research: iaas impact on data center design and staffing (uk)

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ContentS

Introduction—————————————————————————————————— 04

Plans—for—IaaS————————————————————————————————— ——05

Expectations—vs.—reality——————————————————————————— 07

Reallocation—of—budget——————————————————————————— 09

Staffing————————————————————————————————————— 10

Importance—of—CSP—contract—negotiations— —————————————— 12

Impact—on—the—data—center————————————————————————— 13

Survey—methodology— ——————————————————————————— 14

Survey—respondent—demographics———————————————————— 15

Conclusion— ————————————————————————————————— 17

Bibliography— ———————————————————————————————— 18

About—us———————————————————————————————————— 19

RESEARCH: IAAS ImpACT On DATA CEnTER DESIGn AnD STAffInG 4


IntroductionInfrastructure as a Service (IaaS) is a growing solution for many organizations, as shown in an April 2013

TechRepublic research report. About 60 percent of respondents were either planning or had already implemented

cloud infrastructure services. This tracks with Gartner’s 2013 forecast that IaaS will continue to be the fastest-

growing market segment, expected to grow 18.5 percent in 2013. Why the growth? Why are organizations

moving to cloud hosted infrastructure?

In a July 2013 survey, Tech Pro Research reached out to business

and IT professionals to get their take on expected and actual IaaS

benefits. Less than one-half of respondents using IaaS expressed

positive results after placing their hardware under someone else’s

control. Further, expectations of those planning to integrate IaaS

into their business processes differ significantly from actual

benefits realized by current subscribers. This suggests a

disconnect between expectations (hype?) and reality.

Another important finding is that IT staffing remained the same in

most IaaS subscribing organizations. However, a shift began to

move IT focus from maintaining infrastructure to meeting business

process needs. This was accompanied in many cases by a

commensurate shift in IT budget. In other words, instead of

simply removing the cost associated with pre-IaaS infrastructure

management, organizations shifted resources to areas where they

add better business value.

...Instead of simply

removing the cost

associated with

pre-IaaS infrastructure

management,

organizations shifted

resources to areas

where they add better

business value.

http://www.techproresearch.com/downloads/iaas-research-leaders-share-cloud-strategies-for-the-21st-century-data-center/

http://www.gartner.com/newsroom/id/2352816



Plans for IaaS The question and related responses in Figure D show that 60 percent of participants have already implemented

IaaS or plan to do so within the next 12 months. The reasons for planning a move to IaaS focus on several

outcomes. Figure E depicts the reasons given by 38 participants who have not yet moved infrastructure to

a cloud service provider (CSP).

As you can see in Figure E, the biggest reason our respondents gave for moving to the cloud is improved

infrastructure elasticity. Herbst, Kounev, and Reusser (2013) define elasticity as

“…the degree to which a system is able to adapt to workload changes by provisioning and

deprovisioning resources in an autonomic manner, such that at each point in time the available

resources match the current demand as closely as possible” (p. 2).

Infrastructure elasticity is a measure of how quickly IT can respond to changing business needs. It is a function

of how well a CSP can provide on-demand resource scaling. Scaling includes responding quickly to demands for

new solutions, increasing processing power or bandwidth to adapt to monthly or seasonal business cycles, etc.

Business managers expect IT to help them remain competitive; IT must adapt, and IaaS provides a new approach.

29%

31%

40%

Current and future plans for IaaS

Percentage of organizations responding, n=124

Already implemented for one or more systems

Will implement within the next 12 months for one or more systems

No plans to implement within the next 12 months

Figure D

Percentage of all organizations responding, n=124

CURRENT AND FUTURE PLANS FOR IAAS



The next two biggest reasons for implementing IaaS are increasing overall effectiveness (68 percent) and

decreasing operational costs (63 percent). No organization for which I worked during the last 30 years had a large

enough infrastructure engineering team. New solution implementation tasks often fell victim to daily maintenance

tasks necessary to keep existing systems operational. Further, many servers already implemented were not used

efficiently, and new system projects included budget for even more systems. Virtualization certainly helps, but it

often does not go far enough.

Virtualization helps organizations reduce data center hardware costs. However, much of the cost reduction

is shifted to virtualization management. This shift continues to delegate a significant portion of IT budget to

maintaining operations instead of applying those dollars to business solutions design, implementation, and

management. According to Josh Ames (2012), proper use of IaaS can release these dollars, and improving

business continuity issues surrounding virtual servers, storage, and backups tend to disappear from day-to-day

data center tasks. These changes release staff to perform activities focused on supporting increasing business

growth and competitiveness. Our respondents support this change in budget application, with 55 percent

asserting their expectations that IaaS will improve customer satisfaction.

Only 39 percent of respondents selected the final item: More structured change management process. A future

survey might help clarify why respondents do not consider change management, an important element of risk

management (Olzak, 2012), a value-added target of IaaS. Hopefully it is because they already have a strong in-

house change management program. In any case, change management must find its way into any CSP contract.

25%

71%

68%

63%

58%

55%

53%

50%

39%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Overall increase in effectiveness

Decreased operational costs for affected systems

Improved customer satisfaction

Decreased energy costs

More structured change management process

Improved infrastructure elasticity (ability to quickly adjust to changing business demand for additional servers, data repositories, etc.)

Improved response to hardware failure (less business process downtime)

Improved business support (time to production of new solutions reduced)

Expectations once IaaS is implemented

Percentage of organizations responding, n=38 Figure EPercentage of all organizations responding, n=38

EXPECTATIONS ONCE IAAS IS IMPLEMENTED



Expectations—vs.—realityNow that we understand the expectations of organizations not yet initiated into IaaS implementation, let’s take

a look at how current IaaS subscribers (36 of our respondents) describe actual results. Figure F shows a wide

gap between expectations and reality, as described by our respondents. Only 39 percent claim overall operational

improvement, with 8 percent answering that they actually saw a decline. This implies that 53 percent of respon-

dents experienced no change in operational effectiveness. This is reflected in the small number of organizations

(19 percent) where customers were better off. The perceived business value of IaaS is disappointing for anyone

attempting to reduce costs, improve elasticity, improve performance, etc. Figure G adds to the list of IaaS

shortfalls, with only 42 percent of respondents perceiving a reduction in business risk. In fact, one out of three

claimed risk increased.

39%

39%

39%

39%

36%

36%

33%

19%

19%

8%

8%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Overall increase in effectiveness

Improved business support (time to production of new solutions reduced)

Improved response to hardware failure (less business process downtime)

Better system performance

Decreased operational costs for affected systems

Decreased energy costs

More structured change management process

Improved customer satisfaction

No change

Overall decrease in effectiveness

Impact of IaaS on improving operational effectiveness


Improved infrastructure elasticity (ability to quickly adjust to changing business demand for additional servers, data repositories, etc.)

Figure F

Percentage of all organizations responding, n=36

IMPACT OF IAAS ON IMPROVING OPERATIONAL EFFECTIVENESS



Our respondents did tend to meet one expectation: overall IT budget reduction. As shown in Figure H, 67 percent

of respondents experienced some level of IT budget reduction. The remaining organizations in our survey either

saw no change or an increase in overall IT budget. Several conditions might cause an organization’s IT budget

to grow or remain the same after IaaS implementation, including

• Reallocation of operations budget to business process improvements

• No staff reduction following shift of operations tasks to IaaS

• Failure to negotiate a CSP contract that leverages business expectations to describe and mandate

successful service levels

Impact on risk of overall security and regulatory compliance with affected systems


8%

34%

25%

25%

8%

Significant risk decrease

Some risk decrease

No change

Some risk increase

Significant risk increase

Figure G


IMPACT ON RISk OF OVERALL SECURITy AND REGULATORy COMPLIANCE wITh AFFECTED SySTEMS



Reallocation of budgetThe first impact of moving one or more business systems to IaaS is a shift from CAPEX (capital expenditures)

to OPEX (operational expenses). This reflects the trend to perceive IaaS as a utility: a service. Many CIOs see

OPEX as a shortcut to meeting business demands; CAPEX approvals take a lot of time and extend new solution

implementation timelines (Mishra, 2012). A shift to OPEX does not necessarily support cost decreases, but it does

support several other IaaS objectives as listed in Figure D.

In our survey, respondents claimed transfer of at least some savings to other capital projects (33 percent) and to

increased training (25 percent), as shown in Figure I. Transferring dollars to OPEX improves IT capabilities and

allows increased value by directly supporting business operation.

Figure H

8%

Effect of IaaS implementation on overall IT budget


Significant reduction

Minor reduction

Stayed the same

Minor increase

Significant increase

25%

42%

6%

19%


EFFECT OF IAAS IMPLEMENTATION ON OVERALL IT BUDGET



Although moving the infrastructure for one or more systems to the cloud does affect some costs, Figure J shows

that data center management still requires staffing and significant OPEX. The difference is in focus. 33 percent of

respondents applied additional resources to managing critical systems. This tracks with the findings of a March

2013 TechRepublic survey in which 58 percent of respondents saw security concerns as the biggest obstacle to

placing sensitive systems at a CSP location. Consequently, many business-critical systems remain in organization

data centers. Reallocating staff and budget to improving customer satisfaction with core applications limits overall

budget decreases.

StaffingThe increase in training shown in Figure J reflects the impact on staffing for organizations currently using IaaS.

Only 19 percent saw a decrease in staffing, with 64 percent either seeing no change or an increase in staff count.

It appears employees were shifted to enable outcomes related to increased efficiency when providing business

solutions support and services.

Figure K depicts the staffing intentions of organizations just now planning IaaS implementation. Only 40 of the

74 respondents for this question selected one of the staffing increase/decrease options. Out of those, 30 percent

plan to decrease staff, 62.5 percent plan no change, and 1.6 percent expect an increase in staffing. In this case,

expectations seem to match outcomes.

33%

33%

25%

17%

17%

8%

0% 5% 10% 15% 20% 25% 30% 35%

Decreased overall IT budget

Transferred expense savings to capital budget

Increased training budget

Improved security and compliance controls

Created a more aggressive business solutions project portfolio

Increased staffing and focus for business solutions analysis

IaaS budget savings reallocation

Percentage of organizations responding, n=12 Figure I


IAAS BUDGET SAVINGS REALLOCATION

http://www.techproresearch.com/downloads/research-what-leaders-say-about-cloud-capabilities-and-limitations-copy1/



Staff reduction

Staff count stays the same

Staff increase

Staff retraining

Staff reallocation

Begin IT shift fromimplementer to solutionsmanager

Plans for IT staffing changes once IaaS implementation stabilizes


4%

11%

17%

34%

16% 18%

According to an Information Week staffing survey analysis by Neil Roiter (2010), cost savings from moving to the

cloud will likely come from areas other than staffing reductions. Our survey results support this.

In summary, the primary drivers of IaaS implementation, as supported above in Plan for IaaS and Reallocation of

budget, are not largely driven by staffing reductions. Rather, organizations plan to refocus efforts on improving

service delivery. As Roiter writes, “Efficiency is the grail” (p. 12). Our findings support this as many of our IaaS

subscribing respondents retrain existing staff (28 percent), reallocate staff to other IT functions (22 percent), or

begin a shift to a solutions management posture (39 percent). Maintaining hardware in house does not seem to

add enough value for each related OPEX dollar spent.

Steps taken to adapt IT staffing to introduction of IaaS


19%

56%

8%

28%

22%

39%

3%

0% 10% 20% 30% 40% 50% 60%

Staff reduction

Staff count stayed the same

Staff increased

Staff retraining

Staff reallocation

IT began shift from systems implementation/management to solutions management

Replaced existing staff with individuals with non-hardware related skill sets

Figure JPercentage of organizations responding, n=36

Figure K


STEPS TAkEN TO ADAPT IT STAFFING TO INTRODUTION OF IAAS

PLANS FOR IT STAFFING ChANGES ONCE IAAS IMPLEMENTATION STABILIZES



Importance of CSP contract negotiationsCSPs may have a different perspective when pitching the benefits of cloud services. In many cases, they try to

reinforce the perception that cloud-hosted services save money. As we have seen, this is not the primary reason

given for making the shift to IaaS. Joe McKendrick (2012) writes,

“Cloud has been around in its current form for a few years now… and it is seen as an enabler of

topline growth, beyond the cost reduction imperative…” (p. 5).

Making sure the CSP shares an organization’s IaaS objectives is critical to realizing expected outcomes. This

requires clearly defined SLAs describing what the CSP must accomplish every day to ensure outcomes like

process transparency, elasticity, business continuity, and overall increase in effectiveness. For more information

on cloud SLAs, see:

Hazy cloud contracts are hurting everyone: Four ways to put them right

Four things to know about cloud SLAs

Best practices to develop SLAs for cloud computing

http://www.techrepublic.com/blog/european-technology/hazy-cloud-contracts-are-hurting-everyone-four-ways-to-put-them-right/

http://www.techradar.com/us/news/internet/cloud-services/four-things-to-know-about-cloud-slas-1157019

http://www.ibm.com/developerworks/cloud/library/cl-slastandards/



Impact on the data centerPost-IaaS implementation changes to the data center demonstrate IaaS subscriber attempts to meet outcomes

previously described. As shown in Figure L, 39 percent of organizations already subscribing to IaaS at least began

a focus shift from system operations to better business customer management. This was supported by one-third

of respondents indicating a greater focus on critical systems management.

Data center activities related to increased efficiency tended to be more important than those intended to shrink

the size of in-house infrastructure. While 31 percent of responding organizations experienced data center

contraction, 39 percent either increased data center size or saw no significant changes. However as we have

seen, organizations tend to keep critical systems in-house. Further, moving infrastructure to the cloud might

force some organizations to upgrade their networks.

Figure L

14%

31%

39%

33%

28%

25%

11%

25%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Data center expansion

Data center contraction

More focus on critical systems management

Moving to a fully virtualized data center

No significant changes

Shifting from system operations to service, quality and availability management

More focus on network traffic management and quality of service

Data storage or backup management moved to cloud service provider

Changes made to data center because of IaaS implementation



ChANGES MADE TO DATA CENTER BECAUSE OF IAAS IMPLEMENTATION



Survey methodologyIn July 2013, Tech Pro Research opened the online IaaS survey to IT professionals around the world. Tech Pro

Research promoted the survey through editorial coverage and newsletters. Participation was voluntary and

124 respondents completed the survey.

When: July 17 to July 29, 2013

To whom: The IT decision-makers in organizations across the U.S., Canada, Europe, India, Asia-Pacific, China,

Australia, and New Zealand

Approach: Quantitative study, fielded online

Topics:

• Current and future plans for implementing IaaS

• IT staffing changes due to IaaS

• IaaS impact on operational effectiveness

• IT budget impact from IaaS

• IaaS expectations



Survey respondent demographics124 people participated in our survey. They represent a wide range of industries, as depicted in Figure A.

Questions posed to each participant varied based on his or her organization’s current or planned implementation

of IaaS. Figure B shows that most respondents reside in Europe and the US (73 percent) and work for small

businesses with less than 250 employees (57 percent), as shown in Figure C.

Respondents’ primary industry sector


10% 2%

3% 3% 4% 5% 5% 6%

6%

6%

6%

7%

8%

28%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

IT & Technology

Telecommunications

Government

Finance/Banking/Insurance

Education

Retail & Wholesale

Business Services/Consulting

Logistics & Transport

Healthcare

Engineering & Construction

Manufacturing (FMCG)

Legal & Professional

Utilities

Other

Figure A


RESPONDENTS’ PRIMARy INDUSTRy SECTOR



Respondents by region


2%

4% 6%

15%

34%

39%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Europe US Asia-Pacific Australia / New Zealand India Canada

Figure BPercentage of organizations responding, n=124

Respondents by organization size (number of employees)


38%

19%

14%

30%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1000 or more

250-999

50-249

Fewer than 50

Figure C


RESPONDENTS By REGION

RESPONDENTS By ORGANIZATION SIZE (NUMBER OF EMPLOyEES)



Conclusion • Use of IaaS allows a budget shift from CAPEX to OPEX. This helps shrink implementation timelines

and reallocate capital budget for projects held hostage by in-house infrastructure needs.

• Staff reduction is not the primary focus of most organizations considering IaaS. Rather, increased

efficiency — providing better services to business customers — is the preferred outcome.

• Organizations using IaaS are not usually seeing the benefits they expected. Strong SLAs and

continuous CSP relationship management are key elements of meeting IaaS planning objectives.

Do not let potential IaaS vendors try to sell cost as the primary driver.

• Change management must transfer to the CSP, and the subscribing organization must periodically

review change processes along with SLA-governed outcomes.

• Data centers are not always significantly affected by IaaS. Many organizations retain critical systems

in house, improve network infrastructure, or focus on data center improvements that support IT’s

desire to improve business customer service delivery.



BibliographyAmes, Josh. Cloud Computing vs Virtualization: There is a Difference. December 4, 2012.

http://blog.appcore.com/blog/bid/128515/Cloud-Computing-vs-Virtualization-There-Is-A-Difference

(accessed August 13, 2013).

Herbst, Nikolas Roman, Samuel Kounev, and Ralf Reusser. “Elasticity in Cloud Computing: What It Is,

and What It Is Not.” USENIX. 2013.

https://www.usenix.org/conference/icac13/elasticity-cloud-computing-what-it-and-what-it-not


McKendrick, Joe. Cloud Providers Pitch Cost Savings, But Enterprises Want More: Survey. August 16, 2012.

http://www.forbes.com/sites/joemckendrick/2012/08/16/cloud-providers-pitch-cost-savings-but-enterprises-

want-more-survey/ (accessed August 14, 2013).

Mishra, D. CAPEX or OPEX: A CIO’s Dilemma. June 26, 2012.

http://www.dynamiccio.com/2012/06/capex-or-opex-what-should-cios-choose.php (accessed August 14, 2013).

Olzak, Tom. Risk Management - Chapter 2. January 20, 2012.

http://resources.infosecinstitute.com/risk-management-chapter-2/ (accessed August 13, 2013).

Roiter, Neil. “A Hazy Outlook: Changing Role of IT as Services Ascend.” InformationWeek. June 2010.

http://reports.informationweek.com/abstract/5/3435/Cloud-Computing/research-cloud-it-staffing.html




About Tom OlzakTom Olzak is a security researcher for the InfoSec Institute and an IT professional with over 30 years of

experience in programming, network engineering, and security. He has an MBA and CISSP certification.

Tom has held positions as an IS director, director of infrastructure engineering, director of information security,

and programming manager at a variety of manufacturing, healthcare, and distribution companies. He has written

three books, Just Enough Security, Microsoft Virtualization, and Enterprise Security: A Practitioner’s Guide

(to be published in Q1/2013). Before joining the private sector, he served 10 years in the United States Army

Military Police with four years as a military police investigator.

About Alfred Lee, PhDAlfred Lee, PhD, completed his academic training in experimental condensed matter physics before transitioning

to a career making big data useful for business decisions. Former projects have ranged from coding an early

version of the data reduction pipeline for an astronomical research camera to investigating low-temperature,

micro-scale magnetic phenomena with a force microscope. Currently a data analyst at bitly, a leading social

intelligence platform, Alfred enjoys projects that reveal hidden insights in otherwise chaotic data. As a technology

generalist, his curiosity about the latest innovations is insatiable.

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