Demystifying the cloud:
New economics of cloud computing
Bruce E. Otte
IBM Cloud Computing Marketing
December 1, 2009
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
The world is getting smarter – more instrumented,
interconnected, intelligent.
Smart traffic
systems
Intelligent
oil field
technologies
Smart food
systems
Smart
healthcare
Smart energy
grids
Smart retail
Smart water
management
Smart supply
chains
Smart
countries
Smart
weather
Smart
regions
Smart cities
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
A crisis of complexity. The need for progress is clear.
Global Annual Server Spending
(IDC)
300
250
Power and cooling costs
Management and admin costs
New system spend
200
Uncontrolled management
and energy costs
150
100
50
Steady CAPEX spend
$0B
To make progress, delivery organizations must address the server, storage
and network operating cost problem, not just CAPEX
Source: IBM Corporate Strategy analysis of IDC data
3
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
CIOs’ visions of enhancing competitiveness include business
oriented elements
Six Most Important Visionary Plan Elements
86%
Business Intelligence and Analytics
80%
77%
Virtualization
76%
73%
Risk Management and Compliance
70%
71%
Mobility Solutions
66%
73%
Customer and Partner Collaboration
64%
71%
Self-Service Portals
63%
Interviewed CIOs could select as many as they wanted
Source: IBM Global CIO Study 2009; n = 2345
Cloud Computing
Low growth
markets
High growth
markets
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Renovate & innovate
 How do we address the immediate pressure to cut costs, reduce risk and
complexity?
 How do we Innovate to take advantage of new opportunities?
How can we do both at the same time?
 We focus on delivering services in new ways - lowering cost while
increasing speed and flexibility!
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Cloud: Consumption & Delivery Models Optimized by Workload
“Cloud” is:
Cloud enables:
 A new consumption
and delivery model
inspired by consumer
Internet services.
 Self-service
 Sourcing options
Cloud Services
 Economies-of-scale
Cloud Computing Model
6
“Cloud” represents:
Multiple Types of Clouds
will co-exist:
 The Industrialization of
Delivery for IT
supported Services
 Private, Public and Hybrid
Cloud Computing
 Workload and/or
Programming Model Specific
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Is cloud computing really new? Yes, and no.
Cloud computing is a new consumption
and delivery model inspired by consumer
Internet services. Cloud computing exhibits
the following 5 key characteristics:
•On-demand self-service
•Ubiquitous network access
•Location independent resource pooling
•Rapid elasticity
•Pay per use
Usage
Tracking
Web 2.0
End User Focused
Virtualization
Service
Automation
& SOA
While the technology is not new, the end
user focus of self-service, self-management
leveraging these technologies is new.
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Today there are three primary delivery models that
companies are implementing for cloud
Enterprise
Traditional
Enterprise
IT
Public Clouds
Private Cloud
Hybrid Cloud
Private Cloud
IT activities/functions are provided “as
a service,” over an intranet, within the
enterprise and behind the firewall
 Key features include:
–
–
–
–
Scalability
Automatic/rapid provisioning
Chargeback ability
Widespread virtualization
Hybrid Cloud
Internal and external
service delivery
methods are integrated,
with activities/functions
allocated to based on
security requirements,
criticality, architecture
and other established
policies.
Public Cloud
IT activities/functions are provided
“as a service,” over the Internet
 Key features:
–
–
–
–
–
Scalability
Automatic/rapid provisioning
Standardized offerings
Consumption-based pricing.
Multi-tenancy
Source: IBM Market Insights, Cloud Computing Research, July 2009.
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Cost savings and faster time to value are the leading reasons
why companies consider cloud
To what degree would each of these factors induce you to acquire
public cloud services?
Reduce
costs
Faster time to
value
Improve
reliability
Pay only for what we use • Hardware savings
Software licenses savings • Lower labor and IT
support costs • Lower outside maintenance costs
Take advantage of latest functionality •
Simplify updating/upgrading • Speed deployment
77%
72%
• Scale IT resources to meet needs
Improve system reliability •
Improve system availability
50%
Respondents could rate multiple drivers items
Source: IBM Market Insights, Cloud Computing Research, July 2009. n=1,090
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Labor
Leverage
Infrastructure
Leverage
Elements that Drive Cloud Efficiency and Economics
Virtualization of
Hardware
Drives lower capital
requirements
Utilization of
Infrastructure
Virtualized environments
only get benefits of scale if
they are highly utilized
Self Service
Clients who can “serve
themselves” require less
support and get services
Automation of
Management
Take repeatable tasks and
automate
Standardization of
Workloads
More complexity =
less automation possible =
people needed
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Managing Cloud Adoption
 Cloud economics can be compelling
– Small companies will adopt as reliable, easy-to-use services are available
– Scale economics are within reach of many enterprises
 Client migration will be work load driven
– Trade-off is value vs. risk of migration
– Workload characteristics are critical
– New workloads will emerge as cloud makes them affordable (eg
pervasive analytics, Smart Healthcare)
11
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Enterprise Benefits from Cloud Computing
Capability
From
Server/Storage
Utilization
10-20%
Self service
None
Test Provisioning
Weeks
Change
Management
Release
Management
To
Cloud accelerates
business value
across a wide
variety of
domains.
70-90%
Unlimited
Minutes
Months
Days/Hours
Weeks
Minutes
Metering/Billing
Fixed cost
model
Granular
Standardization
Complex
Self-Service
Payback period
for new services
Years
Months
Legacy environments
Cloud Computing
Cloud enabled enterprise
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Clients cite "push factors" for and "barriers" against cloud
adoption for each workload type
Barriers
Higher propensity
for cloud
Fluctuating demand
Highly standardized
applications
Modular, independent
applications
Unacceptably
high costs
Push factors
Data privacy or
regulatory and
compliance issues
High level of Internal
control required
Accessibility and
reliability are a concern
Cost is not a concern
Lower propensity
for cloud
Source: IBM Market Insights, Cloud Computing Research, July 2009. n=1,090
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
IBM Best Practices: Align the DR approach with the
environment and virtualize
 Align DR to match environment
 Update DR in line with changes in production
 Provide choices to match customers
considerations
Customer Example:
 Virtualizing the DR environment, along with the
production servers and storage, can
dramatically improve recovery times as
measured in both recovery time objectives
(RTOs), and recovery point objectives (RPOs).
A large defense contractor client was
interested in the Resilient Cloud Validation
program to combat the very real fear in the
industry that clouds should only run
applications that you can actually do
without for a couple of days.
Since their end-user clients are all DOD,
they needed to be able to prove to them
that the proposed Cloud services could
provide the same level of reliability that
traditional data center centric service
offerings provide.
The Resilient Cloud Validation program
demonstrates to their clients and to the
press that they are running a true cloud
service that can be trusted.
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
So what is IBM’s approach?
IT needs to become smarter about…
… delivering “services” and service management
 Standardized processes
 Service management systems provide visibility, control and automation
 Lower operational costs and higher productivity
… optimizing workloads
 Rate and degree of standardization of IT and business services
 Complex transaction and information management processes
 Rapid return-on-investment and productivity gains
… deployment choices
 New models are emerging for the enterprise
 Self-service, economies-of-scale, and flexible sourcing options
 New choices of deployment – define these new models
Analytics
Collaboration
Cloud Computing
Development
and Test
Desktop and
Devices
Infrastructure
Business
Services
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Focus on Managing Services
End to End Service Management
Architectural and process level integration that
delivers business aligned Visibility, Control and
Automation of all Data Center Elements
Modular, Self-contained,
Scalable Workload
Delivery Platform
Modular, Self-contained,
Scalable Workload
Delivery Platform
Service
Management
Service
Management
WORKLOAD A
WORKLOAD B
+
Mobility
Infrastructure
+
Facilities
Infrastructure
Cloud Computing
IBM CONFIDENTIAL
Legacy Environment :
NON – IBM Solutions
Requiring workload
connectivity
Service
Management
WORKLOAD C
+
Production
Infrastructure
+
Technology
Infrastructure
Communications
Infrastructure
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Clients told us their implementation strategies — public or private
Cloud, present or future — for 25 specific workloads
Analytics
 Data mining, text mining, or other
analytics
 Data warehouses or data marts
 Transactional databases
Analytics
Business Services




Business
Services
 Development environment
Development
and Test
CRM or Sales Force Automation
e-mail
ERP applications
Industry-specific applications
Collaboration
Collaboration
Development and test
 Audio/video/web conferencing
 Unified communications
 VoIP infrastructure
Infrastructure
Infrastructure
Desktop and devices
 Desktop
 Service/help desk
Desktop and
Devices
Source: IBM Market Insights, Cloud Computing Research, July 2009.
Cloud Computing
 Test environment











Application servers
Application streaming
Business continuity/disaster recovery
Data archiving
Data backup
Data center network capacity
Security
Servers
Storage
Training infrastructure
WAN capacity
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
IBM has introduced 3 choices to deploy workloads – providing
you the choice to meet your business needs!
Smart Business Services – cloud services delivered.
1. Standardized services on the IBM cloud – Public Cloud.
2. Private cloud services, built and/or run by IBM – Private Cloud.
Smart Business Systems – purpose-built infrastructure.
3. Integrated Service Delivery Platform
Analytics
Collaboration
Cloud Computing
Development
and Test
Desktop and
Devices
Infrastructure
Business
Services
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
New deployment choices aligned to workloads.
Analytics
Development
and Test
Desktop and
Devices
Infrastructure
Compute
Infrastructure
Storage
Business
Services
IBM Smart
Business
Desktop on the
IBM Cloud
Smart Business
on the IBM Cloud
Standardized services
on the IBM Cloud
Smart Business Cloud
Private cloud services,
behind your firewall,
built and/or managed
by IBM
Collaboration
IBM Smart
Analytics
Cloud
NEW - IBM
LotusLive w/
iNotes
IBM Smart
Business Dev
& Test on the
IBM Cloud
(Beta)
IBM Smart
Business End
User SupportIBM Service
Assist
Lotus
Foundation
IBM Smart
Business Test
Cloud
IBM Smart
Business
Desktop Cloud
IBM
Compute
on
Demand
IBM
Information
Protection
Services
IBM BPM
Blueworks
(Design tools)
IBM Smart
Business
Expense
Reporting on
the IBM
Cloud
IBM Smart
Business
Storage
Cloud
Smart Business
Systems
Pre-integrated,
workload
optimized systems
IBM Smart
Analytics
System
IBM
CloudBurst
IBM
Information
Archive
Existing
Cloud Computing
IBM Smart
Business for
SMB (backed by
the IBM cloud)
New - Oct
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
IBM services & technology in support of Cloud Computing
To help customers get started and deploy more effectively
Services in support of cloud computing
•
•
•
•
•
•
•
•
•
•
•
IBM Infrastructure Strategy and Planning for Cloud Computing (GTS)
IBM Strategy & Change Services for Cloud Adoption (GBS)
IBM Strategy & Change Services for Cloud Providers (GBS)
IBM Testing Services for Cloud (GBS)
IBM Networking Strategy & Optimization – network application optimization for cloud computing (GTS - ICS)
IBM Data Center strategy (GTS – S&F)
IBM Data Center FamilyTM Solutions – data center design services (GTS – S&F)
IBM Vulnerability Management (GTS - ISS)
IBM Managed Email and Web Security (GTS – ISS)
Security Consulting Services in support of Cloud Computing (GTS – ISS)
Resiliency Validation for Cloud Computing (GTS – BCRS)
Technologies designed for cloud computing
•
•
•
•
•
•
•
•
IBM Solution Edition for Cloud Computing (System z)
IBM WebSphere CloudBurst Appliance (WebSphere)
IBM WebSphere Application Server Hypervisor (WebSphere)
Service Management Center for Cloud Computing (Tivoli)
Software Delivery Services for Cloud Computing (Rational)
Telelogic Systems Architect – Rational Transformation Workbench (Rational)
Developerworks (IBM SWG)
SOA Sandbox (IBM SWG)
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Large Hotel Chain Leverages iNotes
Hundreds of thousands of employees working in >60 countries
Knowledge Workers are small % of the total workforce (~5%)
High % of under-served employees, many of whom were using free email
accounts to conduct business.
Underserved Employee Types:
Underserved Employee Needs:
• Customer Service Reps
• Hotel Managers
• Front Desk Staff
• Catering
• Housekeeping
• Maintenance
 Web-based Email
 Small storage requirement
 Infrequent usage patterns
 Access to Corporate Addresses
 Access to all-company notices
 Easy communication within each locale
15,000 previously un-served users enabled with a Boundary
Worker email account for 3+ years. Reps are no longer using
Yahoo accounts to interact with customers. Per user costs are a
fraction of those of the Knowledge Workers.
https://www.lotuslive.com/fr/compare
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Smart Business Desktop Cloud – Pike County, Kentucky, USA
Delivers a modern education to its students without incurring modern costs with help from IBM
Business Challenge
- 27 school buildings with computer labs
- Outdated systems won’t run current applications
- Budget cuts reduce capital fund by 80%
Solution
- IBM Desktop Cloud leveraging x86 and VMWare
- Reuse existing computers as thin clients
- Capital investment only in central data center
Benefits
- Cost of solution 40% less than replacing desktops
- Reused existing equipment
- Improve learning for students
- Lower application licensing costs
22
Cloud Computing
“We no longer worry about
what hardware is in the
school as much. We also no
longer worry about the
applications or processes
that the schools are using
because they are the same
for everyone.”
— Maritta Horne, CIO
Pike County Schools
Solution components:
 IBM Smart Business
Desktop Cloud
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
North Carolina State University
Making a breakthrough in improving access to academic computing resources
Business Challenge
NC State has more than 31,000 students and nearly 8,000 faculty
and staff. Growing demand for academic computing resources
meant the school needed to fundamentally change the way it
managed these resources in order to deliver the service levels that
its key user populations required.
Solution
IBM adapted high-performance computing into a virtualization
model enabling NC State to deliver more resource support across
the university at lower cost. The new “cloud computing” model for
provisioning technology offers the school a quantum improvement
in access, efficiency and convenience over the traditional
computer labs it had relied on.
“Our goal was to rethink the
way we met the academic
computing needs…By
collaborating with IBM, we
are now better able to
deliver on that mission.”
–
Mladen Vouk,
Department Head
Computer Science
NC State University
Benefits
 Projected savings in software licensing costs of up to 75 percent
 150 percent increase in students served per application license
 Increased flexibility to shift computing capacity between
instructional, research and administrative needs
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
UNIFEM/USNC, Women’s International Non-Profit
Improves fundraising initiatives using LotusLive and Cloud Computing
The Business
 UNIFEM is a non-profit organization dedicated to ending violence,
poverty and inequality for women.
The Challenge
 Improve efficiency of distributed fund raising teams
 Connect 28 volunteers from different chapters across 8 states to
national organization and to each other
 Reduce volunteer time spent on administration to increase time spent
on fundraising
Solution
 Use Files to create central repository to store and share documents
(e.g., sponsor contracts, planning documents, fundraising forms)
 Use Activities to:
 Plan and coordinate events (e.g., walkathons)
 Ensure 24 hr access to current materials for events
 Capture and share meeting notes, photos, talking points
“Before we started using
LotusLive Engage, I would
constantly get emails and
phone calls asking for
information, so I spent a lot
of time responding to those
requests. Now people know
to go to LotusLive. In fact, I
personally saved two hours
a week, which is 10% of the
time I spend volunteering
for UNIFEM.”
Younghee Overly, Unifem, North
Carolina Chapter President;
Member, National Annual Walk
Committee
Benefits
 Reduced 10% of weekly hours spent on coordination and
administration for volunteers
 Little training needed for volunteers, they could just use it
 Worked across multiple environments/firewalls
 Eliminated version control problems
Cloud Computing
www.lotuslive.com
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
IBM Information Protection Services on the IBM cloud
Cloud-based technologies protect your
information with professionally managed
business continuity and resiliency services
The United States Golf Association depends on IBM cloud services, both the
Email Management Express for email recovery and Remote Data Protection to
back up their servers.
Jessica Carroll, managing director of IT for the nonprofit governing body of golf,
says her existing backup and disaster-recovery plans were well designed for
business conditions five years ago.
But they were no longer adequate for today's world in which companies can't
afford to be down for even brief periods of time.
She looked for a better option and found a cloud-based business resiliency
service from IBM. "IBM's reputation and the services it was offering were
enterprise class," Carroll says. "I knew right away this was the way to go. The
product was so strong."
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
IBM IPS on the IBM cloud –remote data protection
Managed Service Provides Reliable Data Protection
• Automatically backed up via your existing
network through the cloud to our security-rich,
offsite data centers or onsite to your own data
center.
• Fully managed solution can reduce backup costs
by up to 40%.
• Skilled IBM storage specialists worldwide who
provide 24x7 monitoring and management.
• Quickly implement a best practices–based data
protection strategy.
Cloud Computing
Customer Example:
One of Houston's largest and fastestgrowing human services agencies
Serves over 200,000 citizens in Texas.
Depends on IBM cloud services to backup server and PC data
Tom Comella, chief information officer,
Neighborhood Centers Inc. "IBM cloud
services were critical in our community
recovery efforts following Hurricane Ike.
The benefits of cloud services reach far
beyond disaster recovery. Better data
protection -- demonstrating that we are
good stewards of information -- has
become a selling point for us in willing
contracts."
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
VNTT: Telco Services Cloud for Businesses
Goal:
Vietnam Technology & Telecommunications - State owned telecom joint venture
• Become a leading Telco provider of IT cloud services
• Support a powerful eco system for innovation
• Incubator for new business models
• Transform how IT is consumed in Vietnam
Pain Points:
• Efficiently provide resources & services to surrounding
companies
Benefits:
• Accelerates time to market - rapid access to
applications services and virtual resources
• Provides business flexibility and lower costs with a
“pay per use” model to its clients
• Rapidly established a cloud based data center
IBM Cloudburst
“IBM’s Blue Cloud solution is the
key connection between the two
success factors of business model
innovation and strong
technological infrastructure”
- Nguyen Minh Tan, General
Director, VNTT
http://w3.ibm.com/news/w3news/top_stories/2009/06/vn_wins_vnttoncloud.html
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Platform/Application/Service: A Mobile Cloud for BoP
Applications
Government officials enters
district, state and national
level information
Kiosk-operator gathers local information
from various sources:
Kiosk-operator uploads information
1.
2.
3.
4.
5.
Makes phone calls to get train schedule
through
Gets movie list for today
Gets blackout timings from electricity office
Gets weather information through internet
Gets visitor list (doctors, etc.) by officials from panchayat
a phone
Spoken Web
Govt. Voice sites
organized in a distributed
nation-wide cloud
Villagers call the VoiceSite to get local as
well as district, state and national level
information.
Service delivery to villagers through (mobile)
phones by a voice interface
28
Mobile
Cloud
IBM Confidential
Cloud Computing
3/22/2016
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Application/Service Cloud: B2B Collaboration for an
Asian Department Store
Challenge:
 Thousands of suppliers need efficient operation & effective collaboration with a department store
Solution:
• A retail B2B solution on a low cost, scalable & secure platform ( >2000 suppliers so far)
• Cloud platform with scalability, security, process monitoring dashboard, data transmission
• ISV’s Retail B2B app for biz info exchange, order & inv. mgmt, sales data analysis
Business benefits:
• Enables suppliers to operate business independently w/ lower cost w/o IT operations
• Provides dept store with common order and inventory mgmt across suppliers
• Allows ISVs to join w/ core knowledge in the app w/o worrying about scalability and security
Clients
2000 of Retail Group’s
suppliers
Client
Client
Client Rel’n Owner
Large Int’l
Retail Group
Operator/Composer
IBM
Ind Service Vendor
E-Future
Cloud Platform
Client
Cloud Computing
Managed Remotely
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
IT transformation includes Cloud Computing within IBM.
Yielding a cumulative benefit to IBM in excess of $4B
IBM Technology Adoption Program (TAP)
Saving IBM over $2.5M per year
(Case Study on IBM TAP)
Self-service, on demand IT delivery solution
for 3,000 IBM researchers across 8 countries
(Case Study on IBM Research Cloud)
Enterprise class utility computing solution
for clients
Systems platform testing for Enterprise Clients,
SMBs, & ISVs
Cloud computing solution for IBM Learning
Centers in Europe
IBM
Computing
On Demand
Benchmark
Centers
Common
Location
Project
(Case Study on IBM Learning Cloud )
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
video
 IBM and Dubuque IA partnership
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Getting started with cloud computing
IBM can help you…
Develop cloud strategy and
roadmap
Plan and
Prepare

Condition existing infrastructure
for cloud
 Assess cloud deployment models,
service options and workloads
 Virtualize and automate existing
systems
 ROI Analysis
 Add service management, service
catalog
 Choose initial project
Start with an isolated private cloud deployment
Pilot and
Deploy

 Architect and implement low-risk workloads such as test and development for
cloud
 Standardize applications and systems
 Deploy self-service portal
Roll out cloud across the enterprise
 Enable additional workloads on private cloud
Extend and
Evolve

Cloud Computing
 Add new users
 Use trusted public cloud services to supplement business and IT
workloads
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
In Summary … there is opportunity in the shift to a
smarter planet.
 Growth of instrumentation, interconnection and
intelligence in the world will drive the emergence
of IT and business services ... and the
requirement for service management systems.
 New IT consumption and delivery models are
very compelling for some workloads today – and
will position your enterprise for the future.
 IBM offers new choices to:
– Reduce infrastructure and operational costs.
– Accelerate service deployment and return on
investment.
– Deliver consistent, secure services.
Cloud Computing
© 2009 IBM Corporation
Nevada Digital Government Summit 2009
Cloud Computing
© 2009 IBM Corporation