premise vendor selection criteria includes connectivity and pipeline to public Cloud Service Providers (e.g. AWS, Azure, Google)

• Co-location Trending toward Managed Services – many providers are providing value added services on top of real estate/Ping-Power-Pipe, to include Telco/Integrated Cloud Services/Managed Data Center services

• “Rehosting” of Public Cloud Services – Many Data Center providers deliver “on-premise” cloud services for other vendors (e.g. SUPERNAP/Switch maintain 100+ such services)

• Requirements for a Cloud-Enabled Network – Cloud WAN, Software-Defined Networking, etc., are emerging to provide an on-premise backbone for private cloud as well as enable hybrid cloud requirements (e.g. Active Directory Federation Services)

• “Out of Region Requirements” – Phoenix facilities present an attractive option fulfilling out-of-regional requirements (e.g. AWS West Coast)


Appendix


Amazon Web Services Google Cloud Microsoft Azure

Cloud providers are building data centers in locations that balance cooling efficiency, cost of power, resource availability, and proximity to end users

Cloud Data Center Locations

Sources: amazon.com, google.com, microsoft.com


SDDC is a shift on how Data Centers are built and operated, with the focus shifting from operation and management of compute, network and storage resources to a business application centric vision

Software-Defined Data Center

All infrastructure is virtualized and delivered as a service & the control of this is entirely automated by software Software Defined Data Centers brings significant value to enterprises by offering solutions for the following needs

Scalability at lower cost of ownership through migration to white box switching Agility and flexibility of network programming Ability to integrate with cloud management platforms

Current State Target State

Fully Virtualized Data Center

Software Driven – Dynamic Management / Allocation of

Resources

Fully Automated Service OrchestrationMix of

Virtual and Physical Compute

Physical Network

Physical Storage

Semi-Automated Service Orchestration

Manual Service Orchestration

Manual Service Orchestration


Legacy Architectures

ASICs

Proprietary transport protocols

Custom Hardware

Custom Software Packages

Emerging Architectures

Increasingly commoditized hardware managed by software services

Open Source / Community driven software suites

Whitebox compute / switch

The Data Center Landscape is Evolving for Cloud

About DeloitteDeloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a detailed description of DTTL and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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