Carl Michael Australian Unity
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Capability On Demand
Governance and Architecture
for Businesses to Leverage
Cloud Computing
Carl Michael
Enterprise Architect
Australian Unity
31st May 2011
Sydney Convention & Exhibition Centre
Cloud Computing Conference 2011
Carl Michael Australian Unity
2 of 19
This presentation is a journey and it has been structured in terms
of Boyd’s OODA feedback loop.
Approach OODA
OBSERVE
• We observe the on-demand world and the impact of cloud computing in general to understand the shift in business and consumer expectations.
ORIENT
• We then orient ourselves with the changes that enterprises and IT face in keeping up with future trends as exemplified by the cloud.
DECIDE
• Following that we decide on an effective strategy, governance and architecture for enabling the enterprise through cloud computing. We then act.
ACT
Carl Michael Australian Unity
3 of 19
The on-demand world sets the context for cloud computing and
for the enterprise.
A key driver in the on-demand world is the consumerisation of
information technology. The exploding number of customers
means huge growth in database sizes and processing speeds.
Many enterprises cannot easily provide this.
The trend among consumers is toward on-demand delivery of
products, for them ownership is less important than access and
availability.
In this on-demand world, the development of cloud computing
itself is a necessary precursor to the semantic-web we desire.
In the on-demand world: ‘better, faster, cheaper’ is now more
than a policy, more than a philosophy, it is literally a way of life.
The On Demand World OBSERVE
Carl Michael Australian Unity
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In the on-demand marketplace, just as industrial technology
resulted in assembly lines and economies of scale, as exemplified
by the first car production lines, cloud computing will enable agile
and responsive enterprises that deliver profits in response to
continually changing market conditions.
Agile enterprises, by necessity, need to use variable cost
operating models because it will be too expensive and too risky
to be agile using fixed cost models. Fixed cost models only work if
market demand is reasonably predictable and if service delivery life cycles are reasonably long.
In the on-demand marketplace, agile capabilities make for agile
enterprises.
The On Demand Marketplace OBSERVE
Carl Michael Australian Unity
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Business capabilities provide for
interaction between the business and the marketplace.
A capability defines the enterprise’s
capacity to successfully perform
unique business activities.
A capability based approach
creates alignment by providing
common ground for business & IT.
Business Capabilities
A capability map (displayed above) provides a structured view of
the high level business capabilities of an enterprise, defined in the
context of a value chain. The model provides a common
understanding of where processes, resources and IT fit together, and is a useful tool for managing cloud computing.
OBSERVE
Carl Michael Australian Unity
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Business capabilities relate to the on-demand marketplace.
‘Capability on demand’ or outcomes on demand, is the
provision of business services that deliver desired business value
outcomes which need very little set-up by managers.
‘Capability on demand’ is as close to business process outsourcing as it is to cloud computing because it addresses
value outcomes just as much as it addresses process automation.
Delivering ‘capability on demand’ requires significant business
planning and coordination. Maturity in this area and the cloud
computing approach necessary to enable it will be heavily
impacted by risk and compliance complexities.
Capability On Demand OBSERVE
Carl Michael Australian Unity
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Cloud Computing Model
The final observation is about the cloud
computing model itself. Cloud computing
is a strategic approach. It provides on demand business capability resources
that can be rapidly provisioned or
decommissioned with minimal business
management effort.
Cloud computing has multiple layers:
• Software as a Service (SaaS)
• Platform as a Service (PaaS)
• Infrastructure as a Service (IaaS)
Cloud computing can be delivered:
• Publically via external providers or
• Privately, if it is delivered in house.
(Diagram: Current vs. Future Focus)
OBSERVE
Carl Michael Australian Unity
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We need to orient ourselves to the business impact of the cloud
and the changes that this will create for enterprises and for IT.
Computers and servers which provide the foundation for cloud
computing have already been commoditized. What we see
happening now is the commoditization of computing itself.
When we consider the incorporation of client servers and the
internet into enterprises, we can see that we are now at another
strategic inflection point. This one relates to the cloud.
In the on-demand world, enterprises will still need to control the cost of their services and the cloud addresses that need.
Business Impact of the Cloud
YEAR PERIOD HARDWARE INTEGRATION
1990 10 years Client Servers Functional Integration
1995 10 years Internet Adoption Systems Integration
2010 10 years Cloud Computing Virtual Integration
ORIENT
Carl Michael Australian Unity
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In the end, cloud computing is a business enabler, it’s not just
about IT.
The cloud and elastic capability-on-demand will provide the
impetus for new business models which will empower entrants
faster than ever while reducing their competitive and entry costs.
Mature adoption of cloud computing will be dependent on the
ability to clarify strategy and governance, develop cloud
oriented business architecture and business cases and conduct
the necessary benefits analysis.
IT leaders need to think about the impact of cloud computing on
the business, just as much as on IT.
The advent of ‘capability on demand’ and cloud oriented
business architectures will dramatically change the mission, role
and skills of IT.
Cloud Business Architecture ORIENT
Carl Michael Australian Unity
10 of 19
As the enterprise and the cloud evolve together we will see long
term changes.
In future-oriented agile enterprises, business units and business
processes may not be able to rely on centralized command and
control systems, but rather will have to manage themselves as much as possible.
To take enterprises to new levels of productivity and profitability,
self-adjusting feedback loops should be harnessed to improve
business processes as efficiently as they were harnessed to improve mechanical and electrical processes.
Cloud Evolution in the Business
To improve the rate of decision making, one
should use constructs such as Boyd’s observe-orient-decide-act (OODA) continuous
feedback loop.
ORIENT
OODA
LOOP
OBSERVE
ORIENT
DECIDE
ACT
Carl Michael Australian Unity
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The cloud throws up just as many questions as it provides
answers. One must consider answers to questions such as:
• How should the enterprise exploit cloud computing?
• How should high value business opportunities be identified and
prioritized? Which non-core business processes ought to be cloud-enabled?
• How should enterprise capabilities and architecture evolve?
• How should the enterprise deal with performance and
integration with existing assets, relative to the cloud?
• How should the enterprise ensure business process continuity
and "end-to-end" control of processes, relative to the cloud?
• How should the enterprise ensure cloud vendor viability?
Cloud Considerations ORIENT
Carl Michael Australian Unity
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Business capabilities ought to be defined in cloud lifecycle terms;
categorized as unique, common, standardised or commoditized.
We need to define how the cloud fits with sourcing strategy:
• Categorise business processes relative to the cloud: Should
they be in-house, in-sourced, outsourced or partnerships?
• Ensure synergy with sourcing directives such as for operational
efficiency, for tactical support or for strategic impact.
Cloud Adoption Lifecycle
The diagram shows processes categorized as
‘mission critical’ and ‘core processes’ to decide which processes are currently appropriate for
being cloud enabled.
In terms of adoption of the cloud, business leaders
should beware of the cloud happening by stealth. If leaders are reactive, rapidly changing
events might overtake them.
ORIENT
Carl Michael Australian Unity
13 of 19
We need to decide on an effective strategy and architecture for
enabling the enterprise in the context of the cloud.
Cloud computing ought to be manifesto driven from the top
down and not from the bottom up by IT infrastructure. Defined
strategy should allow for an emergent strategy. Enterprise architecture is now more important than ever, and needs to use a
holistic top down architectural approach.
Cloud strategy should be business centric and address business
architecture and BPM enablement, while bearing in mind the need to manage the transformation of the existing architecture.
Hybrid clouds are inevitable, and one should accept the fact that
it will not be possible to realize intended strategies completely.
Any strategy should incorporate an incremental, maturity-
improvement based approach to building cloud capabilities.
Cloud Computing Strategy DECIDE
Carl Michael Australian Unity
14 of 19
Cloud computing's silver lining is not a given. Strong governance
will make the difference between success and failure of cloud
initiatives.
One should treat the cloud as a combination of Business Model,
Sourcing Model, Operational Model, Utility Model and IT Model.
Layered governance, which is critical to managing outsourcing
must be used. Cloud governance will require extensions to
existing policies and enforcement.
As IT capabilities are delegated to the cloud, a cross-domain system for overarching governance is vital because IT may no
longer provide the necessary controls.
Governance of cloud availability needs to be defined with
reference to more than one entity because cloud computing is
an overlap between the business and the providers.
Cloud Governance
DECIDE
Carl Michael Australian Unity
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Decisions must be made about orchestration of cloud components.
As IT capabilities are dynamically delegated to the cloud, the
business relationship and service-provision relationship between
consumers and providers will be a challenge that must be
addressed.
This means that an automated cross-domain system that performs
overarching collaboration and orchestration for cloud services will
be necessary. Policy Based Management is an effective
mechanism to orchestrate distributed systems.
Policy Based Management
On Demand
On Schedule
On Change Control
On Change
Prevent
Policy Based Management can be used for effective management of various types of
services across the cloud and it can be used to
manage resources within and across service
boundaries.
DECIDE
Carl Michael Australian Unity
16 of 19
Enterprise Architecture for both the cloud and the enterprise must
be principle-driven, technology-neutral and service-centric. EA
decisions/planning should start with the end results in mind and
then move back toward the current position.
Three areas that ought to be addressed for improving the
maturity of cloud oriented enterprise architecture are:
• Expertise Maturity: Increase the maturity of business
architecture and ensure closer relationships with security, risk
and procurement.
• Technology Selection Maturity: Improve knowledge about
when to leverage new cloud technology and services and
how to balance the rewards and risks.
• Managing Complexity Maturity: In the near future the more complex hybrid cloud will be the most common model
because the bulk of solutions may not be sent to public clouds.
Cloud Enterprise Architecture DECIDE
Carl Michael Australian Unity
17 of 19
Agility
Accuracy
Accessibility
Availability
In the context of cloud computing, Security = Risk Management.
IT Risk Management decisions must be proactive and must be tightly integrated with Enterprise Risk Management.
Cloud Computing should be used as an opportunity to invigorate
Enterprise Risk Management’s links with IT Risk Management.
In addition to technology, cloud risks should be considered from the perspective of:
• Huge existing & continuing current investments in IT
• Existing contracts and obligations
• An IT risk hierarchy such as Westerman’s. (diagram)
Cloud computing risk measures should:
• Ensure risk metrics for core areas and
• Link risks to ROI metrics and to user controls.
Security = Risk Management DECIDE
Carl Michael Australian Unity
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Today, change is truly a constant, customers don’t want the
old ways and neither do we. To be agile, cloud architecture
must be change-centric.
The appropriate governance and architecture for the cloud will position IT transformation for success.
Because of the cloud, the reallocation of costs from
infrastructure to projects will create capabilities that will
transform the enterprise as well as the customer experience.
Act to Transform
This is the last slide in our cloud computing journey and we have
reached the point where we need to act. When we act, those of
us in IT need to remind ourselves that the cloud is just a means to
an end, and for the business that end is greater profitability.
The four key areas for transformational change, as shown in the
diagram, ought to be addressed.
ACT
Carl Michael Australian Unity
19 of 19
Carl Michael Enterprise Architect
Australian Unity
31st May 2011
Sydney Convention & Exhibition Centre
Cloud Computing Conference 2011