Basics, Fields of Application and Prospects of Cloud Computing

TO P I C D O S S I E R 2 0 11 „ C L O U D – M O R E T H A N J U S T C O M P U T I N G “

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A Lünendonk GmbH publ icat ion in cooperat ion wi th

Topic Dossier

Cloud – More than just ComputingBasics, Fields of Application

and Prospects of Cloud Computing


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Table of Contents

EdiTorial ......................................................................................................................................................... 4

inTroduCTion T-SySTEmS ........................................................................................................................... 6

KEy TEChnologiES and buSinESS dEmandS arE CulminaTing in Cloud CompuTing ............ 8

Cloud CompuTing – TErm dEfiniTion ................................................................................................... 10

SCEnarioS for uSing Cloud CompuTing ........................................................................................... 16

bEnEfiTS of Cloud CompuTing .............................................................................................................. 18

Cloud aCCEpTanCE .................................................................................................................................... 21

STruCTurE and dEvElopmEnT of ThE Cloud marKET ................................................................... 27

managEmEnT rEquirEmEnTS on ThE way inTo ThE Cloud: SECuriTy and qualiTy firST .. 32

ElEvEn rECommEndEd aCTionS To ThE managEmEnT whEn moving inTo ThE Cloud ......... 35

ExpErT ConTribuTionS and inTErviEwS ............................................................................................. 36

Introduction ....................................................................................................................................................... 37The Cloud as an answer to current business challenges ................................................................................... 39Dynamic Services ............................................................................................................................................. 41Security in the cloud – technology is not sufficient .......................................................................................... 43All is lost without a network ............................................................................................................................. 45Dynamic cloud computing: The flexibility of the new IT generation .............................................................. 46Ready for the cloud? ......................................................................................................................................... 49Interview with Dr. Axel Stötera ........................................................................................................................ 51Infrastructure bit by bit ..................................................................................................................................... 52No standing still – Expanding the cloud product range .................................................................................... 55Partnerships strengthen the cloud engagement ................................................................................................. 56

Company profilES ..................................................................................................................................... 57

T-Systems .......................................................................................................................................................... 57Lünendonk ....................................................................................................................................................... 58


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Dear Ladies and GentlemanDear Business Partners,

Lünendonk® Topic Dossiers have become well es-tablished and are very well received by professionals in business, science, politics and other fields. These professionals appreciate that relevant, topical issues and challenges are clearly outlined, presented in an intelligible manner and substantiated with descriptive examples from practical experience.

With this issue Lünendonk GmbH expands the pre-vious focus of the Topic Dossiers series from man-agement consulting to the field of information tech-nology (IT). These two business-to-business service provider markets have been drawing closer to each other for several years now. These days hardly any change is taking place without a distinct correlation between strategy, organisation and IT.

The Lünendonk® Topic Dossiers "Mobile Enterprise" and "Cloud Computing", both published at the same time, are dedicated to technology topics that are de-cisive for success and demand a premium advisory and implementing competency. Moreover, these two technologies and communication innovations are

more markedly changing the working methods as well as the structure of companies and even the entire society.

The Topic Dossier "Cloud – more than just comput-ing" covers a development in IT that has already released an enormous potential over the past three years. Striving for not having to operate, maintain or update IT infrastructure, applications or entire busi-ness processes by oneself is aimed at reducing over-head costs for operating business and IT processes by buying these services from external service providers depending on the respective scope and temporal de-mand of the purchased services.

Using flexible service offers from IT suppliers that can provide computing power, memory space, as well as up-to-date software in line with demand, remained wishful thinking for a very long time. Adequate net-work architectures, bandwidth, as well as concepts to be able to engage in a multitude of services from the outside, "out of the clouds" so to speak, have been existent only for the past few years. Hence the ex-pression "cloud computing". This innovative techni-cal and organisational concept has been a part of the technological topics which possibly possesses the greatest market potential in the IT service world since 2008.

What makes the cloud computing model so attrac-tive is, among other things, the option to purchase the utilisation of IT flexibly according to one’s own demand – and then only having to pay for the actually acquired services. Additionally, the service provider will take care to keep the IT infrastructure up-to-date; this contributes to performance as wells as to a reduc-tion in costs.

Editorial

Thomas Lünendonk,Proprietor Lünendonk GmbH


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Cloud computing is quite multi-facetted: The scope ranges from consumer-related topics such as private online memory space to business-to-business serv-ices such as Software as a Service (SaaS). The cross-linking of IT and telecommunications (ICT) contin-ues to advance. E-mail services, online photo albums, Facebook and online-storage services have long since become natural to private consumers. The security of the utilised services, however, is often neglected. Companies, though, frequently have to observe very strict security restraints (compliance rules).

Along with the rapidly turning technology cycles, the role of the Chief Information Officer (CIO) also changes. To a CIO, the cloud means providing re-sources to implement internet-based business models such as online portals in customer management or e-commerce, to design ICT-based business processes, and to achieve cost reductions during the ongoing op-eration of IT. At the same time, he needs to take care of a technologically state-of-the-art IT architecture for the operating business. He has to achieve these goals with usually limited IT investments while at the same time contributing to reduce the IT operating ex-penditures.

How can CIOs and companies live up to these seem-ingly contradictory challenges? This is where cloud computing comes into play: The examples from daily practice raised in this Topic Dossier provide impres-sive evidence of how an IT service provider can ac-company customer businesses on their way to suc-cess.

The development of the cloud computing market is actually still in the start-up phase. The dynamics of cloud computing as a future model, however, are al-ready very apparent today. The demand continues to grow in impressive dimensions: Analysts expect a sales volume of almost two billion euros in 2014 just for Germany, while cloud technologies are expected to reach a sales volume of up to 150 billion euros.

The present Topic Dossier therefore covers a manage-ment and technology topic, the significance of which is going to increase tremendously in the future.

We wish you an enlightening and useful read.

Thomas LünendonkProprietorLünendonk GmbH


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Dear Ladies and Gentlemen,

Speed – this term has become a synonym for cloud computing. More than ever before in history is dy-namisation putting companies on the move. And this is regardless of whether it is a well-established large-scale enterprise, a "hidden champion", a "rising star" or a startup.

They all need to respond flexibly to business chal-lenges by taking in, analysing and reacting to the market trends – or by setting trends themselves, di-versifying their product range and launching new business ideas on the market.

In this, integrated information technology has to as-sume a special role in two different ways: For one thing, the business processes, are becoming closer and closer interleaved with ICT. Business and ICT

are closing ranks and become inseparably connected to each other. Basing the business models more and more on information technology causes the signifi-cance of ICT to the business to increase dramatically. For another thing, people in charge of businesses demand that the ICT reflects these dynamics in this dynamic environment – and not the statics of past times with dimensioning the infrastructure to meet expected maximum loads. A breathing computing in-frastructure is the order of the day.

And now the person in charge of ICT comes into play. He needs to allow for a dynamic business and in-creasingly assumes the role of a business enabler and business process supporter. Cloud computing here is one possible answer from his range of options, a solu-tion model for the current challenges and demands he is confronted with.

In cloud computing, various elements are flowing into one stream and allow for a combination of busi-ness interests and ICT in a manner that has never been seen before.

However, along with the cloud computing hype, we must not forget that most companies do have an es-tablished ICT environment that has rendered the busi-ness successful over the past years without any need to radically replace it. A responsible cloud engage-ment must reconcile and integrate these two environ-ments. In this, the maturity of the company plays a significant role for a move into the cloud. We know from discussions with our customers that there is a desire for standardisation. Cost reductions are

introduction T-Systems

Hagen Rickmann,Managing DirectorService, T-SystemsInternational GmbH


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only one side of this coin, mastering the complexities is the other. Reducing the maintenance costs of ICT through standardisation opens spaces for innovation.

The demand for our private cloud product Dynamic Services confirms this orientation towards flexibil-ity and standardisation. We have successfully estab-lished this on the market since 2004. As a logical con-sequence, we have taken the opportunity to align our range of cloud products. Analysts, seeing T-Systems as a major European cloud provider, honour this step.

Cloud computing moves providers and users in much the same way and pushes the door to a new business era wide open. It is very exciting to see what is awaiting us.

Sincerely,

Hagen RickmannManaging Director Service,T-Systems International GmbH


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IT service out of the wall socket: Anytime and any-where, secure and fast. Without investing into hard-ware, with state-of-the-art software; as much as needed and billed as utilised. Now labelled cloud computing. Is this not the dream of any private or business user come true?

Cloud computing key technologies have well ma-tured by now. This includes a tremendous increase in computing power and memory space, virtualisation technologies and the comprehensive availability of high network bandwidths for data transfers. Transfer capacity, computing time and memory space have plunged in price over the past years in this context (see illustration 1).

Bandwiths networks are the backbone of the cloud. The demand for bandwidth increases, and so does the demand for availability and security. 100 Gigabit sys-tems help to fulfil these demands in the future. 100 Gigabit correspond to 90 million text messages per second or 100,000 MP3 files per minute or more than 15,000 HDTV channels broadcasted simultaneously.

Additionally, business requirements push the trend towards cost-effective information and communica-tion technology (ICT) services in line with demand.

Companies need to continuously increase their pro-ductivity, as well as improve their cost structure to remain competitive and act confidently and swiftly in the markets. The business requires quickly avail-able IT resources and a dynamic adaptation to the respective demands. Rigid IT infrastructures, grown over the course of time, offer too little flexibility; furthermore, only very few companies can afford to constantly invest considerable amounts into their own IT in order to always be making use of the most up-to-date technologies. Anyway, to this day, about 70 to 80 percent of the IT expenditures are consumed by operating the IT. So there is a lot to be said for trying alternative approaches: According to a survey of the Computerwoche magazine among IT experts in 2010, about 85 percent of the participants stated that they are looking into cloud computing; almost 30 percent are already using cloud services.

Apparently, cloud computing is going to become a predominant IT trend in the years to come. Still, the image of cloud computing remains to be strangely vague in the current discussions. Have there not al-ready been any approaches that promised similar ac-complishments? This all started with the common us-age of expensive mainframe capacity by companies in the beginnings of IT. And is cloud computing not

Key Technologies and business demands are Culminating in Cloud Computing

Illustration 1: Development of the return for one US dollar from 2003-2008(Source: Electrical Engineering and Computer Sciences, University of California at Berkeley, 2009)

1 US $ WAN Bandwidth/Month CPU hours Memory space

2003 1 GB 8 h 1 GB

2008 2.7 GB 128 h 10 GB


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Illustration 2: The emergence of cloud computing from infrastructure and application trends(Source: T-Systems International GmbH, 2010)

simply the process of anonymising a few larger data centres offering their services to business and private customers? What was that again with the offers of application service providers to provide software via the internet? Are is interconnecting of the currently unused capacity of single computers, usually within one company (grid computing), or utility computing

not predecessors of the phenomenon now becoming known as cloud computing?

To simplify it, cloud computing will result in any kind of service being available via a synthesis of IT and telecommunication services as a single service (illus-tration 2). But what exactly is cloud computing?

Time20082007200620052004200320022001

Cloud Computing

ApplicationService Providing

Software asa Service

UtilityComputingGrid

Computing

Appl

icat

ion

depl

oym

ent

Infra

stru

ctur

evi

rtual

isat

ion


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Cloud Computing – Term Definition

Illustration 3: NIST model structure(Source: National Institute of Standards and Technology, U.S. Department of Commerce, 2010)

It is quite difficult to get an uniform definition for cloud computing. Software, service or infrastructure providers put their emphasis on different aspects, de-pending on their point of view.

Common to all definitions, though, is the fact that they all perceive cloud computing as a concept to pro-vide IT infrastructures, platforms and applications in line with demand as a service via the IT and telecom-munications network. In this concept, applications, computing capacity and memory capacity are drawn from a distributed pool of offers and billed on a pay-per-use basis. Cloud computing allows private and business users to dynamically utilise software (for instance business applications, e-mail security serv-ices) or infrastructure services (for instance memory resources) and provide them apt for multiple clients via the network.

Cloud SErviCES CriTEria – CharaCTEriSTiCS for diffErEnTiaTion purpoSESNot every IT service via the internet is actually cloud computing. But the differentiation between utility computing, grid computing or providing application services is somewhat vague. Cloud computing is a combination of different ICT modules into an inte-grated full-range product.

The National Institute of Standards and Technology (NIST) defines cloud computing as “a model for ena-bling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (or networks, servers, storage, applications, and services) that can be rapidly purchased and re-leased with minimal management effort or service provider interaction.”

5 CharacteristicsOn demandself service

Broad networkaccess

Resourcepooling

Rapidelasticity

Measuredservice

PublicCloud

PrivateCloud

HybridCloud

CommunityCloud

4 Deployment Models

Infrastructureas a Service(IaaS)

Platformas a Service(PaaS)

Softwareas a Service(SaaS)

3 Service Models


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NIST also names five essential characteristics to identify a service as cloud computing:• Users can independently order resources as they re-

quire in real-time (on-demand self-service).• Users have access to a network that allows them to

access the required resources via different kinds of devices (broad network access).

• Users have neither control over the IT resources they use, nor do they know their geographical whereabouts. The IT resources are "pooled" and provided "apt for multiple clients" (resource pool-ing).

• The IT resources are up or downscaled (ideally automatically) synchronously to the development of the demand, similar to providing electricity in countries with secure and sufficient basic supplies (rapid elasticity).

And as a supplementary implied criterion:• Billing per use: An automatic control and optimisa-

tion of the used IT resources allow billing accord-ing to the actual usage (measured service).

These criteria classify a service to be cloud comput-ing and distinguish it from similar services – whereas the users probably do not particularly care about the subtleties of the definition. To them, something else is more essential: Cloud computing allows them to re-deploy investment expenditures to operating expen-ditures, from fixed costs to variable costs.

a Cloud CompuTing STruCTuring modElThe National Institute of Standards and Technology (NIST) cloud computing model is nevertheless a good approach to take a pragmatic look at the dif-ferent shapes of these specific services. Additionally to the five mentioned characteristics, it also encom-passes four different deployment models and three service models.

TypES of dEploymEnT modElS – how do CloudS dElivEr ThEir SErviCES?The different deployment models describe the type of the cloud services. There are a number of specify-ing cloud terms by now. The most basic types are the public cloud and the private cloud.

public cloudsIn public clouds, many users share a common base. It is used by any person or company and is not restricted to internal applications of a single institution.

Public clouds have originally been designed for the consumers: A very large number of users access the (customarily) standard versions of the services via the internet, with the economies of scale resulting in low prices. Typical public cloud approaches are the prod-ucts of Microsoft, Google, Amazon and Salesforce. They offer an abundance of infrastructure resources, different (sometimes proprietary) application devel-opment environments (Azure, Google App Engine, Force.com) and even full-range software solutions (Google Apps, Salesforce CRM).

Codified terms of liability and professional service level agreements (SLA) are very rare among public clouds, with data security and integrity being their points of vulnerability. Users may lose control over the delivery of services and over the data. Neverthe-less, these types of services are a cost-effective and readily available option for private users. If there is no legal general framework to set tight limits and se-curity is only of a secondary concern, then the access to resources and services of public clouds can also be considered from the outside of the consumer sector.


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private cloudsCompanies, public administrations and facilities, however, customarily have to comply to very strict legal regulations and therefore have higher require-ments towards security and IT governance. The pri-vate cloud approach is more suitable to them, because it can be implemented in-house or together with serv-ice providers.

A private cloud provides a basis for many applications to the provider and the user in the same company, for instance also to shared service centres and computing centres of companies or public administrations.

The economies of scale of private clouds are based on the shared usage of infrastructure for different ap-plications. Different IT systems are set onto a shared, dynamic operating platform. This allows for less hard-ware and software to be used while the average load of the IT infrastructure increases – a very convincing argument to any IT optimiser, considering that even the largest German bank assumes the average utilisa-tion of their servers to be only at 30 percent.

Legally binding service levels are agreed for private clouds. The network access is restricted by security mechanisms. Private clouds may also be used for re-quirements crucial to the company, due to better ways to control the access to services and data. A special case is the virtual private cloud, which provides a sealed-off and customised IT environment.

hybrid CloudsHybrid clouds combine the tremendous cost degres-sion effects of public clouds with the security require-ments of a private cloud or a community cloud.

In hybrid clouds, resources and services from differ-ent types of clouds are merged together. Customarily, the hybrid approaches are company – specific combi-nations of services. For instance, mailbox systems of different service providers can be offered within the same company.

Hybrid clouds offer the opportunity of a long-term harmonic development of business and operating processes, as well as applications and IT infrastruc-ture (transformational outsourcing). At the end of this transformation, the user can select the appropriate service from any of the different available partners depending on the individual situation.

Community cloudsThe community cloud is a special type of private cloud. Community clouds refer to fewer users than public clouds but to more than original private clouds do. Community clouds provide standardised indus-try-specific application modules to a defined group of companies with the same or similar business proc-ess and application requirements. The users of such a cloud can collaborate across different companies and rely on certified standards. The economies of scale depend on the size of the target group or the targeted industry. The value-added networks in the automotive industry are good examples for community clouds. The different contributors in such clouds, from the producer or part producer of the services or products to the developer of new services, the cloud operator down to the customer, each take part in shaping the value added network. Community clouds allow espe-cially smaller companies to reduce costs or to even purchase premium IT services.


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Illustration 4: Characteristics of different cloud types(Source: BITKOM Federal Association for Information Technology, Telecommunications and New Media, 2010)

Public cloud/external cloud

Private cloud/internal cloud

Virtual privatecloud Hybrid cloud

Highly standardised, scalable business processes, applications and/or infrastructure basically for everyoneat the same time (apt for multiple clients) on a variable pay-per-use basis.

The users are not connected organisatio-nally to each other and share the infrastructure.

The public cloud aims at economies of scale and consumerisation.

Resources can usually not be located.

Owner and operator ofa public cloud is usually an IT service provider.

Description Deployment of cloud computing services only to pre-defined users.

Access is usually provided via intranet or virtual private network (VPN).

Management and operation within asingle company or a common organisation.

Private clouds offer an efficient, standardised, virtualised and secureIT operating environ-ment under user cont-rol (inside his firewall). Private clouds allow for individual adjustments.

Special type of public cloud. In a virtual public cloud, the user is provided with an IT environment sealed-off and customised by appropriate security mechanisms.

The user has access to a quasi-custom opera-ting environment thatis connected to his IT via a virtual private network (VPN).

Hybrid cloud describesa combination of traditional IT (private cloud) and public cloud.

The entire responsibility remains with the user. The responsibility for operating the IT is shared and lies withthe respective person responsible for operating the IT.

By browser via the internet to IaaS, PaaS and SaaS services

Access Secure access via VPN for a restricted circle of users: usually only the owner of the private cloud himself, authorised business partners, consumers and suppliers.

By browser via the internet (secure VPN connection) to IaaS, PaaS and SaaS services

For the private cloud part: secure access via VPN only for the user himself, authorised business partners, consumers and suppliers.

For the public cloud part: by browser via the internet or via VPN in case of a virtual private cloud.

Standard (usually not customisable)

SLA User-specific definable without limitations

Limited customisation possible

Combination of indivi-dual (private cloud) and standard (public cloud)

Outsourced to service provider

Administration Private clouds are usually operated bythe user himself or byan external service provider based on the user's specifications.

Outsourced to service provider

The private cloud part can be operated by the user himself or a service provider. In principle, this allows for all sourcing options. The public cloud part is outsourced.


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SErviCE modElS: whaT do CloudS dElivEr?Now that it has been clarified how cloud services de-liver – to many users or to an in whatever way re-stricted number of users – the decisive question of what a cloud can actually deliver for the customer arises.

Three different levels of cloud products have basical-ly been categorised in the market: Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Soft-ware as a Service (SaaS). These three levels are sup-plemented by more advanced definitions, as would be expected from a vivid and growing market.

infrastructure as a Service (iaaS)Infrastructure as a Service is the purchasing of "raw" infrastructure resources (such as computing power and network memory) in line with the actual demand, which is usually billed on a pay-per-use basis. In this service, essentially on a technical level, computing

power and memory space is provided on virtualised servers, as well as network infrastructure functional-ity on a highly standardised level and intelligent sys-tem management.

platform as a Service (paaS)Platform as a Service provides development and op-erating environments (databases, data integration and security) for applications. The shared runtime and development platforms are deployed on non-dedicat-ed IT resources via a network. There exist different kinds of billing models for this service. System archi-tects and application developers use cloud services of the PaaS level to develop application components and integrate them across several platforms.

a special type: landscape as a Service (laaS)This type is similar to Platform as a Service but ad-dresses the business customer or the end user. It en-compasses the swift deployment of, for instance, SAP landscapes via the internet. Customarily, the tradi-

Illustration 5: Extended cloud taxonomy(Source: T-Systems International GmbH, 2010)

IaaS

Dynamic Infrastructure

Service

Infrastructure Virtualization

Tools

PaaS

Integrationas a Service

Middleware Virtualization

Tools

SaaS

Dynamic Apps Services

Apps Virtualization

Tools

BPaaS

Dynamic BPO Services

BPVirtualization

Tools

Public Cloud@ Global Provider

Virtual Private Cloud@ Dedicated Provider

Private Cloud@ Inhouse Data Center

Openness

Infrastructure Platforms Applications Business processes

Closeness to the business

Originalcloudmarket

Extendedcloudmarket


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tional installation of a typical SAP landscape, consist-ing of Business Warehouse, CRM and portal system, takes several days. Using Landscape as a Service, these landscapes are ready for login within minutes. LaaS is also suitable as a platform for other appli-cations, for instance web applications or exchange. Users can engage additional systems via a web-based self-service portal to cover peak loads or to increase performance, or can replace or remove systems with-in the landscapes.

Software as a Service (SaaS)Since the internet is usually depicted with a cloud symbol in ICT architecture sketches, the deployment and utilisation of software services is meanwhile re-ferred to as cloud computing.

So, Software as a Service describes the utilisation of software via the internet that is recompensed on a per-user or a per-launch basis instead of monthly lump sum licence fees. Which resources of which provider the user is using and where the individual resources

are physically located, is concealed from him. The user utilises software services in a space that can im-precisely be described as the internet.

In SaaS, business applications are offered as stand-ardised services by a service provider. Desktop, col-laboration and communication applications or indus-try-specific business processes (standard software, ERP, CRM, etc.) are examples for this. Standardised interfaces allow the user to utilise different services of different providers within an integrated application.

Analysts and consultants often attempt to expand the original three-way segmentation. Forrester, for in-stance, paraphrases another level as Business Proc-ess as a Service (BPaaS), where – similar to Busi-ness Process Outsourcing – entire business processes are provided on a pay-per-use basis. Of course, the cloud taxonomy can be considerably expanded with the openness of utilisation, i.e. the possible number of users, or the proximity to the business or the business value of the offer (see illustration 5).


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Cloud computing solutions help answer a number of strategic questions that IT and business decision mak-ers have to deal with:• How can we synchronise our information technol-

ogy with the business situation, in order to be able to respond swiftly to each market demand with a flexible IT?

• How can we minimise risks and only pay for the actually utilised resources, i.e. turn our investment expenditures and fixed costs into running operating costs?

• How can we reduce the duration of IT projects and straightforwardly absorb peak loads in the running operation? This means that we have to purchase re-sources in line with our demands and immediately respond to market changes.

• How can we protect our company data and comply with legal and regulatory frameworks? The secu-rity and environmental requirements will tend to increase in the future.

A number of scenarios describes reasonable operation ranges of cloud computing. Which type of operation makes the most sense depends entirely on the com-pany situation.

Cloud computing is used in computing-intensive projects, for instance, as an infrastructure buffer for high computing loads and memory services.

Scenarios for using Cloud Computing

Others

Manufacturing

Logistics

Controlling

Finance

HR

Marketing

Service

Sales

IT

Planned usage withinthe next 12 month

Current usage

0% 5% 10% 15% 20% 25% 30% 35%

Illustration 6: Operating ranges of cloud computing in companies and their rates of growth in the next twelve months.(Source: Deloitte Consulting GmbH, 2011)


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Cloud computing frequently helps to reduce devel-opment times. Developers test their applications on service platforms and quickly achieve marketable ap-plications by using seemingly unlimited resources for a short time.

Readily available IT services from a cloud allow a swift implementation of new business ideas and re-duce the time-to-market period when entering new markets. Moreover, new business opportunities with scalable applications can be tested beforehand.

Cloud computing is also used to supplement the ex-isting IT on daily business. Having barely used re-sources available can be dispensed with, the load of absorbing peak loads is taken by the provider.

Especially startups and small businesses can keep their fixed costs low with cloud computing. If there are no company-owned IT structures yet, then cloud services provide an alternative to owner-operated IT or traditional outsourcing.

Cloud computing can have a very special significance for desktop services: Utilising cloud computing al-lows the adjustment of workstation systems to the re-

quirements depending on the user’s situation. Appli-cations and data is kept in the cloud, terminal device failures are less critical and the device can be scaled a little smaller and therefore gets cheaper.

Beyond the desktop functionality, cloud computing supports a large number of functions, such as distrib-uted project management, supply chain applications together with suppliers, logistics, sales force control, payroll services, etc.

Cloud archiving services supplement the disaster re-covery strategies of companies down to a full-range replacement of the original storage systems.

The main operating range of cloud computing cur-rently is IT itself. But other market-oriented areas such as sales, services, marketing, and company in-ternal functions such as HR, finance, controlling (see illustration 6) are already following behind.

The essential benefits of cloud computing dominating all application scenarios are the deployment of scal-able IT infrastructure and making costs more flexible. These benefits deserve a closer look.


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Benefits of Cloud Computing

Cloud computing allows users to rent infrastructure, memory space and applications in line with their demands and to flexibly adjust ICT resources to the business performance. Cost structure is improved by turning ICT cost into variable cost. This entails a number of not only economic benefits.

CoST rEduCTion in iCTUtilising cloud computing technology relieves com-pany and organisation IT budgets in at least four areas:

IT investment and investment risks decrease due to discontinued investments into servers, memory space and software, which are replaced by – lower – run-ning expenditures on a pay-as-you-use basis. Funds formerly bound to investments can be used else-where. However, costs for implementing and adapt-ing cloud computing technologies must be taken into account here, too.

Innovation and R&D costs in IT can be reduced if the company resorts to standardised cloud applica-tions instead of expensive own developments. This does not only concern the direct development costs, but also the rollout costs of new applications, that can be done centrally and user-friendly out of the cloud.

IT personnel expenditures contracted because the number of employees in the own IT department can be reduced or IT specialists and administrators may be employed in other areas. The same goes for operating and maintenance costs: The costs for software licences, maintenance lump sums and computing centre rents are inapplicable. Outsourcing the entire application management gives

the ICT departments even more leeway. With an average budget of 70 to 80 percent for the running operation of IT, cloud computing releases funds for innovations.

Other running IT costs for power supply and air-con-ditioning the computing centres, as well as vacancy costs do not apply when using cloud computing serv-ices.

Even if part of these costs are priced into the fees to be paid to the provider of cloud computing services, these total costs will still be lower due to the higher degree of utilisation on the side of the provider of "centralised" ICT services. At the same time, cloud computing improves the cost transparency of the services involved, allows billing according to the ex-act utilisation and thus controlling the purchased ICT services.

ExamplES for CoST rEduCTion Through Cloud CompuTingCloud computing helps reduce costs on many levels. Some examples illustrate this:• Consolidating the ICT infrastructure: Servers,

networks and memory can be consolidated into a private cloud. The US Department of Defense, for instance, merged its 194 computing centres into 14 private clouds thus saving several 100 million US dollars every year.

• Development costs – the Amazon Eli Lilly exam-ple: Eli Lilly only paid 89 US dollars to Amazon Web Services to analyse data for developing a new medicine. The alternative for Eli Lilly would have been to purchase 25 servers for the research department. Since the fees for cloud services are


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running operating expenditures, they help to avoid tedious requests and authorisation processes for in-vestments. Using cloud services shortened the IT budgeting and authorisation process at Eli Lilly and thus the time-to-market period by three months. Es-timates in this case in the patent-protected medi-cine market assume some saved opportunity costs of one billion US dollars.

flExibiliTy and SpEEdResources from the cloud can be used in an extremely flexible way; they are scalable, can be quickly booked or cancelled, depending on the current demand. This predestines cloud computing to be used for occa-sional, seasonal or time-limited tasks or to cover peak loads. The flexibility gained through cloud comput-ing is multi-dimensional:• Peak loads or reduced demand have neither to be

specifically accounted for in the IT nor do they have to be pre-announced by the end user in the company. Limited IT capacities do not interfere with the support of business processes, because the capacities can be booked or cancelled automati-cally in line with demand.

• Vacancy costs are avoided. ICT capacities can be better adjusted to the requirements and fluctuations in utilisation of the business.

• The response time of companies to market demands is reduced, if ICT resources can vary on short-term notice. This provides the companies with a high agility, for instance in the project business, in or-ganisational changes and mergers & acquisitions, as well as in disinvestments.

• Cloud computing users have a greater range of possible providers of ICT services to choose from, compared to outsourcing options. Entering busi-ness relationships faster with cloud computing providers, but also revising decisions when general conditions change, are benefits of cloud computing as opposed to traditional outsourcing partnerships.

SECuriTy in ThE CloudCloud computing can be credited for its security as-pects in some areas, despite the fact that security in the cloud requires some special attention. The ben-efits of these are:• Economies of scale benefits due to minimum size:

Security precautions for data storage, data trans-fer and data processing can be implemented much more economically if an adequate scale is reached.

• Minimum security standards: The customers’ ex-pectations, the demands of the particular market and the competitive pressure spur the cloud com-puting providers to a maximum of security imple-mentations.

• Standard interfaces: Large cloud computing pro-viders can easily and effectively cooperate with managed security services providers via standard interfaces.

• Load-bearing capacity: The authentication resourc-es or the encrypting resources can be deployed to the location with the highest demand at that par-ticular time within the cloud.

• Updates and patches: Updates, security settings and software patches can be implemented quickly within the cloud. This has its benefits especially for Software as a Service users.

• Concentration of resources: Access and access fa-cilities to large data resources are much easier and much cheaper to control than many distributed small data storage devices (for instance field force laptops with their own hard drives).

nEw buSinESS opporTuniTiES Through Cloud CompuTingCloud computing offers not only benefits with respect to costs and flexibility for existing business models but also offers new opportunities.

Especially small and medium enterprises (SME) get quick and low-cost access to internet technolo-


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gies that are scalable and provide them with easier access to national and international markets. Benefits of this are in an increased automation and improved exchange of information across the entire value chain as well as in an improved direct cooperation with cus-tomers, suppliers and other partners.

Small and medium enterprises do not need to compre-hensively invest in ICT capacities in advance but can rather open up new markets with scalable resources from the cloud and reduce the time-to-market period.

The entrance barriers to new markets are much low-er than they used to be thanks to cloud computing. This becomes particularly clear with the example of software providers: Every freelance programmer can develop and market applications with very little ex-penditure and rented resources.


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There are risks to each ICT service model, especially when it comes to outsourcing data and applications. There still continue to be reservations about moving the own ICT into the net. Reports on system failures at Salesforce.com or Amazon Simple Storage Service S3 do not make it any easier for the cloud computing model.

The lack of confidence in data protection and data security concepts, as well as the uncertain legal situ-ation in some individual cases are the greatest hin-drances to a rapid development of the cloud comput-ing market. It does not matter that data is very often even more at risk within the self-operated infrastruc-ture than it is in the cloud.

A recent survey lists the main scope of concerns about cloud applications (see illustration 7).

However, subjective reservations about the cloud due to being unfamiliar with the new service model should be distinguished from risks inherent to cloud computing. The former can be put into perspective through information and trust in cloud services pro-viders, the latter requires specific action and design when implementing a cloud computing model.

First a word about the more atmospheric, subjective type of reservations.

SubJECTivE rESErvaTionS abouT Cloud appliCaTionS:

Can physical data security and access be guaran-teed at all times?The topmost reservation is about data security. Com-panies stop short of releasing their sensitive data from their own reach. This reflects the worries of not being

Cloud acceptance

Uncertain licensing

No financial benefits

Risk of a vendor lock-in

Doubts about long-term availability of the product

Open compliance or legal issues

Insufficient data security/availability

Risk of loss of governance/control

0% 10% 20% 30% 40% 50% 60%

Illustration 7: The top reservations about moving the own ICT and data into the cloud(Source: Deloitte Consulting GmbH, 2011)


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able to access the data at the crucial moment, due to the service not being available for a time or not being able to deliver the appropriate performance.

These worries seem to be exaggerated: If a hardware failure occurs within a traditional IT environment, tremendous damages are inflicted if the system is not designed redundantly. And this is hardly the case anywhere for cost reasons. Characteristic to cloud computing is a high availability due to different im-plementations that remain affordable due to econo-mies of scale. Failures are intercepted. Loss of per-formance or failures can occur in a traditional server landscape due to unexpected peak loads. An essential benefit to cloud computing are the resources being adjustable to the demands in a dynamic and flexible fashion, so that overloads do not occur.

is the data not stored too far out of reach of the customer?As with the private PC user, the potential cloud cus-tomer also anxiously asks the question of whether to accept a long distance physical separation from his data or not. The benefit of the short distance to the own local computing centre seems to be lost. This drawback can be offset or even more than compen-sated for by a gain in security due to the physical dis-tance between using and storing data, as well as an additional data mirroring at other computing centres depending on the security concept of the cloud pro-vider. Is the data sufficiently protected from access by unauthorised people?The survival of a company depends on the data se-curity, the protection against data manipulation and a high availability of the data. Without access to their data, any company would face bankruptcy within a short period of time. Aside from the financial loss, there is also a loss of reputation, if millions of sensi-tive customer details are stolen as happened to Sony.

If a company uses proprietary systems in its own computing centre, then it can take care of the data protection by itself. So, should a company rather re-frain from the cloud despite its high flexibility and the pay-per-use billing?

For instance, in a private cloud with its own connec-tion to a data centre, the data is not transferred via the public internet, but rather through a tunnelled net-work of the provider, with any further risk being reli-ably eliminated by encrypting the data.

does the cloud provider have state-of-the-art software?All software has its flaws and security vulnerabilities, which can be rectified by updates once they become known. With a company-owned ICT, the company is responsible for the servicing of the software by it-self. The required system servicing is a complicated matter that can interfere with working processes and cause additional errors.

In cloud computing, the provider installs the updates centrally and takes care of the system stability and failure safety.

is data in the cloud more severely threatened by viruses?In traditional IT environments, there is customar-ily some anti-virus software deployed. Recognis-ing new malware is frequently difficult, due to rela-tively low computing power and the aging of virus scripts.

In cloud computing, this task can also be centralised and thus performed in an economic, efficient and up-to-date fashion. All customers of the provider auto-matically enjoy the same protection.


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CloSing SECuriTy gapS: CompaniES arE noT faST Enough

do hacker attacks concentrate on targets in the cloud?Data theft at the RSA security group, attacks on the US stock exchange Nasdaq and the French energy group EDF, attacks on Google and Sony databases: Never before have large-scale enterprises been threatened by hackers as they are today. RSA of all companies, one of the leading suppliers of IT security technolo-gies, had to announce – irony of fate – a large-scale review of its so-called tokens, of which, according to estimates, there are more than 40 million circulating with 25,000 customers. These electronic keys gener-ate numerical sequences with which employees log on to company networks via virtual private networks (VPN). RSA had become the victim of hackers who abstracted token data with which they then intruded the computer system of US defence contractor Lock-heed Martin.

All systems, applications and data storage devices, regardless of their environment, can be attacked. In traditional ICT environments, the user himself has to plan, implement, control and update measures such as firewall, intrusion detection, virus scanners or isolat-ing the server from the public network. Analogous to the traditional IT outsourcing, the provider handles these tasks in the cloud. Some cloud providers even

charge independent security companies with simulat-ing hacker attacks and developing counter measures. Intel aims to integrate IT security already on the chip by buying security company McAfee – the entire se-curity concept of the IT industry is thus facing a radi-cal change.

is data in the cloud protected from loss or theft of hardware?In a traditional environment, employees are using mobile devices or USB flash drives with confidential or crucial data. If they get lost or stolen, heavy dam-age is inflicted, even if backup copies or encrypting do exist.

Cloud computing can eliminate this risk by holding the data on central storage devices and using thin clients.

vulnErabiliTiES inhErEnT To Cloud modElSMany subjective apprehensions prove to be exagger-ated when taking a closer look. Nevertheless, cloud models do exhibit some inherent vulnerabilities that can be compensated for by technical, legal and man-agement concepts. These include:

risk: vulnerability of a technically distributed environmentData in a cloud is located in a distributed environment. This makes the data generally less secure compared to data in closed-up IT systems. So, this lets data security become the touchstone of all cloud planning:

The transfer has to be conducted via secure lines, in an encrypted fashion, such as with online bank-ing, for instance. Further measures include control-ling and prefiltering data that does not conform to the specified security regulations. Tools such as encrypt-ed connections, anti-virus solutions and firewalls are deployed, with access rights management also play-ing a significant role.

According to the Qualys survey »The Laws of Vul-nerabilities 2.0«, companies need 59 days on aver-age to install patches for security gaps. In 2005, this took 60 days. This is a drop of one day within five years time. Considering how much labour and efforts to automate this process have been put into patch management over these five years, then this cannot be called an overwhelming success. And this does not just illustrate the tremendous chal-lenges but also how the current software ecosys-tem is ailing.


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risk: protection of virtual machinesAn essential feature of the cloud is virtualisation; it separates the user from the actual hardware such as the computer or disk space. Possible drawback under security aspects: If several applications of different companies are running on a single server and if the administrator accounts are restrictive, then an admin-istrator frequently works with root rights of the op-eration system to manage the host system. But with these rights, he is also able to manipulate the con-nected virtual systems. The virtual machines are un-protected, if they can be manipulated from the system at the next level upward.

This can be remedied by access control systems with a strict role management.

risk: geographically distributed environmentIn contrast to traditional IT environments, it is usu-ally unknown in the cloud, on which system, in which computing centre and above all in which country the provider stores his data. Moreover, some providers charge subcontractors with this. This can cause legal issues, especially where the processing of personal data is concerned. If the data crosses country bor-ders, then they possibly do not comply to important security requirements or legal or industry-specific restraints. For instance, France and Poland do not permit to process financial data outside the country. In the USA and other countries, security technologies such as encrypting are subject to the War Weapons Control Act.

One solution to this predicament can be the assur-ance of the provider to store and process data only in agreed geographical locations, and on the other hand, to meticulously record in a functional specifica-tion document and a product requirement document, which data and which jurisdictions of home and host country are compatible with each other.

A certain aggravation about the issue of country bor-ders also within the EU is brought about by internal regulations of customer companies for the EU-wide

tendering process for larger cloud projects – the leg-islation in the home country of the economically most effective bidder being possibly counter-productive to cloud computing.

risk: leaving the legal space without controlIn dynamic and open cloud computing systems, data is frequently on the move. Cloud providers have to store their data on selected computers and maybe also copy or duplicate it to use their infrastructural capacity to its best and to optimise their performance. These processes are usually outside the influence of the customer and may lead to confidentiality issues, if the data crosses country borders, is stored on less secure systems or stored unencrypted.

This can be remedied by specific agreements between the provider and the user.

uSa paTrioT aCTWhoever stores data in the cloud with US companies, must take into account that American authorities may demand from cloud providers to inspect the customer data. Companies should therefore be aware that it is absolute necessary to extensively assess providers prior to using cloud computing.

The USA Patriot Act has been implemented follow-ing the attacks of September 11, 2001 as a law against terrorism and gives American authorities far reach-ing access to US company data and their customers, regardless of where it is stored. Additionally, the law forbids the providers to reveal the disclosure of data to their customers.

European companies that want to protect their data from access by US authorities should select a provid-er who is not subject to the USA Patriot Act.

risk: availability and performanceCloud services are measured against comparable own applications. Performance and availability define the quality of the service. Cloud computing systems can usually be accessed via a public network and are ex-


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posed to distributed denial-of-service attacks, for in-stance.

Flawed system configurations and a number of serv-ice requests to the cloud provider infrastructure too large to handle, that do not just stress a single service but rather the entire cloud computing system, above all, can lead to an interference with the availability of a cloud system.

However, this cloud computing risk is shared by the in-house IT.

risk: protection of the data integrityA cloud computing system guarantees the integrity of the protected data, if it is impossible for a third party to manipulate it.

Not only must the cloud service used by the end user but all other involved components of a cloud comput-ing system preserve the data integrity. This can prove very challenging in complex distributed cloud com-puting systems. Data, stored on a virtual hard drive, for instance, needs to be protected from unauthorised manipulation. Flawed system configuration by the cloud provider can lead to a breach in the integrity.

Data in cloud computing systems should always be furnished with cryptographic checksums, while the original checksum may be deposited with a trustwor-thy third party for comparison.

risk: Correct separation of dataCompanies and government authorities have to keep their data and their transactions strictly separated from other data, so that others may not gain insight to the data or influence it. Risks are the loss of control over company data, insecure or incomplete deletion of data from the servers, a client separation afflicted with vulnerabilities or open user interfaces.

Technical precautions by the provider, ongoing cer-tification processes and control by the user help to minimise these risks.

Risk: Breach of confidentialityA system guarantees the confidentiality of informa-tion, as far as it is able to prevent unauthorised ac-cess to the information. This requires user rights and control that make sure, that nobody gets unauthorised access to information.

Commonly, there are cryptographic methods as well as user access controls based on strong authentication deployed for protection purposes.

risk: liabilityLiability issues can occur in cloud computing, if, for instance, a violation of the service level agreement occurs, which can be traced back to technical issues in the network or the IT operation. The perpetrator is quite often only determined with difficulty, since there is no end-to-end solution accounted for. Who or if somebody at all is liable in case of a loss of data or whether third parties have access to the company data due to a country-specific legislation, is frequently un-specified.

Specific contracts, SLAs and cloud products from a single source at least ensure unambiguity in liability cases.

risk: Several cloud subprovidersThere can be several or changing service partners involved in the cloud computing services. The de-localisation makes it frequently impossible to define where the data is actually located, i.e. which coun-try’s legislation and which liability is to be applied. A possible mesh of liabilities is bound to become arbi-trarily complicated, if several service providers from different countries are cooperating on an inadequate contractual basis.


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So here it is also valid: Specific contracts, SLAs and cloud products from a single source at least ensure unambiguity in liability cases.

risk: SecuritySome of the current cloud computing products only partly comply with the security requirements of busi-ness clients. Common to all solutions is the connec-tion of the company to the cloud via the internet – usually via a virtual private network (VPN). A direct connection in terms of a point-to-point connection

offers the greatest security but is not possible in most cases.

risk: dependency on the cloud service providerIt is frequently feared to become too dependent on the cloud service provider or to lose control over data and services. So it should be clarified, whether the interoperability of the data in the cloud is a given fact: Are there adequate interfaces to other applications? Can data be transferred from the cloud to another pro-vider, if necessary?

ovErviEw: Top SECuriTy riSKS

• Malicious insider:Intentional or criminal sabotage

• Compliance risk:The cloud provider does not meet the compliance or assessment requirements

• Data protection:The cloud provider is not processing the data ac-cording to security or legal regulations

• Intermixture of data:Intermixture of data between several users of a cloud

• Interface failure:Exploitation of interface vulnerabilities to get unauthorised access to data

• Loss of control:Loss of control that compromises the security to-wards the cloud provider

• Lock-in:Lack or loss of data portability

• Incomplete deletion of data:Requested deletion of data is executed incom-pletely or not at all


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who iS Enquiring for Cloud CompuTing?In the very beginning, cloud solutions were applica-tions for private people. Xing or Facebook members are using the cloud without even thinking about it, the same as e-mail customers of Hotmail or GMX. Meanwhile, cloud-based products such as memory space, applications and collaboration software for private people are mostly offered free of charge in the most basic versions. To the digital natives, the usage of these offers will be a no-brainer – and continue to be, despite the frequently consumer-unfriendly terms and conditions regarding security and privacy.

For the business client it is different: They are care-fully considering the scope and products from the cloud. After all, with IT services they are purchasing essential infrastructure components from the net or are even building their business model on it.

But small, medium and large enterprises have long since started to use cloud computing services. Typi-cal examples for a permanent shift of services into the public cloud are the usage of Google Apps, Salesforce CRM or Microsoft Office 365 as an alternative to tra-ditional local installs. The user enters into a permanent service relationship with the cloud provider here.

Structure and development of the Cloud market

Illustration 8: Cloud computing – Navigating in the cloud(Source: PricewaterhouseCoopers AG, 2011)

12%

39%

57%

57%

59%

59%

61%

63%

63%

63%

0% 10% 20% 30% 40% 50% 60% 70% 80%

No indication

Public sector

Transport and logistics

Energy

Automotive and suppliers

Trade and consumer goods

Technology, manufacturing and construction

Industrial manufacturing

Finance

Chemical, pharmaceutical, health care

Which industries are customers primarily affiliated with?


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Other examples are:• Around 90,000 travelling agencies and almost

59,000 airline ticket selling points are connected to the computing centres of the service provider Ama-deus. The entire process starting from the booking to ticket issuing is done in the cloud.

• Microsoft Germany offers a new online service Office 365 to small and medium enterprises. 70 percent of all participating companies did not have more than 25 employees.

• The Deutsche Telekom is purchasing ICT serv-ices from the cloud to register invoices and pay-ment transactions as well as managing customer accounts and accounts receivables. The revenue management system is processing more than 1.5 million payment transactions per day for around 30 million customers.

• The travel business DERTOUR is working with a highly automated cloud infrastructure to intercept peak loads by booking additional capacities during peak times.

• Bayer is modernising the workplace of more than 100,000 employees worldwide by establishing a single platform for all types of communication from phone to e-mail to social networking. There is reasoning behind the transition: Applications such as text processing or tools for cooperation can be used via the internet and do not have to be installed

on company computers. Bayer Healthcare is equip-ping its sales force in China with iPhones – thus skipping the laptop on its way into the cloud.

• Jaguar Landrover attempted to reduce costs and gain some transparency for its IT landscape, when the company decided to convert 14,500 workplaces to Google Apps. Standardisation is not perceived as a limitation but rather as a benefit. The cost re-ductions are due to more cost-effective software versions and above all a reduction in maintenance costs.

• Cloud computing is used particularly in the me-dia industry. Examples for this are the utilising of Amazon Web Services for the conversion project of archived articles and pictures to the PDF format at the New York Times or an IT project at the Dan-ish media company Berlingske Media; 3,000 users in total have been conveyed to Google Mail and Google Apps there in 2010. It became also known in 2010, that the Telegraph Media Group is putting its money into cloud computing – with comprehen-sively utilising Software as a Service, one of the most popular cloud service models: Salesforce for customer service, Google for e-mail and collabo-ration, Ooyala for video distribution, Disqus for blogs and Cordys for managing business processes and workflows.

Illustration 9: Providers in the surrounding system of cloud computing(Source: BITKOM Federal Association for Information Technology, Telecommunications & New Media, 2009)

Telcos/ ISP & HW-suppliers

IaaSproviders

PaaSproviders

SaaSproviders

SaaS providers & integrators System integrators

Network connection & HW

Infrastruc-ture & operation

Platform services

Application software

Application management & service bundling

Service rendering & customer support

System integration Consulting


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A survey of PricewaterhouseCoopers AG among 51 providers of cloud computing services in Germany proves that cloud services are requested from almost all kinds of industries, starting with the manufactur-ing industry to trading, service providers and financial service providers down to the power industry. Only the public sector is a little underrepresented. Surpris-ing though is, that companies of all sizes, small, me-dium and large, are engaging in cloud services; so, the frequently voiced assumption of the cloud only being interesting to large enterprises is incorrect.

STruCTurE of Cloud providErS and mar-KET volumESMany different providers are offering cloud comput-ing services within the scope of their competency (see illustration 9). There are for instance network provid-ers, IT infrastructure providers, Software as a Service

providers, hosting or outsourcing providers. All their services combined constitute the full-range cloud computing package with the respective focus depend-ing on the provider. The telecom service providers find themselves in a good starting position, because they control the backbone of the cloud – the network.

Cloud computing is going to thoroughly reshape the information industry, its technologies and its business models. Dropping connectivity costs and increasing data transfer rates are supporting this. The former BITKOM president, Professor August-Wilhelm Scheer, even expects that in less than ten years from now, many companies are going to manage without any in-house IT or computing centres. Then almost all companies would be using cloud computing, at least supplementary. This is a bold estimate.

Illustration 10: Estimates: Worldwide public cloud market until 2020(Source: Forrester Research, Sizing, 2011)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

BPaaS ($) 0,15 0,23 0,35 0,53 0,80 1,26 1,95 2,93 4,28 6,00 7,66 9,08 10,02SaaS ($) 5,56 8,09 13,40 21,21 33,09 47,22 63,19 78,43 92,75 105,49 116,39 125,52 132,57PaaS ($) 0,05 0,12 0,31 0,82 1,08 4,38 7,39 9,80 11,26 11,94 12,15 12,10 11,91IaaS ($) 0,06 0,24 1,02 2,94 4,99 5,75 5,89 5,82 5,65 5,45 5,23 5,01 4,78

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Nevertheless: Cloud computing is already registering revenues in the double-digit billion dollar range (see illustration 10). Statements pertaining to the growth of this market vary heavily, depending on the defini-tion of the market observer and the not always clear distinction between public and private clouds.

Berlecon Research estimate public cloud computing revenues of more than 20 billion euros by 2025 for Germany. This is then going to correspond to about 20 percent of overall IT expenditures by German companies. In the range of internet-based software solutions (Software as a Service) alone, the expendi-tures are expected to increase to eleven billion euros for public cloud services until 2025, thus making up 90 percent of the total expenditures for standard soft-ware in Germany.

TrEndS arE Changing ThE CompaniES and Spurring on Cloud CompuTing – iCT iS ThE drivErCloud computing is the tip of the iceberg of what is going to become of ICT: A readily available resource, customisable to a large extent depending on personal needs.

Four market trends are igniting the cloud computing topic even more in the future than they do today:• An increasing globalisation (especially in the vir-

tual world) provides for new and more dynamic markets along with a simultaneous increase in com-petition and competition speed.

• A new generation of people with a high affinity for technology is entering the labour market who want to use resources and services at their workplace that have originally been designed for private areas. Mobility and web-based applications are essential to them.

• Persistent cost pressure forces companies, organisa-tions and their IT to put their IT investments to the test. "Green" considerations also play a role in this.

• Many technologies essential to the implementation of clouds have matured over the past years. They allow for highly automated processes in the produc-tion of IT (IT industrialisation); at the same time, widely available high-performance broadband net-works allow access to cloud-based resources.

These trends allow and even urge companies to change their behaviour, which is going to consider-ably affect the way how companies, partners and cus-tomers cooperate in the future:• Companies are purchasing more and more ICT

services from the network. Using ICT service in line with the own demand and paying on a per-use basis renders companies flexible. This allows them to respond swiftly to market changes.

• There are already several services of different com-panies, their partners and their customers includ-ed in each product today. They mostly cooperate worldwide in a distributed fashion. The automotive industry is considered to be the pioneer – in this industry, already hundreds of suppliers are coordi-nating themselves with each other and the manu-facturers. The new ways of cooperation demand tailor-made platforms in other industries, too.

• More and more companies are mobilising their employees, thus becoming "mobile enterprises" themselves. Employees access data and cooperate regardless of location, time and terminal device. This increases efficiency and creates new freedom, for instance in the cross-linked automobile, which is going to ride the data highway along with mobile phones and PC.

Value is going to be added differently and more ef-ficiently over the next years; ICT is going to be an essential factor to facilitate this in a cross-linked economy. The network is going to be expanded in the upcoming years.


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whErE iS Cloud going? ThE inTErnET of EvEryThing4.3 billion addresses of version 4 of the internet pro-tocol (IPv4) seemed sufficient to the internet pioneers back then. But: No more addresses are being assigned in Asia already; Europe is going to follow soon. The new versions of the internet protocol (IPv6) are sup-posed to be sufficient with 340 sextillions of address-es, so that the internet will never be running out of addresses. IPv6 is going to spur on the "internet of everything", when not only people but also machines and things are going to communicate via the internet. Everything is going to become part of the “internet of everything”: intelligent houses, interconnected cloth-ing with built-in instruments, cars, office equipment.

The "internet of everything" will allow providers to offer their services via the net. Products can be made available and requested, depending on the degree of digitalisation. Services are going to be deployed by different providers at that, linked to value added serv-ices, facilitated to users and consumers and utilised via various channels.

An essential technical prerequisite to the "internet of everything and services" is to provide a sufficient amount of efficient and ubiquitary computing capac-ity as well as a high-performance network to trans-port data for instance between cloud farms and users: simply cloud computing. In light of these perspec-tives, CIOs and executives would be wise to actively prepare for the cloud.

ThE inTErnET of SErviCES viSionIn the internet of services – as is the vision – services and functionalities are mapped as software components and provided by providers via the internet, i.e. in the cloud. This means:• Companies are purchasing ICT resources flexibly and in line with demand via the internet.• All applications are deployed based on the web and platform independently used on mobile devices, for

instance.• Companies are arranging highly flexible ICT architecture modules depending on the individual demand and

the respective business process and are orchestrating individual software components into complex solu-tions.

• Standardised interfaces are integrating the individual applications and modules.• Web services allow for a high degree of interoperability between various technology platforms offering to

outsource tasks and processes to companies.• Web services are augmented with semantic content to facilitate and to automate locating, selecting and ex-

ecuting, as well as combining them with others.

By mapping business processes to IT, not only the own but also the business processes of business partners will be integrated via the web and transactions will be processed.


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management requirements on the way into the Cloud: Security and quality first

The strategic and economic benefits of cloud comput-ing are quite obvious. But what else needs to be con-sidered when preparing for the transition to a cloud solution? The answers to the following questions are definitely part of it:

• Who, including subcontractors, takes over which services?

• What rights and duties does each contracting party have?

• In which country are the services rendered and the data stored?

• Which national, international and European juris-diction applies to which rights and duties?

• In what way are the specific legal requirements ful-filled?

• In what way are the customer’s specifications im-plemented?

• Who gets access to which services and which data?• How are changes in terms of demand implemented?• How is the remuneration calculated for which serv-

ices?• What happens if deviations from fulfilment of the

contract occur?

Which fields does a cloud user need to actively design when transitioning from the traditional own IT into the cloud? Of importance is:

SovErEignTy ovEr ThE daTa: SECuriTy and ConTrolphysical securityCustomer data in the cloud needs to be safeguard-ed against physical and logical errors. Data storage needs to be state-of-the-art technology. This implies, among other things, also the requirements for design-ing and operating the computing centres.

access rightsAccess rights also imply potential security risks. Standards and best practices regarding the manage-ment of access rights such as ISO 27001/2 guarantee to safeguard data from unauthorised access. Only au-thorised users get access and only to the data that they require for their respective work.

EncryptingEncrypting protects data from inspection – also by the cloud service provider. Encrypting data guaran-tees a secure communication via public networks and allows for the virtualisation or shared usage of data management systems by several clients.

Secure data transfersStable broadband networks allow data traffic with and within the cloud. The greatest possible data se-curity is provided by point-to-point connections from the computing centre to the customer.

MPLS networks allow the set up of a completely iso-lated connection for each customer. The second op-tion is to encrypt data via tunnelled connections in the public internet (VPN - virtual private networks) or via SSL (Secure Socket Layer).

Security by means of audits and certificationsAudits and certifications by independent surveyors make choosing a cloud provider much simpler. Cer-tifications and audits prove that for instance security measures have not only been implemented but are ac-tually effective, while engaging cloud services. This relieves the customer of costly inspections.

For some company data to be transferred into the cloud, a specific verifiability and certifiability is re-


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quired: In the USA for instance in terms of the Sar-banes-Oxley Act or the Health and Human Services Health Insurance Portability and Accountability Act (HIPAA).

restorabilityIn cloud computing, one single provider delivers a comprehensive part of an ICT service. The user’s dependency on this single provider increases if he uses provider-specific interfaces to control the cloud resources.

Companies need to consider the technical and eco-nomic scale of withdrawing data and applications outsourced into the cloud. Open and standardised in-terfaces reduce the risk.

Sla dESign for qualiTy aSSuranCEQuality is indispensable for applications that are cru-cial to a company. This is reflected in the contractual service level agreements.

minimum rEquirEmEnTSDisclosing the actual supplier of the agreed ICT services: Subcontractors have to be apparent to the user. End-to-end solutions with a holistic approach avoid breaking points. ICT architecture, production facilities and service models of the providers are of strategic, functional and legal relevance and must be disclosed.

Human resources and qualifications at the computing centre of the provider are crucial to the excellence of the ICT service and the ICT security management. Customer-specific security requirements have to be met. Adequate methods for the business continuity management and disaster recovery have to be estab-lished.

quality levelThe demand for high quality of a cloud service is based on risk-cost-analysis. Important processes and

the ICT solutions used for them require a high quality standard. In case of a service crucial to the business, it is advisable to select a service level with a higher price.

Transparency of services and costsTransparency of cloud services becomes only com-plete with transparency of costs. In this, the distribu-tion of the costs of the purchased services to the com-pany units using the services is of interest. Tools for monitoring and reporting and determining the costs increase the satisfaction with the service products. Cost drivers and possible savings can be identified.

lEgal framEworK:ConTrol of SECuriTyLegal implications play a significant role in terms of data protection and liability. The characteristics of cloud computing of not being able to trace at all times which data is located on which server result in new legal issues, especially in terms of complying with the national laws in various countries.

Third parTy daTa SToragE and proCESSingThe relationship between users of ICT services and an ICT provider is governed by country-specific laws. A company provides its data to a third party at its own risk. However, the service provider has to disclose in detail to the contracting party which risks there are and what he does to counter with these risks (duty of loyalty and duty of care).

inTErnaTional daTa proCESSing ouTSidE ThE EuThe German Federal Data Protection Act does not permit to transfer personal data to countries outside of Europe. As a result, it needs to be ascertained that the provider only uses servers located inside the Eu-ropean Union.


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European companies choosing an American provider or a European provider working with servers in the United States have to be aware of how to comply with the EU regulations or when they become subject to a foreign jurisdiction, for instance the USA Patriot Act. (The USA Patriot Act simplifies investigations by the federal authorities in case of a threat of an act of ter-rorism.) Multi-national companies need to understand how local laws and regulations affect the storage and processing of customer and employee data.

govErnmEnT auThoriTy aCCESS righTS in Third CounTriESThere are risks implied by different national legisla-tion, for instance lawful interception or undetected access. In some countries, government authorities may demand the surrender of full backups without prior notice at any time. American cloud providers, for instance, are obliged to provide customer data to government authorities by the USA Patriot Act, even if these are located on European servers.

rEgulaTory framEworK of ThE Cloud CuSTomErCloud customers are subject to legal requirements (data protection, duty of disclosure) and other regu-latory obligations (accounting legislation, as well as obligation to produce proof or due diligence) that need to be preserved also when purchasing ICT serv-ices from the cloud.

induSTry-SpECifiC rESTriCTionSCompanies in the health care industry or the banking and insurance industry are obliged to a very sensi-tive handling of customer data by industry-specific restrictions and regulations (for instance banking confidentiality).

Tax lawTax laws further restrict the options to outsource company data and require giving tax authorities im-mediate access to data if necessary. Moreover, the taxpayer is obliged to inform the tax authorities of the actual location of the data processing systems.

rESTrainTS from ExiSTing ConTraCTS of ThE Cloud CuSTomErCloud agreements need to be compatible to restraints from contracts of cloud clients with customers, sup-pliers and partners, own regulations and other ob-ligations that the user has entered into explicitly or implicitly.

There are various areas that need to be actively con-trolled during the transition to a cloud computing so-lution. Choosing the adequate cloud computing pro-vider is the very first step that has much in common with choosing a long-term trustworthy partner, with whom to jointly discuss and regulate the above men-tioned topics.


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Entering a cloud service model is no less challenging in many aspects than negotiating an outsourcing deal or any other type of long-term partnership. Every-

thing starts with a detailed clarification of the require-ments and ends with choosing a long-term trustwor-thy cloud service provider:

Eleven recommended actions to the management when moving into the Cloud

1. For a start, a full inventory needs to be taken and the business needs defined: Which IT resources are we using today and which IT resources can be considered for a move into the cloud (memory, applications, IT landscapes, business processes)?

2. Technical prerequisites have to be specified: This includes interfaces, data transfers including transfer costs, as well as security concepts.

3. The legal requirements to cloud services need to be determined: Which legal spheres are to be observed: Home market law, European law, international law, industry-specific restraints, market regulations, re-strictions by private business contracts?

4. Additionally, the necessary security levels need to be defined based on the business model and the type of intended cloud service.

5. Furthermore, some criteria for choosing the individually adequate cloud service provider need to be specified.

6. A short list of all possible providers needs to be established with whom then to negotiate the individual demand.

7. A cost-benefit analysis for the outsourcing to a cloud service provider needs to be done, followed by a make-or-buy decision including the intangibles (security, reputation, certifications).

8. A provider needs to be chosen who is able to represent and guarantee an end-to-end relationship.

9. A service level agreement needs to be drafted and negotiated for the adequate service level at a reason-able price in each individual case.

10. An implementation plan needs to be established together with the provider.

11. Cautious and clear-sighted business people and technicians should take care of drafting and codifying an exit strategy in case it becomes necessary to change the provider.


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T-SystemsExpert Contributions and interviews


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introduction

"We are living in a material world", sang Madonna back in 1985. More than 25 years later, the world has changed drastically and the statement from the hit song is no longer true. We have witnessed the birth and growth of the internet, the widespread use of mo-bile phones, the bursting of the internet bubble – and all in all, an increasing digitisation and dynamisation of the society and the working environment.

purChaSing SErviCES via nETworK now wEll-ESTabliShEdMore and more people of all generations are using internet services quite naturally in their private lives. Online trading, electronic books, virtual visits to a museum – the abundance of opportunities seems to know no limits. And everywhere, where things can be entirely virtualised, for instance in the music in-dustry, business models are changing drastically. At T-Systems, this trend is referred to as Dynamic Net-Centric Sourcing.

The society is becoming increasingly virtual. And while we are just coming to terms with listening to music without a CD, devouring books without paper and moving about in public transport without having a conductor stamping our tickets, we are already fac-

ing a new trend: Using a service replaces more and more the actual ownership of an object – or viewed from the IT perspective: Using an ICT service substi-tutes the supervision of a server. dynamiC SErviCES purChaSing SloShES inTo buSinESS lifEThis trend towards a dynamic utilisation of ICT serv-ices is sloshing into the working life in three different ways:

1. Customers expect stronger dynamics and deploy-ment of virtualised services. Traditional media such as the mail-order catalogue that we have been familiar with for decades is replaced by electronic shopping systems. Business processes are digitally mapped, even cross-company – IT is awarded a different sig-nificance. It is now an interlinking medium, driver of innovations and enabler of new technologies.

2. ICT itself, supporting business processes, must be-come more dynamic. Static dimensioning and stock-taking can not live up to the standards of flexibility and cost adaptation. Companies whose ICT is able to shrink in times of crises are on the winning side just like companies whose ICT capacities may grow rap-idly in boom times – IT is used differently.

3. An entire generation of people that does not know Madonna’s "material world" grew up naturally with the opportunities of networking and, being "digital natives", provides an additional impulse to the utili-sation of services and functionalities that are already well-established in private lives for example instant messaging or social networks such as Facebook – the attitude towards IT changes.

Dr. Michael Pauly, Consultant and Cloud Computing Expert at T-Systems International GmbH


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This results in a boomerang effect: ICT providers have stepped forward with the promise of providing more flexibility to their customers by using ICT. With the emergence of cloud computing, users are increas-ingly requiring from providers that their services are just as flexible as the business of the customer.

Cloud CompuTing nEEdS To grow upHowever, the adaptation of cloud computing in a business environment is not a fast-selling item: Cloud computing requires a holistic approach so that no new IT islands come into existence and new services blend in well with indispensable existing systems.

Cloud computing does not ask for its own standards, but rather requires well-established standards to be extended in terms of cloud computing. This provides

the user with a freedom of choice that he expects from a new paradigm.

Cloud computing requires a new type of security. Traditional approaches are lagging far behind the cloud age.

The company needs to be “cloud-ready” to use cloud computing optimally. The transition to standard services out of the cloud gives increasing rise to the question of added value. But also process-related, or-ganisational and cultural aspects are changing, if for instance end users go shopping for cloud services in self-service.


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The Cloud as an answer to Current business Challenges

mulTiplE ChallEngES To iTMarkets are changing erratically, new business ideas have to be implemented swiftly, the requirements for the quality of ICT are constantly increasing, while simultaneously having to reduce costs: People in charge of ICT are facing a multi-level predicament.

This is intensified by three additional factors: The on-going discussion about a "green" ICT consisting of energy-efficient computing centres, the differential between a privately- and business-used ICT and – last but not least – the fact that 60 to 80 percent of the IT budgets are already planned for operating the IT.

from virTualiSaTion To a buSinESS modElSummary: No one can bypass cloud computing in the IT industry anymore. But what does this term signi-fy? Definitions are as manifold as the assessment of the cloud trend: What is the philosopher’s stone to some seems to be an incalculable risk to others.

T-Systems deems cloud computing to be a further de-velopment of virtualisation towards a business model characterised by five central criteria. These include deploying measurable services and facilitating an ac-

cess to these via Internet in self-service. Other char-acteristics are delivering services from intelligent resource pools, as well as a high elasticity resulting from this. Additionally, cloud computing can be char-acterised by the bandwidth of the services that range from software via platforms down to simple infra-structure resources.

Clarifying imporTanT aSpECTS bEforE implEmEnTaTionDespite the cloud services being readily available, im-plementing this new sourcing model should be criti-cally reviewed in terms of binding parameters such as data security, data protection, compliance require-ments, IT governance and legal regulations. Even cloud services have to comply with the established policies of particular jurisdictions or industries.

When taking a closer look, it becomes apparent that the public cloud services via the Internet yield high flexibility and cost reduction, but do not entirely com-ply with legal and company-specific regulations. For instance, financial data or personal data have to be stored within the realms of certain jurisdictions. Additionally, companies also want to protect their patents or strategies.

rEndEring Cloud CompuTing aCCESSiblE for buSinESS uSE wiTh ThE publiC CloudThis does not mean that cloud computing cannot be profitably implemented in a business environment. Companies can use the private cloud together with an experienced ICT service provider to operate a sealed-off cloud only accessible to a particular circle of us-ers. Higher security standards can be implemented in an Intranet compared to the public Internet. Moreo-

Peter Arbitter,Head of Portfolio Management IT Services, T-Systems International GmbH


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ver, any kind of compliance requirements can be implemented and individual provisions for returning data or fallback scenarios planned. Even guarantee-ing certain service levels is possible.

This is particularly interesting in terms of the end-to-end aspect, where the cloud provider does not only deliver the IT service but also bears the responsibility for the network. An application performance manage-ment can thus not only map continuous security but also an optimised total service quality.

advanTagE: EuropEan providErEven the location of the head office or the computing centres and network resources can be crucial for the user in making the decision – because of the implica-tions on legal and liability aspects.

T-Systems with its Dynamic Services has been offer-ing a model of cloud computing from a private cloud since 2004. Dynamic Services adopt cloud criteria and allow secure operation processes crucial to the company as well.

The private cloud approach with its choice of resource location provides the users with utmost security and reliability. More than 100 customers, such as Shell,

Vorwerk, MAN, Linde or Philips, have put their faith in T-Systems’ Dynamic Services so far. Based on this well-established product from the private cloud, T-Systems is constantly expanding its product range – also in cooperation with partners ‒ with additional cloud services.

T-SySTEmS iS a Top Cloud providEr wiTh a holiSTiC poinT of viEwAnalysts are assessing the position of T-Systems in the cloud market for large enterprises to be very good. With its well-established Dynamic Services product, the IT production in computing centres has become more automated and flexible. T-Systems today offers a unique combination of experience from the old and the new ICT world with a holistic point of view on ICT infrastructure, services and business processes.

Based on this experience and advisory skills, T-Systems assists the customer with his move into the cloud. And in doing so, T-Systems assists in dealing with a central challenge when moving into the cloud: Harmoniously integrating legacy systems with cloud applications while the entire services, starting with operation and consulting down to the actual migra-tion, is offered Made in Germany – including the cor-responding legal certainty.


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lÜnEndonK: Cloud computing is the IT trend par excellence. But is it also the cure-all to each and eve-ry need of the business?

arbiTTEr: Cloud computing is indeed a topic that moves the IT world and the business world, and not without good reason. However, a sound judgement when it comes to cloud computing is still of the es-sence. Customers should mirror the options of cloud computing with the necessities of their business mod-els and then reach a decision in what respect using cloud computing may make sense. And above all, in which way.

lÜndEndonK: Costs are an essential factor when it comes to IT decisions. Are costs still widely consid-ered to be an argument for deciding to invest in cloud computing?

arbiTTEr: Yes, and that is of course a legitimate claim on the customer’s side. But the costs’ side is also worth a second look: Instead of just a dully talking about cost reductions, a detailed cost-benefit analyses is the right approach. And in this process, the priorities of the services that cannot be described in terms of money, for instance the company image, should also be voiced.

lÜnEndonK: T-Systems has positioned itself since 2004 as one of the leading cloud providers with its Dynamic Services. Can you rest yourself on these laurels?

arbiTTEr: We are indeed producing 75 percent of our SAP systems and 60 percent of our other standard applications dynamically and are getting top marks from the analysts for our line-up. But we cannot stand still at this point, especially not in this dynamic market environment. We will continue to expand our cloud services portfolio.

lÜnEndonK: What are your plans?

arbiTTEr: We already have a comprehensive range of advisory services in our portfolio with the Cloud Readiness Services today. With this, we have bun-dled our experience in system integration with the acquired know-how in concluded migration projects. Additionally, we have marketed an IaaS product with our Dynamic Services for Infrastructure, to which our customers have responded in a very positive way.

lÜnEndonK: Why have you launched a separate IaaS product?

arbiTTEr: We have been targeting the business-critical environment with our Dynamic Services for Business Applications. This full-range product, among other things, contains an operating system and backup integrated storage. But our customers asked for greater freedom of scope, which is why we are now offering Dynamic Services for Infrastructure as an unmanaged IaaS. We are now mainly targeting non-critical scenarios. This is a good supplement to our existing product range.

Peter Arbitter, Head of PortfolioManagement IT Services,T-Systems InternationalGmbH

dynamic Services


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lÜnEndonK: Which other products are you plan-ning for?

arbiTTEr: We are planning for Dynamic Services for Collaboration together with Microsoft. Simply stated, this is going to be Office 365 out of our Ger-man computing centres. We have already launched some initial customer projects.

lÜnEndonK: So far, you have been strong in dy-namic SAP services, as the corresponding certifica-tion as SAP Cloud Hoster illustrates. What is happen-ing there?

arbiTTEr: We are going to offer completely pre-configured SAP landscapes for specific utilisa-tion scenarios with our Dynamic Services for SAP projects. This product will be available in a matter of minutes.

lÜnEndonK: Which offers do you have on your ra-dar screen on a long-term basis?

arbiTTEr: On a long-term basis, we are going to offer a development toolkit named “Dynamic Serv-ices for Developers” as a cloud service and our IaaS product also in a managed version.

Networks

ProcessingPower, Storage

Database

Middleware

BusinessApplications

AMM

Cloud Readiness Services

Dynamic Servicesfor Business Applications(SAP etc.)

DynamicServices for

Infrastructure

Dynamic Servicesfor Collaboration

tomorrow plannedtoday

DynamicServicesfor SAP®

Projects

Dynamic Servicesfor Developers

DynamicServices for

managedInfrastructure

Illustration 11: Strategic development of T-Systems Cloud Offerings


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Security in the Cloud – Technology is not Sufficient

Challenges often result from asynchronicity. This becomes evident, for instance, in technological progress: New options exist, but not yet any tested adaptation models and secure routines.

It is quite similar in cloud computing: Concept and architecture promise extraordinary opportunities, but integrating technology into the business processes gives rise to many questions – last but not least re-garding security.

Tying in Cloud implEmEnTaTion wiTh riSK managEmEnTIntegrating new technologies needs to be done care-fully. ICT services, even if outsourced, have to be thoroughly tied in with the company’s risk manage-ment. Because even if these services are outsourced, the risks still remain with the user. Furthermore, the integrating process frequently entails technical and legal restrictions that need to be considered when im-plementing the security requirements. Finally, it is the question of who gets what kind of access to data and applications in the cloud, how to organise this access

and how to control the staff and their accesses. A sep-arate security concept as well as identity management is required to define and maintain the digital identities with their roles and rights.

do noT only ThinK in TErmS of TEChnology whErE SECuriTy iS ConCErnEd!Whoever wants to circumnavigate this cliff simply on a technological level is threatend to suffer ship-wreck: Corresponding measures have to be tied in at an organisational level. At this point at the latest does it become obvious that public clouds originally developed for the consumer are only partly suitable to business applications. The providers have adjusted their protective measures (against manipulation, for data security) to the risk level of the consumer. But what those experiences imply as an annoying mishap could mean the end to a company, or will at least re-sult in high financial losses, damage to the reputation and market value or a disclosure of business secrets.

privaTE Cloud aS a SECurE buSinESS SoluTionIn contrast to this, private clouds are designed for business demands. The provider guarantees the nec-essary availability, is able to comply to duties of data storage using secure archiving systems and can addi-tionally offer an end-to-end full-range service. Holis-tically set up ICT providers can also support the users with integrating the process landscape. The private cloud offers plainly more flexibility if specific secu-rity requirements have to be met.

Dr. Eberhard von Faber, Consultant Security Strategy and Executive Consulting, T-Systems International GmbH


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wEll-vErSEd providErS CrEaTE ComprEhEnSivE SECuriTyLegal, regulatory and industry-specific requirements are part of the compliance aspects as well as those that result from contracts with customers, suppliers or partners, own regulations and other obligations. These are for instance data protection requirements, duties of disclosure or accountancy regulations but also duties of archiving and security requirements in payment transaction systems, just to mention a few.

Internationally, there are also some serious differ-ences in terms of data protection.

Quite a number of issues need to be clarified with the provider for a watertight transition into the cloud. So the following applies: The user companies need a well-versed and strong partner to find their way into secure cloud computing. The technological options are usually already available, but integrating them into the business requires time.

In general, selecting a cloud service needs to be linked to risk assessment on the customer’s side. At first, the adequate security level or the still acceptable risks based on the own business activities need to be de-termined.

Aside from availability aspects, issues of confidentiality, integrity, governance and control as well as com-plying with restraints need to be considered. Only then will it be possible to assess the make-or-buy issue, where options, costs and conditions are being compared. The prospective risks need to be compared to the justifiable risks when choosing a sourcing model and the provider and his services.

An optional fallback or exit strategy should be developed in advance, especially when outsourcing critical services into the cloud.

A specific risk results from cloud computing data being processed out-of-house or even outside the country. Therefore, some additional legal provisions need to be considered.

If personal data is processed the German Federal Data Protection Act and the provisions for commissioned-data processing apply, that regulate the relationship between customer and provider. Further restrictions need to be considered if data is processed abroad. The European data protection directive and other laws also severely restrict the choice of country.

So it needs to be explicitly specified between customer and provider how to handle the data to prevent in-fractions of the law from occurring at all.


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According to the IDC IT market experts, there are al-ready around one billion people working at home or on the road worldwide. "The trend continues upwards" states Neelie Kroes, responsible EU commissioner: "The data traffic increases by 60 percent each year."

Cloud CompuTing rEquirES rEliablE nETworKSDue to the growing demand of versatile network serv-ices, the European Union wants to spend 600 million euros in a public-private partnership for the develop-ment on the "Future Internet" until 2016. Half of this comes from the EU, the remainder from companies, research facilities and public facilities. According to the EU, the share of the digital economy of the GDP is going to increase to 5.8 percent until 2014, which will then correspond to a sales volume of about 800 billion euros.

Integrating IT and telecommunication (ICT) will change the working environment and will link it even more to private life. Cloud computing inspires this trend in a sustainable fashion with its ubiquitary available services. But in the euphoria of the cloud it is frequently overlooked what central significance is awarded to the network infrastructures for success-fully using cloud computing. Without the transfer of applications and data to the terminal device, the whole construction quickly falls apart.

inTEgraTing iCT for ThE Cloud uSErSEstablished network providers offer here, especially in the business environment, a considerable added value, because they are able to merge IT and network serv-ices into a full-range ICT service and to implement essential business requirements such as end-to-end SLAs based on intelligent networks. In such full-range scenarios for a holistic cloud approach, compliance re-quirements in terms of security but also of availability and transparency can be implemented much easier.

opTimiSing nETworKS for appliCaTionSThe network is made fit for the increasing demands of cloud computing with sophisticated application performance management. Optimal coordination of the network with the applications provides for data traffic that is up to 50 times faster and, aside from reliable security, also for a better quality of the serv-ice. Telecommunication services and cloud comput-ing – this is not just a discussion on the infrastruc-tural level. Even traditional communication services are changing with cloud computing. Telephony via IP networks is enriched with supplementary services such as instant messaging and expanded to become unified communications. Other services that simplify collaboration are added.

The DAK has already moved its communication with customers, a key functionality, into the net. It is the second largest health insurance company with more than 6 million insured people, 14,000 employees and 900 offices throughout Germany. 44 percent of all customer contacts, that is 70,000 phone calls a day, are conducted over the phone. Long waiting times, lost phone calls, process breaks – the DAK decided to move its telephone system into the net and found a partner in T-Systems who did not only merge the technology but also offered an innovative pricing model. The entire communication service is billed on a per-workplace basis.

This innovative approach casts a sidelight on the fu-ture development of the market: Voice and data serv-ices are becoming tighter integrated and enriched with well-established applications. These full-range packages are provided based on a pay-per-use bill-ing model. This creates a world of dynamic, net-based aspects, of which companies particularly ben-efit when interacting with customers and partners.

all is lost without a network


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From the beginning, the computer science universe and therefore computing has been subject to constant and very rapid changes. Of course, there have been the great milestones on this not always straight path in the world of bits and bytes – be it the transition from "command line computing" (operating the com-puter by typing in operating system commands) the graphical user interface (GUI) or the epochal imple-mentation of the world wide web, open to everybody who wants to research it.

inTErnET pavES ThE way for iT SErviCESOnly the web, accompanied by an enormous expan-sion of worldwide network infrastructures, finally permitted another paradigm shift in computing: From the local use of computers, i.e. storing application

software and data on local computers and networks over to non-local network based (cloud) computing. The time had come for this model of well-established outsourcing of computing tasks to external service providers to also submit to changes – and providers as well as customers will follow this path into cloud computing.

uTiliSing and billing of iT in linE wiTh dEmandToday, companies and organisations can, on short no-tice, book or cancel and utilise IT resources for their systems at any location in line with their demand. The customer only pays for what he actually needs. T-Systems’ Dynamic Services can be seamlessly in-tegrated into any existing ICT landscape. This means

dynamic Cloud Computing: The flexibility of the new iT generation

Illustration 12: History of T-Systems’ Dynamic Data Centers

History of T-Systems dynamic datacenter

First customeron the AppCom

platform

15 customers

90 SAP Hosting customers

All requirementsfor system validation met in accordance with legislation in GER, EU and US

Migration of one of the largest SAP installations in

the world to a dynamic environment (240 TB)

Dynamic Data Center (DDC) Frankfurt

DDC Sao Paulo

DDC Shanghai

DDC Munich

1,000systems

2,000systems

SAP PinnacleAward

Run SAP

Fit for DCS120

customers

SAP CloudHoster

4,000systemsDDC Houston

DDC Magdeburg

DDC Houston

DDC Cyberjaya

DDC Singapore

DDC Frankfurt II

DDC London

DDC Zurich

2007 2010200820062004 2009. . .


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a protection of investment to a very large extent. At T-Systems, experience and reliability in traditional outsourcing team up with the flexibility options of the new IT generation.

CoST-EffiCiEnT rESTruCTuringPioneer, a global leading manufacturer of audio and video devices, has most recently been affected by profound changes, too. Nothing less than a funda-mental restructuring, the reframing of the company, had been decided by Pioneer’s management in 2009.

The decision to stop manufacturing LCD and plasma televisions and to focus more intensely on the remain-ing business units had been sealed at the corporate headquarters in Tokyo and the European headquarters near Antwerp.

This break necessitated numerous transformations in the organisational structure of Pioneer, for instance fundamental changes in the IT infrastructure all around the world. Pioneer employs a staff of more than 32,000 people on five continents and registered a sales revenue of 4.5 billion euros in 2009.

Pioneer Europe implemented a SAP landscape in 2005. It had been designed for the three then exist-ing business units and a revenue of one billion euros, as well as the intention to double the sales revenues. This proved to be impossible to achieve following the discontinued manufacturing in the TV sector and the subsequent decrease in sales revenue of 500 million euros in Europe. The IT infrastructure, scaled to the maximum demands of Pioneer Europe, quickly be-came too large, maintaining and operating the over-dimensioned IT landscape would soon have become an expensive affair for Pioneer. Decreasing sales revenues and investments bound to ICT – a terrible combo.

Outsourcing came into focus as an alternative to an owner-operation. Outsourcing the SAP systems to an external provider was confirmed to be the right step after long research and so it was decided to go

for T-Systems Belgium after intense consultations and analyses. The leading provider of SAP services proved to be the ideal partner for Pioneer in terms of product range and also of a long-term perspective.

dynamiC iT rEduCES invESTmEnT riSKSThe IT experts at T-Systems developed an outsourc-ing concept for Pioneer’s large and sophisticated SAP environment using the portfolio module Dynamic Services for SAP Solutions. Pioneer can now achieve considerable cost reductions with flexible access to IT resources in line with the business demands and the deployment of resources on a pay-per-use basis.

Cloud computing is more and more becoming an in-strument that companies worldwide urgently need to face the challenges of fast moving globalised mar-kets, for instance cost pressure and market pressure. Cloud technologies do not only assist large customers such as Pioneer.

More and more small and medium enterprises (SME) are starting to respond to these challenges with in-novations and cost awareness. Aside from reduced IT budgets, there is also flexibility and an attractive speed speaking for cloud computing that let com-panies respond swiftly to changing demands on the company’s ICT.

rESponding SwifTly wiTh Cloud SErviCESThe speed with which the expansion strategy in the Asian region has been accomplished was also crucial to Brenntag, a global trader of chemicals. The compa-ny operates a global network at more than 400 loca-tions in over 60 countries, employs a staff of around 11,000 people there and offers more than 10,000 products to over 150,000 customers.

Brenntag grew heavily by acquisitions in Asia. Soon they became aware that the number of technologies to be managed grew rapidly on the IT infrastructural level on one hand and on the application level on the other hand. This lead to bottlenecks in the operation of business processes, as well as a high grade of IT


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complexity. To remedy these issues and not to inter-fere with the continuing expansion, the entire ICT platform in the Asian-Pacific region had to be con-solidated and standardised.

rEliablE Cloud SErviCES alSo for appli-CaTionS CruCial To ThE CompanyTo do so, Brenntag relied on T-Systems’ Dynamic Services for SAP combined with an MPLS backbone. T-Systems’ competency to deliver the full-range ICT spectrum in an end-to-end solution was most con-vincing to Brenntag.

Flexible service level agreements from "Office" to "Highly-available Disaster Recovery" were signed to deliver the up-scalable services in nine countries of the region directly from the highly available comput-ing centre in Singapore.

Brenntag now not only requires less ICT services per-sonnel in the region but can also adjust the demand flexibly to current business requirements.

Additionally, new functionalities can be developed faster thanks to the reduced complexity of the stand-ardised platform and reduced management expendi-ture. Another positive "side effect": Fixed expendi-ture have been replaced with transparent costs, purely depending on the actual utilisation, that are even pre-dictable on a long-term basis.

On the software side, customers can meanwhile also use other cloud solutions on the T-Systems platform with Dynamic Services for Business Applications. These include for instance applications for ERP (En-terprise Resource Planning), CRM (Customer Rela-tionship Management), databases, office and web ap-plications.


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ready for the Cloud?

The cloud has been gathering, diffused and is con-tinuing to grow unbridled. Many people think that is a good thing because companies and organisations are urgently looking for means and ways to cope with the complexities of data processing in a more efficient and economic way and to master the rapidly growing amounts of data.

At T-Systems, the well-established cloud computing paradigm is based not only on the topics hosting and deployment of SAP services. Over 100 customers in total are purchasing several different cloud services from T-Systems’ Dynamic Services platform. More-over, the Deutsche Telekom subsidiary has target-orientedly expanded its cloud product range beyond SAP to many other business applications.

an implEmEnTaTion STraTEgy iS indiSpEnSiblERegardless of industry or ICT application: The T-Systems "Cloud Readiness Services" (CRS) assist to find the right access into the cloud. T-Systems sup-ports its customers with CRS to keep track of their company-owned IT and to build an ICT and business architecture of the future with effective and secure cloud computing. The goal: Sustainable cost reduc-tions and enhancing competitiveness.

Cloud Readiness Services is comprised of a portfolio of independent advisory services and system integra-tion solutions with three focal points that seamlessly supplement each other.

• Cloud Readiness Assessment signifies an initial analysis of the current customer situation in the contextual framework of business ICT services ("BIS-Framework") to develop a cloud strategy and an implementation roadmap.

• Cloud Migration & Integration offers solutions for swiftly and reliably migrating and integrating cloud services into the company IT.

• Cloud Optimisation are advisory services and solu-tions for an optimised utilisation of cloud business models.

opTimal TranSformaTion of Company iTCRS allows customers to safely plan, reliably imple-ment and target-orientedly optimise the transforma-tion of their company IT to cloud computing. This mixture of analytical advisory services as well tech-nical solutions is used to migrate the applications to Dynamic Services, T-Systems’ own private cloud platform, and to integrate other adequate cloud plat-forms.

In a Cloud Readiness Assessment, the customer’s current operation of ICT architecture and application landscape is carefully examined. Simulations assist in developing the optimal future operating mode. More-over, business strategy and processes, as well as the ICT service architecture of the customer are included in the assessment, including his specific compliance and security requirements. A strategy and a roadmap to the transformation into the cloud are the results of the Cloud Readiness Assessment.

Dr. Axel Stötera, Offering Manager responsible for Cloud Consulting and Integration Portfolio,T-Systems International GmbH


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moving ThE appliCaTionS inTo ThE Cloud – noT a Trivial affairThe "Cloud Migration & Integration Services" make application landscapes fit for T-Systems’ standardised cloud services platforms. The goal: The customer shall comprehensively profit from manifold benefits of Dynamic Services as soon as possible. These in-clude full scalability, high availability and cost reduc-tions of up to 30 percent in connection with flexible pricing models.

The path: Applications based on state-of-the-art standard software are migrated to a large extend au-tomatically to the Dynamic Services platform by cus-tomising configuration scripts or using software mod-ules called plugs. These include mail services, unified communication (UC) solutions or applications being superimposed on well-established software products by Microsoft or Oracle. Older legacy applications, however, require a customised approach. For this, an industrialised system integration solution, the "Fit-4DCS" (Fit for Dynamic Computing Services) mi-gration package is applied. T-Systems is operating a dedicated factory for migrating applications in a worldwide network.

ConSTanTly opTimiSing ThE appliCaTion landSCapEIn daily business, some additional optimisation op-portunities are brought about to operate a fully or partly "cloudified" IT environment. This is the field of the third CRS product "Cloud Optimisation".

This concerns legacy applications, for instance, that cannot exploit the potential of Dynamic Services technologies efficiently. The operating and servicing expenditures can be reduced through specific mod-ernisation, for instance by using standard software components, while simultaneously increasing per-formance and availability. There is hardly any doubt among the experts that the new cloud computing paradigm will have far-reach-ing influence on the development of company IT over the years to come. And this will also award a deeper significance to the "Cloud Readiness" topic.


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lÜnEndonK: You are offering a full product range of advisory and integration packages for a move into the cloud with the Cloud Readiness Services (CRS) – this sounds like a lot of time and effort. Did not people always say that solutions based on cloud com-puting were quick and cost-efficient to implement?

STÖTEra: There are of course cloud services that are simple to configure and quick and efficient to use. Just think of IaaS or a standard SaaS. It is, however, a little more complex if customers want to use cloud computing as a strategic instrument to reduce IT costs in a sustainable fashion and to increase their business agility. And there certainly are "quickwins" here too.

But analysts and researchers do not speak of a long-term transformation of business IT in this context without good reason. A trusted advisor such as T-Sys-tems who is providing tailor-made solution products is the key to success in this respect.

lÜnEndonK: Could you give an example to illus-trate this?

STÖTEra: Last year, T-Systems started to move core applications for a business unit of one of its largest customers into the cloud based on CRS. The entire project is designed for a total of three years. All to-gether, some 100 partially voluminous legacy ap-plications will be migrated to the Dynamic Services platform. The underlying long-term strategic plan-ning offers some very convincing benefits. And the customer already today benefits from the substantial reductions in terms of costs with cloud computing.

lÜnEndonK: CRS is comprised of extensively standardised advisory services focussing on cloud computing. In what manner are you assisting your customers with their demand for individual consult-ing and additional focal points?

STÖTEra: The force behind the development of "Cloud Readiness Assessment" was the flexible "BIS Assessment" advisory concept which T-Systems has been using for quite some time for transforming proc-esses of ICT architectures with great success. It can be custom-tailored to the demands of the customer and delivers tangible results. For instance, one of our cus-tomers opted for a strategy of application outsourcing and modernisation through a BIS Assessment.

The investments into the subsequent modernisation can be cost-neutrally protected with the cost reduc-tions because of outsourcing. It is quite natural that cloud services are playing a significant role in every BIS Assessment.

interview with dr. axel Stötera

Dr. Axel Stötera, Offering Manager responsible for Cloud Consulting and Integration Portfolio,T-Systems International GmbH


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SCalablE iT rESourCES on dEmand: flExiblE, SECurE and "JuST in TimE"Infrastructure as a Service, i.e. basic IT capacities on demand, are deemed the trailblazer of the cloud con-ception and door opener into the new era of provid-ing and utilising IT. Flexible utilisation, per-pay-use billing and self-service are essential characteristics of this product. At the same time, these characteristics are what is publicly perceived as the core of cloud computing. The individually configurable capacities can be used in manifold scenarios – they are currently highlighting the IT product with the highest degree of industrialisation.

T-SySTEmS iS Expanding iTS rangE of produCT SoluTionS wiTh iaaST-Systems possesses several years of experience in the cloud: The Dynamic Services product family was established back in 2004 and provides the leading product in the market with its "Dynamic Services for SAP® Solutions". But T-Systems does not stop there. The cloud product range is constantly expanded – at first, with other business applications and also with an IaaS product in 2011.

T-Systems is placing its Infrastructure as a Service (IaaS) product with its new Dynamic Services for Infrastructure (DSI) based on a high security private cloud. With DSI, users will have quick access to com-puting capacity and storage, deployed over networks.

Following a pilot phase in winter/spring 2011, this product has been available as a regular productive environment since the end of June 2011. Dozens of customers of the first DSI rollout phase have made use of free-of-charge trial periods and have provided valuable input. But it is not too late for anyone to step in: Interested customers will continue to have the op-portunity to try the product free of charge – the best opportunity to gain an individual insight to dynamic IT resources.

SECurE iaaS from gErman CompuTing CEnTrEST-Systems has a lot to offer, especially in terms of security and compliance. DSI is only operated from certified computing centres at German locations as a private cloud worldwide, including the required se-curity infrastructure such as firewall and VLAN. A secure network is guaranteed through network con-nections via MPLS/IP VPN (with costs).

This allows for full-range SLAs for the deployment of this service, unlike with other IaaS providers. The service contract is concluded according to German legislation (data protection legislation).

Based on a simple pricing model that is predictable and based on the actual usage (DSI services are billed exactly by the hour), this product tends to the strong demands of large-scale enterprises in particular.

infrastructure bit by bit

Dr. Martin Reti, Marketing Alignment Manager Cloud, T-Systems International GmbH


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The virtualised machines in the server pools at the computing centres are available highly secured via the customer intranets. This means that they are a vir-tual part of in-house computing resources and are thus subject to the compliance regulations of the customer. A dedicated rights and role management provides for the T-Systems customers and their employees to be able to access only those areas for which they have been authorised.

aCCESS via a SElf-SErviCE porTalThe virtualised resources can be configured by the customers solely in line with their requirements using a self-service portal: They decide themselves on the operating system, databases, middleware and appli-cations and can adjust the infrastructure in line with the current demand within minutes. This allows them to start additional servers or stop running ones at any time.

a virTual maChinE wiThin fivE minuTESDeploying a virtual machine takes about five minutes. Whoever starts up a pre-configured and stored virtual machine is even quicker than that. The user chooses between 1 and 16 "processing units" (per unit: 10,000 tpmc – transactions per minute type c) via a simple menu navigation, as well as main memory between 512 MB and 64 GB. Additional memory capacity for storing images, snapshots or backups can be booked in batches of one GB additionally.

The DSI product is hence particularly interesting for computationally intensive research projects or simu-lations that can thus be performed without own hard-

ware on short notice. Whoever works on testing and development projects today, wants to set new busi-ness models into motion or just needs to cover peak loads on short notices, has precious little time and a fluctuating demand for IT resources.

in SErviCE for SofTwarE dEvElopErSThe Deutsche Telekom laboratories require a dynam-ic and scalable development and testing environment at work for their entire software engineering process. The company was looking for a flexible, cost-saving and highly secure solution to achieve this.

T-Systems held this solution in stock with its Dy-namic Services for Infrastructure: In the course of the "Cloud for Developers" project, the T-Labs used DSI from a secure T-Systems computing centre. The users are accessing the resource pool via a self-service por-tal and obtain an adequate virtual machine for their tasks within minutes. Marten Schönherr, T-Labs, Re-search and Development, is very satisfied, especially in terms of the security aspects: "Our own developers’ community as well as external co-workers have been integrated into this product, and, being a research and development facility, our own requirements to secu-rity are very high."

Triad: flExiblE uSagE, CoST rEduCTionS, SECuriTy The developers therefore are getting a maximum of flexibility from their IT infrastructure, as well as a maximum of security – without having to invest in it. Bills prove savings in heavily scaling scenarios of at least 60 percent. The reasons for this are the low costs of the individual virtual instances on the one hand and a pay-per-use billing model on the other hand.

DSI is a highly industrialised cloud product that is working already in a holistic fashion, as Kenneth Lindström, Head of IT Infrastructure Solutions at Nokia Siemens Networks (NSN) points out: "While the subject of cloud services is still just dealt with in PowerPoint presentations, Nokia Siemens Networks

The first stage of expansion of the DSI produc-tive environment comes with a capacity of around 900 PUs (about 900,000 tpmc), 2,7 terabyte main memory as well as about 50 terabyte of memory, thus being sufficient for about 900 web servers or 160 systems adequate for SAP testing systems. This capacity has been constantly expanded al-ready in summer/autumn 2011.


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wanted a real practically relevant pilot project. NSN was pleasantly surprised of how quickly T-Systems could provide NSN with access to a private cloud, secure and still very simple to apply for each user."

Thanks to this short-term deployment and adjustment of resources, prospective cloud users can plan and im-plement their project scenarios or business demands practically overnight, whereas only the actually used IT capacities are billed.

Moreover, some additional new cloud service models such as "Platform as a Service" (PaaS) can be imple-mented with the technology provided by T-Systems – an extended IaaS product to which developers’ tools can be added. IaaS thus becomes the basis for all oth-er service models in the cloud.

dynamiC SErviCES for infraSTruCTurE TargET grEEn aSpECTSDynamic Services for Infrastructure reflects sustain-ability, environmental protection and energy saving aspects in the true sense of green ICT.

The pooled resources can be put to efficient use through using state-of-the-art virtualisation technolo-gies and intelligent automated resource management based on standards.

The consequence: Unused resources will be turned off, physical resources will be optimally utilised – at the bottom line a considerable asset for the environment.


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Public administrations in Minnesota, Los Angeles and companies such as Jaguar that rely on Micro-soft’s or Google’s office packages, as well as the con-tinuing success of technological enterprises such as Salesforce that are growing by 40 percent each year by providing standard software via the internet – all this illustrates vividly that companies are on the move into the cloud. Implementing SaaS is only an initial step here.

Platform services (PaaS) are considerably significant to operating applications, while flexible infrastruc-tural resources (IaaS) can be deployed on a broad scale and create multi-faceted opportunities for re-finement. But utilising the full-range applications in the Software as a Service mode (SaaS) in particular is changing the IT landscape in a most obvious fashion. Traditional licence fees are replaced with pay-per-use billing models. The user is customarily paying a monthly lump sum for using the application. This al-lows for swift deployment of the application, as well as adjusting the software costs with fluctuating num-bers of users.

CuSTomErS ExpECT a broad Cloud produCT rangECloud providers in large enterprises and groups of affiliate companies need to offer a broad range of services for different types of customers. T-Systems is focussing on traditional business applications such as Office and SAP with its SaaS product in an initial step. The product range is constantly expanded through cooperations.

offiCE funCTionaliTy in linE wiTh dEmandIn cooperation with Microsoft, T-Systems is offer-ing an Office suite in a SaaS model. This is based

on Office 365 and includes the services Exchange, Lync and Sharepoint. These services are hosted at a German computing centre at T-Systems. This way a reliable legal framework is created for this product’s customers that is defined by the German data protec-tion legislation. With this approach, complications resulting from the US Patriot Act are eliminated from the beginning.

Initial implementing projects with customers have been launched with international large-scale enter-prises. Standard procedures for integrating collabora-tion services are developed with Fit for DCS (Cloud Readiness Services) to create a consistent seamless system landscape. Integrative abilities are particu-larly important when hybrid cloud scenarios are to be implemented.

Sap landSCapES aT ThE puSh of buTTonT-Systems is expanding its product range with Dy-namic Services for SAP® Projects in the SAP environ-ment, too. Contrary to Dynamic Services for SAP® Solutions, the SAP® Projects services do not target a continuous operation of SAP applications.

A full-range SAP landscape is set up with this new product via the net within minutes. The user may se-lect from dozens of pre-configured combinations of different SAP modules for particular standard scenar-ios. This allows swift deployment of the landscape, for instance for testing, training or development pur-poses, without having to buy licences or hardware and without the processes of installation and set up. The services are billed on a pay-per-use basis.

no Standing Still ‒ Expanding the Cloud product range


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Analysts predict a SaaS share of one third of the glo-bal software market for 2014. Software users expect respective pay-as-you-use models and an adequate range of products from their providers. But these can only come into existence when service providers and software providers cooperate. So, to the customer, the future will belong to the billing model with a distribu-tion of risks on a joint basis.

The paradigm shift towards cloud computing intensi-fies the necessity to engage in partnership ecosystems to create added value for prospective customers.

The high degree of acceptance of well-established cloud services creates a new demand situation that service providers such as T-Systems will have to face. Additionally, partnership networks offer the op-portunity to generate new business. Companies that have previously not been known for being IT service providers could present themselves as cloud service providers by offering their industry or process com-petency through the cloud – for instance energy pro-viders or advisory services providers in the broader sense.

Smaller enterprises will be able to reach an extended range of prospective customers by using the platforms and infrastructures of larger (IaaS) providers, while on the other hand customers will have a greater free-dom of choice due to larger software product ranges. This may make an intelligent sourcing of services from well-established XaaS providers necessary or sensible. It will be the task of the infrastructure or platform provider who is building the ecosystem to make sure that the service product range items can be easily integrated.

This creates a greater added value for the customer in the end and, as a result, stronger customer retention. The strength of the ecosystem will also decide which provider will prevail in cloud computing.

ThrEE STEpS TowardS parTnErShipST-Systems assesses prospective partners in a three-step process. In the first step, the business model is assessed, as well as the degree to which the company has gained a foothold in the cloud market. The com-plementarity of the partner’s product range to T-Sys-tems product range and the added value for T-Systems customers is included in an initial assessment as well.

In a second step, the prospective partners will be subjected to a Cloud Readiness Assessment that as-sesses the business model as well as the technologi-cal abilities.

The third step then marks the start of the partnership based on a royalty business model with legally bind-ing contracts. In this process, no costs are incurred for the service provider. If service revenues are generated with the software, then these will be billed on a pay-as-you-use model; the partner receives a correspond-ing service fee. The future will belong to this billing model with a joint distribution of risks.

partnerships Strengthen the Cloud Engagement

Partner ecosystems based on cloud computing increase the value contribution for enterprise cus-tomers tremendously because the end-to-end re-sponsibilities are an integral part of it.


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Company Profile

T-Systems

T-Systems is the corporate customer division of Deutsche Telekom. With a global infrastructure of data centres and networks at its disposal, the company runs information and communication technology (ICT) systems for multinational corporations and public sector institutions. T-Systems maintains offices in more than 20 countries and has the global delivery capacity to serve companies across all sectors of trade and industry – from the au-tomotive industry to telecommunications, the financial sector, retail, service industries, the media, energy and the manufacturing industry, as well as public administration and the healthcare sector. Some 47,600 employees worldwide apply their expertise and ICT know-how to deliver top-quality service. T-Systems showed a turnover of 9.1 billion euros for the 2010 financial year. When designing its range of services, T-Systems takes the megatrends in society and technology into account which have a profound impact and will pose new challenges for the economy, for society and business. It is im-perative to have the ICT ready for the resulting demands on companies and institutions.

Therefore the solutions offered by T-Systems are based on five Core Beliefs with ICT as a driving force: Dynamic Net-Centric Sourcing, Collaboration, Mobile Enterprise, Security & Governance, Sustainability & Corporate Responsibility.

Dynamic Net-Centric Sourcing addresses questions related to cloud computing. Instead of investing into their own ICT infrastructure and software, companies increasingly use resources from the network as needed. Col-laboration aims at flexible communication and cooperation in modern companies. Intelligent ICT solutions enable teams to work safely and effectively within the company, with suppliers, partners and clients.

Mobile Enterprise is the support network for employees who access essential company resources like CRM sys-tems while out and about. This means that mobile applications and a central administration have to be provided. These business matters are flanked by the cross-sectional aspects of Security & Governance as well as Sustain-ability & Corporate Responsibility, since espionage causes losses amounting to at least 20 billion euros per year for the German economy alone, and rising prices for raw materials and energy require companies to take sustain-able decisions.


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Company Profile

lünendonk

Lünendonk GmbH is an information and communications company based in Kaufbeuren, Germany, which pro-vides fact-finding and consulting services to companies in the IT, consulting and service provider sectors any-where in Europe. The Lünendonk Competence3 Concept offers independent one-stop market research, market analysis and market consulting. Since 1983 the Market Analysis Department has handled the Lünendonk® Lists and Studies, which are seen as a market barometer, as well as the entire market monitoring programme.

Lünendonk® Studies are part of Strategic Data Research (SDR) within the service portfolio of Lünendonk GmbH. In combination with the services contained in the portfolio elements Strategic Roadmap Requirements (SRR) and Strategic Transformation Services (STS), Lünendonk is able to support its clients from start to finish: from devel-oping the strategic questions to obtaining and analysing the necessary information right to the point of activating the results in the operational day-to-day business.

ConTaCTLünendonk GmbH – Gesellschaft für Information und KommunikationThomas LünendonkAddress: Ringweg 23, 87600 Kaufbeuren, GermanyTelephone: +49 (0) 83 41 - 9 66 36 - 0 Telefax: +49 (0) 83 41 - 9 66 36 - 66E-mail: [email protected]: www.luenendonk.de

imprinTPublisher:Lünendonk GmbHRingweg 2387600 Kaufbeuren, GermanyTelephon: +49 8341 96 636-0Telefax: +49 8341 96 636-66E-mail: [email protected]: http://www.luenendonk.de

Author: Thomas Lünendonk, Lünendonk GmbH

Design:K16 GmbH, St. Annenufer 5, 20457 HamburgCopyright © 2011 Lünendonk GmbH, Kaufbeuren, GermanyAll rights reserved

Basics, Fields of Application and Prospects of Cloud Computing

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