Seeing—And Seizing—The Emerging Consumption-Based IT Delivery Opportunities for the Large Enterprise

Seeing—and Seizing—the Emerging Consumption-Based IT Delivery Opportunities for the Large Enterprise A WHITE PAPER PREPARED BY CLOUD CRUISER, INC. JULY 2014 Contents Introduction 1. The Changing Role of Large Enterprise IT 2. The Emergence of Consumption-Based IT Service Delivery 3. The Business Trends Behind Consumption-Based IT Service Delivery 4. The Benefits of Consumption-Based IT Service Delivery 5. Seizing the Consumption-Based IT Service Delivery Opportunity Conclusion About Cloud Cruiser “Indeed the first rule of survival is clear: nothing is more dangerous than yesterday’s success.” – Alvin Toffler Executive Summary Whether an enterprise has moved to cloud computing, chosen (for the present) to remain with traditional IT computing, or embraced a traditional/cloud hybrid approach, mastering consumption-based IT service delivery is a must in order to thrive in this era of accelerating IT transformation. To meet the considerable challenges involved, large-enterprise CFOs, CIOs, and their IT teams will need both to develop appropriate IT strategies and to take full advantage of a new generation of IT tools that can provide far greater clarity, control, and choice, especially in such areas as financial management. Specifically, they need tools that can help them as they perform such tasks as planning for data center consolidation, negotiating volume discounts from public cloud providers, comparing costs across service providers, and assisting lines of businesses (LOBs) in making better procurement and other decisions. As technologies evolve and competitive pressures intensify, such tools are fast becoming an absolute necessity. In a way, the situation is like rowing upstream: not to advance with the help of these kinds of tools is to drop back. Introduction “When you’re through changing,” the adage goes, By embracing the technology options now “you’re through.” This has certainly been true in available, IT becomes the catalyst for competitive many facets of business over the years, and in differentiation. today’s large-enterprise IT world it is gospel. Leading these teams, of course, are the CFOs For large enterprise CFOs, CIOs, and their IT and CIOs charged with guiding their enterprises departments, however, the key challenge lies not through this transformation: leaders who must in acknowledging this fact of business life but in supply both the vision and the tools and other answering the many related questions they hear resources to deliver the clarity, control, and choice that begin with that pesky word “how.” How, for that will enable IT teams to turn the vision of a example, do they change to best meet their needs superb IT capability into a valuable reality; leaders and those of their various collaborators in the IT who have the opportunity to become true heroes to design, development, and delivery process? How their enterprises. do they best balance budget constraints with This white paper aims to speak to these people, the constant call for new capital and operational offering them our thoughts as well as the insights expenses? How can they do all the right things— and research from numerous industry authorities, those things that reduce costs, save time, add surveys, and studies. In particular, it focuses on one value, and ensure a competitive edge—and do all critical component in the emerging large enterprise of them right? landscape: consumption-based IT service delivery. While these questions resonate with most large Whether an enterprise has moved to various cloud enterprise IT teams, they have a special meaning computing approaches, has chosen to remain (for for those that pride themselves on being the the present) with traditional IT computing, or has IT ground-breakers, technology trend-setters, embraced a traditional/cloud hybrid approach, and creative thinkers—the innovators and early mastering consumption-based IT service delivery is adopters who are passionate about, and committed an opportunity today’s large enterprises must see… to, smooth and speedy IT transformation. and seize. For those who embrace transformation, the benefits are substantial. These leaders realize that providing IT resources faster and on a more targeted basis gives the corporation distinct advantages. They are have shorter time to market than competitors, more efficient operating costs than competitors, and higher client satisfaction than competitors. The Changing Role of 1 Large Enterprise IT In recent years, numerous drivers of change have had a dramatic impact on large enterprise IT organizations. One of these has been the growing expectations of users who demand such capabilities as greater mobility, faster delivery, lower costs, and more and better services. Another has been the changing landscape of business itself, which increasingly incorporates new technologies and adopts new organizational and process models to address a variety of internal and client/partner needs. Still another— and one which is already having an enormous impact on large enterprise IT—has been the emergence of new technologies such as cloud computing with its ability to offer benefits such as greater cost savings, productivity improvements, agility, and scalability. While many IT industry observers have long talked about cloud in futuristic terms, the widespread use of this technology has already become an undeniable reality. Today, for example, cloud already accounts for 23% of all IT spending. And, in a recent Cisco/Intel survey of more than 4200 IT leaders from around the world, respondents noted that—by 2016—they see this figure rising to 27%. Echoing this survey, consulting firm IHS recently forecast that between 2011 and 2017, cloud-related spending by businesses globally will literally triple, rising from $78.2 billion to $235.1 billion. The firm also noted that, in 2014 alone, spending would increase from $145.2 billion to an estimated $174.2, or a robust 20%. Global Spending Forecastby Enterprises on Cloud Architecture (Billions of US Dollars) $250 $200 $150 $100 Billions of US Dollars $50 $0 2011 2012 2013 2014 2015 2016 2017 Source: IHS (February 2014) Add to this, Gartner has recently made similar dramatic forecasts. Just three include: • Between 2013 and 2015, worldwide cloud computing market will grow from $131 billion to $180 billion, an increase of 37%. • By 2016, the bulk of new IT spend will be for cloud and cloud-related technologies and services. • By 2017, nearly one-half of large enterprises will not only have private cloud deployments but also private/public (or hybrid) cloud deployments. Yet, while there is a tendency to see cloud computing in monolithic terms, Chris Howard, research vice president at Gartner, suggests a more complex reality. “There is a flawed perception of cloud computing as one large phenomenon,” Howard recently noted. “Cloud computing is actually a spectrum of things complementing one another and building on a foundation of sharing. Inherent dualities in the cloud- computing phenomenon are spawning divergent strategies for cloud computing success. The public cloud, hybrid clouds, and private clouds now dot the landscape of IT-based solutions. Because of that, the basic issues have moved from ‘what is cloud’ to ‘how will cloud projects evolve’.” 3 Cloud Service Delivery Methods SaaS PaaS IaaS Consume Leverage Be the Cloud the Cloud a Cloud JUST ONE COMPONENT OF CLOUD DIVERSITY. Technology blogger Yung Chou affirms Chris Howard’s statement about the very non-monolithic nature of cloud by illustrating the three very different delivery methods of cloud computing: Software as a Service, Platform as a Service, and Infrastructure as a Service, namely SaaS, PaaS, and IaaS. Source: Yung Chou (March 2011) This shift has several key implications. First, the very culture of IT departments is in the midst of changing from a traditional reactive, order-taking focus to a much more pre-emptive one Promo pitching enterprise social software to companies with IT personnel expected to listen more closely to streamline communication between groups, capture to the specific LOBs they serve and help drive collective intelligence, and increase productivity. Source: blueKiwi website business growth and improvement. A key part of the challenge here, according to Dan Roberts, the A couple of additional findings president of Ouellette & Associates, a consulting are notable here. firm that focuses on IT transformation, is positioning the IT department as the “internal consultant of First, while many have feared that the increasing choice,” as opposed to other available consulting roles of LOBs and third-party service providers will or advisory services. lessen the influence of IT departments, the recent Cisco/Intel survey found otherwise. Worldwide, Second, to work successfully with a variety of 56% of its respondents said they believed that, internal and external constituents, more IT teams in coming years, IT departments would become are becoming highly collaborative in nature. This larger and more centralized, and 57% felt that the means that, in addition to working with various role and responsibilities of internal IT departments other internal and external groups, IT teams will would increase relative to third parties. Indeed, need to become far more aware of these groups’ the survey went on to note that LOBs are funding business perspectives and how they add value. 44% of total IT spending globally. This means, the This will, in turn, increase the IT team’s value to survey report noted, “that the emergence of LOBs these constituents. In fact, many large enterprises— as buying centers for IT is not a long-term prospect, appreciating the need to bring employees from but a reality.” different segments of the business such as, say, IT and human resources more closely together—are Second, there is also a growing call for more even promoting enterprise-wide social networks. comprehensive metrics by IT departments, especially when it comes to business ROI. In the Finally, every organization—because its needs recent Cisco/Intel survey of IT leaders worldwide, are unique—must transform itself in the ways that 76% noted that they believe that IT teams “will make the most sense to achieve its business goals.

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