Cloud Computing GSF11 Jim Cooke 1-1

Cloud Computing: The New Economics of IT Jim Cooke – Senior Director IBSG IT Transformation PracticeCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 1

IT is Following a Common Evolutionary Pattern Bespoke Consolidation Utility Evolutionary Pattern Individual Industrial Farming Farming Farms Farming Conglomerates Factory Steam Local Power Electricity Electrical Grid Engines Plants Cloud Service Enterprise Data IT providers IT Service Grid Centers (CSP‟s) Source: Jim Cooke - Cisco IBSG InnovationsCisco Confidential Cisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group Internet Business Solutions Group 2 2

Why Now? Compute & network speeds Storage costs Service-Oriented Architectures Standardization General acceptance of ITaaS Global Economic Crisis Virtualization Cloud Acceleration Source: Technology Avalanche; Dave Evans, Jim Cooke Cisco IBSGCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 3

What Makes Cloud Different? Traditional Cloud Computing Computing Consumption Dedicated Shared Traditional hardware Ease of Use procurement Self service New services added Scale on-demand Scalability manually Manual repair of Automated recovery due to Availability system failure integration / interoperable Provisioning Months Minutes Incremental CapEx Pay per use Cost purchases Source: Cisco CMO SP Mktg - Data Center SolutionsCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 4

Cloud Definition from NIST (National Institute of Standards and Technology) Measured Service Rapid Elasticity Essential Characteristics On-Demand Broad Network Resource Self Service Access Pooling Service Software as a Platform as a Infrastructure as a Models Service (SaaS) Service (PaaS) Service (IaaS) Deployment Models Private Public Hybrid Community http://www.csrc.nist.gov/groups/SNS/cloud-computing/index.htmlCisco Confidential © 2010 Cisco and/or its affiliates. All rights reserved. 2011 Internet Business Solutions Group 5

Deployment Benefits and Challenges Deployment Benefits Deployment Challenges  Sharing services and elastic  Security, Compliance and scaling Regulatory risks  Adding capability without time  Cloud services management and resource intensive build- (Billing , SLA’s, Dependencies) outs  Organizational and operational  Shifting Economics – capex to challenges and impact to opex business processes  Simplifying operations  Interoperability and integration with existing processes and  New potential revenue streams technologies Source: Jim Cooke - Cisco IBSG InnovationsCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 6

The Cloud Computing Journey Consumption models for IT, applications and services are changing dramatically and will be a Inter- hybrid mix – available both Cloud Hybrid on-premise with private clouds and Cloud from service providers in public clouds. Public Cloud Private Cloud Automation PRESENT Virtualization Consolidation Source: Jim Cooke - Cisco IBSG InnovationsCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 7

Current Situation The 70/30 Dilemma 70% of the IT Budget for Maintenance Need to Change the Balance 30% Available for Innovation* 50% 30% 50% 70% Business Business Infrastructure Operations Infrastructure Operations Transformation “Keeping the Lights On” On” Transformation “Keeping the Lights Allows InnovationInfrastructure, And The Shift To ―Real-Time‖ *Source: Gartner - IT & Creates Flexibility Competitive Advantage & Reduces CostCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 8

Infrastructure TCO: Significant Portion of Government IT Spend Other IT Spend Infrastructure Spend 2 $39.2 to $58.8B 1 25% Capex - 75% Opex 50 and 75% 1 Source: http://www.transitionaldata.com/publications/Dr-Data-Center.pdf 2 Federal Govt IT spent for 2010 approx $78BCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 9

Yet, Much Of The IT Spend Is Wasted On Inefficient Infrastructure 100 80 Utilisation Target 75%2 60 $29.4 B Missed Opportunity3 40 20 25%1 0 1 http://www.cioupdate.com/trends/article.php/3289721 Infrastructure Utilization 2 Averaged from multiple sources 3 Assumes 50% of IT Budget of $58B and a 50% utilization improvementCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 10

Infrastructure Costs Are Continuing to Increase Growth Is 6% per Year and Will Have Significant Impact on the Organization  Resources available for new services and innovation will continue to diminish  Agency impact from the IT organization will become more difficult to achieve  Proliferation will increase, ultimately making the problem even worseCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 11

What Can Be Done? Develop and execute an infrastructure roadmap that targets a cloud operating model as an end state to: 1. Implement virtualized and unified architectures to drive down costs in the near term and ensure long-term efficiencies 2. Free up valuable resources to focus on innovation and new service development—IT activities that create impact 3. Better prepare the environment to take advantage of new technology developments – private, community, hybrid and public cloudsCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 12

The Challenge  While the problem may be clear to IT, it is not immediately apparent to the respective agencies  The agencies are typically the culprit in driving these inefficiencies  The key is helping the agencies understand the issue in business terms  The next step is then convincing the agencies to invest in IT over other competing alternativesCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 13

Understanding The Importance of Architecture Vision of a state-of-the-art home… Built without a blueprint Date: 1884 The The Winchester Mansion Winchester Mystery House Work force 147 0 Builders Architects Results • 65 Doors to blank walls • 160 Rooms • 13 Staircases abandoned • 6 Kitchens • 24 Skylights into floors • Gas lights • 47 Fireplaces • 10,000 Windows Construction time • Intercoms 38 Years The first no-clog sink (patent issued)Cisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 15

An Architecture is Not Optional… Technology and business architectures are not optional. Every agency already has them… Some Are Designed… … and Some Just Happen The Cloud Operating Model is the Target ArchitectureCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 16

Elements of Transformational IT Vision/ Strategy Growth/Innovation Architecture Capabilities Productivity Strategies CIO New Business CEO Process IT/Business Capabilities, Execution Technology/Business Architectures, Operational ExcellenceCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 17

Example: Show the Linkage Agency Outcomes Agency Imperatives Agency Capabilities IT Capabilities Infrastructure Provide lean back office Mortgage Scale mortgage across all channels Lean the Mortgage app (web/retail) function Agency Reintroduce insurance Buy or Build insurance capability Core insurance functions Strategic New Revenue Introduce mobility Mobility as-a-channel Core mobility functions Initiatives Regeneration Sell applications Establish an App store (customer facing) catalog service Customer Colleague Rapidly Align SMEs to cust. need Expert Locator function SME Presence Engine Increase  Re-engage Productivity Enable staff to work anywhere Location-independent workplace Virtual workspace functionality (Smart Workspace) with our Martini Rationalise and align IT Smaller IT footprint in branch Virtualisation services constituents Avoid / Reduce Move customers to direct channels Enable direct channel & decisioning Common business functionality across Costs channels Network  Restore the Simplify divestitures Rapid service termination Host service interface within IT pride of our Presentation & Improve Customer Middleware Queue Buster, Decisioning, people Satisfaction Redesign customer experience Reduce customer wait time <5 mins. Expert Locator Application  Radically Enable innovation and collaboration Provide mobile applications to staff Enable staff visibility and recognition App store (Staff Facing) function Social networking function simplify the across boundaries Enable staff to swap shifts Enable Shift Swap functionality Compute agency Provide home user with secure access Remote access service (VPN) Improve Staff Enable flexible staff work locations Morale  Grow quality Enable staff to work anywhere, anytime Provide mobility functionality That accesses: Social collaboration functions(team Enable virtual team huddles services Provide comprehensive training anytime, huddles) eLearning functions anywhere Data Management Personalised corporate communications to Corp. communication channel staff needs subscriptions Invest in development of people Legend Provide personalised HR mgmt. services Enable HR channel subscriptions : Security Provide structure &guidance for staff Provide governance anytime, Cisco Solution anywhere Enabled Improved Cross- Improve staff ability to sell other QueueBuster Multichannel sales progression Click-to-Chat/Serve Sell & Up-Sell products Enabled Simplify divestitures Rapid service termination Host service interface within IT Risk Mgmt. Minimise compliance reporting risk Provide risk guidance & minimise staff Risk and compliance framework with involvement automation Aligning agency capabilities to strategic initiatives How to efficiently enable ITCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 18

Our Story: Cisco Data Centre Issues  Company growth and business requirements such as agility, service continuity  Data Centre space, power, cooling, physical structure  Current locations prone to disaster, DR site 2500 miles away  Heterogeneous hosting platforms/architectures, history of “silo” approach  High resource growth rates and a flat IT headcount & budgetCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 20

4 Phase Approach to Address Issues Consolidate Consolidate Data Centres, Resources Begin to Increase Utilization Data Centre Standards Virtualize Virtual Resource Pools Rapid Delivery of Services Increased Availability, Utilization Unify Single, unified network fabric Integrated services Unified Compute Automate On Demand Utility Runbook Automation Real Time ProvisioningCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 21

Cisco Data Centre Evolution Legacy Consolidated Virtual CITIES Data Centre Data Centre Data Centre • 4 Tier Silos • Standardization • Server Repurposing • Infrastructure Compute Aligned to • Heterogeneous OS • Virtual Machines • VM Mobility Application • Storage Silos • SANs, VSANs • Storage Services Storage • Low Utilization Virtualization • Tiered Storage • Policy Based Management Network • IP Connectivity • Consolidated • Virtualized Network • Intelligent Data Network Services Services Management • Tiered Recovery Security • Perimeter Security • Secure Each Application Tier • Virtual Firewalls • Usage and SLA- based Funding Application • Application Silos • Consolidate, Model • SOA Pockets • Distributed Centralize 2004 2005 - 2006 2007 - 2008 2009 - 2010 Virtualization Phase Consolidation Phase Unification Phase Automation PhaseCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 22

PS Scenarios with Affinity for Cloud Scenario Driver for cloud adoption / Use Case Cloud Type - Typical Applications Citizen facing portals: • Scalability of cloud computing is attractive, due to highly variable and IaaS (State/ • Subject to Freedom of Information Act unpredictable demand, e.g. Fed) • With event-driven access behavior - Seasonality of access to some website (tax year, …) & SaaS (disasters, campaigns, happenings, …) - Disasters will drive people to some core portals (e.g. Texas Online) (Local) • Backup and Disaster recovery • Paying „too much‟ for existing BC/DR solutions IaaS • BI / Decision Support Systems • Increasing demand from legislature for more speed and capability • Unstructured Data, Grid Computing • See slides on cross-vertical IaaS opportunities for more detail • ERP HR, Finance • Pilots underway already SaaS (mostly) • Desktop Virtualization • Cross vertical SaaS opportunities • Collaboration • Specific collaboration use case (HUD): Embed UC an app e.g. open video conference with field office while reviewing grant application for the city STATE & LOCAL: Data Management / Business Intelligence • Explosive growth of content that needs to be retained IaaS • Public Safety and Police Video footage • Cloud scalability and low cost per GB attractive to store those data Seasonal apps/ deal with enrollment • Peak-trough of these applications: 2.5 – 3.5 IaaS & SaaS • School enrollment, test scores • Applications are often customized / special-built • Parks & recreation, Campaigns • Flexibility of IaaS attractive to manage cost FEDERAL: • HUD: Single Family Mortgage Insurance • High volume, working with multiple groups (e.g. 11,000 lenders) IaaS (mostly) process (Batch) • IRS: Decision Support Systems - Data Mining • Analysis of history of tax collection, returns. Future revenue IaaS & Analysis projections. Need for increased frequency • Pursued by Asst. Commissioner of Research pulling statistical data (not individual data). Lower security requirements Source: Cisco IBSG SPCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 23

Siloed Technologies = Siloed Organization IP Address Mgmt INS App / Web Server AFS Directory Services AFS Database AFS Networking INS Identity Management AFS Software Frameworks AFS WebServices / Appl Messaging AFS Network Manager Application Groups Voice Manager IP Telephony INS Data Centre Manager Print CTAPS Client Service Manager Desktop CTAPS Server / OS DCS Storage DCS Collaboration/Communication CTAPS Content Networking / Mgmt DCS Client Services & Support CTAPSCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 24

Service Models and Technology Convergence Require Changes in the Organization StructureArchitecture Program & Portfolio Management IP Address Mgmt INS App / Web Server AFS Directory Services AFS Solutions Architects Database AFS Networking INS Identity Management AFS AFS AFS AFS DCS CTAPS AFS AFS CTAPS WebServices / Appl Messaging AFS Client Services & Support CTAPS DCS INS INS Collaboration/Communication CTAPS INS DCS Software Frameworks AFS WebServices / Appl Messaging AFS Network Manager Software Frameworks Content Networking / Mgmt Directory Services Identity Management App / Web Server IP Address Mgmt Server / OS IP Telephony Networking Database Application Groups Voice Manager IP Telephony INS Storage Desktop Print Data Centre Manager Print CTAPS Client Service Manager Desktop CTAPS Server / OS DCS Storage DCS Collaboration/Communication CTAPS Content Networking / Mgmt DCS Management AFS Client Services & Support CTAPS Security ISTCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 25

The Value of a Cloud Operating Model For Public Sector Agencies  The most significant impact of a Cloud Operating Model is improved agency agility.  Other benefits include… Lower cost structures for providing products and services (improved capabilities)… Shorter cycles to deliver new services (rapid constituent impact) Ability to implement changes in response to changing constituent needs (improved constituent care ) Ability to innovate due to reduced time spent on ―just getting things to work‖ (sustainable service models)… and numerous others…. Source: Cisco IBSG InnovationsCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 27

Value Approach – Old vs New Architecture What can be done with $$ Available Old DC New DC Architecture Architecture Top Initiatives TCO TCO 1 1 1 . Old . . . . . . . . . . . . . . . New . . Business . . . Benefit TCO . . . . . . . . . N N NCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 28

Other Business Benefits  Time to delivery for applications  Time to business capability  Application rationalization benefit  SLA benefits (application availability benefit)  Time to market for new services  Green / SustainabilityCisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 33

Key Takeaways  Service orientation and technology convergence will drive change in your current infrastructure model.  You can choose to take advantage of this shift to create a competitive advantage or wait until you are forced into the change – either way, your infrastructure will change.  Three key areas to focus on to help you take advantage of this change: #1:Tell a story from the business perspective – lay out your vision #2: Show your roadmap #3: Show your business case – compete for resources!Cisco Confidential © 2011 Cisco and/or its affiliates. All rights reserved. Internet Business Solutions Group 34

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