are you ready for the private cloud? [whitepaper]

Copyright© 2012 by KVH Co. LTD

All Rights Reserved. Not to be copied or reproduced without express permission of KVH Co LTD

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WHITE PAPER: KVH Cloud Services

Are you ready for the private cloud? Key considerations when assessing the private cloud and how to know whether it's right for your business.

Table of Contents

2 Introduction

3 Why Adopt the Private Cloud

5 Step-by-step decision process

7 What requirements do you have of your service provider?

9 Summary

10 Case Study – Financial Private Cloud

11 About KVH

Are you ready for the private cloud?

Copyright© 2011 by KVH Co., Ltd. All Rights Reserved

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Introduction

The amount of data generated globally is doubling

every two years, creating immediate and strong

demand for reliable systems that enable businesses

to process and protect their data. Simultaneously,

CIOs are being put under extreme pressure to meet

these new technology needs with tightly restricted

IT budgets. Gartner’s Amplifying the Enterprise: The

2012 CIO Agenda recently found that IT budgets

are expected to increase by a mere 0.5% in 2012,

although 46% of CIOs believe their actual spending

will exceed their budget restraints.

The emergence of cloud computing1 has

introduced new ways for businesses to address

these needs by storing their data on off-site

machines accessible over the Internet and/or

private connectivity to significantly decrease

infrastructure and maintenance costs. Therefore, as

cloud computing enables enterprises to more

cost-efficiently manage their IT environments, it is

not surprising that CIOs have reported “Cloud

computing (SaaS, IaaS, PaaS)” as one of their three

highest technology priorities for 2012.

With the consumerization of IT, cloud services

enable users to access their data from anywhere at

any time to improve business productivity, and with

the continuously changing IT and business needs of

organizations, the cloud provides the flexibility and

1 Cloud computing is a model for enabling ubiquitous,

convenient, on-demand network access to a pool of

configurable computing resources (e.g. network, servers,

storage, etc.) that can be rapidly provisioned and delivered

with minimal management effort.

scalability required to support business growth and

fluctuations in product demand.

However, the Internet boom and this

consumerization together have introduced a

multitude of new security threats to businesses, and

the rise of social media has created even more

channels for these threats to spread and grow

throughout an employer’s network. Consequently,

data security and privacy, particularly for

businesses with mission-critical data such as those in

the financial services sector, has become a high

priority and concern for many businesses. This has

led to the evolution of the private cloud, where

businesses can use their own infrastructure in an

isolated cloud environment, while also leveraging

the high-quality hosting, security, network, and

managed services of their service providers.

Unfortunately, with the influx of businesses entering

this space and with the technology constantly

advancing and evolving, a lot of terminology

surrounding cloud computing has become

confused, and many businesses are still unaware of

exactly what the cloud can offer them and

whether or not they should be adopting this new

technology.

Data and technology trends show that almost all

businesses will need to adopt cloud computing in

some form or another eventually.

For businesses looking to adopt the private cloud,

this whitepaper aims to explain its potential benefits,

and how to make the right decisions when

choosing to make the shift and when selecting a

service provider.



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Why Adopt the Private Cloud?

This section outlines the key IT challenges

enterprises are currently facing, how the private

cloud can address these challenges, and how

businesses can sufficiently prepare and plan to

effectively experience these benefits once their

private cloud is up and running. As each business

will vary in their existing IT systems, internal resources,

staff skill-sets, and data service needs, the extent to

which each company will experience these

benefits will heavily depend on their capacity to

smoothly migrate to the private cloud, as well as

their service provider’s capabilities in supporting

the migration and addressing the company’s

particular challenges and needs.

Security and Privacy

Global IP traffic is multiplying in volume every year,

and is expected to multiply five times by 2013. In

addition to this growth, social media, desktop

virtualization, and the consumerization of IT are

introducing a plethora of new ways for malware to

spread through employers’ networks, and with 85%

of new malware using the internet as its primary

attack vector, there is now a serious need among

organizations for reliable and thorough security

solutions that cover the company’s entire

operations. Particularly, for companies with highly

confidential data, such as those in the financial

services, data leaks or security breaches can be

detrimental to their success and reputation.

Internet-based access for public cloud

environments increases the risk of contamination of

data from unknown, outside sources. On the other

hand, private cloud environments ensure your

infrastructure run on separate networks and servers

from other companies in a secure environment.

These private cloud environments lead to minimal

risk of being tainted or affected by other customers’

environments and deliver guaranteed

performance of the infrastructure.

Maximize Cost-Efficiency

IT budgets are becoming increasingly restricted as

businesses are desperately looking for more

cost-effective ways to manage their IT needs by

doing “more with less”. For most, this means finding

ways to cut the costs of their hardware, software,



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and information security services, while increasing

business productivity.

Most cloud computing environments contain server

orchestration capabilities that provide centralized

management of the server resource pool, including

billing, metering, and chargeback for consumption.

Server orchestration also defines the policies and

service levels through automated workflows,

provisioning, and change management, thereby

creating an application-aligned infrastructure that

can be scaled up or down based on the needs of

each application. Considering that servers in

legacy environments are heavily underutilized,

effectively running at 15-20% capacity, server

orchestration can reduce the number of idle

servers and drive overall server utilization to over

80%. For example, it is feasible for a particular set of

servers to be provisioned at night to run a set of

applications and reimaged in the morning to run a

set of completely different applications. Such

re-use of underutilized resources not only reduces

capital expenditures, but also decreases energy

consumption by 70-80% and yields reductions in

power costs and server maintenance.

For in-house private cloud adopters, the total cost

of ownership of a private cloud environment can

be extremely high without the experience or

expertise internally to help identify where cost

savings can be made while still developing a

solution that meets the business’ specific

requirements. Private Cloud System Integrators

(SIers) have professionals with the right skill-sets,

business partners with the most cost-effective

equipment, and high-performance and highly

secure infrastructure that can boost the

effectiveness of a private cloud environment, while

also shifting your CAPEX to OPEX for optimal

long-term cost-efficiency.

Increased Control

Private cloud is ideal for businesses that want a high

level of control over their IT environment. This could

be applicable to companies with high security

concerns or that deal with highly confidential or

mission-critical data. As a private cloud is highly

customizable, it allows businesses to set up their

servers and networking gear at their desired

specifications to meet their unique requirements.

Whether these requirements stem from specific

regulatory or compliance issues, or whether they

have been imposed from an overseas HQ, the

private cloud environment can be customized to

these needs and, in many cases, this would extend

beyond server specifications to specialized

reporting, monitoring, and supported server

images.

Moreover, since the environment is not shared with

other customers, private cloud adopters can

access and change their environment as it is

running and adjust their settings as they wish, while

also benefiting from the 24x7 monitoring and

technical support, as well as the on-demand

professional consulting of their data center service

providers.

Scalability and Flexibility

Private cloud services enable businesses to scale

their IT infrastructure according to their business

needs. For businesses launching a new product



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with unforeseeable demand in the marketplace,

they can increase or decrease the amount of IT

resources they are using depending on actual

demand after it is launched, which significantly

saves on cost in cases of low demand and

efficiently supports business growth in cases of high

demand. Also, as business needs change regularly

with evolving customer demands and markets

trends, the flexibility to provision services enables

businesses to seamlessly change their IT

environments without negatively impacting their

business workflow.

Step-by-step decision process

With all the capabilities of the private cloud, it can

be tempting to sign up with the first service provider

that promises the aforementioned benefits.

However, it is important to recognize that certain

service providers will be more suitable to particular

businesses and industries than others, and that the

extent of benefits received will depend on the

capabilities of the service provider to meet your

business needs. The following are some basic

considerations to keep in mind when deciding on

whether to make the shift to the private cloud, and

how to choose the best service provider for your

business when the time is right.

Structurally, can your company handle this

change?

Cloud migration can involve significant

architectural changes to a company’s IT systems

and networks. The InformationWeek 2012 State of

Cloud Computing Survey found that only 28% of IT

organizations assess the potential impact of a

cloud service on their internal architecture, though

71% of organizations are either currently in some

stage of a network re-architecture project or

expect to be within the next 24 months. Without

making this critical assessment, it is almost certain

that businesses will face unexpected problems

when developing, customizing, and implementing

their private cloud, not to mention the difficulties

that will arise when monitoring the cloud services

and measuring their effectiveness.

Furthermore, shifting to the cloud requires a major

change in the way a company functions and its

core internal processes. If each department in an

organization is not appropriately prepared to make

this change, the project could not only fail, but it

could potentially raise problems and issues among

teams that will further delay the company from

reaping the cost and efficiency benefits cloud

computing can offer. In particular, silos within a

company, such as a particular department or

team that is not working collaboratively or

effectively with the rest of the organization, could

become a major hurdle in the process of shifting to

the private cloud. It is important to assess the

company’s organizational structure and existing

internal processes to decide whether or not it is

ready for a company-wide adoption of the private

cloud.

Is your internal staff prepared?

Who is going to run this internally? Is there the

skill-set and expertise internally that can efficiently

manage this project on an ongoing basis? It is

highly beneficial to have an internal person or



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team, depending on the size of the company, who

has the technical background as well as a deep

understanding of the business, to work effectively

with the service provider to implement the private

cloud, manage any issues that arise, and actually

understand any changes that need to be made to

the environment as the business changes. In

addition, the service provider should be able to

demonstrate their expertise in running private cloud

environments as well as an understanding of their

customers’ core business and the challenges that

they face. If your staff are not sufficiently trained, or

if the service provider cannot make up for the gaps

in your staff’s skill-sets, moving to the private cloud

will be significantly more time consuming and

costly than necessary.

Are public or hybrid options better suited to your

business model?

For businesses looking to utilize a great number of

servers and for those that are using hosting solutions,

the public cloud would be better suited as it

provides a low-cost service that can handle high

volumes of data. Meanwhile, as mentioned

previously, for businesses that have strong security

concerns or strict compliance and regulatory

factors to consider, the private cloud can better

meet these requirements.

However, it is becoming increasingly apparent that

with the unpredictable nature of data growth and

Internet traffic, many businesses will inevitably

begin to adopt a “hybrid cloud” solution, which is a

combination of both the public and private cloud.

For example, a business may use a private cloud for

a certain application, and during spikes in demand

they may rely on a public cloud to handle excess

data flow. Before adopting a private cloud service,

it is important to assess whether a public or hybrid

solution may better suit your needs.

Where will you house it?

By managing and maintaining a private cloud

environment in-house, it ensures the company has

complete control over the environment, and that

the security risks involved are, theoretically,

minimized since it is isolated from other cloud

environments and networks. For some businesses,

this may seem like a strong reason to host their own

private cloud, though the impacts that this will

have on other areas of the business should also be

kept in mind.

For example, if the private cloud is hosted

on-premise, are there people with the necessary

skill-sets available to attend to the cloud

environment on a 24x7 basis in cases of outages, or

when hardware needs to be added or changed?

Businesses considering this option for security

reasons would need to ensure their infrastructure is

being monitored at all times with the highest level

of security services and professionals who can act

quickly and efficiently when needed. Furthermore,

the in-house facility and internal staff would need

the capabilities to support and manage

uninterrupted power supply systems (UPS, building

generators, etc.) that are required in case of power

outages and mandated building-wide power tests.

Also, unless infrastructure management is a core

component of your business, spending the time,

money, and resources on developing and



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maintaining a private cloud environment could be

wasted efforts. What will be saved from a security

and privacy perspective could be lost from a

business productivity and cost-efficiency

perspective. Private cloud service providers that

specialize in this space would not only be able to

offer a customized, low-cost solution to meet their

customers’ security, data volume, and budget

requirements, but their professional services and

consulting capabilities will ensure that their range

of capabilities are effectively leveraged to

implement the project as seamlessly as possible.

With all that is saved in time and money by

outsourcing, customers can focus their resources

and efforts on strengthening their core business

competencies.

Is compliance an issue for your business?

Strict compliance issues can cause great difficulty

for businesses trying to develop and manage their

own private cloud environments. When assessing

service providers, these kinds of businesses,

especially those in the financial industry, should be

aware of their provider’s ITIL2 competency, as well

as their TIPA and ISO certifications. Providers that

have implemented ITIL training and procedures

across their organization will be able to align and

integrate their support procedures more effectively.

ITIL competency can be measured via TIPA

2 ITIL (Information Technology Infrastructure Library) provides a cohesive set of best practices, drawn from the public and private sectors internationally and supported by a comprehensive qualifications scheme, accredited training organizations, and implementation and assessment tools. For more information, visit the official IT website at: http://www.itil-officialsite.com/

assessments. To meet security compliance needs,

ISO certifications will determine whether a

provider’s infrastructure meets domestic and

international security standards.

What requirements do you have of your service provider?

Before selecting a service provider, ensure you

have a clear proposal of what challenges you

hope to overcome and what goals you anticipate

reaching by adopting a private cloud. This will help

determine the kind of service most appropriate to

your business and what kind of service provider will

best be able to meet your needs.

Firstly, confirm your performance goals, which

could include processing needs and response

times. This will influence the geographical proximity,

network performance needs within and outside the

cloud environment, and the choice of computing

resources regarding CPUs, disks, and storage

devices.

Secondly, assess whether you need a

Software-as-a-Service (SaaS), Platform-as-a-Service

(PaaS), or Infrastructure-as-a-Service (IaaS) solution.

As most providers will either specialize in one area

or have a combination of these capabilities to a

certain extent, you will need to choose the

provider that can offer the best services in the field

you need. The type of solution will also affect the

roles of your internal/end-customer IT support staff.

Thirdly, question whether you need an SLA and, if so,



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which cloud provider can offer it guaranteed. Your

SLA will influence the requirements you place on

the cloud provider and the architecture needed

for the solution. Internal staff or the cloud provider’s

Professional Services will need to have the

capabilities to design a system architecture based

on the building blocks available from the cloud

provider.

Does your cloud provider own and manage

networks as well?

Private cloud hardware and infrastructure costs

include networks, switches, circuits, servers, and

more. Providers that develop these products as

well as offer cloud services will most likely try to sell

all of their products in a single offering. While this

greatly benefits the provider, this can often limit the

cost savings and quality of service for the customer.

Similarly, while some providers may specialize in a

particular product and be able to offer that

product at a significantly low price, the customer

would still need to find other vendors that can

provide the remaining missing pieces of their

private cloud.

Alternatively, service providers that have system

integration capabilities can combine

high-performance, best-in-class devices from

various vendors to offer lower end-to-end cost for a

significantly higher quality service. Furthermore,

with the high level of network sophistication

involved in cloud services, the best providers are

those than can offer integrated cloud and

networking solutions that have comprehensive SLAs

across the environment. These providers will ensure

better integration with legacy systems and “one

throat to choke” if there are any issues, reducing

the number of relationships, support processes, and

skills that would be required internally to manage

multiple vendors.

How well does your provider understand your

needs?

The type and volume of data being generated

and handled will differ across the financial, media,

carrier, and manufacturing industries, and will

further differ depending on the size, location,

growth patterns, and products of each company.

As such, the service providers that manage, store,

process, and protect the data of each of these

companies and industries will need to be able to

demonstrate their capabilities and experience in

these fields. Your service provider needs to

understand your industry, your core business area,

and the challenges that you are facing with your

data, to ensure that the contracts and conditions

of the provided services are agreed upon in a

common technical language.

Also, for businesses that have operations across

several international offices, the service provider

needs to be able to offer services in multiple

languages to streamline communication between

the provider and customer, as well as minimize

downtime in times of crisis or when changes need

to be made to configurations in a timely manner.

What is the value-add?

Every private cloud service provider will claim they

offer the best service available in the industry, but

the key differentiating factor between them and



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their competitors will be the value they can add to

your business beyond the basic service.

As well as multilingual support capabilities,

best-in-class infrastructure, highly regarded expert

consulting, and solid ITIL implementation among

other certifications, what else can they offer? Do

they offer networks, security, managed services,

proximity services, and backup capabilities? Assess

how your service provider can support your private

cloud environment, while also meeting your other IT

needs.

Summary

With the amount of data generated globally

doubling every two years and CIOs under extreme

pressure to meet these new technology needs with

tightly restricted IT budgets, the adoption of cloud

computing environments is moving into the main

consciousness of most businesses. Cloud

computing represents a shift away from traditional

IT consumption models to delivering IT as a service.

While the benefits of cloud computing in terms of

flexibility, speed of deployment, and reduced

capital and operating costs are proven, there are

various types of cloud deployments, such a

“public,” “private,” and “hybrid” to choosing from.

Selecting the most appropriate cloud will be

dependent upon such factors internal policies for

security and compliance, level of desired

customization, and internal technical skills and

infrastructure for managing and hosting the

environment.

Private cloud is ideal for businesses that want a high

level of control over their IT environment. This would

be applicable to companies with high security

concerns or that deal with highly confidential or

mission-critical data. As a private cloud is highly

customizable, it allows businesses to set up their

servers and networking gear at their desired

specifications to meet their unique requirements.

Private cloud environment can be customized to

these needs and, in many cases, this would extend

beyond server specifications to specialized

reporting, monitoring, and supported server images

and applications.

There are many factors to consider when selecting

your external IT services provider. What level of

SLA do you require and is your cloud service

provider capable of providing a one-stop solution

in being able to manage networks as well? What

degree does the service provider understand your

industry and are there specific compliance

considerations that need to be understood and

factored into the implementation? What

professional services capabilities does the provider

offer that will allow you to implement this project as

smoothly as possible and position you best to

receive the full anticipated benefits?

Moving to a private cloud environment, whether a

significant IT migration or a smaller deployment, is

not easy for most companies. Selecting the right

service provider with the appropriate infrastructure,

technical expertise, and service portfolio will allow

businesses to overcome their technical and

resource challenges and to implement a solution

that is most appropriate to their specific needs.



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Case Study – A Closer Look at a Financial Private Cloud

Challenges in Financial Services

Businesses in the financial services sector need to meet strict industry standards (such as Basel III for banks),

reach low latency levels to stream market data feeds and/or conduct high-frequency trading, and

effectively protect their confidential and mission-critical data with highly reliable systems. Some of the key

challenges these businesses face include maintaining modern security levels that address the needs of

the entire company and the range of current and emerging security threats, managing robust

infrastructure with lower IT budgets, and finding ways to focus purely on their core competencies in

finance rather then spending time and resources on maintaining their IT systems.

A leading global financial services company was faced with the above challenges, as well as the

difficulties of not having the internal resources and skill-sets to effectively migrate their entire IT systems to

the private cloud. With several thousand applications that needed to be hosted on several hundred

servers in a secure and private cloud environment, and a range of upcoming demands for trading

solutions, reliable data backup, and significant cost reduction, they decided to leverage the expert

consulting and high-performance infrastructure and networks of a private cloud service provider.

Solution – The Private Cloud

The customer adopted a secure, private Infrastructure-as-a-Service (IaaS) environment of Application

Servers with Dedicated WAN connections to their data center, as well as a remotely accessible Control

Center through which they could efficiently manage their IaaS environment. They also leveraged their

service provider’s Professional Services, Project Management Services, and Private Cloud Consulting

professionals to provide performance analysis of their private cloud environment, and also to conduct a

thorough analysis of their requirements to assist in creating the customer’s internal business case for

outsourced application grid server farms.

They received the highest level of security through their service provider with ISMS-ISO 27001 Certification

for data center services, SAS70 and FISC Compliance, Caged data center environments, secure and

dedicated WAN lines direct to the customer’s data center locations, Due Diligence Auditing, and Control

Center Software developed in-house by the provider for the sole operation of the customer.

Benefits - Maximize Control and Cost-Efficiency



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The solution enabled the financial services company to significantly decrease TCO of their infrastructure

with greater scalability and flexibility in payment and delivery options, meet their extensive security needs,

and also reach a high level of control over their Private Cloud environment through their Control Center, a

server management software service that uses the latest web technology. The Control Center allows the

customer to personalize their display based on server status, control their server power, provision machines,

and share status updates with other customers of the service provider.

Furthermore, the service provider offered disaster recovery (DR) planning, a back-office

Desktop-as-a-Service (DaaS) solution to increase flexibility for employees, and a global network of low

latency connectivity to enable the monitoring, analyzing and optimizing of market data feeds. The overall

solution not only met the initial needs of the customer, but also provided added value and support to the

core areas of their business, allowing the financial services company to save time, money, and resources,

while improving the way their IT systems are managed and maintained and focusing on the services that

generate profits for their business.



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About KVH

KVH was established in Tokyo in 1999 by Fidelity Investments as a Japan focused IT / communications

service provider. As an information delivery platform that allows enterprise customers to store, process,

protect and deliver their vital business information, KVH offers integrated cloud and network solutions that

include infrastructure-as-a-service, managed services, data center services, professional services, data

networking, internet access, and voice services. KVH operates the lowest latency network in Japan, and

with over 450 financial services customers, is the leading provider of ultra low-latency network and

proximity hosting solutions to the high-frequency trading community in Tokyo and Osaka. KVH also offers

low-latency connectivity services between major financial markets in the Asia/Pacific region and the US

including Tokyo, Chicago, New York, Singapore, Hong Kong, Shanghai, and Sydney.

More information on KVH can be found at www.kvh.co.jp/en/

are you ready for the private cloud? [whitepaper]

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