Business impact of cloud computing

www.pwc.com Business Impact of Cloud Computing David Lemphers Director, Cloud Computing @ PwC e: david.lemphers@us.pwc.com t: http://twitter.com/davidlem

Sorry In Advance! PwC 3

What’s Going On? PwC 4

Customer’s Want On-Demand Services Cost •  Lower upfront costs and start-up capital makes launching new services easier and less risky Choice •  Consuming, composing and churning services is easier in the on- demand world Agility •  Subscribing to and consuming services as soon as required assists organizations adapt to rapidly changing market/customer requirements PwC 5

BUT: Traditional Business Is Not Currently Optimized Build Sell Run Provider Customer PwC 6

Becoming On-Demand Requires Transformation PwC 7

And Great Tech! Provision Manage PwC 8

So Where Do We Start? PwC 9

At a High Level Business •  Build -> Sell -> Deliver -> Support Service •  Provision -> Run -> Manage -> Deprovision Infrastructure •  Plan -> Procure -> Deploy -> Commission -> Maintain PwC 10

Step 1. Costs Start-Up •  Facilities (Capital) •  Infrastructure (Hardware, Software) •  Business Support (Legal, Consulting, etc.) Ongoing COGS •  Variable •  Utilities (Power, water, network) •  Sustained Engineering •  Fixed •  Facilities (Operational) PwC 11

Cost of Goods Sold (COGS) •  Understanding and managing COGS is critical to a successful on- demand business •  Consumption based pricing translates directly to variable on-going costs •  What do you do with fixed/start-up costs? •  Perhaps a blended model? (Subscription + Consumption) PwC 12

Step 2. Business Model •  What are you going to be selling? •  Compute •  Storage •  Value-Add Services •  How will you charge customers? •  Subscription Plan •  Consumption Based Pricing •  Blended Model •  What are your “promises”? •  Service Level •  Quality of Service •  Compliance PwC 13

Relationship between Costs and Revenue •  Ensure your costs are closely aligned to revenue •  Revenue Recognition (Upfront Spend versus Trailing Revenue) •  Managing variable costs is easy •  You just pass these directly onto the customer •  Managing start-up/fixed costs is harder •  Why? •  Because it’s hard to predict your total customer base up-front when preparing your rate card •  Front-loading fixed costs can make your initial price point too high •  Back-loading fixed costs can result in aggressive losses early if you’re wildly successful at the start •  Churning your rate card can severely impact customer satisfaction, retention and adoption PwC 14

Step 3. Integrate Business Model into Technology Platform Sign-Up •  Pricing model and rate card •  Discounts and incentives Provisioning •  COGS Metering •  Compliance Billing •  Revenue Customer Support •  SLA PwC 15

Major Areas of Business Transformation PwC 16

Billing •  Billing is the most important part of an on-demand environment •  It is also the most frequent and critical interface to the customer •  Bill payment •  Usage Review •  Key focus areas •  Accuracy: This requires a massive investment of engineering effort early in the process •  Pricing: Applying SLA credits, discounts, peak/off-peak pricing, is non-trivial •  Compliance: With Federal, State and Local Tax regulations PwC 17

Integration Supply Chain •  Capacity planning and management Sales and Order Fulfillment •  Provisioning, Deprovisioning Operations and Support •  SLA, QoS (Dashboards, etc) CRM •  Customer Satisfaction •  Purchasing Behavior PwC 18

Capacity Planning •  One of the biggest challenges to running an on-demand cloud service •  Balancing under utilization and resource exhaustion is tricky •  Key focus areas •  Deterministic factors •  Current resources (# of servers, total ingress/egress bandwidth) •  Non-deterministic factors •  System load •  Impact of SLA •  When factoring deterministic and non-deterministic factors into your capacity planning, always remember to account for SLA targets PwC 19

Compliance Tax •  Sales Tax •  Income Tax •  Varies greatly from state to state, and even at the municipality level Legal •  Horizontal Standards (SAS 70, ISO 27001) •  Vertical Standards (HIPAA, FISMA) •  Location Concerns (Patriot Act and Non-US Customers) PwC 20

And the list goes on… Business Model Support and Legal Pricing Model Operations Technology Capacity Planning Policies and Billing Governance Facilities Management Application Migration Cross-Group and Compatibility Procurement and Collaboration Asset Management Hybrid Environments Change Management Business Process (On-premise + Cloud) Integration People and Change Finance Maintenance and Warranty Risk Analysis Compliance Security Assessment Tax BCP/DRP PwC 21

Summary •  Cloud Computing and On-Demand Services are exciting and customers want it •  Identify key business areas to transform and integrate with •  Focus on the go to market blockers first •  Develop skills and capabilities around new core competencies like billing, support and operations, compliance PwC 22

Let’s Talk! Thoughts? Questions? Comments? Insights? PwC 23

Business impact of cloud computing

by Open Stack on Nov 10, 2010

Accessibility

Categories

Upload Details

Usage Rights

Statistics

Business impact of cloud computing Presentation Transcript