economics of the cloud

Avtex Customer Conference 2012The Intersection of Technology and Customer ExperienceHyatt Regency | Minneapolis |10.25.2012

Economics of the Cloud

Tom MoenDirector of Strategy and Innovation

@Cloudmovr

Avtex Customer Conference 2012 The Intersection of Technology and Customer Experience Hyatt Regency | Minneapolis |10.25.2012


Gartner (yesterday) Top 10 Trends1. Mobile Devices2. Shift from Native Apps to Web Apps3. Personal Cloud Replaces Personal Computer4. The Internet of Things

5. Cloud6. Strategic Big Data7. Actionable Analytics8. In-memory Computing9. Virtual Appliances Integrated Ecosystems10. Enterprise App Stores


Cloud Momentum Building Fast

Sources from top to bottom: 1. IDC; 2. Gartner; 3. Gartner; 4. ITU/Internet World stats; 5. comScore 6. Microsoft (Skype); 7. Microsoft;

TODAY 4 billion searches monthly

663 million users2 BillionInternet users

worldwide

369 million users

2012 of Fortune 1000 will use cloud computing80%

2014 market for cloud computing$150 Billion

2020of all data will live in or pass through the cloud30%


AMI-Partners (www.ami-partners.com) 2011

IT Cloud Spend (as a %) Increasing

http://www.ami-partners.com/


Total Cloud Revenue WorldwideBillions

2005 2010 2015 2020$0

$50

$100

$150

$200

$250

$300

$350

$400


Total Mobile Units Worldwide


Reasons They Migrated to Cloud

Reduce Upfront Costs

Flexibility

Agility

Focus on Core Business

Competitive Advantage

Don't Know

0 10 20 30 40 50 60 70 80


What I Hear…

What IT is saying:

• Email/Collab is Too Expensive• CapEx to OpEx• Need Capability/Feature NOW!• Consolidation of BUs• Upgrades/Updates Kill Us• New Sheriff in Town• Merger or Acquisition• Applications Too Costly• Scale/Performance/Capacity• Better Up-time• Regulatory/Compliance Issue

• We Hate Upgrading• We Lack Skills/Retention• Projects Require High ROI• Need Predictable Spend• Need Enhanced Reliability• Need Enhanced Security• Deliver New Capabilities • We Like to Sleep

What Business is saying:


Why I Believe in Cloud

Improved customer responsiveness Increased employee productivity Reduced cost and increased IT agility More Secure infrastructure

IT is a cost center

Basic e-mail with no calendar

Public or no instant messaging (IM)

Sporadic Web conferencing; separate audio

PBX phone

IT is a more efficient cost

center Standard platform

for secure e-mail and IM

Presence in desktop applications

IP telephony pilots

IT is a business enabler

Increasing unification of communication channels

Mobile device access PC-IP Telephony Unified messaging

Software-powered VoIP

Seamless communication across the firewall

Federation of communication information and policy

IT is a strategic asset

Your Priorities

Cloud Helps Accelerate Your Journey


Pay for access,not for

ownership!

Pay for shared

resources which cost much less!

Pay for speed/agility and become

dynamic!

Pay only for what you

need! Scale up/down

effortlessly.

There are Benefits of Cloud


There are many Clouds


Private Clouds• Faster, simpler deployments of VMs in your

own data centers• Faster, simpler deployments of applications

with fewer errors• Automated discovery and remediation of

problems.

Private Clouds are a facet of improved systems management.


Public Clouds• Faster, simpler deployment of VMs in external

datacenters• Deployment of packaged and custom

applications using pay-as-you-go compute resources

• Faster , simpler application development and enhanced management

• Lower-cost storage with blobsPublic Clouds allow you to scale your IT

environment on demand


Think ANDNot OR


PaaS SaaS

Think of it as an IT Continuum…Evolution toward highly-virtual and beyond to cloud

Physical Virtual / Private IaaS


You Manage You Manage

Vendor Manages

You Manage

Vendor Manages

Platform(as a Service)

Storage

Servers

Networking

O/S

Middleware

Virtualization

Applications

Runtime

Data

Software(as a Service)

Storage

Servers

Networking

O/S

Middleware

Virtualization

Applications

Runtime

Data

Infrastructure(as a Service)

Storage

Servers

Networking

O/S

Middleware

Virtualization

Data

Applications

Runtime

You Manage

Vendor Manages

Cloud Services

On Premises

Storage

Servers

Networking

O/S

Middleware

Virtualization

Data

Applications

Runtime


HYBRID Cloud

Common Technologies:

Database Platform Infrastructure

BusinessApplicationsProductivity

PRIVATE CloudCustomer Hosted Or Partner Hosted

Microsoft Or Partner

Syndicated

PUBLIC Cloud

Microsoft’s Enterprise Cloud Offerings

AND happens HERE


Let’s Get Economical!


Do You Consider Investment In Technology as a Means to Cut Costs?

•A majority of CFOs considered investment in technology as a means of cutting costs.

•Those who thought otherwise considered investment in technology as a means to improve processes.


Normal Project Cost Benefit/Reduction

• Reduction in Storage• Improvement in Server Consolidation• Problem Resolution Savings• End User Savings• Application Development Savings• Space and Utilities


Cloud Economics

Demand Side

Multi Tenant

Supply Side


Estimated Annual Costs Data Center*

• Sioux Falls, S.D. $9,684,282 • Winston-Salem, N.C. $9,799,928 • San Antonio, Texas $10,314,249 • Birmingham, Ala. $10,340,534 • Ames, Iowa $10,378,916 • Charlotte, N.C. $10,440,123 • Indianapolis, Ind. $10,451,796 • Tulsa, Okla. $10,452,228 • Des Moines, Iowa $10,480,298 • Columbus, Ohio $10,499,091

*125,000 sq feet, employing 75 peopleSource: Boyd Company, Princeton, NJ


Over 85%

Staffing

Downtime

IT Staff Training

Server Hardware

Server Software

Services

IT Costs


Worldwide Spending On Servers


Time Effect On Servers


Electricity

“If a CIO has not had to build a new data center recently, electricity is likely to be a huge surprise”

Ken BrillFounder and Executive Director

Uptime Institute


Electricity Costs

• .6% in 2000• 1.5% in 2010• 3% in 2012

40% of this bill is for cooling!

$42,000,000$135,000,000$330,000,000


On-Prem Email/User/Month – SaaS ModelHardware $0.60 1.37%Client Software $3.49 7.98%Server Software $3.61 8.26%Storage $2.40 5.49%Email & Hygiene/Filter $2.99 6.84%Archiving & Compliance $8.99 20.57%Staffing $5.16 11.81%Mobility $8.88 20.32%Financing $1.08 2.47%Real estate $0.84 1.92%Utilities $0.63 1.44%HA/DR $5.04 11.53%Total Costs /User /Mo $43.71 100.00%


Cloud Email/User/Month – SaaS Model

Hardware $0.60 1.37%Client Software $3.49 31.47%Server Software $3.61 8.26%Storage $2.40 5.49%Email & Hygiene/Filter $3.92 35.35%Archiving & Compliance $3.68 33.18%Staffing $5.16 11.81%Mobility $8.88 20.32%Financing $1.08 2.47%Real estate $0.84 1.92%Utilities $0.63 1.44%HA/DR $5.04 11.53%Total Costs /User /Mo $11.09 100.00%


Forrester Research Inc


TEI Exchange 2010 - Forrester

$237,797 per Year1,500 Users

$158 /yr/user

$13.21/mo/user


GroupWise


Total Cost ComparisonOn-premises cost

General costs

Hardware and maintenance $174,814

Software $1,496,893

Operations $2,668,100

Deployment and migration $212,663

Running total $4,552,470

High availability


Software $101,985

Operations $8,800

Deployment and migration $14,209


25% over-allocation for future growth


Software $168,901


Included $104,150

Included $101,985

Included $8,800

Included $14,209

$2,046,617 $2,734,997

Microsoft Online cost Savings

Included $174,814

$1,196,726 $300,167

$741,960 $1,926,140

$107,931 $104,732

$2,046,617 $2,505,853

n/a $34,301

n/a $168,901

$2,046,617 $2,938,199

TOTAL $4,984,816 $2,046,617 $2,938,199

Per user per month $55.39 $22.74 $32.65

For 2,500 total users:• 2,250 using e-mail,

collaboration, IM/presence

• 250 using Kiosk e-mail & collaboration

• 275 E3 Plan• 600 using web

conferencing

45% savings over 3 years


Windows Azure Comparison – PaaS Model

The first scenario included initial one time costs. In this scenario, we determined that CUSTOMER could realize a cost savings of 91.7% with adoption of the proposed Windows Azure Platform architecture.


Azure Savings – IaaS Model

Ideas Imaging Insight PAS0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

AzureOn-premise

Azure On-Premise$867,889 $2,282,072


Cloud Economics

Demand Side

Multi Tenant

Supply Side


Demand Side – Workloads Ideal Cloud

tCom

pute

InactivityPeriod

On and OffOn & off workloads (e.g. batch job)Over provisioned capacity is wasted Time to market can be cumbersome

t

Unpredictable BurstingUnexpected/unplanned peak in demand Sudden spike impacts performance Can’t over provision for extreme cases

Com

put

e

t

Predictable BurstingServices with micro seasonality trends Peaks due to periodic increased demandIT complexity and wasted capacity

Com

pute

t

Growing FastSuccessful services needs to grow/scale Keeping up w/ growth is big IT challenge Cannot provision hardware fast enoughCo

mpu

te


Demand Side EconomicsRandomness

Time of Day

Multi-Source

Uncertain Growth


Cloud Economics

Demand Side

Multi Tenant

Supply Side


Top Data Centers in 2006

• Disney• Shell Oil• P&G• Others names and logos you’d recognize


Multi Tenancy -Top 10 DCs 20111. 350 East Cermak

/ Lakeside Technology Center (Digital Realty) 2. Metro Technology Center, Atlanta (Quality Technology) 3. The NAP of the Americas, Miami (Terremark) 4. NGD Europe, Newport Wales (Next Generation Data) 5. Container Data Center, Chicago (Microsoft) 6. Microsoft Dublin (Microsoft) 7. Phoenix ONE, Phoenix (i/o Data Centers) 8. CH1, Elk Grove Village, Ill. (DuPont Fabros) 9. Microsoft Data Centers in San Antonio (Microsoft) 10. Microsoft Data Centers in Quincy (Microsoft)

http://www.datacenterknowledge.com/special-report-the-worlds-largest-data-centers/worlds-largest-data-center-350-e-cermak/




http://www.datacenterknowledge.com/special-report-the-worlds-largest-data-centers/largest-data-centers-ngd-terremark-qts/





http://www.datacenterknowledge.com/special-report-the-worlds-largest-data-centers/largest-data-centers-io-data-centers-microsoft/



http://www.datacenterknowledge.com/special-report-the-worlds-largest-data-centers/largest-data-centers-supernap-microsoft-dft/









Multi Tenancy • Fixed labor costs shared• Server utilization shared


WHY HASN’T EVERYBODYMOVED TO Cloud??


Impediments to Cloud Adoption


Gartner – Impediments to Cloud


Impediment - Disbelief of Savings


Impediment Who Takes the Lead???

CEOCFOCIO


Impediment – Big Questions That I Get


SERVERSERVICE

GAP


Compliance Adherence in Business Productivity Online Suite

EU Safe HarborSAS-70 Type I (SSAE SOC 1 Type I)


Compliance Adherence in Office 365

SAS-70 Type II(SSAE SOC 1 Type II)

Access to our “Trust Center”

EU Model ClausesFISMA

HIPAA/BAAData Processing Agreement

EU Safe Harbor

ISO 270001

SAS-70 Type I (SSAE SOC 1 Type I)


SharePoint Online 2007 – Customer’s Requirements

• Infrastructure• Document management• Search• Legal

Holds/Retention/eDiscovery• Social Collaboration• Bandwidth / Network• Language Packs• Workflows• Records Center Management• ISO• Anywhere access• AD Integration• OSC Presence

• GB Limits• Dev/Test/Training Environments• Internal/External Access• EU Privacy• BI• Platform• Dashboards• People Search• Security• Upgrades• Architecture Flexibility• Up Front Costs• Support Costs

• Maintenance Costs• Intranet Roadmap• Login(s)• 3rd Party Tools• Upgrade Roadmap• Resource Needs


SharePoint Online 2010 – Customer’s Requirements

• Bandwidth / Network

• BI• 3rd Party Tools


Exchange Online 2007 Concerns

Customize OWA login page

Outlook 2003 support

Public folders

POP/IMAP

“Send as” capabilities

Server-side auto-forwarding

Free/busy calendar sharing

Unified Messaging

Post-processing of outbound mailOWA multi-factor authentication

Journal to on-premise archive

Messaging Records Management

Cross-mailbox search

Application connectivity via older APIsAllow SMTP relay

On-premise OCS voice/UM integration

PowerShell access

Exchange Management Console access

Transport rules

Custom mobile device policies


Exchange 2010 OnlineOutlook 2003 support

Public folders

Application connectivity via older APIs


Where Can I Find More?


Silver Lining Planning Services! Understand your current environment Gain a thorough understanding of your requirements.

• Deliver a SAW and SAW Report• Deployment Planning Tools and Report• Other tools to uncover potential hurdles

Generate a very accurate SOW Artifacts include

• Complete project plan• SOW,• ROI/TCO for your project.

This is work includes up to four days on site and two days of documentation depending on your requirements.


Than

k

You!

economics of the cloud

Technology

customer experiencehyatt

eu safe harbor

microsoft

simpler deployments

49 email amp

compliance

microsoft

impediment