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PritamDey

CloudComputing

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PRITAM DEY

CLOUD COMPUTING

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Cloud Computing1st edition© 2015 Pritam Dey & bookboon.comISBN 978-87-403-0990-4

http://bookboon.com

CLOUD COMPUTING

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Contents

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CONTENTS

1 Introduction to Cloud Computing 6

1.1 What is Cloud Computing? 6

1.2 Cloud Computing History 9

1.3 Types of Cloud Computing 10

1.4 Benefits and Challenges 13

2 How Does Cloud Computing Work? 15

3 Cloud Computing Landscape & Value Drivers 19

3.1 Cloud Value Proposition 19

3.2 Cloud Computing Value Chain 19

3.3 Predicted Market Growth 20

3.4 Competitive Landscape 22

3.5 Cloud Computing Adoption Factors 22

4 Cloud Computing Business Case 24

5 Cloud Computing Reference Architecture 26

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Contents

6 Cloud Computing Maturity Model 30

7 Cloud Computing Pricing Model 33

8 Cloud Computing Return on Investment (ROI) 37

9 Is Cloud Computing Right Fit For Your Organization? 40

10 Cloud Computing Adoption Roadmap 42

11 Public Cloud Migration Requirements 45

12 Implementation Challenges 47

13 Public Cloud Service Provider Selection Model 49

14 Cloud Readiness Assessment Questionnaire 51

15 Next Generation Cloud Computing 52

16 Top Questions to Ask Yourself Before Adopting Cloud Computing 57

17 Top Questions to Ask Your Cloud Service Provider 58

18 References 60

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IntroduCtIon to Cloud ComputIng

1 INTRODUCTION TO CLOUD COMPUTING

1.1 WHAT IS CLOUD COMPUTING?

Cloud computing is ubiquitous. It is the most talked about topic nowadays. Businesses talk about adopting cloud software and solutions to reduce operational cost. We use emails which are stored somewhere in a remote location. We upload our pictures to a website that stores them in cloud storage (e.g. iCloud). Our files are stored in Amazon Cloud drive. Our videos are uploaded to YouTube. In today’s world, it is tough to imagine a scenario where cloud computing has not touched our lives. So what exactly is cloud computing?

Cloud computing is a term used to signify a way of accessing software, infrastructure, and computing power from a location other than our own. The resources usually reside in someone else’s computer or distant data centres. Nowadays the reach of cloud computing is so vast that the resources are located in a different country and continent that often we have no clue of the exact location. Think of the emails in your Gmail inbox. The emails do not reside in our computers. Google serves these emails from the servers that reside in any of the data centres located in Americas, Asia, or Europe.

Another simple way to explain Cloud concept is through the example of ordering food. In the absence of a Cloud model, you would typically have a kitchen in your house where you will prepare your food. This entails a number of financial and non-financial implications. There are costs involved to maintain the kitchen, procure groceries to prepare the food, pay for utility expenses, etc. The non-financial factors are the time involved to prepare the food, cleaning the kitchen, maintaining hygienic conditions, etc. In essence, there is an overhead involved in running your own kitchen. But what if you could just buy the food you need without going through the hassle of cooking? You could either buy the food from the store or order by calling the restaurant. You are least bothered about where the food is prepared and what costs are entailed in the process. The kitchen is hosted in some location. All you care is the delivery of quality food at right time and price. You only pay for the service (in this case, food) you consume. The Cloud model works on the same concept. You pay for the IT service you use; the infrastructure which provides the service is not located in your premise. It is hosted and managed by a third party. The nitty-gritties of the host are unknown to you. This ‘unknown’ is diagrammatically represented as a ‘cloud’.

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Where did Cloud computing get its name from? If you remember the IT network diagrams, the internet is often represented as a cloud pictorially as shown below.

The cloud icon is like the proverbial “black box” that makes the internet work. We don’t know that it contains but it serves our purpose. Since it is owned and managed by someone else, why diagram it out its details? Therefore the cloud computing concept, in all likelihood, may have been derived from this notion. A more elaborated Cloud computing structure is shown here.

Source: Wikipedia

All the elements inside the cloud – applications, platform, and infrastructure – are oblivious to the end users. All the users need is the access devices such as laptops, phones, tablets, etc. and network connectivity to the cloud that is mostly provided by Cloud service providers.

Let us look at some of the popular definitions of Cloud computing.

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Cloud computing is the delivery of computing as a service rather than a product, whereby shared resources, software, and information are provided to computers and other devices as a utility (like the electricity grid) over a network (typically the Internet).

– Wikipedia

Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.

– The National Institute of Standards and Technology (NIST)

“Cloud Computing”, by definition, refers to the on-demand delivery of IT resources and applications via the Internet with pay-as-you-go pricing.

– Amazon

…the practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server or a personal computer.

– Google

According to NIST, the cloud computing model is composed of five essential characteristics, three service models, and four deployment models.

Characteristics Service Models Deployment Models

• On-demand self-service• Broad network access• Resource pooling• Rapid elasticity• Measured service

• Software as a Service (SaaS)• Platform as a Service (Paas)• Infrastructure as a Service

(IaaS)

• Public Cloud• Private Cloud• Community Cloud• Hybrid Cloud

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1.2 CLOUD COMPUTING HISTORY

Cloud computing is the result of evolution of a number of key technology concepts such as virtualization, grid computing, multi-tenancy, scalability, and the exponential increase in computing power and storage.

Even though the origin of cloud computing is not exactly known, the analogy of cloud computing has been existed since 1950s when mainframe computers became available to perform high-volume computing processing. Mainframes were costly and bulky to use. Therefore to make more efficient use of them, a practice evolved that allowed a number of thin clients (or static computer terminals) to share the computing power of mainframes. And this is how “resource pooling” and “time-sharing” – key terms associated with cloud computing – came into common parlance.

The 1990s saw telecommunication service providers using virtual private network (VPN) to manage their network bandwidth effectively. Depending on the demand load, they would switch the traffic to the available servers. This process happened at the infrastructure and data centre level without the users being aware of it. The telecommunication service providers began to use the cloud symbol to demarcate the boundary between the network service providers and the users. In other words, it is akin to saying to end users, “You do not need to know where and how you get the network bandwidth as long as it is available to you uninterrupted. Leave it to us.” In essence, this is where the concept of Infrastructure-as-a-Service took roots.

The decade of 2000s saw the actual emergence and evolution of Cloud computing to its present form. Scientists and technologists explored ways to extend Cloud computing beyond applications and platforms. Technology companies made major breakthroughs in their Cloud products and services. This decade saw the introduction and popularization of “pay-as-you-go” pricing model. Gartner predicted that Cloud computing would change the relationship between consumers and providers of IT services. It also observed that “organizations are switching from company-owned hardware and software assets to per-use service-based models” so that the “projected shift to computing…will result in dramatic growth in IT products in some areas and significant reductions in other areas.”

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Major cloud technology innovations were made in this decade. In 2008, OpenNebula came out with open-source software for deploying private and hybrid clouds. In 2008, Rackspace – another major player in Cloud space – launched OpenStack, an open-source cloud software. In 2011, IBM launched SmartCloud framework to support Smarter Planet. Companies such as Microsoft, Amazon, and Oracle also came out with your own Cloud products and services. Today most of the technology companies have some presence in the Cloud market space.

Today Cloud computing has become so ubiquitous that people are no longer talking about the potential or implementation-challenges of Cloud. The talk of the town is how Cloud platforms can be used for the next generation innovations such as Big Data, Internet of Things, Mobility, Analytics, Digitization, and Advanced Research. By removing the overhead of CAPEX, Cloud has made possible for innovators to use ready-made technology platform to test and roll-out their ideas quickly. In other words, it has reduced the time-to-market of ideas.

1.3 TYPES OF CLOUD COMPUTING

Cloud Service Models Examples/Providers

Infrastructure-as-a-Service (IaaS)

This is the most basic cloud service model where providers provide hardware capacities by demand. Key services provided are: virtual

machines, servers, storage, load balancers, network, firewalls, IP addresses, virtual local area networks (VLANs). Users are billed according to

the amount of resource allocated and consumed.

Amazon web services, Rackspace,

Cloud Scaling, Eucalyptus

Systems, HP

Platform-as-a-Service (PaaS)

Cloud providers provide a computing platform to build applications without the

need to buy hardware or software licenses. Typical services provided are: Operating System, Execution runtime environment,

database, web server, development tools.

Amazon web services, Google

App Engine, Salesforce.com,

Openstack, Rightscale

Software-as-a-Service (SaaS)

SaaS providers provide users access to application software and databases without the need to install on their devices. Cloud service providers manage the infrastructure and platforms that run the applications. This

is usually priced on a pay-per-use basis.

Salesforce.com, Oracle On Demand,

AppDynamics, Microsoft Office 365

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Unified Communications

as a Service (UCaaS)

In this model, multi-platform communications over the network are packaged by the service provider.

The services could be in different devices, such as computers and mobile devices. Services

may include IP telephony, unified messaging, video conferencing and mobile extension.

Telesphere, Verizon, AT&T,

Microsoft, Cisco

TelePresence as a Service (TPaaS)

Providers provide Telepresence as a service. TeleSpace

Contact Center as a Service (CCaaS)

Providers provide Contact Centre services such as interactive voice response, email,

web and real-time chat as a service.

Cisco HCS, Metro CSG

Cloud Deployment Models

Private Cloud Cloud infrastructure dedicated to a single customer (or organization), managed internally or

by a third-party, and hosted internally or externally

HP, Cisco Systems, Microsoft

Public Cloud Cloud infrastructure resources shared by multiple customers. The services are rendered over the internet, and offered on pay-per-usage model.

Salesforce.com, Amazon, Microsoft,

Oracle, Google

Hybrid Cloud Hybrid cloud is a combination of private, public and community cloud services. These services

could be from different service providers.

IBM, VMware, Rackspace,

HP, Expedient, Eucalyptus

Community Cloud Cloud infrastructure dedicated to a group of customers.

Cloudian, CFN Services

Distributed Cloud Cloud computing provided by a distributed set of machines that are running at

different locations, while still connected to a single network or hub service.

Amazon, Microsoft, Google

Intercloud Interconnected global “cloud of clouds” Cisco

Multicloud Multicloud refers to multiple cloud services that could be running in a single heterogeneous

architecture. Multicloud is mostly used to reduce dependence on single vendor, and spread the risk across multiple service providers.

A figurative representation of the above table is depicted below.

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Hybrid Private Public

Hardware / Operating System

Computin ComputinStorage

Software Development Platform

Business Integration

Unified Communications Services

Tele Presence Services

Contact Center Services

SaaS

PaaS

IaaS

UCaaS

TPaaS

CSaaS

A clear segregation of each Cloud computing layers is shown here. At the top is the business and application services that are provided by SaaS layer. If an organization decides to develop the software in-house but does not have the necessary development platform, it can opt for PaaS. PaaS provides the platform to develop application software. The application software needs servers (for computing power), storage, and Operating System. These can be procured through IaaS. The network and communication services are provided through models such as UCaaS, TPaaS, and CSaaS.

The economies of scale are increasingly achieved as we move from Private to Public cloud model as the infrastructure is shared with a large pool of consumers.

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1.4 BENEFITS AND CHALLENGES

Cloud computing offers multiple benefits. Some of the top reasons companies are adopting cloud are:

• Cost effective: Cloud computing services help in cost savings because you pay only for what you consume. The additional overheads of maintaining CAPEX is removed.

• Ease of implementation: Cloud services are easy to procure and implement. All you need is a subscription to the cloud services and network connectivity to the cloud. The cloud service provider is responsible for the installation, upkeep and maintenance of the cloud environment.

• Secure & Reliable: Cloud services are generally considered to be secure and reliable as long as extremely sensitive data is not hosted on cloud.

• Flexibility & Scalability: One of the biggest benefits of cloud is that it is highly flexible and scalable. One can scale up the computing requirements based on the business demand. And if you no longer need the service, you can scale down the usage too.

• Interoperability: Cloud interoperability means the ability of applications to move from one cloud environment to the next (e.g. switching between public and private cloud), or the ability of applications running in different clouds to share information. Nowadays customers can use the same management tools with variety of cloud computing platforms and providers.

Cloud computing comes with its own sets of challenges and pitfalls.

• Security: One of the biggest challenges of cloud computing is its perceived security risks. There is a general notion that anything hosted on cloud is not safe and secure; they are vulnerable to hackings and data compromise.

• Data Governance: If the data is stored on cloud servers, the enterprise may not be accurately aware of the physical location of the servers. Therefore it becomes extremely challenges to provide data governance. Another point of debate is who owns the data stored in cloud. Is it the cloud service providers or the cloud service consumers? The cloud service providers may demand significant extra service fee to return the date to the organizations.

• Multi-tenancy: If the same cloud environment is used as multi-tenancy (sharing of cloud infrastructure/applications by multiple organizations), security and privacy comes a major concern for organizations.

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• Data Privacy and Integrity: As users, we are mostly concerned with data privacy. How do we know that our sensitive personal information is not sold by the cloud service provider to a third-party?

• Regulatory compliance: Nowadays regulations require that sensitive corporate or user data cannot be stored in a cloud environment hosted in a different country. There are compliance challenges around data location or cloud security policies. Privacy laws, Payment Card Industry (PCI) requirements, or financial reporting laws are some of the compliance requirements that organizations need to abide by.

• Disaster Recovery: It is a concern of enterprises about the resiliency of cloud computing as data may reside in multiple servers and geographical locations. In such a situation, what is the disaster recovery plan if any of the servers go down? What if we lose data at a point in time due to server failure? Organizations therefore are extremely concerned on the disaster recovery plan.

Listed above are just few of the benefits and challenges. We will uncover more of them as we proceed in the next chapters.



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How does Cloud ComputIng work?

2 HOW DOES CLOUD COMPUTING WORK?

The underlying tenet of Cloud Computing is that capabilities are delivered as a service. As mentioned earlier, Cloud computing model is created so that customers pay only for usage; not for investment in hardware, software licenses, upgrades, maintenance fees, and man-power cost to run the service in-house. A major reason for this shift is the increasing commoditization of IT. Internet has become cheaper and available everywhere, cost of IT platforms have reduced substantially, hardware could be commoditized, storage has become cheaper (for the same price, one can buy bigger storage capability – thus justifying Moore’s Law), virtualization technologies have become common and affordable, increasing adoption of open source software, abstraction for the users, and lastly increased standardization of IT. Additionally there has been a constant pressure to cut IT costs (largely because in most organizations, IT is still a cost centre rather than a profit centre).

From an architectural standpoint, Cloud computing includes dynamic delivery of capabilities (or services) in the form of applications (Software as a Service), Platform services (Platform as a Service), and Infrastructure services (Infrastructure as a Service).

Figure – Cloud Computing Architecture Overview

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Cloud service provides expose these services mostly through a web interface. All the consumers need to do is have a stable internet connect, and subscribe to these services. Basically they are leasing the services and return them when they no longer need them.

From a cloud service provider point of view, Cloud Computing provisioning is made capable through major architectural innovations. Multi-tenant architecture helped providers to use the same infrastructure to provide services to multiple consumers. Multi-tenancy is fundamental to both public and private clouds; it applies to all three layers of a cloud: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS). Multi-tenancy is the fundamental technology that providers use to share IT resources with multiple applications and tenants (businesses, organizations, etc.) This enables the providers to spread the CAPEX across multiple consumers, thus driving down the cost of cloud services. According to an article on Multi-tenancy in Computerworld, Salesforce.com, for example, supports 72,500 customers who are supported by 8 to 12 multi-tenant IaaS/PaaS instances in a 1:5000 ratio. In other words, each multi-tenant instance supports 5,000 tenants who share the same database schema.

The second architectural characteristic of cloud computing is the increasing portability and interoperability between in-house applications and cloud solutions. “Portability and interoperability relate to the ability to build systems from re-usable components that will work together “out of the box”, as per The Open Group. The most common kinds of cloud computing portability are data portability, application portability, and platform portability. Data portability enables re-use of data components across different applications. Application portability enables the re-use of application components across cloud PaaS services and traditional computing platforms. Platform portability enables re-use of platform components across cloud IaaS services and non-cloud infrastructure, and re-use of bundles containing applications and data with their supporting platforms. Interoperability provides the ability to have different application components deployed on one platform communicate with similar application components deployed on different platforms. For example, an application deployed in-house in a traditional IT setup may communicate with another component deployed in a hybrid cloud or one deployed on private cloud. This aspect of portability and interoperability is critical to cloud computing success.

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The third major architectural innovation in Cloud computing is virtualization. In simple terms, virtualization is the capability that separates physical infrastructure to create multiple dedicated resources. “Virtualization software makes it possible to run multiple operating systems and multiple applications on the same server at the same time,” said Mike Adams, director of product marketing at VMware, a pioneer in virtualization and cloud software and services. “It enables businesses to reduce IT costs while increasing the efficiency, utilization and flexibility of their existing computer hardware.” The technology behind virtualization is known as a virtual machine monitor (VMM) or virtual manager, which separates compute environments from the actual physical infrastructure. Virtualization separates the physical infrastructure, and cloud computing builds on that separation. The key benefits of virtualization are it helps to maximize infrastructure resources, provides multi-tenancy capability, and better rationalization of IT costs. Virtualization provides the basic building blocks to enhance agility and flexibility. So much so that businesses and organizations who are thinking of moving to cloud are advised to fully implement and leverage the virtualization capability in their IT environment.

Figure – Virtualized Cloud Model

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The fourth architectural aspect of Cloud computing is load-dependent scalable architecture. Note the unique selling proposition of Cloud is its ability to scale based on demand. By definition, scalability is the ability of computer solution (software or hardware) to continue to function well and efficiently irrespective of the load on its infrastructure. It should provide the same performance and Quality of Service (QoS). This is usually made possible by using several servers and distributing the load between them according to the demand. This is typically done by Load Balancers that do the necessary scaling. Load Balancers provide the aggregation of new servers to distribute the load among several servers. Similar to server scalability, there is also network scalability. Network scalability allows bandwidth-provisioned network pipes and other network resources to handle the sudden increase in network bandwidth.

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Cloud ComputIng landsCape & Value drIVers

3 CLOUD COMPUTING LANDSCAPE & VALUE DRIVERS

3.1 CLOUD VALUE PROPOSITION

The adoption of Cloud computing has proved to be a significant value driver by addressing key concerns of CIOs/CTOs. Cloud computing has brought in much-needed resiliency, availability, and optimum usage of existing IT infrastructure. It is able to scale up to the increasing demand for servers & storage space by optimally utilizing the IT infrastructure. This is accomplished by building in much-needed redundancy in the infrastructure landscape by quickly provisioning for additional hardware/storage requirements from Cloud service provider. At the same time by using server consolidation and virtualization features of existing infrastructure, Cloud computing is able to increase the ROI of the infrastructure. This leads to reduced Total Cost of Ownership (TCO).

3.2 CLOUD COMPUTING VALUE CHAIN

An understanding of cloud computing value chain is needed to grasp the potential of the cloud computing opportunities in markets, and in which space major cloud players play their game. The traditional linear value chain for IT services starts from consulting, and extends to design, implementation, and operation/maintenance of IT infrastructure and applications. The same value chain model can be applied to cloud computing business.

At the top of the value chain, we have the cloud advisory services and System Integration. The next layer is the service delivery, application management, service brokering, and customer support. This is the space where SaaS providers & system integrators focus on. The cloud applications are built on Cloud platform and Application services – the domain of PaaS & SaaS providers. The bottom layer is occupied by Infrastructure & Hosting services. This is where major IaaS hardware vendors such as Dell, HP, IBM, Oracle, etc. dominate the market. The last mile – network connectivity layer – is left to Telcos, ISPs and HW vendors to service.

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Figure: Cloud Computing Value Chain

Because of the segregation of capabilities at each step of the Cloud computing value chain, a number of new, innovative and independent players have entered the market choosing the segment where they are likely to achieve competitive advantage. They are able to launch their IT service offerings on the market with minimal capital expenditure and controllable operating costs. This resulted in a rich ecosystem of IT service providers who choose to play at any step of the value chain according to their capabilities and long term strategies.

3.3 PREDICTED MARKET GROWTH

According to Gartner, the overall cloud computing market size is expected to touch $220 billion by 2016.

Figure: Public Cloud Services Market by Segment, 2010–2016 (Gartner)

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From Cloud services standpoint, a significant amount of growth is expected in Cloud Infrastructure Services. Gartner’s Public Cloud Services Forecast predicts that IaaS is expected to grow at 41.7 percent CAGR between 2011 and 2016, followed by PaaS at 26.6 percent and SaaS at 17.4 percent.

Figure: High Growth Expected in Cloud Infrastructure Service (Gartner)

According to Research and Innovation Estimates, the Cloud computing spending is forecast to grow at a rate of 36.6 percent during 2008–13 to $55.2 billion in 2013–14. By 2020, the percentage of on premise spending replaced by cloud computing is likely to be 14.5 percent – up from 0.36 percent in 2008.

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3.4 COMPETITIVE LANDSCAPE

More than a technical solution, Cloud computing has brought in tremendous changes in the way of doing business. Since cloud computing is built on a dynamic environment where the cloud service is expected to be provided on-demand, self-provisioning, and pay-as-you-use model, it opened up a plethora of opportunities for players in the market to offer new ways of doing business, offering services in new ways, and making the supply chain more integrated and cohesive.

The advent of Social, Mobility, and Analytics, combined with the power of Cloud computing, has made the world heavily connected. This connectivity has led to emergence of new companies that develop new applications, services, and the next generation of platforms.

Apart from the traditional Cloud Service providers, the competitive landscape is gradually bringing into its fold new players in the markets. The competitive advantage may be shifting from traditional players who concentrated on offering infrastructure capability to new players who offer infrastructure, application, and data services on cloud. In coming days, we will increasingly witness the co-existence of traditional Cloud players (such as Oracle, HP, or Dell) with non-infrastructure players (such as Amazon and Google). We are going to see a new and constantly-evolving battleground in Cloud computing competitive landscape.

3.5 CLOUD COMPUTING ADOPTION FACTORS

There have been host of factors that led to the increasing adoption of Cloud computing.

The primary reason for the rapid increase in Cloud adoption is the growth in demand for virtual machines, memory, and storage. According to a study conducted by Verizon in 2013, the use of cloud-based storage has increased by 90 percent during the time period studied (January 2012 and June 2013), and cloud-based memory by 100 percent; this has been driven largely by the shift of business-critical applications to the cloud.

Another key factor is the independence the firms get from investing in capital expenditure for costly IT infrastructure. The pay-as-you-go model provides the much needed economic flexibility to invest solely based on business demand. The overhead of procuring, implanting, operating, maintaining, and upgrading of the infrastructure frees up the bandwidth of the firms which can be better utilized for core business activities.

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The other factor that led to the growth in adoption of cloud computing is the declining cost over the years. Due to the network effect (declining per unit cost with growth in the number of consumers), the cost of Cloud technology has been significantly coming down. Firms have the bargaining power to procure right solution and services at a price affordable to them. They also have the upper-hand to negotiate on the right Service Level Agreements (SLAs) advantageous to them.

Another factor is the availability of cloud skills in the market. Early adopters of Cloud faced significant challenges in implementation and support. The lack of adequate consultants with right skills and the limited support capability of Cloud service providers had led CIOs to spend sleepless nights trying to figure out solutions to the technical challenges. Nowadays there is ample availability of consultants with Cloud computing skills. There is also marked improvements in vendor’s customer support capability.

The Cloud technology maturity has also been another growth factor in Cloud adoption. Due to the increased reliability of cloud technology, the user confidence around Cloud adoption is on her rise. Cloud service providers and vendors are able to tailor the product according to consumer needs. Cloud consumers now know better how they want to use Cloud for their business needs. According to a Verizon study, organizations have moved beyond testing and development in the cloud and are now running external-facing and critical business applications.

Security is still one of the major impediments to Cloud adoption. While the industry has seen marked improvements in addressing the security risks, the larger security concerns around data privacy still remains.

In conclusion, according to the Verizon study, “Enterprise cloud has reached a tipping point. Organizations have seen the benefits cloud can provide – both in efficiency and cost – and are ready to move an increasing number of mission-critical applications to cloud-based infrastructure. However in order for this to happen, cloud service providers must deliver to enterprise-grade availability and security.”

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Cloud ComputIng BusIness Case

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4 CLOUD COMPUTING BUSINESS CASE

Most people think that Cloud Computing is a new technology model solution created to solve specific problems around applications and IT infrastructure. While this is true to some extent and cannot be debated otherwise, business willing to adopt Cloud would be short-changed if it Cloud is just considered a technology platform. Great value can be derived from Cloud Computing if it is treated as a business model.


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Cloud ComputIng BusIness Case

Why should Cloud Computing be treated as a business model? Precisely because of the reasons mentioned earlier in this book. Cloud computing is a business model because it changes the way IT is delivered and consumed. Cloud is a flexible, scalable, and pay-per-use model that helps business address cost and scalability challenges. With its pay-as-you-use model, Cloud helps move IT costs from CAPEX to OPEX. It is scalable because IT capability can be ramped up or down depending on the changing business demand. For new start-ups, Cloud facilitates them to set up their IT environments quickly without creating an overhead of IT expenditure. Organizations are moving to SaaS-based solutions that help them to avoid large investments in licensing enterprise software. This aspect of cloud computing business model has come as a boon to Small & Medium Enterprises (SME) who mostly do not have the resources and funding to invest in building expensive IT ecosystem.

Over the years, this has enabled organizations to channelize their savings from Cloud adoption to invest in innovating its products and services. Cloud computing therefore speeds up entry to new markets and shortens time-to-market of new products. This is the reason Cloud computing is synonymously known for innovative IT service delivery model.

This does not mean that Cloud computing is a solution for everything or everyone. Cloud is recommended in situations where there is likelihood of rapidly growing computing resource demand, the need to reduce IT capex, rapid setup and deployment of IT environment, demand on business to be agile and respond to market dynamic quickly, and leveraging the cloud computing infrastructure to a broader set of users to reduce per-unit cost. Cloud computing is not usually recommended when the demand for computing resource is likely to be stable over a period of time, sensitive data is involved, heavy integration is involved between in-house and cloud applications, the benefits of cloud computing is marginal as opposed to the effort involved in adopting cloud, and there is not a clear business case for cloud adoption.

There is also a clear distinction between what is feasible to be hosted on private cloud vis-à-vis public cloud. Core business applications, applications built on significant internal intellectual property (IP), mission critical applications are better candidates for private cloud. Similarly enterprise-wide collaboration tools used across geographical locations can be deployed on private cloud. Data analytics platforms & storage solutions are best retained within the boundaries of private cloud as data security is still a major concern for business. At the other end of the spectrum, customer solutions such as Customer Relationship Management (CRM), Enterprise Resource Planning (ERP) can be moved to public cloud as SaaS based solutions have gained customer trust and confidence. Disaster Recovery and backup solutions can be moved to public cloud as they can lead to big cost savings.

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Cloud ComputIng referenCe arCHIteCture

5 CLOUD COMPUTING REFERENCE ARCHITECTURE

For an organization embarking on a Cloud computing journey, is there a blueprint or template that can be reused as a reference to make sense of various elements of Cloud computing? Fortunately the answer is yes. A Reference Framework can be used to organize Cloud computing ideas in a practical structure.

In simple terms, a Reference Framework consists of two elements – a Ref7erence Model and a Reference Architecture. A Reference Architecture provides the decomposition, various views, and best practices of the subject in discussion. Basically it helps us to answer the question, “what is the composition of the subject matter (Cloud computing in this case)? What are the capabilities that Cloud Computing provides?” The Reference Model, on the other hand, explains the concepts and relationships of the various components of the Reference Architecture. Together the Reference Framework helps us to understand any technical subject matter better.

There are various Reference Frameworks available for Cloud Computing. This is because each Reference Framework is built based on the viewpoint of a specific organization or person. A Cloud service provider would define a Reference Framework that may differ significantly from the one defined by a Cloud hardware vendor. There is no strictly mandated standard for defining the Reference Framework. It is left to the judgement of the designing authority to define the framework that best addresses its perspective and needs. However the thumb rule is any Reference Framework designed must be at a high-level and understandable.

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There are a number of Cloud Computing Reference Architecture, Models and Frameworks. Everware-CBDI – an innovator in architectures and practices for Cloud, Service and Component based concepts, technologies and techniques – classifies Cloud reference models as one of two styles:

1. Role-Based: Where activities or capabilities are mapped to roles such as cloud provider or consumer.

a) DMTF Cloud Service Reference Architectureb) IBM Cloud Computing Reference Architecture c) NIST Cloud Computing Reference Architecture

2. Layer-Based: Where activities or capabilities are mapped to layers in architecture such as application or resource layers or to the service management architecture or security architecture.

a) Cloud Security Alliance Reference Model is one of many layered models showing the cloud ‘stack’

b) CISCO Cloud Reference Architecture Framework is an architecture of architecture, placing Cloud on top of layers of Service, Security and Technology architectures

c) IEFT Cloud Reference Framework goes into more depth, showing the capabilities for each layer.

Everware-CBDI has taken the various elements from these different architectures, models and framework and places them into a generic RF. It consolidated the elements contained across the different reference architectures, models and frameworks for Cloud Computing into a unified framework.

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Figure – Cloud Computing Reference Framework

The above Reference Framework can then be mapped to the requirements of the different scenarios. The mapping can be done against either roles or capability streams as shown in the two tables below:

RAEW1 Consumer Provider Broker Auditor Carrier

Consume

Provide

Manage

Enable

Table – Mapping Process Activities to Roles

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1RAEW: Responsibility, Authority, Expertise, Work

Capability Streams

Consumer Provider Broker Auditor Carrier

Architecture

Framework and Process

Lifecycle Infrastructure

Operational Infrastructure

Organization

Projects and Programs

Management

Table – Mapping Capabilities to Roles

It is up to the organization adopting the Reference Framework to manage its reuse effectively minimizing the reinvention of the wheel.

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Cloud ComputIng maturIty model

6 CLOUD COMPUTING MATURITY MODEL

Maturity models are used to benchmark our organization against others in the industry. Mostly based on the Capability Maturity Model Integration (CMMI), the Cloud Maturity Model measures Cloud capability against six defined maturity levels.

Since Cloud adoption is a long-term process, a true awareness and understanding of an organization’s current capability in Cloud computing helps in crafting a sustainable strategy and architecture to harness the full benefits of Cloud and reduce the risks associated with Cloud adoption and transformation.

There are various Cloud Computing Maturity Models available in the market. While a detailed study of these various models are outside the purview of this paper, it is worthwhile to, at least, discuss one model so that the readers have a general idea of Cloud Maturity Model and how it could be useful in defining a Cloud strategy.

The Open Data Center Alliance (ODCASM) Cloud Maturity Model supports multiple perspectives in order to accommodate the variety of cloud adoption patterns that different organizations will encounter. They explore an organization’s maturity across each of the individual cloud service models: SaaS, PaaS, IaaS, and Info-aaS. The CMM plots the progression of structured cloud service integration from a baseline of no cloud use through five progressive levels of maturity, as shown in Figure below.

The figure below gives a summary description of each maturity model.

Figure – Open Data Center Alliance Cloud Maturity Model

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According to ODCA, these CMM levels enable the realization of a number of cloud characteristics which in turn translate into the enablement of business functionality and value. These business outcomes are the recommended results of positioning capabilities within the various CMM levels: capability gains, efficiency gains, quality gains, and velocity gains, which ultimately result in powerful business strategy enablement.

• Federated. Federation refers to the ability of identity and access management software to be able to securely share user identities and profiles. This ability allows users within a specific organization to utilize resources located in multiple clouds without having to generate separate credentials in each cloud individually. IT is able to manage one set of identities, authorizations, and set of security review processes. From the user perspective, this enables seamless integration with systems and applications.

• Interoperable. There are two key concepts of interoperability: (1) The ability to connect two systems that are concurrently running in cloud environments, and (2) the ability to easily port a system from one cloud to another. Both involve the use of standard mechanisms for service orchestration and management, enabling elastic operation and flexibility for dynamic business models, while minimizing vendor lock-in.

• Open Standards. The term “open” refers to both software and standards. Open source software operates at a fast rate of change supported by diverse, vibrant community updates. These frequent update cycles provide access to the latest features and capabilities, including performance and efficiency improvements. The use of common APIs or abstraction layers makes it easier for end users to rapidly consume cloud services from different providers to meet business requirements. Even if the software is not open source, it should adhere to open standards, in order to maximize the benefits of cloud deployment.

ODCA has defined Cloud Maturity Model for each of the below perspectives:

• Business perspective• Technology perspective• Infrastructure-as-a-Service Maturity• Platform-as-a-Service Maturity• Software-as-a-Service Maturity• Information-as-a-Service Maturity

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It is not necessary for an organization to aspire to CMM Level 5 in all cases – different levels in the different capability areas may be quite acceptable and may meet that organization’s requirements adequately. It is up to each organization to determine for itself where it wants to be, and what actions and enablers will take it there, per capability.

The key takeaway from the various perspectives of ODCA Cloud Maturity Model is that it helps an organization to define a well-thought out Cloud adoption roadmap. The cloud adoption roadmap provides an end-to-end visualization for how the technical use of cloud technologies in the enterprise develops over time. A typical technical adoption roadmap is represented in Figure below.

Figure – Technical Cloud Computing Adoption Roadmap

This adoption roadmap gives context to technical planning and assists organizations in quantifying existing deployments and the steps that following from that point.

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Cloud ComputIng prICIng model

7 CLOUD COMPUTING PRICING MODEL

A significant amount of innovation has gone into pricing Cloud Computing services correctly. Unlike fixed-price models of IT resources with definite demand projections, the pricing of Cloud Computing is based on amount of resources allocated. This makes Cloud pricing constitute a significant portion of variable pricing. Think of Cloud pricing model similar to the utility services you consume. You pay electricity bill for the number of units you consumed, or the amount of your water consumption bill is proportionate to the amount of consumption. The bill varies as per your consumption. While the pricing of Cloud computing is similar in concept, there is a slight variance as compared to the utility service pricing. The shift from fixed-price model to variable-price model mainly happened due to the fact that not all users have the same need; hence charging them for units they don’t consume is not considered fair. Cloud Computing pricing varies according to its various models. A SaaS model will be priced differently than an IaaS model. The table below shows the key components of Cloud pricing based on the Cloud service model.

IaaS Amount of resource allocatedNo. of physical or virtual machines, IP addresses,

firewalls, load balancers, virtual machine images, virtual local area networks (VLANs)

PaaS Usage of Computing platformOperating systems, hardware, programming language execution environments, servers, and databases.

SaaS Usage of software applications No. of software licenses

Cloud computing pricing consists of two main approached – fixed and dynamic. In fixed pricing, the customer the same amount at all times. This includes the pay-per-use model, in which the customers pay for the amount they consume of a product or the amount of time they use a certain service. In dynamic pricing, the pricing varies according to the level of consumption, service features, Quality of Services (QoS), etc. A new pricing model that is being increasingly adopted is the market-dependent pricing; this pricing depends on the real-time market conditions such as bargaining, auctioning, demand behaviour, and yield management.

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34

Note the key drivers of Cloud Computing pricing are on-demand self-service, range of network access, speed of elasticity, resource pooling, and quality of service. The most important factors that influence pricing in cloud computing are:

• Initial Costs: This is the initial setup costs the service provider spends to buy resources.• Contract Period: This is the period the customer will lease resources from the service

provider. Longer the contract period, lower is the subscription price.• Quality of Service: This is the quality of service the service provider guarantees

to meet. This is the mostly debated component of Cloud pricing. Better the QoS guaranteed, higher is the pricing.

• Age of resources: This is the age of the resources employed by the service provider. The older the resources are, the lower the price charged will be.

• Cost of maintenance: This is the amount the service provider spends to maintain the cloud service.

In general terms, the cloud pricing model consists of three main components: actual cloud pricing approach, Quality of Service (QoS), and Utilization/Contract Period.



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Figure – Key Components of Cloud Computing

As mentioned earlier, Cloud computing pricing models have undergone tremendous innovation and changes in recent years. Partly due to the fact that a Cloud service provider’s incoming cash flow may decrease because of consumers’ preference for pay-per-use mechanism, industry has come up with various Cloud pricing model. The table below provides a quick summary of these models.

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Pricing Model Approach

Pay-as-you-go modelPrice is set by service provider

and remains constant

Subscription Price is based on the period of subscription

A novel-financial economic model Usage-based

Pay-for-resources model Cost-based

Pricing algorithm for cloud computing Real-time pricing

Dynamic resource pricing on federated clouds

Auction-based pricing

Genetic model for pricing in cloud computing markets

Real-time pricing

Datacenter net profit optimization with individual job deadlines

Based on job scheduling

Value-based pricingPrice set according to the value

perceived by the customer

Cost-based pricing Price set by adding a profit element on top of cost

Competition-based pricing Price set according to competitors’ prices

Customer-based pricingPrice set according to what the

customer is prepared to pay

Hybrid pricingPrice changed according to the

job queue wait times

In short, the underlying theme of Cloud computing pricing is “pay-as-you-go” model. It is advised to prospective consumers of Cloud Computing services that they should negotiate adding Quality of Service (QoS) attributes to the pricing set by Cloud service providers. This will ensure that the pricing is not biased towards the service provider; and they have a pressure to deliver on consistent performance and Quality of Service.

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Cloud ComputIng return on InVestment (roI)

8 CLOUD COMPUTING RETURN ON INVESTMENT (ROI)

Until recently business viewed Cloud Computing ROI through capacity-utilization lens primarily because it wanted to avoid the cost impact of over-provisioning and under-provisioning. The on-demand service model and ability to pay-as-you-go enables business to provision for the service just when they required it (without worrying about the fixed cost and up-front investment cost). To a large extent, the Capacity vs. Utilization model sufficed for a practical ROI model as it focused on operational efficiency.

As the industry matured, business realized that there could be other drivers to measure the ROI. In addition to operational efficiency, performance efficiency is another critical aspect they cannot overlook. Not all cloud computing service providers provide the same level of Quality of Service (QoS). Hence business has starting pushing service providers to add stringent Service Level Agreements (SLA) to the service agreements/contracts. A common QoS Key Performance Indicator (KPI) used is Availability and Recovery SLA – an indicator of availability performance compared to current service levels.

The next driver of ROI is the security assurance. For business involved in sensitive data management (e.g. financial services, healthcare industry), data security and risk management is critical component of their business. They are willing to pay more for a service if they are assured that their data would be protected and not compromised with.

Depending on the nature of the business and its requirements/expectations from cloud service providers, organizations use a plethora of combinations of KPIs and ROI models to measure the cloud ROI. The key ROI drivers are still a continuation of traditional IT drivers – time, cost, quality, and profitability. Based on the specific need of the business, parameters such as compliance, risk management, sustainability, etc. are added.

The Open Group Cloud Computing Work Group introduced a key approach to measure Cloud computing ROI by giving an overview of Cloud KPIs and metrics. Figure and table below show an overview of its Cloud Computing ROI models and KPIs.

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Figure – Cloud Computing ROI Models and KPIs

Table below describes each of these indicators:

Availability versus recovery SLA

Indicator of availability performance compared to current service levels

Workload – predictable costs Indicator of CAPEX cost on-premise ownership versus Cloud

Workload – variable costsIndicator of OPEX cost for on-premise

ownership versus Cloud; indicator of burst cost

CAPEX versus OPEX costs Indicator of on-premise physical asset TCO versus Cloud TCO

Workload versus utilization % Indicator of cost-effective Cloud workload utilization

Workload type allocationsWorkload size versus memory/processor distribution;

indicator of % IT asset workloads using Cloud

Instance to asset ratioIndicator of % and cost of rationalization/consolidation

of IT assets; degree of complexity reduction

Ecosystem – optionalityIndicator of number of commodity assets,

APIs, catalog items, self service

TimelinessThe degree of service responsiveness; An indicator

of the type of service choice determination

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ThroughputThe latency of transactions; The volume per unit of time

throughput; An indicator of the workload efficiency

PeriodicityThe frequency of demand and supply activity; The

amplitude of the demand and supply activity

Temporal The event frequency to real-time action and outcome result

ExperientialThe quality of perceived user experience; The quality of User Interface (UI) design and interaction – ease-of-use

SLA response error rate Frequency of defective responses

Intelligent automation The level of automation response (agent)

Revenue efficienciesAbility to generate margin increase/budget

efficiency per margin; Rate of annuity revenue

Market disruption rate Rate of revenue growth; Rate of new market acquisition

Speed of time reductionCompression of time reduction by Cloud adoption; Rate

of change of TCO reduction by Cloud adoption

Optimizing time to deliver/execution

Increase in provisioning speed; Speed of multi-sourcing

Speed of cost reductionCompression of cost reduction by Cloud adoption; Rate

of change of TCO reduction by Cloud adoption

Optimizing cost of capacityAligning cost with usage, CAPEX to OPEX

utilization pay-as-you-go savings from Cloud adoption; Elastic scaling cost improvements

Optimizing ownership usePortfolio TCO, license cost reduction from Cloud adoption;

Open Source adoption; SOA re-use adoption

Green costs of Cloud Green sustainability

Optimizing time to deliver/execution

Increase in provisioning speed; Reduced supply chain costs; Speed of multi-sourcing; flexibility/choice

Optimizing margin Increase in revenue/profit margin from Cloud adoption

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Is Cloud ComputIng rIgHt fIt for your organIzatIon?

9 IS CLOUD COMPUTING RIGHT FIT FOR YOUR ORGANIZATION?

There is no straight forward answer to this question. Whether cloud computing is right solution for you depends on various factors:

• Total Cost of Ownership (TCO): Since cost savings is one of the most important decision factors for opting for Cloud solution, it needs to be assessed what impact it would have on the TCO. A thorough TCO analysis needs to be done. It has been observed that the actual value (value realized after adopting Cloud) vs. Perceived value (expected value perceived before adopting Cloud) is quite marginal for some organizations if other non-tangible factors are considered (e.g. data security, implementation ease, support availability, Quality of Service, etc.).

• Data Security: Data security is still one of the top fear factors for enterprises. There have been ample evidences of breach of data security in recent years. The high profile Sony hack is now famous in the industry. In 2014, JP Morgan Chase saw 80 million records breached for use of identity theft. In the same year, Apple iCloud was a victim of hacking of major celebrity accounts, leading to the release of private photos and videos to public domain. If your business involves dealing with mission critical accounts and sensitive confidential customer information, conduct proper risk assessment and evaluation of cloud service provider. Perform proper and regular risk assessments to identify where the cloud service provider stores and transmits valuable data. In such cases, opting for private cloud could be a better option than public cloud.

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Is Cloud ComputIng rIgHt fIt for your organIzatIon?

• Compliance and Governance: Cloud computing gets increasingly complex (for both Cloud service providers and consumers) when it comes to legal, regulatory and compliance issues. There are a host of regulations to deal with. There are government regulations such as Sarbanes-Oxley and European Union Data Protection Act, and industry regulations such as PCI DSS for payment cards, and HIPAA for healthcare. Additionally there are geo-specific regulations such as country and state laws to deal with. Therefore before embarking on a Cloud solution (for service consumers), evaluate how creating and implementing measures to comply with the regulations is going to add to the existing workload. Check with your service providers where Cloud data centres are located; and ascertain whether the regulations permit storing data outside the country. For example, the EU Data Protection Act mandates keeping personal information within the European Union. If an organization is storing health-related information regardless of which industry it belongs to, then it is subjected to HIPAA. Hence work closely with your cloud service provider to identify all legal and regulatory requirements, and the steps to meet these regulations. Even if you are dealing with a third-party provider, subject them to the same contractual clauses as you would do for your primary supplier. After all, non-compliance could be costly. The Payment Card Industry (PCI) can impose fines of up to $100,000 per month for violations to its compliance.

• Ease of Integration: Determine how easy it is to integrate the cloud solution to your existing IT landscape. Check for interoperability with your corporate applications, custom applications, in-house developed solutions, and non-standard interfaces.

• Service Level Agreements (SLA): A carefully-crafted SLA is paramount to receiving the right Quality of Service (QoS). Not that by adopting cloud services, you are giving up control of your ability to manage availability, performance, maintainability, and timely support as you would have with your in-house infrastructure. Therefore negotiate the process, control mechanisms, and SLAs tightly with your service provider to guarantee consistent QoS.

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Cloud ComputIng adoptIon roadmap

10 CLOUD COMPUTING ADOPTION ROADMAP

The Cloud Computing adoption plan depends on the cloud model one opts for. If the requirement is simply for SaaS or PaaS solutions, the adoption plan is straightforward. One has to assess the business application functionality that one wants to outsourced, determine the right cloud solution and vendor, and procure the cloud services.

For IaaS adoption, especially for organizations that have a significant investment in infrastructure CAPEX, the migration to Cloud depends on a number of factors. The basic requirement is to leverage the existing infrastructure fully through virtualization, and other related concepts.

In general, the Cloud Computing adoption roadmap includes the following approach:

Manage Change & Cloud Landscape

Adopt Cloud (Private, Public, Hybrid)

Select best-fit Cloud Partner

Define Cloud Architecture

Virtualize & Standardize

Conduct Proof of Concept

Establish Business Case

Assess Cloud Suitability

CLOUD

Figure – Cloud Computing Adoption Model

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1. Determine what to move to Cloud – Assess the business needs and what you will migrate to cloud. Prepare an inventory of workloads that you want to procure from Cloud. Some of the common workloads that are readily available from Cloud are in the areas of analytics, infrastructure such as storage, backup, applications, collaboration tools, infrastructure compute, disaster recovery, business processes, and so on. Once you decide the service you will procure from Cloud, define the parameters such as service availability requirements, no. of users (for SaaS solutions), subscription model, support model and such things. This step is mainly to come up with a clear requirements and roadmap.

2. Assess Cloud Suitability: The first step is to assess the need to move to Cloud or procure Cloud services. One needs to assess whether the business functionality is core to business, whether a Cloud-based solution is worth the risks associated with it (i.e. data theft, service downtime, etc.).

3. Establish Business Case: Establish clear business case for cloud adoption. Determine the financial and non-financial benefits to be realized over medium to long term (3+ years).

4. Conduct Proof of Concept (PoC): The safest option is to conduct a small PoC to validate whether the Cloud model really works for you. Lots of cloud service providers provide trial period to try out their Cloud solutions. During the PoC stage, assess the technical feasibility of integrating in-house solutions with Cloud solutions.

5. Virtualize and Standardize: As mentioned earlier in the document, fully leverage the capability of virtualization before moving to Cloud. Virtualization provides the same benefits as those provided by Cloud services. There could be lots of unutilized capacity in your infrastructure; virtualization enables you to optimize them fully. Also standardize your process and technology (software, hardware, tools, etc.) so that you can avail standardized cloud services.

6. Lay Cloud Foundation: Lay a clear Cloud computing foundation if you have a long-term roadmap for moving to Cloud. Define reference architecture and scalable application architecture including an integration roadmap. A well-defined architecture will help in managing the change and impact of cloud adoption.

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44

7. Select Cloud Partner: Carefully evaluate the Cloud service partner. Assess their capability, strengths/weaknesses, and their ability to meet your support and service requirements. Determine how safe is your data in their Cloud environment and what preventive mechanisms they have in place for any eventualities. Ask for relevant case studies and do reference checks if needed. The key is to determine the level of trust you can place on your cloud partner.

8. Manage Cloud Infrastructure: This is post-cloud migration activity. This should include managing your cloud infrastructure by enabling self-service features such as ramping up/down your demand (e.g. storage needs), change subscription models, support services, etc. The idea is to retain some control to yourself, rather than depending completely on the service provider.



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puBlIC Cloud mIgratIon requIrements

11 PUBLIC CLOUD MIGRATION REQUIREMENTS

Successful cloud migration requires an overhaul of organization structure, processes and technology, and a clear understanding of business impact and risks.

Figure – Public Cloud Migration Requirements

One of the key pre-requisites for moving to Cloud is to fully leverage the capability and benefits of virtualization. In most cases, virtualization provides the same benefits as those provided by Cloud computing. The key benefits of virtualization are:

a) Provisioning of available capacity can be procured quickly to meet business demands.b) Significant infrastructure management efforts are minimized by adoption of

virtualization tools.c) It eases in managing the elasticity and scalability of demand as ramping up or down

the required infrastructure capacity is easy.d) Reduced OPEX due to optimization of available infrastructure.e) Reduced CAPEX due to sharing of assetsf ) Increased utilization and availability of infrastructure.g) Reduced Total Cost of Ownership (TCO) as depicted in the figure below.

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puBlIC Cloud mIgratIon requIrements

Figure – Virtualization and Cloud Computing TCO Source: CISCO

If virtualization is as good as Cloud computing and both are complimentary to each other, how does organizations decide which option to opt for? The simple answer is, it depends. It depends on the type of organization, and the CAPEX/OPEX spent, scalability requirements, security needs, etc. One should also note the key difference between virtualization and Cloud.

While Cloud mostly includes the virtualization capability, additionally Cloud provides benefits such as self-service, elasticity, automated management, scalability and pay-as you go service that is not inherent in virtualization. Smaller organizations that have fewer IT staff, less prone to security risks, and are more OPEX oriented are likely candidates for adopting cloud computing. Cloud is suitable for such organizations who want to hit the ground running, keep IT costs under control by only paying for usage they consume. On the other hand, large organizations that have invested heavily in CAPEX, have unique business applications that may pose challenge integrating with Cloud environment, and have better need for security controls may want to continue with virtualization of current infrastructure. Such large organizations usually maximize the power of virtualization before going for low-hanging Cloud services such as backup, storage scalability, SaaS-based solutions for non-core business functionalities, etc.

The key point to note is: Virtualization is fundamental technology on which cloud computing is built; it makes Cloud computing work. Hence both are not interchangeable. Virtualization is employed locally, while cloud computing is accessed as a service.

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ImplementatIon CHallenges

12 IMPLEMENTATION CHALLENGES

Cloud Computing has its own pitfalls when it comes to implementation. Implementation challenges exist deployment happens outside the boundaries of an organization – in a realm not in organization’s total control. There are challenges around security, risks, regulations, etc. It is worthwhile to highlight the most common challenges surround Cloud computing deployments.

• Regulatory challenges: All cloud service providers may not be familiar with all the security requirements that are unique to each country. There are host of regulations around data centre locations, general security risks, data loss and privacy risks, violation of intellectual property rights etc.

• High deployment costs: Most often that not, organizations realize that the one-time cost for Cloud deployment, integration and transition may be higher than expected. In the long run, does the benefits from Cloud computing offset this cost? This is something that every cloud provider must figure out.

• Data portability and interoperability: There is a lack of standards on data portability and interoperability between cloud service providers. Hence there is an inherent risks that cloud service consumer may get locked into a particular Cloud product/vendor. Hence is it best advised to avoid cloud solutions that lack inter-operability.

• Integration challenges: Integration with existing architecture is a big challenge when it comes to Cloud deployment. A particular make of servers in an organization’s data centre may not be compatible with the infrastructure provided by the Cloud providers. This mostly happens if the organization persists with legacy infrastructure that has not been upgraded to recent versions. Cloud providers mostly adopt the latest technologies to be able to leverage virtualization as well as establish a common infrastructure platform that is likely to cater to diverse consumers’ environment.

• Managing change: Adopting cloud services results in significant disruption to business. Organizations have still not geared up to operating in an environment where cloud computing is the norm. Who do business users reach out to when they need urgent changes in the applications or the core business application is down? How does in-house IT department manage the crisis when the management of application resides with the cloud service provider? Will not able to address business challenges lead to erosion of trust between IT and business? Hence a change management process related to cloud computing must be clearly defined.

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ImplementatIon CHallenges

• Operating the Cloud: Organizations are yet to put in place management capabilities and processes of operating with cloud services. Processes need to be defined on supervising and managing cloud usage, performance, scalability, SLAs, and any unplanned downtime.

• Commoditization vs. Customization: The last major challenge is how to balance between commoditization and customization. Cloud service providers are looking to commoditize their services, cloud consumers may need to go for specific customized services to achieve business differentiation? How can one reconcile the two?

• Managing the vendors: Most cloud computing contracts come with a mixed bag of outsourcing, leasing, and software contracts. There could be multiple contracts related to the software, platform, and hardware services. Secondly a single cloud provider may not suffice all the needs of the businesses. They may have to procure services from multiple cloud providers. If it comes to his stage, managing the multiple cloud vendors and contracts could be an organizational nightmare.

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puBlIC Cloud serVICe proVIder seleCtIon model

13 PUBLIC CLOUD SERVICE PROVIDER SELECTION MODEL

Once you have decided to opt for a Cloud solution, the next challenge is selecting the right cloud service provider. An analytical approach and well-defined evaluation criteria would be helpful in such scenarios. A snapshot of the criteria is provided in the table below:

Security

• Physical security of the location/data centre where cloud service is hosted

• Application & data security• Security related to multi-tenancy• Data encryption management• User access management

Quality of Service

• Performance guarantees (through SLAs)• Availability of service• Service reliability• Network performance and latency• Underlying hardware performance• Scalability of performance• Incident response time• Planned maintenance and upgrade downtime

Service Level Agreement (SLAs)

• Are the SLAs SMART?ο S – Specificο M – Measurableο A – Achievableο R – Realisticο T – Timely

Total Cost of Ownership (TCO)

• Price – relative to in-house solution, other public cloud service offerings and providers

• Price-to-performance ratios• Cost for upgrade• Support costs• Overhead costs• Hidden costs• Total cost

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puBlIC Cloud serVICe proVIder seleCtIon model

Technical Ease

• Easy of deployment• Deployment/implementation lead time and support• Ease of technical integration and interoperability with in-house

solutions• Compatibility with legacy systems• Ease of connectivity with cloud solution• Analytics and reporting access

Location and Regulations

• Location of data centres (in-country or outside the country)• Local and international regulations• Geographic redundancy

Disaster Planning

• Data centre architecture redundancy• Backup and failover services and options• Time to recover down services (including track record!)• Cloud architecture (disaster avoidance / preventive perspective)• Location of alternate data centres with duplicate services

Service

• Support services• Managed services• Professional services• Recovery services• Service monitoring

Others• Sustainability (green data centres and environment efficiency)• Level of carbon footprint

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Cloud readIness assessment questIonnaIre

14 CLOUD READINESS ASSESSMENT QUESTIONNAIRE

Following table highlights the top questions that business and organizations must ask themselves before embarking on a Cloud journey (especially Public Cloud).

Dimension Description

Business Case

• Have you developed business justification for implementing cloud project?

• Have you identified success factors for implementing cloud project?

• Have you identified the availability and business continuity requirements for your next cloud project?

Data Center Virtualization

Have you leveraged virtualization fully? Data center virtualization creates economies by putting in-house

resources (infrastructure and people) to best use?

Interoperability

To be cloud-compatible, applications must share a common method of programmatic interaction to underlying cloud

resources and services. Have you assessed the interoperability of your business applications with the applications on Cloud?

IntegrationHow would in-house applications integrate

with applications on the cloud?

Computing resource usage

How much do your demands for computing resources change over the course of a year?

Data security

• Do you have a data security plan to determine the minimum level of data security that you would accept from a cloud service provider?

• Where is your core business data located – in-house or at Cloud location?

Application Migration Strategy

Have you developed a plan for migrating applications to a cloud?

Performance Requirements

What performance requirements have been identified for your cloud project?

Risk ManagementHave you assessed the risks and implications if the Cloud

service goes down or your data on Cloud is compromised?

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next generatIon Cloud ComputIng

15 NEXT GENERATION CLOUD COMPUTING

The next generation of cloud computing will be the confluence of three key cloud capabilities – (a) ability to build and deploy quickly in Cloud environment (Platform as a Service), (b) ability to work from anywhere and anytime using cloud solutions (Software as a Service), and (c) availability of host of next generation Cloud services (e.g. Data as a Service).

Figure: Next Generation Cloud Computing Aspects

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Major innovation will take place in the area of Cloud platform services. The next generation cloud platform will be highly intelligent, support multiple configurations, inter-operable across various infrastructures, provides high degree of service flexibility to consumers, and easily integrate with enterprise environment and processes. It will provide a common platform for building SMAC capability in an organization – Social Media, Mobility, Analytics, and Cloud-driven services. The merger of Cloud and Internet of Things (IoT) will create next generation of intelligent, software-driven machines that can be operated remotely with minimum supervision and control. The software-driven concept will also extend to hardware such as servers, storage, networking equipment. The entire infrastructure can be virtualized and centrally controllable, or software-defined.

Organization (cloud service consumers) will be at an enormous advantage as it is highly likely that any new technology or business service could be available as Cloud service. Already concepts such as Big Data, Analytics are already available on Cloud. In August 2014, IBM launched Watson Discovery Service to enable researchers accelerate the pace of scientific breakthroughs by discovering previously unknown connections in Big Data. According to IBM, “Available now as a cloud service, IBM’s Watson Discovery Advisor is designed to scale and accelerate discoveries by research teams. It reduces the time needed to test hypotheses and formulate conclusions that can advance their work – from months to days and days to just hours – bringing new levels of speed and precision to research and development.”

Cloud computing is also embracing open source in a big way. OpenStack is one such example. It is an open source Infrastructure as a Service. “OpenStack is a cloud operating system that controls large pools of compute, storage, and networking resources throughout a datacenter, all managed through a dashboard that gives administrators control while empowering their users to provision resources through a web interface.” – OpenStack. OpenStack also provides various shared services such as Identity Service, Image Service, Telemetry Service, Orchestration Service, and Database Service.

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Figure: OpenStack Cloud Operating System

Source: OpenStack



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Extending this same open source adoption further, Intel laid out a vision for open cloud computing. Called Intel’s Open Cloud Vision, its three key themes are federation, automation, and client-awareness. Federation will allow “communication, data and services move easily within and across cloud computing infrastructure.” Automation will allow cloud services to be “specified, located, and securely provisioned will minimum human interaction.” Client-aware means that “cloud-based applications are able to recognize individual client device capabilities to adapt and optimize application delivery securely, while enhancing the user’s experience.”

Figure: Intel Cloud 2015 Vision

Source: Intel

InterCloud – a concept briefly introduced in the first chapter – will become increasingly popular. We will see bundling of different cloud services provided by different cloud provides into one to manage cloud resource better.

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Finally next generation cloud computing will bring in enormous amount of benefits to end users. End users will increasingly use more personal cloud services such as putting personal data in the cloud. Organizations will realize that employees no longer maintain personal folders in their office workstations; employees just put everything in cloud (e.g. Google drive, Apple iCloud) by leveraging BYOD (Bring Your Own Device) policies that corporates extend. Therefore employers will be compelled to explore ways to incorporate personal cloud services in the enterprise environment.

According to Herb Van Hook, Deputy Chief Technology Officer (CTO) for BMC Software, the next generation cloud computing “…will deliver value to the business faster by automating everything from request to deployment and configuration – and do so up and down the stack and across the entire infrastructure.” The key drivers of next generation cloud computing will be Business Value, Efficiency, Scalability, Security, and Self-Service.

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top questIons to ask yourself Before adoptIng Cloud ComputIng

16 TOP QUESTIONS TO ASK YOURSELF BEFORE ADOPTING CLOUD COMPUTING

1. What are the business goals we are trying to achieve through Cloud computing?2. Do we have a clearly defined and approved business case for cloud computing?3. Which cloud model (Private, Public, and Hybrid) is fit for our environment?4. Which cloud solution (SaaS, PaaS, and IaaS) will address our business needs?5. Have we clearly assessed the financial and non-financial cost of the cloud solution?6. Do we have a clear cloud strategy and roadmap?7. What are the business problems we seek to address through the cloud solution?8. Which business process/functionality do we plan to roll out to cloud?9. Have we clearly articulated the economic benefits we are going to achieve through

the cloud solution?10. Have we assessed the various risks (security, technical, regulatory, etc.) that the

cloud solution may impart?11. Have we done proper due-diligence to validate that the cloud solution will pose

no integration and deployment challenges?12. Has the cloud vendor addressed our information security risks?13. Have we assessed the impact of any impacted risks? E.g. impact of data loss?14. Are we convinced that our data is safe in the vendor’s cloud environment?15. Have the cloud vendor ably demonstrated the disaster recovery and backup plan?16. Has the cloud vendor demonstrated enough credibility and trust in its capabilities?

Are we comfortable doing business with them?17. What are our SLA requirements?18. What are our Quality of Service (QoS) requirements?19. What business impact would it have if the cloud solution does not meet the Ser

vice Level Agreements (SLA)?20. What are the tangible and intangible business impacts of the solution not achieving

the minimum SLA?21. Do we understand the contractual terms and obligations?22. Have we understood the pricing plan, and terms & conditions? What immediate

set-up/implementation cost do we incur? 23. What is the Return on Investment (ROI) over a 3–5 year term?24. How will the cloud solution impact our Total Cost of Ownership (TCO)?25. Have we check cloud vendor’s references and similar deployments?26. What level of support will the cloud vendor provide?

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top questIons to ask your Cloud serVICe proVIder

17 TOP QUESTIONS TO ASK YOUR CLOUD SERVICE PROVIDER

1. Have you understood our Cloud strategy and the business goals we seek to achieve through Cloud?

2. How will your solution/service address our business problem?3. How will your Cloud solution/service meet our needs – both functionally and

financially?4. How does your solution/service differentiate from your competitors?5. Why should we adopt your solution/service?6. Can you demonstrate successfully implementation at organizations/situation similar

to ours?7. Do you have a trial period where we validate your solution can integrate with our

environment?8. What contractual flexibility do you provide?9. Are the service level agreements (SLA) amendable to changing business needs? If

so, how frequently?10. What price protection do you provide?11. What Quality of Performance (QoS) parameters does your solution/service

consistently meet?12. How transparent are you in sharing SLA performance feedback on a regular basis? 13. Can we tie the pricing to the SLA performance objectives?14. What efficiency and pricing gains can we achieve through your multi-tenancy model?15. Where are your data centres located? In which data centre will our solution and

data reside?16. Do you have a Disaster Recovery Plan? What are your Recovery Point Objective

(RPO) and Recovery Time Objective (RTO)?17. How frequently do you test your DR plan?18. How will your cloud solution/service meet the operational, security, and compliance

risks?19. How do you plan to meet the stringent general and industry-specific security and

compliance standards security requirements?20. Are you aware of the different regulatory requirements that we both need to comply

with? How do you plan to comply with them?

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top questIons to ask your Cloud serVICe proVIder

21. What are your policies to safeguard and protect our data?22. What flexibility does your solution provide to configure to our needs?23. Does your solution provide the integration capabilities that our business needs?24. What is the division of responsibilities between you and our organization once the

solution/service is successfully deployed?25. What level of Cloud management control do your provide to your consumers? Can we

have a self-service tool/mechanism to manage the elasticity of our demands?26. What level of support do you provide? What is the escalation matrix?

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referenCes

18 REFERENCES1. Velte, Antony T., Velte, Toby J., Elsenpeter, R. (2010). Cloud Computing – A

Practical Approach. McGraw Hill, pp 3–4.2. Mell, Peter, Grance, Timothy (2011). The NIST Definition of Cloud Computing.

National Institute of Standards and Technology.3. May Al-Roomi, Shaikha Al-Ebrahim, Sabika Buqrais and Imtiaz Ahmad (2013).

Cloud Computing Pricing Models – A Survey.4. The Open Group Cloud – Computing Work Group: Building Return on Investment

from Cloud Computing.5. Open Data Center AllianceSM Usage Model: Cloud Maturity Model Rev. 2.0.6. Verizon. 2013 State of the Enterprise Cloud Report.7. Wilkes, Lawrence. Everware-CBDI. Commentary on Service Oriented Architecture,

Enterprise Architecture, Application Modernization, Cloud Computing and Enterprise Mobility.

8. Szymanski, Aleks. (2015). Cloudtech – Frequency vs. size of cloud data breaches: Which is worse?

9. Buchanan, Jim. (2011). CIO.com – Cloud Computing: 4 Tips for Regulatory Compliance.

10. Winkler, Vic (J.R.). (2012). TechNet Magazine – Cloud Computing: Legal and Regulatory Issues.

11. Burns, Paul. (2014). Neovise – Public Cloud Selection Criteria: Getting Beyond the Basics.12. Huang, Ryan. (2014). ZDNet – Key questions when selecting a cloud-based provider.13. Kajeepeta, Sreedhar. (2010). Computerworld – Multi-tenancy in the cloud:

Why it matters.14. Bobrowski, Steve. Salesforce Developers – The Force.com Multitenant Architecture.15. The Open Group. (2013). Cloud Computing Portability and Interoperability.16. Angeles, Sara. (2014). Business News Daily – Virtualization vs. Cloud Computing:

What’s the Difference?17. Skamser, Charles. (2010). eDiscovery Times – Building ROI for an eDiscovery

Cloud Computing Model.18. Van Hook, Herb. (2014). Bmc.com – Get ready for your next-generation cloud:

lessons learned from first-generation private clouds

http://www.cloudcomputing-news.net/news/?user=5979

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referenCes

19. Banafa, Ahmed. (2014). Thoughts On Cloud – The next generation of cloud computing.

20. Press Release, IBM (2014). IBM Watson Ushers in a New Era of Data-Driven Discoveries.

21. Oracle White Paper 2012 – Ten Questions to Ask Your Cloud Vendor Before Entering the Cloud

22. OpenStack.23. Everware-CBDI.24. Wikipedia.

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