Webinar: Introduction to EnterpriseCloud EconomicsEvent hashtag: #cloudeconScott Bils                  Dale StaraPartner  ...
Today’s Agenda          What Are The Keys to Enterprise          Cloud Economics?          Are Enterprise Cloud Economics ...
Today’s Focus – IAAS / PAAS                                                Description                        Common Servi...
The Cloud Enables New Delivery Models“Traditional” Model    Private – On Prem                      Private – Off Prem     ...
Enterprise Data Center Economics Driven byHigh Fixed CostsDATA CENTER OPERATING COST BREAKDOWN*                           ...
High Fixed Costs Make Data Center UtilizationCritical IMPACT OF UTILIZATION                                            Ill...
Cloud Offers Potential to Drive UtilizationImprovements Within and Across EnterprisesDedicated     Virtualized / Private C...
The Critical Question for Cloud andEnterprise Economics…. If utilization is the key driver                                ...
Today’s Agenda          What Are The Keys to Enterprise          Cloud Economics?          Are Enterprise Cloud Economics ...
Virtualization Has Driven a Disruptive Wave ofEnterprise Transformation Average Enterprise Workload Cost* $ / GHz hrs     ...
Let’s Take a Closer Look at Private CloudUtilization                                                                      ...
Based on Unit Costs, Public Clouds InitiallyAppear to be a ‘Yawner’ for Enterprises  Average Enterprise Workload Cost  $ /...
What If We Leverage Public Cloud Flexibility?                                                                             ...
Public Cloud Options Unlock ExtraordinaryEnterprise Economics Average Enterprise Workload Cost* $ / GHz hrs               ...
… and Economics Will Improve Further OverPR Time         Amazon Driving Pricing Down….                                    ...
Today’s Agenda          What Are The Keys to Enterprise          Cloud Economics?          What Elements of the Cloud are ...
Unique Customer Requirements and ChallengesExist around Enterprise Hybrid Models         Hybrid Migration Challenges      ...
Enterprises Don’t Need to Wait for ‘The Silver Bullet’                           Continuum of Base / Peak Capabilities    ...
Factors Driving the Hybrid Opportunity                        Workload Characteristics                        Overall wor...
Assessing Potential Impact of Enterprise Cloud – Approach     1 Create Workload           2 Assess Cloud                  ...
Hybrid Economics Example - eBay        Situation                                                                          ...
In Summary…                    Utilization - The Key to Enterprise                    Cloud Economics                    H...
Q&A   Click the question mark (Q&A) button located on the floating tool bar in    the bottom right of your screen – this ...
For More Information   Attendees will receive an email with a link to download today’s    webinar presentation. A recordi...
Everest Group Leads Clients from Insight to ActionContact us for more information about our consulting, research, and indu...
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Introduction to Enterprise Cloud Economics

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Everest Group experts will disucss the transformational impact emerging cloud models can have on IT cost and performance in the enterprise. This webinar will focus on the specific enterprise benefits of cloud infrastructure services, including compute, storage and networking.

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Introduction to Enterprise Cloud Economics

  1. 1. Webinar: Introduction to EnterpriseCloud EconomicsEvent hashtag: #cloudeconScott Bils Dale StaraPartner Engagement DirectorNext Generation IT Next Generation ITEverest Group Everest Groupscott.bils@everestgrp.com dale.stara@everestgrp.com : @everest_cloudMay 24, 2011
  2. 2. Today’s Agenda What Are The Keys to Enterprise Cloud Economics? Are Enterprise Cloud Economics Truly Disruptive? How Can Enterprises Capture the Opportunity? 2 Proprietary & Confidential. © 2011, Everest Global, Inc.
  3. 3. Today’s Focus – IAAS / PAAS Description Common Services • End-to-end business • Payroll Business • Order-to-cash Process as a process delivered as a service • Procure-to-pay Service • Hire-to-retire (BPaaS) • Multi-tenant applications • CRM Software as and business services • HCM a Service • Email (SaaS) • Collaboration Cloud • F&AServices • Multi-tenant application • Dev Only Platform as a development and • Dev + Runtime Service hosting environments (PaaS) • Shared data center, • Compute Infrastructure- infrastructure hardware (Server / OS) as-a-Service and software resources • Storage (IaaS) • Database • Networking • Content Delivery 3 Proprietary & Confidential. © 2011, Everest Global, Inc.
  4. 4. The Cloud Enables New Delivery Models“Traditional” Model Private – On Prem Private – Off Prem Public Cloud• Customer Data • Customer Data • Third-party Data • Third-party Data Center Center Center Center• Customer-owned • Customer-owned • Dedicated Assets • Vendor Assets Assets Assets • Customer or Vendor- • Multi-tenant• Dedicated HW • Virtualized HW owned • Virtualized HW “Hybrid” Cloud 4 Proprietary & Confidential. © 2011, Everest Global, Inc.
  5. 5. Enterprise Data Center Economics Driven byHigh Fixed CostsDATA CENTER OPERATING COST BREAKDOWN* 2% 70-80% of costs 8% for the typical data 25% Variable center are fixed !!! Costs 14% 7% 15% 23% 75% Fixed Costs 31% Labor Hardware Facility Hardware Power Licenses Network Total DC Costs Maint and Costs Costs Cooling* Everest analysis assuming 3,000 server data center, 200:1 server-to-admin ratio 3 year depreciation schedule 5 Proprietary & Confidential. © 2011, Everest Global, Inc.
  6. 6. High Fixed Costs Make Data Center UtilizationCritical IMPACT OF UTILIZATION Illustrative ON COMPUTE COSTS • Data centers highly ‘leveraged’ • Improvements in Cost / Compute Hour utilization drive disproportionate improvements in cost • Same reason why enterprises ensure mainframe utilization Server Utilization > 90% 6 Proprietary & Confidential. © 2011, Everest Global, Inc.
  7. 7. Cloud Offers Potential to Drive UtilizationImprovements Within and Across EnterprisesDedicated Virtualized / Private Cloud Public Cloud Customer #1 Customer #2 App App App App App App App App App Operating System VM VM VM Hypervisor Hypervisor Enterprise Enterprise Cloud Service Server Server Provider Server 7 Proprietary & Confidential. © 2011, Everest Global, Inc.
  8. 8. The Critical Question for Cloud andEnterprise Economics…. If utilization is the key driver Where can Cloud of enterprise economics… improve utilization??? 8 Proprietary & Confidential. © 2011, Everest Global, Inc.
  9. 9. Today’s Agenda What Are The Keys to Enterprise Cloud Economics? Are Enterprise Cloud Economics Truly Disruptive? How Can Enterprises Capture the Opportunity? 9 Proprietary & Confidential. © 2011, Everest Global, Inc.
  10. 10. Virtualization Has Driven a Disruptive Wave ofEnterprise Transformation Average Enterprise Workload Cost* $ / GHz hrs • Disruptive economics 100% for enterprise 35% reduction • Limited difference between virtualized, private cloud 65% • 2-3x improvement in typical server utilization rates • But….utilization rates Virtualized/ Dedicated Private Cloud still only ~ 15% !!!!* Based on average workload mix and profile. Assumes 8:1 virtualization ratio. 10 Proprietary & Confidential. © 2011, Everest Global, Inc.
  11. 11. Let’s Take a Closer Look at Private CloudUtilization Need toServer Utilization ‘Size to Peak’ ~15% Inability to ‘Diversify’ Variability • Workload correlations • Geography and latency • Application platforms 11 Proprietary & Confidential. © 2011, Everest Global, Inc.
  12. 12. Based on Unit Costs, Public Clouds InitiallyAppear to be a ‘Yawner’ for Enterprises Average Enterprise Workload Cost $ / GHz hrs 100% 60-70%* 65% • Workload unit costs in ‘breakeven’ zone (+/-10%) • Complex vendor pricing models limit transparency • Cloud service providers living under pricing Dedicated Virtualized/ Public Cloud ‘umbrella’? Private Cloud* Varies depending on public cloud vendor and offerings. Evaluated vendors included Amazon AWS, MS Azure, Rackspace 12 Proprietary & Confidential. © 2011, Everest Global, Inc.
  13. 13. What If We Leverage Public Cloud Flexibility? 3 Eliminate Excess Capacity! Private CloudServer Utilization 2 Move ‘Peak’ Load to Public 1 Keep ‘Base’ Load in Private 13 Proprietary & Confidential. © 2011, Everest Global, Inc.
  14. 14. Public Cloud Options Unlock ExtraordinaryEnterprise Economics Average Enterprise Workload Cost* $ / GHz hrs • 45% potential efficiency gain • Hybrid economics more 100% disruptive than virtualization! 60-70%** 65% Peak Load - Public Cloud 25% Base Load - Private Cloud Dedicated Virtualized/ Hybrid Cloud Public Cloud Private Cloud* Based on average workload mix and profile. 15% of total peak workload hours shifted to public cloud ,on demand model. Does not include applicationmigration costs.. 14 Proprietary & Confidential. © 2011, Everest Global, Inc.
  15. 15. … and Economics Will Improve Further OverPR Time Amazon Driving Pricing Down…. Future Market Dynamics Will Be More Attractive • Public cloud capacity rapidly expanding • Existing cloud service providers highly profitable • IAAS / PAAS pricing likely to improve !!!Source:Cloudscaling, AWS, Everest Analysis15 Confidential 15 Proprietary & Confidential. © 2011, Everest Global, Inc.
  16. 16. Today’s Agenda What Are The Keys to Enterprise Cloud Economics? What Elements of the Cloud are Truly Enterprise Disruptive? When Should Enterprises Start the Journey? 16 Proprietary & Confidential. © 2011, Everest Global, Inc.
  17. 17. Unique Customer Requirements and ChallengesExist around Enterprise Hybrid Models Hybrid Migration Challenges Customer Needs / Requirements Enterprise-Class ‘Peak’ Environments Cloud services that fully address enterprise-class requirements – Network and network security – Security – Performance SLAs – Business Continuity – Compliance Workload Migration and Management Viable bursting options that maximize efficiency and minimize latency – Scale-up (adding capacity to a single VM) – Scale-out (adding VMs) Internal Skills and Expertise Organizational domain experience and expertise – Service providers, offerings and technologies – Cloud solution architecture – Service configuration, deployment and support Confidential 17 Proprietary & Confidential. © 2011, Everest Global, Inc.
  18. 18. Enterprises Don’t Need to Wait for ‘The Silver Bullet’ Continuum of Base / Peak Capabilities Near-Term Future Target Virtualized 6-11am Applications Workload balancing automation Manual Scheduled Tool-enabled Dynamic allocation bursting bursting bursting Re-platforming complexity & cost18 Confidential 18 Proprietary & Confidential. © 2011, Everest Global, Inc.
  19. 19. Factors Driving the Hybrid Opportunity Workload Characteristics  Overall workload fit - Frequency - Height - Duration Cost to Migrate  Application and platform Peak migration costs - App virtualization Base - App cloud re-platforming costs - Infrastructure sw / svc costs Hybrid Cloud Efficiencies Willingness to Migrate  Potential enterprise migration constraints - Security - Compliance - Latency / performance19 Confidential 19 Proprietary & Confidential. © 2011, Everest Global, Inc.
  20. 20. Assessing Potential Impact of Enterprise Cloud – Approach 1 Create Workload 2 Assess Cloud 3 Prioritize Workload Migration Inventory Viability Opportunities Analytics Workload Migration Matrix - Data mining Technical Criteria - Workload variability Public - Data warehouse Business Apps - Compute intensity - CRM - Memory intensity - Marketing - Bandwidth intensity Hybrid - ERP - SCM - HCM Collaboration Private - Web conferencing Attractiveness - Unified comms Business Criteria - VOIP - Data sensitivity Infrastructure - Business criticality • Prioritize workload opportunities - App streaming - Auditabilty - Business continuity /DR - Mobility / Access • Conduct ‘deep dive’ assessments on - Data archival high potential workloads - Data backup • Develop overall migration and transformation roadmap20 Confidential 20 Proprietary & Confidential. © 2011, Everest Global, Inc.
  21. 21. Hybrid Economics Example - eBay Situation Utilization Profile – Top 8 Workloads Fixed Cost • Global marketplace footprint (NA, Request for Data Europe, Asia) • Highly ‘spiky’ compute utilization • Top 8 workloads supported by 1,900 servers • ~80% of data center costs fixed Current Traffic text text text text text text text text • $80mm annual data center spend Timeline Hybrid Model Impact • Time-shifted workloads, consolidated servers, starting to burst to public cloud • Identified opportunities to reduce overall compute costs by 40% via hybrid models • Peak bursting would be more cost effective even if public cloud unit costs were 4x higher than internal unit costs! Source: Neil Sample, VP of Architecture, eBay Confidential21 21 Proprietary & Confidential. © 2011, Everest Global, Inc.
  22. 22. In Summary… Utilization - The Key to Enterprise Cloud Economics Hybrid – The Disruptive Driver of Enterprise Cloud Migration How Can Enterprises Capture the Opportunity– Get Started Now!!!22 Confidential 22 Proprietary & Confidential. © 2011, Everest Global, Inc.
  23. 23. Q&A Click the question mark (Q&A) button located on the floating tool bar in the bottom right of your screen – this will open the Q&A Panel Be sure to keep the default set to “send to All Panelist” Then, type your question in the rectangular field at the bottom of the Q&A box and click the send button to submit Related Content• Drop us an email at cloud@everestgrp.com to join our mailing list: − Upcoming Next Generation IT webinars and events − Consulting Practice updates − ERI Cloud Research announcements• Follow Everest’s Next Generation IT Practice : @everest_cloud : Gaining Altitude at (www.everestgrp.com) 23 Proprietary & Confidential. © 2011, Everest Global, Inc.
  24. 24. For More Information Attendees will receive an email with a link to download today’s webinar presentation. A recording of the webinar will be available within 24 hours on our website at www.everestgrp.com/category/webinars For more information on cloud infrastructure economics, please contact :  Scott Bils, scott.bils@everestgrp.com  Dale Stara, dale.stara@everestgrp.com  Cloud Team, cloud@everestgrp.com For background information on Everest Group, please visit:  www.everestgrp.com  www.everestresearchinstitute.com Thank you for attending today’s presentation 24 Proprietary & Confidential. © 2011, Everest Global, Inc.
  25. 25. Everest Group Leads Clients from Insight to ActionContact us for more information about our consulting, research, and industry resources. Dallas (Corporate Headquarters) Canada info@everestgrp.com canada@everestgrp.com info@everestresearchinstitute.com +1-416-865-2033 +1-214-451-3000 +1-214-451-3110New York India/Middle Eastinfo@everestgrp.com india@everestgrp.com+1-646-805-4000 +91-124-496-1000 +91-124-496-1100 UK Netherlands & Continental Europe unitedkingdom@everestgrp.com benelux@everestgrp.com +44-870-770-0270 +31-20-301-2138www.everestgrp.com | www.everestresearchinstitute.com | www.sherpasinblueshirts.com 25 Proprietary & Confidential. © 2011, Everest Global, Inc.
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