Deloitte Consulting, LLP

Cloud Computing Discussion

Dave Duden

Director

June 21, 2011

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Deloitte Perspectives

on Cloud Computing

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Cloud computing represents a major change in the way information services are

delivered, based on wide use of internet standards and virtualization

Service Source

Public cloud (External)

Hybrid Virtual Private CloudCommunity

Private cloud (Internal)

Business Model

Cloud Service Subscriber

Cloud Service Broker

Cloud Service Provider

Cloud Service Enabler

Service Type

Business-as-a-Service

Software-as-a-Service

Platform-as-a-Service

Infrastructure-as-a-Service

“Location independent

resource pooling”

“Rapid elasticity”“Pay per use”

“Ubiquitous network access”

“On-demand self-service”

Reduce capital spending

Reallocate resources

Increase Agility

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The emergence of cloud computing is a major permanent change to the information

services market, is central to the evolution and transformation of IT services

Cloud computing represents a major change in information technology architecture, sourcing and

services delivery, by giving business on-demand access to elastic, shared computing capabilities

Cloud Computing is changing in how business purchase, deploy, and support IT services, and offers

significant opportunities to expand and enhance their services to customers

Ongoing IT industry disruptions will result from the deployment of cloud computing as an alternate

sources of supply for products and services

For enterprises in the information services business -- as well as IT vendors, services providers, and

their suppliers -- cloud computing is the new basis of competition

Cloud Computing is a disruptive force comparable to emergence client/server architectures 25 years

ago. Enterprises must act to manage risks and taking advantage of emerging services.

Businesses that cannot establish a position in the market by leveraging cloud computing, may face

increasing competitive pressure from challengers

Enterprises that adopt cloud computing delivery models have the potential to

fundamentally re-shape the broader business landscape

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Cloud computing has been subjected to significant marketplace confusion. To

demystify cloud computing services, clearly define what cloud is, and what it is not...

…on-demandClouds can provide an almost immediate access to a IT applications and services, platforms, or a pool of hardware

resources (compute, network and storage) that can be allocated and provisioned on-demand

…scalable and

elastic

The key characteristic of a cloud service is the ability to dynamically provision and de-provision applications,

compute, memory, and storage resources, and to be able to seamlessly scale services (up or down)

…pay-as-you-useVendor-provided cloud solutions do not require upfront capital investments by the buyer. Billing is tied to metered use

of resources, shifting expenses from CapEx to OpEx.

Cloud is…

Cloud computing offers increased agility through faster time to market, lower upfront IT

capital expenditure and the ability to easily scale up / down and reallocate resources

Cloud is not…

…simply

virtualization

While many cloud solutions, both public and private, leverage virtualized infrastructure resources to deliver

functionality, cloud raises the bar by providing on-demand provisioning. Publicly-announced private clouds are

essentially an aggressive virtualization program on top of the traditional enterprise IT stack

…just applying

SOA principles

Service Oriented Architecture (SOA) is a set of design principles, whereas cloud is a service. Cloud based services

will be defined and enabled through SOA. As such SOA is a prerequisite to reap cloud computing benefits. However,

following SOA design principles alone does not guarantee the ability to easily transition to a cloud based solution

…traditional

hosting

Cloud and traditional hosting share many characteristics but unlike traditional hosting cloud service is offered on-

demand, is scalable and elastic – a user can have as much or as little of the service as they need and pay for the

resources actually used

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IT Services will migrate to different cloud computing models at different times, based

on fit, the maturity of services providers, and availability of suitable technology

Today

Websites, Intranet

Rapid App Dev

Productivity Apps

High Performance

Computing / Clusters

High-End Servers

Storage & Back-Up

Standard Servers

Dev & Test

Collaboration

Office Productivity

“Standalone” Apps

Core ERP

Engineering Apps

New Core Apps SaaS

IaaS

PaaS

Low

High

Ad

op

tio

n

Mainstream Adoption of Workloads by Service Type

Comparing Managed Hosting to Cloud Computing

Managed

Hosting

Applications

Cloud

Applications

“Static &

Continuous”

“Dynamic &

Bursty”

Email & Messaging

Voice Systems

Corporate Web Sites

Back-Office Systems

Legacy Applications

Structured Databases

Financial Systems

Software as a Service

Dynamic Applications

High-Compute Processing

Collaboration & Analytics

Test and Development

DR, Backup and Storage

Future

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Enterprises deploying Cloud Computing services must have a comprehensive

strategy for managing a wide variety of key capabilities in a new “cloud savvy” way

Governance

Cloud Computing

Strategy Business-IT

Alignment

Cloud Service

Delivery

Strategic Planning and

Architecture

Governance Risk Management

Data controls

Technology controls

Audit and Assurance

Backup and DR

Vendor “lock-in”

IT Operations

Readiness

Risk Management

Compliance

Corporate Policies

Industry Policies

Regulations:

− State

− Federal

− International

Compliance

Security & Privacy

Data Segregation,

Integrity and Deletion

Identity and Access

Physical Security

Network Security

Application Security

Security & Privacy

Legal

Contract Mgmt

Service Mgmt

e-Discovery

Business Processes

Regulatory and

Compliance

LegalTax

Proactive tax analysis

and strategy

Tax alignment

Domestic and Local

Country Tax

Treatment

Tax

Technology

Virtualization

Next-Gen Architecture

Infrastructure and

Process

Standardization

Resource Mgmt and

Metering

TechnologyPeople

Skills and Talent

Culture

Training and

Development

Organization

People

Service Operations

Service Provisioning

Resource Planning

Incident Mgmt

Technical and

Professional Support

Service Operations Product

Development

Pricing Tiers

Profit vs. Break-even

External Cloud

Contracts (Hybrid

Operations)

Platform License &

Entitlements

Economics

If using public clouds or hybrid clouds, also consider implications for Sales and

Marketing, Underwriting, Billing, Order and Customer Experience

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Potential Cloud-based applications include analytics, leveraging non-traditional data

structures to achieve high scale and rapid results

Datasets used in business can grow very large because they are increasingly being gathered by

ubiquitous information-sensing mobile devices, software logs, cameras, microphones, wireless

sensor networks, etc.

Data analytics workloads are computationally intense. The computing environments needed to

perform analytics can require significant capital investment using traditional approaches, so many

enterprises do not incorporating analytics into their business.

Because it is “horizontally scalable”, cloud computing is well suited to the very large datasets

typically used in analytics applications.

Horizontal scalability is achieved by adding more computers to a cloud computing architecture,

allows them to achieve aggregate computing power many times greater than traditional systems. A

variety of new database technologies is now available to support these “NoSQL” data sets, such as

those powering Google, Facebook, Amazon, and others.

In cloud computing, NoSQL database management systems differ from classic relational database

management systems, and may not require fixed table schemas, avoid join operations and typically

scale horizontally.

The combination of horizontally scalable cloud computing architectures and NoSQL

database technologies allows for dramatically improved data analysis capabilities.

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Approach for Adoption of Cloud Computing

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Enterprises should consider several dimensions when evaluating strategic options

for applications and services to be delivered through cloud computing

Cloud Considerations

Regulatory and Compliance

Technology Business and Financials

Operational

Considerations For Building a Cloud Strategy

What are the availability requirements for this application and can

those be met by cloud?

How will support model for this application change if it is moved to

the cloud? Are the potential changes acceptable?

How will cloud impact my chargeback model for this application? Can

I support the new model? Will business accept the changes?

Can cloud meet my business continuity and disaster recovery

requirements for the application?

Is the vendor limiting interoperability or access to your data?

Do the workloads exhibit characteristics that can derive real benefits

from scalability and elasticity?

Will the application be built to run on a cloud supported platform (e.g.,

commodity hardware, supported OS)

Can the application components be architecturally designed to be

suitable for deployment to a cloud based solution?

What design trade-offs will be needed to make this application cloud-

ready?

Are internal IT architecture and organization structures “ready”?

Are there any risk management or compliance requirements for this

application? Will cloud be able to satisfy those requirements?

Does the application hold confidential or customer data? Can this data

be easily masked in the future?

Does the application data need to reside within organization? Will we be

prohibited from moving data outside of the country?

Who owns the data? How is it used? Are controls in place?

How is security achieved? What is the level of privacy protection?

Can you meet needs for legal compliance and tax issues?

What are the anticipated usage patterns for the application and will it be

cost effective to move to the cloud?

What is business sponsor's preference for CapEx vs OpEx?

How will designing for cloud readiness impact my implementation

cost and timelines? Can I achieve overall lower TCO?

Will moving to cloud help me capture new sources of value for the

business?

Are cloud offerings mature enough for these workloads?

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To successfully make the transition, enterprises must address key operational and

governance issues during the adoption of cloud computing services models

Data Controls

Back Up and

Disaster Recovery

Vendor “Lock-In”

IT Operations

Security and

Privacy

Audit and

Assurance

Tax and Legal

IT Readiness

Who owns the data? How is it be used? Are controls in place?

How is security achieved? What is the level of privacy protection?

Are there risk management controls to applications and data?

Can you meet needs for legal compliance and tax issues?

Are data backup, retention, and disaster recovery practices sufficient?

Is the vendor limiting interoperability or access to your data?

What IT services and applications are best suited for the cloud?

Are internal IT architecture and organization structures “ready”?

Alignment with Enterprise Risk and Governance strategy will help organizations address

the operational hurdles to cloud adoption

Cloud Operational and Governance Issues

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Summary & Discussion

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What are the near term business benefits of comprehensive Cloud Strategy?

• Significantly increased flexibility: reduced time to design, implement, and “go to

market” with cloud-based software systems

• Much faster time to develop, test, and deploy packaged software

• “Encapsulating” single-tenant non-cloud software is a fast path to short-term value

• Longer-term value in cloud will offer significantly higher benefits, but will require

replatforming and replacement of “legacy” software – and that is a big hurdle

• Cost Savings: reduced CapEx, at a lower amortized cash flow, using subscriptions

• Reduction in total costs of software licenses and ongoing maintenance costs,

through use of SaaS subscription models rather than on-site licensed software

• Reduced physical infrastructure costs by moving to vendor cloud IaaS: reduced

hardware, networking, data center, facilities, power, etc.

• Positioning for major cloud architecture changes coming in the future:

• By introducing cloud products and services into the complex IT architectures, you

will be positioned for the major changes to reap the benefits of cloud

Enterprises that adopt cloud computing delivery models have the potential to re-

shape their competitive position – and the broader business landscape

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Our POV: Cloud Computing will have a significant impact on IT Strategy

Cloud offers major benefits of flexibility, cost savings, and improved IT capabilities. To gain

these advantages, we recommend that enterprises:

• Establish new IT application and technology architectural principles and standards which

are necessary to reap cloud benefits.

• Revisit current major system architecture and design principles and evaluate fit with cloud

suitable design concepts

• Understand the timing of major system software architecture changes, and plan for

adjustments to enable „cloud friendly‟ application delivery models

• Identify new usage models, considering new options for SaaS, IaaS “encapsulation”,

mobility apps, and “Big Data” analytics, to enable highly efficient and flexible products and

services

• Quantify the benefits that cloud will bring to your company, while assessing all affected

roles and functions to gauge organizational and business impacts and risks

New cloud software is fundamentally different, and improvements to “legacy”

software often require complex software engineering and architecture refactoring.

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Deloitte thought leadership and insights on cloud computing, developed by our global

subject matter experts

Selection of Deloitte Thought Leadership

Deloitte Thought Leadership on Cloud

Depth Perception: A Dozen

Technology Trends

Shaping Business and IT in

2010

Insights into trends

changing the IT landscape,

including cloud and what

makes it truly revolutionary

Cloud Computing:

Considerations on the

Road to Adoption

Outlines issues which

affect enterprise use of

cloud computing and long-

term adoption approach

Cloud Computing:

A Collection of Working

Papers

Discusses cloud architecture

and implications on moving

existing information

technology platforms to

cloud

Cloud Computing:

Forecasting Change

Overview of cloud

market, key players,

and social networking

drivers

Cloud Computing:

Security, Privacy and

Trust

Insight into challenges

around data security and

privacy challenges in the

cloud

A Balancing Act

What Cloud Computing

means for Business

Assessment of cloud

from a business

perspective, including

existing barriers and

future opportunities

Cloud Computing

Finding Value Beyond

the Hype

Overview of Deloitte

advisory services in

guiding enterprises

around potential

obstacles for cloud

adoption

There is No Cloud

Insight into how

to best leverage

the potential

business benefits

from cloud

2010 Predictions: Cloud

– More Than Hype but

Less than Hyper

Perspective on

immediate and long-

term take up of cloud

and likelihood of

achieving expected

benefits

Fueling Business

Growth through Cloud

Computing Services

Deloitte‟s Enterprise

Value Delivery

methodology for

deploying cloud

Developing the Cloud

Insight into leveraging

force.com Platform-as-

a-Service offering to

maximize

salesforce.com

investments

10 Things a CxO Should

Know About Cloud

Overview of cloud

computing for C-suite

executives, including

cloud‟s origins, benefits,

and challenges

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Contact information

Dave Duden

Director

Deloitte Consulting

dduden@deloitte.com

+1 860 725 3041

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