The Economics of vCloud: Which Cloud Do I Need

and How Do I Get There?

Chris Colotti, VMware

Jenny Fong, VMware

Mike Kohn, Harley-Davidson Dealer Systems

PHC5732

#PHC5732

2

Agenda

Which Cloud Do I Need?

Jenny Fong, Senior Product Marketing Manager

How to Get to Cloud

Chris Colotti, Senior Technical Marketing Manager

Customer Case Study

Mike Kohn, Harley-Davidson Dealer Systems

Q&A

3

Server Virtualization Started a Transformation Journey

*Source: IDC 2012 Virtualization and the Cloud MCS

CapEx Savings

Through

Consolidation

OpEx Saving

Through

Automation

Game Change

Through

IT as a Service

IT Production Business Production IT as a Service

Cloud

Virtualization

Abstract. Pool. Automate. Empower.

2008

47% New Apps*

2012

71% New Apps*

Goal

99+%

4

The math for virtualization was clear…

8 servers 1 server

Server consolidation was an easy sell…

(relatively)

5

Server Virtualization ROI / TCO Calculator

Example) 100 physical servers 9 virtualized servers

Hardware Savings = $168,649

Rack/Power/Cooling Savings = $334,600

Labor Savings = $334,494

Downtime Savings = $487,893

TCO = CapEx + OpEx + Downtime Costs

6

The math for cloud seems…well…cloudier…

Cloud:

• Time savings?

• Easier to manage?

• Agility?

• ? ? ? ? ?

1 virtualized server

7

It depends on the kind of cloud you are going to…

VMware vCloud

Hybrid Service

On-Premise Off-Premise

VMware vCloud Suite Existing & New Apps

Seamless Networking

Common management

One Support call

8

NEW! VMware vCloud Hybrid Service General Availability

Santa Clara, CA Las Vegas, NV Sterling, VA

Just Announced!

• vCloud Hybrid

Service General

Availability

• Opening of 2 more

data centers

• New features and

capabilities

9

Cloud-Adjusted TCO: New Metric for Defining Cloud Economics

Going to a public cloud service might give you:

• Improved agility

• Geographic scale

• Reduced Time-to-Market

• Secondary data center

But it also means:

• Understanding the risks involved

• Loss of control

Key is finding quantifiable criteria that impact the risk and rewards

of cloud computing

10

Step 1: Start with Total Cost of Ownership

CapEx

Server Hardware $52,992 $0

Storage Hardware & Software $1,020,000 $0

Networking & Security Hardware $44,444 $0

VMware Software + SnS $445,327 $0

OpEx

Administration $540,000 $316,800

Power & Cooling $47,469 $0

Rack Space & Office Space $42,000 $0

Subscription Costs $0 $1,770,003

Downtime

Downtime Costs $360,000 $379,513

TOTAL COST OF OWNERSHIP $2,552,233 $2,466,316

PUBLIC PRIVATE

TCO = CapEx + OpEx + Downtime Costs

Two Retail Examples:

1) Deploying a new

web app to expand

market segment

2) Deploying a new

ERP inventory app

to support market

expansion

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Consider Economic Impact of Risk Criteria

Availability

• How does downtime affect employee & customer productivity?

• How does downtime affect revenue?

• Are there any legal/regulatory fines associated with downtime?

Governance & Compliance

• What standards do you have to meet and can those be met?

• What happens if you are not compliant?

• Are there geographical restrictions?

Security & Privacy

• How does a security breach affect customer productivity?

• How does a security breach affect revenue?

• What is the impact on brand/goodwill?

Business Relationship Management

• What happens if you need to exit?

• What is the longevity of the contract/solution?

• What happens if the service terms or software changes?

12

2. Adjust for Risk Criteria (Risk Adds to TCO)

1) Deploying a new

web-based product

selector app to

expand market

segment

1) Deploying a new

ERP inventory app

to support market

expansion

Impact

Magnitude

Likelihood of

Occurrence On-

Premise

Likelihood of

Occurrence Off-

Premise

Availability Medium Medium Low

Governance &

Compliance

Low Low Medium

Security &

Privacy

Low Low Medium

Business

Relationship

Management

Medium Low Medium

Impact

Magnitude

Likelihood of

Occurrence On-

Premise

Likelihood of

Occurrence Off-

Premise

Availability Medium Medium Low

Governance &

Compliance

High Low Medium

Security &

Privacy

High Low Medium

Business

Relationship

Management

High Low Medium

+ + +

+ + +

13

Reward Criteria

Accessibility

•What if you could access anywhere, any time, any device?

•What if you could have multi-geographic site redundancy?

Business Responsiveness

•What if you could deploy IaaS, PaaS, and SaaS rapidly?

•What if you could reduce Time-to-Market (TTM) for new applications?

Scalability

•What if you could scale capacity on demand?

•What is the value of offloading Test/Dev to less critical tiers of infrastructure?

•What is the value of BCDR plans?

Cost & Resource Accounting

•Am I CapEx or OpEx constrained?

•Do I have the personnel to support this?

•Do I have the real estate and budget to support this?

14

3. Calculate Upside Opportunity from Reward Criteria

1) Deploying a new

web-based product

selector app to

expand market

segment

1) Deploying a new

ERP inventory app

to support market

expansion

Impact

Magnitude

Likelihood of

Occurrence On-

Premise

Likelihood of

Occurrence Off-

Premise

Accessibility High Low High

Business

Responsiveness

High Low High

Scalability High Low High

Cost & Resource

Accounting

Medium Low High

Impact

Magnitude

Likelihood of

Occurrence On-

Premise

Likelihood of

Occurrence Off-

Premise

Accessibility None Low High

Business

Responsiveness

Low Low High

Scalability None Low High

Cost & Resource

Accounting

Medium Low High

- + +

+ +

15

RESULT: Cloud-Adjusted TCO with Upside Opportunity

1) Deploying a new

web-based app to

expand market

segment

1) Deploying a new

ERP inventory app

to support market

expansion

TCO = $2,558,533

Upside = ($6,300)

TCO = $1,946,316

Upside = $606,000

TCO = $2,394,233

Upside = $158,000

TCO = $2,437,616

Upside = $114,700

Private Public

Private Public

16

Introducing the Cloud Compass Tool

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These Criteria Will Change Over Time….

Consider:

• An application moving from Test/Dev/QA into Production

• An application maturing over time

• A company changes or expands their business model

VMware provides both cloud solutions to address different needs

under a common management framework

18

How Do I Get There? Some things to think about

19

Let’s Go Back in Time

20

History Is Always Bound To Repeat Itself

Think Back….

• What did you virtualize first?

• Test/Dev

• File/Print

• Application Servers

• Basic Infrastructure

• Why those workloads?

• Easy?

• “Low Hanging Fruit”?

• Someone told you to?

• What were the business reasons?

• Aging Hardware?

• Legacy Applications (Windows NT)

• Someone told you to?

21

Virtualization Tools – A Quick Review Of the Past

What Did We Use to Decide On What To Virtualize

• VMware and Partner Professional Services?

• Capacity Planner?

• Windows Task Manager?

How Did We Actually Virtualize Workloads?

• VMware Converter

• Platespin

How Did We Learn?

• How to Right-size Virtual Machines

• Not everything is as it seems

• Ongoing Capacity Planning

• Resource allocation

• Resource Pools

• Admission Control

22

Let’s Look to The Future

23

Prepare to “Cloudify” Your Datacenter

Understand Your Applications

• Technical Interdependencies

• User accessibility

• Application’s capability to “Grow” and Scale on demand

Examine the “Low Hanging Fruit”

• Of your virtualized server what can you Identify Now?

• What are the easy things to move?

• Easy network changes

• Easy end users to work with

• Less impactful to your business

Reclaim Expensive Resources

• Workloads using your capital infrastructure

• Get local resources back for internal use

24

What’s Your Virtualization Policy?

What Percentage Virtualized are you?

• 25%

• 50%

• Over 80%

Do you have a Virtualization First Policy?

• Could this be considered a Cloud First Policy now?

“What can I run in vCloud Hybrid Service?

• What CAN’T you run?

• It’s vSphere under the covers

• Anything you run today

Which Model do I choose?

• Dedicated Cloud (More Control to you)

• Virtual Private Cloud

25

Start to “Cloudify” Your Datacenter

Consider the Tools of the Future

• vCloud Connector (V2C is the new P2V)

• Network Virtualization

• vCloud Automation Center

• vCloud Networking & Security

• vCenter Operations Manager

New Skillsets May be Needed

• No longer just vSphere Admins

• Networking Expertise

• Traffic connectivity

• Security Knowledge

• Firewall rules

26

Don’t Miss These vCloud Hybrid Service Breakout Sessions!

vCloud Hybrid Service Jump Start Series

1. vCHS Architecture & Consumption Principles (PHC5070) - Monday, 12:30pm

2. vCHS Networking & Security Basics (PHC5409) - Tuesday, 12:30pm

3. vCHS Advanced Networking & Security (PHC5488) - Tuesday, 2:00pm

4. Identifying and Deploying Workloads in vCHS (PHC5045) - Wed, 12:30pm

5. Hybrid Cloud Management (PHC5561) - Thursday, 10:30am

Other Interesting Sessions:

• A Parallel Between vCHS and AWS (PHC5123) – Tuesday, 5pm

• How to Build Your Hybrid Cloud… (PHC4783) – Wednesday, 8am

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EAP Customer: Harley-Davidson Dealer Systems

Industry

Headquarters

Background

Supports 500+ Harley-Davidson Dealerships in North America

• Currently supporting custom PoS application on-premise locally at

dealerships

New Opportunities

• Want to take advantage of available transaction and customer

data and perform data analytics

• Want to offer complementary web based products on a global

basis

Key Decisions

• Should we deploy this in house?

• Additional storage or new SAN? New SAN Switches?

• Upgrade networking infrastructure?

• Upgrade Bandwidth?

• Capital expenditure

• Should we use a cloud service?

• Bandwidth is cost effective; not sharing with office workers

• Global presence is required

• Predictable billing directly to application owner

PROFILE

Retail System Support

Cleveland OH

EXISTING VMWARE FOOTPRINT

• vSphere 5.1 Enterprise Plus

• 95%+ virtualized today supporting

both back office and developer

environment

• Deployed Lab Manager in 2009 for

self-service test/dev; now vCloud

Director 5.1

28

Thank you! Any Questions?

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Other VMware Activities Related to This Session

HOL:

HOL-HBD-1301

vCloud Hybrid Service - Jump Start for vSphere Admins

HOL-HBD-1302

vCloud Hybrid Service – Networking & Security

HOL-HBD-1303

vCloud Hybrid Service – Manage Your Cloud

PHC5732

THANK YOU

The Economics of vCloud: Which Cloud Do I Need?

Chris Colotti, VMware

Jenny Fong, VMware

Mike Kohn, Harley-Davidson Dealer Systems

PHC5732

#PHC5732