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Why the systemic risks in Enterprise Cloud Computing could cripple your business - What Every CFO Should Know About Hybrid Cloud
 

Why the systemic risks in Enterprise Cloud Computing could cripple your business - What Every CFO Should Know About Hybrid Cloud

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Organisations that have successfully implemented standalone cloud systems may feel that they have won the war against complex and expensive enterprise IT. That feeling may not last too long once ...

Organisations that have successfully implemented standalone cloud systems may feel that they have won the war against complex and expensive enterprise IT. That feeling may not last too long once these systems need to be integrated with other systems, cloud or otherwise. The minute you start integrating your cloud with these other systems, you have what is termed a Hybrid Cloud.

Your IT risks are now becoming systemic risks – a point not lost in the most recent KPMG 2012 Audit Institute Report which identified “IT Risk & Emerging Technologies” as the second highest concern for 2012

In this presentation, Rob Livingstone, suggests some practical approaches that CEOs, COOs and CFOs should be considering in the identification and mitigation of the pitfalls of Cloud computing in the enterprise.

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  • (Read them out) So lets get started – by the way if you have questions at any time please feel free to raise your hand.

Why the systemic risks in Enterprise Cloud Computing could cripple your business - What Every CFO Should Know About Hybrid Cloud Why the systemic risks in Enterprise Cloud Computing could cripple your business - What Every CFO Should Know About Hybrid Cloud Presentation Transcript

  • © All rights reserved. Rob Livingstone Advisory Pty Ltd. Unauthorized redistribution prohibited without prior approval.‘Navigating through the Cloud’ is a Trademark of Rob Livingstone Advisory Pty Ltd. Why the systemic risks in Enterprise Cloud Computing could cripple your business What Every CFO Should Know About Hybrid Cloud CFO Summit 24th October 2012 ROB LIVINGSTONE - PRINCIPAL, Rob Livingstone Advisory Pty Ltd, and - Fellow, University of Technology, Sydney, Australia navigatingthrougthecloud.com
  • Agenda What I will be covering1. Exploring the real definition of Cloud2. Scope of this presentation3. Systemic vs. Technical risks4. Hybrid Cloud is the reality5. Adding in mobility6. BYOD, or Bring your own Disaster?7. Hybrid Cloud + Mobility + BYOD  Systemic Risk?8. Standards? Which standards?9. Orchestrating the transition
  • 1. Exploring the real definition of Cloud The most quoted Definition of Cloud: “Cloud computing is a model for enabling convenient, on- demand network access to a shared pool of configurable computing resources (e.g. networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or cloud provider interaction”
  • 1. Exploring the real definition of Cloud The most sensible Definition of Cloud:“Forget your technical definition of the Cloud, askyour mom what the Cloud is….…And what your mother will tell you about the Cloudis that it means it’s not on my computer.”Dave Asprey – Global VP, Cloud Security, Trend Micro‘Navigating through the Cloud ‘ - Podcast Episode 23 rd May 2012
  • 1. Exploring the real definition of Cloud The 3 key ‘classic’ Ingredients of Cloud • You’re counting on SaaS vendor in order to provide all the multi-tenancy for your data. • You hope they’ve written their applications well, secure their databases, and so on …. • You’re sharing the database with everyone else. Adoption Greatest
  • 2. Scope of this presentation lo ud ci fic C R spe re? Y OU e futu a p to d in th th is m w an d oes oth no H ow es , b iv in itiat
  • 2. Scope of this presentation • Mission critical, non-commodity, enterprise systems • Multi-year investment in a cloud solution • Shifting existing enterprise capability to Cloud, (or integrating) • Mid to large enterprise • High security, privacy and confidentiality needs • High governance loads and compliance environments • Low risk appetite / high failure penalty environments
  • 3. Systemic vs. Technical Risk
  • 3. Systemic vs. Technical Risk Inherent Risk Relationship with Cloud Service Delivery and Deployment Models http://www.coso.org The Committee of Sponsoring Organizations of the lo ud fic C Treadway ci spe re? Commission (COSO) R OU e futu is a joint initiative of Y p to d in th five private sector a th is m w an organizations and is oes oth no dedicated to providing d H ow es , b thought leadership iv itiat through the in development of frameworks and guidance on enterprise risk management, internal control and fraud deterrence
  • 3. Systemic vs. Technical RiskSystemic Risks• Taking a systemic view of risk will give you a better perspective of the actual risk, rather that what you think the risk might be• Systemic risks are those with the greatest potential impact as they affect the entire system (ie: Organisation, government, country, world…) • Case in Point: How is that the finance industry, which is one of the more regulated, and invests heavily in risk identification, mitigation and transference could be the cause of the current global financial problems?• Systemic risk for the enterprise is the silent killer and is often the hardest to identify as only a few have a complete, transparent and objective overview of the overall enterprise in sufficient detail.• Mitigation through approaches such as Enterprise Risk Management (ERM), origins in fraud, organisational governance, insurance, etc
  • 3. Systemic vs. Technical Risk Technical (or functional) Risk • Identifying, categorising and ranking technical and functional risks is core to conventional IT risk assessment approaches: o Risk of a specific event = (Impact x Probability of that event occurring) + Risk Adjustment • Underpins conventional risk certification frameworks e.g. ISO 2700X • Certification does not necessarily equal security or effectiveness of a risk management model • Often focusing on the diverse range of technical risks, does not account for the interaction between risks. • Systemic risks are often more significant than the sum of the individual, technical risks • Technical risks are the predominant focus for traditional IT shops
  • 4. Hybrid Cloud is the reality The 4 flavours of cloud computing – basic attributes Public Private/ Hybrid Community Internal• No control • You control all • Combination of 2 • Multiple• No ownership • You may own or more models organisations• You own data • You define • Can be more share same private• Apps stay behind architecture complex cloud infrastructure • You determine • Need to manage your own security interfaces, position integration
  • 4. Hybrid Cloud is the reality Hybrid will be the dominant form in the enterprise “Within five years, it will be primarily deployed by enterprises working in a hybrid mode”. - Gartner Gartner "Predicts 2012: Cloud Computing Is Becoming a Reality” (Published: 8 December 2011 ID:G00226103)
  • 4. Hybrid Cloud is the reality…… …. As is the potential for complexity….! • Orchestrating versioning, change control and rollback • Life expectancy alignments • Business Continuity • Identity Management • Due diligence • Forensics /eDiscovery • BYOD • Mobility • Legislative / Jurisdictional c tion • Contractual complexity s t ra s ? o f ab risk ….. To name but a few ayer emic h er l syst a n ot t he d s t a reA d ha …w
  • 4. Hybrid Cloud is the reality…… Why understanding your Cloud Computing Reference Architecture is important in coming to grips with systemic risk
  • 4. Hybrid Cloud is the reality…… Is the Cloud Broker your IT Department in the Cloud?
  • 4. Hybrid Cloud is the reality…… "Cloud consumers should budget for additional integration costs which can range from 10% to 30% — and sometimes as high as 50% — of the total cost of cloud IT projects.“ Gartner Predicts 2012: Cloud Services Brokerage Will Bring New Benefits and Planning Challenges - Published: 22 November 2011 G00227370
  • 4. Hybrid Cloud is the reality Hybrid cloud can contribute to…. •Increased vulnerability due to its fragmented architecture and larger surface … •however if it is properly architected, risks largely eliminated by implementing measures such as… o Deploying effective policy based key management processes o Properly segmenting your public and private clouds o Encrypting each part of the hybrid Cloud with separate keys o … amongst other measures
  • 5. Adding in Mobility Mobile Devices •Are powerful cloud access devices •Extend the perimeter of your cloud •Disperse the perimeter to your cloud Have the potential to increase the vulnerability •The compromising of one of these mobile devices could be significant and compromise your entire cloud. •Use policy based key management regimes for your data.
  • 6. BYOD or Bring Your Own Disaster? BYOD stands for Bring Your Own Device, •Reflects the increasing demands of users and organisations of their own IT departments to be increasingly agile and responsive to their needs when it comes to iPads, tablets and other mobile devices.
  • 6. BYOD or Bring Your Own Disaster?BYOD requires management:•Deploy Mobile Device Management systems (Remote wipe,policy enforcement)•Introduce a non-porous Virtual Desktop environment - No datacan flow between the Cloud system and the mobile device itself•Containerisation: • Segregates corporate from personal data and applications • Enforces encryption and prevention of data leakage between containers • Application / device specific therefore can be a challenge to expand across the entire mobile environment for all applications.
  • 7 . Hybrid Cloud + Mobility + BYOD  Systemic Risk? Is the Systemic risk increased by the combination of: – Hybrid Cloud – Mobility Yes’ er is ‘ – BYOD? answ he at t t th ges sug ould Iw
  • 8. Standards? Which standards? Plethora of forums, industry groups and associations – Cloud Security Alliance – Cloud Standards Customer Council – Distributed Management Task Force (DMTF) – Cloud Management Working Group (CMWG) – The European Telecommunications Standards Institute (ETSI) – National Institute of Standards and Technology (NIST) – Open Grid Forum (OGF) – Object Management Group (OMG) – Open Cloud Consortium (OCC) – Organization for the Advancement of Structured Information Standards (OASIS) – Storage Networking Industry Association (SNIA) – The Open Group – Association for Retail Technology Standards (ARTS) – TM Forum’s Cloud Services Initiative Source: cloud-standards.org
  • 8. Standards? Which standards?• Compliance standards were originally designed for on-premise IT systems and infrastructure that were relatively static• Auditing institutions are averse to cutting edge technologies• Is your organisation (or parts thereof) standards/compliance driven? – Compliance to Standards vs. Unimpeded Innovation based on principle of caveat emptor?• Regulators not providing much specific and concrete guidance on Cloud, however many guidelines exist
  • 9. Orchestrating the Transition
  • 9. Orchestrating the Transition#1: Adopt an integrated approach to enterprise Cloud• Standardised, traditional methodologies within specific disciplines such as IT security, project management, audit, and information security, in and of themselves, can be self limiting.• Each discipline and/or technology is only really effective when applied actively coordinated with the other key moving parts of the organisation Harmonization of functionally specific methodologies and technologies unleashes value and eliminates waste Cloud solutions may or may not help!
  • 9. Orchestrating the Transition #2: Manage the conflicting messages • 24% of CEOs surveyed in the 2012 PWC CEO Survey expect ‘major change’. • The eighth annual KPMG 2012 Audit Institute Report identified “IT Risk and Emerging Technologies” as the second-highest concern for audit committees, which is unprecedented in the history of the report. • Cloud evangelists see cloud as imperative, others not • Rigorously test generic, enterprise Cloud policy statements in the context of your business unit, agency or department. Map and quantify the gaps  Develop an effective mechanism for interpreting these messages in the context of your organisation
  • 9. Orchestrating the Transition #3: Actively identify, embrace and managing shadow IT “Shadow IT can create risks of data loss, corruption or misuse, and risks of inefficient and disconnected processes and information” – Gartner*  Embrace shadow IT, and define what and what is not eligible to be considered enterprise IT  Develop, socialize and police appropriate policies on the selection of Cloud based services, no matter how innocuous for your key information assets.  Elevates systemic risk due to opacity *CIO New Years Resolutions, 2012 ID:G00227785)
  • 9. Orchestrating the Transition #4: Identify systemic risks across the organisation • Systemic risks can jeopardise all or parts of the organisation  Ensure your executives and key decision makers are aware of long term, systemic risks  Federate enterprise IT decisions vs. Managing the systemic risk  Understand the systemic risks inherent in long lead time IT projects where Cloud plays a critical part  Consider implementing key aspects of Enterprise Risk Management (ERM) as they relate to your IT projects and initiatives
  • 9. Orchestrating the Transition #5: Don’t gloss over complexity • Senior LOB managers with agency and/or functional responsibility over specific vertical silos of the organisation may underestimate the overall complexity of their own organisations as a whole. • From a functional perspective, specific methodologies and technologies exist to support specific activities, however integration can be the Achilles heel for single instance Cloud applications. • Cost your medium / long term Cloud strategy with rigour.  Don’t believe that simple IT solutions can paper over underlying business complexity. Test assumptions if critical.
  • ThankYou!ROB LIVINGSTONE- Fellow, University of Technology, Sydney- Principal, Rob Livingstone Advisory Pty Ltd W1: www.rob-livingstone.com W2: www.navigatingthroughthecloud.com E: rob@rob-livingstone.com P: +61 2 8005 1972 M: +61 419 632 673 F: +61 2 9879 5004 @rladvisory © All rights reserved. Rob Livingstone Advisory Pty Ltd ABN 41 146 643 165. Unauthorized redistribution prohibited without prior approval. ‘Navigating through the Cloud’ is a Trademark of Rob Livingstone Advisory Pty Ltd.