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IDC TECHNOLOGY SPOTLIGHT

Hybrid Cloud Powers Enterprise Success in the Digital Economy

July 2018

Sponsored by Intel

Written by Rajnish Arora, Vice President, Enterprise Computing, IDC Asia/Pacific

Introduction

Digital transformation (DX) is driving winds of change that are disrupting traditional business models that companies have leveraged for decades for success and competitive advantage. Businesses across industries are innovating by embracing new technology paradigms that enable them to not only drive operational excellence, bring to market new products and services at an accelerated pace, create personalized experiences at scale for customers, and lower barriers to entry across untapped market segments. IDC Asia/Pacific’s C-Suite Barometer research in 2017 showed that 44% of the CxO respondents across the region indicated that Information Transformation is pivotal to their DX strategy, second only to Operational Model Transformation which was indicated by 49% of the respondents. In addition, 49% of respondents indicated that Information Transformation is having a profound impact on their profit which was tied for the number 1 position with Operating Model Transformation. CIOs are increasingly challenged because businesses are demanding new IT capabilities which require infrastructure transformation and innovation that will enable them to run many of the “born in the cloud” modern applications and microservices that drive new business outcomes. However, IT needs to continue delivering highly RAS feature-rich infrastructure that helps run core business-critical applications that are the heartbeat of any modern enterprise. Business-critical applications increasingly need to run 24 x 7 in an online transaction processing (OLTP) mode versus running in batch processing mode.

Applications are not only requiring greater levels of infrastructure agility, flexibility and scale but also capabilities to deliver lower latencies levels as well the ability to support a larger number of connected users and transactions that will continue to increase by an order of magnitude in the next 5 to10 years. CIOs are increasingly grappling with flat to declining budgets while having to focus their limited human and financial resources towards applications and systems that drive customer and partner insights and engagement. Line of business is clearly seeking to drive value from the company’s digital assets, stronger competitive differentiation, and sustainable competitive advantage in the digital economy.

CIOs are increasingly finding that public cloud enables them to address many of the IT infrastructure challenges and issues that saddle the legacy IT environment. Digital strategy demands an extremely agile and flexible IT infrastructure which is both highly optimized and

Organizations looking to succeed in the digital economy will need to invest in modernizing and bulletproofing their IT infrastructure to sustain the business innovation engine.

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IDC TECHNOLOGY SPOTLIGHT Hybrid Cloud Powers Enterprise Success in the Digital Economy

rationalized in terms of cost and workload. However, agility and flexibility that public cloud provides comes with some loss of control and data privacy concerns in a shared environment.

To address these very concerns, many CIOs have embarked on an aggressive IT infrastructure modernization strategy which includes investing in automation, provisioning and management software tools and capabilities for private cloud buildout. IT organizations are increasingly seeking a common cloud management platform that enables them to seamlessly move applications and data across private and public cloud resources, depending upon rapidly changing business goals and service-level agreements (SLAs).

This IDC Technology Spotlight reaffirms the viewpoint that organizations seeking to succeed in their DX journey will need to invest in modernizing and bulletproofing their IT infrastructure to sustain the business innovation engine. IDC expects most large commercial and public sector organizations in the Asia/Pacific to invest in modernizing their on-premises IT infrastructure to run myriad of traditional business-critical applications or systems of records that require even higher levels of performance supporting a larger number of internal and external users. In addition, traditional applications are requiring lowering latency levels to support faster decision making or drive business outcomes in real time. Private cloud buildout is the cornerstone of many IT infrastructure modernization projects across the region.

IDC feels that organizations are increasingly driving conversations with technology partners that pivot around workload and cost optimization issues and challenges, infrastructure agility and flexibility concerns, and the use of open technologies.

DX Driving Competitive Differentiation and Advantage

IDC defines DX as the continuous process by which enterprises drive disruptive changes in their external ecosystem leveraging digital competencies. This innovative process leads to the creation of new business models that blend digital and physical products and services. In addition, DX drives consistent business and customer experiences across various engagement channels such as online, mobile and physical, while improving operational effectiveness and organizational performance.

IDC believes that businesses will need to digitally transform themselves to become more agile, flexible and cost-optimized to compete and succeed in a highly unpredictable world over the next several decades. Continuous innovation and disruption are the cornerstones of any successful DX journey in the longer term. Businesses are innovating across multiple vectors to recreate sustainable competitive advantage in this era of the digital economy. Organizations are not only transforming their business processes but entire business models which they have successfully leveraged for sustainable competitive advantage for decades, across vertical industries, opines IDC. In 2018, 70% of corporate IT spending in Asia/Pacific will be driven by 3rd Platform products, technologies and applications, which is consistent in India as well. IDC’s research shows that 65% of enterprise strategies in Asia/Pacific excluding Japan will be driven by a significant DX component.

Continuous innovation and disruption

are the cornerstones of any successful

DX journey in the longer term.

Businesses are innovating across

multiple vectors to recreate

sustainable competitive advantage in

this era of the digital economy.

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Businesses are not only transforming the way they create, build and bring new products and services to market, but also changing the way they deliver the value of these products and services for customers. The key to success in the midst of market disruption lies in becoming a digital native enterprise – one able to scale its operations and innovate at a pace that is an order of magnitude greater than traditional businesses. It is driven by a customer-centric and empowered workforce that embraces risk taking as it seeks to continuously innovate. Technology and data are its lifeblood, fueling more efficient operations, new revenue streams and customer loyalty (Figure 1).

FIGURE 1: Business Success in the Midst of Digital Disruption

Source: IDC, 2018

For instance, General Electric (GE), a 126-year-old industrial conglomerate with businesses spanning across transportation, medical imaging and power generation systems is quickly redefining itself as a solution, services and analytics company under CEO Jeff Immelt. GE’s Predix analytics software will generate almost US$6 billion in revenues in 2016, with the goal to top US$10 billion by the end of the decade. GE is certainly not intending to become the largest independent analytics solution company, but Predix’s capabilities will enable the company to help deliver better business outcomes for its customers, whether it is healthcare providers that need better diagnostics using data collected from CT and MRI scanners, or helping airlines improve the operational efficiency and reliability of aircraft engines. Robert Bosch has installed more than 200,000 sensors on its boilers deployed across France which will enable the company to analyze the operational efficiency of the boilers as well as do predictive maintenance by replacing parts before actual failure which will dramatically reduce uptime and reliability.

The key to success in the midst of

market disruption lies in becoming a

digital native enterprise – one able to

scale its operations and innovate at a

pace that is an order of magnitude

greater than traditional businesses.

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State Bank of India is investing in building its digital strategy which includes building an integrated digital banking and shopping platform. The bank is embarking on an aggressive digital strategy stemming from key technology shifts such as mobile commerce, ewallet and peer-to-peer payments solutions which are disrupting the traditional retail banking model. The bank’s large physical branch and ATM infrastructure – spanning the length and breadth of the country – has been a significant competitive advantage but is becoming less relevant in the digital economy era. Businesses across industries in India are being disrupted and are no longer immune to rapid changes being ushered in by new technologies such as big data/analytics, artificial intelligence (AI) and machine learning (ML) powered applications, cognitive systems and the use of mobile and social to create new experiences for customers. The transformation of businesses is taking place across multiple vectors, which is having a profound impact on the underpinning IT infrastructure that powers applications and services required to meet the demands and expectations of customers and partners.

• Innovation – Businesses are innovating at an accelerated pace, not only in terms of how they design and build products and services, but also how they are helping to enhance their customers’ experiences and achieve better business outcomes. Companies such as GE Medical and Hitachi are using BDA solutions and capabilities that enable them to analyze data coming off their medical imaging systems such as CT and MRI scanners. The analysis is helping hospitals and healthcare providers with more accurate diagnostics information about patients’ problems which in turn helps them deliver better healthcare solutions. Utility companies that have moved to smart grid and smart metering technology are capturing information every few seconds from the network instead of capturing information every fortnight or on a monthly basis. They are leveraging this humongous amount of information to reduce energy losses which can be as high as 25% in certain cases, apart from offering services such as differential pricing based on time and consumption. In addition, they are delivering value-added services which help their industrial customers and consumers better manage their utility expenses – as much as 30%–35% of their revenues from completely new sources.

• Agility – Time to market or speed to market has become critical for businesses across many industries to compete and succeed. The window of opportunity is rapidly shrinking as economic boom cycles are rapidly shrinking from 3 to 5 years to less than 2 years. The concept of brand loyalty is also being redefined by next-generation consumers – millennials and Generation Z who need instant gratification – which means that if the business cannot reach its customers before its competitors then they have probably lost them forever. eCommerce sellers and retailers are using deep learning capabilities and predictive analytics to build extremely deep profiles about their customers, which helps them quickly spot fast-changing buying patterns as well as improve their ability to cross-sell

Time to market or speed to market

has become critical for businesses

across many industries to compete

and succeed. The window of

opportunity is rapidly shrinking as

economic boom cycles are rapidly

shrinking from 3 to 5 years to less

than 2 years.

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products. CIOs are being challenged because these new capabilities require the underpinning IT infrastructure to be able to process large amounts of structured and unstructured information in order to deliver meaningful insights to the business in real time or almost near-real time.

• Experiential Engagement – IDC’s research shows that more than 60% of business-to-business and 80% of business-to-consumer businesses will open their digital front door which means they will overhaul their “digital front door” to support up to 10,000 times as many customers, partners and supplier touchpoints. The underpinning IT infrastructure demand created by the delivery of these experiences will surpass all other corporate demand combined. Waterfall approaches will be unacceptable in rapid experimentation. There is also an expectation to plug into hundreds and thousands of external microservices related to customer experience (CX), creating a substantial integration challenge. Many companies have transformed themselves by developing deeper insights around customer preferences and buying preferences. Nike is one example, transforming itself into a luxury lifestyle brand from one selling sportswear. Nike is leveraging predictive analytics to quickly innovate and deliver a myriad of choices to the customer, while reducing the time it takes to bring to market new products by 50%.

• Reliability – With most businesses operating 24 x 7, there is little time for planned or unplanned downtime of IT infrastructure and applications running on top of it. Business is increasingly demanding CIOs to deliver higher levels of availability. Unplanned outages can have a significant impact on the company’s financial performance, not only in terms of revenue loss but also its bottom line. In addition, outages can damage a company’s brand credibility and have legal and fiduciary implications. Reliability of the IT infrastructure and the continuous availability of infrastructure services is becoming pivotal to a business’ sustenance. The push toward an agile application development environment also requires the ability to quickly provision bare metal/physical, virtual or container resources.

• Resilience – The economic volatility is forcing businesses to develop capabilities that enable them to quickly scale up or down their resources – financial, capital, human as well as technology – to align them closely with the state of the business. CFOs are increasingly exploring flexible sourcing models such as public cloud for IT, which enables them to right source based on their current technology requirements versus making significant investments upfront, in anticipation of business expected to come in the medium to long term.

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Technology Paradigms Create Demand for Modernizing IT Infrastructure

Traditional approaches to sourcing, deploying and managing IT infrastructure are becoming less relevant to meet the needs of the business. The rapidly changing mix of modern web-scale applications that are developed using 3rd Platform technologies, such as BDA, mobile, AI, machine learning, cognitive and social, and designed to run in the cloud (private or public), are changing the IT buyer and technology partner conversation. Scale and performance remain critical; however, flexibility, agility and business value that applications deliver are becoming even more paramount when technology buyers are discussing the right mix between traditional, private and public cloud infrastructure platforms and services with their technology partners.

IDC believes that the following are some of the technology shifts that have significantly changed the technology buyer-supplier conversation over the past several years when it comes to making the right infrastructure platform choices and decisions:

• Cloud-native Applications – Cloud-native applications are built using stateless application components and scale extremely well horizontally. The applications and data layer do not assume the infrastructure resilience. Applications are built using an agile development model based on continuous development, integration and deployment model. IDC’s Worldwide Server Tracker Workload, Q4 2017 release shows that worldwide cloud-native applications will account for 29.7% of the total server spending in 2022 compared with 19.6% in 2017, versus 21.2% in 2017 increasing to 28.1% by 2022 in India.

• Containers – Containers are lightweight OS-level virtualizations on top of the server host OS that allow users to run applications and its dependencies in a resource-isolated environment. All the necessary components, such as application code, configurations, run-time frameworks and other dependencies which are required to run an application, are packaged as a single image in the container. The single image can be re-used that helps shorten the cycle between testing, qualification and deployment in production. Environmental consistency, operational efficiency, developer productivity, and individual container level version control are some of the key catalysts for container adoption.

Containers became popular with hyperscale service providers because hundreds of thousands of application images can be consistently deployed in an extremely agile manner. However, adoption has been slow in the enterprise segment due to lack of hardened services to support business-critical requirements. IDC forecasts that containers will become mainstream in the Asia/Pacific including India as customers modernize and transform their legacy IT into private cloud over the next 2 to 3 years.

• AI Applications – IDC’s research shows that 40% of DX initiatives across Asia/Pacific will be using AI services by 2019. In 2021, IDC is estimating that 75% of commercial enterprise applications will be using AI technology. AI will become a mainstream technology with 50% of consumers interacting with customer support bots and more than 50% of new industrial robots will leverage AI technology.

Scale and performance remain

critical; however, flexibility, agility

and business value that applications

deliver are becoming even more

paramount…

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• In-memory Computing – In-memory computing is the architectural approach in which information is stored in the computer system’s main memory (RAM) rather than in relational databases hosted on storage arrays. The time and compute capacity required to analyze large amounts of data in an in-memory computing environment is much less due to significant reduction in I/O traffic generated when fetching data from storage arrays. Enterprises across financial services, telecommunications, manufacturing (FMCG), retail and web commerce, as well as federal agencies across Asia/Pacific are investing in in-memory computing technology to analyze internal and external data in real time to recognize unique patterns. Businesses are leveraging in-memory computing capability to drive business outcomes such as bringing to market new products and services, detecting fraud, analyzing unique buying behavior patterns at scale, and reducing the risk of investment in new initiatives.

In-memory computing will enable businesses to run OLTP applications at much higher performance levels, both in terms of the number of transactions growing by an order of magnitude of up to 10X–30X in the next 5 years and at lower latency levels. In addition, businesses are able to process mission-critical batch processing applications within minutes and seconds that previously required man-days or even many man-hours using traditional infrastructure. For many of the next-generation predictive analytics applications powered by AI and cognitive technologies in the digital economy, in-memory computing infrastructure will be a key imperative, opines IDC.

• NoSQL Database – A non-relational and largely distributed database system, NoSQL database enables rapid, ad hoc organization and analysis of extremely high-volume disparate data types. Compared to traditional relational databases in which data is stored in a structured fashion in either row or columnar format or a combination of the two, NoSQL databases work with a flexible and schema-less mode. These databases scale extremely well horizontally using distributed compute architectures. A key strategic driver for implementing a NoSQL database environment is the ability to mine the data that is being collected at breakneck speed which will help ultimately support real-time decision making by line of business. MongoDB, ContexDB, MarkLogic and Datastax are some of the NoSQL databases which are powering many modern web-scale applications.

• Hadoop – Hadoop enables large sets of structured and unstructured data to be analyzed using clusters of x86 servers, which scale extremely well from a single server to thousands of systems in a fault-tolerant environment. At the core is an extremely scalable distributed file system called Hadoop Distributed File System (HDFS) and MapReduce processing engine for very large-scale data processing. Hadoop does not require a structured data schema and is able to mine information from multiple sources at high speed, which makes it an extremely appealing data analytics engine for predictive and cognitive workloads.

Businesses are leveraging in-

memory computing capability to

drive business outcomes such as

bringing to market new products

and services, detecting fraud,

analyzing unique buying behavior

patterns at scale, and reducing the

risk of investment in new initiatives.

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• Apache Spark – This open source cluster computing framework has an in-memory distributed compute engine with speed analysis on large-scale data up to 100X faster than comparable technologies. If Hadoop assists in the collection and cleansing of limitless data for further analysis, Spark processes the very same data through a memory-optimized data processing engine. DX compels organizations to systematically collect, process and analyze data which will make Hadoop and Spark integral components for any next-generation predictive analytics engine.

DX Underpinning Hybrid Cloud Adoption

Organizations that have embarked or are embarking on their multi-year DX journey are realizing that investing in private and public cloud resources is no longer an optional choice for them, but an imperative for their success. Cloud as a delivery engine enables CIOs to address many of the issues that saddle the traditional approaches to sourcing, deploying and delivering infrastructure resources and services to support business goals and SLAs. With businesses requiring a lot more agility, flexibility and resilience from IT, public cloud emerged a compelling alternative to building, managing and maintaining an on-premises infrastructure.

The following are some of the key reasons underpinning strong adoption of public cloud as a delivery platform in the enterprise segment:

• Service and Resource Sourcing Becomes Key Skill – There is a strong realization among CIOs and their teams that business and management expectations are changing rapidly, driven by myriad of new-age applications required to drive new and differentiated outcomes. In addition, businesses are defining new service delivery standards and business SLAs for internal IT based on what public cloud providers can deliver. IDC believes that most CIOs across Asia/Pacific, even in emerging markets such as India, are undergoing a sea change in their key role which is all about delivering the most relevant technology solutions, in the shortest possible time and in a highly cost-optimized manner. The CIO’s role is no longer about running large monolithic IT shops because size, scale and complexity are becoming a bane in the new order and an impediment for continuous business innovation led expansion.

• Chasm Widens between LoB and IT Service Model – IDC believes that the chasm between business expectations and IT delivery capabilities continues to widen, especially those organizations that are embarking on their digital journey. The chasm between business and IT continues to widen, stemming from rapidly increasing expectations from the variety and type of services, as well as the velocity at which they are expected. Many IT organizations are still structured around expertise silos, wherein applications were designed, built and deployed based on “waterfall approaches” for highest levels of stability and reliability. However, in the new paradigm, modern applications are designed in an iterative and agile manner to accelerate time to market. Cloud supports the agile development model by giving IT the flexibility to quickly provision the right resources for development, testing, staging and rolling out production applications.

Cloud as a delivery engine enables

CIOs to address many of the issues

that saddle the traditional

approaches to sourcing, deploying

and delivering infrastructure

resources and services to support

business goals and SLAs.

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• IT Spend Versus Business Performance – Businesses are increasingly rightsizing their spend and investment on capital, human and even IT resources based on current requirements versus investing in technology for potential business expansion and growth in the next 2 to 3 years. There is a clear disconnect in many organizations between buyers of technology, the operators and the end consumer which has made cloud a viable sourcing option. It is exactly for this reason that outcome-driven services are in vogue because they match value and cost.

• Asset Ownership Less Relevant – Asset ownership is becoming increasingly less relevant, especially as more CFOs move from a CAPEX to OPEX model given the variability and volatility in the external business and market conditions.

• Customer Experience is a Key Imperative – Traditionally IT was expected to deliver applications and service capabilities that line of business will then use for business process optimization and automation to drive competitive advantage. However, increasingly business is expecting IT to have a skin in the game and help them drive new business outcomes which is completely re-defining the role and KPIs of many CIOs and their teams. IT is longer a business function but technology is intrinsically embedded across every function in an organization.

• Engineered and Optimized for Scale and Speed – Many midsize enterprises with limited IT resources are finding it challenging to compete against the innovation capabilities of the large hyperscale cloud service providers. Even in the case of large enterprises, when budget is a constraint and time to market is a key driver, customers are finding that public cloud becomes a compelling choice to quickly drive the desired outcomes. IDC believes that unless CIOs and their teams start thinking and functioning like the public cloud providers, it will be extremely challenging for them to compete against the wherewithal of public cloud providers. CIOs will need to quickly start addressing the issues, challenges and concerns that business leaders have with legacy IT that will enable them to stay relevant.

IDC’s research shows that public cloud spending will continue to grow, and many organizations deploying many of the modern born in the cloud workloads on public cloud, apart from migrating many of the traditional applications. However, public cloud comes with several key challenges and concerns which will encourage many CIOs to strike a balance between spending on private versus public cloud resources. The following are some of the concerns and hidden pitfalls of trying to move everything into the public cloud:

• Costs Escalate with Scale – Cost barriers to public cloud are extremely low which enable businesses to start small and quickly scale up. However, many organizations are realizing that as they build scale for many of the applications with predictable loads in terms of the number of connected users or the number of transactions being processed, the cost benefits of moving to public cloud can quickly dissipate. Private cloud deployment enables the business to make upfront investment in infrastructure that they can then monetize and amortize over a period that goes beyond the typical 3-year period for writing off assets in the balance sheet.

• Performance and Latency Sensitive Applications – Large organizations typically run many business-critical applications that are extremely performance oriented and sensitive to latency issues that may impact the desired performance expectations in a shared public cloud environment. Applications in the financial services industry such

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as high-speed trading and electronic payment processing will continue to be run in an on-premises traditional or private cloud environment. There are other applications such as telecom billing and mediation applications (BSS), utilities energy management systems or even shop-floor automation systems for a high-tech manufacturing company will continue to run in an on-premises cloud for highest levels of availability, reliability and performance metrics.

• Data Privacy and Security Concerns – Healthcare, insurance and government are some of the vertical industries in which data security and privacy is of prime concern. IDC believes that organizations in such industries may choose to host certain applications in an on-premises private cloud for greater degree of control and security. The potential cost benefits of hosting highly sensitive data in a public cloud environment are far outweighed by potential financial and legal cost implications stemming from any form of data breach and application outage.

Private Versus Public Cloud – The Debate Rages On

IDC strongly believes that there are no easy and simple answers to take a strong unilateral stand in favor of private cloud over public cloud, or vice-versa. Every CIO needs to make the right choice between private and public in the context of their organization’s long-term. In addition, CIOs will need to continue investing in best-of-breed traditional systems for many of the core business-critical applications while they accelerate their cloud journey. Many of the traditional mission-critical applications and relational databases require the highest levels of scalability, reliability and security features.

Reliability is a shifting goal post with business expectations in terms of availability continuing to increase. If six 9s was something that defined highest level of availability 5 years ago, it is increasingly becoming a standard for most mainstream business applications.

IDC’s supply side market trackers and tech buyer research across Asia/Pacific including India show that businesses are doubling down their investments across both public as well as private cloud. Customer choice to move workloads on to private versus public cloud or even retaining them on traditional platforms and systems is primarily driven by performance, scale, agility, flexibility and cost-optimization. In addition, change management is a key bottleneck when it comes to moving some of the traditional applications to a cloud platform, given the strong dependencies on other applications. Furthermore, many traditional applications are intrinsically weaved into business processes, which means that migration to cloud may entail business process re-engineering and transformation.

IDC’s 2018 CloudView survey results show that private cloud adoption further accelerated in 2018 compared to 2016 and 2017, both across Asia/Pacific as well as in India. In 2018, 81.6% of the respondents in India indicated that they are embracing private cloud, compared with 66% in 2016 and 78.3% in 2017. Interestingly, public cloud adoption increased significantly in India with 78% of respondents indicating that they are using some form of public cloud services in the 2018 CloudView survey compared with only 55.8% of the respondents in the 2017 survey. CloudView research shows that a majority of the respondents who have migrated

Reliability is a shifting goal post

with business expectations in terms

of availability continuing to

increase. If six 9s was something

that defined highest level of

availability 5 years ago, it is

increasingly becoming a standard

for most mainstream business

applications.

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to public cloud in India are being driven by those embracing public cloud for software as a service (SaaS). In the 2018 survey, 68% of the respondents who indicated using public cloud services were using Software-as-a-Service (SaaS), followed by 43.2% using Platform-as-a-Service (PaaS) and only 40.4% indicated that they are using bare-metal Infrastructure-as-a-Service (IaaS).

FIGURE 2: Hybrid Cloud Adoption is Accelerating in India

N=254

Source: IDC CloudView Survey, 2018

According to IDC’s Worldwide Quarterly Cloud IT Infrastructure Tracker, 34.7% of the spending on servers in India was driven by public cloud providers in 2017. The mix of spending on public cloud was slightly more than double the spending on private cloud. Private cloud accounted for 16.1% of the total spending on servers in India in 2017. Almost half the total spending on servers in India in 2017 was driven by on-premises traditional IT or a small percentage of it on hosted IT where customers are deploying servers in an external datacenter or off-premises infrastructure.

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FIGURE 3: Cloud Infra Spending: Market Reality Versus Hype

Source: IDC Asia/Pacific Cloud IT Infrastructure Tracker, Q1 2018, June 2018

Server spending by public cloud providers surged in 2017 in India because the top 3 public cloud providers – AWS, Microsoft and Google – were in a race with each other to rapidly expand their local datacenter footprint in India. IDC believes that each of the public cloud providers has embarked on an aggressive strategy to gain a large share of the rapidly expanding public cloud services market, as well as build strong brand preference. Although the top 3 cloud providers will continue to invest in expanding their infrastructure in India over the next 5 years, IDC expects that the 17% exceptionally strong growth recorded in 2016 will temper down.

Public cloud spending is not almost entirely fueled by enterprise, commercial and public sector organizations. IDC believes that there is a fairly large share of spending on public cloud infrastructure which is intended to support the strong growth in the consumer driven web-services.

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Despite the massive marketing blitzkrieg and hype created by public cloud providers around their overarching dominance, IDC strongly believes that enterprises, midsize commercial and public sector customers will continue to invest in on-premises infrastructure for expansion and modernization. With almost major cloud providers partnering with various server and storage OEM partners to sell their cloud stack solutions for on-premises deployment, there is a growing realization that most customers in India will balance their current spending and future investments across on-premises infrastructure (traditional as well as private) cloud and public cloud.

Public Cloud Providers Throw the Gauntlet into the Private Cloud Market

Public cloud providers have finally come to the realization that enterprises with significant investments in on-premises IT will not completely move lock, stock, and barrel into the public cloud for a variety of reasons, at least in the foreseeable future. Microsoft Azure, AWS and Google – the three main public cloud providers in the Asia/Pacific – are enabling customers to build a tight connect between on- and off-premises private cloud and public cloud resources for seamlessly moving applications and data as business and technology requirements change over a period of time.

AWS offers infrastructure services that support applications running in a hybrid cloud environment through its virtual private network service using Virtual Private Cloud that can manage network failover between availability zones, as well as enabling customers to use their internal IP addresses to setup a private network in AWS. In addition, AWS offers Active Directory services using its AWS Identity and Access management offering.

VMware's vCloud Hybrid Service (vCHS) offers specialized software tools which provide its existing enterprise customers with an identical and seamless experience across internal and external infrastructure cloud resources. VMWare vSphere and vCloud Suite customers can use vCloud connector to move VMs between private and public cloud resources. The key benefit is that they can continue to use vCenter management console for provisioning, orchestrating and managing VMs and the underlying data between private and public cloud.

Microsoft has partnered with key server and storage OEM vendors to offer Azure Stack to help customers build a hybrid cloud environment using Azure services using their own datacenter resources. Applications which have been designed, optimized and validated to run in MS Azure can be delivered using a customer’s own IT infrastructure with the same set of management and automation tools across both clouds. This, while enjoying the highest levels of security and compliance requirements necessary to retain the workloads and data in a private environment.

IDC feels that each of these hybrid cloud approaches enables customers to start small and scale up their environment as they achieve the right resiliency, reliability, and optimal performance. Security and compliance are key requirements for many customers and are the major “speed bumps” in their hybrid journey. Each of the hybrid cloud offerings from major cloud providers enables customers to start in a controlled fashion, having complete control and visibility of their applications and associated data. IDC strongly believes that each of these approaches from major public cloud providers will help customers in India accelerate the

Despite the massive marketing

blitzkrieg and hype created by

public cloud providers around their

overarching dominance, IDC

strongly believes that enterprises,

midsize commercial and public

sector customers will continue to

invest in on-premises infrastructure

for expansion and modernization.

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modernization of their traditional on-premises infrastructure into private cloud, putting them in good stead to eventually embrace and build hybrid IT.

Intel® Xeon® Scalable Processors Power Infrastructure Modernization for DX Era

Intel launched the Intel® Xeon® Scalable family of processors in July 2017. The new generation of server processors from Intel are broadly segmented into four distinct family of products designed and targeted to address unique customer requirements. The Platinum family of processors provide maximum or extreme performance; Gold provides a balance of performance, memory and I/O; Silver is energy efficiency; and Bronze is entry-level performance. Customers increasingly require infrastructure that is optimized differently around three key characteristics – performance, security and power efficiency, depending upon the workload profile and deployment scenario.

Intel® Xeon® Scalable Processors represent a significant announcement that will help customers transform, modernize and bulletproof their infrastructure to successfully run traditional business critical as well as modern web-scale workloads and applications.

The following are some of the key innovations that Intel is bringing to market with its Xeon® Scalable Processor Family:

• 4–28 cores: Each core supports two threads. Although Intel's prior generation of Xeon processors used a ring architecture that operated on a bus that cycled signals through various resources (such as caches, DRAM, and PCI Express [PCIe] channels), the Intel® Xeon® Scalable Platform processors are based on a mesh architecture that allows every core to access and share the Level 3 cache, memory channels, and PCIe channels. The Platinum, Gold, Silver, and Bronze families of processors primarily vary based on clock speed, cache size, and maximum power envelope.

• Three levels of cache: Each core has its own Level 1 cache, with 64K for instructions and 32K for data, and each core has its own Level 2 cache, with 512K for instruction and data. Each CPU complex shares an 8MB Level 3 cache across four cores.

• Six DDR4 DRAM channels per socket: There are 2 DIMMs per channel, up to 1.5TB of DDR4-2666 DRAM per socket. Each processor can support RDIMMs, LR-DIMMs, and 3DS LRDIMMs.

• Expanded I/O: There are 48 lanes of PCI Express version 3 per socket, updated

Ethernet controllers, and Intel QuickAssist, which enables crypto acceleration

• New Intel Advanced Vector Extensions 512 (AVX-512): Special x86 instructions are designed to improve performance for certain computational tasks, including modeling and simulation, data analytics, machine learning, and data compression. The previous Xeon generation supported 256 vector extensions. Intel AVX-512 is a set of new instructions that can accelerate performance for workloads and usages such as scientific simulations, financial analytics, AI/deep learning, 3D modeling and analysis, image and audio/video processing, cryptography and data compression.

With ultra-wide 512-bit vector operations capabilities, Intel AVX-512 can handle customers’ most demanding computational tasks. Applications can pack 32 double precision and 64 single precision floating point operations per second per clock cycle

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within the 512-bit vectors, as well as eight 64-bit and sixteen 32-bit integers, with up to two 512-bit fused-multiply add (FMA) units, thus doubling the width of data registers, doubling the number of registers, and, doubling the width of FMA units, compared to Intel Advanced Vector Extensions 2.0 (Intel AVX2).

• 3 Optional integrated Omni-Path Architecture (OPA) Host Fabric Interface and FPGA accelerator: Select versions of the new Xeon® processors integrate OPA and FPGA into the same package to eliminate the need for a discrete host fabric or FPGA card

Intel® Xeon® Scalable processors provide CIOs seeking to modernize their datacenters with a rich suite of platform feature innovations that deliver quantum jump in performance for many of the workloads, which are powering the DX journey of customers across the Asia/Pacific. A few of the key modern workloads that are likely to benefit from the rich feature set of Intel’s latest processor family include:

• Artificial Intelligence – IDC predicts that 40% of DX initiatives will be powered by AI services and 75% of commercial applications will use AI technology by 2021. CIOs are increasingly looking to modernize their datacenter infrastructure that will support these paradigm shifts around AI technology. Intel® Xeon® Scalable processor-based systems can deliver 2X higher deep learning training and inference, as compared to the previous generation systems. In combination with software optimizations, the new Intel® Xeon® Scalable processor-based systems will deliver a manifold increase in deep learning performance gains, compared to a 3-year-old non-optimized server system when it comes to speeding delivery of AI-fueled services.

• High-Performance Computing – High-performance computing workloads will get significant performance boost from Intel® AVX-512 technology and integrated Intel Omni-Path Architecture ports, which deliver improved compute capability, I/O flexibility and memory bandwidth to accelerate discovery and innovation.

• Software-defined Storage – The new processors when combined with Intel’s Optane SSDs and Storage Performance Development Kit can deliver differentiated performance, both in terms of higher number of IOPS as well as lowering latency levels, versus out-of-the box NVMe SSD solutions.

• Network Transformation – The transition from the current 3G/4G technologies to the much more distributed hierarchical 5G network 5G networks implies a greater degree of network processing distributed across the infrastructure, including the network edge, compared with today's more centralized approach of bringing traffic back into their central offices (COs). Telecom service providers are transforming their existing networks and COs at a massive scale, leveraging SDN and NFV technologies which will help provide flexibility and dynamic agility required for managing and orchestrating network traffic.

IDC predicts that 40% of DX

initiatives will be powered by AI

services and 75% of commercial

applications will use AI technology

by 2021. CIOs are increasingly

looking to modernize their

datacenter infrastructure that will

support these paradigm shifts

around AI technology.

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IDC believes that the SDN and NFV based approach underscores a marked shift towards software capabilities and less reliance on purpose-built, ASIC-driven, hardware-oriented approaches as has been the case in the telecom segment in the past. Vendors of programmable communications processors, SoC ASSPs as well as standalone MPUs such as the x86 architecture, can engage with telecom operators and work closely with them to define the next generation of network architectures that benefit from greater flexibility, agility and scalability required to quickly provision and deliver network services.

• Trusted Infrastructure – Trusted Infrastructure relies on hardware-based security built directly into the foundation of the platform, Intel® Xeon® Scalable processors. It is part of a suite of solutions that includes: Intel® Cloud Integrity Technology (Intel® CIT), Intel® Trusted Execution Technology (Intel® TXT) with One-Touch Activation, and Intel® Platform Trust Technology (Intel® PTT).1

IDC Viewpoint – Infrastructure Platform Choice is not a Zero-Sum Game

Organizations will continue to make informed choices about infrastructure platforms and deployment models that will help them best meet or exceed the rapidly changing and ever-increasing needs and demands being placed by the business, opines IDC. IDC believes that there is a strong business case for small to midsized IT shops to move completely their IT infrastructure over to public cloud. It will be extremely challenging and difficult for small to midsized IT shops to continue innovating while managing their on-premises infrastructure in a highly cost-optimized and secure manner. Most enterprise customers will choose a mix of private versus public cloud resources, as well as traditional systems based on value that the application or the workload creates for the business and the priority and strategic importance in helping the business transform. In Figure 4, IDC’s prescriptive framework helps CIOs and technology decision makers determine which workloads go on to which platforms and deployment models.

IDC believes that eventually organizations will make platform choices based on two key metrics: business value and business priority. Every organization will uniquely decide the value and priority criteria for workloads and applications based on their long-term strategy and short- to medium-term tactical game plan. In addition, management’s appetite for investing in technology paradigms based on a CAPEX versus OPEX financial model will be pivotal in driving the raging conversation between private and public cloud. Agility, flexibility and resiliency will be some of the key drivers and catalysts underpinning their technology decisions, against the backdrop of a more business outcome-based approach to IT.

IDC believes that eventually

organizations will make platform

choices based on two key metrics:

business value and business

priority. Every organization will

uniquely decide the value and

priority criteria for workloads and

applications based on their long-

term strategy and short- to

medium-term tactical game plan.

https://www.intel.in/content/www/in/en/products/processors/xeon/scalable.html

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FIGURE 4: Applications Drive Infrastructure Platform Decisions

Source: IDC, 2018

From a technology standpoint, the following should be the key considerations for all technology buyers and decision makers when it comes to making an informed choice between workloads to run on private versus public cloud and traditional architectures and platforms.

• Performance – Application performance will continue to be one of the primary criteria influencing platform choices because performance impacts the end-customer’s experience. Moreover, application performance increasingly has to be evaluated against the business outcomes that an organization is expecting to achieve. With the number of connected users, both external and internal, as well as the number of transactions being processed continue to increase at an exponential rate, infrastructure choices become critical to ensure innovation engine is sustained which will power the organization’s digital journey.

• Agility – With time to market or speed to market becoming absolutely paramount for an organization to compete and succeed on an ongoing basis, IT needs to make the right platform choices that enable them to quickly build new applications and services or even drive continuous innovation on existing ones. Agile development or dynamic DevOps is becoming the key underpinning for many modern applications that are helping organizations drive new customer experiences. CIOs no longer have the luxury of taking 6 to 8 weeks to provision new infrastructure resources. If private cloud has to make sense, it should enable development teams to provision resources with the same speed and agility that they can do off public cloud resources.

• Resiliency – Business is entering a new era of extreme volatility and unpredictability which is placing tremendous pressure on IT to be able to accurately rightsize the infrastructure and thus optimize the ensuing medium to long-term technology investments. Gone are the days when the CIOs could build scale, investing in datacenter infrastructure, based on potential business in the next 2–3 years. Many modern web-scale applications such as digital marketing or ecommerce, support business scenarios that require infrastructure resources at certain periods of time that

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are an order of magnitude more than what can be defined as average IT infrastructure resource utilization. Public cloud is an extremely compelling option to address such scenarios, opines IDC.

• Security, Trust and Compliance – With data becoming the new currency in the digital era, there is tremendous pressure on organizations to not only protect their digital assets but also ensure trusted, secure and federated access to users. In addition, governments across Asia/Pacific are formulating trust and compliance requirements around customer information which places significant responsibility on the CIO and their teams to ensure that data is appropriately secured. Security and compliance requirements will drive many of the decisions to determine the best infrastructure platform to address data privacy concerns. For certain business-critical applications that host extremely sensitive data, either from a fiduciary standpoint or competitive advantage, organizations will need to make the choice of building and investing in private cloud or continuing hosting it on best-of-breed traditional systems that have highest levels of security features at the system level itself.

• Cost-optimization – CIOs need to carefully evaluate the cost of various infrastructure and deployment options, not just in terms of initial upfront cost but also OPEX cost over a period. Cost evaluations should also take the implications of provisioning additional infrastructure resources to address unplanned peak workload requirements into account. IDC strongly believes that organizations should not move lock, stock and barrel to public cloud, without doing the necessary due diligence around initial and ongoing cost, as well as the cost involved in moving back to an on-premises environment should that be a consideration on the minds of the CxOs in the organization.

IDC believes there are no right or wrong answers and ways of placing workloads across the myriad infrastructure and platform options available today. Every organization and its CIO will make informed choices of retaining some of the workloads on traditional architectures and platforms, while modernizing and migrating a larger mix to the private and public cloud. In addition, almost all, if not all new workloads, especially those modern born in the cloud, are starting their journey in the public or private cloud. One thing is certain that organizations will need to embark on an aggressive strategy to modernize and bullet-proof their IT infrastructure, which will support both traditional mission-critical applications as well as many of the modern applications that will be a key underpinning for delivering new and differentiated outcomes.

Infrastructure transformation will play a profound role in helping organizations successfully embark and build sustainable competitive advantage in the digital economy. Organizations should seek technology partners that will not only help modernize their infrastructure, but also offer a complete stack of hardware and software building blocks for private cloud. In addition, they will need strong partnerships with major public cloud providers to help organizations realize their vision of a hybrid IT world in which applications and data can seamlessly move across delivery platforms in a highly cost-optimized manner.

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1 Disclaimers

• Intel® technologies features and benefits depend on system configuration and may require enabled hardware, software or service activation. Performance varies depending on system configuration. No computer system can be absolutely secure. Check with your system manufacturer or retailer or learn more at https://www.intel.in.

• Results have been estimated based on internal Intel analysis and are provided for informational purposes only. Any difference in system hardware or software design or configuration may affect actual performance.

• Software and workloads used in performance tests may have been optimized for performance only on Intel® microprocessors. Performance tests, such as SYSmark* and MobileMark*, are measured using specific computer systems, components, software, operations and functions. Any change to any of those factors may cause the results to vary. You should consult other information and performance tests to assist you in fully evaluating your contemplated purchases, including the performance of that product when

combined with other products. For more complete information visit: http://www.intel.in/benchmarks. The benchmark results may need to be revised as additional testing is conducted. The results depend on the specific platform configurations and workloads utilized in

the testing, and may not be applicable to any particular user's components, computer system or workloads. The results are not necessarily representative of other benchmarks and other benchmark results may show greater or lesser impact from mitigations.

• Intel, Intel Xeon, Intel Core, Intel Atom, Intel Xeon Phi, Intel Optane, 3D XPoint, and the Intel logo are trademarks of Intel Corporation in the U.S. and/or other countries.

• Other names and brands may be claimed as the property of others.

https://www.intel.in/content/www/in/en/homepage.html

https://www.intel.in/content/www/in/en/benchmarks/benchmark.html

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