Cloud Computing:

The New Economics of IT

Jim Cooke – Senior Director

IBSG IT Transformation Practice

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 IT is Following a Common Evolutionary Pattern

Bespoke Consolidation Utility

Evolutionary
Pattern

Individual Industrial Farming

Farming
Farms Farming Conglomerates

Factory Steam Local Power

Electricity Electrical Grid
Engines Plants

Cloud Service
Enterprise Data
IT providers IT Service Grid
Centers
(CSP‟s)

Source: Jim Cooke - Cisco IBSG Innovations

Cisco
Cisco
Confidential
Confidential © 2011
© 2011
Cisco
Cisco
and/or
and/or
its affiliates.
its affiliates.
All rights
All rights
reserved.
reserved. Internet
Internet
Business
Business
Solutions
Solutions
Group
Group 2 2
 Why Now?
Compute & network speeds
Storage costs
Service-Oriented Architectures
Standardization
General acceptance of ITaaS
Global Economic Crisis
Virtualization
Cloud Acceleration

Source: Technology Avalanche; Dave Evans, Jim Cooke Cisco IBSG

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 What Makes Cloud Different?

Traditional Cloud
Computing Computing

Consumption Dedicated Shared

Traditional hardware
Ease of Use procurement Self service

New services added Scale on-demand

Scalability manually
Manual repair of Automated recovery due to
Availability system failure integration / interoperable

Provisioning Months Minutes

Incremental CapEx Pay per use

Cost purchases

Source: Cisco CMO SP Mktg - Data Center Solutions

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 Cloud Definition from NIST
(National Institute of Standards and Technology)

Measured Service Rapid Elasticity

Essential
Characteristics
On-Demand Broad Network Resource
Self Service Access Pooling

Service Software as a Platform as a Infrastructure as a

Models Service (SaaS) Service (PaaS) Service (IaaS)

Deployment
Models Private Public Hybrid Community

http://www.csrc.nist.gov/groups/SNS/cloud-computing/index.html

Cisco Confidential © 2010

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 Deployment Benefits and Challenges

Deployment Benefits Deployment Challenges

 Sharing services and elastic  Security, Compliance and
scaling Regulatory risks
 Adding capability without time  Cloud services management
and resource intensive build- (Billing , SLA’s, Dependencies)
outs
 Organizational and operational
 Shifting Economics – capex to challenges and impact to
opex business processes

 Simplifying operations  Interoperability and integration

with existing processes and
 New potential revenue streams technologies

Source: Jim Cooke - Cisco IBSG Innovations

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 The Cloud Computing Journey

Consumption models for IT,

applications and services are
changing dramatically and will be a
Inter-
hybrid mix – available both Cloud
Hybrid
on-premise with private clouds and Cloud
from service providers in public
clouds. Public
Cloud

Private
Cloud
Automation
PRESENT
Virtualization
Consolidation

Source: Jim Cooke - Cisco IBSG Innovations

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 Current Situation
The 70/30 Dilemma
70% of the IT Budget
Need for Maintenance
to Change the Balance
30% Available for Innovation*

50%
30% 50%
70%
Business
Business Infrastructure
Infrastructure Operations
Operations
Transformation “Keeping
Transformation “Keeping the On”
the Lights Lights On”

Allows Innovation
*Source: & Creates
Gartner - IT Infrastructure, Flexibility
And The Shift To ―Real-Time‖
Competitive Advantage & Reduces Cost

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 Infrastructure TCO:
Significant Portion of Government IT Spend

Other IT
Spend

Infrastructure Spend
2
$39.2 to $58.8
1
B
50 -and
25% Capex 75%75% Opex

1 Source: http://www.transitionaldata.com/publications/Dr-Data-Center.pdf
2 Federal Govt IT spent for 2010 approx $78B
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 Yet, Much Of The IT Spend Is Wasted On
Inefficient Infrastructure

100

80 Utilisation Target
75%2

60
$29.4 B Missed
Opportunity3
40

20
25%1
0
1 http://www.cioupdate.com/trends/article.php/3289721
Infrastructure Utilization
2 Averaged from multiple sources
3 Assumes 50% of IT Budget of $58B and a 50% utilization improvement

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 Infrastructure Costs Are Continuing to
Increase
Growth Is 6% per Year and Will
Have Significant Impact on the
Organization
 Resources available for new
services and innovation will
continue to diminish
 Agency impact from the IT
organization will become more
difficult to achieve
 Proliferation will increase,
ultimately making the problem
even worse

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 What Can Be Done?

Develop and execute an infrastructure

roadmap that targets a cloud operating model
as an end state to:
1. Implement virtualized and unified architectures to
drive down costs in the near term and ensure
long-term efficiencies
2. Free up valuable resources to focus on innovation
and new service development—IT activities that
create impact
3. Better prepare the environment to take advantage
of new technology developments – private,
community, hybrid and public clouds

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 The Challenge
 While the problem may be clear to
IT, it is not immediately apparent to
the respective agencies
 The agencies are typically the
culprit in driving these inefficiencies
 The key is helping the agencies
understand the issue in business
terms
 The next step is then convincing
the agencies to invest in IT over
other competing alternatives

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Convincing the Funding Agencies
#1 Educate them..describe the vision

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 Understanding The Importance of
Architecture
Vision of a state-of-the-art home… Built without a blueprint
Date: 1884
The The Winchester
Winchester Mansion
Mystery House

Work force
147 0

Builders Architects

Results • 65 Doors to blank walls

• 160 Rooms • 13 Staircases abandoned
• 6 Kitchens • 24 Skylights into floors
• Gas lights
• 47 Fireplaces
• 10,000 Windows Construction time
• Intercoms 38 Years
The first no-clog sink (patent issued)

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 An Architecture is Not Optional…
Technology and business architectures are not optional.
Every agency already has them…

Some Are
Designed…

… and Some Just

Happen

The Cloud Operating Model is the Target Architecture

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 Elements of Transformational IT

Vision/
Strategy

Growth/Innovation
Architecture

Capabilities
Productivity Strategies

CIO New Business CEO

Process

IT/Business Capabilities,
Execution

Technology/Business Architectures,
Operational Excellence

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 Example: Show the Linkage
Agency Outcomes Agency Imperatives Agency Capabilities IT Capabilities Infrastructure
Provide lean back office Mortgage
Scale mortgage across all channels Lean the Mortgage app (web/retail)
function
Agency Reintroduce insurance Buy or Build insurance capability Core insurance functions
Strategic New Revenue Introduce mobility Mobility as-a-channel Core mobility functions
Initiatives Regeneration
Sell applications Establish an App store (customer facing) catalog service
Customer
Colleague
Rapidly Align SMEs to cust. need Expert Locator function SME Presence Engine
Increase
 Re-engage Productivity Enable staff to work anywhere Location-independent workplace
Virtual workspace functionality
(Smart Workspace)
with our Martini
Rationalise and align IT Smaller IT footprint in branch Virtualisation services
constituents
Avoid / Reduce Move customers to direct channels Enable direct channel & decisioning Common business functionality across
Costs channels
Network
 Restore the Simplify divestitures Rapid service termination Host service interface within IT

pride of our Presentation &

Improve Customer Middleware
Queue Buster, Decisioning,
people Satisfaction
Redesign customer experience Reduce customer wait time <5 mins.
Expert Locator

Application
 Radically Enable innovation and collaboration
Provide mobile applications to staff
Enable staff visibility and recognition
App store (Staff Facing) function

Social networking function

simplify the across boundaries
Enable staff to swap shifts Enable Shift Swap functionality Compute
agency
Provide home user with secure access Remote access service (VPN)
Improve Staff Enable flexible staff work locations
Morale
 Grow quality Enable staff to work anywhere, anytime Provide mobility functionality
That accesses:
Social collaboration functions(team
Enable virtual team huddles
services Provide comprehensive training anytime,
huddles)
eLearning functions
anywhere
Data

Management
Personalised corporate communications to Corp. communication channel
staff needs subscriptions
Invest in development of people
Legend Provide personalised HR mgmt. services Enable HR channel subscriptions
: Security
Provide structure &guidance for staff Provide governance anytime,
Cisco Solution anywhere
Enabled Improved Cross- Improve staff ability to sell other
QueueBuster Multichannel sales progression Click-to-Chat/Serve
Sell & Up-Sell products
Enabled
Simplify divestitures Rapid service termination Host service interface within IT
Risk Mgmt.
Minimise compliance reporting risk Provide risk guidance & minimise staff Risk and compliance framework with
involvement automation

Aligning agency capabilities to strategic initiatives How to efficiently enable IT

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#2: Describe how you will get there

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 Our Story: Cisco Data Centre Issues
 Company growth and business
requirements such as agility,
service continuity
 Data Centre space, power,
cooling, physical structure
 Current locations prone to
disaster, DR site 2500 miles away
 Heterogeneous hosting
platforms/architectures, history of
“silo” approach
 High resource growth rates and a
flat IT headcount & budget

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 4 Phase Approach to Address Issues
Consolidate
Consolidate Data Centres, Resources
Begin to Increase Utilization
Data Centre Standards

Virtualize
Virtual Resource Pools
Rapid Delivery of Services
Increased Availability, Utilization

Unify
Single, unified network fabric
Integrated services
Unified Compute

Automate
On Demand Utility
Runbook Automation
Real Time Provisioning

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 Cisco Data Centre Evolution
Legacy Consolidated Virtual
CITIES
Data Centre Data Centre Data Centre

• 4 Tier Silos • Standardization • Server Repurposing • Infrastructure

Compute Aligned to
• Heterogeneous OS • Virtual Machines • VM Mobility Application
• Storage Silos • SANs, VSANs • Storage Services
Storage • Low Utilization Virtualization
• Tiered Storage • Policy Based
Management
Network • IP Connectivity • Consolidated • Virtualized Network • Intelligent Data
Network Services Services Management
• Tiered Recovery
Security • Perimeter Security • Secure Each
Application Tier • Virtual Firewalls • Usage and SLA-
based Funding
Application • Application Silos • Consolidate, Model
• SOA Pockets
• Distributed Centralize

2004 2005 - 2006 2007 - 2008 2009 - 2010

Virtualization Phase
Consolidation Phase Unification Phase
Automation Phase
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 PS Scenarios with Affinity for Cloud
Scenario Driver for cloud adoption / Use Case Cloud Type
- Typical Applications
Citizen facing portals: • Scalability of cloud computing is attractive, due to highly variable and IaaS (State/
• Subject to Freedom of Information Act unpredictable demand, e.g. Fed)
• With event-driven access behavior - Seasonality of access to some website (tax year, …) & SaaS
(disasters, campaigns, happenings, …) - Disasters will drive people to some core portals (e.g. Texas Online) (Local)
• Backup and Disaster recovery • Paying „too much‟ for existing BC/DR solutions IaaS
• BI / Decision Support Systems • Increasing demand from legislature for more speed and capability
• Unstructured Data, Grid Computing • See slides on cross-vertical IaaS opportunities for more detail
• ERP HR, Finance • Pilots underway already SaaS (mostly)
• Desktop Virtualization • Cross vertical SaaS opportunities
• Collaboration • Specific collaboration use case (HUD): Embed UC an app e.g. open video
conference with field office while reviewing grant application for the city
STATE & LOCAL:
Data Management / Business Intelligence • Explosive growth of content that needs to be retained IaaS
• Public Safety and Police Video footage • Cloud scalability and low cost per GB attractive to store those data
Seasonal apps/ deal with enrollment • Peak-trough of these applications: 2.5 – 3.5 IaaS & SaaS
• School enrollment, test scores • Applications are often customized / special-built
• Parks & recreation, Campaigns • Flexibility of IaaS attractive to manage cost
FEDERAL:
• HUD: Single Family Mortgage Insurance • High volume, working with multiple groups (e.g. 11,000 lenders) IaaS (mostly)
process (Batch)
• IRS: Decision Support Systems - Data Mining • Analysis of history of tax collection, returns. Future revenue IaaS
& Analysis projections. Need for increased frequency
• Pursued by Asst. Commissioner of Research pulling statistical data
(not individual data). Lower security requirements

Source: Cisco IBSG SP

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 Siloed Technologies = Siloed Organization

IP Address Mgmt INS

App / Web Server AFS Directory Services AFS

Database AFS Networking INS

Identity Management AFS

Software Frameworks AFS WebServices / Appl Messaging AFS Network Manager

Application Groups Voice Manager IP Telephony INS

Data Centre Manager Print CTAPS

Client Service Manager

Desktop CTAPS

Server / OS DCS Storage DCS Collaboration/Communication CTAPS

Content Networking / Mgmt DCS

Client Services & Support CTAPS

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 Service Models and Technology Convergence
Require Changes in the Organization Structure
Architecture Program & Portfolio Management
IP Address Mgmt INS
App / Web Server AFS Directory Services AFS
Solutions Architects

Database AFS Networking INS

Identity Management AFS
AFS

AFS

AFS

DCS
CTAPS
AFS

AFS

CTAPS
WebServices / Appl Messaging AFS

Client Services & Support CTAPS

DCS

INS

INS
Collaboration/Communication CTAPS

INS
DCS
Software Frameworks AFS WebServices / Appl Messaging AFS Network Manager
Software Frameworks

Content Networking / Mgmt

Directory Services

Identity Management
App / Web Server

IP Address Mgmt
Server / OS

IP Telephony

Networking
Database

Application Groups Voice Manager IP Telephony INS

Storage
Desktop

Print
Data Centre Manager Print CTAPS
Client Service Manager

Desktop CTAPS

Server / OS DCS Storage DCS Collaboration/Communication CTAPS

Content Networking / Mgmt DCS Management AFS

Client Services & Support CTAPS

Security IST

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#3: Show the business case

Presentation_ID © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Public 26
 The Value of a Cloud Operating
Model For Public Sector Agencies

 The most significant impact of a Cloud Operating

Model is improved agency agility.
 Other benefits include…
Lower cost structures for providing products and services
(improved capabilities)…
Shorter cycles to deliver new services (rapid constituent
impact)
Ability to implement changes in response to changing
constituent needs (improved constituent care )
Ability to innovate due to reduced time spent on ―just
getting things to work‖ (sustainable service models)…
and numerous others….

Source: Cisco IBSG Innovations

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 Value Approach – Old vs New
Architecture
What can be
done with
$$ Available Old DC New DC
Architecture Architecture
Top Initiatives TCO TCO
1 1 1
. Old . .
. . .
. . .
. . .
. . .
. New . .
Business . .
. Benefit TCO
. . .
. . .
. . .
N N N

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 Data Centre Benefits Calculator

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 Green Infrastructure Carbon Calculator

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 Network Carbon Calculator

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 Other Business Benefits

 Time to delivery for applications

 Time to business capability
 Application rationalization benefit
 SLA benefits (application availability benefit)
 Time to market for new services
 Green / Sustainability

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 Key Takeaways
 Service orientation and technology convergence will drive
change in your current infrastructure model.
 You can choose to take advantage of this shift to create a
competitive advantage or wait until you are forced into the
change – either way, your infrastructure will change.
 Three key areas to focus on to help you take advantage of
this change:
#1:Tell a story from the business perspective – lay out your vision
#2: Show your roadmap
#3: Show your business case – compete for resources!

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 Q & A

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