Decoding Cloud for the Non-IT Executive Shared Services & Outsourcing Exchange

1. © 2015 Information Services Group, Inc. All Rights Reserved.
Proprietary and Confidential. No part of this document may be reproduced in any form or by any electronic or mechanical means,
including information storage and retrieval devices or systems, without prior written permission from Information Services Group, Inc.
Stanton Jones, ISG
10 June 2015
Shared Services & Outsourcing Exchange
Decoding Cloud for the Non-IT Executive

2. © 2015 Information Services Group, Inc. All Rights Reserved 2
Democracy is the worst form of government, except for all
those other forms that have been tried from time to time.
-- Winston Churchill

3. © 2015 Information Services Group, Inc. All Rights Reserved 3
The democratization of enterprise technology
Started in 2006, AWS
S3 now stores over 2
trillion objects and is
growing over 100%
year-over-year.
The democratization of enterprise-class technology, via cloud, is fundamentally
changing how we think about access to massive-scale technology on scale simply
unimaginable just a decade ago.
200 TB of the 1000
Genomes Project data
is available for free on
S3; researchers using
EC2 to analyze.
Started in 2007, EC2
grows from almost 0
server to 11K racks of
servers, adding roughly
2,200 racks per year
Each innovation continues to build upon the previous innovation.
Source: https://huanliu.wordpress.com/

4. © 2015 Information Services Group, Inc. All Rights Reserved 4
Democratization will accelerate as all sectors try to emulate
The traditional outsourcing market remains robust, however, as nearly all sectors
transform to “as-a-service”, enabled by cloud, democratization will accelerate.
Source: ISG Research
As-a-Service
Everything is easy to buy,
but is it what I need?
Computer
Equipment
Software
Public
Cloud$140
$110
Public & Telco Commercial
IT Services
Global
Outsourcing
B
B
Engineering
Services

5. © 2015 Information Services Group, Inc. All Rights Reserved 5
The sourcing industry is feeling the effect of cloud democratization
What was once a monolithic industry with few suppliers has exploded into a multi-
sourced ecosystem with hundreds of providers.
Internal Shared Services / Captives
Function
Function
Function
Function
Function
All Towers
OR
 Infrastructure
 ADM
 BPO Function(s)
Tower
Tower
Tower
Tower
Importance
of Labor Arbitrage
Importance
of Software, Platforms,
Labor Automation, & Scalability
Function
Social Media
Collaboration
Mobility BYOD
Analytics & Big Data
Cloud
Computing & Storage
Service Integration
Strategic & Selective Sourcing Multi-Sourcing Confederation
MARKET 5 – 10 YEARS AGO LAST 5 YEARS NEXT 3 TO 5 YEARS

6. © 2015 Information Services Group, Inc. All Rights Reserved 6
Apps and workloads are nexus of democratization trend
Applications are now center-stage; sourcing decisions will increasingly be focused
on finding the best delivery model for each application, based on specific criteria:
Rationalization and Filtering Process
Tactical Implementation
of Delivery Model
Application Portfolio
Current State
4 Regulatory Constrains on Application and Data
1 Business Criticality, Cost of Migration and Maintenance
3 Security and Data Privacy Requirements
Traditional
Data Center
IaaS: Virtual
Private
IaaS: Public PaaS
2 Technical Suitability: Workload Attributes, Service Levels Required
Systematic,
repeatable
processes needed
to continually
evaluate an
application profile.
SaaS

7. © 2015 Information Services Group, Inc. All Rights Reserved 7
This creates a delivery model challenge
Cloud delivery models vary greatly across technology, operations, commercial and
contractual considerations; sharing (multi-tenancy) disrupts traditional models.
PaaS
SaaS
IaaS: Public
Traditional Data Center
Iaas: Virtual Private
Iaas: Private
HighLevelofStandardization(technology,SLAs,terms)
Low HighBusiness Ownership
Sharing Model
Hosting Location
Accounting Treatment
Cloud Characteristics
Management/ITIL Services
Multi-tenant
Opex (multi-year baseline commitment)
External
Self-service
Multi-tenant
Opex (no commitment)
External
Self-service
Multi-tenant or Dedicated
Opex (no commitment)
External
Self-service (ITIL-based management services available from SI ecosystem)
Multi-tenant or Dedicated
Opex (minimum commitment often required)
External
Self-service or ITIL-based managed services depending on vendor
Dedicated
Opex or Capex (for Opex, minimum commitment required)
Internal
Managed Services
Dedicated
Capex
Internal
Internally supported
Systems of Record (ERP,
Transaction Processing)
Systems of Engagement
(CRM, Mobile, Analytics)

8. © 2015 Information Services Group, Inc. All Rights Reserved 8
Standard operating models are also problematic
While multi-tenancy can have massive strategic benefits, the sharing of software
and hardware disrupts traditional processes around security & contracting.
Versus
 Accept standard operating model & terms

9. © 2015 Information Services Group, Inc. All Rights Reserved 9
As well as a supplier evaluation and selection challenge
“Moving to the cloud” has become standard fare in our industry; however, no such
thing exists. “Moving to a cloud” is a better term to describe the shift.
‘The’ Cloud ‘A’ Cloud
Each provider has a unique API,
often replacing standard ITIL
as the primary interface.

10. © 2015 Information Services Group, Inc. All Rights Reserved 10
Cloud is not always cheaper, but is almost always faster
SaaS and IaaS should not always be considered levers to reduce cost; however, they
should almost always be considered ways to move faster.
Public cloud software
►Avoid capex, however, pre-payment often req’d
►Business case based on upgrade avoidance
►Paying premium for premium features
Public cloud infrastructure
►Highly dependent on usage & features
►Generally won’t know cost until running
►High usage often unfavorable to internal IT

11. © 2015 Information Services Group, Inc. All Rights Reserved 11
Which drives an entirely new sourcing process
Emerging IaaS Sourcing Model
Traditional IT Sourcing Model
Assess and design
candidate
workloads and
service tiers
Engage market
with solution-
oriented RFS
Evaluate and
compare
vendor
responses
Negotiate
selected terms
Pilot selected
workloads
Define
Requirements,
Service Levels,
Categorize Assets
Develop
Financial Base
Case
Engage Market
with
prescriptive
RFP
Evaluate and
compare
vendor
responses
Negotiate,
Contract,
Transition
Sourcing for shared, multi-tenant platforms is fundamentally different than traditional ITO.
SaaS and IaaS also differ significantly.
Emerging SaaS Sourcing Model
Determine SaaS
readiness for
specific application
Engage market
with solution-
oriented RFS
Evaluate and
compare
vendor
responses
Negotiate
price,
baselines &
selected terms
Prepay portion
of subscription
TCV; implement
Typical focus: reduce run cost via labor arbitrage.
Typical focus: get code into production faster, reduce capital for variable workloads.
Typical focus: increase customer, employee, partner engagement; analytics; mobile.
Accept standard operating model & terms




12. © 2015 Information Services Group, Inc. All Rights Reserved 12
The way forward: Cloud democracy embedded with the rule of law
Cloud broker platforms and marketplaces may be the answer as they enforce “rule
of law” versus “rule by law” because IT is subjected to same competitive pressures
of external suppliers.
Change Change Change
Assess App
for Cloud
Compare
Different
Clouds
Collaboratively
Design Solution
Add Managed
Services
Order from IT
Approved
Marketplace
View
Estimated Bill
of IT
Get approval
through
Workflow
Track Usage
and Cost
Orchestrate &
Provision
Living Order
Management
Backup
Security
Monitor
Or
Jump to
Marketplace
Solution
$$$$$
$$$$$
$$$$$
$$$$$
Technical
Financial
Legal
Readiness
Benefit
$
SLA
Cloud broker: can be
internal IT or managed
services provider

13. © 2015 Information Services Group, Inc. All Rights Reserved 13
Key Takeaways
Cloud creates opportunities to move much faster than traditional on-premises or
outsourced options.
Cloud is not always cheaper, but can significantly reduce future capital
expenditures.
Multi-tenancy creates significant strategic advantages, but also significantly
disrupts the traditional sourcing process.
Cloud shifts significant levels of responsibility back to the buyer; take this into
account when developing business case and target operating model.
A democratic approach to cloud, where IT competes like an external provider, via
a brokerage-based approach, is where ISG believes the market is headed.

14. © 2015 Information Services Group, Inc. All Rights Reserved 14
Let’s Connect
Stanton Jones
Director & Emerging Technology Analyst
+1 281 795 2636
stanton.jones@isg-one.com
@stantonmjones
linkedin.com/in/stantonjones

15. www.isg-one.com
Information Services Group is a leading technology insights, market intelligence and advisory services company, serving more than 500 clients around the
world to help them achieve operational excellence. ISG supports private and public sector organizations to transform and optimize their operational
environments through research, benchmarking, consulting and managed services, with a focus on information technology, business process transformation,
program management services and enterprise resource planning. Clients look to ISG for unique insights and innovative solutions for leveraging technology,
the deepest data source in the industry, and more than five decades of experience of global leadership in information and advisory services. Based in
Stamford, Conn., the company has more than 800 employees and operates in 21 countries.
knowledge powering results®