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Judith PurvesCFO – IBM Canada7 June 2012

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Cloud is a style of computing. IBM’s view is consistent with the industry view which focuses on five key characteristics that Cloud computing delivers.

Cloud computing is a new consumption and delivery model inspired by consumer Internet services that exhibits the following key characteristics:

1. On-demand self-service 2. Ubiquitous network access3. Location independent resource

pooling4. Rapid elasticity5. Pay per use

See NIST Definition of Cloud @ http://www.nist.gov/itl/cloud/upload/cloud-def-v15.pdf

…that creates a configurable supply chain for IT services

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Cloud Computing: a new consumption and delivery model for IT, inspired by consumer internet services -> The Fundamentals

BPaaS

Consume

SaaS

PaaS

IaaS

Deployment

Public

Private

Hybrid

Community CONSOLIDATEPhysical Infrastructure

CLOUDDynamic provisioning

VIRTUALIZEIncrease Utilization

STANDARDIZEOperational Efficiency

AUTOMATESelf Service

SHARED RESOURCESCommon workload profiles

Traditional IT

Standard Managed Services Cloud Delivered Services

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BPaaS

Consume

SaaS

PaaS

IaaS

Deployment

Public

Private

Hybrid

Community

Server/Storage Utilization 10-20% 70-90%

Self service None UnlimitedProvisioning Weeks Minutes

Change Management Months Days/Hours

Release Management Weeks Minutes

Metering/Billing Fixed cost model

Term/value based

Payback period for new services Years Months

Cloud Computing: a new consumption and delivery model for IT, inspired by consumer internet services -> The Fundamentals

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Cloud Game Changing Value Drivers

Standardization enabled by integrated service management

Lower IT Operating and Capital Costs Capex to Opex

Fast access to current technology and

powerful computing

Removing IT complexity from end

users

Fine grained IT services with rapid

provisioning

The Adoption of Cloud is driven by the significant benefits realized by many clients

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Real Customer Example: Cloud computing can reduce data centre costs by 20% to 30%.

Traditional IT Budget Breakdown

Competitive IT Budget

Labor Costs (reduce 10%)

Hardware Costs (reduce 20% to 30%)

Invest in new Business Needs(> 35%)

Reduce Software Costs(typically 20%)

Power Costs(reduce 20%)

Typ

ical

Sp

end

on

IT

Mai

nte

nan

ce =

75%

Labor Costs (Operations & Maintenance)

Hardware Costs (annualized)

Invest in new Business  Capabilities (<25%)

Software Costs

Power Costs

Operating Environment Savings %

Production* 1%

Performance* 1%

DR 13%

Dev / Test 94%

* Includes 5x capacity buffer and significant performance and operational benefits.

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Current Observations and Implications of Cloud- IT needs to accelerate Cloud Adoption to stay business relevant

Observations

Market / Offerings still maturing – Many view points

Increased IT Transparency –– Continuous Benchmarking– Self-Service; Speed of Provisioning

Acceleration to Service-Oriented Models of IT– IT built with Service ‘Cloud’ Modules– Manage Heterogeneous Clouds v.

Technologies

‘Sexy’ and ‘new’ Cloud …not really new under the covers

Implications/Recommendations

Ensure you have an open strategy/solutions that meet your requirements; Avoid early lock-in to isolating offerings/technologies that will prevent integration. Choose appropriate workloads to get started with.

Pressure on IT to stay business relevant. Need to get started and get quick wins (choosing appropriate workloads)

– Provisioning / Self-Service could unlock next level of end-user demand

Interoperability / Integration of Services essential– Common architectures / standards

needed

Do not forget your basic IT Principles around Service Levels, Performance, Resiliency, Auditability, etc...and Vendor Management!

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Cloud Provides the Foundation for the Next Decade

Prioritization of focus topics for the IT strategy of the next decade

Operational Excellence

Cloud (Hybrid Cloud & Service Broker)

Cloud(IaaS PaaS SaaS)

Mobility&Collaboration

„Big Data“ & Analytics

Cyber Crime Prevention

IT becomes an integral partof the business

Time

3 IT Strategy for the Next Decade and its Operationalization

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Key Consideration 1: What workloads to move to cloud?Ready for Cloud

- Infrastructure Services - Middleware & Business Applications

May not yet be ready for migration…

Sensitive Data

Complex processes & transactions

Regulation sensitive

Not yet virtualized 3rd party SW

Highly customized

Analytics

Collaboration

Development & Test

Workplace, Desktop & Devices

Infrastructure Storage

Infrastructure Compute

Business Processes

Industry Applications

Pre-production systems

Information intensive

Isolated workloads

Mature workloads

Batch processing

New workloads made possible by

clouds…Medical Imaging

Financial Risk

Collaborative Care

Energy Management

Disaster Recovery

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Bus

ines

s Va

lue

Time & Innovation

Initial benefits –basic

virtualization & cycle time

2009 2010 2011+

IBM’s internal cloud roadmap and plan

Realization

Early Adoption

Converge cloud efforts with in-process virtualization, data center consol & systems management initiatives

Increase internal cloud workloads to realize cost reductions & increased flexibilityLeverage ‘public cloud’ model for more dramatic cost reduction

Expect increased security, reliability, delivery model and performance capabilities

Continue to understand emerging opportunities, adopt yet-to-be defined cloud capabilities as models & technologies mature

Expand benefits – operational efficiencies & capabilities

Expand & Converge

Initial ‘production services’ cloud (1H+) -- non-critical workloadsExpand Dev/Test Cloud

– Broader internal development community adoption (2Q)

– Expanded platforms (z) (4Q)Expanded Business Analytics cloud deployment/adoptionBring emerging cloud opportunities to concept/plan:

LotusLive, storage, desktop

Create a program management approach which ties together all IBM enterprise cloud activities Align CIO approaches/plans with IBM Public Cloud team (EI)Determine which internal workloads make sense on cloudDevelop/ deploy initial clouds

CIO Develop & Test (3Q)Business Analytics cloud (4Q)w3 ‘production cloud’ prototype (4Q)

Effective, yet disparate platforms and efforts

Cloud: IBM Internal Strategy, Use & Experience

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1

IBM is actively applying cloud in several areas with various levels of maturity and understanding

Fit for purpose middleware platformCommon Compute Platform

(Compute/ Network/ Storage)

Analytics

BlueInsight

295K users, over 162 projects boarded across all process areas

being enhanced in 2012 to include IBM DB2 Analytics Accelerator (IDAA)

Collaboration

LotusLive Meetings for IBM85% of web

conference minutes1.85X meeting

minutes proj’d for 2010

Development& Test

CIO Dev/Test Cloud

Server setup from 5 days to 1 hour

> 90% of new server reqs via this cloud

Desktop

WorkplaceCloud

2,000 users China Develop Lab

200 user pilot SBDC on the IBM Cloud

Storage

Storage Clouds

File storage cloud used by > 130K users & applications

Block Storage -Smarter ILM deployed to Boulder in 2011, Poughkeepsie planned in 2012.

Business Services

ProductionCompute

CloudPrivate

instance up; assessing public

First set of applications migrated in and operating

Base Enterprise Platform

Cloud: IBM Internal Strategy, Use & Experience

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Back Up

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The move to Cloud accelerates IT service delivery by increasing resiliency, improving quality, while and reducing operating costs

Infra

stru

ctur

e Le

vera

ge

Virtualization of Hardware

Utilization of Infrastructure

Labo

urLe

vera

ge

On Demand Self Service

Automation of Management

Standardization of Workloads

Solution Lever will… Delivering Significant Benefits

Users “serve themselves,” requiring less support and improving productivity by delivering services faster

Increased agility / Speed to marketService improvementImproved QualityReduced CostsIncrease employee satisfaction

Reduce effort, time and errors by automating repeatable tasks and services

Service improvementImproved QualityIncrease resiliencyReduced Cost

Reduce complexity: more tasks can be eliminated or automated, reducing software and labourcosts and errors

Service improvementImproved QualityIncrease resiliencyReduced CostCapacity Flexibility

Increase workload capacity & flexibility over traditional physical environments

StandardizationReduced CostWorkload optimization and operating flexibility

Increase utilization of infrastructure and increases economies of scale

Capacity flexibilityEffective utilization of Data CapacityReduced Cost

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Key Consideration 2: What delivery models (and service offerings) required to best support the workload needs?

Device & Desktop

Storage

Servers

Virtualization

O/S

Middleware

Runtime

Info & Data

Applications

Traditional On-Premises

Storage

Servers

Virtualization

O/S

Middleware

Runtime

Info & Data

Applications

Platformas a Service

Storage

Servers

Virtualization

O/S

Middleware

Runtime

Info & Data

Applications

Softwareas a Service

Vendor Manages in Cloud Client Manages

Standardization; OPEX savings; faster time to value

Storage

Servers

Virtualization

Middleware

Runtime

Info & Data

Applications

Infrastructureas a Service

O/S

Communications Communications CommunicationsCommunications

Device & Desktop Device & DesktopDevice & Desktop

Networking Networking NetworkingNetworking

Business Process

as a Service

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60%of CIOs plan to use cloud up from 33% two years ago

…the majority being hybrid clouds

Key Consideration 3: What deployment model is best for the delivery model?

Internal, on-premise and external service delivery methods are integrated.

Hybrid

IT capabilities are provided“as a service” over an

intranet, within the enterprise and behind

the firewall.

Private cloud

IT activities and functions are provided “as a service”

over the Internet.

Public cloud

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Key Consideration 4: Cloud components and management framework required to enable optimization and reuse

Example – IBM’s Cloud Computing Reference Architecture (CC-RA) and Governance Model

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Key Consideration 5: Identify opportunities to leverage other cloud service provider offerings to accelerate your journey and adoption.

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12 major steps in the roadmap towards creating a cloud service

5. Implement monitoring metrics & event correlation rules

6. Implement incident, problem and asset mgmt processes

7. Implementresiliency SLA

Select existing agent / implement new agent for monitoring JVM heapsize, hypervisor swap file size, # of processes, etc.

Incident, problem & asset mgmt process is specific to cloud service customization needed

Examples: HA for management system, delivered WAS cluster must be highly available

1. Specify cloud service description1. Specify cloud service description

2. Implement runtime functionality

3. Define unit of delivery & rating

Describe function, price , SLA of cloud service, incl. management scope

Examples: Select off-the-shelf hypervisor (VMaaS), implement custom app (e.g. LotusLive)

Examples: VM, file system, distributed app, virtual IP address, queue, web conference, RDBMS, 3-tier business app, etc.

10. Implement cloud service specific billing metrics

11. Implement rates for charging cloud service consumption

9. Implementsecurity functions

Examples: CPU/hour, # of DB transactions, GB/month, # of users/webconf/hour, etc.

Examples: $0.11/VMhour; $0.19/MBsTransferred;$0.02/webconference; $0.05/fraudAnalysis

Implement authentication, auditing, data protection, governance & audit

8. Implement backup approach

Examples: Backup all VMs, backup DB of LotusLiveapplication

4. Implement self-service delivery & management functionality

Examples: “Create VM, add more nodes to WAS cluster, change max # of seats for LotusLive web conf

12. Register cloud service to service catalog

A cloud service must be registered to the service catalog to be externally accessible, entitlements need to be configured,

Storage Network 1*

1

*

*1 1

1

11

11

1*1

*11

1

11

11

1*1

** 11

111

11

$$$

Server

OS

MW

App

!

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Deployment options for cloud computing - The choice belongs to the client.

Some buy the parts and build their own private cloud. Others are buying services to implement and/or run it while others are buying services from public clouds.

3rd partyoperated

3rd party hosted and operated

Enterprise data center

Enterprise data center

Private cloud Hosted private cloud

Managed private cloud

Enterprise

Shared cloud services

Enterprise A

Enterprise B

Public cloud services

A

Users

B

Client DCClient ownedClient integratesClient operatedHighly customized

Client DCClient owned3rd Party operatorMore standardization & less customizationSome utility pricing

3rd party DCShared ownership3rd Party operatorHighly standardizedSome Utility pricing

Mix of private and public servicesShared across enterprisesSubscription or membership pricingAccess over VPN

Shared resourcesElastic scalingPay as you goFully standardizedLittle customizationPublic Internet

Public cloudShared or Hybridor Community

cloud

Private cloud

Internally operated

Private --- > to Public

Trade-off Customization and Control

FOR Cost Variability and Elastic Scaling

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Your Hybrid Cloud will require several main components. The components may be built or bought.

2) Cloud Services offered to users / stakeholders

4) Reliable and scalable infrastructure to manage and provide cloud services

1) Services and tools used to create a sustainable portfolio of cloud services (the building blocks)

5) Service Management and Delivery Software provides the OSS & BSS capability needed to operate an integrated cloud solution reliably with automation

6) On-going management of Cloud performance, capacity, growth, enhancement, usability,…

3) ‘Storefront’

Common and consistent portal with extensible service catalog for:

• Internal employees

• Customers• Business

Users

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

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

Define and develop Cloud Computing architecture; design blueprint for processes, technology, organization

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

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

Moving

to

Cloud

Next steps: Develop your Cloud roadmap by putting actions to address key elements

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2

3

4

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Get onto IBM’s SmartCloud Enterprise and start experimenting– See what your Cloud could look like / Use it to develop a business case for change– www.ibm.com/cloud/ca

Assess your current state and readiness for Cloud or assess which of your workloads are most suitable to move to a cloud

– www.ibm.com/cloud-computing/us/en/consulting-and-implementation.html