Sele ve Corporate Cloud Sour i g

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1 Gai i g a Co pe ve Lead Through Sele ve Corporate Cloud Sour i g A Gi kgo Ma age e t Co sul g Pu li a o HAMBURG SHANGHAI SINGAPORE ZURICH

2 Introduction Mu h has ee i e a out loud o pu g o e athe i a a e pt to e ploit the a e o the topi u e tl e jo s i the edia tha t ea g it as hat it eall is, a e deli e odel fo e te al data e te s that p o ises o pa ies o -de a d a ess to i tuall u li ited o pu g esou es paid fo a o di g to a tual usage. I this ote, Gi kgo i es gates the e efits a d isks i he e t to loud o pu g f o the CIO s pe spe e a d o ludes ho o pa ies a gai a te po a ut sizea le o pe e ad a tage th ough ea l a d sou d p epa a o fo this e sou i g op o. Lars Godzik, Founding Partner, Ginkgo Management Consulting

3 Definition from the CIO s Perspective Rathe tha a isolated te h olog i itself, loud o pu g is a o ept that o i es u e ous loosel elated te h ologies a d ethodologies, i ludi g ost p o i e tl i tualiza o a d h pe isio, i.e., i tualiza o a age e t solu o s. Be ause of this, it is athe diffi ult to efute a of the a ious, o e iased, loud o pu g defi i o s p o ided, fo i sta e, data e te ope ato s, outsou i g se i e p o ide s o i tualiza o so a e de elope s. I a effo t to pla e the CIO a d his/he o pa s i te ests at the e te of a e o, Gi kgo offe s its o defi i o i the follo i g. Shared E ter al Resour es. Mul ple usto e s o su e e te all p o ided, i tual o pu g esou es ia full auto ated e -i te fa es. Co su ed i tual o pu g esou es a e i f ast u tu e, pla o s o e e appli a o s. U de l i g ph si al o pu g esou es a e sha ed a o g usto e s ithout thei o o. Qualit a d othe p ope es of the p o ided esou es a e o figu ed, ot ego ated. Be o d o figu a o, o su e s ha e o o t ol o e ho e a tl esou es a e p o ided. Elas it. Resou es a e p o ided o -de a d, i.e., usto e s do ot eed to pla thei de a d i ad a e ut a tap o elease i tuall li itless esou es as eeded a d al ost i eal e.

4 Pa per Use. Billi g is losel ed to a usto e s a tual o su p o of i tual esou es; o pu g, thus, e o es a ope a o al e pe ditu e that does ot e ui e a upf o t i est e ts. While the i di idual te h ologies a d ethodologies u de l i g loud o pu g ha e ee a ou d fo ea s o e e de ades, p a al eal-life loud se i e offe i gs a s ll e o side ed to e i thei i fa. A azo s EC2 is a e a ple fo a loud se i e that offe s o -de a d o pu g i f ast u tu e, Google s App E gi e a d Microso s Azure fo se i es that offe o -de a d o pu g pla o s.sales Fo e s Custo e Rela o ship Ma age e t so a e is a p o i e t e a ple fo a full- lo appli a o that is p o isio ed i a loud o pu g fashio. O e easo fo the e e t su ge of te h ologies that a e d i i g it. The soa i g p e ale e of oad a d I te et a ess is a othe. Potential for Substantial Mutual Benefits The ag itude of the h pe a out loud o pu g has le a i ol ed ith IT skep al of its t ue e its. But sh uggi g it off as just a othe passi g fad, a old te h olog i a e d ess, dis isses o e p o isi g a d ha d to efute fa t. De a d fo o pu g esou es at i dividual o pa ies usuall is a thi g ut ala ed. The eed to p e e t o ges o du i g peak es he e auses the u liza o of o po ate IT fa ili es to a e age a a s all lo th ee to te pe e t. E e a huge o pa ith a usto e ase as ast a d glo all dist i uted as Google s ea hes a u liza o of o l a out fo t pe e t. The collec ve de a d of a la ge u e of geog aphi all dispe sed o pa ies, ho e e, a e e pe ted to e a lot less e a. As loud o pu g p o ide s se e la ge u e s of usto e s that all sha e the sa e ph si al i f ast u tu e, the a e ell posi o ed to gua a tee ea h usto e the u i te upted a aila ilit of suffi ie t esou es at a e ithout ha i g to ai tai e uall deplo a le le els of e ess apa it. E hi it : Cloud Sou i g at Diffe e t A st a o Le els E o o i Effi ie. The ost ad a tage due to highe u liza o of ph si al esou es alo e is al ead la ge e ough to e de loud sou i g a a a e sou i g op o fo o pa ies that lea es p o ide s ith e ough oo fo o fo ta le a gi s. But the e essit to ai tai huge e ess apa it is ot the o l easo h o -p e ise hos g of o pu g esou es is ou d to e o e ostl tha loud

5 sou i g. The ela e u e of staff e ui ed to keep a o e o al o -p e ise data e te up a d u i g is also sig ifi a tl highe tha that eeded to ope ate a loud o pu g fa ilit as the la e e efits f o highl auto ated p o esses a d su sta al s ale effe ts. Selective Corporate Cloud Sourcing The e is a p i e, ho e e, that o pa ies ha e to pa i o de to e jo the e efits that o e ith loud o pu g. Cloud sou ed esou es a e usto ized o l ea s of o figu a o as opposed to ego a o ith the total u e of possi le o figu a o s ei g athe li ited as usto iza o, a e all, has to happe ia sta da dized e -i te fa es. A o e all, usto e s ust ot e gi e the op o of ot sha i g the ph si al esou es u de l i g a loud offe i g. E hi it : E ess Capa it Re ui e e ts Busi ess Agilit. But sou i g o pu g esou es ia full auto ated e i te fa es ot o l esults i edu ed staffi g osts. With li le to o hu a i te a o e ui ed, it also aises the effi ie a d elia ilit of p o esses that a e elated to o pu g esou es. Ha d a e o de i g les, fo i sta e, a e o e edu ed f o o ths to i utes. This ea s a e o ous agilit gai that a i ediatel e u lized fo the good of the usi ess. Cost Tra spare. With illi g losel ed to a tual o su p o, loud o pu g akes it easie fo IT o t olle s to a u atel assess the total ost of o e ship fo usi ess p o esses that depe d o IT. As the e is o apital e pe ditu e ut o l ope a o al ost, loud o pu g also fa ilitates p e ise ROI al ula o s, o p ehe si le ha ge a k e ha is s, t a spa e t udget pla i g a d i p o ed IT fi a ial a age e t i ge e al. Othe ise loud o pu g ould ot u fold its e efits. The efo e, o pa ies eed to assess dilige tl hat o po e ts of thei e te p ise a hite tu es ualif fo loud sou i g a d hat should e kept o -p e ise. Co pe ve Adva tage. Co po e ts that a e u ial fo a o pa s o pe e ess ge e all do ot ualif fo loud sou i g as the la e ould e ui e o p o ises ith espe t to the e a t shape a d atu e of these o po e ts; o odit o po e ts, i o t ast, a e atu al a didates fo loud sou i g. Opera o al Cri alit. Co po e ts that do ot help a o pa dis guish itself f o o pe to s ut a e i al fo its ope a o s a e likel to e ai o -p e ise fo the fo eseea le futu e; loud o pu g p o ide s a e ot e pe ted to e te this su sta all s alle, sig ifi a tl o e diffi ult a ket a e soo.

6 E pe ted Be efit. Co po e ts that a e eithe sou es of o pe e ad a tage o i al fo a o pa s ope a o s ut a e sou ed i -house at o pe e ost a d ith suffi ie t ualit do ot eed to e ushed i to the loud; the i -house solu o s o pe e ess, ho e e, is likel to dete io ate o e e as loud offe i gs atu e. A e all, loud o pu g is o l o e addi o al op o fo sou i g o po ate o pu g esou es. I o de to gai the highest possi le ad a tage f o loud o pu g, egula e alua o of osts, e efits, isks, a d sou i g alte a es is as u h e ui ed as its lose alig e t ith a o pa s e te p ise a hite tu e a d o e all IT st ateg. Risks Expected to be Mitigated Over Time Facts As u h as it is p aised, loud o pu g also e ei es st o g i is fo a u e of isks eputedl i he e t to the o ept itself. Gi kgo has i es gated the isks that a e ost f e ue tl held agai st loud o pu g a d fou d that a i s fail to a - k o ledge o e si ple ut pi otal fa t. Cloud o pu g p o ises su sta al e a ds to oth usto e s a d p o ide s. Co se ue tl, oth pa es a e e pe ted to u de take e e thi g i thei po e s i o - de to eli i ate the o st ai ts that u e tl p e e t the f o eapi g the a ifold e efits loud o pu g offe s. While, fo i sta e, se u it o e s a e likel to e ai a se ious issue i the fo eseea le futu e, a isks that appea p ohi i e toda a e likel to e i gated th ough te h ologi al ad a es a d the i t odu o of ope sta da ds. 1 Ve dor Lo k-i. While the e is ha dl a i te ope a ilit a o g toda s o e iall a aila le loud o pu g offe i gs, p o ide s a e ell a a e that ope sta da ds a e a p e e uisite if the a t to g o the a ket to a size that allo s the o ept to u leash its a e efits. Widel suppo ted o ga iza o s a d o i ees ai i g to esta lish p a al ope sta da ds i lude the Ope G oup, the O je t Ma age e t G oup a d the Ope Cloud Co so u. 2 Loss of Co trol. Ma i s e o the loss of o t ol o e ho e a tl esou es a e p o ided, ut fail to o e ze the e efit of e ai i g i total o t ol. I fa t, op al sou i g e ui es a u ate k o ledge of hat is eeded e a tl. O e o pa ies ha e figu ed this out, p o ide s a e e pe ted to t ha d to a s e these alls ade uate ea s of o figu a ilit. Google, fo i sta e, allo s its usto e s to o figu e the ou t thei data is held i, a e ui e e t o e stated loud o pu g i s.

7 3 I ature I dustr. The loud o pu g i dust, ithout dou t, ill see a a es of o solida o o e the ea s to o e. A d ith e e a uisi o of a loud p o ide, the e is a da ge that its usto e s ill see se i e dis up o s. Afo e e o ed ope loud o pu g sta da ds as ell as a ket fo es, ho e e, a e likel to i i ize this isk. That said, o pa ies of ou se should hoose thei loud p o ide s ith e ual dilige e as the ould appl he sele g thei t adi o al outsou i g pa t e s. 5 Data Vul era ilit. Cloud o pu g p o ide s se e s o es of usto e s. Thei data e te s, the efo e, o tai data of i e se i te est fo ha ke s a d i dust spies ho a e e pe ted to o e t ate thei fo es o the. But u like thei usto e s, loud p o ide s ega d the p ote o agai st e te al a a ks as a o e o pete of thei s. Although e e as safe as a o -p e ise data e te that is o pletel shut off f o the outside o ld, it a e e pe ted that data sto ed i the loud is ade uatel safe fo a ajo it of pu poses. 4 Data Separa o. The e e thought of sha i g ph si al de i es ith othe o pa ies, pe haps e e ith o pe to s, u de sta da l lea es a IT de isio ake s s a ed. The fea a ide tal if ot i te o al iola o s of the louds i tual o de s. But p ote g these o de s is ot a e p o le i the o ld of i fo a o te h olog, a d effe e o epts fo a dotes a e al ead a aila le i the fo of the a ious VPX te h ologies, e p o a d apidl ad a i g i tualiza o te h i ues.

8 Background Information Cloud Computing Benefits and Company Size The a tual e efit a o pa d a s f o loud sou i g depe ds hiefl o the size of its IT ope a o s see ta le elo. While a s all o pa ith ope a o s o l i a si gle ou t is likel to p ofit su sta all f o ot ha i g to ai tai a u de u lized o -p e ise data e te, la ge o pa ies that a e a e o a glo al s ale a al ead ea h o pa a el good le els of u liza o full e ploi g i tualiza o a d o solida g thei o ld ide data e te s. La ge o pa ies, ho e e, o e suffe f o ast ad i ist a e p o esses a d, thus, a e likel to e efit g eatl f o the agilit offe ed loud sou i g. A gai i ost t a spa e, ho e e, a e e pe ted to e el o e at a o pa, o a e its size. Company Size Economic Efficiency Business Agility Cost Transparency Small Medium Large Prevailing Threats & Uncertainties While e tai l ot e haus e, the a o e list of o e s su a izes a ge e al t e d to dis uss loud o pu g so e hat u fai l f o a pe spe e fo used solel o offe i gs that a e a aila le al ead toda as opposed to hat ill e a aila le i the futu e. The e a e, ho e e, a u e of alid th eats a d u e tai es that a ot e ta kled ith sta da ds o te h olog a d loud o pu g p o ide s, the efo e, a ot o t ol. A gua l, ea h of these is- sues has the pote al to da pe the a tual e efits that a e e pe ted f o p a al loud o pu g offe i gs, ut o e of the see s st o g e ough to th eate the o ept i its e et.

9 U ertai Prospe ts. Cloud o pu g edu es the eed fo e ess apa it as ul ple o pa ies olle e de a d fo o pu g apa it is dist i uted o e e e l tha that of a i di idual usi ess. Just ho u h o e e e l is et to e see. Google s data e te s, fo i sta e, ea h a u liza o of oughl fo t pe e t. But a Google s usto e ase, ostl p i ate o su e s, se e as a e h a k fo o pa ies, hose o pu g de a d is o side a l i flue ed fa to s su h as offi e hou s, p odu o les a d epo g s hedules? I ala ed Glo al De a d. As the p e ious poi t al ead suggests, it is i po ta t fo loud o pu g p o ide s to se e usto e s a oss all e zo es i o de to a i ize the u liza o of thei ha d a e. Sta g out as a t ul glo al loud o pu g p o ide is e tai l ot a eas feat ut possi le fo o pa ies that al ead ha e a p ese e as glo al as that of, e.g., A azo, Google o Mi oso. It ill, ho e e, take o side a le e u l o puta o al de a d ill e t ul ala ed all o e the glo e, if e e. Ve dor Depe de. Fo loud o pu g to deli e the highest possi le e efits, p o ide s eed to e huge a d a e o a glo al s ale. The i dust, thus, a e e pe ted to u de go se e al a es of agg essi e o solida o u l o l a s all u e of o pe g loud o pu g p o ide s is le. This ill despite ope sta da ds effe el li it the u e of ia le alte a es usto e s a hoose f o. Legal O sta les. P e aili g la s i a ou t ies e de aspe ts of loud o pu g illegal, e ui i g, fo i sta e, that data is sto ed ithi a o al ou da ies a d, if elo gi g to sepa ate legal e es, e e o sepa ate ph si al de i es. Su h legisla o, of ou se, is ot est i ted to loud o pu g. C oss- o de data e te o solida o a i es, fo i sta e, a e e uall affe ted. Alte i g su h ju isdi o e ui es e a d a duous lo i g f o p o ide s a d usto e s alike.

10 Summary & Implications for the CIO Cloud o pu g is he e to sta too p o isi g a e its e efits oth fo usto e s a d p o ide s. B de elopi g ope sta da ds a d appl i g ad a ed te h ologies, p o ide s a e e pe ted to g aduall i gate ost of the isks that a e f e ue tl held agai st o po ate loud sou i g. Those isks p o i g esilie t to these effo ts ight pote all li it the e te t to hi h loud sou i g a e applied at o pa ies, ut the a e u likel to p ohi it its appli a o e el. Fo the easo s elo, Gi kgo e ou ages CIOs to tho oughl e aluate the ea l adop o of the o ept of loud o pu g g aduall t a sfo i g pa ts of thei e te p ise a hite tu es i to p i ate louds, i.e., i to a hite tu es that el i pa t o e- sou es sou ed f o i tual louds that a e p o ided o -p e ise a d the o pa ies the sel es. Best Practices Cloud o pu g is a o pila o of elated te h ologies a d ethodologies, ost of hi h ha e ee a ou d fo ea s a d a e ega ded as est p a es. At a o pa ies ha es a e that u e ous of these te h ologies a d ethodologies a e al ead i pla e. Ma appli a o s, fo i sta e, a e al ead i ple e ted as Se i e O ie ted A hite tu es, a d the ha d a e u liza o of a o p e ise data e te s gets al ead oosted ia i tualiza o te h olog oth huge steps to a ds a e te p ise a hite tu e that is ead fo the loud. Te h ologies a d ethodologies that a e ot et a aila le eed to e i ple e ted. As all of these a e a epted est p a es of p o e e its the sel es, thei i t odu o alo e is al ead likel to p o ide a i depe de t e efits fo ost e te p ise a hite tu es. Of ou se, o e of these e efits a e gua a teed a d eed to e tho oughl e aluated i the o te t of ea h o pa s i di idual e te p ise a hite tu e. Competitive advantage Rife ith u de ia le e efits, pu li loud o pu g is ou d to ake its a i to o po ate IT. If a o pa p epa es its e te p ise a hite tu e fo sou i g f o e te al louds t a sfo i g it i to a p i ate loud as laid out a o e a d the keeps a lose e e o o fo a e ith the apidl de elopi g loud o pu g sta da ds, it is i a st o g posi o fo a s ooth a d g adual o e to e te al loud offe i gs. Enterprise Architecture Economic Efficiency E hi it : Stages of EA a d thei Be efits Business Agility Transparency Traditional Virtualized Public cloud Private cloud Doi g so ea l a lea e a fi ith a sizea le, al eit te po a, edge o e o pe to s that fail to p epa e fo e te al loud sou i g a d, thus, ill ha e to e o k ajo pa ts of thei e te p ise a hite tu es late, if the do t a t to isk ei g le ehi d ega di g the effi ie, agilit, a d t a spa e of thei IT ope a o s.

11 GINKGO MANAGEMENT CONSULTING HAMBURG SHANGHAI SINGAPORE ZURICH Lehmweg Hamburg Germany 83 Fumin Road #08-56 Mayfair Tower Shanghai PR China 30 Cecil Street #19-08 Prudential Tower Singapore Singapore Sonnhalde Pfäffikon Switzerland HAMBURG SHANGHAI SINGAPORE ZURICH

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