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Cisco Confidential 1© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Cloud Computing: The New Economics of IT
Jim Cooke – Senior DirectorIBSG IT Transformation Practice
Cisco Confidential 2© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions GroupCisco Confidential 2© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Bespoke Consolidation Utility
FarmingIndividual
FarmsIndustrial Farming
Farming Conglomerates
ElectricityFactory Steam
EnginesLocal Power
PlantsElectrical Grid
ITEnterprise Data
Centers
Cloud Service providers (CSP‟s)
IT Service Grid
Evolutionary Pattern
IT is Following a Common Evolutionary Pattern
Source: Jim Cooke - Cisco IBSG Innovations
Cisco Confidential 3© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Why Now?
Compute & network speeds
Storage costs
Service-Oriented Architectures Standardization
General acceptance of ITaaS
Global Economic Crisis
Virtualization
Cloud Acceleration
Source: Technology Avalanche; Dave Evans, Jim Cooke Cisco IBSG
Cisco Confidential 3© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Cisco Confidential 4© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions GroupCisco Confidential 4© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
What Makes Cloud Different?
Traditional
Computing
Dedicated
Traditional hardware procurement
New services added manually
Manual repair of system failure
Months
Incremental CapExpurchases
Shared
Self service
Scale on-demand
Automated recovery due to integration / interoperable
Minutes
Pay per use
Consumption
Ease of Use
Scalability
Availability
Provisioning
Cost
Cloud Computing
Source: Cisco CMO SP Mktg - Data Center Solutions
Cisco Confidential 5© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Private Public Hybrid CommunityDeployment
Models
ServiceModels
Software as a Service (SaaS)
Platform as a Service (PaaS)
Infrastructure as a Service (IaaS)
EssentialCharacteristics
On-Demand Self Service
Broad Network Access
ResourcePooling
Rapid ElasticityMeasured Service
http://www.csrc.nist.gov/groups/SNS/cloud-computing/index.html
Cloud Definition from NIST (National Institute of Standards and Technology)
Cisco Confidential 5© 2010 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Cisco Confidential 6© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Deployment Benefits and Challenges
Sharing services and elastic
scaling
Adding capability without time
and resource intensive build-
outs
Shifting Economics – capex to
opex
Simplifying operations
New potential revenue streams
Deployment Benefits Deployment Challenges
Security, Compliance and
Regulatory risks
Cloud services management
(Billing , SLA’s, Dependencies)
Organizational and operational
challenges and impact to
business processes
Interoperability and integration
with existing processes and
technologies
Cisco Confidential 6© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Source: Jim Cooke - Cisco IBSG Innovations
Cisco Confidential 7© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Automation
HybridCloud
PublicCloud
Virtualization
Inter-Cloud
Consolidation
PrivateCloud
The Cloud Computing Journey
Consumption models for IT, applications and services are changing dramatically and will be ahybrid mix – available bothon-premise with private clouds and from service providers in public clouds.
Source: Jim Cooke - Cisco IBSG Innovations
PRESENT
Cisco Confidential 8© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
30% 70%Business
TransformationInfrastructure Operations“Keeping the Lights On”
70% of the IT Budget for Maintenance30% Available for Innovation*
*Source: Gartner - IT Infrastructure, And The Shift To ―Real-Time‖
Need to Change the Balance
50% 50%Business
TransformationInfrastructure Operations“Keeping the Lights On”
Creates Flexibility & Reduces Cost
Allows Innovation &Competitive Advantage
Current SituationThe 70/30 Dilemma
Cisco Confidential 9© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Infrastructure TCO:Significant Portion of Government IT Spend
1 Source: http://www.transitionaldata.com/publications/Dr-Data-Center.pdf2 Federal Govt IT spent for 2010 approx $78B
Other IT Spend
Infrastructure Spend
50 - 75%1
$39.2 to $58.8B2
25% Capex and 75% Opex
Cisco Confidential 10© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Yet, Much Of The IT Spend Is Wasted On Inefficient Infrastructure
1 http://www.cioupdate.com/trends/article.php/3289721
2 Averaged from multiple sources
3 Assumes 50% of IT Budget of $58B and a 50% utilization improvement
Infrastructure Utilization
0
20
40
60
80
100
25%1
Utilisation Target
75%2
$29.4 B MissedOpportunity3
Cisco Confidential 11© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Infrastructure Costs Are Continuing to Increase
Resources available for new services and innovation will continue to diminish
Agency impact from the IT organization will become more difficult to achieve
Proliferation will increase, ultimately making the problem even worse
Growth Is 6% per Year and Will Have Significant Impact on the Organization
Cisco Confidential 12© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
What Can Be Done?
Develop and execute an infrastructure roadmap that targets a cloud operating model as an end state to:
1. Implement virtualized and unified architectures to drive down costs in the near term and ensure long-term efficiencies
2. Free up valuable resources to focus on innovationand new service development—IT activities that create impact
3. Better prepare the environment to take advantage of new technology developments – private, community, hybrid and public clouds
Cisco Confidential 13© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
The Challenge
While the problem may be clear to IT, it is not immediately apparent to the respective agencies
The agencies are typically the culprit in driving these inefficiencies
The key is helping the agencies understand the issue in business terms
The next step is then convincing the agencies to invest in IT over other competing alternatives
© 2010 Cisco and/or its affiliates. All rights reserved. Cisco PublicPresentation_ID 14
Convincing the Funding Agencies#1 Educate them..describe the vision
Cisco Confidential 15© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Understanding The Importance of Architecture
Vision of a state-of-the-art home…
The Winchester Mansion
• 160 Rooms
• 6 Kitchens
• Gas lights
• 47 Fireplaces
• 10,000 Windows
• Intercoms
The first no-clog sink (patent issued)
Date: 1884
Built without a blueprint
Builders Architects
147 0Wo
rk f
orc
e
• 65 Doors to blank walls
• 13 Staircases abandoned
• 24 Skylights into floors
Construction time
38 Years
Results
The Winchester Mystery House
Cisco Confidential 16© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
… and Some JustHappen
An Architecture is Not Optional…
Some Are Designed…
The Cloud Operating Model is the Target Architecture
Technology and business architectures are not optional.Every agency already has them…
Cisco Confidential 17© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Cap
ab
ilitie
s
Arc
hitectu
reElements of Transformational IT
New BusinessProcess
Growth/InnovationProductivity Strategies
Vision/Strategy
IT/Business Capabilities, Execution
CIO CEO
Technology/Business Architectures,Operational Excellence
Technology/Business Architectures,Operational Excellence
Cisco Confidential 18© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
New Revenue Regeneration
Agency Outcomes Agency Imperatives
Minimise compliance reporting risk
Aligning agency capabilities to strategic initiatives How to efficiently enable IT
Increase Productivity
Agency Strategic Initiatives
Re-engage
with our
constituents
Restore the
pride of our
people
Radically
simplify the
agency
Grow quality
services
Avoid / Reduce Costs
Improve Customer Satisfaction
Improve Staff Morale
Improved Cross-Sell & Up-Sell
Risk Mgmt.Simplify divestitures
Improve staff ability to sell other products
Enable innovation and collaboration
Redesign customer experience
Rationalise and align IT
Enable staff to work anywhere
Rapidly Align SMEs to cust. need
Sell applications
Introduce mobility
Reintroduce insurance
Infrastructure
Scale mortgage across all channels
Simplify divestitures
Move customers to direct channels
Invest in development of people
Enable flexible staff work locations
Cisco Solution Enabled
Legend:
QueueBusterEnabled
IT Capabilities
Provide lean back office Mortgage function
Core insurance functions
Core mobility functions
catalog service
SME Presence Engine
Virtual workspace functionality (Smart Workspace)
Virtualisation services
Host service interface within IT
Common business functionality across channels
Queue Buster, Decisioning, Expert Locator
App store (Staff Facing) function
Enable Shift Swap functionality
Enable HR channel subscriptions
Corp. communication channel subscriptions
eLearning functions
Social collaboration functions(team huddles)
Provide mobility functionality
Social networking function
Remote access service (VPN)
Click-to-Chat/Serve
Risk and compliance framework with automation
Host service interface within IT
Provide governance anytime, anywhere
Lean the Mortgage app (web/retail)
Agency Capabilities
Buy or Build insurance capability
Mobility as-a-channel
Establish an App store (customer facing)
Provide mobile applications to staff
Expert Locator function
Rapid service termination
Smaller IT footprint in branch
Location-independent workplace
Enable direct channel & decisioning
Reduce customer wait time <5 mins.
Enable staff to swap shifts
Provide personalised HR mgmt. services
Personalised corporate communications to staff needs
Provide comprehensive training anytime, anywhere
Enable virtual team huddles
Enable staff to work anywhere, anytime
Enable staff visibility and recognition across boundaries
Provide home user with secure access
Multichannel sales progression
Provide risk guidance & minimise staff involvement
Rapid service termination
Provide structure &guidance for staff
Managem
ent
Martini
Presentation & Middleware
Compute
Data
Security
CustomerColleague
Network
That accesses:
Applic
atio
n
Example: Show the Linkage
© 2010 Cisco and/or its affiliates. All rights reserved. Cisco PublicPresentation_ID 19
#2: Describe how you will get there
Cisco Confidential 20© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Our Story: Cisco Data Centre Issues
Company growth and business requirements such as agility, service continuity
Data Centre space, power, cooling, physical structure
Current locations prone to disaster, DR site 2500 miles away
Heterogeneous hosting platforms/architectures, history of “silo” approach
High resource growth rates and a flat IT headcount & budget
Cisco Confidential 21© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
4 Phase Approach to Address Issues
ConsolidateConsolidate Data Centres, Resources
Begin to Increase Utilization
Data Centre Standards
VirtualizeVirtual Resource Pools
Rapid Delivery of Services
Increased Availability, Utilization
UnifySingle, unified network fabric
Integrated services
Unified Compute
AutomateOn Demand Utility
Runbook Automation
Real Time Provisioning
Cisco Confidential 22© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Cisco Data Centre Evolution
2005 - 20062004 2007 - 2008 2009 - 2010
• Standardization
• Virtual Machines
• 4 Tier Silos
• Heterogeneous OS
• Storage Silos
• Low Utilization
• IP Connectivity
• Perimeter Security
• Application Silos
• Distributed
• Server Repurposing
• VM Mobility
• Storage Virtualization
• Virtualized Network Services
• Virtual Firewalls
• SOA Pockets
• Infrastructure Aligned to Application Services
• Policy Based Management
• Intelligent Data Management
• Tiered Recovery
• Usage and SLA-based Funding Model
Legacy
Data Centre
Virtual
Data CentreCITIES
Consolidated
Data Centre
Consolidation PhaseVirtualization Phase
Automation Phase
Compute
Storage
Network
Security
Application
• SANs, VSANs
• Tiered Storage
• Consolidate, Centralize
• Consolidated Network Services
• Secure Each Application Tier
Unification Phase
Cisco Confidential 23© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
PS Scenarios with Affinity for CloudScenario
- Typical Applications
Driver for cloud adoption / Use Case Cloud Type
Citizen facing portals:
• Subject to Freedom of Information Act
• With event-driven access behavior
(disasters, campaigns, happenings, …)
• Scalability of cloud computing is attractive, due to highly variable and
unpredictable demand, e.g.
- Seasonality of access to some website (tax year, …)
- Disasters will drive people to some core portals (e.g. Texas Online)
IaaS (State/
Fed)
& SaaS
(Local)
• Backup and Disaster recovery
• BI / Decision Support Systems
• Unstructured Data, Grid Computing
• Paying „too much‟ for existing BC/DR solutions
• Increasing demand from legislature for more speed and capability
• See slides on cross-vertical IaaS opportunities for more detail
IaaS
• ERP HR, Finance
• Desktop Virtualization
• Collaboration
• Pilots underway already
• Cross vertical SaaS opportunities
• Specific collaboration use case (HUD): Embed UC an app e.g. open video
conference with field office while reviewing grant application for the city
SaaS (mostly)
STATE & LOCAL:
Data Management / Business Intelligence
• Public Safety and Police Video footage
• Explosive growth of content that needs to be retained
• Cloud scalability and low cost per GB attractive to store those data
IaaS
Seasonal apps/ deal with enrollment
• School enrollment, test scores
• Parks & recreation, Campaigns
• Peak-trough of these applications: 2.5 – 3.5
• Applications are often customized / special-built
• Flexibility of IaaS attractive to manage cost
IaaS & SaaS
FEDERAL:
• HUD: Single Family Mortgage Insurance
process (Batch)• High volume, working with multiple groups (e.g. 11,000 lenders) IaaS (mostly)
• IRS: Decision Support Systems - Data Mining
& Analysis• Analysis of history of tax collection, returns. Future revenue
projections. Need for increased frequency
• Pursued by Asst. Commissioner of Research pulling statistical data
(not individual data). Lower security requirements
IaaS
Source: Cisco IBSG SP
Cisco Confidential 24© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Siloed Technologies = Siloed Organization
App / Web Server AFS
Collaboration/Communication CTAPS
Content Networking / Mgmt DCS
Database AFS
Desktop CTAPS
Directory Services AFSIP Address Mgmt INS
IP Telephony INS
Networking INS
Print CTAPS
Server / OS DCS
Software Frameworks AFS
Storage DCS
WebServices / Appl Messaging AFS
Client Services & Support CTAPS
Identity Management AFS
Data Centre Manager
Application Groups
Client Service Manager
Network Manager
Voice Manager
Cisco Confidential 25© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Service Models and Technology Convergence Require Changes in the Organization Structure
Architecture Program & Portfolio Management
Solutions Architects
Ap
p /
Web
Serv
er
A
FS
Co
lla
bo
rati
on
/Co
mm
un
ica
tio
n
CTA
PS
Co
nte
nt
Ne
two
rkin
g /
Mg
mt
DC
S
Da
tab
as
e
A
FS
De
sk
top
C
TA
PS
Dir
ec
tory
Se
rvic
es
A
FS
IP A
dd
res
s M
gm
t
IN
S
IP T
ele
ph
on
y
IN
S
Netw
ork
ing
IN
S
Pri
nt
C
TA
PS
Se
rve
r /
OS
DC
S
So
ftw
are
Fra
mew
ork
s
A
FS
Sto
rag
e
DC
S
Web
Serv
ices /
Ap
pl
Messag
ing
A
FS
Management AFS
Security IST
Clien
t S
erv
ices &
Su
pp
ort
C
TA
PS
Iden
tity
Man
ag
em
en
t
AF
S
App / Web Server AFS
Collaboration/Communication CTAPS
Content Networking / Mgmt DCS
Database AFS
Desktop CTAPS
Directory Services AFSIP Address Mgmt INS
IP Telephony INS
Networking INS
Print CTAPS
Server / OS DCS
Software Frameworks AFS
Storage DCS
WebServices / Appl Messaging AFS
Client Services & Support CTAPS
Identity Management AFS
Data Centre Manager
Application Groups
Client Service Manager
Network Manager
Voice Manager
© 2010 Cisco and/or its affiliates. All rights reserved. Cisco PublicPresentation_ID 26
#3: Show the business case
Cisco Confidential 27© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
The Value of a Cloud Operating Model For Public Sector Agencies
The most significant impact of a Cloud Operating Model is improved agency agility.
Other benefits include…
Lower cost structures for providing products and services (improved capabilities)…
Shorter cycles to deliver new services (rapid constituent impact)
Ability to implement changes in response to changing constituent needs (improved constituent care )
Ability to innovate due to reduced time spent on ―just getting things to work‖ (sustainable service models)…
and numerous others….
Source: Cisco IBSG Innovations
Cisco Confidential 28© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Value Approach – Old vs New Architecture
Top Initiatives1..........N
Old DC Architecture
TCO1..........N
New DC Architecture
TCO1..........N
What can be done with
$$ Available
Old
NewBusiness Benefit TCO
Cisco Confidential 29© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Data Centre Benefits Calculator
Cisco Confidential 30© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Green Infrastructure Carbon Calculator
Cisco Confidential 31© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Network Carbon Calculator
Cisco Confidential 32© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Cisco Confidential 33© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Other Business Benefits
Time to delivery for applications
Time to business capability
Application rationalization benefit
SLA benefits (application availability benefit)
Time to market for new services
Green / Sustainability
Cisco Confidential 34© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Key Takeaways
Service orientation and technology convergence will drive
change in your current infrastructure model.
You can choose to take advantage of this shift to create a
competitive advantage or wait until you are forced into the
change – either way, your infrastructure will change.
Three key areas to focus on to help you take advantage of
this change:
#1:Tell a story from the business perspective – lay out your vision
#2: Show your roadmap
#3: Show your business case – compete for resources!
Cisco Confidential 35© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group
Q & A
Cisco Confidential 36© 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group