Digital Fuel & Forrester Cloud Computing IT Financial Management
Transcript of Digital Fuel & Forrester Cloud Computing IT Financial Management
IT Cloud Financial Management
March 2010
Yisrael DanczigerCEO & President
Digital Fuel
Thomas MendelVice President &
Research Director
Forrester
Business Service Management And IT Financial Management In The Cloud
Dr. Thomas Mendel, Ph.D.
Vice President & Research Director
Forrester Research
March 2010
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Agenda
• Understanding the cloud
• It’s time for IT financial management
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Cloud ClarityCloud Clarity
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What IS cloud computing? Give me three steps
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Source: Wipro
Understanding vendors cloud portfolios
Cloud computing is:
A standardized IT capability (services, software, or infrastructure) delivered via Internet technologies in a pay-per-use, self-service way.*
*September 9, 2009, “Best Practices: Infrastructure-As-A-Service (IaaS)” Forrester report
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Cloud service management
Step1: What comes as a service?
INFRASTRUCTURE
MIDDLEWARE
APPLICATIONS
Typical “cloud computing resources” New resources
INFORMATION
PROCESSES
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Cloud service management
Step2: What is the level of sharing?L
evel o
f sh
ari
ng
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Infrastructure Middleware Applications
Privatecloud@ in-house data center
Virtual privatecloud@ dedicated provider
Publiccloud@ global provider
Business
value
Level of
sharing
Forrester’s full cloud taxonomy
Businessprocesses
PURECLOUD
MARKET
EXTENDEDCLOUD
MARKETInfrastructurevirtualization
tools
BPvirtualization
tools
Dynamicinfrastructure
services
Integration-as-a-service
IaaS SaaSPaaS BPaaS
Dynamicapps
services
DynamicBPO
services
Middlewarevirtualization
tools
Appsvirtualization
tools
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Infrastructure Middleware Applications Business
value
Forrester’s cloud taxonomyand example vendors
Businessprocesses
Level of sharing
Force.comRackspace (soon)Google AppEngine
Cordys
Salesforce CRMOracle-
CRM On DemandGoogle Apps+Voice
On Demand Process as a S.
MeetingexpectationsPayPal
Amazon EC2Rackspace
Infrastructurevirtualization
tools
BPvirtualization
tools
Dynamicinfrastructure
services
Integration-as-a-service
IaaS SaaSPaaS
Dynamicapps
services
DynamicBPO
services
Middlewarevirtualization
tools
Appsvirtualization
tools
BPaaS
Boomi.comHubspan
Oracle E-BusinessSuite On Demand
On demand portionof BPO, e.g., Wipro
Cable&WirelessSIS, T-Systems
Oracle Fusion Middlew.vSphere-Spring
Cisco
Fujitsu FlexFramefor SAP
FluidOps.comITMS Vendors
Tools used in Shared Service Center
BPM
Oracle VM andAssembly Builder*
VMwareIBM Cloudburst
*Oracle Assembly Builder is part of the ongoing Oracle Fusion Middleware 11g roll-out
PURECLOUD
MARKET
EXTENDEDCLOUD
MARKETPrivatecloud@ in-house data center
Virtual privatecloud@ dedicated provider
Publiccloud@ global provider
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Infrastructure Middleware Applications
Privatecloud
@ in-house data center
Virtual privatecloud
@ dedicated provider
Publiccloud
@ global provider
Business
value
Forrester’s cloud taxonomymapping to vendors’ portfolios
Businessprocesses
*Emerging service provider, rarely existing today.
Level of sharing
Infrastructurevirtualization
tools
BPvirtualization
tools
Dynamicinfrastructure
services
Integration-as-a-service
IaaS SaaSPaaS
Dynamicapps
services
DynamicBPO
services
Middlewarevirtualization
tools
Appsvirtualization
tools
BPaaS
$6b $4.8b $9b
$2.1b$150m$2.1b
$120m $9.0b $100m
$3.3b
$460m
$35m
PURECLOUD
MARKET
EXTENDEDCLOUD
MARKET
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Infrastructure Middleware Applications Business
value
Level of
sharing
End user perspective of offerings
Businessprocesses
PURECLOUD
MARKET
EXTENDEDCLOUD
MARKETInfrastructureVirtualization
Tools
BPVirtualizatio
nTools
DynamicInfrastructur
eServices
Integration-as-a-
Service
IaaS SaaSPaaS BPaaS
DynamicApps
Services
DynamicBPO
Services
MiddlewareVirtualization
Tools
AppsVirtualization
Tools
IT Tools(licensed)
In-house process
chargeing
IT Service(pay per use)
Human Centric
Business Service Markets(pay per
use)
Privatecloud
@ in-house data center
Virtual privatecloud
@ dedicated provider
Publiccloud
@ global provider
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Service cost and performance aggregation becomes a core skill
LoB LoB LoB
IT organization
Internal service aggregation External service aggregation
SP 1 SP 2 SP 3
SP 4 SP 5 SP 6
Client companyService provider ecosystem
• Cost and performance management across end-to-end service delivery
• Coordinated across all stakeholders and constituencies, internal and external
• Requirements capture and new project initiation
• Balanced responsibility between in-house IT and external service providers
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Defining IT financial management
Forrester defines IT financial management as:
The discipline of planning, budgeting, monitoring, and
controlling the use of a firm's total IT budget
(operations/maintenance and new projects/investments).
IT financial management software provides an application that allows companies to support and automate the process of IT financial management. This is done by applying general cost accounting principles to IT.
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IT financial management – Why now?
IT users and IT departments are experiencing an accelerating need for IT financial management because:
• Cloud & virtualization are driving additional IT adoption at a rapid rate
• Business units are demanding IT cost visibility and predictability
• Profit pressures demand businesses to manage IT cost vs. business performance tradeoffs and alternatives like never before
• IT process maturity (e.g. ITIL) has moved many IT organizations from a chaotic to a stable state so they are now better prepared to add IT financial discipline
• Data availability and accuracy (through discovery) has improved greatly
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Key capabilities of IT financial management software
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Emerging trends: IT financial management software
• The IT financial management software market will exceed $500 million annually in 2012.
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IT financial management adoption s-curve
IT budgetreview
Full integration
Activity Based
Costing (ABC)
Processmodels
Service models
Basic product definitions/
Service catalogs
Basic chargeback
Cost models
Understand IT costs Manage IT costs Manage IT demand
Ad-hoc BU cost visibility
projects
Ongoing corporate cost visibility
Costbenchmarks
Pricebenchmarks
Advanced chargeback
Basic integration
Service based costing
ChangeUser
behaviour
Maturity Of IT
Financial Management
Implementations
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IT financial management – Best practices
• Create a governance structure and revamp your organization
• Deploy service definitions/service catalogs
• Develop cost and service models
• Optimize delivery through right sourcing
• Invoice customers to rationalize behaviors
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Thank you
Dr. Thomas Mendel, Ph.D.
http://blogs.forrester.com/vendor_strategy/
www.forrester.com
IT Cloud Financial Management
March 2010
Yisrael DanczigerCEO & President
Digital Fuel
Managing the Cost of Cloud Services
Where to Start: Build A Cost Model
Application Cloud Infrastructure Cloud Process Cloud
Cost Model Enables You to know:
• Total Service Cost and Usage
• Usage based cost allocation
• Underlying Cost Drivers cost
• Unit Cost
• Calculate key metrics:
– Cost per headcount
– Cost per revenue
– Capex vs Opex
– Many others
Managing the Cost of Cloud ServicesWhat can you do with this knowledge?
IT Cloud Cost Model
Proactive Cloud Cost Control
• Cost trends at all levels
• Track Actual vs Budget
• Automatic observations
• Root cause
• What if planning
Business Unit Cost Visibility and Predictability
• Detailed periodic invoices
– Cost and Usage
• Forecast
• Reforecast
• Compare to alternatives
• What if analysis
Cost Value Optimization
• Mix and match, Compare between:– Vendor and internal options– Different service offerings– Delivery models– Cost models
• Meter usage, Identify:– Virtualization candidates– Consolidation candidates– Standardization options– Defer upgrade potentials– End-of-life potentials
Usage based IT Cost Allocation
• Allocations must be:– Automated– Consistent and ongoing– Justifiable– Audit trail– Standard
• Pass in “flying colors”:– Tax audits– Stock market reporting– Regulator audits
Accurately Plan and Budget – Based on Facts
• Actual Historically based unit cost:– For every IT service and cost driver
• Actual Historically based usage:– Accurate demand forecasting
• Demand & driver information– Sophisticated calculator
– Applies the historically calculatedcosts, drivers, and usage
– Automatically produce a proposed IT budget
Summary
IT Cost management enables realization of cloud benefits!
Thank you!
Questions? Please enter your questions in the Q&A panel
located in the lower right section of your screen
Presented by:
Thomas Mendel Yisrael Dancziger
Forrester Digital Fuel [email protected] [email protected]