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Drive Your Business And what it means for IT leaders Industry Report State of Cloud

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Page 1: State of Cloud 2016 - WGroup Industry Report

Drive Your Business

And what it means for IT leaders

Industry ReportState of Cloud

Page 2: State of Cloud 2016 - WGroup Industry Report

2 ©2016 WGroup. ThinkWGroup.com

by Bill Genovese, Tony Ioele, Doug Smith and David Spindel

State of CloudAnd what it means for IT leaders

Copyright © 2016 WGroup. All rights reserved.

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3 ©2016 WGroup. ThinkWGroup.com

Cloud technology is core to delivery of services

in almost every industry, but its ongoing

evolution means your organization needs to

be flexible and agile enough to change with it.

New services and applications appear daily,

and cost structures are constantly changing.

This special WGroup industry report, “State of

Cloud,” will help you understand its rapid evolution

so you can refine your IT strategy and fully leverage

the power of today’s cloud in your organization.

Feel free to contact me personally to discuss at

610-854-2700 or [email protected].

Foreword

– Harry Wallaesa, WGroup CEO

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Table of ContentsIntroduction...............................................................................................................................................

Governance is a must, not an option........................................................................................................

The state of cloud.....................................................................................................................................

Cloud is diverse...........................................................................................................................

Cost structures are changing.......................................................................................................

The rise of data............................................................................................................................

Increased automation..................................................................................................................

Increased performance and security............................................................................................

Staying competitive......................................................................................................................

Challenges and opportunities....................................................................................................................

Cloud players................................................................................................................................

Detailed leading cloud vendor comparison...................................................................................

Cloud challenges CIOs face today.............................................................................................................

Evaluating your current state.....................................................................................................................

The big picture..............................................................................................................................

Performance.................................................................................................................................

Security and compliance..............................................................................................................

Vendors........................................................................................................................................

Making the move to cloud............................................................................................................

Applications..................................................................................................................................

Cost-effective cloud adoption....................................................................................................................

Evaluating your cloud implementation......................................................................................................

How WGroup can help.............................................................................................................................

About the authors ....................................................................................................................................

References...............................................................................................................................................

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Cloud technology has gained a permanent foothold in IT and continues to revolutionize businesses

and other organizations in increasingly significant ways. With the ability to provide greater scalability,

functionality, and in many cases cost-effectiveness, almost every organization is implementing cloud

deployments in some form. With SaaS, PaaS, IaaS, private cloud, hybrid cloud, and other public

cloud technologies, this new paradigm is bringing remarkable change to IT departments across all

industries. WGroup believes that cloud technology will become just as ubiquitous to all of us as the

Internet is. In order to harness the power of this environment, businesses must learn how to more

effectively secure and manage cloud, leveraging it to make their organization more responsive.

At any given moment, we can access information on the Internet via computers, phones,

tablets, and televisions. This trend will continue, and one day all of the enabling IT

infrastructure will be available like a utility to further offer access to information and

data through cloud computing and technology. The explosion of information and data is

increasing, along with new technology to capture and monitor more information.

So, how does a company harness this data through cloud technology?

Introduction

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It begins with the use of a well-defined strategy with specified business processes and aligned IT

services (via private, public and “hybrid” cloud deployment models). A mature enterprise architecture-

driven framework provides building blocks that can act as investment enablers for decisions on

how and where to begin to take advantage of cloud technology, for example, to gain faster access

to data. This strategy and framework is critical for cost avoidance, so that maximum accelerated

ROI is achieved, and duplication of investments is limited or prevented. In addition, a mature

enterprise architecture function provides the guardrails to mitigate risk as technologies converge.

An enterprise-technology framework defines the technology services and functions (IT capabilities)

required to support the business applications and data, including common (or shared) application

services, common data services, common system services, network services, security services,

and platform services, as well as the management tools used to support the delivery of IT service. It

also helps to define the specifics for a line of business that may be required as well, or in the case

of a software defined and enabled hybrid-cloud model, what system or application must stay in the

datacenter at the corporation. (For example, “system of record” vs. what may be hosted in a SaaS or

Public Model and also potentially accessed via a “system of engagement” via a mobile device, where

data and analysis output can be received). This reference framework can help to define what are private

or bounded service definitions, policies, and patterns; it also helps define the policies for a hybrid-

cloud delivery model and how best to access and secure structured and unstructured data outside the

organization. That data is being captured and delivered via technology sensors and devices across

entities, geographies, and even people (via wearable devices), as part the Internet of Things (IoT).

Our society is rapidly transforming with the explosion of data. To best harness it for its full advantage,

enterprise architecture provides a roadmap on where to best leverage existing assets for development

of services. A well-established enterprise-technology framework aligns with an enterprise-security

architecture framework to define the guardrails, based on regulatory and corporate policy.

WGroup can accelerate your cloud-value journey to enable faster business outcomes,

by guiding you and your team as you define a very specific IT strategy, based on your

business goals and objectives. We can also guide you through identifying the required

enablers and accelerators (leveraged as services) to identify the optimal entry points

for the converging technologies, as delivered through cloud technology.

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Cloud technology is evolving every day, and keeping up with the latest trends, standards,

security, and opportunities is not always straightforward. Although most businesses have

awoken to the benefits of cloud and started to implement it, many have not yet taken full

advantage of new technologies and deployed them in a strategic way. Managing contracts

with cloud vendors can be very complex as many organizations struggle to validate their

SLAs and keep track of multiple providers. Ensuring that a cloud deployment is securely and

reliably maintained can be equally challenging. In order to make sure that your organization

is taking full advantage of the power and flexibility

cloud can offer, it’s important to assess the current

state and maturity level of cloud technology

and its applicability in your organization. Is your

business already leveraging that power? Where

are future opportunities? How can cloud be used

to meet your business goals and challenges?

This paper will help you better understand

cloud, how it affects your organization,

how to take advantage of cloud

technology, and how to meet the challenges and opportunities it brings.

It’s important to assess the current state and maturity level of cloud technology and its applicability in your organization.

Is your business already leveraging that power?

Where are future opportunities?

How can cloud be used to meet your business goals and challenges?

Managing the changing cloud

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When moving to a cloud environment, whether you manage your own cloud environment or

use a cloud-service provider, there should be no difference between your IT management

of your existing SLAs and associated systems. If anything, you should expect more from

a cloud service provider, then what you may have already implemented in-house.

For example, imagine you have applied discipline to the management team of what was once a loose

process consisting of one meeting a year,

which usually resulted in priorities shifting

based on squeaky wheels. You now run

quarterly cross-functional meetings to

review requirements and are holding to

the priorities. In accordance with this, you

are establishing a project management

office (PMO). Your intent is to make the

PMO not overly burdensome. Is the

PMO standing on its own to help execute

the individual projects on a transaction-by-transaction basis or squeaky wheel basis? Is the portfolio

aligned to the business strategy? Who in the organization is ensuring the “right” technology

and architecture for what the business needs? A solid PMO is a good part of the puzzle and

needed for project (and larger program level) governance and execution, but without a mature

enterprise-architecture function in the organization, are they the right projects? Are they ensuring

the organization is making the right choices for technology to meet the business drivers and

requirements, while ensuring technical risk is mitigated and stability is maintained or improved?

As part of this scenario, imagine you have many large-scale infrastructure transformation

initiatives planned and some are in flight, so having a PMO to govern and manage them is

a good thing. You have a roadmap to transform your infrastructure with a “rolling thunder”

approach that will take at least three years and cost about $30 million. Your CFO and board are

already aware and support it (even though your board may not know what the core technology

is, and how it will solve the most pressing issues for the business and by when).

Governance is a must, not an option

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The strategic steps you have in mind include assessing the current state, developing

the future vision (leveraging cloud and new technologies), developing the roadmap

to achieve the vision, and executing. Today you are in the process of assessing your

infrastructure, as a starting point. In developing your future vision you have a number of

items that are known considerations, in-flight initiatives, and challenges you are facing

– your enterprise requirements. They include the following hypothetical activities:

• June 2016 is a milestone month. Your Enterprise Microsoft contract is up for renewal.

• You plan to upgrade to JDE EnterpriseOne (your options in this regard are limited).

• As has been planned, your JDEOne ERP implementation is likely to start.

• As you look at renewal options you are considering migrating to Microsoft Office 365,

to potentially reduce costs and administrative burden. This analysis should also start

to consider integration of other capabilities from Microsoft Sharepoint for collaboration,

Microsoft Dynamics as a potential alternative for JDEOne, and as you are growing your B2B

model and business you are possibly considering a CRM solution, which Dynamics provides

as well, vs. what you may have in house today.

• Another potential integrated solution to investigate is Microsoft Azure. You may be able to

further reduce application licensing and administrative burden, and reduce risks by going

with a hosted Microsoft cloud offering through Azure.

• Then, you start thinking. Today you are generally on-premise for about 50 enterprise

applications. Should this be moved to co-lo or cloud? A benefit of moving away from on-

premise will enable you to have resources focused on core activities. But what applications

and workloads should be moved and can be moved? What are the risks?

• Given the intended moves to MS and the JDE ERP installation you should be able to

consolidate applications that will reduce resource requirements.

• You are a VMware shop and are your IT staff is very comfortable with this. There is no issue

here or compelling reason to change this.

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• Then as you get further into the analysis, you realize that moving applications into cloud has

network implications that need to be considered. Have you planned for this?

• You also have apps that hold core systems of record in your datacenter on legacy systems (e.g.

AS400), that may not be the best candidates to re-platform (for interoperability reasons) or move

off-premise (due to data privacy issues).

• You’ve given a large portion of the responsibility for addressing and solving the above challenges to

your IT operations manager, while maintaining, running, and operating your existing daily demands

on IT.

• You have heard (rightly or wrongly) that cloud can be your saving grace to solve these challenges.

• Your expectations for taking advantage of cloud for the future minimally include lower HW

investment, lower staffing requirements, and more flexibility and scale.

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To further complicate the above, you may now also have existing applications or systems

that are undergoing or in need of overhaul because they are not yet ready to meet new

regulatory mandates. Your data may be at risk of exposure or not properly protected.

The above is a typical example of what all organizations are facing today. The challenges and

obstacles are oriented on people, process, and technology. Introducing what can be perceived

as disruptive technology can create additional obstructions for the business and your IT staff.

Before moving workloads to a vendor-hosted cloud, you need evidence

that the vendor is already meeting regulatory standards (e.g., HIPAA, PCI-

DSS, FedRAMP, FISMA) for organizations similar to yours.

As data proliferates, there is increasing improvement to standards that deal specifically with

governance and management of data and information security, including the identification of risks

and the implementation of security controls to address these risks. The ISO/IEC 27000-series is

the most widely recognized and applied set of standards relating to the security of ICT systems.

The core standards are 27001 and 27002, with 27001 containing the requirements related to

an information security management system,

and 27002 describing a series

of controls that address specific

aspects of the information-

security management system.

ISO 27001 is an advisory standard that is

meant to be interpreted and applied to all types and sizes of organizations, according to the

particular information security risks they face. In practice, this flexibility gives users a lot of

latitude to adopt the detailed information-security controls that make sense to them, but can

make compliance testing more complex than some other formal certification schemes.

ISO 27001 is an advisory standard that is meant to be interpreted and applied to all types and sizes of organizations, according to the particular information security risks they face.

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ISO 27002 is a collection of security controls (often referred to as best practices) that are used as a security standard.

ISO 27002 is a collection of security controls (often referred to as best practices) that are used

as a security standard. Assuming that the design and/or operation of a cloud service provider’s

information security management systems are

consistent with the standard (e.g., there are

no notable gaps) it can be asserted that their

environment is compliant with the standard.

The 27001 and 27002 standards apply generally

to the operation of ICT systems. ISO 27017 and ISO 27018 are two new standards under development

that describe the application of 27002 to cloud computing. ISO 27017 deals with the application

of the ISO 27002 specification to the use of cloud services and to the provision of cloud services.

ISO 27018 deals with the application of 27002 to the handling of personally identifiable information

(PII) in cloud computing, sometimes described as dealing with privacy in cloud computing.

At a minimum, cloud-service customers are advised to look for providers that conform to the ISO

27002 standard for information systems security. This is not necessarily specific to cloud computing,

but the principles can still be usefully applied to the provision of cloud services (i.e., as a measure

of maturity and as a necessary safeguard of doing “the right things” in an IT organization). A cloud-

service provider can assert on its own behalf as to its compliance with a standard, but having an

independent/qualified third-party certify compliance is a notably stronger form of attestation.

In addition, customers are advised to check whether their cloud-service provider

conforms to ISO 27017 and ISO 27018, standards, since they are specific to cloud

computing for information security and for the handling of PII, respectively.

WGroup is your preferred and chosen advisory partner to ensure that effective governance, risk,

and compliance processes exist. If they don’t, we’ll show you how to implement and deploy them.

However, this is just the first step. We are here to help you through the analysis of choices and

architectural decisions you will need to make, with critical input from your team. We’ll help you

adapt the leading and best practices implemented by those who have made this journey.

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WGroup’s vision and capabilities align with Cloud Standards Customer Council’s 10

steps to help your organization ensure success for secure cloud computing.

1. Ensure effective governance, risk, and compliance processes exist.

2. Audit operational and business processes.

3. Manage people, roles and identities.

4. Ensure proper protection of data and information.

5. Enforce privacy policies.

6. Assess the security provisions for cloud applications.

7. Ensure cloud networks and connections are secure.

8. Evaluate security controls on physical infrastructure and facilities.

9. Manage security terms in cloud SLA.

10. Understand the security requirements of the exit process.

Taking a holistic approach to your challenges and in-flight initiatives, WGroup develops a strategy

with you and your team. We meet your most pressing needs, but also align these to next steps in

meeting your business strategy. In the most cost-effective and safest approach possible, we bring

higher standards to your organization through service-provider capabilities and management.

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The state of cloudCloud is a diverse, rapidly changing model that can enable a range of services and applications

for business and other organizational users. It represents any system that gives end-

users access to computing resources, allowing organizations to more easily scale their

businesses, share information, and implement new functionality. Clearly cloud will be an

increasingly important fixture in organizations for the foreseeable future. That’s why it’s so

important that your business understands the current state of cloud, have robust governance

processes in place, and prepare for the changes that the shifting landscape will bring.

An ever-expanding array of cloud applications and services is available. SaaS, IaaS,

PaaS, private cloud, hybrid cloud, and other solutions each offer unique opportunities

and challenges for businesses. To determine which choices fit their needs, organizations

need to understand this wide range of options and their security considerations.

Cloud is diverse

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Multiplying XaaS options

Each organization has unique cloud needs, and public-cloud providers are offering a

growing range of options to meet them. Although many non-IT focused organizations

can use primarily pre-packaged SaaS solutions, others are leveraging more flexible

offerings to fully or partially outsource internal infrastructure. PaaS offers another option

for organizations looking for an environment to develop and customize applications.

Although these have been the standard XaaS options for several years, many cloud providers

offer an increasing range of service options. Storage as a service, communications as a

service, network as a service, and disaster recovery as a service are all now common options

for business. Another new service that is expected to increase in popularity in the coming

years is big data as a service, with the total big data market projected to reach $88 billion

by 2021.1 These offerings allow companies to leverage powerful infrastructure to collect and

analyze data more cost efficiently and flexibly than would often be possible in-house.

Public, private and hybrid cloud

XaaS options exist in the realm of the public cloud, but many organizations choose to share computing

resources in a generic third-party owned solution. This provides many benefits, such as economies of

scale, flexibility, and reduced need for maintenance. However, some organizations find they need to

create their own private cloud using proprietary servers, primarily due to information security concerns.

Many are also using a public deployment option in conjunction with in-house infrastructure in a hybrid-

cloud configuration. This allows them to take advantage of the flexibility and cost savings of the public

cloud for certain applications, while keeping other applications on-premises for compliance or other

reasons. This hybrid solution can offer many new opportunities for businesses that can’t fully outsource

to the public cloud, allowing them to benefit from cost savings and get products to market faster.

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The rising influence of MSPs

Another increasingly important option in cloud arena is the managed service provider (MSP).

These providers let organizations outsource their IT operations, providing security, maintenance,

monitoring, and other services. Although these companies began managing servers for organizations

remotely, many have grown to offer their own or third-party cloud services to customers. Many

can provide fully managed hybrid implementations, often including mobile-device management.

This can offer an attractive solution for SMBs without the human

resources to manage their operations in-house.

Deciding on IaaS, PaaS, or SaaS is not always as cut and dry as one would

expect. With any “as-a-service” solution, information security requirements

could diminish the value of these solutions. Some things to consider:

• IaaS is a good option when the organization has the resources to manage the environment

either by in-house or sourced resources. IaaS solutions provide the capabilities to secure data

in transit and at rest with key management firmly in your control.

• PaaS is a good option when the organization does not have the resources to manage the

environment but has the expertise and resources to manage the application. Like IaaS

solutions, PaaS solutions allow for data to be secured in transit and at rest, however there is

less flexibility on the tools utilized. A primary difference between IaaS and PaaS is that PaaS

includes the database and middleware components.

• Saas is a good option when the organization has requirements meeting the standard

configurations of a SaaS solution. SaaS solutions provide data security in transit and at rest, but

the provider usually manages the encryption keys.

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Some of the primary driving factors of change in IT are evolving cost structures. IT infrastructure was

once incredibly specialized and costly. With technological developments and the increased popularity

of cloud, it is now being provided more economically than ever. Businesses can move a larger

portion of their IT workload and storage onto cloud services, which can offer them almost limitless

computing capabilities cost effectively and shift the cost structures of the business fundamentally.

Cost structures are changing

Falling prices

As competitive, high-volume providers such as Amazon and

Microsoft expand in the market, costs for cloud storage, computing,

and other services have fallen rapidly. Today, a typical on-

demand application costs $1.68 per hour with the best price

offerings down nearly 12% over the prior year.2 Many have

speculated that there may be no bottom price for certain cloud

infrastructure components, as companies can theoretically offer

storage for free while profiting off of other extra services.

CapEx Vs. OpEx

Cloud-service providers fundamentally change the cost structures of the IT department. Adding IT

functionality once required a significant capital expenditure in the form of buying new servers, adding

infrastructure, and hiring new employees. Cloud providers today simply charge a monthly or per-hour

fee for usage of their services. This shifts much of IT costs into day-to-day operating expenditure.

This offers some benefits given current technology consumption models. Investing a significant sum

in infrastructure that could be obsolete in two years no longer makes financial or business sense. It

is frequently more cost effective to simply “rent” cloud services that will automatically be upgraded.

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Hidden costs

With the explosion of available data and the desire to bring into the organization, there is a natural

tendency to look at off-premise clouds as a way to gain faster access to new data. An alternative

is to move existing workloads to the off-premise cloud with the expectation that new data from

ancillary applications or sources outside the enterprise is now “closer” and more easily accessible.

True, in many cases infrastructure-hosting costs may be reduced vs. in-house spend. But there

will always be requirements to transfer and likely integrate off-premise hosted-data applications

(for example, accessed with mobile devices and supported through enterprise BYOD policies or

systems of engagement) with on-premise hosted data applications (systems of record). Data transfer

expense can be a hidden cost that is not accounted for in comparing cloud-service providers.

Looking at and analyzing per-instance-based costs when comparing cloud service providers

is misleading and does not reflect the real world. In data intensive environments, system and

application architectures are becoming key determinators of cost differentiation. Workload-based

comparisons running on clouds are a true indicator of cost. The following must be considered:

The true holistic workload-based cost elements that should be considered when comparing cloud service

include infrastructure cost, data transfer cost, and software cost. These cost elements are important when

comparing and contrasting cloud-provider hosting services to determine what it costs your organization

on a per unit performance basis, typically based on a workload specific benchmark that provides a

relative performance score (rps). Since workloads vary in characteristics, using this method can provide a

more realistic holistic cost analysis to help you decide which solution provider and cloud solution to select.

• What is the cost of delivering a workload? You need to consider line item cost elements beyond

the acquisition cost.

• What is the infrastructure needed to deliver a given workload?

• What are the performance requirements and how do they factor in?

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Infrastructure costs are relatively similar when comparing the leading providers, but this

can vary based on workload requirements. Software cost can vary based on requirements,

either by selecting hosted software from cloud solution provider vs. “porting” or requesting

that your own software and applications get moved to the hosting providers cloud.

One of the largest differences in cost between providers is data transfer cost. One leading provider doesn’t

charging anything for data transfer cost, while others charge on a per GB basis per month after the “free”

initial allocation is met. (For example, first 5 GB free, then anywhere from .05 to .19 cents per GB based

on tiering, with anything above 500TB of data per month as negotiable). Another leading provider does

not allocate or provide any initial “free” data transfer upfront and charges .08 to .21 cents per GB based

on tiering, with anything above 100TB per month as negotiable. These rates are classified as “outbound

data transfer to the Internet” where, for example, your company may be sending data to another company

or one of your customers from your data center to the application hosted in the service provider’s cloud.

The interdata center data transfer charges from each provider fluctuate even more. If your company is

spread across a country or is an international company with multiple datacenters, these costs can add up.

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In conclusion, when selecting your cloud service provider, ensure that you can account for and uncover

any potential hidden costs as you decide on your cloud strategy and deployment model. The following

are key components of consideration, as you complete your analysis, and identify your cloud workloads:

• Shared virtual infrastructure: For workloads that are not as critical, but need to be

provisioned, deployed, and released rapidly.

• Non-shared virtual infrastructure: For workloads requiring predictable performance or more

stringent security.

• Bare metal (non-virtual): For workloads requiring highest performance, security, and

manageability.

• Mix of virtual and bare metal infrastructure: For flexibility in deployment.

• Virtual Private Cloud: Logically isolated section of cloud in a virtual network you define, which

provides further flexibility for security and manageability.

• Build your own private cloud: For the ultimate control over configuring and managing your

infrastructure.

• Unlimited datacenter-to-datacenter networking: For replication, backup, failover for critical

workloads.

• Transparency from topology to hardware: For layered control, security, and compliance.

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As computing power has increased and storage has become cheaper, companies have turned to

data analysis as an invaluable tool to increase their productivity and profitability. Big and small data

are no longer relegated to massive corporations; now even small business can leverage the power

of cloud to gain a competitive advantage. Independent research studies show that between 2011

and 2015, the total amount of enterprise data grew by

800%.3 As the price of physical hard drives fall dramatically,

cloud storage prices also have significantly decreased.

Many leading cloud providers have explicitly stated that

they are seeking to offer cloud storage to enterprises for

free, while charging for other services, such as analytics.

The rise of data

Automation and autonomics are revolutionizing businesses, allowing them to increase

performance while redirecting human resources to more value-added activities in support

of the business. Cloud services make it possible for businesses to automate an increasing

amount of their workload. The computing power offered by these tools allows many businesses

to outsource repeatable processes to computers. This is particularly apparent in the IT

department, where operational costs make up 80% of the average budget.4 By implementing

automation and autonomics, businesses can reduce these costs by as much as 35%.5

However, these new tools can present several challenges for organizations. As many tasks that

were once performed by human workers are given to

automated processes, the structure of the workplace

must change. It is now important to have staff who

can oversee the automated workers, and step in as

necessary. Human employees will be more focused

on higher-level tasks, such as collaborative work,

creative work, or more complicated processes.

Increased automation

Independent research studies show that between 2011 and 2015, the total amount of enterprise data grew by 800%.

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Performance and security concerns have been major obstacles to cloud adoption since its

inception. Ninety percent of organizations responding to a 2015 survey said that they were either

moderately or very concerned about security in the public cloud6, while 32% of respondents to

another survey said that performance was the greatest barrier to entry into the public cloud.7

However, in recent years, security and performance in cloud have significantly improved, in many

cases even surpassing on-premises solutions. New connection possibilities create adjacency

and increase security and performance for many applications, allowing organizations to deploy

some mission-critical, sensitive applications and services in a cloud environment. Cloud providers

also are becoming increasingly mature and sophisticated in their ability to provide and assure

security. Leading providers like Google and Amazon can often offer more cost-effective security

than would be available on-premises. As companies begin to realize that they can achieve

similar performance and security with cloud deployments, adoption rates will continue to rise.

The explosion of data coupled with social, mobile

and analytic applications is challenging IT

departments as never before. CEOs now view

the rapid pace of technological innovation

as the #1 issue impacting business.8

Increased performance and security

The rapid pace of technological innovation is viewed by CEOs as the #1 issue impacting business.

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• Disruptive innovation affecting how

data is stored and processed, from

structured data at rest to unstructured

data in motion.

• Fast evolving software ecosystems and

application frameworks, along with what

to do with the older legacy software and

applications.

• The move from monolithic applications

to composable services.

• Re-usable iterative processing instead

of relying on linear batch processing.

So what are the issues and challenges facing organizations

looking at these new born-in-cloud technologies?

• Data is growing exponentially and demands new approaches

(both from a technology and strategy perspective).

• Hard disk drives (HDD) performance and capacity are losing

ground to keep up with the demand.

• Microprocessor clock rates have stalled.

• Network bandwith is becoming choked and cannot keep up.

• Encompassing all of the above is the demand to drive costs

down, and do more with less.

• Converged data and compute, instead of

data and compute in silos.

• Management of unpredictable workloads.

• The maturation of cloud deployment options

(private, public, and hybrid).

• Multi-tenant platform as a service options

instead of siloed IT environments.

• Open innovation and standards vs.

proprietary and “locked-in” standards.

• Dynamic services defined by software

instead of “static” infrastructure.

• New service-delivery models.

“Born-in-the-cloud technologies” are causing a re-think of IT infrastructure, in terms of:

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Workload readiness for cloud and the most suitable cloud-deployment types are driven

mainly by elasticity of demand and mission criticality. The following diagram provides

examples of workloads in respect to their readiness for cloud, their characteristics,

and suggested placement via the different cloud deployment models.

WORKLOAD READINESS FOR CLOUD(examples)

HighlySensitive

Data

OnlineTransactions

Regulated /AuditableProcesses

HighlyCustomized SW

(Unvirtualized)Third Party SW

READY

LESS READY

HighlyElastic Demand

Daily, monthly, seasonal variations, unknown demand or

seasonal transient needs

Inelastic Demand

High Security / Mission Critical Low Security / Non-Mission Critical

Medical Imaging(not medical records)

CollaborationTools & Email

Web Apps

Developmentand Test

Desktop andDevices

Traditional BI

(Virtualized)SaaS Apps Big Data

Analytics

Overfow Storage,Offsite Backups

Generic Compute(one-time batch jobs)

Compute-Intensive R&D**• Bioinformatics• Engineering simulations• Financial risk modeling

**Except those requiring full use of multiple cores and high performance file systems or very high bandwidths

TraditionalData

Centers

EnterprisePrivateCloud

ManagedPrivateCloud

HostedPrivateCloud

HybridCloud

PublicCloud

As another example, to better understand the current rate of cloud adoption, as well as drivers,

barriers, and considerations that are influencing the adoption of cloud computing, IBM conducted a

survey (“Dispelling the Vapor Around Cloud Computing in the Financial Services Industry”) of 1,090

IT and line-of-business decision makers around the world, including participants from 161 financial

institutions.10 The findings validate that many organizations are now considering cloud computing, with

most of the financial services sector respondents currently favoring a private-cloud delivery model.

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Workload Type Workload Public cloud reference

Private cloud reference

Analytics • Data mining, text mining or other analytics • Data warehouses or data marts • Transactional databases

9% 21% 11%

52% 44% 45%

Business Services • CRM or sales force automation • Email • ERP applications • Industry-specific applications

30% 21% 25% 21%

43% 48% 55% 49%

Collaboration • Audio / video / web conferencing • Unified communications • VoIP infrastructure

41% 26% 14%

34% 50% 49%

Desktop and Devices • Desktop 17% 47%

Development and Test • Development environment • Test environment

20% 16%

40% 42%

Infrastructure • Application servers • Application streaming • Business continuity / disaster recovery • Data archiving • Data backup • Data center network capacity • Security • Servers • Service / Help Desk • Storage • Training infrastructure • WAN capacity

17% 24% 24% 22% 18% 14% 17% 15% 17% 18% 15% 29%

47% 37% 40% 46% 48% 46% 46% 50% 54% 50% 47% 43%

As part of the study, respondents were asked to rate IT workloads they would consider most appropriate

for deployment in a public- or private-cloud environment. Financial services has a rapidly growing appetite

for computing resources that can more flexibly and efficiently deliver services such as conferencing,

VoIP, desktop service/help desk WAN capacity, and storage. Using a public cloud is the ideal solution

for such requirements, where the emphasis is on achieving high utilization (and therefore low costs).

The full list of 25 workloads included in the survey is shown in the table below. This table indicates

which workloads the financial services respondents preferred for public or private cloud solutions

(either currently using or planning to use the features in the next 12 months following the survey).

Workloads: Financial services respondents’ preference for public or private cloud solutions. The study asked respondents to rate 25 different workloads they had already deployed or would

consider deploying in a public or private cloud.

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Workloads are increasingly comprised of distributed services. Organizations are deploying

distributed applications from a variety of sources, out of business necessity, often on costly,

underutilized, replicated infrastructure. Thus, more and more “cloud native” applications

are being developed to meet these demands, and have the following characteristics:

• Parallel – they can run on distributed topologies.

• Resilient – the components are designed from the beginning for resilience/fault-tolerance.

• Elastic – services can flex up or down as required.

• Scalable – services can scale out horizontally.

• Mobile – independent of specific hardware.

• Services – have interdependencies between one another, and can be maintained either

state or stateless.

• Introduction of “microservices” – the application is broken into decoupled stateless and

stateful services.

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Microservices are the resulting set of services (mini applications, if you will) that arise

from the process of decomposing an application into smaller pieces. If you take a

monolithic application and segment it into many pieces, you end up with microservices.

It is an application architecture; an approach to designing applications.

This architectural approach has a significant impact on the network architecture, as it forces

broader distribution of application-affine services like load balancing, caching and acceleration to

be located closer to the individual service. Microservices as an approach is a forcing factor in the

bifurcation of the network as it separates application-affine services from corporate-affine services.

Microservice architectures are beneficial in that they are highly efficient; it separates

functional or object domains and thus lends itself well to a more targeted and efficient

scalability model. It is particularly useful when designing APIs, as in addition to the scalability

benefits it also localizes capabilities and enables isolated upgrades and new features

without necessarily disrupting other services (and the teams developing other services). This

lends itself well to agile methodologies while enabling a greater focus on API development

as it relates to other services as well as the applications that will use the service.

Microservices

Monolithic Architecture

/account

Microservices Architecture

App/config

/status

App

App

App

Billing

Polling &Notification

Config &Options

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In conclusion, when assessing which workloads to move to cloud, the choice of a

hosting provider and cloud platform is critical to ensure both the newer cloud native

applications as well as the older legacy applications can be supported adequately, safely

and securely. These new requirements and capabilities for cloud platforms are:

• Fine-grained integration with application

frameworks

• Multi-dimensional resource management

• Data “locality” – affinity, anti-affinity

• Compute and data convergence

• “Co-optimization” for compute, storage,

and network

The choice of a hosting provider is critical when assessing which workloads to move to cloud.

• Horizontal and vertical auto-scaling

• SLA management

• Lifecycle management for distributed

services

• Dependency management

• Distributed state management

• Multi-tenancy, isolation, and security

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Cloud offers many benefits to companies. It can help dramatically boost the efficiency and cost-

effectiveness of an organization, and transform IT from a cost center to a profit enabler. This has made

cloud usage nearly universal across businesses. However, despite the ever-increasing popularity

of cloud deployments, it’s important to understand that technology, software, and IT are changing

every day, and companies must stay proactive in order to adapt. Automation, increased scalability,

and lower costs can all boost profitability for IT, but managing cloud contracts, implementing new

technologies, and building a team knowledgeable in cloud can be difficult. Companies must stay

aware of changes and build a knowledge base that can be used to navigate the evolving cloud.

Staying competitive

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Challenges and opportunitiesToday’s cloud offers many benefits to organizations, allowing them to gain new IT functionality

faster, deploy applications more rapidly, reduce costs, and gain increased flexibility. But in order

to stay competitive and gain the greatest advantage from the evolving technology, it’s critical

that organizations stay aware of the changing challenges and opportunities that it brings.

Leaders in the cloud marketplace include Amazon, Microsoft,

Google, and IBM. They all have their pros and cons.

There are a lot of choices in the market place today for cloud providers. If you are thinking of moving

into cloud technology and services, you are most likely thinking of one of the market leaders: Amazon,

Microsoft, VMware, Google, and IBM. Your choice will depend on your specific requirements and how

the provider’s solution is best for your needs. WGroup can guide you through this selection process.

Cloud-computing business models are shifting from product- or service-based business models to

an ecosystem business model. A few years ago, technologies like ESX virtualization, products like

vBlock cloud appliance, and services like Windows Azure were competing in isolated silos. Today,

cloud ecosystems like Amazon AWS ecosystem, OpenStack ecosystem, and VMware vCloud

ecosystem have emerged, and the primary competition

is moving towards ecosystem dominance.

When we talk ecosystem, we are talking about

keystone players providing a platform for a myriad of

partners and niche players to innovate, create value,

and co-invent the future. As such, characteristics

like critical mass are very important, possibly

more important than the technology itself.

Cloud players

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Let’s use VMware as an example to illustrate this business model shift.

In 2008, VMware was the undisputed leader in the data-center virtualization market. They

sustained their domination with incessant innovation, and they were ruling the game on this

market, despite growing competition from Microsoft Hyper-V and open source KVM. They did

not perceive cloud threat at this time because it was easy to convince the world that they had

the technology to create private clouds and that this was all that mattered for enterprises.

However, things started to change with the

emergence of large clouds like Amazon.

Instant access to unlimited resources raised

a lot of interest from startups, enterprises,

developers, and other service providers.

People learned to use these clouds; they liked

the flexibility and started to create tremendous value out of them. Suddenly, people did not care

anymore about the hypervisor technology, which lost its importance, and companies provided

ready-to-deploy AWS software images. The threat became clear to VMware: Many developers,

startups, and enterprises (a growing ecosystem) were embracing this new paradigm.

VMware’s response was to feed a competing ecosystem with the vCloud program.

They empowered external partners like Dell or Terremark to create VMware compatible

public clouds. At that time, they recognized the importance of the ecosystem, but

they were still a technology-oriented company, and this was not enough.

More recently, VMware again reoriented their strategy by building their own

public cloud (vCloud Hybrid Services) and by providing enterprises with a multi-

cloud management system gained from the DynamicOps acquisition.

Instant access to unlimited resources raised a lot of interest from startups, enterprises, developers, and other service providers.

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Business ecosystems are proven models and are becoming more and more important in our

global economy. Apple with its app store ecosystem, Twitter with its APIs, and Salesforce with

its AppExchange are great example of successful ecosystems. Business ecosystems are the

underpinning principle of what we call the API economy. The IBM Watson program is also a great

example of ecosystem creation. IBM provides the cognitive platform, makes it as easy as possible to

leverage, and opens its platform to as many companies as possible for them to create value out of it.

Business ecosystems have specific characteristics which that been analyzed and summarized

in several studies. Ecosystems typically include a keystone player that provides the

ecosystem platform. This platform is being embraced by niche players, which are creating

most of the value. The business ecosystem can die or can grow, very much like living species

within natural ecosystems. The health of ecosystems is a function of critical mass (like for

invasive species), but is also a function of how the symbiotic relationships between the

ecosystem participants allow co-evolution, value creation, and continuous innovation.

Clouds are on a business ecosystem competition. But what really defines cloud ecosystem platform?

Any IT platform exposes some sort of API for others to innovate

and create value out of it. So a new question emerges:

On the typical IT scale from hardware to business

application APIs, what is the level of abstraction that

has the potential to feed successful ecosystems?

In the past decade, plenty of utility markets have

been tested, and there is now a fair amount of evidence that the winning platform is

defined by the infrastructure as a service or software-defined environment.

VMware started an empire at the hypervisor level but was forced

to make a move to the IaaS level to survive.

SUN made a move into utility computing in 2004 with their Network.com $1 per CPU-hour offering.

The underlying technology was SUN grid engine, and the workloads had to be packaged like

The health of ecosystems is both a function of critical mass – and the symbolic relationships between the participants.

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jobs with specific constraints. These constraints made it difficult to generate a lot of interest, and

the service was withdrawn in 2008 with only 13 customers. SUN learned from this adventure and

they had plans to launch in 2009 a cloud service very similar to Amazon. But they were acquired

by Oracle at that time, and it took several years for Oracle to recognize the importance of cloud.

Microsoft and Google started their utility-computing journey with PaaS offerings. PaaS provides a

higher level abstraction, directly targeting developers. However, for multiple reasons not foreseen

at the beginning, the PaaS market is still a niche market, and its success still needs to be built.

Furthermore, the potential PaaS ecosystems are fragmented by nature, because a single PaaS

cannot serve all IT needs. Therefore, Microsoft and Google were forced to make a recent move

toward infrastructure clouds and entered the IaaS battle in 2012 in order to stay in the game.

Cloud ecosystems are defined by their infrastructure model (defined by its APIs and behavior). But this

does not infer that infrastructure as a service (IaaS)

is the most important layer. IaaS only defines the

ecosystem keystone, and most of the value will

be created on top of this platform. Given that the

market has now selected the winning keystone

abstraction, there is no reason to fight against it.

The software-defined environment APIs

split the IT world into two areas: the

infrastructure providers who will serve the

APIs and the myriad of upper level systems

who will consume the APIs. Both areas are places in which companies are innovating.

The business natures of the areas are different, The infrastructure-providers tend to be high-volume

and low-margin businesses. The businesses built on top of these APIs are very diverse, can serve very

specific IT needs, can include unique skills or knowhow, and can potentially be high margin businesses.

A good proxy to evaluate cloud ecosystem size would be the aggregate revenue of the keystone player.

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Let’s first consider the three leading web-scale cloud providers: Amazon, Google and Microsoft

Azure. Amazon is currently the undisputed leader. Google is a new entrant in this battle, taking

advantage of its web scale experience and innovation capacity. There is an intersection between

the two ecosystems because Google storage service has the same API as Amazon’s S3 storage.

This is a strategic play to ease portability for application written on top of AWS storage (the likes of

Dropbox, Flickr, Smugmug, etc.). Microsoft provides cloud Infrastructure services in parallel with

their Azure PaaS offering. Their strategy is to attract and retain their large developer base.

Beside these three giants, we have the vCloud ecosystem which is

VMware’s attempt to maintain its enterprise footprint.

The latest ecosystem is the OpenStack ecosystem. The open-source OpenStack initiative was

launched in 2010 by NASA and Rackspace engineers to enable every company and organization

to build its Amazon clone. Then the OpenStack initiative acquired interest from the broader IT

community and from major companies like IBM and HP who joined the community. At that stage,

OpenStack released a second API which is now known as the OpenStack API. OpenStack

community faces a strategic choice. One option is to join Amazon’s ecosystem and provide the

reference implementation for private clouds. The other option is to run another independent

ecosystem in order to counter Amazon’s dominance. When analyzing the market leaders’ strengths

and weaknesses, it is important to consider the emerging cloud trends in the marketplace:

1. Big players have now ALL entered the web scale infrastructure

market (IaaS), fighting for ecosystem dominance.

2. Enterprises need to strategically pursue a multi-cloud approach.

• Traditional DC / private cloud / public cloud integration as intermediate tactical solutions.

• The shift to public clouds is inevitable.

• Multi sourcing for public clouds is mandatory and the only way to avoid lock-in.

• A multi-cloud management platform may be the future control point for cloud accounts. Even

keystone players fighting for their ecosystem have a Plan B with multi-cloud control (either via

acquisitions or via internal developments).

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The following table provides a high level summary of each of the

leading cloud vendors and considerations for selection.

Southbound Innovation

Northbound Innovation

Cloud Management

Multi-cloud

TYPE Strategic Ecosystem

• Web scale DC • Networking • Breadth of

features

• Shared services • Business

administration

• Governance • Monitoring • Capacity • Catalog

• Single pane of glass

• Brokering • Networking

Amazon Keystone player AWS

Microsoft Azure

Keystone player Azure

HP Keystone player OpenStack

VMware Keystone player vCloud

Oracle Keystone player OpenStack

Cisco Niche player vCloud / OpenStack / AWS

BMC Niche player AWS / vCloud / OpenStack

Accenture Niche player AWS / vCloud / Azure

Google Keystone player Google compute / AWS

IBM Keystone player OpenStack

3. Most of the innovation emerges in the platform services (horizontal services) and the

business automation services (vertical services), all built on top of cloud-computing APIs.

• Re-inventing the IT, given cloud-computing APIs.

• Value will be dramatically higher than traditional IT, given the new agility, scale, and speed

delivered by cloud services.

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Amazon Web Services

Overall strategy: “Cloud is a Disruptive Force to IT”

• IaaS Market Leader and de-facto standard

• Huge ecosystem

of system integrators, ISVs and added value service providers

Multi-cloud strategy

• They are not in this role

• However, partnership with Eucalyptus provides enterprise multi-cloud capability

Ability to serve enterprises

• Traditional enterprises fear public clouds like AWS

• However, they are using it for specific workloads

• The vibrant ecosystem is progressing fast and increases enterprise capabilities

Ability to drive an ecosystem

• Constant feature introduction

• Price structure innovation

• Developer certification program

• Technology and consulting partners > 8000

Innovation

• Availability zones

• Server, storage, network innovation

• Innovation goes up to the power supply

• Innovation in pricing

• Pave the way for platform services

• Database, Hadoop, data warehouse

• Orchestration, VPC

• Rely on partners for high level business services

Detailed leading cloud vendor comparison

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Microsoft

Overall strategy: “Embrace Cloud to Survive”

• Leverage Microsoft control points (tooling,

user interface, programming models) with developers and IT to build an

ecosystem of partners and solutions on the Microsoft Cloud platform

• Turn Hyper-V as a credible alternative to ESX

• Leverage ITSM toolkits into private cloud software

Multi-cloud strategy

• Very strong integration between System Center-based private clouds and Azure

• AWS management pack to monitor and manage AWS VMs - no support for OpenStack

Ability to serve enterprises

• System Center is hypervisor agnostic so can be installed on top of ESX or KVM based DC

• Hyper-V installed based (increasing)

Ability to drive an ecosystem

• Initially wanted to leverage existing .NET developers with Azure Platform

• Moved in 2012 to IaaS to counter AWS

• Current ecosystem has not reached critical mass

Innovation

• Hyper-V is gaining market shares (27% in 2012 from 11% 2 years ago – 84 % for SMBs)

• Web scale data center – in competition with AWS and Google

• Azure provides application services like data bases, queuing services

• Proven PaaS with initial Azure offering

• Azure HD Insight for Big Data Hadoop deployments

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Google

Overall strategy: “Analytics and Big Data In Cloud”

• “Production container cloud” with all the security,

performance, and orchestration that implies

Multi-cloud strategy

• Focus on data security to propagate data

• Google object store has the same AWS S3 API (simple for customers to move to Google)

Ability to serve enterprises

• Strong in all layers (Google App,Google App Engine, Google Compute)

• BigQuery

• Dataflow

Ability to drive an ecosystem

• Primarily between AWS and Google adopters

Innovation

• Google compute differentiation:

– Priced by the minute

– Live migration to avoid instance shutdown

– Faster boot time

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VMware

Overall strategy: “Cloud is a natural extension of virtualization”

• Leverage VMware’s virtualization leadership

as a datacenter control point

• Partner with Cisco to obtain network, server, and services management

• Strong communication around SDDC

Multi-cloud strategy

• vCloud automation center is hypervisor agnostic and can manage AWS

• Based on DynamicOps acquisition

Ability to serve enterprises

• Established dominant virtualization market

• “Private Cloud” story resonates with customers

Ability to drive an ecosystem

• The vCloud ecosystem is primarily the established ESX base + the public cloud partners

• Dell, Verizon moved away

• vBlock relative success but ESX is expensive

Innovation

• Primarily focused on private cloud technologies

• Active in networking (VXLAN)

• Active in hypervisor related features (vMotion, HA)

• Partners with public providers, now opens VHS

• Moves to the upper layers

• Less innovative than Amazon

• Project Serengeti (Hadoop on VMware)

• Project Cloud Foundry – Pivotal spin-off

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IBM

Overall strategy: “Provides all the ingredients for cloud”

• Cloud and non-cloud assets such that they work

together as a single, end-to-end system

Multi-cloud strategy

• Hybrid clouds deploy both private cloud instances and multi-tenant public instances,

as well as on-premises servers, infrastructure components, and microservices

Ability to serve enterprises

• Bluemix DevOps framework

• Cloud Foundry for deploying PaaS software stacks

• IBM knowledge of how to run workloads in data center

• Extensive set of offerings to build complete solution

• Consulting services

• Established base of customers

Ability to drive an ecosystem

• Aggressive move into Hybrid cloud space and providing help to customers

• IBM joined OpenStack ecosystem as large contributor

• However SoftLayer does not participate in this ecosystem, thus blurring the message

Innovation

• SoftLayer innovates with bare metal offering

• Worldwide coverage is another important asset

• Proprietary API hinders developer adoption

• Broad set of deployment capabilities (patterns, orchestration, TSAM)

• Rational for Dev/Test, Platform computing for HPC

• However, the lack of strategic IBM API makes it hard to unify hybrid customer experience

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Oracle

Overall strategy: “Opportunistic Strategy”

• Re-engineer Oracle applications to run in Hybrid Clouds

• Cloud optimization around Oracle middleware stack

• Offers hybrid cloud experience (within Oracle)

• Recently joined OpenStack ecosystem

Multi-cloud strategy

• Hybrid experience between Oracle private and Oracle public clouds

• No clear positioning into multi cloud management

• Commitment to have all products offered as cloud services

• Mid 2015 launch of 27 cloud services

Ability to serve enterprises

• Oracle Product suite spans IaaS, PaaS and SaaS – No other company has the span of Oracle

• Oracle has 40% WW market share In App Servers and 41% in Data Base

• Lock-in effect

• Oracle positions its cloud messaging around these workloads

Ability to drive an ecosystem

• Not an actor in this space

• Joined OpenStack

• Creating price wars with AW, Google, Microsoft and IBM

Innovation

• Entered the public IaaS market

• Aim to compete with Amazon

• Build on Oracle VM for private clouds

• Oracle optimizes and adapts its core stack (Java and Data Base) to cloud

• Availability of Big Data solutions

• Targets ISV with Oracle Platform for SaaS

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Cloud challenges CIOs face todayMany organizations are rightfully excited about the benefits of cloud, but minimize the challenges

that it can bring. In order to properly prepare for these challenges and make good decisions

about cloud deployments, companies must educate themselves and understand the risks.

Security

Security is one of the primary concerns when implementing a new cloud deployment, particularly

in a public- or hybrid-cloud environment. Entrusting critical applications and sensitive information

to third parties can create great anxiety for organizations used to managing their IT infrastructure

themselves. In a recent survey, the top perceived threats were unauthorized access (63%),

account hijacking (61%), and malicious insiders (43%).6 It is notable that users also fear that they

cannot trust their cloud providers. 71% of respondents to a survey said that they did not think

their provider would alert them if customer data were stolen, and 72% believed they wouldn’t be

notified if confidential business information were stolen.10 One of the major sources of these

fears is a lack of visibility. One recent survey found that approximately half of an enterprise’s cloud

applications aren’t visible or fully accessible to the IT professionals on staff.12 This obviously can

create significant trust issues and leads many organizations to be wary of cloud solutions.

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Although there are unique security risks to using a public-cloud implementation, in reality it

is often much safer to use the public cloud than on-premises IT. Tech leaders like Amazon,

Google, IBM, and Microsoft have significant budgets, with experienced professionals working to

certify products and configurations to protect their clients’ data and applications. The IT security

departments of these providers are significantly better funded and more experienced than those

of their clients. However, it is still important to understand the security risks at play and carefully

vet cloud providers to ensure that they are a proper fit for your organization and applications.

Focus on what is core vs. non-core to your organization. Cloud usage must be business-

value aligned. Everything else should be viewed as a commodity and outsourced.

• CIOs should have a “cloud first” policy and have good business case and decision process for

non-cloud implementation.

• CIOs are now out of the business of managing data centers or being programmers and in the

business of driving business value. Finding ways to use technology to generate more revenue,

increase customer satisfaction, and improve profits are top objectives for today’s CIO.

• Cloud implementations are not a substitute for monitoring and management of the applications.

However, with cloud, technologists can focus on higher value initiatives.

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Financial

Cutting costs, whether IT or business-related, remains a primary driver influencing

initial cloud-investment decisions. The following diagram shows the results of a

survey conducted by Ovum of CIOs, IT managers, and IT decision-makers from

large Enterprises across US, UK, France, and Germany. It is clear that cutting

costs is the leading primary driver influencing cloud-investment decisions.

3.3

3.1

3.1

2.8

2.6

HighlySensitive

Data

Cutting IT costs

Cutting overall business costs

Improve business agility

Application modernization

Improvement of business processes

Data center or IT consolidation

Develop innovative new business activities

Improve time to market

Entry into new markets or lines of business

Merger or acquisition activities

Entry into new geographies

Layoffs or staff reduction

Entry into new vertical industries

Source: Cloud Services Business Trends Survey, Summary Results, Ovum, Jan. 2012(Survey of CIOs, IT managers and IT decision makers from large enterprises across the US, UK, France and Germany, consucted by Ovum)

4.0

3.9

3.8

3.6

3.6

3.5

3.5

3.5

Least important Most important

Source: Cloud Services Business Trends Survey, Summary Results, Ovum, Jan. 2012 (Survey of CIOs, IT managers and IT decision makers from large enterprises across the US, UK, France and Germany, constructed by Ovum)

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Cloud technology can help turn IT from a major expense to a significant profit enabler. By leveraging

strategic outsourcing and shifting much of the IT department to 3rd parties reduces the need to invest

in expensive infrastructure so that organizations can improve their overall profitability. Innovative

companies are leveraging cloud by using data collection and analysis, automation, and other new

technologies to reduce expenditure and increase revenues. It is critical that every organization stays

abreast of current trends in order to maximize their revenue and productivity, and minimize expenses.

Still, many organizations remain reticent about new cloud technologies and are unsure

what their real financial impact will be. IT professionals and executives need a solid

framework upon which to base their cloud decisions in order to ensure that they are

maximizing cost effectiveness and getting the most from their cloud services.

According to a study by Forrester’s James Staten,

“There’s a disturbing trend reemerging in our client inquiries of late: rising demand

for software-as-a service- (SaaS) solutions and purchases of solutions that are

not really SaaS. When we inform clients that the solution they’re talking about isn’t

SaaS, we are increasingly hearing, “So what? As long as I don’t have to run it, it’s

better.” This is a trap that can cost you more, result in less agility, and lock you into a

poor sourcing decision. Too many vendors today are seeing an opportunity to make

big profits in software-as-a- service by taking advantage of customer naiveté and

simply rebranding older deployment models as SaaS, on-demand, or cloud. These

solutions inevitably fail to live up to customer expectations for agility, standardization,

and efficiency. As SaaS continues to increase in popularity across a growing range

of application areas, technology buyers (ranging from CIOs to line-of-business [LOB]

execs) need to know what differentiates SaaS from application service providing

(ASP) and other on-demand implementations cloudwashed with the SaaS term.”

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The following table illustrates the important considerations for evaluating

true SaaS vs. other “off-premise” deployment models:

Tenancy

Upgrades

Payment model

Location

Responsibility for managing

the application

SaaS ASP Managed

All customers run the same version? Yes No No

Significant modifications possible?* No Yes Yes

Multitenant architecture? Yes No No

Originally designed to be SaaS? Yes No No

Who controls upgrade timing? Provider Customer Customer

Frequency of feature enhancements As often as every week Typically 2-4 per year Typically 2-4 per year

Frequency of major releases Typically 2-3 per year Typically 1 or fewer per year Typically 1 or fewer per year

How is the software priced? Subscription Subscription with multi-year commitment required

Upfront license + maintenance fee

Customer owns license? No No Yes

Where does the code and data reside? SaaS provider ASP AO provider (but sometimes at the customer site)

Who develops application? SaaS provider Software provider (may not be the ASP)

Software provider (not hosting provider)

Customer control over operation, deployment and configuration of the app

None Limited Negotiable

Vendor examples: salesforce.com, Workday, SAP’s Success Factors

BTRG’s PeopleSoft-as-a-Service offering

PeopleSoft run by Oracle on Demand, Accenture managing

SAP

*Significant modifications include: adding unique modules, changing application configurations, adding custom code, unique infrastructure, etc.

These are all very important considerations to help you choose a deployment

model for cloud and selecting your non-core services vs. core services.

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Understanding the changing landscape

Cloud growth, automation, and other technological changes are shaping the way business is done,

products are sold, and IT is managed. CIOs need to cope with this changing landscape by reallocating

resources, finding personnel with the right skills, and reducing redundant staff and infrastructure.

However, sometimes understanding what actually needs to be done can be challenging, particularly

if executives have limited experience working with new cloud

technology. In order to make the right choices, organizations

need to fully understand what these new

innovations can actually do for the company,

how they work, and how they should be

managed. This requires a deep understanding

of the technology and the marketplace.

Managing cloud contracts

One of the most challenging aspects of implementing cloud in an organization is managing vendor

contracts. Dealing with a range of cloud providers offering vastly different services and guarantees

can be incredibly challenging and requires a comprehensive understanding of how the contracts

are structured and what an organization really needs from the provider. Organizations must ensure

that the provider complies with all local, applicable laws, that they have necessary control over

any cryptographic keys used, that the provider has been recently audited, and many other similar

details that might be overlooked by those that do not fully understand the current environment.

Getting the big picture

In order to manage all of these concerns, each organization needs a framework to

understand where they are and where they’re going. With the shifting dynamics of today’s

evolving IT world, businesses need comprehensive situational awareness that allow them

to understand their needs and how new technologies can help them stay competitive.

Organizations must fully understand what new innovations can do for the company, how they work, and how they should be managed.

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Evaluating your current stateIn order to gain situational awareness and make better decisions when implementing

cloud into your organization, it is important to examine how others in your industry

are being impacted by cloud, your current state in terms of cloud consumption, and

your needs. Analyze your current organization to assess both your readiness and

“need” for adopting cloud technology along the following five imperatives:

1. Identify your reasons for using cloud: The development of a cloud-computing

strategy begins with defining the motivations and goals for migrating to cloud. The reasons

for using cloud include a range of benefits for an enterprise, although IT leaders should

usually focus on no more than three specific objectives for their strategy. Common goals

for a cloud strategy include improving IT efficiency, increasing investment flexibility,

accelerating application delivery, reducing risks, and expanding markets.

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• Level 1 organizations may be developing strategies for cloud, but they haven’t yet

deployed cloud applications. These organizations typically need to define their architecture

requirements, evaluate their available options, and select the applications that would be

most appropriate for cloud.

• Level 2 organizations are usually still working with proof of concepts or initial projects for

cloud. They usually need to gain additional experience with cloud before they can determine

the next steps in their cloud strategy.

• Level 3 organizations have already deployed multiple applications to cloud. They’re typically

most interested in increasing and improving their use of cloud resources.

• Level 4 organizations are already making heavy use of cloud-based infrastructures. Their

greatest area of interest is usually in optimizing operations and minimizing the costs of

working in cloud.

2. Assess your cloud maturity level: The next step in developing a cloud-computing strategy is to

assess your organization’s level of cloud maturity. This assessment determines your organization’s

current level of preparedness for migrating to cloud. A catalog of strengths and weaknesses in cloud

technology will indicate the steps needed to make this transition. Cloud analysts often categorize

organizations into four levels of cloud maturity, with level 1 indicating the least experience:

3. Develop your portfolio: Most enterprises are planning a multi-cloud strategy for

using both public and private clouds or they have already implemented such a strategy.

Organizations that maximize their vendor options for cloud platforms can take advantage

of the rapid changes in service and price that are common in this volatile industry.

4. Overcome challenges: Organizations must overcome several challenges in their journey

to cloud. The four most common of these are reliability, security, culture, and expenses.

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5. Select your strategy for cloud adoption: IT leaders can develop cloud-adoption strategy for their

enterprise once they have determined the reasons for migrating to cloud, assessed their enterprise’s

cloud-maturity model, planned their cloud portfolio, and identified the challenges. The options for

an enterprise’s cloud-adoption strategy include cloud-first, targeted, and grassroots. Each of these

approaches requires a separate set of considerations and procedures. An organization’s strategy for

adopting cloud will typically change as its deployment proceeds. For example, an organization may

begin with a grassroots strategy, change to a targeted strategy, and finally adopt a cloud-first strategy.

Cloud-first: A cloud-first strategy is the best choice for organizations that select cloud for all

existing applications, as well as new applications. Enterprises that choose this adoption strategy

are typically seeking to leverage public and private clouds aggressively to obtain significant

business gains. Existing projects must be evaluated for migration to cloud, and new applications

must be designed to operate in a cloud environment. The organization must evaluate each of these

applications against business and technical criteria to ensure they meet ROI requirements. A cloud-

first strategy means that the organization is fully committed to cloud, including the IT department.

Targeted: In a targeted cloud-adoption approach, the organization identifies the applications

that are best suited for cloud, which generally means they have variable demand and global

scale. These applications typically include batches runs, big data analytics, mobile applications,

and social media. Enterprises adopting this strategy typically will have limited cloud usage,

along with a desire to increase their cloud workload in measured steps. A targeted approach

generally involves developing new applications for cloud and migrating existing applications

to cloud over time. The targeted strategy is a short-term approach that should help an

enterprise gain expertise in developing cloud architectures for public and private clouds.

Grassroots: A grassroots adoption strategy generally consists of the IT department providing

individual business units and developers with a self-service portal that allows users to access

public and private clouds. The self-service portal used in this strategy should include technology

stacks that meet the enterprise’s standards, while still providing the flexibility expected of a

public cloud. Enterprises use this strategy to help business units and developers embrace cloud.

Easy on-demand access to cloud services is essential for allowing developers to enable cloud

adoption. This type of strategy is also effective when coupled with IT Operations and Service

Management improvements and raising maturity, i.e., through adoption to an ITIL framework.

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As the five imperatives are developed for a cloud strategy,

organizations must ask themselves many questions:

The big picture

• What is the current size, growth, and financial state of my organization?

• Do you have an acquisition or new geography launch that requires creation of new enterprise

infrastructure?

• What challenges do you face in responding to

requirements for new or changed enterprise

services?

• What cloud solutions has my organization already

adopted?

• What cloud components would my organization like

to implement?

• Why is cloud being used?

• How would the organization benefit from cloud?

• What cloud solutions are the competition

implementing?

• How mature is our enterprise architecture and governance?

• Where are there gaps between business expectations and what cloud is delivering?

• Does the organization have a cloud strategy that helps us stay competitive and reduce costs?

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Performance

• What are the performance requirements: CPU, memory, IPOS, network?

• What are your current SLA’s for the enterprise service (availability, performance, service

delivery)?

• How long does it currently take to add capacity for your enterprise?

• Are you able to easily scale up and down in alignment with your enterprise load requirements?

• How long does it take to install a new enterprise module?

• Are you facing any issues in procuring the HW/SW you need for enterprise applications?

• Which applications can be moved to cloud, and which must be kept on-premises based on

information security data classifications?

• Can the public cloud deliver the same or better performance as on-premises solutions?

• Are enterprise resources constrained with routine enterprise maintenance and operations that

limits their ability to support critical new enterprise projects required for business growth?

• How are you managing your virtual enterprise environments, and what improvements would

you like to see?

• Are you being asked to provide basic metering for “charge back” services?

• Are you facing high enterprise administration costs and is management labor intensive?

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Security and compliance

• Is privacy and security your biggest worry or concern?

• Where is sensitive information stored? Is it encrypted at rest and in transit?

• Which applications are mission critical and need to exist in an extremely secure

environment?

• Can cloud vendors deliver the same or better security as the IT team?

• What compliance regulations are relevant to the organization?

• Do you have an enterprise testing strategy?

• What does your enterprise dev/test environment look like?

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Vendors

• If the organization subscribes to cloud services today, are the needs of the

organization being met?

• What are the termination, indemnity, and performance clauses of existing cloud

contracts/subscriptions?

• Is the organization effectively managing its cloud vendors?

Making the move to cloud

• Will cloud be cost-effective?

• Does the organization have the knowledge and resources to maximize the effectiveness of

cloud implementations?

• What business functions can benefit from being moved to cloud?

• What deployment model is right for the organization? Will the flexibility and ease of public

cloud be right, or is there a requirement for a single-tenant cloud or on-premises private

cloud? Is a hybrid solution the best option?

• What changes in governance, architecture, and process are required to be effective?

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Applications

• Are you ensuring the best customer experience and adapting to changing employee needs your

most important priorities?

• Do you have many applications that are customized due to unique business processes or unique

integrations and require custom modules or extensions?

• What are your plans for growth in the enterprise application area?

• Will you be implementing any new enterprise module/solution in the following months?

• Will you be upgrading your enterprise systems in the following months?

• Are enterprise applications growing or shrinking in your enterprise and how does this affect the

cost and quality of delivering services to your customers?

• Describe the level of support required to deliver and maintain enterprise applications as well as

any inhibitors to supporting the environment.

• How does the infrastructure required to deliver enterprise applications affect your ability to deliver

services to your customers.

• What plans do you have to more fully utilize your existing enterprise application servers and how

much of your ERP infrastructure is underutilized due to being reserved for future projects?

It’s all about the applications! The architecture of the application dictates the success of

cloud implementations. Many think cloud is part of an infrastructure strategy, but it is really

an application strategy. Any strategy to migrate workloads to cloud must include

an application portfolio and architecture and security assessment.

Determining which applications can be migrated to cloud will be determined by user interface,

transaction volume, identity and access management framework, information security

requirements and component isolation (e.g. different VLANs, firewalls between UI, app, DB layers).

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Cost-effective cloud adoptionOne of the most important considerations when adopting new cloud technology is cost. By taking steps

to ensure that your organization is implementing cloud in a way that provides a high ratio of benefits

to costs, the organization can help make IT a revenue enabler that adds value to the organization.

Make a cost / benefit analysis

Whether your organization is implementing cloud for the first time or evaluating current

deployments, a good first step is making a cost/benefit analysis of the technology. How much

will upfront and monthly costs be for cloud deployment? How much will the company save in

productivity, increased sales, or reduced downtime? What are the costs of alternative solutions?

Repurpose existing investments

One of the most effective ways to reduce the cost

of cloud is to repurpose existing investments as

entry points. By using an enterprise-technology

framework to identify what can be reused and

what needs to be rebuilt, organizations can greatly

decrease the financial costs of a cloud deployment.

Investments made for server consolidation, ITSM,

virtualization, API adoption and development,

high availability improvements, and scripting

automations are all examples of improvements

that can be applied in particular to private cloud

deployments. These can also be a part of a hybrid

deployment or integrated into a public deployment.

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Here’s the example of one client, a regional South East Asia bank:

• Leverages IBM AIX Power7 virtualization technology investments, service management

program improvements and maturity, and new automation as Private Cloud Entry points to

achieve accelerated benefits.

• New technology and cloud entry enablement was funded by other enterprise initiatives,

including infrastructure modernization, optimization, server consolidation, virtualization, and

enterprise-wide new ITIL program with supporting technology. These IT infrastructure and

operations maturity improvements provided a funded cloud solution.

• Platforms and Technologies: IBM Power 7 servers, IBM x3650, x3850, IBM System Director,

LPM (Live Partition Mobility), Tivoli Service Delivery Manager (ISDM) and ITSM.

Negotiate agreeable terms

When working with public cloud vendors or MSPs, it is extremely important to negotiate terms

that meet the needs of the organization. Make sure that your organization has considered what

maintenance is included, what the uptime guarantees are, how much support is available, and what

the vendor’s reliability record is as these will all influence the ongoing cost of the deployment.

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Evaluating your cloud implementationTo ensure that your organization stays competitive and takes full advantage of the growing

power of cloud, it is important to constantly evolve your cloud implementation. Below are some

key questions and steps to help your organization make its use of cloud more effective.

1. Evaluation

• Identify the business challenges your organization is facing.

• How is IT affecting these challenges?

• How effective are my cloud implementations (if any)?

• How are my business stakeholders interfacing with cloud vendors without me?

2. Implementation

• What are the existing investments that can be repurposed as entry points to cloud?

• How will your internal cloud capability grow alongside your virtualized environments?

• How will you start building relationships with external cloud providers?

• As you begin to adopt more cloud solutions, how will it change your network architecture and

data center requirements?

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3. Ongoing management

• What cloud deployment models can be used to fill gaps, improve efficiency, and build

the business?

• Is the internal cloud and external environment more

efficient and cost effective?

• What are your current SLA’s for the enterprise service

(availability, performance, service delivery)?

• How will you maintain talent?

• How will you manage current providers and continue to

build relationships with new ones?

• Do you have systems in place to help you keep pace with

changing technology?

4. Delivery models

• How will cloud impact how you interface with your suppliers and customers and deliver

your services?

• What are the opportunities for reduced costs?

• What are the opportunities for improved efficiency?

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5. Financial models

• What new means of charging and paying for services does cloud allow?

• How can cloud help your organization drive profits?

• How will cloud affect IT’s ongoing budget?

• How will cloud affect IT’s capital and operational expenditures?

6. New operating models

• How do I manage security in the public and private cloud?

• What are the greatest threats to a cloud deployment?

• How do I ensure performance?

• Do existing SLAs ensure uptime?

• What staff do I need to maintain? What skills do they need?

• How does cloud affect enterprise architecture?

• How does cloud affect governance?

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How WGroup can helpAt WGroup, we understand that cloud has revolutionized IT and continues to

rapidly evolve. We also understand that businesses must stay proactive in order

to ensure that they remain competitive in this shifting marketplace.

In order to help you meet these goals, we work with your organization to simplify IT and allow you to

use it more effectively. We are leading experts in cloud-vendor management, cloud strategy, and cloud

evolution. We can help your organization better understand the opportunities and challenges that this

changing technology brings, so you can be equipped to make better decisions for your business.

If you’d like to learn more about how to leverage cloud’s rapid evolution to

grow your business, contact one of our representatives today.

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Tony Ioele has 30 years of experience across the Information

Technology disciplines with demonstrated ability to transform

business opportunities resulting in a competitive advantage,

increased customer satisfaction and positive financial impact for

his customers. Tony is a senior leader with a unique blend of

strategy, technology, security, risk, finance, personnel, operations,

business and process management skills and experiences.

Tony is known for his astute sourcing and vendor stewardship

as well as his broad knowledge and experience in the areas of

enterprise architecture, ITIL process management, COBIT/SOX

controls creation and enforcement, technical services delivery,

customer services delivery, application development and delivery,

infrastructure services and security and risk management.

Tony holds a BS from East Stroudsburg University of PA and a

Masters Certificate, Applied Project Management from Villanova.

See more at Tony’s LinkedIn profile

About the Authors

Tony Ioele, Managing Principal

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William (Bill) Genovese is a CTO, executive architect and

consultant with over 20 years of experience. He has a proven track

record comprised of leadership through consulting, design, and

implementation of infrastructure, applications and core systems

on an enterprise scale for global organizations. His passion

includes raising architectural maturity for organizations by aligning

business and technical strategy, and leading and inspiring people

to deliver outcomes and drive increased performance. His focus is

on both tactical and strategic architecture definition, enablement,

and delivery, through interpretation of complex subjects and

architectures, and recommendation of simple and tactical choices

while ensuring these integrate with the enterprise strategy.

Bill has a Bachelor’s Degree from Western Connecticut State

University. He also has the following certifications:

Bill Genovese, Principal

Bill is also a CTO and Executive Board member at Saving Promise, a national non-profit

organization whose charter is to help prevent and change domestic violence in America.

See more at Bill’s LinkedIn profile

• The Open Group – Distinguished IT Architect

• The Open Group – Master IT Specialist

• IBM Executive Certified IT Architect (Application Architecture,

Infrastructure Architecture and Systems Engineering Disciplines)

• IBM Expert Certified IT Specialist (Systems

Management – Cross Platform)

• IBM Certified IT Consultant

• ITIL V3

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Doug is a seasoned information technology executive with over

20 years of experience as an IT leader and strategist. He has

held numerous operational, program-level, and strategic roles in

a variety of industries including healthcare, manufacturing, and

technology. His areas of expertise include IT strategy, enterprise

architecture, technology governance, infrastructure modernization,

technology innovation, application rationalization, cloud strategy,

advanced analytics, and talent development. Doug is passionate

about the transformative nature of technology and focuses on

improving the organization’s capacity to adapt to change.

Before joining WGroup, Doug built and led the Enterprise Architecture

function for McKesson, a Fortune 15 pharmaceutical distribution,

health information technology, and medical supply company. Doug

began his career at IBM Global Services as an IT consultant.

Doug holds an MBA from Duke University’s Fuqua School of Business

and a BA in International Studies from the University of Alabama. Doug

is a board member of the CTO forum and an attendee of Yale’s CEO College. He has spoken at numerous

conferences on the topics of innovation, collaboration, and leading change in technology organizations.

See more at Doug’s LinkedIn profile

Doug Smith, General Manager

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David Spindel has over 25 years of experience in Strategy and Business

/ IT Transformation – both as a consultant and as an executive with

Fortune 500 technology companies. At WGroup, David focuses on IT

Strategy, IT Transformation, IT / Business Alignment, Sourcing Advisory

Services, IT Governance, and Organization Design and Implementation.

Before joining WGroup, David was Vice President of Corporate Strategic

Planning for Unisys Corporation and prior to that VP of Strategy for Unisys’

Professional Services and Vertical Solutions business unit. Prior to joining

Unisys, David spent over 20 years at Xerox Corporation where he held

increasingly responsible positions in strategy, product management,

strategic pricing and marketing, most recently as VP of Strategy for

the company’s $5B Document Production Systems business unit.

David has both a BA in Mathematics and an MBA from the University of Chicago.

See more at David’s LinkedIn profile

David Spindel, Principal

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References[1] http://www.forbes.com/sites/bernardmarr/2015/04/27/big-data-as-a-service-is-next-big-thing/

[2] https://451research.com/cloud-pricing-index

[3] http://www.intel.com/content/dam/www/public/us/en/documents/

product-briefs/big-data-cloud-technologies-brief.pdf

[4] https://www.usenix.org/legacy/event/hotos05/final_papers_backup/brown/brown_html/hotos05.html

[5] http://www.slideshare.net/cheahwk/ipsoft-autonomics-it-service-management

[6] https://esj.com/articles/2015/03/30/security-concerns-block-cloud-adoption-survey-says.aspx

[7] http://www.cdwnewsroom.com/wp-content/uploads/2013/02/

CDW_2013_State_of_The_Cloud_Report_021113_FINAL.pdf

[8] http://fortune.com/2015/06/04/fortune-500-ceo-survey/

[9] http://www.slideshare.net/IBMIndiaSS/dispelling-the-vapor-around-cloud-computing-7461827

[10] http://www.infoworld.com/article/2607997/cloud-security/users-

fear-cloud-breaches-are-more-expensive.html

[11] http://go.netskope.com/rs/netskope/images/Ponemon-DataBreach-CloudMultiplierEffect-June2014.pdf

[12] https://www.forrester.com/Beware+Of+The+SaaS+Trap/fulltext/-/E-RES115775

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Drive Your Business

Founded in 1995, WGroup is a technology management consulting firm that provides Strategy,

Management and Execution Services to optimize business performance, minimize cost and create

value. Our consultants have years of experience both as industry executives and trusted advisors

to help clients think through complicated and pressing challenges to drive their business forward.

Visit us at www.thinkwgroup.com or give us a call at (610) 854-2700 to learn how we can help you.

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