CHANGEA Guide to findinG your Cloud Power

about Conversations

we believe that the

answer is in the cloud;

and it’s going to change the

way you do business.

Every business has unique and dynamic needs. I am sure yours is no different. Being constantly connected yet maintaining security,

increasing productivity and agility, reducing capital expenses – the demands from IT are changing. Now, it’s not just about doing the

same things in a new way but about a new way of doing new things.

A recent Gartner poll found that by 2012, 80% of Fortune 1000 enterprises will be using some form of cloud or off-premises computing

services, and 20% of businesses will own no IT assets. We believe that the answer is in the cloud; and it’s going to change the way you do

business.

Consider how fast we have shifted online as users – to store data, connect with friends and using apps on our

personal mobile devices. Your workplace undoubtedly stands to gain by integrating with this ‘consumerisation’.

With the most comprehensive IT solutions of the cloud on earth, we now bring you the power to take control of this

change - develop and host applications with infinite scalability (Windows Azure), stay secure with your private cloud

(Windows Server Hyper-V), enable productivity and real-time collaboration (Office 365) and get better customer

connection (Microsoft Dynamics CRM Online). With investments worth US $2.3 billion in cloud infrastructure, over

30,000 dedicated engineers and more than 9000 Microsoft Partners, the Microsoft cloud is Enterprise-ready.

I invite you to explore more of the cloud to experience the benefits of the change that the cloud brings - being

ready for anything, but paying only for actual results; being able to scale as high or low as you want; save energy,

space and yet be omnipresent.

As a technologist, our cloud opens up a world of choices for you. With solution-specific benefits, a whitepaper on the ‘Economics of the

Cloud’ and business impact studies of organisations that have moved to the Cloud, this handbook will help you start a conversation of

change within your organisation.

This is an exciting journey for any business interested in being what’s next.

we call it cloud power, and it’s yours for the taking.

Warm Regards,

Sanket Akerkar, Managing Director,

Microsoft Indiawww.cloudpower.in

A Conversation about Change

THE CLOUD POWER PACK 1 - 13 Explore the areas in which IT can change your business for the better

SCALE Applications to near infinity 2Build applications flexibly on the familiar Windows Azure platform

CONNECT PEOPLE without making them meet 4Drive productivity by communicating with Microsoft Online Services in the Cloud

CREATE a real-time collaboration hub 6 Enable people to work across time zones and locations with Microsoft Office 365

DRIVE greater control and IT efficiency in your Private Cloud 8Transform IT services for greater business intelligence with Microsoft System Center

and Windows Server Hyper-V

KNOW what your customers want 10Respond faster with better customer intelligence with Microsoft Dynamics CRM Online

What Cloud Power holds for You 12Benefit from working with Microsoft Cloud Services

RESOURCES 14 - 61Explore and share the power of cloud in business with whitepapers and real-life case studies

The ECONOMICS of the Cloud 15 - 35Read this Microsoft Whitepaper to understand the long-term vision of the underlying

economics of cloud computing

CASE STUDIES of Cloud Power @ Work 36 to 61

SEAMLESS MIgRATION @ 3630,000 employees migrate to the Cloud without interrupting business or daily operations

Improved PRODUCTIvITY @ 44A simplified user experience improves collaboration and cuts IT costs by 30%

EffICIENCY in the Private Cloud @ 49120 servers become 20 with data center budgets getting cut by 40%

IT as a SERvICE @ 54 A global company builds an online Visual Attention service application on Windows Azure

Your Guide to NavigatiNg the Cloud

contents

the most CompreheNsive solutioNs for the Cloud. oN earth.

SOfTWARE as a Service PLATfORM as a Service iNfRASTRUCTURE as a service

Windows LiveTM

MessengerWindows Update

the Microsoft Cloud for Consumers

the Microsoft Cloud for Businesses

Windows LiveTM

HotmailTM

1

With the cloud, you can create a flexible IT ecosystem that addresses needs as they arise, backed by the confidence that you always have the ability to do so. The Microsoft technologies that you have already invested in is a great place to start.

piCK YourCloud poWerHere’s what the Cloud means for everyone in your organisation

TRANSFORM IT services in your Enterprise | Pg 8

SCALE Applications to near infinity | Pg 2CONNECT without having to meet | Pg 4

CREATE a Real-time collaboration hub | Pg 6

fOR IT PROfESSIONALSOn-demand computing with the right

Infrastructure to actively host, scale and

manage all your services with ease and

speed. Plus the choice to keep high-value

applications on-premises and move

commodity workloads to the cloud.

fOR DEvELOPERSEasy scalability and reduced time to

market for developing applications on the

Windows Azure Platform. Our family of

on-demand services provides a familiar

deployment experience that helps focus on

coding and reduces complexity.

fOR INfORMATION WORKERSProductivity from any location from the PC,

phone and web with familiar Applications,

now on the cloud. Our powerful

communication and collaboration tools

provide security-enhanced connectivity

and federated access control.

the most CompreheNsive solutioNs for the Cloud. oN earth.

KNOW what your customers want | Pg 10

2

Offer your developers a flexible and familiar environment to easily create and host

cloud-based applications with Windows Azure

get the poWer toAnalysts' View“Just as Windows played a significant part in earlier shifts, Windows Azure is poised to take an important role in this new world. If you're responsible for charting your firm's path, understanding and evaluating the Azure environment makes good sense.”David Chappell & Associates

easily scale your ApplicationsWhile running applications in the Cloud, you don’t have to worry about scalability or performance issues. If there is a sudden demand or load expected on the servers, the performance can be boosted easily by just increasing the processing capabilities.

Cloud Power @ Work“Windows Azure helps 3M customers take advantage of complex algorithms that encapsulate 30 years of research and get simple, powerful results from their browser, almost instantly.”TERRY COLLIER, Marketing Manager, 3M

on creating and launching a web-Based Visual

Attention service for customers on Windows Azure

developwithout boundaries Creating in the cloud means no more worries about servers, storage or hardware. Your developers can focus on the code with a test bed always at hand and go from a test server to a production server almost immediately.

Cloud Power @ Work “By running manageCarbon (HCL’s new carbon-data management application) on Windows Azure, our customers can be up and running in one-quarter of the time that it took with an on-premises model.”RAjESH BABU SURAPARAjU,

Product Manager, HCL

APPliCAtionS to neAr infinity

sCale

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A Secure FrameworkUse the security framework you are familiar with many of the Windows Azure services using the core .Net libraries, keeping much of the security and encryption details the same. A firewall mechanism enables you to allow or prevent connections from various sources, right down to specifying IP addresses or IP range. Cloud Power @ Work“Windows Azure gives IT departments, incredible flexibility and efficiency in deploying new services. As a trusted third party, VeriSign adds a layer of (online) security to those environments.”RYAN WHITE, Product Marketing Manager

for SSL, VeriSign on adding VeriSign® SSL

Certificates on Windows Azure.

Avoid training costsThe interoperable Azure platform integrates with what you already have. Visual Studio developers can start building applications in no time and also work across SOAP, REST, XML and PHP platforms from a single location.

Cloud Power @ Work“The software distribution system we built with Windows Azure is 10 times cheaper than our previous solution... Most of our developers are experienced with Visual Studio tools. That was a good argument for using the Windows Azure platform, because we can use the same development environment.” ELMAR STOECKER, Director Portfolio

Management, Siemens IT Solutions and Services

no more data maintenance With SQL Azure, you can easily provision and deploy multiple databases without having to install, setup, parch or manage any software. High-availability and built-in fault tolerance makes physical administration obsolete.

Cloud Power @ Work

“By using these tools to rapidby build applications and services and migrate them to the Windows Azure platform, we will be able to help our customers quickly react to market changes without major capital expenditures.” CHANDRA SURBHAT, Global Head of Microsoft

Business Solutions, Wipro Technologies

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Help information workers meet and stay updated from any location with secure

online communication services for email, conferencing, chat and networking

poWer up CoNNeCtivitY With

Analysts' View “Exchange Server 2010 (is) an upgrade worth considering. Look for improvements in three areas: back-end improvements largely connected to storage; benefits to information workers; and built-in basic archiving capabilities.” Forrester Research, Inc.

real-time meetings without the travel Connect with colleagues and engage customers in real-time meetings, trainings or events on Microsoft Live Meeting. Interact by sharing applications or desktops and using the multiple video and VoIP audio capabilities. Whiteboard tools and high-fidelity recording also help keep notes.

Cloud Power @ Work“Our goal in the long term is to replace many of the PBX systems. The enhanced voice capabilities simplify everything, cost less, and give people more functionality. I don’t see a downside.”jOHN TSCHANNEN, Director of IT and User

Services, Energizer, on deploy the voice over

IP (VoIP) capabilities of Microsoft Office

Communications Online

An always-connected remote workforce Employees on the move can easily stay in touch with presence, instant messaging (IM), and PC-to-PC audio and video calling with Office Communications Online. Availability can also be shown through embedded presence in Microsoft Outlook.

Cloud Power @ Work “We have improved our organizational efficiency by 30 percent. We have senior management using Windows Mobile devices who needs messages ‘on the go’, mobile users who need to access email from any connectivity framework and sales personnel who work from cyber cafes and access email using Outlook Web Access.”MANI MULKI, Vice President-IT,

Godrej Industries Limited

PeoPle witHout MAkinG tHeM Meet

CoNNeCt

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familiar tools that can be used by all Mobile access to Exchange Online is available from all email-ready phones, spanning Windows Phone, the iPhone, Android, Palm, Nokia, and Blackberry devices. Choose between on-premises and online mailboxes depending on what users want.

Cloud Power @ Work”I’ve been able to provide equal or better email service at a much lower cost, which is a big win for Godiva. We’re looking at a $250,000 annual savings from eliminating Notes.” STEvE WHITELAM, Director of Information

Technology, Global Shared Services, Godiva

Chocolatier on productivity gains from moving to

Microsoft Online Services

increased email reliability and security Moving to the cloud helps your IT team provide multiple filters and virus-scanning engines using Microsoft Forefront Online Protection to protect from spam, viruses and phishing scams. A central administration console helps manage subscriptions, provision users, reset passwords, and configure services from any location with Internet access Cloud Power @ Work”In moving from Exchange Server 2007 to Exchange Server 2010, the big driver will be the changes to service availability…. We can design a system that will have a much higher level of uptime.”STEvEN PRESLEY, IT Engineer - Staff, Qualcomm on

cutting email recovery time from 10 minutes to less

than 30 seconds

Seamless online migration With Exchange Online, users can acess their familiar Outlook account online without needing a VPN connection. You can migrate all mailbox content including e-mail, calendar items, contacts, and tasks.

Cloud Power @ Work”In a five-month timeframe, we migrated roughly 30,000 people to a hosted solution, without impacting their business or interrupting their day-to-day operations.”ESAT SEzER, CIO, Coca Cola Enterprises

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Connect your information workers across time zones and geographies to shareinformation and work together in real time

poWer up CollaboratioN bY

Analysts' View “Cloud-based email and collaboration services will see 10% penetration of the enterprise email and messaging market by 2012 and will near 65% penetration by 2020.” Gartner

Connecting across devices and versions Make it easy to access, edit and share Office documents, presentations and spreadsheets from the PC, phone or browser using Microsoft Office 365. Users can collaborate across different platforms (PC or Mac), different Microsoft Office versions and even without have Microsoft Office on their computers (from any web browser). Cloud Power @ Work”Infosys is going to use Office Web Apps extensively, and we expect it to drastically reduce the time it takes to complete RFPs and budgets.”vIvEK BHARATHAN, Lead Technology Specialist,

Infosys, on overcoming document version

compatibility across 100,000 Microsoft Office users

Making the most of new opportunities Ensure reliability and connectivity for all users - from colleagues located around the world, to temporary employees to people from a new acquisition. With no server purchases or deployments on SharePoint Online, empower a small satellite office, interim staff, or a newly acquired business to work better together right from the start.

Cloud Power @ Work “Departments are getting information out to stores faster, because SharePoint Online is so easy to use. We are excited to start using workflows to automate common processes such as onboarding new employees.”RHONDA COBB, Information Technology

Manager, REEDS Jewelers

A reAl-tiMe CollABorAtion HuB

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Sharing data reliably without infrastructure costs All documents and files saved online are hosted on Microsoft servers maintained by our own trained experts. Patches and security updates are supplied in real time, ensuring that users always work on the latest, most up-to-date versions of applications.

Cloud Power @ Work“Moving to Online Services will enable us to reduce our IT operational costs by roughly 30% of what we’re currently spending. The ability to introduce a variable cost subscription model for these collaborative technologies allows us to more rapidly scale or divest our investment as necessary.”ALASTAIR ROBERTSON,

VP, Information Workplace

enabling knowledge sharing quickly A unified enterprise content management system can help employees easily share best practices and expertise with blogs, wikis, search, surveys and RSS feeds. Users can also easily create and maintain collaborative workspaces using meeting and team site templates.

Cloud Power @ Work“Together with Microsoft, we hit the overall goal in 142 days and helped Aviva achieve the deployment in around one half of the cost of the original budget”TOBY REDSHAW, CIO, Aviva, on creating 1

intranet in 12 languages for 60,000 employees

work with what you knowThe familiar interface of Microsoft Outlook and Office applications is now extended online with Office 365 for Enterprises. Meaning no learning curve plus now online productivity features for your employees.

Cloud Power @ Work

“The speech-to-text features will be great for our 20,000 or so mobile device users because they will be able to access their voice-mail messages even if they can’t call into the system.”DEAN SEPSTRUP, Product Manager for Exchange,

Boeing on the Voice-Mail Preview that’s helping

drive employee productivity

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it SerViCeS in your enterPriSe

Drive efficiency through greater flexibility and control of IT services

in your own private cloud

poWer up busiNess agilitY With

Efficiency through automation Build a flexible and efficient private cloud infrastructure using Windows Server 2008 R2 Hyper-V and System Center. By automating data resources management and following a self-service model, you can save on operational costs in physical administration and troubleshooting.

Cloud Power @ Work ”We have trimmed our physical server holdings from 120 to merely 20 servers. The expenses on server boxes have dropped drastically by 40 percent of our data center budget.”SANDEEP gANDHI, Sr. Manager, Data Center

Operations, KPIT Cummins

Analysts' View“For most organisations, virtualisation will provide the foundation and the stepping-stone for the evolution to private cloud computing… Security must become adaptive to support a model where workloads are decoupled from physical hardware and dynamically allocated to a fabric of computing resources.”Thomas Bittman, Gartner analyst

traNsform end-to-end Management ControlAutomation and migrating online doesn’t mean loss of control. In fact, you can now manage your entire IT infrastructure spanning physical on-premises and virtual cloud environments from a single screen.

Cloud Power @ Work “We chose Windows Server 2008 R2 Hyper-V because we have standardized our IT setup on Microsoft technologies. Moving to a new platform would have meant lack of predictability and increased costs”SHYAM CHANDRAMANI, Unit Manager -

Global Server Team, Mphasis Limited

Rs.

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Maximise your it investments Leverage your existing assets and skill sets - across identity (Active Directory), management (System Center) and developer technologies (.Net, SQL Server and Visual Studio) - to work on private and public cloud environments.

faster time to marketWith its flexibile setup, private cloud technology accelerates development times for custom applications and lets IT respond quickly to changing business needs. The private cloud can integrate with existing toolsets and provide symmetry with your on-premises or cloud database.

Cloud Power @ Work“You simply plug in and use the relevant resources... The ability to receive these resources as a service made it possible for us to considerably speed up the process of reaching customers. Plus, we avoided spending US $50,000 on hardware and a hosting facility.”NIR HAgSHURY, Chief Technical Officer, TicTacTi

freedom to focus on business Simplifying IT management and the assurance of security means more time for you to focus on developing solutions that would have not been possible before.

Cloud Power @ Work“Microsoft has invested billions of dollars in cloud technologies, which gives us peace of mind... confidence at the Associated Press that our data is secure, even though it is off-premises.”PRAMOD ANCHUPARAYIL, Software Architect,

Associated Press on hosting its Breaking News API

on Azure

Cloud Power @ Work“With Windows Azure, we didn’t have to make changes to the architecture of our solution to get it running. To start up quickly - that is really big for us.”RAIK DITTRICH, Innovation Manager, T-Systems

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Strengthen customer interactions, improve marketing

and boost sales with easy online access to information

poWer up Customer relatioNs bY

Analysts' View “Microsoft Dynamics CRM shines by offering flexibility for large and midsized organizations… Offering buyers the ‘Power of Choice’ so that companies may choose how to deploy, how to pay, and how to use the application.”The Forrester Wave

ensuring rapid user adoption Inflexible software and a poor user experience often hamper usage of CRM applications. Microsoft Dynamics CRM Online provides an entire suite of marketing, sales and service solutions within the familiar interface of Microsoft Office Outlook on the PC or when accessed online, ensuring rapid user adoption and fast results.

Cloud Power @ Work“We know that salespeople find the new system much easier to use. The rate of responses in our new system has increased by 30 to 45 percent over what it was in Salesforce.com.”AISHA THOMAS, Marketing IT Manager, Unico

Closing deals faster Give sales professionals instant fast access to customer data and history when connected to the In-ternet and even when offline. Sales prospects and customers can be informed of new product and service offerings with wizard-based communication tools.

Cloud Power @ Work “It would have taken 70 hours a month to get the pre-opportunity data that now is just there in the system. Our efficiency has soared by well over 100 percent with Microsoft Dynamics CRM Online.”jEff KIELY,

Vice President of Sales and Marketing, Trion

know wHAt your

wAntCustomers

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Growing with your business needsEasy-to-use wizards and point-and-click customization tools help you customise and connect your CRM data with existing business system data in real-time. The pay-per-user model delivered online, makes setting up quick to scale as required without any server setup or expensive hardware upgrades.

Cloud Power @ Work“By switching to Microsoft Dynamics CRM Online from Salesforce.com, we’re saving nearly $13,000 each month with 160 users.”jOEL fRIEDMAN, CIO, Century Payments

Generating great demand Understand your customers better and target your resources to the areas of highest return with a comprehensive set of marketing capabilities. Marketing professionals can increase marketing effectiveness and track key performance with intuitive data segmentation tools, campaign management features and marketing analytics, all available online.

Cloud Power @ Work

“Using Marketing Automation in Microsoft Dynamics CRM, we now deliver over 5,000 birthday emails a day to participants, reminding them to celebrate their birthdays with us.” HEATHER DORR, Senior Manager of Marketing

Information Systems, Cold Stone Creamery which

has enrolled over 15 lakh Birthday Club participants

with thousands of new members joining everyday

Better informationsharing Ensure customer loyalty with consistent, efficient service by empowering customer service personnel with the right information. Customer data can be made available as and when needed - through the user interface, online or as an exported web file. The intuitive configuration capabilities can be tailored to fit your business needs by quickly adding or modifying fields, forms, workflow and reports.

Cloud Power @ Work“Microsoft Dynamics CRM has been essential to helping us improve our customer satisfaction levels and implement an effective sales management process. It provides a single version of our customer data to all our sales staff.”UMAIR CHAUDHARY, COO, Barclays Bank LP, UAE

and Gulf on increasing customer satisfaction

by 15 percent

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paY for What happeNsIT costs are now flexible – just pay per user per month on any application as a service. Different usage models also help you accurately predict costs.

doN’t throW aNYthiNg aWaYMove only what you want to the cloud with a hybrid model of on-premises and off-premises resources. Build on your existing IT assets and connect them to online services.

What Cloud poWer holds for You Benefit from working with Microsoft Cloud Services - the most comprehensive set of solutions for the cloud

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No more maiNteNaNCeAlways use the latest software without worrying about upgrades and patches. The cloud automatically updates to the latest versions.

No traiNiNg requiredAll your users can easily move to and from the cloud, using their skill sets and familiarity with the products they currently use. Get a consistent experience across all devices.

15 Years of experieNCe When you work in the Microsoft Cloud, you leverage the knowledge and expertise of 15 years, ranging from applications (Hotmail) to search (Bing) and platforms (Xbox Live)

help at haNd Our ecosystem of 9,000 partners - spanning ISVs, value-added resellers and systems integrators - choose from our ecosystem to help you in migration, hosting services and creating customised applications.

develop faster Build applications faster than ever with a million-strong developer base writing to Microsoft platforms and more coming through our interoperability support of third-party solutions.

staY seCure Your data is stored on a global network of 200+ enterprise-class data centers with SAS 70 and ISO 27001 security certifications audited by an independent third party.

alWaYs available All the resources needed for a robust cloud computing infrastructure - a global reach, a commitment to security, 99.9 percent uptime SLA with 24/7 service and support.

loWer Costs No more paying for hardware and facility expenses. Cut down on maintenance and operational overheads by paying for service.

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Improved Productivity at GlaxoSmithKline | Pg 44

Efficiency in the Private Cloud at KPIT Cummins | Pg 49

The Economics of the Cloud | Pg 15

IT as a Service at 3M | Pg 54

why the Cloud makes Business Sense Thousands of companies are discovering why making their IT an enterprise-ready service makes business sense. Explore more with our whitepaper and see how global companies are seeing business benefits in the Microsoft Cloud.

resourCesSeamless migration at Coca Cola Enterprises | Pg 36

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Computing is undergoing a seismic shift from client/server to the cloud, a shift similar in importance and impact to the transition from mainframe to client/server. Speculation abounds on how this new era will evolve in the coming years, and IT leaders have a critical need for a clear vision of where the industry is heading. We believe the best way to form this vision is to understand the underlying economics driving the long-term trend. In this paper, we will assess the economics of the cloud by using in-depth modeling. We then use this framework to better understand the long-term IT landscape.

the eCoNomiCs of

the Cloud

For comments or questions regarding the content of this paper,

please contact Rolf Harms (rolfh@microsoft.com) or

Michael Yamartino (michael.yamartino@microsoft.com)

16

When cars emerged in the early 20th century, they were initially called

“horseless carriages”. Understandably, people were skeptical at first, and they viewed the invention through the lens of the paradigm that had been dominant for centuries: the horse and carriage. The first cars also looked very similar to the horse and carriage (just without the horse), as engineers initially failed to understand the new possibilities of the new paradigm, such as building for higher speeds, or greater safety. Incredibly, engineers kept designing the whip holder into the early models before realizing that it wasn‘t necessary anymore.

Initially there was a broad failure to fully comprehend the new paradigm. Banks claimed that, The horse is here to stay but the automobile is only a novelty, a fad”. Even the early pioneers of the car didn‘t fully grasp the potential impact their work could have on the world. When Daimler, arguably the inventor of the automobile, attempted to estimate the long-term auto market opportunity, he concluded there could never be more than 1 million cars, because of their high cost and the shortage of capable chauffeurs1.

By the 1920s the number of cars had already reached 8 million, and today there are over 600 million cars – proving Daimler wrong hundreds of times over. What the early pioneers failed to realize was that profound reductions in both cost and complexity of operating cars and a dramatic increase in its importance in daily life would overwhelm prior constraints and bring cars to the masses.

Today, IT is going through a similar change: the shift from client/server to the cloud. Cloud promises not just cheaper IT, but also faster, easier, more flexible, and more effective IT. Just as in the early days of the car industry, it‘s currently difficult to see where this new paradigm will take us. The goal of this whitepaper is to help build a framework that allows IT leaders to plan for the cloud transition2. We take a long-term view in our analysis, as this is a prerequisite when evaluating decisions and investments that could last for decades. As a result, we focus on the economics of cloud rather than on specific technologies or other driving factors like organizational change, as economics often provide a clearer understanding of transformations of this nature.

In Section 2, we outline the underlying economics of cloud, focusing on what makes it truly different from client/server. In Section 3, we will assess the implications of these economics for the future of IT. We will discuss the positive impact cloud will have but will also discuss the obstacles that still exist today. Finally, in Section 4 we will discuss what‘s important to consider as IT leaders embark on the journey to the cloud.

Introduction

Horseless Carriage Syndrome

1Source: Horseless Carriage Thinking, William Horton Consulting2 Cloud in this context refers to cloud computing architecture, encompassing both public and private clouds.

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Economics are a powerful force in shaping industry transformations. Today‘s discussions on the cloud focus a great deal on technical complexities and adoption hurdles. While we acknowledge that such concerns exist and are important, historically, underlying economics have a much stronger impact on the direction and speed of disruptions, as technological challenges are resolved or overcome through the rapid innovation we‘ve grown accustomed to (Fig. 2). During the mainframe era, client/server was initially viewed as a toy technology, not viable as a mainframe replacement. Yet, over time the client/server technology found its way into the enterprise (Fig. 3). Similarly, when virtualization technology was first proposed, application compatibility concerns and potential vendor lock-in were cited as barriers to adoption. Yet underlying economics of 20 to 30 percent savings3 compelled CIOs to overcome these concerns, and adoption quickly accelerated.

The emergence of cloud services is again fundamentally shifting the economics of IT. Cloud technology standardizes and pools IT resources and automates many of the maintenance tasks done manually today. Cloud architectures facilitate elastic consumption, self-service, and pay-as-you-go pricing. The massive aggregate scale of these mega DCs will bring considerable and

eCoNomiCs of the Cloud

Fig. 2: Cloud Opportunity

Source: Microsoft

Source: “How convention shapes our market” longitudinal survey, Shana Greenstein, 1997.

3 Source: Dataquest Insight: Many Midsize Businesses Looking Toward 100% Server Virtualization. Gartner, May 8, 2009

fig. 3: Beginning the Transition to Client Server Technology

Cloud also allows core IT infrastructure to be brought into large data centers that take advantage of significant economies of scale in three areas:•Supply-side savings. Large-scale data centers (DCs) lower costs per server.•Demand-side aggregation. Aggregating demand for computing smooths

overall variability, allowing server utilization rates to increase.•Multi-tenancy efficiency. When changing to a multitenant application

model, increasing the number of tenants (i.e., customers or users) lowers the application management and server cost per tenant.

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Fig. 4: ECONOMIES OF SCALE (ILLUSTRATIVE)

Source: Microsoft

4 Source: The Economics of Virtualization: Moving Toward an Application-Based Cost Model, IDC, November 2009.5 Not including app labor. Studies suggest that for low-efficiency datacenters, three-year spending on power and cooling,including infrastructure, already outstrips three-year server hardware spending.6 Power Utilization Effectiveness equals total power delivered into a datacenter divided by critical power – the power needed to actually run the servers. Thus, it measures the efficiency of the datacenter in turning electricity into computation.The best theoretical value is 1.0, with higher numbers being worse.7 Source: U.S. Energy Information Administration (July 2010) and Microsoft. While the average U.S. commercial ratesome locations offer power for is 10.15 cents per kilowatt hour, as little as 2.2 cents per kilowatt hour

2.1 Supply-Side Economies of ScaleCloud computing combines the best economic properties of mainframe and client/server computing. The mainframe era was characterized by significant economies of scale due to high up-front costs of mainframes and the need to hire sophisticated personnel to manage the systems. As required computing power – measured in MIPS (million instructions per second) – increased, cost declined rapidly at first (Fig. 4), but only large central IT organizations had the resources and the aggregate demand to justify the investment. Due to the high cost, resource utilization was prioritized over end-user agility. Users‘ requests were put in a queue and processed only when needed resources were available. With the advent of minicomputers and later client/server technology, the minimum unit of purchase was greatly reduced, and the resources became easier to operate and maintain. This modularization significantly lowered the entry barriers to providing IT services, radically improving end-user agility. However, there was a significant utilization tradeoff was, resulting in the current state of affairs: datacenters sprawling with servers purchased for whatever needed existed at the time, but running at just 5%-10% utilization4.

Cloud computing is not a return to the mainframe era as is sometimes suggested, but in fact offers users economies of scale and efficiency that exceed those of a mainframe, coupled with modularity and agility beyond what client/server technology offered, thus eliminating the tradeoff.

The economies of scale emanate from the following areas:Cost of power: Electricity cost is rapidly rising to become the largest element of total cost of ownership (TCO),5 currently representing 15%-20%. Power Usage Effectiveness (PUE)6 tends to be significantly lower in large facilities than in smaller ones. While the operators of small data centers must pay the prevailing local rate for electricity, large providers can pay less than one-fourth of the national average rate by locating its data centers in locations with inexpensive electricity supply and through bulk purchase agreements7. In addition, research has shown that operators of multiple data centers are able to take advantage of geographical variability in electricity rates, which can further reduce energy cost.

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Fig. 5: RECENT LARGE DATA-CENTER PROJECTS

Source: Press Releses

8 Source: James Hamilton, Microsoft Research, 2006.9 In this paper, we talk generally about resource utilization. We acknowledge there are important differences among resources.For example, because storage has fewer usage spikes compared with CPU and I/O resources, the impact of some of what we discuss here will affect storage to a smaller degree.10 Multiple applications can run on a single server, of course, but this is not common practice. It is very challenging to move a running application from one server to another without also moving the operating system, so running multiple applications on one operating system instance can create bottlenecks that are difficult to remedy while maintaining service, thereby limitingagility. Virtualization allows the application plus operating system to be moved at will.

Infrastructure labor costs: While cloud computing significantly lowers labor costs at any scale by automating many repetitive management tasks, larger facilities are able to lower them further than smaller ones. While a single system administrator can service approximately 140 servers in a traditional enterprise,8 in a cloud data center the same administrator can service thousands of servers. This allows IT employees to focus on higher value-add activities like building new capabilities and working through the long queue of user requests every IT department contends with.

Security and reliability: While often cited as a potential hurdle to public cloud adoption, increased need for security and reliability leads to economies of scale due to the largely fixed level of investment required to achieve operational security and reliability. Large commercial cloud providers are often better able to bring deep expertise to bear on this problem than a typical corporate IT department, thus actually making cloud systems more secure and reliable.

Buying power: Operators of large data centers can get discounts on hardware purchases of up to 30 percent over smaller buyers. This is enabled by standardizing on a limited number of hardware and software architectures. Recall that for the majority of the mainframe era, more than 10 different architectures coexisted. Even client/server included nearly a dozen UNIX variants and the Windows Server OS, and x86 and a handful of RISC architectures. Large-scale buying power was difficult in this heterogeneous environment. With cloud, infrastructure homogeneity enables scale economies.Going forward, there will likely be many additional economies of scale that we cannot yet foresee. The industry is at the early stages of building data centers at a scale we‘ve never seen before (Fig. 5).

ongoing R&D to bear on running them more efficiently, and make them more efficient for their customers. Providers of large-scale DCs, for which running them is a primary business goal, are likely to benefit more from this than smaller DCs which are run inside enterprises.

2.2 Demand-Side Economies of ScaleThe overall cost of IT is determined not just by the cost of capacity, but also by the degree to which the capacity is efficiently utilized. We need to assess the impact that demand aggregation will have on costs of actually utilized resources (CPU, network, and storage)9. In the non-virtualized data center, each application/work-load typically runs on its own physical server10. This means the number of servers scales linearly with the number of server workloads. In this model, utilization of

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Fig. 6: RANDOM VARIABILITY (EXCHANGE SERVER)

Source: Microsoft

Source: Bing Search volume over 24-hour period

11 Source: The Economics of Virtualization: Moving Toward an Application-Based Cost Model, IDC, November 2009.

servers has traditionally been extremely low, around 5 to 10 percent11. Virtualization enables multiple applications to run on a single physical server within their optimized operating system instance, so the primary benefit of virtualization is that fewer servers are needed to carry the same number of workloads. But how will this affect economies of scale? If all workloads had constant utilization, this would entail a simple unit compression without impacting economies of scale. In reality, however, workloads are highly variable over time, often demanding large amounts of resources one minute and virtually none the next. This opens up opportunities for utilization improvement via demand-side aggregation and diversification.

We analyzed the different sources of utilization variability and then looked at the ability of the cloud to diversify it away and thus reduce costs.We distinguish five sources of variability and assess how they might be reduced:1. Randomness: End-user access patterns contain a certain degree of randomness. For example, people check their email at different times (Fig.6).

2. Time-of-day patterns: There are daily recurring cycles in people‘s behavior: consumer services tend to peak in the evening, while workplace services tend to peak during the workday. Capacity has to be built to account for these daily peaks but will go unused during other parts of the day causing low utilization. This variability can be countered by running the same workload for multiple time zones on the same servers (Fig. 7) or by running workloads with complementary time-of-day patterns (for example, consumer services and enterprise services) on the same servers.

To meet service level agreements, capacity buffers have to be built in to account for a certain probability that many people will undertake particular tasks at the same time. If servers are pooled, this variability can be reduced.

Fig. 7: TIME-OF-DAY PATTERNS FOR SEARCH

21

Source: Microsoft

While it‘s possible to adjust capacity by buying servers optimized for CPU or storage, this addresses the issue only to a limited degree because it willreduce flexibility and may not be economic from a capacity perspective. This variability will lead to resources going unutilized unless workload diversification is employed by running workloads with complementary resource profiles.

5. Uncertain growth patterns: The difficulty of predicting future need forcomputing resources and the long leadtime for bringing capacity online isanother source of low utilization (Fig. 10).

3. Industry-specific variability: Some variability is driven by industry dynamics. Retail firms see a spike during the holiday shopping season while U.S. tax firms will see a peak before April 15 (Fig. 8).

There are multiple kinds of industry variability - some recurring and predictable (such as the tax season or the Olympic Games), and others unpredictable (such as major news stories). The common result is that capacity has to be built for the expected peak (plus a margin of error). Most of this capacity will sit idle the rest of the time. Strong diversification benefits exist for industry variability.

4. Multi-resource variability: Compute, storage, and input/output (I/O) resources are generally bought in bundles: a server contains a certain amount of computing power (CPU), storage, and I/O (e.g., networking or disk access). Some workloads like search use a lot of CPU but relatively little storage or I/O, while other workloads like email tend to use a lot of storage but little CPU (Fig. 9).

Fig. 8: INDUSTRY-SPECIFIC VARIABILITY

Fig. 9: MULTIRESOURCE VARIABILITY (ILLUSTRATIVE)

Fig. 10: DIVERSIFYING RANDOM VARIABILITY

Source: Alexa Internet

Source: Microsoft

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Fig.11:

DIVERSIFYING

RANDOM

VARIABILITY

Source: Microsoft

12 To calculate economies of scale arising from diversifying random variability, we created a Monte Carlo model to simulatedata centers of various sizes serving many random workloads. For each simulated DC, workloads (which are made to resemble hypothetical web usage patterns) wer successively added until the expected availability of server resources dropped below agiven uptime of 99.9 percent or 99.99 percent. The maximum number of workloads determines the maximum utilization rate at which the DC‘s servers can operate without compromising performance.13 Ideally, we would use the server utilization history of a large number of customers to gain more insight into such patterns. However, this data is difficult to get and often of poor quality. We therefore used web traffic as a proxy for the industry variability.

For startups, this is sometimes referred to as the TechCrunch effect. Enterprises and small businesses all need to secure approval for IT investments well in advance of actually knowing their demand for infrastructure. Even large private companies face this challenge, with firms planning their purchases six to twelve months in advance (Fig. 10). By diversifying among workloads across multiple customers, cloud providers can reduce this variability, as higher-than-anticipated demand for some workloads is canceled out by lower-than-anticipated demand for others.

A key economic advantage of the cloud is its ability to address variability in resource utilization brought on by these factors. By pooling resources, variability is diversified away, evening out utilization patterns. The larger the pool of resources, the smoother the aggregate demand profile, the higher the overall utilization rate, and the cheaper and more efficiently the IT organization can meet its end-user demands.

We modeled the theoretical impact of random variability of demand on server utilization rates as we increase the number of servers12. Fig. 11 indicates that a theoretical pool of 1,000 servers could be run at approximately 90% utilization without violating its SLA. This only holds true in the hypothetical situation where random variability is the only source of variability and workloads can be migrated between physical servers instantly without interruption. Note that higher levels of uptime (as defined in a service level agreement or SLA) become much easier to deliver as scale increases.

Clouds will be able to reduce time-of-day variability to the extent that they are diversified amongst geographies and workload types. Within an average organization, peak IT usage can be twice as high as the daily average. Even in

large, multi-geography organizations, the majority of employees and users will live in similar time zones, bringing their daily cycles close to synchrony. Also, most organizations do not tend to have workload patterns that offset one another: for example, the email, network and transaction processing activity that takes place during business hours is not replaced by an equally active stream of work in the middle of the night. Pooling organizations and workloads of different types allows these peaks and troughs to be offset.

Industry variability results in highly correlated peaks and troughs throughout each firm (that is, most of the systems in a retail firm will be at peak capacity around the holiday season (e.g., web servers, transaction processing, payment processing, databases)13. Fig. 12 shows industry variability for a number of different industries, with peaks ranging from 1.5x to 10x average usage.

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Fig 12:

INDUSTRY VARIABILITY

Source: Microsoft

Microsoft services such as Windows Live Hotmail and Bing take advantage of multi-resource diversification by layering different subservices to optimize workloads with different resource profiles (such as CPU bound or storage bound). It is difficult to quantify these benefits, so we have not included multi-resource diversification in our model.

Some uncertain growth pattern variability can be reduced by hardware standardization and just-in-time procurement, although likely not completely. Based on our modeling, the impact of growth uncertainty for enterprises with up to 1,000 servers is 30 to 40 percent overprovisioning of servers relative to a public cloud service. For smaller companies (for example, Internet startups), the impact is far greater.

So far we have made the implicit assumption that the degree of variability will stay the same as we move to the cloud. In reality, it is likely that the variability will significantly increase, which will further increase economies of scale. There are two reasons why this may happen:• Higher expectation of performance: Today, users have become

accustomed to resource constraints and have learned to live with them. For example, users will schedule complex calculations to run overnight, avoid multiple model iterations, or decide to forgo time-consuming and costly supply chain optimizations. The business model of cloud allows a user to pay the same for 1 machine running for 1,000 hours as he would for 1,000 machines running for 1 hour. Today, the user would likely wait 1,000 hours or abandon the project. In the cloud, there is virtually no additional cost to choosing 1,000 machines and accelerating such processes. This will have a dramatic impact on variability. Pixar Animation Studios, for example runs its computer-animation rendering process on

• Batch processes will become real time: Many processes — for example, accurate stock availability for online retailers — that were previously batch driven, will move to real-time. Thus, multi-stage processes that were once sequential will now occur simultaneously, such as a manufac-turing firm that can tally its inventory, check its order backlog, and order new supplies at once. This will amplify utilization variability.

We note that even the largest public clouds will not be able to diversify away all variability; market level variability will likely remain. To further smooth demand, sophisticated pricing can be employed. For example, similar to the electricity market (Fig. 13), customers can be incented to shift their demand from high utilization periods to low utilization periods. In addition, a lower price spurs additional usage from customers due to price elasticity of demand. Demand management will further increase the economic benefits of cloud.

Windows Azure because every frame of their movies takes eight hours to render today on a single processor, meaning it would take 272 years to render an entire movie. As they said, We are not that patient. With Azure, they can get the job done as fast as they need. The result is huge spikes in Pixar‘s usage of Azure as they render on-demand.

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Fig. 13: VARIABLE PRICING IN ELECTRICITY

Source: Ameren Illinois Utilities

Source: Microsoft2.3 Multi-tenancy Economies of ScaleThe previously described supply-side and demand-side economies of scale can be achieved independent of the application architecture, whether it be traditional scale-up or scale-out, single tenant or multitenant. There is another important source of economies of scale that can be harnessed only if the application is written as a multitenant application. That is, rather than running an application instance for each customer – as is done for on-premises application and most hosted applications such as dedicated instances of Microsoft Office 365 – in a multitenant application, multiple customers use a single instance of the application simultaneously, as in the case of shared Office 365. This has two important economic benefits: • fixed application labor amortized over a large number of customers:

In a single-tenant instance, each customer has to pay for its own application management (that is, the labor associated with update and upgrade management and incident resolution).

We‘ve examined data from customers, as well as Office 365-D and Office

365-S to assess the impact. In dedicated instances, the same activities, such as applying software patches, are performed multiple times – once for each instance. In a multi-tenant instance such as Office 365-S, that cost is shared across a large set of customers, driving application labor costs per customer towards zero. This can result in a meaningful reduction in overall cost, especially for complex applications.

• fixed component of server utilization amortized over large number of customers: For each application instance, there is a certain amount of server overhead. Fig. 14 shows an example from Microsoft‘s IT department in which intraday variability appears muted (only a 16 percent increase between peak and trough) compared to actual variability in user access. This is caused by application and runtime overhead, which is constant throughout the day. By moving to a multitenant model with a single instance, this resource overhead can be amortized across all customers. We have examined Office 365-D, Office 365-S, and Microsoft Live@edu data to estimate this overhead, but so far it has proven technically challenging to isolate this effect from other variability in the data (for example, user counts and server utilization) and architectural differences in the applications. Therefore, we currently assume no benefit from this effect in our model.

Fig.14:

UTILIZATION

OVERHEAD

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Fig 16: IT SPENDING BREAKDOWN

Source: Microsoft

Source: Microsoft

New application development accounts for just over a tenth of spending14, even though it is seen as the way for IT to innovate. Therefore IT leaders generally want to increase spending here. The economic benefits of cloud computing described here will enable this by freeing up room in the budget to do so. We will touch more on this aspect in the next paragraph as well as in Section 3.

Applications can be entirely multitenant by being completely written to take advantage of these benefits, or can achieve partial multi-tenancy by leveraging shared services provided by the cloud platform. The greater the use of such shared services, the greater the application will benefit from these multi-tenancy economies of scale.

2.4 Overall ImpactThe combination of supply-side economies of scale in server capacity (amortizing costs across more servers), demand-side aggregation of workloads (reducing variability), and the multi-tenant application model (amortizing costs across multiple customers) leads to powerful economies of scale. To estimate the magnitude, we built a cost scaling model which estimates the long term behavior of costs.

Fig. 15 shows the output for a workload that utilizes 10 percent of a traditional server. The model indicates that a 100,000-server datacenter has an 80% lower total cost of ownership (TCO) compared to a 1,000-server datacenter.

This raises the question: what impact will the Cloud Economics we described have on the IT budget? From customer data, we know the approximate breakdown between the infrastructure costs, costs of supporting and maintaining existing applications, and new application development costs (Fig. 16). Cloud impacts all three of these areas. The supply-side and demand-side savings impact mostly the infrastructure portion, which comprises over half of spending. Existing app maintenance costs include update and patching labor, end-user support, and license fees paid to vendors. They account for roughly a third of spending and are addressed by the multi-tenancy efficiency factor.

14 New application development costs include only the cost of designing and writing the application and excluding the cost of hosting .them on new infrastructure. Adding these costs results in the 80% / 20% split seen elsewher

Fig 15: ECONOMIES OF

SCALE IN THE CLOUD

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Fig.17 CAPTURING

CLOUD BENEFITS

Source: Microsoft

2.5 Harnessing Cloud EconomicsCapturing the benefits described above is not a straightforward task with today‘s technology. Just as engineers had to fundamentally rethink design in the early days of the car, so too will developers have to rethink design of applications. Multi-tenancy and demand-side aggregation is often difficult for developers or even sophisticated IT departments to implement on their own. If not done correctly, it could end up either significantly raising the costs of developing applications (thus at least partially nullifying the increased budget room for new app development); or capturing only a small subset of the savings previously described. The best approach in harnessing the cloud economics is different for packaged apps vs. new/custom apps.

Packaged applications: While virtualizing packaged applications and moving them to cloud virtual machines (e.g., virtualized Exchange) can generate some savings, this solution is far from ideal and fails to capture the full benefits outlined in this Section. The cause is twofold. First, applications designed to be run on a single server will not easily scale up and down without significant additional programming to add load-balancing, automatic failover, redundancy, and active resource management. This limits the extent to which they are able to aggregate demand and increase server utilization. Second, traditional packaged applications are not written for multi-tenancy, and simply hosting them in the cloud does not change this. For packaged apps, the best way to harness the benefits of cloud is to use SaaS offerings like Office365, which have been architected for scale-out and multi-tenancy to capture the full benefits.

New/custom applications: Infrastructure-as-a-Service (IaaS) can help capture some of the economic benefits for existing applications. Doing so is, however,

a bit of a horseless carriage in that the underlying platform and tools were not designed specifically for the cloud. The full advantage of cloud computing can only be properly unlocked through a significant investment in intelligent resource management. The resource manager must understand both the status of the resources (networking, storage, and compute) as well as the activity of the applications being run. Therefore, when writing new apps, Platform as a Service, most effectively captures the economic benefits. PaaS offers shared services, advanced management, and automation features that allow developers to focus directly on application logic rather than on engineering their application to scale.

To illustrate the impact, a startup named Animoto used Infrastructure-as-a-Service (IaaS) to enable scaling - adding over 3,500 servers to their capacity in just 3 days as they served over three-quarters of a million new users. Examining their application later, however, the Animoto team discovered that a large percentage of the resources they were paying for were often sitting idle - often over 50%, even in a supposedly elastic cloud. They re-architected their application and eventually lowered operating costs by 20%. While Animoto is a cloud success story, it was only after an investment in intelligent resource management that they were able to harness the full benefits of cloud. PaaS would have delivered many of these benefits out-of-the-box without any additional tweaking required.

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3.1 Possibilities & ObstaclesThe economics we described in section 2 will have a profound impact on IT. Many IT leaders today are faced with the problem that 80% of the budget is spent on keeping the lights on, maintaining existing services and infrastructure. This leaves few resources available for innovation or addressing the never-ending queue of new business and user requests. Cloud computing will free up significant resources that can be redirected to innovation. Demand for general purpose technologies like IT has historically proven to be very price elastic (Fig. 18). Thus, many IT projects that previously were cost prohibitive will now become viable thanks to cloud economics. However, lower TCO is only one of the key drivers that will lead to a renewed level of innovation within IT:

impliCatioNs

Source: Coughlin Associates

1. Elasticity is a game-changer because, as described before, renting 1 machine for 1,000 hours will be nearly equivalent to renting 1,000 machines for 1 hour in the cloud. This will enable users and agencies to rapidly accomplish complex tasks that were previously prohibited by cost or time constraints. Being able to both scale up and scale down resource intensity nearly instantly enables a new class of experimentation and entrepreneurship.2. Elimination of capital expenditure will significantly lower the risk premium of projects, allowing for more experimentation. This both lowers the costs of starting an operation and lowers the cost of failure or exit – if an application no longer needs certain resources, they can be decommissioned with no further expense or write-off.3. Self-service Provisioning servers through a simple web portal rather than through a complex IT procurement and approval chain can lower friction in the consumption model, enabling rapid provisioning and integration of new services. Such a system also allows projects to be completed in less time with less risk and lower administrative overhead than previously. 4. Reduction of complexity. Complexity has been a long standing inhibitor of IT innovation. From an end-user perspective SaaS is setting a new bar for user friendly software. From a developer perspective Platform as a Service (PaaS) greatly simplifies the process of writing new applications, in the same way as cars greatly reduced the complexity of transportation.These factors will significantly increase the value add delivered by IT. Elasticity enables applications like yield management, complex event processing, logistics optimization, and Monte Carlo simulation, as these workloads exhibit nearly infinite demand for IT resources. The result will be massively improved experience, including scenarios like real-time business intelligence analytics and HPC for the masses.

In this section, we will discuss the implications of the previously described economics of cloud. We will discuss the ability of private clouds to address some of the barriers to cloud adoption and assess the cost gap between public and private clouds.

Fig 18:

PRICE ELASTICITY

OF STORAGE

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• Compliance and Data Sovereignty – Enterprises are subject to audits and oversight, both internal and external (e.g. IRS, SEC). Companies in many countries have data sovereignty requirements that severely restrict where they can host data services. CIOs ask: which clouds can comply with these systems and what needs to be done to make them compliant?

Source: Gartner CIO survey

However, many surveys show that significant concerns currently exist around cloud computing. As Figure 19 shows, security, privacy, maturity, and compliance are the top concerns. Many CIOs also worry about legacy compatibility: it is often not straightforward to move existing applications to the cloud.

Fig 19: PUBLIC CLOUD CONCERNS

Fig 20:

COMPARING

VIRTUALIZATION,

PRIVATE CLOUD, AND

PUBLIC CLOUD

• Security and Privacy CIOs must be able to report to their CEO and other executives how the company‘s data is being kept private and secure. Financially and strategically important data and processes often are pro-tected by complex security requirements. Legacy systems have typically been highly customized to achieve these goals, and moving to a cloud architecture can be challenging. Furthermore, experience with the built-in, standardized security capabilities of cloud is still limited and many CIOs still feel more confident with legacy systems in this regard.

• Maturity and Performance Cloud requires CIOs to trust others to provide reliable and highly available services. Unlike on-premises outages, cloud outages are often highly visible and may increase concerns

While many of these concerns can be addressed by cloud today, concerns remain and are prompting IT leaders to explore private clouds as a way of achieving the benefits of cloud while solving these problems. Next, we will explore this in more detail and also assess the potential tradeoffs.

3.3 Private CloudsMicrosoft distinguishes between public and private clouds based on whether the IT resources are shared between many distinct organizations (public cloud) or dedicated to a single organization (private cloud). This taxonomy is illus-trated in Fig. 20. Compared to traditional virtualized datacenters, both privateand public clouds benefit from automated management (to save on repetitive labor) and homogenous hardware (for lower cost and increased flexibility). Due to the broadly-shared nature of public clouds, a key difference between private and public clouds is the scale and scope at which they can pool demand.

Source: Microsoft. Shaded checks indicate an optional characteristic

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• Private clouds move beyond virtualization. Resources are now pooled across the company rather than by organizational unit,15 and workloads are moved seamlessly between physical servers to ensure optimal efficiency and availability. This further reduces the impact of random, time-of-day, and workload variability. In addition, new, cloud-optimized application models (Platform as a Service such as Azure) enable more efficient app development and lower ongoing operations costs.

• Public clouds have all the same architectural elements as private clouds, but bring massively higher scale to bear on all sources of variability. Public clouds are also the only way to diversify away industry-specific variability, the full geographic element of time-of-day variability, and bring multi-tenancy benefits into effect.

Private clouds can address some of the previously mentioned adoption concerns. By having dedicated hardware, they are easier to bring within the corporate firewall, which may ease concerns around security and privacy. Bringing a private cloud on-premise can make it easier to address some of the regulatory, compliance and sovereignty concerns that can arise with services that cross jurisdictional boundaries. In cases where these concerns weigh heavily in an IT leader‘s decision, an investment in a private cloud may be the best option.

Private clouds do not really differ from public cloud regarding other concerns, such as maturity and performance. Public and private cloud technologies are developing in tandem and will mature together.

A variety of performance levels will be available in both public and private form, so there is little reason to expect that one will have an advantage over another.16

While private clouds can alleviate some of the concerns, in the next paragraph we will discuss whether they will offer the same kind of savings described earlier.

3.4 Cost Trade-OffWhile it should be clear from the prior discussion that conceptually the public cloud has the greatest ability to capture diversification benefits, we need to get a better sense of the magnitude. Fig. 21 shows that while the public cloud addresses all sources of variability the private cloud can address only a subset.For example, industry variability cannot be addressed by a private cloud, while growth variability can be addressed only to a limited degree if an organization pools all its internal resources in a private cloud. We modeled all of these factors, and the output is shown in Fig. 22.

Fig 21: DIVERSIFICATION BENEFITS

15 Aggregation across organizational units is enabled by two key technologies: live migration, which moves virtual machineswhile remaining operational, thereby enabling more dynamic optimization; and self-service provisioning and billing.

16 Private clouds do allow for a greater degree of customization than public clouds, which could enhance performance for a certain computational task. Customization requires R&D effort and expense, however, so it is difficult to make a direct price/performance comparison .

Source: Microsoft.

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Source: Gartner CIO survey

Source: Micrisoft

.Fig 22: COST BENEFIT OF PUBLIC CLOUD

Fig 23: COST AND BENEFITS

OF PRIVATE CLOUDS

In addition to the increase in TCO, private clouds also require upfront investment to deploy - an investment that must accommodate peak demand requirements. This involves separate budgeting and commitment, increasing risk. Public clouds, on the other hand, can generally be provisioned entirely on a pay-as-you-go basis.

The lower curve shows the cost for a public cloud (same as the curve shown in Fig. 15). The upper curve shows how the cost of a private cloud. The public cloud curve is lower at every scale due to the greater impact of demand aggregation and the multi-tenancy effect. Global scale public clouds are likely to become extremely large, at least 100,000 servers in size, or possibly much larger, whereas the size of an organization‘s private cloud will depend on its demand and budget for IT.

Fig. 22 also shows that for organizations with a very small installed base of servers (<100), private clouds are prohibitively expensive compared to public cloud. The only way for these small organizations or departments to share in the benefits of at scale cloud computing is by moving to a public cloud. For large agencies with an installed base of approximately 1,000 servers, private clouds are feasible but come with a significant cost premium of about 10 times the cost of a public cloud for the same unit of service, due to the combined effect of scale, demand diversification and multi-tenancy.

3.5 Finding Balance Today: Weighing the Benefits of Private Cloud against the Costs We‘ve mapped a view of how public and private clouds measure up in Figure 23. The vertical axis measures the public cloud cost advantage. From the prior analysis we know public cloud has inherent economic advantages that will partially depend on customer size, so the bubbles‘ vertical position is dependent on the size of the server installed base. The horizontal axis represents the organization‘s preference for private cloud. The size of the circles reflects the total server installed base of companies of each type. The bottom-right quadrant thus represents the most attractive areas for private clouds (relatively low cost premium, high preference).

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3.6 The Long View: Cloud Transition Over TimeAs we pointed out in the introduction of this paper, it is dangerous to make decisions during the early stages of a disruption without a clear vision of the end state. IT leaders need to design their architecture with a long term vision in mind. We therefore need to consider how the long term forces will impact the position of the bubbles on Fig. 23.

We expect two important shifts to take place. First, the economic benefit of public cloud will grow over time. As more and more work is done on public clouds, the economies of scale we described in Section 2 will kick in, and the cost premium on private clouds will increase over time. Customers will increasingly be able to tap into the supply-side, demand-side and multi-tenancy savings as discussed previously. As shown in Fig. 27 this leads to an upward shift along the vertical axis.

Source: Microsoft.

We acknowledge that Figure 23 provides a simplified view. IT for is not monolithic within any of these industry segments. Each organization‘s IT opera-tion is segmented into workload types, such as email or ERP. Each of these has a different level of sensitivity and scale, and CIO surveys reveal that preference for public cloud solutions currently varies greatly across workloads (Figure 24).

An additional factor is that many app portfolios have been developed over the past 15-30 years and are tightly woven together. This particularly holds true for ERP and related custom applications at larger companies who have more sizable application portfolios. Apps that are more isolated‘ such as CRM, collaboration, or new custom apps may be more easily deployed in the cloud. Some of those apps may need to be integrated back to current on-premises apps.Before we draw final conclusions, we need to make sure we avoid the horseless carriage syndrome and consider the likely shift along the two axes (economics and private preference).

Fig 24: CLOUD READY

WORKLOADS (2010)Fig 27: EXPECTED PREFERENCE SHIFT FOR PUBLIC AND PRIVATE CLOUD

Source: Microsoft Survey Question 'In the next 12-24 months, please indicate if a cloud offering would augment on-prmise offering or completely replace it

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At the same time, some of the barriers to cloud adoption will begin to fall. Many technology case studies show that, over time, concerns over issues like compatibility, security, reliability, and privacy will be addressed. This will likely also happen for the cloud, which would represent a shift to the left on Fig. 27. Below we will explore some of the factors that cause this latter shift.

Cloud security will evolvePublic clouds are in a relatively early stage of development, so naturally critical ar-eas like reliability and security will continue to improve. Data already suggests that public cloud email is more reliable than most on-premises implementations. In PaaS, the automatic patching and updating of cloud systems greatly improves the security of all data and applications, as the majority of exploited vulnerabilities take advantage of systems that are out-of-date. Many security experts argue there are no fundamental reasons why public clouds would be less secure; in fact, they are likely to become more secure than on premises due to the intense scrutiny provid-ers must place on security and the deep level of expertise they are developing.

Clouds will become more compliantCompliance requirements can come from within an organizational, industry, or government (e.g., European Data Protection Directive) and may currently be challenging to achieve with cloud withouta robust development platform designed for enterprise needs. As cloud technologies improve, and as compliance require-ments adapt to accommodate cloud architectures, cloud will continue to become more compliant, and therefore feasible for more organizations and workloads. This was the case, for example, with, e-signatures, which were not accepted for many contracts and documents in the early days of the Internet. As authentication and encryption technology improved and as compliance requirements changed,

e-signatures became more acceptable. Today, most contracts (including those for opening bank accounts and taking out loans) can be signed with an e-signature.The large group of customers who are rapidly increasing reliance on public clouds—small and medium businesses (SMBs) and consumers of Software as a Service (SaaS)—will be a formidable force of change in this area. This growing constituency will continue to ask governments to accommodate the shift to cloud by modernizing legislation. This regulatory evolution will make public cloud a more viable alternative for large enterprises and thus move segments along the horizontal axis toward public cloud preference.

Decentralized IT (also known as ‘rogue IT’) will continue to lead the chargeMany prior technology transitions were led not by CIOs but by departments, busi-ness decision makers, developers, and end users – often in spite of the objections of CIOs. For example, both PCs and servers were initially adopted by end users and departments before they were officially embraced by corporate IT policies. More recently, we saw this with the adoption of mobile phones, where consumer adoption is driving IT to support these devices. We‘re seeing a similar pattern in the cloud: developers and departments have started using cloud services, often without the knowledge of the IT group (hence the name rogue clouds). Many business users will not wait for their IT group to provide them with a private cloud; for these users, productivity and convenience often trump policy.It is not just impatience that drives rogue clouds; ever-increasing budgetary constraints can lead users and even departments to adopt cheaper public cloud solutions that would not be affordable from traditional channels. For example, when Derek Gottfrid wanted to process all 4TB of the New York Times archives and host them online, he went to the cloud without the knowledge of the Times‘

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IT department17. Similarly, the unprecedented pricing transparency that the public cloud offers, will put further pressure from the CEO and CFO on CIOs to move to the public cloud.

CIOs should acknowledge that these behaviors are commonplace early in a disruption and either rapidly develop and implement a private cloud with the same capabilities or adopt policies which incorporate some of this behavior, where appropriate, in IT standards.

Perceptions are rapidly changingStrength in SaaS adoption in large enterprises serves as proof of changing perceptions (Fig. 28) and indicates that even large, demanding enterprises are moving to the left on the horizontal axis (i.e., reduced private preference). Just a few years ago, very few large companies were willing to shift their email, with all the confidential data that it contains, to a cloud model. Yet this is exactly what is happening today.

As positive use cases continue to spur more interest in cloud technology, this virtu-ous cycle will accelerate, driving greater interest in and acceptance of cloud.

In summary, while there are real hurdles to cloud adoption today, these will likely diminish over time. While new, unforeseen hurdles to public cloud adoption may appear, the public cloud economic advantage will grow stronger with time as cloud providers unlock the benefits of economics we discussed in Section 2. While the desire for a private cloud is mostly driven by security and compliance concerns around existing workloads, the cost effectiveness and agility of the public cloud will enable new workloads.17http://open.blogs.nytimes.com/2007/11/01/self-service-prorated-super-computing-fun/

Fig 28: INCREASING ADOPTION OF SOFTWARE AS A SERVICE (SAAS)

Source: Gartner.

Revisiting our horseless carriage analogy, we see that cars became a huge success not simply because they were faster and better (and eventually more affordable) than horse-drawn carriages. The entire transportation ecosystem had to change. Highway systems, driver training programs, accurate maps and signage, targeted safety regulation, and a worldwide network of fueling infra-structure all had to be developed to enable this transition. Each successive de-velopment improved the value proposition of the car. In the end, even people‘s living habits changed around the automobile, resulting in the explosion of the suburbs in the middle part of the 20th century. This created net new demand for cars by giving rise to the commuting professional class. This behavioral change represented a massive positive feedback loop that inexorably made the automobile an essential, irreplaceable component of modern life.

Similarly, we believe cloud will be enabled and driven not just by economics and qualitative developments in technology and perception, but by a series of shifts from IT professionals, regulators, telecom operators, ISVs, systems inte-grators, and cloud platform providers. As cloud is embraced more thoroughly, its value will increase.

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Fig 29: SEGMENTING IT PORTFOLIO

Source: Microsoft

the JourNeY to the CloudBecause we are in the early days of the cloud paradigm shift, there is much confusion about the direction of this ongoing transformation. In this paper, we looked beyond the current technology and focused on the underlying economics of cloud to define the destination - where all of this disruption and innovation is leading our industry. Based on our analysis, we see a long-term shift to the cloud driven by three important economies of scale: (1) Larger datacenters can deploy computational resources at significantly lower cost than smaller ones; (2) Demand pooling improves the utilization of these resources, especially in public clouds; and (3) Multi-tenancy lowers application main-tenance labor costs for large public clouds. Finally, the cloud offers unparal-leled levels of elasticity and agility that will enable exciting new solutions and applications.For businesses of all sizes, the cloud represents tremendous opportunity. It represents an opportunity to break out of the longstanding tradition of IT professionals spending 80 percent of their time and budget keeping the lights on, with few resources left to focus on innovation. Cloud services will enable IT groups to focus more on innovation while leaving non-differentiating activities to reliable and cost-effective providers. Cloud services will enable IT leaders to offer new solutions that were previously seen as either cost pro-hibitive or too difficult to implement. This is especially true of cloud platforms (Platform as a Service), which significantly reduce the time and complexity of building new apps that take advantage of all the benefits of the cloud.

This future won‘t materialize overnight. IT leaders need to develop a new 5- to 10-year vision of the future, recognizing that they and their organizations will play a fundamentally new role in their company. They need to plot a path that connects where they are today to that future. An important first step in this is to segment their portfolio of existing applications (Fig. 29). For some apps the economic and agility benefits may be very strong so they should be migrated quickly. However, barriers do exist today, and while we outlined in section 3 that many of them will be overcome over time, cloud may not be ready for some apps today. For tightly integrated apps with fairly stable usage patterns, it may not make senseto move them at all, similar to how some mainframe apps were never migrated to client/server. While new custom apps don‘t have the legacy problem, designing them in a scalable, robust fashion is not always an easy task. Cloud optimized platforms (Platform as a Service) can dramatically simplify this task.

This transition is a delicate balancing act. If the IT or-ganization moves too quickly in areas where the cloud is not ready, it can compromise business continuity, security, and compliance. If it moves too slowly, it can put the company at a significant competitive disadvantage versus competitors who do take full advantage of cloud capabilities, giving up a cost, agility, or value advantage.

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Moving too slowly also increases the risk that different groups or individuals within the company will each adopt their own cloud solution in a fragmented and uncontrolled fashion (rogue IT), wresting control over IT from the CIO. IT leaders who stay ahead of the cloud trend will be able to control and shape this transi-tion; those who lag behind will increasingly lose control.

To lead the transition, IT leaders need to think about the long term architecture of their IT. Some see a new role emerging, that of a Cloud Services Architect, who determines which applications and services move to the cloud and exactly when such a move takes place based on a business case and a detailed understand-ing of the cloud capabilities available. This should start by taking inventory of the organization‘s resources and policies. This includes an application and data classification exercise to determine which policy or performance requirements (such as confidential or top secret data retention requirements) apply to which applications and data. Based on this, IT leaders can determine what parts of their IT operation are suitable for public cloud and what might justify an investment in private cloud. Beginning in this manner takes advantage of the opportunity of cloud while striking balance between economics and security, performance, and risk.

To accomplish this, IT leaders need a partner who is firmly committed to the long-term vision of the cloud and its opportunities, one who is not hanging on to legacy IT architectures. At the same time, this partner needs to be firmly rooted in the realities of today‘s IT so it understands current challenges and how to best navigate the journey to the cloud. IT leaders need a partner who is neither incentivized to push for change faster than is responsible nor to keep IT the same. Customers need a partner who has done the hard work of figuring out how best to marry legacy IT with the cloud, rather than placing that burden on the

customer by ignoring the complexities of this transformation.

At Microsoft, we are all in on the cloud. We provide both commercial SaaS (Office 365) and a cloud computing platform (Windows Azure Platform). Office 365 features the applications customers are familiar with like Exchange email and SharePoint collaboration, delivered through Microsoft‘s cloud. Windows Azure is our cloud computing platform, which enables customers to build their own applications and IT operations in a secure, scalable way in the cloud. Writing scalable and robust cloud applications is no easy feat, so we built Windows Azure to harness Microsoft‘s expertise in building our cloud-optimized applications like Office 365, Bing, and Windows Live Hotmail. Rather than just moving virtual machines to the cloud, we build a Platform as a Service that reduces complexity for developers and IT administrators.

Microsoft also brings to the cloud the richest partner community in the world. We have over 600,000 partners in more than 200 countries servicing millions of busi-nesses. We are already collaborating with thousands of our partners on the cloud transition. Together we are building the most secure, reliable, scalable, available, cloud in the world.

Over the last three decades, Microsoft has developed strong relationships with IT organizations, their partners, and their advisors. This offers us an unparalleled understanding of the challenges faced by today‘s IT organizations. Microsoft is both committed to the cloud vision and has the experience to help IT leaders on the journey.

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CoCa-Cola eNterprises

OvERvIEWCountry or Region: Worldwide Industry: Consumer goods Retail

Customer ProfileCoca-Cola Enterprises (CCE) is the world’s largest marketer, producer, and distributor of nonalcoholic beverages, which it delivers with the industry’s most effective marketplace execution.

Business SituationCCE’s increasing competition was resulting in declining revenues. This required company executives to launch a new strategic direction, mandating a platform to communicate and engage with all employees.

selects Microsoft SharePoint Online to advance productivity

SolutionCCE implemented a Microsoft-based hosted worldwide intranet with messaging and collaboration tools, which are accessible to all employees from any device, enabling employees to boost productivity and time with customers.

Benefits• Productivity andcustomer focus• Companywide intranet• IT transformation• Effective remote teams• Deskless worker access

Coca-Cola Enterprises (CCE) employs approximately 72,000 people in 431 facilities around the globe. Much of its workforce is mobile with 55,000 vehicles and 2.4 million coolers, vending machines, and beverage dispensers. With increasing competition in the marketplace, CCE needed a more effective way to collaborate with its employees, to increase its productivity, to enable better flow of information and to create more time for sales persons to engage with customers. Its worldwide presence required employees and executives to spend numerous hours on the road every week, travelling to internal meetings. With Microsoft® Online Services technologies, CCE can save travel expenses through online meeting tools and collaboration platforms that span time zones and geographies.

Microsoft gave us an incredible platform that allows us to do a number of things, beyond hosting our portal. It provides workflow management and team collaboration across geographies and time zones. JoHn key, Assistant Director Communication and Collaboration Technologies, CCE

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SituAtionCoca-Cola Enterprises (NYSE: “CCE”) is the world’s largest marketer, producer, and distributor of Coca-Cola products. Coca-Cola Enterprises’ growing product portfolio includes the world’s greatest brands and beverages which it delivers with the industry’s most effective marketplace execution. Today, it serves 419 million consumers, throughout North America, the U.S. Virgin Islands, other Caribbean islands, Belgium, France, Great Britain, Luxembourg, Monaco, and the Netherlands. It employs approximately 72,000 people and operates 431 facilities, 55,000 vehicles, and 2.4 million coolers, vending machines, and beverage dispensers.

Coca-Cola Enterprises faces strong competition from other beverage companies and needed a way to work more effectively with its customers and partners. This required innovation and a new way of communicating within the corporation. In 2008, CCE acknowledged that its current communications platforms were no longer enabling the innovation and collaboration required to take it to the next level to compete in an increasingly demanding economic environment.

CCE required a centralized platform on which to promote the company’s initiatives. Its messaging was based largely around e-mail, which was unable to reach its largely mobile workforce. Chairman and

CEO John Brock and CIO Esat Sezer agreed that in order to evolve the company culture and improve customer relationships at CCE, the leadership team needed the ability to communicate with all CCE employees, especially those managing day-to-day operations in the field. Most of the diverse CCE personnel work in a distributed manner. Employees in manufacturing facilities had limited access to the corporate network. Its mobile, customer-facing employees, who are on the front line, making sales and positioning the CCE products in store environments, also lacked convenient access to company content. Additionally, CCE needed to drive action and information to all employees in its business by role. CCE’s infrastructure did

Our CEO challenged us to find better ways to connect all of our employees…. SharePoint Online addressed those challenges and helped us launch from a legacy infrastructure to a solution which provided better business value to all of our people. keVin flowerS, Director of Enabling Technologies, CCE

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not allow for this, making it difficult for employees to locate appropriate content in a timely manner. Kevin Flowers, Director of Enabling Technologies, says, “John Brock, our CEO, challenged us to find better ways to connect all of our employees. He asked us to create a unified way to reach all of the field resources for more than 400 locations in the U.S. alone. SharePoint Online addressed those challenges and helped us launch from a legacy infrastructure to a solution which provided better business value to all of our people.”

Taking on a new project like building a corporate intranet was exciting yet daunting as IT resources were engaged on many other initiatives as part of their transformation

journey. IT considered using partners to address its messaging needs and wanted to expand this to include development of its corporate intranet. Both solutions needed to support mobile devices to reach employees in manufacturing facilities and the field.

SolutionWith many older systems, CCE had several partners providing dozens of communication and collaboration solutions. CCE saw an opportunity to optimize its infrastructure by broadening its relationship with Microsoft. With the implementation of Microsoft Online Services, which includes Microsoft SharePoint® Online, Microsoft Exchange Online, Microsoft Office

Communications Online, and Microsoft Office Live Meeting, CCE consolidated and streamlined its IT partnerships and enhanced its focus on providing value to the business. CCE deployed its corporate intranet on SharePoint Online as its primary collaboration platform, which included content management, enterprise search, workflow, line of business integration, and rights management capabilities.

In its assessment of whether to upgrade its current platform or transform the company to a hosted model, CCE considered options presented by several major software and service providers. CCE desired a partnership where it could utilize its enterprise software

We had a massive change agenda that we were trying to communicate to the organization….We had a lot of objectives, but the two primary ones were a better way to communicate with our employees while at the same time driving effectiveness and efficiency.lAuren SAyeSki, Communications, CCE

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on premises with integrated software services in the cloud, and turned to Microsoft to execute upon its objectives. Planning for the project began in mid January 2008 and was completed by mid May. Microsoft Exchange Online and Microsoft SharePoint Online received “service acceptance” by July and user migration for both began in September. By the end of 2008, 23,000 users had been migrated to Exchange Online, 30,000 users were on SharePoint Online, and 10,000 users had migrated from IBM Sametime to Microsoft Office Communications Server for instant messaging. It added Microsoft Office Live Meeting for Web and video conferencing in April 2008.

SeCurity Initially, Tim Smith, the Chief Information Security Officer at CCE needed to be convinced that Microsoft would provide security measures that matched or exceeded CCE’s stringent requirements. Visiting the Tukwila data center, Smith was impressed by the virtual and physical security provided by Microsoft, as well as the third-party SAS 70 audit reports that Microsoft uses to monitor security compliance. Tim Smith, CCE Chief Information Security Officer, says, “Step one in getting comfortable with giving our data to Microsoft was visiting one of their data centers. To understand the physical nature of what they’re doing to safeguard not only their own information, but also

CCE’s, gave us a great sense of comfort that Microsoft has thought of all the right things.”

A fundamental shift occurred in how CCE viewed Microsoft services and capabilities running in Microsoft data centers, not as an outsourcing arrangement, but as a security-enhanced extension of CCE’s own enterprise network.

the right information at the right time CCE decided to use Microsoft integrated communication and collaboration tools to streamline communication across its entire organization. A critical component of the corporate intranet portal at CCE was the integration of SAP user role information into its on-premises Active

To have one source of the truth is very important as teams start to form across the globe. You want to be sure you always have the latest version of the document you’re working on. SharePoint Online makes that possible.JoHn key,Assistant Director Communications and Collaboration Technologies, CCE

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Directory® service and its Microsoft SharePoint Online environment. This will allow CCE to target the right information to the right employee based on roles outlined in SAP. By integrating SAP data into SharePoint sites, CCE employees can access data through recognizable Microsoft Office programs, giving employees the ability to make information for business operations easy to find, share, and update. Previously, CCE did not have a common solution that enabled document management. Documents that needed to be shared with colleagues were housed in shared folders on network drives, sent via e-mail, or stored in team rooms, all of which were limited in access, version control, and searchability.

ease and effectiveness of Collaboration Seeing the business need and the ability to increase its communication and collaboration capabilities, CCE was able to move very quickly to execute the migration. Lauren Sayeski, Public Affairs and Communications Manager, says, “We had a massive change agenda that we were trying to communicate to the organization. We had a lot of objectives with this project, but the two primary ones were a better way to communicate with our employees while at the same time driving effectiveness and efficiency.” Content management features on SharePoint Online include version management, workflow management, and rights management, all

of which enable seamless collaboration across geographies and time zones. John Key, Assistant Director of Communication and Collaboration Technologies, says, “To have one source of the truth is very important as teams start to form across the globe. You want to be sure you always have the latest version of the document you’re working on. SharePoint Online makes that possible.”

knowledge Sharing and Social networking CCE’s executive communication prior to its new corporate intranet was historically top-down. With its Microsoft SharePoint Online intranet solution, it now has open dialogue with employees communicating to leadership and with each other. Sayeski says,

There was huge excitement and energy around the CCE partnership with Microsoft. This has been one of the best IT partner projects CCE has experienced and we have the added value of a longer IT roadmap with Microsoft.... keVin flowerS,Director of Enabling Technologies, CCE

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“We focused on ways for employees to comment back to the organization as well as communicate with each other. Now we have the ability to post comments on the intranet and create team sites. We’re finding that employees are talking to each other and using each other’s resources, sharing knowledge. We launched our first CEO blog last year and in the first five minutes had more than 40 responses back. That’s just the beginning; we know that the intranet can be so much more powerful as a place of action.”

BenefitSProductivity and Customer focus The Microsoft solution enabled CCE to bring new technologies to everyone in the company, providing

them with the information they need, where and when they need it most. Microsoft SharePoint Online has been embraced by employees across the company. Within four weeks of enabling users to create team sites, there were over 800 requests for sites focused on business priorities and customer-facing business teams. Tom Barlow, Vice President of Business Transformation, N.A., says, “From a business transformation perspective, we have a lot of projects underway which focus on revenue generation and cost savings. Through the use of SharePoint Online, we’re able to educate our team so that they can find information and establish interdependencies across the different projects. SharePoint allows us to code and manage information so

that we can get it very quickly.”

worldwide Collaboration CCE now has a robust intranet portal to support worldwide collaboration and communication of corporate strategy. Sapient Consulting and Slalom Consulting designed the custom intranet and collaboration solution on top of Microsoft SharePoint Online. Sapient created the compelling visual design with a user-based enterprise portal workflow. Slalom designed and developed custom SharePoint features in accordance with Microsoft development standards and best practices, as well as provided guidance to CCE regarding the deployment and configuration options available in SharePoint

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Online. Sayeski says, “When you have a workforce like ours, 72,000 strong and geographically dispersed, that may or may not have access to technology, it can be a challenge to ensure that the message of the organization is getting through with the clarity and the speed that you want it to. We focused heavily on the use of video, particularly with our CEO, to ensure that some of our most critical messages were being captured in a way that the audience immediately understood. So combining the power of video with the intranet gave us the ability to touch many more people.”

Powerful Search with enterprise Content Management The corporate intranet also serves as a central location for

things like CCE’s HR process improvement and self-service HR portal and provides a communication platform for CCE’s desk-based workers. CCE has also increased employee engagement and education around corporate responsibility and sustainability through the portal content, thereby addressing the cultural change initiative. Sayeski says, “There have been some particular areas where we’ve seen that concept of two-way dialogue playing out very well. One is in our corporate responsibility and sustainability efforts where employees are sharing—actively sharing their own ideas and their own solutions within their own facilities about ways they’re generating energy effectiveness.”

Through the intranet, CCE employees are eager to be part of the company direction and dialogue. Brett Kirkland, Collaboration Architect, says, “The SharePoint Online search engine is ten times better. It allows us to make items more discoverable, to check them in and out, and surface particular items that we consider pieces of content that should rise to the top. The SharePoint solution also gives IT more control and governance over what content is published and how it is ranked and profiled in search.”

Key says, “Microsoft gave us an incredible platform that allows us to do a number of things, beyond hosting our portal. It provides workflow management and team collaboration across

SOfTWARE & SERvICES Microsoft Exchange Online Microsoft SharePoint Online Microsoft OfficeCommunications Online Microsoft Office Live Meeting

SERvICES Microsoft Services

PARTNERS Slalom Consulting Sapient Binary Tree cococola

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geographies and time zones.”

the road AheadIn phase II, CCE will be expanding the Microsoft footprint to reach an additional 42,000 deskless workers who work in the field or in sales/distribution facilities. These employees do not have computers but will be enabled in phase II to have access to the intranet via Microsoft SharePoint Online through computer workstations at their facilities. Additionally, Microsoft is co-developing a sales force automation system that will further take advantage of SharePoint Online and enable local merchandisers to be more efficient in getting the things they need into the outlets and stores. CCE will also be using Microsoft Office Communications Server

desktop voice and video for multi-user applications and adding more than 10,000 BlackBerry users. Kevin Flowers concludes, “There was huge excitement and energy around the CCE partnership with Microsoft. This has been one of the best IT partner projects CCE has experienced, and we have the added value of a longer IT roadmap with Microsoft than if CCE had built the solution on premises. This project has exceeded our expectations from an IT standpoint, showing how well an organization can lay a foundation and transform the way people communicate in a large company.”

www.slalomconsulting.com

www.sapient.com

www.binarytree.com

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glaxosmithKliNe

OvERvIEWCountry or Region: GlobalIndustry: Pharmaceuticals

Customer ProfileSecond largest pharmaceutical company in the world, GlaxoSmithKline supplies a quarter of the world's vaccines and produces some of the leading prescription medicines and consumer healthcare products.

Business SituationGlaxoSmithKline needed to improve collaboration with partners, to improve effectiveness in growing markets, to move away from customized solutions, and to lower the cost of operations and investments.

leads the Way With Microsoft Online Services

SolutionGlaxoSmithKline chose to deploy Microsoft Business Productivity Online Suite – including Microsoft® Exchange Online, Microsoft® Office SharePoint Online, Microsoft® Office Communications Online, Microsoft® Office Live Meeting and the Microsoft® Deskless Worker Suite.

Benefits• Reduce Operational Costs• Drive Innovation• Improve Collaboration• Simplify User Experience

GlaxoSmithKline (NYE: GSK) is a pharmaceutical industry leader: supplying a quarter of the world’s vaccines, spending over $13 million each day to research new medicines, and providing many of the world’s leading prescription medicines and consumer healthcare products. It is estimated that GlaxoSmithKline makes up seven percent of the world’s pharmaceutical market, and it is one of the few companies committed to researching vaccines for the World Health Organization’s three priority diseases – HIV/AIDS, tuberculosis, and malaria. Yet, an internal strategic review of their IT systems outlined a need to take a new approach to collaboration, support growing markets, and address costs. Illustrating its industry leadership, GlaxoSmithKline found its solution in pioneering Microsoft Online Services solutions.

We have chosen Microsoft Online Services because it promises to deliver a simple intuitive Information Workplace that should not only bring value to the company through simplification, but provide an improved user experience and ultimately create a more productive GSK. Bill louV, Chief Information Officer, GlaxoSmithKline

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SituAtionIn 2001, after the merger of GlaxoWellcome and SmithKline Beecham, GlaxoSmithKline had to integrate two complex IT systems. In order to successfully make this merger, they chose the Notes platform SmithKline had strongly invested in over the Exchange platform Glaxo utilized. This provided a single communications channel and B2E platform across the global company. By using several in-house developed solutions, GlaxoSmithKline supported collaboration and Lotus Notes Sametime for instant messaging. In conjunction with the Lotus Notes and Domino system, GlaxoSmithKline also used Google’s Postini mail filtering service.

After an internal strategic review in 2007, GlaxoSmithKline recognized several points of needed improvement: the ability to collaborate with external partners, effectiveness at supporting growing markets outside of the UK and USA, a requirement to move away from customized solutions, and a decrease in the operating and investment costs. The review also noticed that the current Notes platforms were reaching their refresh cycles, necessitating action and renewed investment for the next three years. To research their options, GlaxoSmithKline constructed a cross-functional team of representatives from the various global IT organizations, partners in the business units, and major growth markets.

Solution GlaxoSmithKline evaluated a number of data points before making a decision. “The team reviewed, in detail, what services were being offered at what service levels around the globe, how our existing technologies were used as application platforms,” says Ingo Elfering, VP of Information Technology Strategy, GlaxoSmithKline, “and how the various tools worked together to create an integrated collaboration environment now and in the future.” GlaxoSmithKline conducted several user studies, but the focus wasn’t just on the present. The future of changing pharmaceutical user profiles, devices, and software was also a strong factor.

We wanted to build the business case first so that it would really be a slam dunk in the approval process Bill louV, Chief Information Officer, GlaxoSmithKline

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Moving to Online Services will enable us to reduce our IT operational costs by roughly 30% of what we’re currently spending…. A variable cost subscription model for these collaborative technologies allows us to more rapidly scale or divest our investment as necessaryAlAStAir roBertSon, VP of Information Workplace

In the conservative industry of pharmaceuticals, GlaxoSmithKline was looking to put together the facts. While GlaxoSmithKline was looking for a productivity and collaboration increase from the switch, the first priority was to build a strong business case. “We wanted to build the business case first so that it would really be a slam dunk in the approval process,” says Bill Louv, Chief Information Officer, GlaxoSmithKline. The approval process considered the risk of patient safety and confidential data, but a strong business case led to the approval of innovative cloud services with Microsoft.

GlaxoSmithKline chose to replace the Lotus Notes, Domino, and Postini services with the Microsoft Business Productivity

Online Suite – including Microsoft® Exchange Online, Microsoft® Office SharePoint Online, Microsoft® Office Communications Online, Microsoft® Office Live Meeting and the Microsoft® Deskless Worker Suite to deploy to all of its employees worldwide. Everything would be hosted by Microsoft at Microsoft data centers around the globe.

Through Online Services, Microsoft offers the ability to have fully functioning applications with a lean presence. The software will operate in the same capacity in a hosted solution as it would if it were implemented on-premise. By deploying the Business Productivity Suite with the Deskless Worker Suite, GlaxoSmithKline is able to offer total functionality

to its entire spectrum of information workers. This suite offers those who don’t have a laptop the ability to go to a Web kiosk. It’s a lighter version and a more manageable option for the sales force at a lower cost to GlaxoSmithKline. The Deskless Worker Suite will be deployed for 15,000 of GlaxoSmithKline’s employees, and unlike Google Apps, this enables both the full-service Online Services and Deskless Worker Suite to be managed in a central location determined by the company itself.

BenefitSThe global implementation of Microsoft Online Services at GlaxoSmithKline is intended to have numerous advantages for the company including: reducing operational costs,

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GlaxoSmithKline has approximately 100,000 employees, hundreds of business partners, and locations around the world, so effective collaboration is critical to our business. We have chosen Microsoft Online Services… Bill louV,Chief Information Officer, GlaxoSmithKline

driving innovation and collaboration, expanding external collaboration, and simplification of user experience. This solution is much more effective than the Notes and Google Apps combination in driving lower costs, more collaboration, and greater accessibility.

reduce operational CostsThe use of Microsoft Online Services offers a dramatic yearly reduction in costs. “Moving to Online Services will enable us to reduce our IT operational costs by roughly 30% of what we’re currently spending. The ability to introduce a variable cost subscription model for these collaborative technologies allows us to more rapidly scale or divest our investment as necessary,” confirms Alastair Robertson, VP of

Information Workplace. The difference for GlaxoSmithKline means putting more money back into the business.

drive innovationWhile GlaxoSmithKline is able to reduce costs with Microsoft Online Services, productivity is not harmed, but enhanced. Through Microsoft Online Services, GlaxoSmithKline can utilize the IT department for key projects instead of tasking them with managing the infrastructure software or servers.

The model allows for increased innovation where it counts. “The team needed the ability to focus internal IT on driving further innovation that differentiates GSK in the market while offloading innovation

around communication and collaboration to Microsoft. This ensures that we can focus on our core competencies and also that we have an ‘evergreen’ IT strategy where the latest technologies are always at our disposal via the cloud,” says Elfering.

The Microsoft Online Services model drives this innovation as well as allows the increased flexibility in moving forward. The subscription service can be tailored to fit growing and changing needs. So that when GlaxoSmithKline adapts to changing market, its software adapts too.

expand external CollaborationGlaxoSmithKline is aggressively driving a more externally collaborative

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SOfTWARE AND SERvICES Products Microsoft Data Centers ServicesSERvICES Microsoft Exchange Online

Microsoft SharePoint Online Microsoft Office Communications

Online Microsoft Office Live Meeting

Online Microsoft Deskless Worker Suite

business through all practices: research and development, manufacturing, and sales. With Microsoft Online Services, this effort can be maximized without compromises in the security and integrity of sensitive information. The information is stored in the cloud, allowing for a more direct form of access than if it were stored directly on an internally maintained server. Also, as Louv notes, the Microsoft brand is more common and therefore easily interfaced than its competitors. This supports collaboration between partners and GlaxoSmithKline, allowing for a more innovative and competitive business.

Simplification of User experienceMoving away from the customized solutions environment, GlaxoSmithKline was looking for a simple solution that would effectively extend to the many branches, regions, and employee types internally. The company needed a solution that would also translate externally to increase collaboration and the resulting innovation. That is why GlaxoSmithKline chose the Microsoft solution.

“GlaxoSmithKline has approximately 100,000 employees, hundreds of business partners, and locations around the world, so effective collaboration is critical to our business,” says Louv, “We have chosen Microsoft Online Services

because it promises to deliver a simple intuitive Information Workplace that should not only bring value to the company through simplification, but provide an improved user experience and ultimately create a more productive GSK.”

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Kpit CummiNs

OvERvIEWCountry or Region: India Industry: IT Services

Customer ProfileKPIT Cummins is a global IT consulting and product engineering partner company focused on the Manufacturing (Automotive, Industrial and Hi-Tech) and Diversified Financial Services industries.

Business SituationKPIT Cummins wanted to cut capex and opex expenses, reduce the number of physical servers it operated, and optimize system flexibility and maintenance to best serve its business requirements.

shrinks 120 servers to 20, reduces costs and cuts energy usage with virtualization

SolutionTo optimize the growing data centers operations, KPIT Cummins implemented a virtualization solution centered on Windows Server® 2008 Hyper-V™ technology to consolidate hardware, minimize rack space and ownership and software cost.

Benefits• Consolidates multiple servers • Reduces power consumption• Reduces opex and capex cost• Improves service quality

Headquartered in Pune, India, KPIT Cummins is an emerging leader in providing consulting, solutions and services in the fields of finance, accounts and manufacturing. It is one of the world’s first few companies to achieve the BS25999:2007, ISO9001, ISO 27001:2005, CMMI- level 5 certifications. With accumulation of servers, it was becoming increasingly difficult for the company to manage costs and handle issues like high expenditure on technology hardware, software licensing, power consumption, and physical space. Hence, KPIT Cummins decided to migrate operations to Windows Server® 2008 with Hyper-V™ technology to take advantage of server virtualization efficiencies. With its new optimized infrastructure, the company can grow faster and dramatically reduce IT costs. The company has virtualized 120 of its physical servers to 20 servers and thus has optimized space and power use.

Virtualization has helped to reduce the provisioning time for new applications by almost 6-8 weeks helping us to deploy applications within 4 hours on the virtualized platform.MAndAr MArulkAr,Head, Technical Infrastructure Management Services, KPIT Cummins

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SituAtionFounded in 1990, KPIT Cummins specializes in consulting in Governance and Regulatory Compliance, high end transactional BPO/KPO and Enterprise Support to global customers. The company is focused on co-innovating domain intensive technology solutions for manufacturing corporations in automotive, industrials, hi-tech verticals and diversified financial services. It has established state of art eco friendly facility equipped with advanced technologies, processes, and equipment - complying with international standards.

With 4500 employees worldwide and more than 95 active global clients, the company has offshore centers in Pune and Bangalore in

India. Besides, it has onsite presence in United States, United Kingdom, Germany, France, Japan, Singapore, South Africa and Poland.

KPIT Cummins operates multiple data centers in its Pune and Bangalore centers. To help meet the needs of more than 5000 users across the globe, the company manages more than 200 servers, storage area networks and business applications such as SAP R/3 ERP, Microsoft Exchange Server 2007 with unified communication. In addition, it manages configuration management servers, project management applications, intranet and portal applications, development and testing servers supporting customer projects. The company has a network

operations centre that takes care of network and perimeter security and client services which takes care of desktop and peripheral devices support.

KPIT Cummins realized that more than 150 servers had reached the end of their life, they had hardware which was older the 3 years. At the same time, there were more than 50 servers that had less than 30 percent utilisation. Initially the managers planned to replace some of them by new hardware and renew the annual maintenance contract (AMC) of remaining servers, but these options required considerable capital and operating expenses. “Our goal was to deploy Green IT solutions, reduce and opex expenses by at least 15 percent and improve

We have trimmed our physical server holdings – from 120 to merely to servers. Currently the entire setup is running on 20 infrastructure servers virtualized on Microsoft Hyper-V Server 2008. The expenses on server boxes have dropped drastically by 40 percent of our data center budget.SAndeeP GAndHi, Sr. Manager, Data Center Operations, KPIT Cummins

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asset utilization by 20 percent,” explains Mandar Marulkar, Head, Technical Infrastructure Management Services, KPIT Cummins. “The growing number of servers, however, was resulting in more energy consumption and increased data centre energy consumption.”

With growing server network, the company was incurring huge costs for technology hardware, software licensing, and power consumption. It recognized that its IT environment had become too large and complex to be managed effectively and efficiently in a traditional manner. The company also wanted to cut back on the number of physical servers it operated, improve server performance, and optimize system flexibility and

maintenance to best serve its business requirements.

SolutionKPIT Cummins recognized that it could use virtualization technology to reduce the number of physical servers in its data center, and enhance the availability of applications and services. Shrikant Kulkarni, CIO, KPIT Cummins concluded that rather than paying for many under-utilized server machines or less efficient server machines, each dedicated to a specific workload, server virtualization would allow consolidating all the workloads onto a smaller number of more fully used machines. Not only this, he convinced the business users the benefits of this technology.

The IT team at KPIT Cummins evaluated several products, including the Hyper-V™ technology included with the Windows Server® 2008 operating system, VMware, and others. Considering the business requirement, licensing model, cost factor and technical support available, the company ultimately decided to deploy Hyper-V as it provides all the functionality needed and meets all the requirements.

Deployment took place in Pune and Bangalore centers. The process commenced in April 2009 and was 90 percent completed by Oct 2009. The implementation dramatically prune its physical server holdings, from 120 to 20 systems. The company can now efficiently deploy, scale, and manage a virtualized

By reducing the number of physical servers with the help of Microsoft Hyper-V solution, we are able to reduce the power consumption enormously and thus helped the company going green.SAndeeP GAndHi, Sr. Manager, Data Center Operations, KPIT Cummins

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server infrastructure without the extra cost of a third-party solution.

Initially the team faced some issues to understand the technology, manage virtualized setups and convince the business users to move the application on virtualized platform. But later on, after 3-4 application migrations, the team was quite comfortable in migrating the applications without any down times and dynamically allocating appropriate resources. “Virtualization has helped to reduce the provisioning time for new applications by almost 6-8 weeks helping us to deploy applications within 4 hours on the virtualized platform,” says Mandar Marulkar, Head, Technical Infrastructure

Management Services, KPIT Cummins.

BenefitSBy using Hyper-V technology to virtualize its physical servers, KPIT Cummins optimized its server environment, cut hardware costs and power consumption, enhanced server reliability and utilization, and reduced maintenance and support costs.

Consolidates Multiple Servers KPIT Cummins decided to use Microsoft Hyper-V solution for virtualization instead of paying for many under-utilized server machines. Consolidations helped in running multiple applications on the same server in single operating

system by eliminating some of the servers. By using Hyper-V to virtualize servers, the company is able to significantly reduce hardware costs and decrease the hardware footprint at its data centers. Now the IT department can support the business with less hardware, which means lower equipment costs, reduced electrical consumption for server power and cooling, and less physical space.

“We have trimmed our physical server holdings - from 120 to merely 20 servers. Currently the entire setup is running on 20 infrastructure servers virtualized on Microsoft Hyper-V Server 2008. The expenses on server boxes have dropped drastically by 40 percent of our data center

Server virtualization has brought in significant reduction in capital expenditure. We have consolidated physical servers by more than 40 percent, reduced physical rack space by 60 percent resulting in savings of more than 40 percent in data center budget. MAndAr MArulkAr ,Head, Technical Infrastructure Management Services, KPIT Cummins

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budget,” elaborates Sandeep Gandhi, Sr. Manager, Data center operations, KPIT Cummins.

reduces Power ConsumptionThe significant reduction in servers contributes hugely to KPIT Cummins “green” initiatives. “By reducing the number of physical servers with the help of Microsoft Hyper-V solution, we are able to reduce the power consumption enormously and thus helped the company in going green,” says Sandeep Gandhi, Sr. Manager, Data center operations, KPIT Cummins.

Consolidation and virtualization has aided the company in its objective to deploy green data centre solutions by reducing carbon

footprint in turn giving cost savings as a part of reducing energy consumption. Along with reduced power requirements, lesser cooling facilities need to be deployed for the servers.

reduces opex and Capex CostThe operating and capital cost of deploying new servers, and maintaining and running more than 200 servers is much higher than fully utilizing 20 servers for all the applications. Virtualization has helped consolidating practically 10 servers into a single virtual server. Loading different operating systems and applications on a single virtual server has resulted into improving the utilisation up to 70 percent of the less utilised servers.

“Server virtualization has brought in significant reduction in capital expenditure. We have consolidated physical servers by more than 40 percent, reduced physical rack space by 60 percent resulting in savings of more than 40 percent in data center budget,” says Mandar Marulkar, Head, TIMS, KPIT Cummins.

improves Service Quality“Consolidation and virtualization reduced the time needed to provision servers from several months to just 4 hour, restored data in 10% of the time previously required, and created a highly reliable environment, improving its quality of service,” says Mandar Marulkar, Head, TIMS, KPIT Cummins.

The time taken in tracking the AMCs and other issues with servers is now brought down considerably. Fewer people are required to mange the lesser number of servers.

During the consolidation process, the IT team got a chance to review all the existing applications and this helped in deactivating some of the old development and testing servers, thus improving the service. Consolidation, virtualisation and deactivation of the applications helped in reutilisation the existing servers more efficiently for critical applications avoiding new hardware investments. With reduced hardware, lesser operating cost, the company can offer better and competitive prices to its customers.

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3m lauNChes Web-based visualatteNtioNserviCeOvERvIEW

Country or Region: United StatesIndustry: Manufacturing - High tech and electronics

Customer ProfileWith 75,000 employees and operations in more than 60 countries, 3M develops an extensive range of consumer and industrial products. Well-known 3M brands include Scotch, Post-it, Thinsulate, and Scotch-Brite.

Business Situation3M wanted to make its Visual Attention Service (VAS) available to customers as a Web-based application, with high performance, scalability, and low infrastructure and management costs.

to heighten design impact

Solution3M used the Windows Azure™ platform to deliver the VAS solution to customers, taking advantage of Microsoft® data center infrastructure and service management to keep performance high and costs low.

Benefits• Easy, efficient deployment• Lower costs, high scalability• Excellent customer solution

A recognized world leader in technology research and development, 3M wanted to make its decades of expertise in the workings of the human visual system available as a service to customers. Using the Windows Azure™ platform, 3M created a Web-based application that gives designers the ability to invoke complex algorithms to analyze the effectiveness of a design, based on how the human eye will respond. By hosting its application in Microsoft® data centers, 3M has made an innovative service available to a global audience, while minimizing its investment in hardware infrastructure and ongoing administration. The solution, which permitted developers to evaluate frequent iterations of the application, helped the company speed time-to-market for its service and achieve higher quality results, faster than in a traditional development environment.

Windows Azure helps 3M customers take advantage of complex algorithms that encapsulate 30 years of research and get simple, powerful results from their browser, almost instantly. terry Collier,Marketing Manager, 3M

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SituAtionFrom well-known brands such as Post-it products, Thinsulate insulation, and Nexcare first aid, to high-strength bonding tapes, industrial abrasives, and traffic safety systems, 3M products are ubiquitous around the world. Founded in 1902, 3M is a science-based company and has developed thousands of innovative products for a broad range of markets. The company now operates in 60 countries and its worldwide sales in 2008 were more than U.S.$25 billion.

3M supports more than 40 different technology platforms and has invested years of scientific research in developing them. In fact, 7,000 of the company’s employees are dedicated solely to research. One area

of research that is used in many 3M products - such as reflective materials used in roadway signage, emergency exit markings, and display and graphics technologies - is the understanding of how the human visual system works. The company’s vision scientists, working in its corporate research labs, study how the human brain processes visual information and have developed complex algorithms for predicting what a person will notice in a visual scene.

Bill Smyth, Business Manager at 3M, says, "Our job, on the business and marketing side, is to make the most of these capabilities." To this end, Smyth and his colleagues identified a use for these predictive algorithms. "We knew there was a need to

make the process for designing things that people interact with visually more science-based and iterative to bring about more effective results."

Terry Collier, Marketing Manager at 3M, adds, "In our market research, we found that designers spend a lot of time creating, honing, and optimizing their images but they can be challenged by the fact that they don’t ever truly know how people are seeing a design before it’s completed."

3M’s goal was to provide designers with predictive measurements about how their creations - from a logo design, to a Web site layout, to the placement of an electronic screen in a hotel lobby - would be perceived by their audience. Also, it was critical that this information

We knew there was a need to make the process for designing things that people interact with visually more science-based and iterative to bring about more effective results.Bill SMytH, Business Manager, 3M

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be immediately available. "We needed to be able to provide designers with access to this information directly from their computer desktop, multiple times throughout the design process, so they could alter their designs in direct response to the analyses, rather than engaging in lengthy focus group sessions that happen after a design reaches a near-final state of completion," says Collier.

The company developed a prototype of a Web-based application, called the 3M Visual Attention Service (VAS). The service makes it possible for designers to test the effectiveness of their content using visual attention models, which are based on algorithms that predict the elements of a scene that a viewer is likely to see and to

remember. The prototype, a Web-based application that was hosted on 3M data center servers, enabled users to upload photographs of a physical environment or a graphic design to the VAS. The application’s processing engine then evaluated the image for its 'visual saliency' and returned a map of the image that indicated, using

markings such as those seen on a heat map, which areas of the image were most likely to attract a viewer’s attention. (Figure 1.)

But 3M wanted the application to work efficiently as part of its customers’ existing design processes. To become a viable offering, the VAS application had to be

The similarities between Windows Azure and our current development environment gave us a huge advantage and made the decision easy.JiM GrAHAM, Technical Manager, 3M

figure 1. 3M VAS image map indicating areas most likely to attract viewers’ attention

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available to customers in real time, be capable of processing images and returning near-immediate results, of scaling rapidly during peak design times, such as just prior to holiday advertising deadlines, and it had to carry a low up-front investment risk for 3M. "Especially in the current economic environment, we have to be very careful about how we invest our capital," says Smyth."We didn’t want to invest in costly data center infrastructure and capacity that, much of the time, would sit idle and unused."

Jim Graham, Technical Manager at 3M, adds, "We needed to be able to provide a high-performance application to customers everywhere, without deploying data centers around the world."

Solution3M believed that the most effective approach would be to operate the VAS application from a "cloud computing" environment, in which the solution would be hosted and managed on the Internet and reside in an external partner’s data centers. The company evaluated hosted infrastructure offerings from Microsoft and others, but, says Graham, "3M has for a long time relied on Microsoft® tools and technologies to support the development of our technology. For this reason, 3M chose the Windows Azure™ platform from Microsoft." Windows Azure is a cloud services operating system that serves as the development, service hosting, and service management environment for the Windows Azure platform.

Windows Azure provides developers with on-demand compute and storage to host, scale, and manage Web applications on the internet through Microsoft data centers.

From its experience with the Community Technology Preview (CTP) of Windows Azure, a Microsoft program for early adopters to experiment with prerelease technology, Graham’s team thought that the solution was a good fit for 3M. "The similarities between Windows Azure and our current development environment gave us a huge advantage and made the decision easy," says Graham. 3M relied on the Microsoft Visual Studio® 2008 development system to produce the VAS application, including Microsoft Visual

SQL Azure is of great value to 3M because it takes the database management piece off our plate.JiM GrAHAM, Technical Manager, 3M

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Studio Team System 2008 Team Suite and Microsoft Visual Studio Team System 2008 Team Foundation Server. It also used Microsoft Expression Blend™ 3 design software and Microsoft SQL Server® 2008 data management software. "We saw that Windows Azure would work well with our Visual Studio development environment. We also saw the opportunity to take advantage of a new technology platform that would allow us to deploy in different countries, with rapid scaling capabilities and no up-front capital investment," says Graham.To prepare the VAS application for commercial release, 3M built a new user. interface. The timing coincided with the CTP of Windows Azure, so Graham’s team developed the interface to Windows

Azure specifications. "We developed the whole user experience, from the ground up, on Windows Azure," says Graham. His team also used the Windows Azure development fabric, which it used to simulate the Windows Azure environment on local computers, making it easy to run and test the VAS application before deploying it.

VAS incorporates a number of unmanaged, high-performance image-processing software libraries developed by 3M. "The Windows Azure development fabric helped us perform quick iterations of code, allowing us to overcome many of the hurdles we might not have seen until we had deployed to a more formal staging or production

environment," explains Graham. The VAS interface, and the Web site where users go to access it, was developed using Microsoft ASP.NET 2.0, part of the Microsoft .NET Framework. Graham’s team used the Microsoft Silverlight™ browser plug-in to build controls into the application that enable users to edit and modify images they submit to the VAS processing engine. The Silverlight-enabled controls are embedded into the ASP.NET application framework, creating a seamless experience for users. "Users don’t have to switch between different interfaces to perform certain functions," explains Graham.

The VAS application relies on the Access Control Service feature of Windows Azure to authenticate users to the

We will be able to deploy much faster on the Microsoft technology platform through Windows Azure than with any other cloud solution we evaluated.JiM GrAHAM,Technical Manager, 3M

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figure 2. Diagram of 3M VAS deployed on Windows Azure

system, providing access to various components of the service based on a user’s credentials. 3M used Microsoft SQL Azure, a cloud-based relational database platform that is built on SQL Server technologies, to manage the images that users upload. SQL Azure also is used to deliver analytical results from the

off our plate," says Graham.3M uses Windows Azure data storage services to store image files and analysis generated by the engine, and it uses the Queue service feature to provide users with high-performance and near-immediate response times even when the application is inundated with high traffic during peak load times.

In short, explains Graham, "With Access Control, we can create a pipeline from the ASP.NET-based interface, to the Queue service, to the VAS engine where the analysis is performed using the algorithms our scientists have developed." (Figure 2.)

Currently, VAS helps customers evaluate any number of graphical or photographic images that they choose to

image processing engine. SQL Azure, as part of the Windows Azure platform, provides automated management capabilities, including built-in data protection, self-healing, and disaster recovery - crucial for protecting customers’ data. "SQL Azure is of great value to 3M because it takes the database management piece

3M VAS and Windows Azure will help our customers spend their marketing dollars more wisely.Bill SMytH,Business Manager, 3M

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responds. By using a cloud service, 3M experienced an efficient deployment and lowered its infrastructure costs. The highly scalable Web-based service will make it possible for 3M customers to optimize designs in response to scientific analysis, thereby helping to make the most of their marketing dollars.

Easy, Efficient DeploymentThe close connection between Windows Azure and the 3M Visual Studio development environment helped the company achieve a rapid deployment of the VAS application. "We were able to wrap our core technology into Windows Azure in less than eight weeks. It was very fast, "says Graham. "The tools and technologies we were already using, for instance forms authentication, are

fully supported in Windows Azure. And, the Windows Azure development fabric provided a great simulation environment in which we could see our work in progress and incorporate feedback- early and often. We rapidly deployed interim releases to stakeholders within the company. The Windows Azure development fabric has been a significant time savings."

In addition, once the VAS application development is complete and the service is made publicly available on Windows Azure, 3M will be able to quickly release product updates and enhancements. "We will be able to deploy much faster on the Microsoft technology platform through Windows Azure than with any other cloud solution we evaluated," says Graham.

upload to the application. In future versions, 3M plans to provide customers with the ability to create entire databases of test images, enabling users to experiment with, for example, the content of an advertisement in a variety of design scenes - or, conversely, a number of different types of advertising content in one particular scene. 3M plans to release a final version of the VAS application running on Windows Azure to customers by mid-November 2009.

BenefitSUsing the Windows Azure platform, 3M developed a highly innovative Web-based service that can dramatically alter and improve the process for designing images and environments that rely on how the human visual system

SOfTWARE AND SERvICES Windows Azure Platform Windows Azure Access Control Service Microsoft SQL Azure Microsoft Server Product Portfolio Microsoft SQL Server 2008 Microsoft Visual Studio Microsoft Visual Studio Team System 2008 Team Foundation SERvER Microsoft Visual Team System 2008 Team Suite Microsoft Expression Microsoft Expression Blend 3 Technologies Microsoft ASP.NET 2.0 Microsoft .NET Framework Microsoft Silverlight

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lower Costs, High ScalabilityWith Windows Azure, 3M capitalizes on a pay-as-you-use pricing model to minimize hosting costs and maximize profits. "With Windows Azure, we get a highly scalable environment, pay only for the resources we need, and relieve our IT staff of the systems management and administration responsibilities of supporting a dynamic infrastructure," says Graham.

3M found SQL Azure to be especially beneficial because it can use it to offer the VAS application to a global audience, without the expense of establishing and maintaining regional data centers. Graham explains, "With SQL Azure, we can deploy internationally without having to migrate customer

data from one region to another, without having to replicate databases, and without all of the service management we would otherwise have to engage in." Graham compares the time and cost savings that result from the use of Windows Azure as a cloud services platform to other endeavors at 3M. "We have full-time staff members who are solely dedicated to managing our hosted solutions. Were we to host the VAS application ourselves, we would have to increase our support staff."

excellent Customer Solution Most importantly, 3M used Windows Azure to deliver a new technology that could change the design process paradigm, especially in areas where success hinges on a

viewer’s response to a scene. "Windows Azure helps 3M customers take advantage of complex algorithms that encapsulate 30 years of research and get simple, powerful results from their browser, almost instantly," says Collier.

Graham says, "We wanted to make it so simple for our users that they didn’t even have to step outside of the workflow they are used to. With the VAS application running on Windows Azure, users can open a Web browser and analyze any number of files, straight from their computer." As VAS becomes an integral, natural element of the design process for 3M customers, the company expects to "significantly reduce the time and cost of design iterations - while improving the overall

impact of the designs," says Graham.

"3M VAS and Windows Azure will help our customers spend their marketing dollars more wisely," explains Smyth. "In our research, we found that customers value having an analytical, science-based assessment of their designs. It takes it out of the ego space of subjective evaluations from colleagues or from their own clients. We believe that with the Windows Azure - based solution, we can have a significant impact on the financial aspects of marketing-based design."

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