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Cloud Computing Simplify your journey to the Cloud January 2010

CloudComputing - Capgemini · [email protected] [email protected]. CloudComputing 3 Introduction Cloud Computing is regarded by many as the new revolution

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Page 1: CloudComputing - Capgemini · nicolas.a.gauthier@capgemini.com eric.kruidhof@capgemini.com. CloudComputing 3 Introduction Cloud Computing is regarded by many as the new revolution

Cloud Computing

Simplify your journey to the Cloud

January 2010

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2 Cloud Computing

Contents

Introduction 3

A large but fragmented market 4

The potential benefits of Cloud Computing 8

Issues raised by Cloud Computing 16

How to succeed in cloud computing implementation? 19

Conclusion 22

Capgemini Consulting service offering 23

Authors:

Nicolas Gauthier Eric KruidhofVice President Vice [email protected] [email protected]

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Cloud Computing 3

Introduction

Cloud Computing is regarded by many as the new revolution in the IT industry.Analysts and media alike have generated significant ‘buzz’ around the term and thetechnologies it describes, reporting multi-billion market developments. All the majorplayers of the IT Industry (IBM, Microsoft, Sun, HP, Cisco, etc.), pure Internet players(Google, Yahoo, Amazon, Sales Force, ...) and telco operators have developed their own“cloud” offering. Alliances have been formed to prepare and position for CloudComputing that have multiplied to cover the entire IT landscape and value chain.

This array of alliances within the industry has however brought considerable confusionto the cloud. As a result, most CxOs do not clearly see the benefits and risks associatedwith it, and many CIOs have already become cautious about the real benefits of CloudComputing.

Is Cloud Computing only a media hype encompassing old concepts of IT on-demand- or is it the promised ’revolution‘ that will radically change the IT services deliverymodel?

This document aims to clarify the value and the impacts of Cloud Computing. Itdiscusses various technical and non-technical issues that organizations face, andhighlights the strategies that organizations may adopt during their migration to CloudComputing.

This report addresses the following questions from the perspective of CIOs and CxOs:

• How can companies benefit from Cloud Computing? How could it impact theirstrategy?

• How do organizations implement Cloud Computing, and how can they prepare forthe upcoming changes?

• Is there a real business case associated with Cloud Computing?

• What risks and pitfalls exist in Cloud implementation?

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4 Cloud Computing

Definition

As Cloud Computing is still an evolving concept, many definitions exist; these varydepending on the experts and vendors offering the definition. Cloud Computing’sdefinitions – in terms of use cases, underlying technologies, issues, risks, andbenefits – are regularly refined and changed. We seek here a broad definition,which attempts to encompass all the various approached to the cloud.

Make it easy: Cloud Computing is a broad concept of accessing, through the Internet,on-demand technology or business services hosted on mutualised computingresources (servers, applications…). It is named after the cloud representation ofthe Internet on a network diagram.

We already use some Cloud Computing Services as part of our daily lives. Thisincludes web-based office applications, online photos, video, music and documentsharing, with services like Gmail, Google maps, YouTube, flickr, Zoho, Spotify,Vevo…

For organizations, Cloud Computing relies on the same delivery of dynamic,“on-demand” IT or business services with virtual capacity, abstracted from theunderlying infrastructure. It is a next step in a technological evolution fed by agileand networked economies and high-bandwidth broadband infrastructures.

Cloud Computing relies on massively scaled IT or business resources assembledvirtually, accessed over the Internet, used on demand and on a pay-per-use orsubscription basis, where the workloads are shared among multiple customers.

Cloud Computing is alreadymainstream for our personal

use; it will also changethe way in which businesses

will interact."

Chapter 1 A large but fragmented market

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Cloud Computing 5

Threemain features characterise Cloud Computing

Cloud Computing differs in three ways to the traditional IT delivery model:

New service models: Corporations can access to three types of Cloud services

(see figure 1):

- Software as a Service (SaaS): In this case, corporations access applications

over a network. These applications, though shared between many customers,

are tailored to each client needs and priorities.

Examples: Salesforce.com, Netsuite, SugarCRM, Crownpeak. Google Maps can be

seen as an application and also as a platform that enables usage in other applications.

- Platform as a Service (PaaS): To create and run their own applications on

the cloud, using virtual software development environments.

Examples: Force.com, Google App Engine, Yahoo Pipes.

- Infrastructure as a Service (IaaS): Corporation access shared processing,

network, storage and other fundamental computing resources. These capabilities

are offered like a commodity over the Internet.

Examples: This service is provided by Amazon (Amazon Web Services or AWS) and

Sun; Alternative offers are delivered by 3Tera and Liquid .

Empowered IT capabilities

- Scalability and flexibility:

:

Scalability and flexibility are the most important

features that drive the emergence of Cloud Computing. Resources are accessed

by customers based on their exact requirement, at each moment of the day,

week and month.

- On-demand self-service provisioning: The computing Clouds provide

resources and services to users on demand.

- Abstracted System: The computing Cloud is managed transparently to users.

Hardware, software and data inside clouds can be automatically reconfigured,

orchestrated and consolidated to present a single platform image, finally

rendered to users.

- Resource pooling enabling resource and cost sharing among users.

- User-centric interfaces: Users obtain and employ computing platforms in the

Clouds as easily as they access a traditional public utility. The Cloud client

interface is location independent and can be accessed by some well established

interfaces like Web services framework and Internet browser.

Computing

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• New deployment models: Cloud services can be provided through differentdelivery models:

- Public Cloud, where resources are shared and sold over the Internet amongall clients, sharing the same large-scale infrastructure.

- Private Cloud, where resources though flexible as above are operated solelyfor an organization.

- Community Cloud, where resources are shared by a few organizations on awall-garden model.

- Hybrid Cloud, which mixes different cloud models, typically to adjust thelevel of service and security between different applications.

A large but fragmented market

Cloud Computing is announced as the fifth generation of computing modelsafter mainframe, personal computer, client-server, and the web.

In 2009, Gartner Research has positioned Cloud Computing at the top of its hypecycle, named “the peak of inflated expectations”; it could be one of the reasonwhy market size estimates still vary in such an important way, from $42B in 2012for IDC, to $160B in 2013 for Gartner (including advertising revenues), or $107Bin 2013 for Merryl Lynch. The general estimate is that 20% of both applicationsand infrastructure spendings will go to the Cloud by 2013.

Cloud Computing’s market development has advanced to its first mature phase:all leading players have now positioned themselved in the promising market.This has led to the first significant alliances, created to cover the whole scope ofservices and to create critical mass in a fragmented market. These alliances includeIBM-Juniper, Acadia with Cisco-EMC-VMware, or BMC-Salesforce. These alliancesare accompanied by massive investments in the new data centers critical to CloudComputing and Services deployment.

20% of all infrastructureand application spendings

will go on the Cloudin 2013."

6 Cloud Computing

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Cloud Computing 7

A new business model for the whole IT value chain

Cloud Computing has a major impact on the whole IT ecosystem, from hardwarevendors to software publishers, web players, telecom operators and systemintegrators:

• Cloud Computing is driving an unprecedented business model change in theIT industry. While most of the industry was built on a Capex model whereclients or players were massively investing upfront, the Cloud model is basedon an Opex model with faster time-to-benefits. This change in business modelwill affect all players, but especially the software publishers, hardware vendorsand systems integrators that need to adapt.

• Cloud Computing is also changing the IT value chain with potential disinter-mediation for some players. Cloud services vendors are emerging as significantplayers in the value chain, potentially disintermediating hardware manufacturersand software editors from their final customers.

Applications

ApplicationDevelopmentEnvironment

VirtualInfrastructure

databasesWeb

servers

Applicationruntime

environment

Physical servers(Datacenters)

Virtual servers (Virtualization)

Monitoring & managementof Services & Resources

Service Catalog,component library

End-user applicationsavailable throughinternet

Stack of Cloud Services

The Cloud

SaaS offerings

PaaS offerings

IaaS offerings

Examples of offerings

Figure 1 - Landscape of the offerings available on the market

The market is also reaching a first segmentation stage with 3 distinct types of services on offer:

• Cisco Webex• Constant Contact (Marketing)• Microsoft Office Live• Netsuite.com (ERP/CRM/ECommerce)• Salesforce.com (CRM)• Success Factors (HR Management)• Taleo (HR recruiting)

• Amazon Simple Stotage Solution (S3)• Boomi• Bungee Connect• Google App Engine• Heroku• IBM• Microsoft Azure• NetSuite -Business Operating System• Rollbase• Salesforce - Force.com

• Acadia (Cisco, EMC, VMWare)• Amazon ElasticCould Computing (EC2)• Dell• ElasticHosts• Eucalyptus• GoGrid• HP• IBM• Mosso Hosting Cloud (Rachspace)• Nimbus

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8 Cloud Computing

The benefits fall then into 3 categories:

• IT Cost reduction: Cloud Computing can significantly reduce IT costs by providingaccess to an on-demand pool of shared resources, providing significant economiesof scale. Furthermore, the pay-per-use model lowers the initial investment and theassociated Capex and reduces the risk of over-investment.

• Business Transformation acceleration: transformations and performanceimprovement programs very often require significant IT investments andsupporting technologies to adjust and shape new operations modes. These ITinvestments have proven often to be complex and lengthy to implement.Through on-demand access to services over the web, Cloud Computing can speedup transformations and performance gaps requiring support from IT services.Thus Cloud Computing may allow for rapid corporation reconfiguration attimes when companies need be able to adapt their organizations and deliverymodels globally to meet market evolutions and changes.

• Changing the game: Cloud, with its standardization, flexibility and new businessmodel, allows business model innovation, changing the competive landscapewithin an industry, while lowering barriers to new entrants on a global scale.

Through its flexibility and change in business model, Cloud Computing cangenerate a variety of opportunities, from IT cost cutting to acceleratedtransformation and innovation.

First Cloud Computing is more relevant in some situations as depicted in Figure 2.If your company fits the description then you are most likely to derive benefitsfrom the Cloud.

Speed of provisioning is constraining business execution

Existing hardware has reached end of serviceable life andrefresh options are being considered

Time-constrained or event-based infrastructure is required toramp quickly and be disposed of shortly afterwards

Applications & processes have highly variable demand

High compute capacities are required to accelerateinformation discovery and publishing

Internal datacenter capacity limits are being reached and hostinglocations must be re-balanced

Figure 2 - When is Cloud Computing a fit for the enterprise?

Chapter 2 The potential benefits of Cloud Computing

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Cloud Computing 9

For instance, the Total Cost of Ownership of Google Apps is estimated at onlyone third of traditional on-premises solutions.

However, the economic benefits of Cloud Computing very much depend on theinitial industrialisation and size of the corporation. As the major financial benefitis coming from the massive scale and the virtualization of the resources, small andmedium enterprises which don’t have the option of developing by themselvescost-efficient data centres are the first targets of Cloud Computing.

Reducing total IT costs

This first level of benefits to Cloud Computing focuses on providing technology asan industrialized and cost effective utility through the provision of elastic technologyresources and through the pay-per-use model of Cloud Computing.

• Cloud Computing induces a transformation of the IT economic model to a“pay per use” variable costs model. As upfront IT costs can be dramaticallyreduced, financial risks associated to IT investments are much lower:

- Little to no upfront capital required for servers, storage, or applications,- Lower financial risks associated with project failure or delays.

• Cloud Computing also reduces Total Cost of Ownership (TCO) of application,solutions and infrastructure. This results from low-cost, standardized cloudoffers, as well as the industrialization of those offers, which allow Cloudproviders to leverage powerful economies of scale. Cloud also results in a moreadapted resource provisioning based on the exact requirements and needs ofthe organization. The adaption of resources to the exact client requirements isdepicted in figure 3 .

Capacity Cost PerformanceCapacity

Time

You just lostcustomersLarge

CapitalExpenditure

OpportunityCost

PredictedDemand

TraditionalHardware

ActualDemand

AutomatedCloud capacity

PredictionsCost Money…

Source: Amazon Web Services

Figure 3 - Adapting capacity and costs to requirements

Providing technology as anindustrial and cost effectiveutility through the provisionof elastic technologyresources and through thepay-per-use model .”

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10 Cloud Computing

For the large companies which have already realized the benefits of virtualizingIT services, Cloud Computing has to be compared with the most efficient datacenter solutions. Based on comparable IT configuration, a proper business casehas to be established to identify if Cloud Services are more competitive than datacenter solutions. From a pure unit costs perspective, Cloud tends to be moreexpensive than traditional delivery means for already efficient and highlyvirtualised data centers. Nevertheless, for large organizations, if Cloud economiesof scale do not deliver their full benefit, TCO can be a real advantage and Cloudcan deliver benefits when significant peak loads are experienced.

Organizations should consider that shifting their business case from traditional ITmodel to Cloud based model will trigger changes in the nature of the costs theyexperience, and in the revelation of hidden costs. An example of this is thatsoftware costs may no longer be relevant; software costs will often be replaced bylicense fees or even transaction fees. (see figure 4).

Moving from a standard IT model to Cloud-based models of delivery creates newsources of cost, of course, which are hidden to an extent by the transition cost andad hoc project costs. These costs include those of the interoperability with the legacysystems, the updating of the legacy systems, new kinds of legal and regulatoryvalidation, as well as new support mechanisms and training of IT resources.

These new costs must be foreseen, tracked and managed as part of the transitionprocess. The net value of the movement to the Cloud Computing – and the netvalue of the organization itself – may depend on the level of attention paid to thesecosts and the effort spent in managing them.

Net added value

Fees(license,

subscription…)

Environmental costs

Labor costs

Project Costs

Transition costs

Project costs

Software costs

Environmentalcosts

(power, building …)

Labor costs

Hardware costs

One shotcosts

Recurringcosts

• Infrastructure virtualisation

• Scale out of- IT operations- Buildings and

associated services

• New way to deliver projects

• Additional costs to migrateexisting IT to cloud

- User training- Architecture change- Data migration

Figure 4 - Structure of the Cloud Computing services’ Business Case

For large corporations, ifCloud economies of scale

don’t deliver their full benefit,TCO can be a real advantage

and Cloud can deliver benefitswhen significant peak loads

are experienced."

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Cloud Computing 11

Accelerating Business transformation

Organizations are facing accelerated business changes, global and domesticcompetitive pressure and social responsibility demands. They are striving to reachtheir full potential by rapidly implementing innovative business models whilesimultaneously lowering the barriers to drive innovation and change.

These challenges call for a more dynamic model that enables rapid innovation fororganizations, processes, applications and technology services. Cloud Computingcan be a significant enabler for such a model.

Scalable operations

Cloud Computing infrastructure architecture allows organisations to provision aninfrastructure and add to computing capacity on demand and release them backwhen not required. This elastic nature of the Cloud allows organisations not onlyto deploy the solution quickly but also to scale up based on demand.

Enterprises can seamlessly scale their services in correlation with the businessvolume variations. When demand grows, they can quickly scale up, and whenopportunities dry up, they can just as quickly scale down with minimum wasteof time and capital.

Another benefit of this elastic usage is that Cloud Computing enables organizationsto use servers much more efficiently in terms of workload and power. Servercapacity for the organization is determined not on the peak workload, butaccording to each demand – and thus power usage reflects more exactly thedemand required by the usage. Cloud Computing therefore has a Green benefitfor organizations.

Example of Business context where Cloud computingis relevant to support Business variations

Scalability

• Create and deploy quickly IT toolsfor a new business or a new offer.

• Manage explosive growth ofoperations, or downsize / stop abusiness while minimizing ITconstraints.

Playfish.com,make games on socialnetworks, which generally have10 000 to 20 000 users per week.Some games start experiencing

phenomenal success (500 000 usersper week) due to the speed of viralmarketing on social networks.

Animoto: has increased its activityby 7000% in 3 days through

Facebook.

Supportbusinessvariations

Enterprises can seamlesslyscale their services incorrelationwith the businessvolume variations .”

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12 Cloud Computing

Weeks instead of months for process transformation

Business transformations and process reconfigurations have traditionally reliedon complex and risky applications and infrastructure developments, leading tosignificant time-to-benefits in months and often years, not taking into accountpotential delays.

With solutions available, Cloud Computing can provide in few months theservices that the business needs. The first experiences often show a reduction inactual implementation by a factor of 2 to 4 compared to traditional solutions.

There are 3 main reasons for this acceleration:

• Faster adaptation and process redesign: solutions are available and often easyto adapt especially when they are stand alone application to plug on top of therelated IT environment. So far, they focus on ‘targeted’ processes whose integrationwith the rest of the enterprise is loose, such as: sales force management, marketingcampaigns management, or taking orders and billing. However, to supportmore complex business processes with high level of functional customization,these Cloud services should be adapted and integrated with other enterprisesystems.

• Faster roll-out: with solutions available over the web, they can be available tousers around the world instantly with no to little roll-out of technology. Thetechnology roll-out of global projects which very often takes several months isreduced to a few days or weeks.

• Faster adoption: these solutions rely on web based user interfaces which areeasier to adopt by users.

The first experiences oftenshow a reduction in actualimplementation by a factor

of 2 to 4 compared totraditional solutions."

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Cloud Computing 13

Cloud Computing for rapidlybundling and unbundling.””

Changing the rules of the game

Faster and easier Business reconfiguration

Acceleration of market evolutions and of products life cycles, the quest for extremelevels of efficiencies, the ever changing markets of resources and demand, requiresfrom organisation the ability to rapidly reconfigure business activities. And this needsto be done at a global scale, within the organisation and also through the wholevalue chain. An in-house R&D centre in Europe can be transferred to a partner inChina in a few months. The organisation and its supporting technology need toadapt to such rapid reconfigurations.

Cloud Computing has the potential to provide for such flexibility in businessreconfiguration. Figure 5 shows how a Cloud architecture can be implementedto match with the organization principles. Elastic technology resources as well asapplications available over the internet can allow for a rapid reconfiguration insidethe organization or even through the value chain, as resources, applications andinformation can be made available ‘instantly’ to any supplier, client or partnerthroughout the world. For instance, a life science company has recently created asignificant breakthrough in its R&D by implementing a Cloud-based enterprisesocial network, which allows for collaboration and interactions among the 3000researchers in the organization but most of all among the 7000 researchers fromhundreds of organizations outside the corporation. This solution was actuallyimplemented within months.

Organizations trying to create collaborative processes with partners are increasinglyfrustrated by the resulting complexity of their global IT resources, lack of resilienceand weak traceability. Cloud Computing can help tackle these issues.

Figure 5 - IT and Business agility model

CENTER OF EXCELLENCE& FACTORIES MANAGEMENT

STRATEGIC ALLIANCES &PARTNERSHIPS MANAGEMENT

PERFORMANCE & RISKMANAGEMENT

CUSTOMER EXPERIENCETRANSFORMATION

GOVERNANCE& RESOURCE

MANAGEMENT

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14 Cloud Computing

Cloud-based innovation on business models

The economics of Cloud Computing allows for more innovation around businessmodels - indeed, the nature of the change that it brings to the way organizationswork, how they deploy and how they are positioned is potentially disruptiveenough to allow for the emergence of new players in an industry value chain or ofan entirely new business model.

A good example of this disruption is seen in the music industry, which after yearsof intense turmoil is finally establishing a digital distribution model with a simple99c charge per track, and the emergence of digital retailers (with Apple and itsiTunes solution accounting for 50 to 75% of the digital market depending onthe region under discussion). New players, however, are now developing anad-sponsored or a subscription-based model where customer have unlimitedstreamed access to their preferred music. This emerging model does not simplyallow for resources – in this case, music – to be available on the cloud (ratherthan users’ computers): It relies on the cloud for its delivery. Thus a new economicmodel – and one which could potentially rescue an industry - has been enabledby Cloud Computing solutions and resources. Apple’s recent acquisition of Lala,a leading music streaming service, demonstrates that traditional players areinvesting in these new models.

Example of Business context where Cloud computingis relevant to accelerate Business reconfiguration

Speed to value, pay per use

• Quick business services deployment- Accelerate project implementations- Quick and massive roll-out

• React to a crisis (e.g.: recallcampaign of defect products) andorganize the processing tools andorganizations required(e.g.: dedicated contact center).

• Develop a temporary business:incubation of new activities withoutdisturbing current business.

A major airline has suffered asevere and fast decline in its

revenues, and strengthening itssales management has become its

priority. A new CRM has beendeployed with Salesforce in amatter of weeks. The scope was

quickly defined, the tool was set-upand configured in a few days of

workshop.

AccelerateBusiness

reconfiguration

We think that CloudComputing is potentially

disruptive enough to allowfor the emergence of new

players in an industry valuechain or of an entirely new

business model."

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Cloud Computing 15

Technology-intensive industries may also see the emergence and dominance ofnew players in their value chain; players whose focus is on a specific element orprocess of the value chain, and which can leverage Cloud Computing to deliverthose processes with an outstanding level of performance and a very aggressivebusiness model.

For instance, the healthcare industry might see the emergence of one or manyplayers specializing in gathering, managing and synchronizing patient data. Anenterprise such as this would have to bring together constantly changing datafrom all sources - patients, physicians, hospitals, healthcare companies, insurancecompanies. Cloud Computing would enable organizations to take a dominantposition in a value chain through a range of services and processes (Process as aService) essential for an industry.

Example of Business context where Cloud computingis relevant to change a Business model

Speed to value, scabililty

• Create new composite services(package of several offers /suppliers) essentially for Internetcustomers.

On-demand, pay per use

• Industrialize BPO/PRaaS suppliersoffers.

• Facilitate BPO integration in thecustomer IT system.

Birchstreet: e-procurement solutionfor hospitality and food service.

Ketera: spend managementplatform.

Amiando: events organization.

RunMyProcess: BPM solutionbased on cloud.

Walmart announced in September2009 that it is opening up its online

e-commerce platform to thirdparties.

Amazon offers partners a fulfillmentservice alongside its onlinee-commerce platform.

Create BPOand PRaaS

offerings foran industry

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16 Cloud Computing

Chapter 3 Issues raised by Cloud Computing

As IT becomes a utility,Business performance is

derivedmore from the properusage of IT services thanon the ability to developthe right IT capabilities ."

Cloud Computing still faces challenges, notably in terms of security, integrationwith other applications, and quality of service monitoring. The standardizationassociated with multi-tenancy of public cloud services makes it difficult to changethe terms of generic cloud contracts. This “take it or leave it” approach could be astrong constraint for companies with specific requirements in terms of integrationor SLA.

The following points will therefore require careful attention when selecting andapplications to be migrated to the clouds.

Security of data

In Cloud Computing data is stored anywhere (certainly not inside the firewall ofthe client company or institution). Therefore, security measures and guaranteesare required. Providers of quality Cloud Computing and Services must be able toprovide these guarantees.

In fact, security need not be sacrificed in the journey to the Cloud. ReliableCloud Computing and Services offer unique and robust data security protocolswhich protect from all kinds of logical and physical intrusion, in which each dataset is split, encrypted and stored in several data centers throughout the world.

Rules and regulations

Most industries are having to cope with an increasing pressure on regulation andcompliance. For instance, rules and regulations sometimes prohibit the storage ofdata abroad or in certain countries. While some industries are more sensitive thanothers on such issues, the level of complexity of such issues has significantlyincreased with the development of national and multi-national constraints.With Cloud Computing (at least in its public form) where data can be storedanywhere, Cloud providers and their clients will have to make sure they still arecompliant.

Integration

Cloud Computing has a significant impact on IT architecture. While Cloud canbe deployed very quickly, its software, applications, platforms and services mustbe integrated with the rest of the technology architecture. The availability ofapplication architecture and of middleware solutions can be a strong help to makethe right decisions and deploy quickly – particularly because there is as yet nointeroperability between cloud systems.

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Cloud Computing 17

Control over changes

Software-as-a-Service speeds up the rollout of new systems and versions withouta significant and complex administration task; new functionalities can bedeployed instantly to all users. However, this can lead to a lack of control overthe changes that could impact the user’s experience or the interoperability withthe rest of the information systems.

Performance

Managing performance on the Cloud, with multiple clients and users on the samearchitecture, can be a complex challenge. While Cloud providers will usually geartheir performance to SLAs, attention must be paid to regular reporting andbenefit-tracking, and to ensuring that the SLAs have sufficient measures in placeto detect and define failures, backed up with appropriate deterrent penalties forfailure. The key is for clients to seek suppliers with whom they can form arelationship, and in which improvements to performance and operations can bemade on an ongoing basis.

Change of provider

While using Cloud Computing, switching from one provider to another or bringingresources back in house is a radical step. The Cloud Computing market is still in itsinfancy and vendors are today focusing more on the construction and creation ofmarket differentiators rather than on standardization and interoperability. Theyalso have to develop less monolithic service offerings, enabling a smooth transitionfrom legacies to Cloud architectures.

Sourcing and contracts

As a new operational framework will be implemented with Cloud applications orinfrastructure, clients are redefining their sourcing and contract policies. Afterhaving dealt with the traditional make or buy dilemma for years, organizations nowhave to face a third option: lease. Sourcing and legal policies have to be adaptedto this new framework and solution. Contracts are the key legal enforcementmechanism and must be adapted to take into account any organization’s uniqueneeds and the dynamic nature of Cloud Computing.

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18 Cloud Computing

The following issues should be addressed while formalising contract with supplier:

• Liability and intellectual property: the Cloud service provider should beaccountable for complying with the relevant regulations and that their subcontractors are also compliant.

• Understanding of any secondary uses of data by the Cloud provider anddevelopment of contract language to prohibit them if necessary.

• Identification potential cross-border data transfers and prohibition if necessary.

• Service Levels Agreements (SLA): that includes defining the process of managingand monitoring the capacity, data protection, data privacy, operational integrity,vulnerability management, business continuity, disaster recovery, identitymanagement, and ownership of intellectual properties.

• Reversibility: when the provider-customer relationship ends, customer assets,amongst which are data and applications should be packaged and delivered tothe customer.

Adapting the IT organization

Cloud will have a significant impact on the IT organization, as well as its processesand accountabilities. IT operations will become more about managing multiplesuppliers, as the overall strategy of IT shifts to the delivery of services rather thanthe maintenance of infrastructure and resources. As applications and infrastructureare moved to the Cloud, Operations organizations, which represent on average40% of IT staff nowadays, will reposition themselves to manage multiple parties(internally or externally) in order to ensure IT provision as a reliable, industrialized,and cost-efficient end-to-end user experience.

Because designing the architecture and the partner ecosystem necessary to enableCloud Computing operations is complex, constant development and checking ofinfrastructure, sourcing, legal and service management capabilities is essential.

Changing the way IT projects are run

Organizations need to adapt the traditional sequential approach to IT projects asthey move to the more agile, responsive and resilient Cloud model. Agile applicationimplementation, based on iterative development by cross-functional teams, is welladapted to SaaS projects. These projects are run with a strong Time-to-Benefitsobjective, which leads to much shorter cycles of development, and an emphasison the creation of performance gaps.

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Cloud Computing 19

Define Cloud objectives and priorities

Cloud Computing offers opportunities to build new business models, to free thebusiness from the constraints that bind traditional IT, to accelerate businessprocess transformation and to reduce IT costs. Because the potential of cloud mayhave a transformative effect on the organization, business and IT leaders need toagree on the objectives of their journey to the Cloud - among which are:

• Reducing IT costs: With this as a key objective, the Cloud journey will mostlybe a technical programme, led by the IT organization with little involvementfrom other CxO’s.

• Accelerating business transformation.

• Develop ongoing strategy with new technologies: Moving to cloud-based ITenables new strategic opportunities, such as the creation of PRaaS offers ortheir integration into the organization’s value chain.

The main element in defining cloud priorities and to successful fulfillment of theorganization’s vision is to choose the most appropriate candidates for CloudComputing development or migration. Opportunity studies and business casesare based on the following main measurements and criteria:

• Time to market.

• Need for flexibility: The ability to evolve solutions on demand or to meetservice levels requirement.

• Security and compliance: The level of security obtained in the cloud has to bematched to the core-business nature of the service.

• Regulation: Priority should be given to applications and domains that showthe fewest regulatory constraints.

• Criticality: Agreement must be made on which services or applications can infact be moved into the cloud environment. This should be considered in thelight of two factors: (1) how important the application is to the organization,and (2) what infrastructure and SLAs the application requires for fulfilment.

Chapter 4How to succeed in Cloud Computingimplementation?

Free the business from someof the usual constraints ofIT.””

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20 Cloud Computing

Choose the appropriate path to Cloud

Different adoption paths to the Cloud can be considered depending on the abovebusiness priorities and IT maturity. Two dimensions are to be considered whendefining a Cloud implementation path:

• The first dimension is mostly a technology one, moving applications to the Cloud(public, private, hybrid, …) looking for more flexible resources and for costsavings.

• The second dimension looks at the migration path through the business lens,assessing how each step delivers some business value.

Different roadmap can then be designed along these two dimensions as shown infigure 6.

Existingmodel

IT transformation

Bus

ines

str

ansf

orm

atio

n

“to agile & extendedenterprise”

“to Cloud IT”

Infrastructure virtualization

Non core business applications(email, office, …)

Markettest

Core business applicationsfor building and rolling outbusiness services

Incubation of newbusinesses

Business Businessactivities supportedby Cloud services

Costreduction

Cloud services forcritical business

Cloud servicesfor non-criticalbusiness

Cloud servicesfor Business differentiation

Figure 6 - No single way to reach the cloud

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Cloud Computing 21

• Applications can be moved to a Cloud infrastructure, providing more flexibleresources and cost-cutting.

• Some non-core business applications like emails, office applications … can bedelivered through Cloud services with little risks and impacts on the business.

• Some business processes or activities can be supported by specialized Cloudsolutions. The Cloud vendors enrich progressively their offerings in order toprovide ‘turnkey’ solution for supporting business activities like sales,marketing, distribution, enterprise social networks, ….

• New business projects can be delivered through Cloud Computing on anopportunistic basis; it will foster business innovation and allow to test and todemonstrate the value of this new IT delivery model.

Adapt Business / IT Governance

Cloud Computing offers CxOs the ability to roll out IT projects in a very differentway to that which they have previously been to employ, offering new perspectives,new timings and new approaches. Because of this cloud requires a very differentmodel of governance than traditional IT.

While Cloud Computing and Services offer new ways of working, it is misleadingto imply that Cloud Computing will totally empower business managers on ITdecisions, and fully “liberate” them from the company IT environment andorganization:

• With or without cloud, rationalizing and standardizing information systems willremain a challenge that will require decision making and implementation.

• Business leadership on IT is still required to benefit fully from the agility thatcloud can deliver. Integration must still be adjusted and enforced. On the otherhand, there must be a balance – while some measure of centralized control muststill be exerted by IT decision makers, making decisions too centrally wouldnegate the flexibility that is sought through adopting cloud-based infrastructure,platforms and services.

• Legacy systems will not be replaced by cloud application on the short term. It islikely that, for some years, CIOs will be tasked with the delicate responsibilityof managing the interactions between applications in the cloud and in-housesystems.

It would be an illusion tothink that Cloud Computingwill totally empowerbusiness managers on ITdecisions.”

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22 Cloud Computing

Cloud Computing is not just a hype. Its maturity level could even be reachedrather quickly considering that the offers are partly based on rescaling existingservices.

Competition has begun among providers opening doors to better and morestable Cloud services. Strategy to Cloud is also now looked upon by both privateand public sectors leading to the necessary uncomfortable pioneer discussionsbetween suppliers, partners and customers.

Cloud is big and is happening. Nevertheless as described, its benefits are notgranted and should be carefully assessed. Myth such as:

• “SaaS won’t be used as its TCO is higher than traditional IT”: could be true ifyou look at it from the traditional IT usage. However it is not meant to: itshould be used when and where you need it only.

• “Public Cloud is not expected to be as secured or reliable as traditional IT”:right, but again, purpose is not to switch all applications to public Cloud onlythe IT applications which are not core to business

Cloud Computing is not a 100% winning solution and deserves to be analysedand weighted upfront carefully and above all to be looked upon with a differentmindset.

You have to think about your cost model differently. You have to review you addedvalue, rethink your organisation purpose and expertise, and assess howmuch Cloud could strengthen your business. Thus if Cloud may raise opportunities,you need to gather the proper conditions to take over the challenges and make itworth it.

Time has come. Look at it now to define your own journey to the Cloud.

Chapter 5 Conclusion

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Chapter 6 Capgemini Consulting service offering

Capgemini Consulting is particularly well structured, developed and positionedto help organizations leverage Cloud Computing:

• Employing its sector expertise to lead strategic moves and enable businessbreakthroughs.

• Capitalizing on our Technology Transformation practice to address ITchallenges.

• Leveraging the knowhow of the entire Capgemini Group to supply strongtechnical IT expertise, to assess, design, run and test end-to-end offers.

Our expertise covers the complete scope of the Cloud lifecycle, as well as thedifferent skills and partnerships required to successfully deliver a cloudstrategy.

Capgemini gathers a comprehensiveset of skills to drive your journey tothe Cloud :

• Cloud Strategy and ReadinessAssessment.

• Cloud-based BusinessTransformation.

• Fast-Track Cloud migration.

About Capgemini

Capgemini,one of theworld's foremost providers of consulting, technology and outsourcing

services, enables its clients to transform and perform through technologies. Capgemini

provides its clients with insights and capabilities that boost their freedom to achieve

superior results through a unique way of working, the Collaborative Business ExperienceTM.

The Group relies on its global deliverymodel called Rightshore®,which aims to get the right

balance of the best talent from multiple locations, working as one team to create and

deliver the optimum solution for clients. Present in more than 30 countries, Capgemini

reported 2008 global revenues of EUR 8.7 billion and employs 90,000 people worldwide.

More information is available at www.capgemini.com.

Rightshore® is a trademark belonging to Capgemini.

About Capgemini Consulting

Capgemini Consulting is the Global Strategy and Transformation Consulting brand of the

Capgemini Group, specializing in advising and supporting organisations in transforming

their business, from the development of innovative strategy through to execution, with

a consistent focus on sustainable results. Capgemini Consulting proposes to leading

companies and governments a fresh approach which uses innovative methods, technology

and the talents of over 4,000 consultants world-wide.

For more information:www.capgemini.com/consulting

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Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group

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