Cloud Computing - Technologies and Trends

© 2012 IBM Corporation

Cloud Computing: Technologies and Trends

Marcelo SávioIT Architect – IBM

www.linkedin.com/in/msavio

© 2012 IBM Corporation2

Talking about trends....


Some definitions …

© 2012 IBM Corporation4 Cloud Computing - Strategic View

Cloud is a new Consumption & Delivery Model that re lies on the industrialization of delivery for IT supported Serv ices

� a new consumption and delivery model inspired by consumer Internet services.

� Private, Public and Hybrid

� Workload and/or Programming Model Specific

� The Industrialization of delivery for IT supported Services

� Self-service

� Sourcing options

� Economies-of-scale

“Cloud” can be:“Cloud” represents:

“Cloud” enables:“Cloud” is:


IT and network capacity and capabilities are – ideally automatically, via Self Service capabilities – rapidly provisioned using Internet standards without transferring ownership of resources

Utility pricing, variable payments, pay-by-consumption and subscription models make pricing of IT services more flexible

Resources scale up and down by large factors as the demand changes

Uniform offerings readily available from a services catalog based on public interfaces

IT resources -from servers to storage, network and applications- are pooled and virtualized to provide an implementation independent,efficient infrastructure

Details

Elastic scaling

Advanced virtualization

Self service through Standardized offerings

Rapid provisioning

Flexible pricing

Cloud Characteristic

Cloud exhibits a set of well-defined characteristic s


Virtualized environments only get benefits of scale if

they are highly utilized

Drives lower capital requirements

Reduced complexity, increased automation possible; reduced

admin burden

Take repeatable tasks and automateLa

bor

Leve

rage

Infr

astr

uctu

re

Leve

rage

Clients who can “serve themselves” require less support and get services

Major factors driving cloud

Self Service

Automation of Management

Standardization of Workloads

Virtualization of Hardware

Utilization of Infrastructure


Banks use automated teller machines to improve

service and lower cost.

Manufacturers use robotics to improve quality and

lower cost.

Telcos automate traffic through switches to assure

service and lower cost.

Standardization, Automation and Self Service have c hanged many other industries become more efficient.


Cloud computing is more than the sum of the parts…

Virtualization Standardization Automation Self Service+ + +

Cloud Computing

With

� Enables flexibility

� Increase utilization

� Energy efficient

� Soft configuration

� Infrastructure abstraction

Without

� Physically constrained

� Capital intensive

� Hard configuration

� Linked to PO process

With

� Simplification

� Few configurations

� Enables automation

� Easier support

Without

� Physically constrained

� Many configurations

With

� Low human involvement

� Rapid deployment & mgt

� Repeatable configuration

� Improves compliance

Without

� Manually intensive

� Skill dependent

� Error prone

� Costly

With

� User in control

� Cost and usage choices

� Increased visibility

� IT/Business alignment

Without

� Dependency of availability of data centre staff

� Lack of awareness

Operational Exp Capital Exp Agility Timeline Compliance Customer Service


NoneSelf service

Fixed cost modelMetering/Billing

WeeksProvisioning

Payback period for new services

Release Management

Change Management

Server/Storage Utilization

Years

Weeks

Months

10-20%

Unlimited

Granular

Minutes

Months

Minutes

Days/Hours

70-90%

Legacy environments Cloud enabled enterprise

Cloud accelerates business value across a wide variety of domains.

Capability From To

So what’s different about Cloud?


Business Process-as-a-Service

Employee Benefits Mgmt.

Industry Specific Processes

Procurement

Business Travel

Software/ Application-as-a-Service

Financials

Industry SpecificApplications

CRM/ERP/HR

Collaboration

Platform-as-a-Service

Middleware

Database

Web 2.0 ApplicationsRuntime

DevelopmentTools

Desktop

Infrastructure-as-a-Service

Servers Networking StorageData Center Fabric

Consolidated, standardised, virtualised,shared, dynamically provisioned, automated

Cloud Service Models


Cloud deployment options

Private PublicHybrid

IT capabilities are provided “as a service,”over an intranet, within the enterprise and behind the firewall

Internal and external service delivery methods are integrated

IT activities / functions are provided “as a service,” over the Internet

Enterprise data center

Managed private cloud

� Third-party operated� Client owned� Mission critical� Packaged applications� High compliancy� Internal network

Enterprise data center

Private cloud

� Private� On client premises� Client runs/ manages

Public cloud services

Users

B

� Shared resources� Elastic scaling� Pay as you go� Public Internet

A

Member cloud services

A

Enterprise

B

� Mix of shared and dedicated resources

� Shared facility and staff� Virtual private network (VPN)

access� Subscription or membership

based

Hosted private cloud

Enterprise

� Third-party owned and operated

� Standardization� Centralization� Security� Internal network


Cloud Computing Reference Architecture (The Open Gr oup)

Governance

Security, Resiliency, Performance & Consumability

Cloud ServiceCreator

Cloud Service ProviderCloud ServiceConsumer

Cloud Services

IaaS

PaaS

SaaS

BPaaS

Common CloudManagement Platform

Cloud Service Integration

Tools

Consumer In-house IT

Infrastructure

Middleware

Applications

Business Processes

OSS – Operational Support Services

BSS – Business Support Services

Subscription Management Pricing

Entitlement Management

Metering Rating Billing

Clearing & Settlement

Accounts Payable

Accounts Receivable

Customer Account

Management

Service Offering Catalog

Service Offering

Management

Contracts & Agreement

Management

Service Request

Management

Order Management

TransitionManager

DeploymentArchitect

OperationsManager

Service Provider Portal & API

Consumer Administrator

Consumer BusinessManager

Consumer End user

Service Creation Tools

Service Management Development

Tools

Service Runtime Development

Tools

Software Development

Tools

Image Creation Tools

Service Component Developer

Inf rastructure

Security &Risk Manager

CustomerCare

ServiceManager

BusinessManager

Service Composer

OfferingManager

ServiceIntegrator

Service M

anagement

Service C

onsumer P

ortal & A

PI

Service D

evelopment

Portal &

AP

I

AP

I

AP

I

AP

I

AP

I

Existing & 3rd party services, Partner

Ecosystems

ProvisioningIncident & Problem

Management

IT Service Level

Management

Service Automation Management

Service Delivery Catalog

Service Request

Management

Change & Configuration Management

Image Lifecycle

Management

Monitoring & Event

Management

IT Asset & License

Management

Capacity & Performance Management

Platform & Virtualization Management

Infr

astr

uctu

reM

gm

t Int

erfa

ces

Pla

tform

Mg

mt

Inte

rfac

esS

oftw

are

Mg

mt

Inte

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P M

gm

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terf

aces



Summary so far

Infrastructure as a Service (IAAS)

Platform as a Service (PAAS)

Software as a Service (SAAS)

Business Process as a Service (BAAS)

Customers use processing, storage, networks, other computing resources with ability to rapidly and elastically provision & control resources without the need to own/manage assets

Customers use programming languages, tools and platforms to develop and deploy applications on multi-tenant, shared infrastructure without owning underlying resources

Customers use applications from multiple client devices through a Web browser on multi-tenant and shared infrastructure without the need to own the assets

Customers consume business outcomes (Back Office Acctg) via Web-centric Service Integration on multi-tenant and shared infrastructures, without the need to own the assets.

Hybrid Clouds

Private Clouds

Public Clouds

Cloud Architecture tailored to meet the needs of an enterprise. (i.e. some service like trade promotions validation executed in the firewall with external on demand services like graphics

A Cloud Architecture (end user provisioned, provider managed, consumption based) behind the firewalls of an enterprise

Service provider makes resources, such as applications and storage, available to the public over the Internet. (i.e. rented by the hour, month etc.).

DELIVERY MODELS

CLOUD SERVICES

Delivery Services, Software and Hardware

Delivery services, technologies business services in support of cloud computing that are required to help companies build deploy and integrate cloud computing architectures within their existing IT infrastructure

ARCHITECTURAL COMPONENTS


Trends for Cloud Computing


What is coming?

In 2021, cloud computing is simply computing, corporate office parks are senior housing facilities and the IT organization of the future has been absorbed by the business.

� Internal IT becomes an internal cloud.

� IT becomes a services broker.

� IT will become a function of the business.

Gartner, 2011


What are general trends in the IT industry?

GartnerTechnology

� Cloud Computing� Mobile

Applications & Media Tablets

� Next-GenerationAnalytics

� Social Analytics� Social

Communications & Collaboration

� Video� Context-Aware

Computing� Ubiquitous

Computing� Storage Class

Memory� Fabric-Based

Infrastructure and Computers

GartnerBusiness

� Increasing Enterprise Growth

� Attracting and Retaining New Customers

� Reducing Enterprise Costs

� Creating New Products and Services

� Improving Business Processes

� Implementing and Updating Business Applications

� Improving Technical Infrastructure

� Improving Enterprise Efficiency

� Improve Operations� Improving Business

Continuity, Risk and Security

Forrester

� Smart Computing� Empowerment� Cloud Computing� IT as Business

Technology� Mobile Enterprise

Apps� Disruption-as-a-

Service� HW-SW-

Appliances� Next-Gen

Analytics� IT and

Sustainability� Social Media

IDC

� Cloud Computing in theDatacenter

� Public Cloud Services

� Platform-as-a-Service

� Enterprise Mobility

� Free SW, Open Source

� BPM Platforms� BI and Analytics� Enterprise Data� Social Media� Smart Devices

Ovum

� IT Security� Data

Management� Business

Analytics� Mobility� Datacenter

Transformation� Cloud

Computing� Collaboration� IT and

Sustainability� Drive IT as

Business� Context-Aware

Computing

Source: Gartner, cio.de, IBM MD Germany, IBM MI, HorizonWatch

IBM Horizon Watch 2012

� Cloud Computing

� Virtualization � Social Business� Mobile

Computing� Big Data � Analytics � IBM Watson� Human /

Computer Interaction

� Security� Sustainability &

Green IT� Consumerization

of IT


13%

41%21%

28%38%

21%

Today 3 yrs

Nearly half (48%) of CIOs surveyed evaluate cloud o ptions first, over traditional IT approaches, before making any new IT investments

Cloud is recognized as an increasingly important te chnology; adoption is expected to accelerate rapidly in the c oming years

Source: (1) 2011 joint IBV/EIU Cloud-enabled Business Model Survey of 572 business & IT leaders; Q4. Which of the following most accurately describes your organisation’s level of cloud technology adoption today and which do you expect will best describe it in three years? Sizing the cloud , Forrester Research, April 21, 2011; http://www.cio.com/article/684338/Survey_CIOs_Are_Putting_the_Cloud_First

Piloting

Adopting

SubstantiallyImplemented

+215%

+33%

72%

91%

What is Your Organization’s Level of Cloud Adoption?

% of Respondents

The Global Cloud Computing Market is Forecast to Grow 22% per year through 2020

$0B

$50B

$100B

$150B

$200B

$250B

2011 2015 2020

$241B

$41B

$150B

Source: Sizing the cloud, Forrester Research, Inc., April 21, 2011


14% 10% 5%

21%22% 34%

32%44%

43%

<$1B $1B - $20B >$20B

Piloting

Adopting

SubstantiallyImplemented

67%

76%82%

Company Annual Revenues

Today, at least two thirds of companies of all size s are actively either experimenting with or implementing cloud

Source: (1) 2011 joint IBV/EIU Cloud-enabled Business Model Survey of 572 business & IT leaders, Q4, n=363

What is Your Organization’s Level of Cloud Adoption ?% of Respondents; Today


The IT Perspective


IT and Business are attracted to cloud for differen t reasons.E

ffici

ency

Tra

nsfo

rmat

ion

Rethink IT.

• Rapidly deliver services• Integrate services across

cloud environments• Increase efficiency

• Initiate new revenue streams• Drive faster time to market for

new services• Meet changing customer expectations

Reinvent business.

**Source: Gartner, Cloud Computing Services, Virtualization Top CIO 2011 Wish Lists Jan 24 2011


IT is drawn to cloud’s cost, efficiency and control…

…while business users are drawn to cloud’s simplified,self-service experience and new service capabilities.

of CIOs plan to use cloud—up from 33% two years ago.

of business executives believe cloudenables business transformation and leaner, faster, more agile processes.

2011 IBM CIO Study, London School of Economics, December 2010

Effi

cien

cy

Tra

nsfo

rmat

ion

IT and Business are attracted to cloud for differen t reasons.


Cloud helps business and IT create and deliver valu e in fundamentally new ways.

Build enduring customer relationships Gain customer insight and use it to improve products and services, fostering trust and loyalty among constituents.

Deliver IT without boundaries Unlock the value of new IT and business processes that break down traditional silos, simplify access to information and connect people across your ecosystem.

Improved speed and dexterity Optimize and accelerate the delivery of IT computing resources and services and serve them with new, flexible business models.

Transform the economics of IT Speed delivery of new offerings and services with new models of self-service and deployment.


Meeting the insatiable demand for new services…

How does IT develop from a quantitative perspective ?

Between 2000 and 2010

Servers grew 6x (2000-2010)

Storage grew 69x (2000-2010)

Virtual machines grew 51% CAGR (2004-2010)

32.6 million servers worldwide

85% idle computer capacity

15% of servers run 24/7 without being actively used on a daily basis

Data centers have doubled their energy usein the past five years

18% increase in data center energy costs projected

Internet connected devices growing 42% per year

1.2 Zetabytes (1.2 trillion gigabytes) exist in the “digital universe”

50% YTY growth

25% of data is unique; 75% is a copy

… …while IT budgets are growing less than 1% per year...


Trigger for transformation

InternetWeb2.0

Web 3.0 (Cloud, Mobile, Social)

1964 20082003

January 11, 201224

19941981

Mainframe

Client Server/PC

Mobile Devices (Smartphones,

Tablets, etc)Generations ofComputing Platforms

Phases of theInternet

2012

2020...

Source: HorizonWatch: Top Technology Trends To Watch In 2012, Bill Chamberlin

The 3rd phase of the internet “colliding” with the 3rd generation of computing platform


IT as Service Provider “IT as a function of the business“

IT Strategy for the next decade: an evolution of today‘s focus topics

VirtualizationConsolidation

Cloud

AutomationAutomationAutomationAutomation

SOA

on demand

Service Management

Service QualityCyber CrimePrevention

Big Data

Analytics

Operational Excellence

MobilityCollaborationCollaborationCollaborationCollaboration

Open Source Social MediaData CenterOptimization

Appliances

Smart Devices

Cost Pressure

DataManagement

IT Security

...

...


Consolidate

Standardizeand automate

� Reduce infrastructure complexity

� Reduce staffing requirements

� Manage fewer things better� Lower operational costs

� Remove physical resource boundaries

� Increase hardware utilization

� Reduce hardware costs

� Simplify deployments

� Standardize services� Reduce deployment

cycles� Enable scalability� Flexible delivery

=Cost

Flexibility

Virtualize

Dynamic

Cloud Computing deployment became part of the existing IT optimization strategy and roadmap


Check Cloud readiness – do relevant processes, procedures as well as roles & skills exist to manage the expected hybrid cloud delivery models

Analyze workloads and select delivery models – which workload is suitable for which cloud model; which service levels are needed based on business requirements; what happens to “legacy“?

Define and develop Cloud Computingarchitecture ; design blueprint(processes, technology, organization)

Establish management procedures to manage the different cloud models like a homogeneous environment

Define and publish a service catalogue for all relevant services to enable simple access to all services and disguise complexity of service delivery for customers / end users

Efficiency

Cloud

Key IT aspects for a Cloud strategy

1

2

3

4

5

Governance

Security, Resiliency, Performance & Consumability

Cloud ServiceCreator

Cloud Service ProviderCloud ServiceConsumer

Cloud Services

IaaS

PaaS

SaaS

BPaaS

Common CloudManagement Platform

Cloud Service Integ ration

To ols

Consumer In-house IT

Infras tructure

Middleware

Applicat ions

Bus iness Processes

OSS – Operational Sup port Services

BSS – Business Support Serv ices

Subscription M anag em ent Pricing Entitlem ent

Management

Metering Rating Billing

Clearing & Settlement

Accounts Payable

Accounts Receivable

Customer Account

M anag em ent

Service Offering Catalog

Service Offering

Management

Contracts & Ag reement

M anag em ent

Service Req uest

M anag em ent

Order Management

Transit ionManager

DeploymentArchitec t

OperationsM anager

Service Provider Portal & API

Consumer Adm inistrator

C onsumer Bus inessM anager

Consumer End user

Service Creation Tools

Service Managemen t Development

To ols

Service Runtime Development

Tools

Software Development

Too ls

Imag e Creation Too ls

Service Component Developer

Infrastructure

Security &Risk Manager

C ustomerC are

ServiceM anager

Bus inessManager

Service Composer

OfferingManager

ServiceIntegrator

Se

rvice M

ana

gem

ent

Service Consum

er Portal & AP

I

Service D

evelopment P

ortal & API

API

API

API

API

Existing & 3rd party services, Partner

Ecosystems

ProvisioningIncident & Problem

M anag em ent

IT Service Level

Management

Service Automation Management

Service Delivery Catalog

Service Request

M anag ement

Change & Configuration M anag ement

Imag e Lifecycle

Management

M onitoring & Event

M anag ement

IT Asset & License

M anag ement

Capacity & Performance Management

Platform & Virtualization Management

Infra

stru

ctur

eM

gmt I

nter

face

sPl

atfo

rm M

gmt

Inte

rface

sS

oftw

are

Mgm

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terfa

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BP

Mg

mt

Inte

rface

s


The realities of cloud versus hype

Source: Market Insights and Gartner

Reality Today

Internal IT plus 3rd party for some things

Everything in the cloud and all at once

Cloud Hype

Sourcing mixture -retain legacy, plus

private/hybrid, public

Future Reality

Trad. SO Trad. SO

So, no “BIG BANG” !

≠


Ready for Cloud

Some workloads are ready for cloud delivery

Sensitive Data

Complex Processes & Transactions

Regulation Sensitive

Not yet Virtualized

3rd Party SW

Highly Customized

Analytics

Collaboration

Development & Test

Workplace, Desktop & Devices

Infrastructure Storage

Infrastructure Compute

Business Processes

Industry Applications

Pre-Production Systems

Information Intensive

Isolated Workloads

Mature Workloads

Batch Processing

May not yet be ready

for migration


A Survey …http://www.ibm.com/services/c-suite/cio/study.html


28%

33%

31

The CIO Vision

Note: Growth Markets include Latin America, Asia Pacific (excluding Japan), Central and Eastern Europe, Middle East and Africa

39% 1,000 to 10,000 employees22% Financial Services

71 countries

28% <1,000 employees

33% >10,000 employees

6% Japan

16% North America

35% Europe

43% Growth markets

12% Communications

15% Public

25% Industrial

26% Distribution

18 industries All organization sizes

39%

22%

26%

15%

12%

43% 6%

16%

35%

Results from more than 3,000 face-to-face CIO interviews


CEO focus over the next 5 years

Source: 2010 CEO Study Q13: “Which of the following dimensions will you focus on more to realize your strategy in the new economic environment over the next 5 years?” (n=1,523); 2011 CIO Study, Q13: “Where will you focus IT to help your organization’s strategy over the next 3 to 5 years?” (n=3,018)

CIO focus over the next 5 years

CEOs and CIOs are both focused on insights, clients and people skills

“Business Intelligence will provide information to the company that no one in the industry has ever seen, and will open up opportunities that were not previously considered.”

Utilities CIO, USA

Getting closer to customer

People skills

Insight and intelligence

Enterprise model changes

Risk management

Industry model changes

Revenue model changes

Insight and intelligence

Client intimacy

People skills

Internal collaboration & Communications

Risk management

Enterprise model changes

Industry model changes

Revenue model changes

88%

81%

76%

79%

71%

66%

57%

55%

54%

54%

64%

50%

48%

39%

35%


CIO visionary plans are evolving

Source: 2011 CIO Study, Q12: “Which visionary plans do you have to increase competitiveness over the next 3 to 5 years?”(n=3,018)2009 2011

Business Intelligence and analytics 83%83%

Mobility solutions 74%68%

Virtualization 68%75%

Cloud computing 60%33%

Business process management 60%64%

Risk management and compliance 58%71%

Self-service portals 57%66%

Collaboration and Social Networking 55%54%

Most important visionary plan elements(Interviewed CIOs could select as many as they wanted)


CIOs are focusing on the benefits of global integrat ion

Changing the mix of capabilities, knowledge and ass ets within the organization

Partnering versus doing everything in-house

Source: 2011 CIO Study, Q7: “To benefit from global integration will your organization do the following?”(n≤1,214); some responses may add to over 100% due to rounding up

“Our focus is on best of breed partners and strategic alliances rather than outsourcing.”

Government CIO, UK

“Gradually, the insight has grown that the organization cannot continue doing everything in house.”

Media and Entertainment CIO, Belgium

Maintain thecurrent mix

Deeply changethe mix

Do everythingin-house

Partnerextensively

Both

Both

66%20%14%

65%18%17%


CIOs are changing the delivery….

35

� Enable state-of-the-art collaboration Evaluate and adopt tools to strengthen enterprise-wide collaboration and exchange of data.

� Tighten business and technology integration Increase two-way transparency by involving internal clients in planning and decision-making.

� Focus on the core Rely on trusted partners to handle non-strategic IT functions.

� Simplify, automate, integrate Implement advanced business process management.

� Advance the metrics Provide sophisticated dashboards through more advanced types of analytics.

� What leading edge collaboration tools have you implemented across the enterprise to help integrate technology with business?

� How deeply are your internal customers involved in your key planning and decision processes?

� What is your plan to engage partners to outsource information technology functions?

� Which persistently inefficient processes can you eliminate or improve to increase customer satisfaction?

� How do you work with internal customers to ensure dashboards measure enterprise-wide key performance indicators?

How to excel Are you essential?


The Business Perspective

Cloudnomics: The Power of CloudDriving Business Model Innovation


In addition to enhancing internal efficiencies, org anizations clearly intend for cloud to improve their business capabilities

35%

28%

30%

25%

29%

31%

26%

27%

29%

26%

29%

22%

15%

17%

Increased collaboration with external partners

Competitive/cost advantages thru vertical integration

New delivery channels/markets

New/enhanced revenue streams

Competitive differentiation thru specialization

Rebalanced mix of products/ services

Flexible pricing models

Important Very Important

How Important are the Following Objectives for Adop ting Cloud?% of Respondents

Source: 2011 IBM/EIU Cloud Survey Results, Q5: How Important are the Following Objectives for Adopting Cloud?, n= 572

62%

57%

56%

54%

51%

46%

43%

Business Capabilities Internal Efficiencies


While only a few visionary businesses today are usi ng cloud for business innovation, the number will multiply in three years

What is the Primary Focus of Your Organization’s Cl oud Adoption Strategy?% of Respondents

Close to half (42%) of organizations surveyed plan to harness cloud for radical business model innovation within three years

8%

16%3%

17%

2%

5%

3%

4%

Today 3 yrs

16%

42%

Change industry role

Redesign industry

New industry

New business

Source: 2011 IBM/EIU Cloud Survey Results, Q8 : What is the primary focus of your organization's cloud technology adoption strategy ? n (today) = 572; n (in 3 years) = 572


Mobility, social media, increasing digitization and new analytics capabilities are conspiring to drive broad business change

Mobile revolution� Connectivity, access and participation are growing rapidly� Smart devices are becoming the primary route to get connected� Devices are getting smarter as they are increasingly enriched by mobile apps

Major Technology Trends driving Business Change

Social media explosion� Social media is quickly becoming the primary communication and collaboration format� GenY’s or “digital natives” use of technology and social media platforms is accelerating adoption� Enterprises are adopting social media but are struggling to realize the value and manage risk

Hyper digitization� Digital content is produced and accessed more quickly than ever before� Internet traffic is growing globally driven by consumer use of video, mobile data, interconnectedness� An increasing number of connected devices and sensors is further driving growth

The power of analytics� New capabilities for real time analysis, predictive analytics and micro-segmentation are emerging� Top performing companies use analytics to drive action and business value� Analytics are making information “consumable” and is transforming all parts of the organization, from

customer intimacy to supply chain management

Source: IBV Analysis


Cloud harnesses the capabilities borne out of these trends to empower six potentially “game changing” business ena blers

Source: IBV Analysis

Cloud’s Business Enablers

Cost Flexibility1

� Shifts fixed to variable cost� Pay as and when needed

Business Scalability2

� Provides limitless, cost-effective computing capacity to support growth

Masked Complexity4

� Expands product sophistication� Simpler for customers/usersContext-driven

Variability5

� User defined experiences� Increases relevance

Ecosystem Connectivity 6

� New value nets� Potential new businesses

Market Adaptability

� Faster time to market� Supports experimentation

3


Customer Value Proposition

What is my customer value proposition?

� What mix of products and services?

� Which customer needs are being satisfied?

How will I do what I do?� What kind of delivery structures?� Which operating model?� What is the cost structure?

What is my role in the value chain?� What to do and when to rely on

others?� Where to specialize and how

to set up interdependent networks?

Val

ue C

hain

Which customers am I serving?� Which customer segments?� What type of relationships to

maintain?� Which channels?

How do I generate revenue?� Which pricing models?� How and where to capture

value?

Cloud business enablers are already driving innovat ion across company/industry value chains and customer value pr opositions

41

Cloud Enablement Framework


Enterprises are leveraging cloud to enhance, extend and invent new customer value propositions


Enhance Extend Invent

Enhance� Improve current value

proposition to retain/attract customers for existing products and services

� Appeal to existing customer segments

� Garner incremental revenue

Extend� Extend value proposition to

attract customers to different products and services

� Attract existing or adjacent customer segments

� Generate significant new revenues

Invent� Construct radically different value

proposition to create a new “need” and own the market

� Form new customer segments � Generate entirely new revenue

streams

42



Cloud is also being leveraged to improve, transform and create new organization and industry value chains

Impr

ove

Tra

nsfo

rmC

reat

e

Improve� Increase efficiency and effectiveness of the

organization� Increase partnering, sourcing, and collaboration

Transform� Change organizational role within the industry or

enter a different industry value chain� Develop new operating capabilities� Enter adjacent industries

Create� Build a new industry value chain or

disintermediate an existing one� Radically change industry economics

Val

ue C

hain



Organizations can be classified according to the exte nt to which their use of cloud impacts value chains and value proposit ions

Disruptors create radically different value propositions, generate new customer needs and segments. They disintermediate existing industries or even create new ecosystems

Innovators significantly extend customer value propositions resulting in new revenue streams and transform their role within their industry or enter a different industry ecosystem

Optimizers use the cloud to incrementally enhance their customer value propositions while improving their organization’s efficiencyIm

prov

eT

rans

form

Cre

ate


Val

ue C

hain


Optimizers

Disruptors

Innovators

Organizations should determine how and to what degr ee cloud can be used to enable their business model



These categories map closely to IBM ’s innovation classifications, which characterize the spectrum of business innovatio n

Optimizers

Disruptors

Innovators

Product and Service Innovation

Operational Innovation

Revenue Model Innovation

Enterprise Model Innovation

Industry Model Innovation

Pro

duct

and

Ser

vice

an

d O

pera

tiona

l In

nova

tion

Bus

ines

s M

odel

In

nova

tion

IBM’s Innovation Classifications


There are strong correlations between cloud business en ablers and types of innovation identified on the cloud-enablem ent framework

Revenue Model

Innovation

------- Business Model Innovation -------Operational Innovation

Product and Service

Innovation

Market Adaptability� Faster time to market� Supports innovative ideas

Business Scalability� Elastic resource provisioning � No scale economy limitations

Cost Flexibility� Shifts fixed to variable cost� Faster payback & higher ROI

Ecosystem connectivity� New value nets� Potential new businesses

Context-driven Variability� User defined experiences� Increases relevance

Masked Complexity� Expand product sophistication� Simpler for customers/users

Industry Model Innovation

Enterprise Model

Innovation

Business Model Enablers

Types of Innovation

�

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Optimizers, innovators and disruptors each face strategic opportunities and significant risks

� Untested business models may not succeed

� Fast followers are often more successful than first movers

� Rapid replication of innovation by competitors

� Value capture may not be sustainable

� Realization of limited revenue or market share gains

� Increased dependency on partners

� Potential industry disruption from less risk averse player

Major Risks

� Capture unique competitive edge through creation of new or disruption of existing industry

� Invent new customer needs or define entirely new markets

� Take advantage of and sustain first mover advantage

� Expand ability to move into adjacent market or industry spaces

� Combine previously unrelated elements of the value chain and value proposition to increase total value

� Gain competitive advantage

� Deepen customer relationships by expanding value

� Increase partnering by applying cloud� Reduce costs by leveraging cost

flexibility� Increase overall efficiency

Major OpportunitiesOrganizational Classification

Optimizers

Innovators

Disruptors


Cloud’s business enablers are fuelling innovation an d empowering organizations to optimize, innovate and disrupt busin ess models

Impr

ove

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Val

ue C

hain


Optimizers

Disruptors

Innovators


Val

ue C

hain


Context-driven Variability

5

Masked Complexity4

Market Adaptability

3

Business Scalability

2

Ecosystem Connectivity

6

Cost Flexibility

1

Cloud’s Business Enablers

Cloud offers six “game changing”business enablers …

…that are fuelling innovations across enterprise value chains and customer value propositions…

…empowering organizations to optimize, innovate or disrupt business models

Organizations need to assess themselves using the C loud Enablement Framework and examine the potential to innovate by leveraging the cloud’s business enablers

Summary so far…


There are three initiatives you can start today to capture valuefrom cloud-enabled business models

1. Establish shared responsibility for cloud strategy and governance across the Business and IT;

2. Look beyond your organization’s borders to maximize value derived from your cloud adoption;

3. Strategize whether your organization will be an Optimizer, Innovator or Disruptor through the use of cloud-enabled business models.

Recommendations…


Envisioning the full potential of cloud requires or ganizations to challenge existing approaches in their business and industry

Organizations that maximize the potential of cloud’ s business enablers can position themselves to capture significant value an d sustainable advantage

… you could reach hitherto unaddressed customers or

markets and target them based on their individualized preferences

through analytical insights?

Reflecting on your business, question yourself – “Wh at you would do if…

… you had access to unlimited computing

resources to scale your business?

… you could easily and seamlessly connect and

collaborate with business partners and customers?

… you could inexpensively and rapidly develop and

launch new product & service offerings?

…you could give any of your customers access to any of your products and services anytime, anywhere, on any

device?

…you could redefine your role in your industry and change your competitive

positioning?


Thanks for your time and attention

www.ibm.com/cloud-computing

www.ibm.com/developerworks/cloud