Moving your collaboration infrastructureto the Cloud.    

Stairway to heaven or Highway  to hell  ?  

Olaf  Boerner  BCC  6.11.2015  

PLATINUM  &  CHAMPAGNE  SPONSORS

GOLD  SPONSORS

SILVER  SPONSORS

BRONZE  SPONSORS

Agenda  

• Introduction• Cloud  layers    • TCO  • IBM  &  MS  Offering  

• Why  Cloud  ?  • Vendors  Arguments  for  Customers• Vendors  Arguments  for  Investors  

Vendor  strategies  • What  you  need  to  consider  ?  

• Organizational  issues  • Security  &  Privacy  • Risk  Management  

About  me• Studied  Business  Administration  and  

Computer  Science  • Notes  Consulting  since  1994• CEO  and  Founder  of  BCC  in  1996  • Working  as  project  manager  senior  architect  

with  large  enterprise  customers• Securing  IBM  Social  Business  infrastructures  • reducing  Total  cost  of  Ownership  of  IBM  Social  Business  

Infrastructures  thru  automating  Administration  

• IBM  Champion  in  2014  &  2015  • Twitter:  @OlafBoerner

Cloud  Service  Models  

• CRM,  Email  ,  Web  Meetings,  Virtual  Desktops  

Software-­‐as-­‐a-­‐Service

• Web  Servers,  Database  Servers,  Runtime  execution  

Platform-­‐as-­‐a-­‐Service  

• Virtual  machines  ,  Servers,  storages  etc.  

Infrastructure-­‐as-­‐a-­‐Service    

TCO  – Total  Cost  of  Ownership  

• TCO  is  used  to  calculate  all  relevant  cost  „driver“  for  an  IT  Service  over  a  given  time  frame  -­‐>  Life  cycle  

• TCO  can  be  split  in• Cost  of  Investment      

• Software  • Hardware    • Implementation  

• Cost  of  Operation• SW  Maintenance  • HW  Maintenance  • Personal  required  to  run  operations  • Facilities  and  power  

• Cost  of  Divestment  • Deinstallation• “Wrecking”  

TCO  – Total  Cost  of  Ownership  

TCO On  Premise CloudCost of investment Signifcant investment in  

Company  asset3  to 5  years lifecycle

No /  Onboading only

Cost of operation Low to medium   Significant„shared“  Cloud providerinvestments has to beincluded

Cost of divestment Low   Low  ?  DataMigration  ?  Provider  Offboarding

IBM  Social  Cloud  Offering  

• Public  Cloud  based  on  Softlayer• IBM  Connections  Cloud  S1  

• Complete  package    • „Connections“  • Web  Meeting  • Verse  /  Notes  Mail  • Document  Editors    • Mobile  Apps  

• IBM  Connections  Cloud  S2    • „Smaller“  package  • Without  Mail  and  Document  Editors  

• IBM  Social  Cloud  Stand-­‐alone  Service• IBM  SmartCloudNotes

IBM  Social  Cloud  Stand-­‐alone  Services

• IBM  Connection  Social  Cloud  • including   file  sharing,  personal  dashboard,   communities,  activities  and  instant  

messaging• IBM  Connection  Chat  Cloud  

• Instantly  communicate  with  colleagues  inside  your  organization  with  text  chat,  audio  and  video,   file  transfer,  and  screen  capture.u

• IBM  Connection  Files  Cloud  • 1TB  File  storage,  sync,  and  sharing   in  a  security-­‐rich  environment  across  web,  

desktop,  and  mobile  devices.  • profiles  and  contacts,  post  status  updates,  and  view  updates  across  your  

network.• IBM  Connection  Meetings  Cloud  

• Web  meetings  with  desktop  and  application  sharing,   chat,  and  polling.  Host  meetings   for  up  to  200  attendees  with  anyone  outside  your  company.  Intra-­‐company  meetings  require  subscriptions  by  all  internal  participants

MS  Cloud  Offerings• Office  365  Enterprise  1  

• Office  online  (web  browser)• Mail  and  calendar  with  50  GB  per  User  • 1  TB  file  storage  and  sharing  for  each  user  • Skype  • Team  Site  • Vc• Yammer  

• Office  365  Enterprise  3  • E1  plus  • Advanced  E  Mail  • Full  Office  Suite  on  PC/Mac  with  apps  for  tablets  and  phones• Seach and  Discovery  etc

• http://products.office.com/en-­‐au/business/office-­‐365-­‐enterprise-­‐e3-­‐business-­‐software

Why  moving  to  the  cloud  ?  Cloud  benefits  for  customers  

What  Analysts  and  vendor  Marketing  are  telling  you  ?

Common  arguments why  using  the  cloud  • Cost  arguments    • cost  efficient    -­‐ reduce  your  cost  of  ownership  • Leverage  “economies  of  scale”  • No  IT  operation  overhead  • Pay  as  you  use  

• Quality  Arguments  • Always  using  the  most  current  software  releases• Better  business  results  due  to  modern  software  technologies  

• Higher  availability• No  license  asset  management    

Vendor  Marketing  J• 1.  Fully  utilized  hardware

• Cloud  can  provide  high  utilization  and  smoothing   of  the  inevitable  peaks  and  troughs   in  workloads.  

• Sharing  server  infrastructure  with  other  organizations'  computing   needs  ensure  efficient  use  of  hardware  

• 2.  Lower  power  costs• Due  to  economies  of  scale  and  better  hardware  utilization  

• 3.  Lower  people  costs• Biggest  part  of  TCO  • IT  people  are  expensive;  their  salaries,  benefits,  and  other  employment  costs  

usually  outweigh   the  costs  of  hardware  and  software• 4.  Zero  capital  costs

• Buying  your  hard-­‐ and  software  you're  looking   at  up-­‐front  capital  costs• 5.  Resilience  without  redundancy  

• If  run  your  own  servers,  you  need  to  buy  more  hardware  than  you  need   in  case  of  failure.

• Expensive  to  maximize  uptime.

There  ain‘t no  such  thing  as  a  free  lunch  !(Milton  Friedmann )

Cloud  service  provider  are  no  “magical  non  profit”  companies

Cloudprovidersmust  makeprofits !

Need  to keeptheir currenthigh  profitmargin !(70-­‐

80%)

Grow /keepcompany

market value/  stock  price

http://csimarket.com/Industry/industry_Profitability_Ratios.php?ind=1011

Cloud  benefits  for  vendors

What  vendors  are  telling  their  investors  ?  

Currently  “no  real  information”  !

• There  is  no  reliable  information  available  !  • Vendors  do  not  publish  detailed  level  of  information  about  the  Cloud  business  EBIT  margin  !• Amazon  is  currently  the  only  exception  

IBM  Q1  /  2015  – Investor  Statement  

• revenue  performance  improved  to  flat  from  prior  year• Did  not  decline  again  !  

• Strategic  imperatives  revenue  growth  accelerated  to  more  than  30%

• Cloud  business  grew  over  75%;  exited  the  quarter  with  an  annual  as-­‐a-­‐Service  run  rate  of  $3.8  billion

• Analytics  was  up  more  than  20%,  Social  more  than  40%,  and  Mobile  more  than  4  times

• Remember  IBM  Earning  Strategy  • Invest  in  high  profit  business  which  is  growing  • Sell  or  discontinue  low  profit  or  declining  business  

MS  Investor  Statement  

MS  Investor  Statement  

Microsoft  Cloud  Strategy

• Does  MS  makes  money  converting  EA  customers  to  Office  365  ?  • Not  sure    • But  they  are  „financing“  MS  huge  cloud  investments    

• Profit  will  come  from  converting  transactional  customers  

• Microsoft  is  seeing  following  benefits  • Ensure  continuous  revenue  stream  • Direct  and  tight  relationship  with  customers  • Grow  and  extend  opportunities  with  customers  >  Starting  point  for  Upselling  customer  with  new  addon services    

IBM  Q1  /  2015  – Investor  Statement  

• revenue  performance  improved  to  flat  from  prior  year• Did  not  decline  again  !  

• Strategic  imperatives  revenue  growth  accelerated  to  more  than  30%

• Cloud  business  grew  over  75%;  exited  the  quarter  with  an  annual  as-­‐a-­‐Service  run  rate  of  $3.8  billion

• Analytics  was  up  more  than  20%,  Social  more  than  40%,  and  Mobile  more  than  4  times

• Remember  IBM  Earning  Strategy  • Invest  in  high  profit  business  which  is  growing  • Sell  or  discontinue  low  profit  or  declining  business  

IBM  subscription  revenue  due  to  automatic  renewal  • 6.1  Automatic  Renewal  of  a  Subscription  Period• If  Customer's  PoE designates  the  subscription  renewal  as  automatic,  

Customer  may  renew  Customer's  expiring  IBM  SaaS Subscription  Period  by  written  authorization  to  renew  (e.g.,  order  form,  order  letter,  purchase  order),  prior  to  the  expiration  date,  in  accordance  with  the  terms  of  the  Agreement.

• IF  IBM  DOES  NOT  RECEIVE  SUCH  AUTHORIZATION  BY  THE  EXPIRATION  DATE,  THE  EXPIRING  IBM  SaaS SUBSCRIPTION  PERIOD  IS  AUTOMATICALLY  RENEWED  FOR  EITHER  A  ONE  YEAR  TERM  OR  THE  SAME  DURATION  AS  THE  ORIGINAL  TERM  UNLESS,  WITHIN  NINETY  (90)  DAYS  OF  THE  EXPIRATION  DATE,  IBM  RECEIVES,  EITHER  DIRECTLY  FROM  CUSTOMER  OR  THROUGH  CUSTOMER'S  RESELLER,  AS  APPLICABLE,  CUSTOMER'S  WRITTEN  NOTIFICATION  THAT  CUSTOMER  DOES  NOT  WANT  TO  RENEW.  OTHERWISE,  CUSTOMER  AGREES  TO  PAY  SUCH  RENEWAL  CHARGES.

What  kind  of  business  is  Cloud    or  will  it  be  ?  

High  volume

High  margin

What  kind  of  business  is  „Cloud“  

High  volume

lowmargin

Amazon  – for  AWS

• Amazon  is  the  first vendor  who  published  details    • AWS  Q4  2014  • $5  billionbusiness• operating  profit  of  $265  million  with  • an  profit  margin  of  19.6  percent• IBM’s SW  gross margins are just  over 50  percent

• AWS  proves  Cloud  business  is  high  volume  with  low  margin  

• AWS  says  • that  Infrastructure  as  Service  will  be  a  Commodity  (low  margin)  

• Trying  to  move  up  to  Application  Level  

Summary  

• Cloud  infrastructure  market  will  become  a  commodity  market  

• Software  vendors  are  trying  to  convert  “highly  profitable”  but  unstable  software  revenue  stream  to  continuous  subscription  streams    

• Software  vendors  are  fighting  for  market  share  and  accepting  decreasing  profit  margins  and  revenue  for  these  “transition”  period    to  become  Cloud  service  providers      

• Application service (SaaS)  is the most profitable  business

What  you  need  to  consider  ?  So  how  will  this  impact  my  cloud  

evaluation?  What  are  my  other  options  ?    

What  do  consider  BEFORE  ?  (KPMG  Study  2014)

What  do  consider  AFTER  ?  (KPMG  Study  2014)

Security  &  Data  privacy  issues    (not  our  focus  today  J)• System  Complexity  

• A  public  cloud  computing  environment  is  extremely  complex  (e.g.  IBM  SmartCloud on  premise  )  

• Shared  Multi  tenant  Environment  • client  organizations  typically  share  components  and  resources  

with  other  consumers  that  are  unknown  to  them  • Compliance  

• Law  and  Regulations,    Data  Location  ,  Electronic  Discovery  • Trust  

• Giving  up  direct  control  over  many  aspects  of  security  and  privacy  requires  a  high  level  of  trust  onto  the  cloud  provider

• Access  to  company  Insider  Information  is  expanded  to  cloud  providers  and  subcontractors  

• Ensure  rights  to  audit  cloud  provider  !!!

Potential  Business  Risk

• Cost  • Loosing  possibility   to  plan  and  manage  your  cost      • Risk  of  increasing  prices

• Availability  • Temporary  Outages  • Prolonged  and  Permanent  Outages  /  Discontinue  of  services  

• Incident  Response  • Data  Availability  • Poor  Incident  Analysis  and  Resolution  

Potential  Business  Risk:  Quality  &  Cost• Cloud  provider  is  saving  money  by  extending  hardware  

lifecycle  and  operate  with  lower  qualified  people  • Cloud  Provider  is  terminating  your  contract  because  your  

are  too  demanding  /  expensive  • Using  to  much  bandwith• Using  to  much  server  load  

• Cloud  Provider  is  significantly  changing  his  offerings  or  not  keeping  up  with  competition  • Cloud  Provider  C  is  offering  a  much  „better“  offering  • Your  Cloud  Provider  is  increasing  monthly  prices  or  force  you  to  

upgrade  to  more  expensive  service  package  (see  MS  and  IBM  • Cloud  Provider  is  shutting  down  his  offering  • Cloud  Provider  is  going  out  of  business  or  bankrupt    

(How  fast  can  you  react)  

Example  Shutting  Down  Service  Postini• Postini was  a  startup company  founded  in  1999  • BY  February  2005,  it  was  operating  ten  U.S.  data  centers,  processing  2.5  billion  e-­‐mail  messages  weekly,  and  providing  anti-­‐spam  services  for  more  than  4,200  companies  and  "6  million  end  users  

• On  July  9,  2007,  Google  announced  that  it  had  signed  a  definitive  agreement  to  acquire  Postini.[5]  Google  paid  $625  million  in  cash  for  the  acquisition

• August  21,  2012,  Google  announced  it  would  be  shutting  down  all  of  Postini's web  services  

• The  1TB  limit on  Office  365  users takes effectimmediately.

• You have 12  month to remove your files fromOneDrive

• Consumers  that  are  not  satisfied  by  the  new  storage  plan  can  opt  out  of  Office  365  and  receive  a  pro-­‐rated  refund.

• http://www.computerworld.com/article/3000642/cloud-­‐storage/microsoft-­‐shrinks-­‐onedrive-­‐storage-­‐limits-­‐for-­‐office-­‐365-­‐customers.html

Microsoft  shrinks OneDrive storage limits

Consider  leasons learned  from  “Outsourcing  Business”  !  • What‘s  difference  to  Cloud  ?• increased  complexity  • No  dedicated  Provider  Manager  • Difficulty  to  maintain  accountability  and  control  over  deployed  applications  or  systems  

• What’s  similar  to  Cloud  ?  • Steps  that  organizations  need  to  onboard• Provider  coordination  &  communication  efforts  • Service  Provider  change  !  • Existing  guidelines  for  outsourcing  still  apply  !  

Risk  Management:  Business  Continuity  Management  ?  • Which  risks  do  you  need  to  manage?  • How  can  you  manage  these  risks  ?    • Think  about  how  9/11  created  Business  Continuity  Management    !!!

• Data  Backup  &  Migration  • How  do  you  ensure  access  to  your  critical  data  • Where  to  you  store  these  backups  ?  

• Additional  BackUp /  Cold  StandBy Cloud  Provider  required  ?

• Is  „Off  Boarding“    possible  ?  • IBM  Domino  is  easy  !• IBM  Connections  not  sure  ?  

Summary  

• There  ain’t no  free  lunch  or  magical  economies  of  scale  providers  must  earn  money  !  

• Carefully  select  with  internal  IT  services  you  want  to  use  as  an  cloud  service  • Chat,  WebMeeting are  easy  choices  • “Extranet”  Applications  makes  sense  

• Utilize  outsourcing  experience  for  moving  to  Cloud  Services  • Do  not  underestimate  cloud  complexity    • Do  not  underestimate  cost  of  coordination  and  communication  with  cloud  service  provider  

• Discuss  and  plan  off  boarding  and  worst  cases  BEFORE  moving  to  cloud  services