Hybrid IT Strategies and the Role of Azure Stack What is it? How it can be applied?

A Tech Research Asia ReportCommissioned by Data#3 and Dell EMC

Introduction and Executive Summary Hybrid IT is the dominant IT strategy in the Australian

market today, replacing the notion of “cloud first”. IT and

business leaders realise that not every application can

be shoehorned into a centralised cloud, data sovereignty

and security is of critical importance, and many of our

new services and applications require edge computing.

We are still enthusiastic about using cloud services and

changing our operating models (using approaches such

as DevOps) to optimise our returns on innovation efforts.

But the majority of organisations are now pursuing a fit-

for-purpose workload-by-workload playbook. This is a

fundamental change from the past few years of cloud

first thinking.

One of the challenges with Hybrid IT to date, however,

has been the lack of a truly seamless bridge between any

on-premises infrastructure and the public cloud services.

All public cloud providers have acknowledged this and

the fact that organisations won’t lift and shift everything

onto their centralized clouds. They are now all bringing

solutions to market to try and provide the seamless

bridge. Microsoft’s version of this is called Azure Stack.

This Tech Research Asia (TRA) report explains why

Hybrid IT is now the dominant approach and gives an

explanation of what Azure Stack actually is, and how to

use it. We do this based on our extensive research and

in depth interviews we conducted with 15 Australian IT

leaders in February and March, 2018. We also include a

list of questions that organisational leaders need to be

able to answer about their own hybrid IT strategy.

Key points:

• While data centre consolidation continues and cloud adoption grows, the market has matured and is now predominantly pursuing Hybrid IT that accepts a combination of on-premises and edge computing. The challenge is in creating a seamless edge to core

bridge.

• Data security and sovereignty are a critical focus for

all Australian organisations and as such are leading

many to re-evaluate app and data location.

• The majority of CIOs in Australia want to move faster,

be agile and spend more on new projects. DevOps is

a significant driver of these requirements, developing

Industry 4.0 services in a cloud-native manner.

Recommendations:

• Take a health check on your IT strategy today by

answering the questions in this report. You should

already be looking at what comes after the last few

years of “cloud first” thinking.

• Create your own fit for purpose, workload-by-

workload blueprint for where you will locate apps and

data. Ensure it has a security by design approach, is

DevOps driven, and delivers early wins.

• Evaluate Azure Stack and its competitors with a view

to them being the seamless bridge in helping you

from edge to your cloud core.

Hybrid IT and Azure Stack — What is it? Cloud First is no longer the main IT infrastructure and

workload strategy being pursued in the Australian

market. While this concept informed and drove significant

adoption and supply of cloud computing in Australia over

the past few years, the market has matured. In its place

has emerged a far more nuanced Hybrid IT approach.

One that absolutely embraces cloud computing and all

the capabilities it promises, but which also recognises

that not every application or all data should or will be

transitioned to a public cloud offering.

Instead, TRA research and the interviews we conducted

for this report indicate that as of 2018 the majority of

those Australian CIOs and IT leaders are following a fit

for purpose workload-by-workload, data set-by-data

set playbook. This incorporates a mix of on-premises

data centres (although they will continue to decline by

about 25% over the next 2 years) and edge computing,

colocation facilities and the ecosystems within them,

all the way through to the major public clouds. In other

words, an “edge to cloud core” architecture.

There are many reasons for this change to a Hybrid IT

strategy, not least of which is an acknowledgement that

you should never decide your solution till you know what

the problem or opportunity looks like (which arguably

is what “cloud first” often suggested). Further, most

organisations have learnt the journey to cloud while

mostly beneficial, is not always that easy.

Refactoring or rehosting applications to migrate can be

time-consuming and costly – while 9 in 10 organisations

use a cloud service of one kind or another, for any

given application type less than 40% of Australian

organisations have it running in a public cloud. Changing

culture to leverage cloud (e.g. DevOps, APIs, containers

and microservices) can be challenging, as is managing

commercials and the heterogeneous nature of service

suppliers.

“It’s all about cloud - we’re pushing 100% to cloud. We know we can’t totally get there due to risk and governance but as much as possible it’s where we want to take both our infrastructure and apps. It’s the way things are going and it’s easier manage at the hardware level and capex perspective. We’re not going to cloud to save money especially over three to five years and the business understands that. What we have done is spend a lot of time helping them understand how moving to cloud should bring other benefits around the biz opex model, agility, flexibility. scale and production.”

Australian Legal Firm CIO

Moreover, we now have a far more acute focus on

security, privacy, and compliance when it comes to our

data which is causing many organisations to pause and

re-evaluate where they locate apps and data. To be sure,

security is the number one priority in Australia today,

followed not too far behind by automation.

At the same time Australian organisations are also

striving to shift their spending and allocation of resources

towards new projects and innovation; the goal for one

in two CIOs is to spend 50% of their budget on new

projects by 2020. A lot of this comes under the umbrella

of Industry 4.0 and the Internet of Things (IoT) with

applications that are often location dependent that

require compute, networking, and storage at a site to

overcome latency, lack of suppliers, or to provide better

customer experience.

In TRA’s view and based on the interviews we’ve

conducted very few organisations have mastered this

new set of circumstances with Hybrid IT and even less

could say they have completed their journey. There

is a lot of work still ahead. Most CIOs and IT leaders

are arguably in the midst of working out or refreshing

their playbooks, choosing where to host workloads,

optimising their existing investments, working on new

cloud-native apps, and continuing to address cultural

change.

“We have a global mandate to move things into the cloud. But it is a long-term project and is taking time. We’ve been lifting and shifting.”

Global Pharmaceutical Infrastructure Manager

Although we’ve had “private cloud” and virtualisation

for some time, one of the missing pieces in the Hybrid

IT puzzle has been a seamless bridge between any

on-premises (or colocation-based) infrastructure and

public cloud services. This piece, however, is now being

addressed in force by most of the large cloud computing

providers with a variety of different offerings (each tied

to their own IaaS or PaaS offerings). One of these is

Microsoft’s Azure Stack.

What is Azure Stack and how does it fit in?

The first thing to emphasize is that “Azure Stack” is a

distinct solution from Microsoft’s public cloud IaaS and

PaaS offering known as Azure. However, it is useful

to think of Azure Stack as being an extension of the

Microsoft public cloud. It provides an organisation the

ability to use the same public cloud Azure features,

resources and platform but in their own data centre, a

colocation facility or a managed service provider’s site.

It does this via the Azure Resource Manager. In other

words, Azure Stack is the public cloud Azure sitting in

the place of your choice.

How? By deploying an integrated (hardware and software)

solution on-premises. Let’s repeat that because it is an

important point of difference – to use Azure Stack you

are deploying an integrated system into the data centre

of your choice.

These integrated solutions – which can also be

considered hyperconverged infrastructure (HCI) – are

available from a select group of vendors, including Dell

EMC. Organisations can buy Azure Stack in one of two

ways: 1. By purchasing the solution themselves and

doing all the implementation; or 2. As a managed service

from one of many providers. Users are then also charged

on the same basis as when consuming Azure public

cloud services – i.e. pay as you consume.

Notably, users can establish their own curated

marketplaces with Windows and Linux offerings along

with deploying technologies like blockchain, Mesos

and Cloud Foundry. Basic Azure Stack services such

as App Service and Function ship with the integrated

systems but additional services can be bolted on as

required. Users can also implement Active Directory in

Azure Stack and use the same DevOps tooling and open

source languages and containers that they use in the

public Azure cloud.

There are many features and functions included in Azure

Stack and just as Microsoft provides regular updates

to its IaaS and PaaS services, it will also do the same

for Azure Stack, including new marketplace content.

In short, Azure Stack is Microsoft’s effort at providing a

seamless bridge that takes users from the edge to the

cloud core.

This of course is just a basic introduction to Azure Stack and you can get more detail here and do your own proof of concept here.

“We use Azure today via our colocation provider, so we could see Azure Stack working for our development and for any data we need secure. We are big users and are expanding so there are bound to be workloads for us to use it with.”

Australian Insurance Provider CIO

Azure Stack use cases5 ways to use itThere are as many ways to use Azure Stack as there

are applications in the world. But, of course, not every

workload is suited to the one platform – including cloud

computing – and you will always have a multiple of

options to choose from. In these early days of Azure

Stack and according to the CIOs we interviewed for this

report, the main types of workloads it is being used for,

or envisaged to be used for include:

• DevOps and cloud-native development of apps –

this can be using open source DevOps tools or

Microsoft-specific.

• Industrial IoT in Manufacturing and Utilities or with

projects like smart buildings or factories.

• When deploying hyperconverged infrastructure (HCI).

• In locations where the Azure public cloud services

aren’t available such as in New Zealand or regional

Australia.

• On campus sites like mines, universities, airports, or

sporting arenas.

• On vehicles like ships, planes or even submarines.

• When you want cloud-like abilities but need to keep

the data in a specific location either for compliance

purposes or simply because you want to do so.

“It makes sense for our manufacturing and IoT workloads where we don’t want to send lots of data tothe cloud, but still want a cloud option.”

Australian food manufacturer CIO

At present, there are very few publicly available case

study references that dig into the lessons learnt from an

Azure Stack pilot. We expect more of them to become

available and encourage IT leaders to engage their peers

to explore the opportunities when they do. TRA would

also highlight the following five use cases where we see

Azure Stack (and its competing, similar options) likely to

be adopted. Note that we aren’t suggesting Azure Stack

is your only option or necessarily the right option, but that

the following are possible considerations:

Controlling where your data is stored tightly:

There are many reasons why an organisation may

want to have tight control over where the data it

collects and stores is located. This ranges from

data sovereignty requirements for government

and other regulatory compliance, through to

risk mitigation and plain old preference. This

requirement is only going to get harder as more

focus is placed on data compliance, security and

control. Something like Azure Stack, where the

hardware is placed in the location of your choice

– your own facility, a colocation facility or a

managed service provider’s data centre – allows

you to retain this control and take advantage of

the cloud services.

Industry 4.0 applications: There are many types

of Internet of Things (IoT) workloads that require

computing, networking and storage capabilities

in distributed locations, or which are location

dependent. In other words, edge computing. Of

course, Industry 4.0 is much broader than IoT,

but it is the edge computing aspect combined

with IoT that may have application for something

like Azure Stack, especially if the goal is to have

the data and application architecture go from

edge to a cloud core. This ranges from real time

video analysis, data analysis and collection from

sensor networks, smart factories, campuses or

buildings, smart and safe cities and industries.

Supporting the speed of DevOps teams:

Moving faster in the digital era with continuous

development and delivery is a big part of what

DevOps teams strive to achieve. Anything that

can help maintain the right levels of control

over IP but still push improvements in speed

to releases or products should be welcomed.

Using tools like containers, microservices, APIs

and a consistent code base/platform (such

as with Azure Stack) can help in the need for

DevOps speed.

In regional areas or remote locations: There

are still many places in Australia where using

the cloud computing services that are based

out of Sydney or Melbourne (where most of the

major players are) simply isn’t feasible from a

latency or cost perspective. The same is true

for many vehicles like ships, airplanes, and even

submarines. However, Australian CIOs tell us

that even when this is the case they still want the

same cloud-like capabilities available to them in

the places they need them. It is here that an

offering like Azure Stack might make sense.

Developing new cloud native apps on your

premises: Cloud computing offers many

different ways to develop applications that aren’t

possible, or which are vastly more difficult, with

a traditional on-premises environment. Many

organisations in Australia have been “lifting and

shifting” or refactoring applications to be hosted

on PaaS offerings to take advantage of burst

capabilities, DR across regions, and integration

with other services for example. Many are now

also starting or wanting to write their own new

applications in a cloud native manner, but have

only been able to do so in the public cloud, which

for some is considered a risk too great to take.

Options like Azure Stack can let the organisation

write an application to take advantage of all the

cloud capabilities on their own premises, on

their own terms, and deploy anywhere.

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Hybrid IT and Azure Stack Steps to take in 2018The following is a list of key questions that TRA

recommends all Australian organisations be able

to answer about their Hybrid IT and Azure Stack

approaches. It is not meant as an exhaustive list of

guidance questions but should be used to help start –

or restart – internal discussions about optimising your

infrastructure and workload strategy.

The hybrid IT vision

Have you evaluated in collaboration with

all stakeholders (IT and non-IT) which

application workloads in your organisation

are core to helping it achieve its purpose and

provide real differentiation? Do you need to

develop any new ones?

Have you established or reviewed your IT

strategy and set of guiding principles that will

underpin all of your choices when it comes to

investment decisions? This may include things

like:

• Workloads placed in the most appropriate locations in a fit for purpose approach.

• Agility and Flexibility with DevOps, Microservices and the API economy.

• Ensuring access to opportunities (ecosystems or expansion).

• Being customer- and outcomes-first.• Starting as far up the stack as we can to

quickly meet business requirements.• Sharing platforms where possible. • Standardising on a platform that lets you code

once and deploy to the best location.• Build only when prudent.• Business Continuity and Disaster Recovery

leader.• Security and Privacy by design.• Leader in emerging technology and

innovation.• Value before cost.• Builds local industry and social value.• Environmental sustainability.

Have you subsequently categorised all of

your organisations’ applications and data into

levels of importance, such as critical, core,

non-core, commodity?

Do you have a profile of the behaviour of

each of the critical and core applications,

including the performance in terms of

user experience, the value of the data and/or

IP, and the financial implications?

Do you have a blueprint or roadmap for a

workload-by-workload modernisation

program for your data centre and infrastructure

environments and does this include a list of

priority application projects?

Have you done this with a “best case scenario”

mindset? Meaning that it is formulated

regardless of possible factors that could

impinge on its success.

• Has this been clearly articulated to the organisation at large and do they support the approach?

• Is it rigid or able to adapt if things change?

• Does it take into account things like the National Data Breach notification scheme and the GDPR in the EU?

• Does it include a program of “doing useful things”, or in other words a series of quick wins that can help the organisation as defined by its business leaders and the users themselves?

• Does the priorities list take into account current investment lifecycle considerations such as hardware refresh requirements or data centre leases?

• Does it balance the benefits of having a platform in place for delivering applications as a service to users versus the performance or differentiation possible by taking an application-independent view?

• Does it consider commodity curves and how you can leverage them for better value?

• Does it encompass edge computing all the way through to cloud computing with a fit for purpose mindset when it comes to the location these workloads are placed?

• Does it consider the way the market is moving and the technology developments that are emerging such as the introduction of Azure Stack and similar offerings?

• Have you considered whether you could turn existing facilities and infrastructure investments into a profit-centre by offering services?

• Have you evaluated it with the 6Rs of

workload migration:

• Remove/retire the application or service.

• Retain and refresh – keep the workload

as is.

• Re-platform – move to virtual machines

or containers.

• Rehost – lift and shift the application into

an IaaS service.

• Repurchase – go with something new

or change your licensing model.

• Refactor – redesign and rewrite the

workload for new architectures such as

PaaS.

• For any non-core or commodity applications that you are addressing, have you considered locating them in a third-party service like SaaS offerings so you can focus on more important parts of the business, get to the outcomes desired with those applications quicker, and also automatically take advantage of feature releases? In TRA’s view, there is little value in keeping these types of workloads in-house.

Do you have the funding available to pursue

your strategy and if not, how can you secure

it or amend the strategy to achieve the same

purpose?

Do you have the skills available?

How will you measure success?

What cultural change needs to take place and

how will you address this?

What mechanisms are in place for reviewing

the strategy and taking steps to enhance it?

Azure Stack

Have you investigated what Azure Stack is

and how it is different from the public cloud

services that Microsoft offers in the form of

IaaS and PaaS (Azure)?

Have you investigated and evaluated

competitors to Azure Stack and completed a

thorough comparison?

If you are a DevOps organisation, have you

considered how Azure Stack may offer benefits

in terms of having the one code base?

Does your organisation have any exceptional

circumstances regarding data location that

means it needs to be retained on-premises or

with a local service provider?

Do you desire public cloud-like features and

consumption models but in your own (or

trusted partner’s) data centres?

Are you in a regional or remote area – or have

sites in such locations – that don’t have public

cloud computing services available at an

appropriate latency and performance level?

Do you want public cloud-like services in these

locations and have you considered Azure Stack

or similar to provide it?

What is your Industry 4.0 approach and what

workloads will make this happen for you?

Does it involve edge computing and could

something like Azure Stack and a cloud native

approach to development help?

What education, training, and change

management steps do you need to take

to ensure things like Azure Stack are used

effectively?

Do you have a clear understanding of the

licensing and legal factors related to the use of

any third-party services?

This report was commissioned by Data#3 and Dell EMC. For more information, please visit www.data3.com.au

About Data#3: A leading Australian IT services and solutions provider, Data#3 Limited (DTL) is focused on helping customers

solve complex business challenges using innovative technology solutions. Built on a foundation of over 40 years’ experience,

combined with world-leading vendor technologies, Data#3 delivers an integrated array of solutions spanning cloud, mobility,

security, data & analytics and IT lifecycle management. These technology solutions are delivered by combining Data#3’s services

across consulting, project services and managed services. Listed on the ASX in 1997, Data#3 reported revenues of $1.1 billion

in the 2017 financial year and has more than 1,100 employees.

About Dell EMC: Dell EMC, a part of Dell Inc., enables organizations to modernize, automate and transform their data center

using industry-leading converged infrastructure, servers, storage and data protection technologies. This provides a trusted

foundation for businesses to transform IT, through the creation of a hybrid cloud, and transform their business through the

creation of cloud-native applications and big data solutions. Dell EMC services its customers – including 98 percent of the

Fortune 500 – with the industry’s broadest, most innovative infrastructure portfolio from edge to core to cloud.

About Tech Research Asia: TRA is a fast-growing IT analyst, research, and consulting firm with an experienced and diverse

team in: Sydney | Melbourne | Singapore | Kuala Lumpur | Hong Kong | Tokyo. We advise executive technology buyers

and suppliers across Asia Pacific. We are rigorous, fact-based, open, and transparent. And we offer research, consulting,

engagement and advisory services. We also conduct our own independent research on the issues, trends, and strategies that

are important to executives and other leaders that want to leverage the power of modern technology. TRA also publishes the

open and online journal, TQ.

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