POWERING THE CLOUD : 30th – 31st October 2012, Congress Frankfurt

SNW EUROPE; DATACENTER TECHNOLOGIES; VIRTUALIZATION WORLD

#ptc #SNWEurope #vw #dct

Business Transformation through IT Transformation.

Presented by Rob Jenkins, Advisory Services Director, EMEA,

VMware

Session reference KN14 for your feedback forms

© 2009 VMware Inc. All rights reserved

Business Transformation through

IT Transformation

Rob Jenkins, Advisory Services Director, EMEA

cloud_rob

3

1. Business aligned IT Strategy can create a competitive edge

2. IT business value can be related to cost savings, increased revenue, market share or reputation

3. CIOs can become value creators

4

Old IT Shop

5

New IT Shop

6

Major Shifts in the Technology Landscape …

Delivery Architectures

Devices

Applications

Work Style

7

IT is Traditionally Forced to Focus on Non-Value-Add Activity

Source: VMware Fortune 100 Customers

Overwhelming complexity

+

Brittle infrastructure

=

< 30% of IT budgets

goes to innovation and

competitive advantage

IT Investment

42% Infrastructure

Maintenance

30% Application

Maintenance

23% Application

Investment

5% Infrastructure

Investment

Business Agility

Depends on IT Agility

8

Cloud enables higher economic value generation from

business model transformation and productivity growth

8

1 Benefits beyond IT spend reduction were not quantified

Non x86

Telecom

Facilities and Fabric

Hardware

Software

Internal Service

IT Services

Cloud services

Hybrid cloud

76

Pure public

cloud

80

Pure private

cloud

82

Legacy IT

100

Annual total IT spend, 100=Total IT spend with all on-premise infrastructure

Lower IT spend vs.

legacy on-prem

Time to focus on innovative business models driven

by next generation cloud products e.g., analytics

Chose cloud

model based on

security and risk

profiles

9

9

IT spend by industry

0

1

2

3

4

5

6

7

8

9

0 3 6 9 12 15 18 21 24 27 30

IT spending as % of revenue

Operating margin

Percent

Construction, materials

and natural resources

Food and beverage

processing

Chemicals

Retail and wholesale

Media and

entertainment Transportation

Industrial electronics

and electrical equipment

Healthcare

providers

Software publishing

and internet services

Banking and

financial services

Professional

services

Education

Telecomm-

unications

Insurance

Industrial

manufacturing

Utilities

Pharmaceuticals,

life sciences and

medical products

Consumer products

Energy

Current IT has become table stakes; spending more on IT does

not achieve any financial gain

R2 =

0.0726

SOURCE: Gartner “IT Metrics: IT Spending and Staffing Report”, 2012; McKinsey Business Support Function (BSF)

proprietary database

10 10

Current IT has been employed for 3 principal use cases, and they

have reached diminishing marginal returns

• IT contribution to productivity growth down to

~10% (2000-2010) from up to 30%

Individual

worker

productivit

y

• Few breakthrough computational problems

solved by computing innovation since 1980s

Non-

human-

scale

computing

Key stats Use case

• > 50% decline of transaction workers (1974 to

2010)

• 80% of the automation benefits achieved by

2002-2003

Labor

automation

11

1

1

Business executives believe cloud computing will increase the

flexibility and responsiveness of both business and IT

Percent of respondents

SOURCE: McKinsey Quarterly Survey on information and technology strategy, 2010 (BTO strategy Q24, 25)

No

Do not

know

Yes

5

22

29

55

70

Other

Increased ability for IT

to scale up (or shrink)

to meet business needs

Disaster recovery and business continuity

Lower unit cost of IT

Increased business flexibility

(N = 332) Multiple selections allowed (N = 252)

Do you believe that cloud

computing could drive value

at your company?

What are the most significant ways you

expect your company to realize value?

9

16 75

12 1

2

There is “New IT” that enables business model

changes and additional revenues

Business model change lever Amazon.com example

Changing the cost of inputs

Utilize a sophisticated supply chain management

system to improve operational efficiency

Eliminating value chain intermediaries

Providing a digital publishing platform bypassing

traditional publishing houses and keeping ~70% of

sales

Driving customer preference in an existing market

Leveraged large amounts of data around customer

behaviors to offer Prime

Serving an underserved market in a new way

Creating a single marketplace across thousands of

sellers of out of print books

AWS selling rented timeslot on the cloud, instead of

physical computer Introducing new monetization model

SOURCE: McKinsey, team analysis, Amazon.com, press releases

AMAZON.COM EXAMPLE

NOT EXHAUSTIVE

New IT attributes needed to enable changes e.g. real-time behavior and

data tracking, scale and flexibility and multi-device connectivity

13

NewIT enables new business models and sources of growth

• Online collaboration tools (e.g.,

internal wikis) help teams work

together

Individual

worker

productivity

• Google’s AdWords delivers

customized, personalized ads

Non-human-

scale

computing

• Amazon.com uses heavy “push”

for cross-selling related products Labor

automation

Example uses Current IT use cases New use cases

Team &

corporate

productivity

growth

Digital only

products

Business

model

transfor-

mation

14

Successful top firms are perceived in social media as more innovative

than non-successful top firms

1

4

64

108

155

Ø 93

47

The 100 largest firms

globally ranked and

grouped by total

return to

shareholders (TRS)

and their average

Innovation Sentiment

Score1

2nd quartile TRS

Average Innovation Sentiment Score1 by TRS quartile2

Hundreds web articles; global social media; Mar – Aug 2011

Top quartile TRS

Bottom quartile TRS

3rd quartile TRS

1 Number of positive-sentiment articles and blog posts linking company with the words “innovation” or “innovative” over the last 6 months

2 Performance measured by average TRS over the last 5 years (2006 – 2011)

SOURCE: Sysomos Web Analytics; Bloomberg; Datastream; team analysis

x3

15

CIOs need to invest in “NewIT” to enable innovative

business model and drive new monetization opportunities

15

Architect the Cloud for future

needs so as to monetize these

new business models

Envision the Cloud as a

vehicle that can deliver

new revenue streams

Do not bow down to

data silos

Select vendors with

integrated apps plus data

solutions

Engineer the Cloud to derive

insights from data collected

across multiple sources and BU’s

Chose solutions that provide an

integrated application and data

platform, as independent data and

application offerings might not

provide best in class results

16

Our Focus

Empowered, Secure

Mobile Workforce

Faster

Time-to-Market

for Modern

Applications

A More Flexible,

Scalable, Efficient

Infrastructure

for All Apps

Existing Datacenters Public Cloud Services

17

SEGA

Industry

Headquarters

Employees

““We have large capacity fluctuation requirements to do our product

testing. The Colt vCloud solution allows us to have a very flexible

infrastructure, which scales with the up and down of our business

without the CAPEX and management burdens we previously had.”

― Stuart Wright, IT Director, SEGA

• VMware vCloud Director

• VMware vSphere 4

Objectives

• Develop a secure on-line game delivery system to share game

builds with external testing studios globally

• Ensure capacity to meet spikes in demand during game

development lifecycle

VMware Solution

• A hybrid cloud provides a secure environment to mirror builds from

internal systems onto compatible external public cloud

Business Impact

•Greater consistency and control of Q&A testing

•Quicker time-to-market for new games & versions

PROFILE

Gaming

Brentford, UK

Approx. 3,000

VMWARE PRODUCTS & SERVICES

Service Provider

18

University of Oxford

Industry

Headquarters

Employees

Access to information is critical to maintain our position as the world’s

top university and we needed a flexible, scalable infrastructure.

After doing our own research, we decided a Hybrid Cloud as best

suited to our requirements. The vCloud datacentre service

combined with Colt’s pedigree in information delivery, was the

natural choice for us.”

― Dr Stuart Lee, Director of IT, University of Oxford

• VMware vSphere

• VMware vCloud Director

Objectives

• To administer a secure database-as-a-service hybrid cloud to

manage and share research data between Oxford Colleges and

other research universities

VMware Solution

• Hybrid Cloud, as this was the only solution to overcome security

restrictions on datasets which require on-premise location

Business Impact

• Increased data protection and improved service levels enhance

their reputation in research excellence

• Now proven in production, DBaaS will be offered out as a service to

all major UK Research Universities

PROFILE

Education

Oxford, UK

10,450

VMWARE PRODUCTS & SERVICES

Service Provider

19

Cloud Capability Model: “Defining a New Operating Model for the Cloud Era”

Reactive “Standardize”

Proactive “Service Broker”

Innovative “Strategic Partner”

Software Technology

& Architecture

IT Business

Management

People, Culture

& Organization

Processes

& Control

20

1. Business aligned IT Strategy can create a competitive edge

2. IT business value can be related to cost savings, increased revenue, market share or reputation

3. CIOs can become value creators

21

Thank You!