Dancing on a Cloud: A Framework for Increasing Business Agility

Table of Contents

Executive Summary

Introduction

1.0 Background

2.0 Major Barriers to Cloud Computing Adoption

3.0 Business Development and Cloud Transformation Models

4.0 Product Development and Life Cycle Management of Cloud Services

5.0 Business Strategy Implementation

6.0 Key Takeaways and Conclusions

Appendix A

Appendix B

Appendix C

Notes

Glossary

Bibliography

Executive Summary

We are living in the age where IT and telecom forces are converging and enabling users to leverage virtualization and the power of the Internet to gain ubiquitous access to global services and applications. In this environment, a major transformational challenge is related to how we craft realistic goals and road maps for service providers that enable benefits from cloud services to be realized and customers and constituent partners to be better served. In addressing challenges in crucial areas of business planning and operations associated with cloud services, practical steps and frameworks are needed to ensure that each business environment is properly supported. It requires programs and initiatives that effectively combine people, processes, and technology so that operational risk is minimized while cloud platform benefits are maximized.

This book investigates the latest evolution of IT and networking development related to cloud computing. It discusses ways executives, managers, and implementers can leverage these advances to avoid additional complexity in platform, process, and organizational changes. The book begins with an overview of key market and technology forces driving the adoption and expansion of cloud services. Next, several critical characteristics of cloud ecosystems are examined in detail: (1) balance between cloud networks, storage, and computing functions and their impact on the health and performance of IT and telecom environments; 2) adjustments made by recipients of cloud services—businesses, consumers, suppliers, and vendors—that enable cloud capabilities to be fully leveraged; and 3) advantages of being in the cloud and ways one should go about leveraging its capabilities to fit personal, business, and consumer goals.

This book discusses how the buildup of cloud technologies requires a balance of ecosystem factors and offers a structure to guide adoption of cloud capabilities. In addition, a transition road map is discussed, covering organization alignment along with measures of progress and maintenance of balance. Comparative case studies on planning and implementation of cloud capabilities are examined to provide a framework for execution. After examining previous technology waves and their tendencies to develop solutions that limit interoperability, a framework that best leverages the benefits of cloud computing applications and services is provided.

The book identifies sources creating imbalance in cloud ecosystems and present results integrating experiences and interactions with C-level executives and decision makers who have actively considered and delivered services in these environments. In addition, other relevant literature and resources are cited where appropriate. As part of the solution framework, ecosystem player roles involved in building elements of the cloud system are sketched. These players include service providers, customers, vendors, systems integrators, outsourcing entities, and independent software vendors (ISVs) along with their contribution to avoid buildup of cloud silos. Finally, critical steps for service providers and enterprises to consider acting on are highlighted, including the following:

♦   Focusing on business issues and technological challenges related to the development and deployment of cloud computing, mobility, and virtualization solutions

♦   Analyzing client operational and market environments that cover development of mobile and data center—centric business models integrating TDM, wireless, and IP networks

♦   Developing contingencies for relevant cloud application barriers faced by clients covering current platform complexities, financial considerations, and customer support

♦   Analyzing relevant trends and client implications of investments in cloud technologies and phased reengineering efforts in support of network-centric services

♦   Considering issues related to client-specific environments affecting quality of service, security, migration complexity, service selection, and technology platforms

The evolution of cloud services and applications development will be built on the basis of improvements in cost-efficiency and business agility of day-to-day operations. Balance (or imbalance) established between players within enterprise and service provider cloud ecosystems will significantly influence the efficiency delivered by services and applications. We hope that these discussions, case studies, and frameworks offer you, the reader and ecosystem player, the opportunity to apply a practical approach to creating your particular cloud ecosystem balance.

Introduction

Cloud computing provides a sense of unlimited resources with its model of always-on services. These resources relate dimensions of service flexibility and agility to functional capabilities like computing, storage, networking, and others. Much like natural clouds (i.e., rain clouds), these man-made clouds may be composed of elements with varying degrees of quality, density, compatibility, performance, and scalability. However, they can be viewed as having analogous purposes and characteristics to that of natural clouds.

Given that natural clouds provide rain to the land, shade from the sun, and weather patterns at different times and seasons across geographical regions, their effect maintains climate balance across earth’s ecosystem. At times, however, even the earth’s ecosystem exhibits heavy imbalance—as reflected in extreme weather patterns, such as more than usual snowfalls, floods, and natural disasters. Results of these patterns require humans and animals to adapt to both sudden and prolonged changes. When they adapt successfully, communities thrive on the benefits of these changes (e.g., collection of rain water, construction of irrigation systems, and the use of fertilizers to produce bumper crops and high-yield fruits and vegetables).

Cloud computing and its associated capabilities can exhibit characteristics parallel to those of natural clouds. The first characteristic involves striking a prudent balance between the storage, networks, and computing functions inside and outside these cloud computing platforms. This maintains the health and performance of IT and telecom ecosystems. The second characteristic involves adjustments made by recipients of cloud services—businesses, consumers, suppliers, and vendors—that extend business capabilities by utilizing predicted activities, such as application performance and service assurance. The third characteristic is related to the advantages of being in the cloud and how one goes about measuring personal, business, and consumer goals. For example, adoption of mobile workforce solutions, automation of service provisioning, or implementation of self-service billing portals all can leverage cloud capabilities to improve business functions.

Given the market’s cloud computing euphoria, some may think that cloud computing will provide solutions to many problems related to the creation and delivery of IT, telecom, and cable services. In this mind-set, cloud computing would solve problems related to customer care, cost of delivery, and maintenance. Yet service providers (SPs) and their customers will only realize the benefits delivered by cloud computing when inherent IT capabilities and telecom systems are fully understood. Knowing how those systems behave and interact with each other will be critical to successful business execution.

There is no dearth of information—conferences, webinars, articles, and white papers—about cloud computing. Plenty of business scenarios describe important dimensions related to reduction in the total cost of ownership (TCO) or the business agility of companies. However, pause and consider the following: do cloud computing market vendors really know the individual challenges associated with service providers’ (e.g., AT&T, Sprint, and Verizon) or enterprises’ (e.g., JPMorgan Chase, ExxonMobil, and GM) IT and telecom networks and delivery platforms?

Even when assuming that cloud computing concepts can be applied generically across service providers and enterprises, specific solution application is still required. Solution providers may have a view of a client’s current capabilities in network, storage, and data center infrastructure as well as their expectations of cloud services. However, claims of having viable solutions to complex problems or planned transformations without first knowing the inertial factors associated with operational elements ring hollow.

We are living in the age where IT and telecom forces are converging and enabling users to leverage virtualization and the power of the Internet to gain ubiquitous access to global services and applications. In this environment, a major transformational challenge is related to how we craft realistic goals and road maps for service providers that enable benefits from cloud services to be realized and customers and constituent partners to be better served. Similarly challenges appear in the crucial areas of security and privacy. Only after the completion of an individual assessment, unique program identification, and initiative creation that balances people, processes, and technological capabilities can one minimize the risk of threat and privacy exposure.

In the cloud computing marketplace, equipment vendors have often crafted their own strategy, while systems integrators, service providers, and software providers often have different approaches altogether. For instance, service providers and enterprises typically focus on doing more with less, while vendors expand the number and variety of elements. When one considers additional cloud ecosystem players (e.g., independent software vendors, equipment providers, standards organizations, and open-source consortiums) taking part in a complex solution, the resulting product can likely be more tedious, complex, and suboptimal. Crafting the best and most agile solution environment challenges clients to thread a needle through a maze of conflicting forces.

This book describes a framework to consider how to fully leverage the benefits of cloud computing applications and services. In our discussion, sources creating imbalance in the cloud ecosystem are identified. Results from practical experience with C-level executives and decision makers who have actively considered and delivered these services are also presented. In addition, relevant literature and resources are cited where appropriate.

The discussion begins with an overview of cloud services, covering the definition of cloud services and market forces along with ways consumers and businesses purchase these services. A sample of key market players, current services, and offerings is given for context.

The book follows with a discussion of market adoption barriers and current methodologies used to alleviate these hurdles. Business development approaches and a transformational framework are then discussed, which covers business and technological dimensions. Next, cloud product development and life cycle management considerations are outlined including aspects of managing ecosystems. Finally, business strategy formulation and implementation methods are detailed. Several case scenarios are discussed and recommended services outlined that provide a practical guide on how to incorporate cloud platforms and services.

A framework for developing your own approach to decision making associated with cloud services adoption is included. This framework can be adapted to your specific environment and value chain in order to maximize your capabilities and service to customers.

1.0 Background

Cloud Computing: Definition and Components

Definition: 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, and services) that can be rapidly provisioned and delivered with minimal management effort or service provider interaction.

While cloud computing is still in its early stages of development, clear definitions of functions, types, and delivery models have been developed. These elements are described well by the cloud computing definition from 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, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.¹

A more detailed description is provided in appendix A. The key takeaways of this definition cover the essential characteristics of cloud computing, including (1) on-demand service, (2) broad network access, (3) resource pooling, (4) rapid elasticity, and (5) measured service. The takeaways also define service models, including Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS), as well as deployment models, including private, community, public, and hybrid cloud structures. An additional characteristic identified by architects of cloud environments is the sharing of resources across multiple tenants—one of the primary enablers of lowering TCO.²

To complete the market landscape, let us also consider the enabling services and resources provided by cloud software management and professional services. For many cloud service vendors, these segments act as their focus and growth areas. On the whole, growth in cloud-related software and professional services is expected to be $2.5 billion³ and $8.2 billion⁴ respectively by 2015 according to IDC. Lustratus Research captures this framework in their high-level overview.

Figure 1—Cloud Services Segments: Technical View

⁵

Size of Cloud Computing and Data Center—Centric Applications Market

Growth Projections: Worldwide Cloud Computing market expected to cross $25 billion by the end of 2013; Worldwide Cloud Services revenue is forecast to reach $148.8 billion and enterprises will spend $112 billion on cloud services by 2014.

Significant growth of the cloud services and applications market is projected over the next two to three years. In particular, investment in private cloud environments will accelerate as businesses adopt a greater proportion of cloud-based capabilities. The total size of the expected market and level of spending in each category includes the following:

•   Worldwide Cloud Computing market growing at a rapid rate and expected to cross $25 billion by the end of 2013⁶

•   Platform as a Service (PaaS) market size expected to reach $400 million by 2013

•   Infrastructure as a Service (IaaS) market expected to increase at 52.53% CAGR for the period spanning 2010 to 2013

•   Office suites market size expected to increase at 55.02% CAGR for the period spanning 2010 to 2013

•   Worldwide Cloud Services revenue forecasted to reach $148.8 billion and enterprises to spend $112 billion cumulatively on Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS) by 2014.⁷

•   Investment spending forecasted to grow by over 50% CAGR in private cloud, 27% in hybrid, and 9% in public cloud. See projections below.⁸

Figure 2—Projected Growth of Investment in Cloud Services

Source: IDC, SIOS, July 2010

Why Now? What Is Driving Cloud Computing?

Key technology breakthroughs along with changes in customer demand patterns created