Cloud :

A disruptive technology that CEO should use to transform their business (and their IT department)

Cloud :

What cloud really means ?

You are already using the cloud in your everyday life:

Communicate Store

Back-up and synchronise across devices

Access data and/or Process transactions

Cloud: definition

Cloud computing can be defined as a scalable and flexible shared computing solution in which third party suppliers use virtualization(1) technologies to create and distribute computing resources to customer on demand via the internet browser

©Alex Krikos – Disruptive Technology Business Models in Cloud Computing – MIT 2010

Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction

NIST (National Institute of Standards and Technology – US Department of Commerce) Special Publication 800-145

(1) Server virtualization is the idea of taking a physical server and, with the help of virtualization software, partitioning the server, or dividing it up, so that it appears as several "virtual servers," each of which can run their own copy of an operating system.

About.com

Cloud: typologyInfrastructure as a service (IAAS) Platform as a service (PAAS) Software as a service (SAAS)

Definition

Providing basic server, processing or network services.

The customer control the operating system and applications on this

infrastructure

Platform provided to develop and deploy applications.

The customer control the application but not the hardware and the

operating system.

Utilisation of end-user application run on the cloud.

The customer manage only limited configuration settings and interface

with other applications.

Use Case

StorageBack-up and recovery plan

Web-hostingBig data projects requiring large capacity to store and compute

Short-term peak workload: tests, project resources,…

Development and run of end user application both stand-alone or

applications that enhance an existing SAAS offering

Utilisation of turn-key solutions reducing drastically the time to

implement and the operation and maintenance work.

Providers

Amazon, Rackspace, Dell, IBM,…Telco providers,…

Microsoft Azure, Google Apps platform, Amazon,…

Salesforces.com, Google Apps, Office365.

SAAS version of Oracle or SAP software

In addition, a new category of services appears: BPAAS: Business Process As A Services: this cover the provision of BPO services (payroll, suppliers invoices, payment,…) based on a cloud technology.

Key advantages of cloud technologies

Drastically reduce implementation

time

Cloud can significantly reduce the implementation time for large ERP, CRM or Big Data Projects. These projects can be focused on key business issues and can be freed from most technical IT

issues. Large roll-out time can be measured in weeks instead of months.

Simplify

Scalability and Reliability

Respond immediately to a significant increase in the work load: website experiencing a significant increase in traffic, IT projects requiring large temporary server need, ..

Embedded back-up and disaster recovery process.

By relying on cloud, CEO can significantly simplify their organisation and their projects: simplified IT architecture, reduced infrastructure and maintenance tasks, small project team can conduct

large global projects.

Cloud services enable access wherever you are on a 24 hours a day basis, 365 days per year while reducing the need for large operation team. This will facilitate standardisation of process,

economies of scale and collaboration on a global basis.

Cloud SAAS offer a permanent seamless migration to the latest available version. This will reduce the burden on IT teams to constantly run large migration projects. This will also have a positive

impact on staff motivation and retention.

Accessibility across the globe and on

multi-device

Provide staff with the most up to

date IT tools

Cloud :

How it should help CEO transform their business ?

How the cloud should help CEO transform their business ?

« The widespread introduction on Mclean’s new system (the freight container) saw port costs plummet over the next few decades.

If freight had been cheap before 1960, afterwards it became practically free – in the unlovely jargon of economic “frictionless”. Freed of burdensome tariffs and shipping costs, good began circulating more freely around the globe”. (2)

(1) Source: Alex Krikos, Disruptive Technology Business Models in Cloud Computing (MIT 2010)

(2) Source: (1) and William Bernstein, In a splendid exhange; how trade changed the world (Grove/Atlantic 2008)

The impact of Cloud on IT services and business strategy will be similar to the impact that containers had on freight and international trade. (1)

How the cloud should help CEO transform their business ?

A new entrepreneurial

spirit

Increase speed and agility

Time to implement IT projects is significantly reduced

SimplifyOrganisation and back-office can be

significantly simplified and will focus more on application and business related projects vs.

infrastructure and maintenance

Enhance collaboration

among staff using the latest tools available

Increase innovationCloud reduce the need for large

upfront investment and therefore facilitate the launch of small

innovative projects

Deliver globallyCloud services are available globally and will reduce the need for large

roll-out projects

Reduce costsCapex and Fixed costs are

significantly reduced

Total costs are reduced with a high variable portion

Cloud :

How it should help CEO transform their IT department ?

Reduce and transform your IT costs

Projects

Operate and maintain

Cloud can reduce the overall IT spend and increase the share dedicated to projects vs. operation and maintenance.

Share of total IT spend

30/40%

60/70%

50/60%

40/50%

IT costs without the use of cloud solutions

IT costs with a mix of cloud and legacy solutions

Where will the saving come from?

0

10

20

30

Year 1 Year 2 Year 3 Year 4 … Year 5 to 8

Cloud based SAAS pricing

IT providers offer generous discount on list price on hardware or licences. But:

- Project costs to implement are high,

- Maintenance costs (5 to 15% of list price per year) are expensive.

- After a 4 to 8 year period IT providers discontinue their maintenance and support on their hardware or software putting customers under strong pressure to upgrade to new version.

0

20

40

60

80

100

120

Year 1 Year 2 Year 3 Year 4 … Year 5 to 8

Traditional IT pricing model (hardware or software)

Discounted price List price

Cloud based SAAS price will vary depending on usage with no up-front purchase price and no upgrade price.

Implementation costs will be significantly lower.

Upgrades to new versions are provided as part of the SAAS cost.

What will be the other benefits for the IT function?

Disaster Recovery / Back Up / Compliance

Mid-size companies often have poor disaster recovery process. These require

significant CAPEX. Cloud can simplify these tasks, reduce drastically their costs and increase the efficiency of these plans.

Reduce the risk of the use of non-authorised cloud

solutionsWhen no group wide cloud solutions are

provided, staff use they own private solutions (Dropbox, Skype,…). This creates

a high risk of a security breach.

Drastically reduce implementation time of new

projectsSome tasks such as the provisioning of a

new server are reduced from days to minutes. The overall workload of new

project is reduced and the maintenance work is drastically reduced

Migration workThe workload of migrating hardware or

software on a regular basis to newer versions is drastically reduced.

SkillsEnable the IT team to focus on core

business related skills. Cloud reduce the need for specialist infrastructure or

maintenance skills

Cloud :

A successful cloud project

Prerequisite for a successful cloud project

Assessment of the provider

- A financial and technical assessment of the provider must be made- What is the pricing strategy of the provider: do you have some assurance on how current pricing will evolve

over the next few years?

Confidentiality, Legal and Security

issues

Interoperability

- Using the cloud should not result in creating new IT silos: the interoperability of the cloud offer is critical as the Cloud will not be suitable for all systems (old legacy system)

- The long term product strategy and the depth of the offer of the provider should be assessed: is your provider using open standard ? Does it support the full spectrum of cloud offers (IAAS, PAAS, SAAS)?...

- Compliance to laws on private or sensitive data have to be assessed.- Legal and Security issues have to be assessed bearing in mind that they also exits with internal IT structure and that Cloud providers might be better equipped to mitigate these risks.

- The capacity to change from one cloud provider to another should be assessed and tested. - Vendors lock-in must be avoided.

- Managing a cloud environment requires specific skills that your company might not currently have.- IT teams are often reluctant to embrace cloud technologies. They often see this has a threat to their power,

jobs and budget: CEO and CFO should therefore be involved in supporting a cloud strategy

Reversibility

IT Team

Data storage

Web hosting Development and Testing

Where to start ?

Project difficulty

DIFFICULT SIMPLE

Benefit from the transfer

HIGH

LOW

Email and collaborative

tools

Legacy systems (old ERP,…)

Back-up and Disaster Recovery

New ERP projects

Existing data-warehouse

Bertrand MaesCFO

fr.linkedin.com/in/bertrandmaes

bertrandmaes@gmail.com