Digital Fuel & Forrester Cloud Computing IT Financial Management

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Digital Fuel & Forrester Cloud Computing IT Financial Management

  1. 1. IT Cloud Financial Management March 2010 Yisrael Dancziger Thomas Mendel CEO & President Vice President & Digital Fuel Research Director Forrester
  2. 2. Business Service Management And IT Financial Management In The Cloud Dr. Thomas Mendel, Ph.D. Vice President & Research Director Forrester Research March 2010
  3. 3. Agenda • Understanding the cloud • It’s time for IT financial management 3 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  4. 4. 4 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  5. 5. 5 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  6. 6. Cloud Clarity 6 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  7. 7. What IS cloud computing? Give me three steps 7 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  8. 8. Understanding vendors cloud portfolios Cloud computing is: A standardized IT capability (services, software, or infrastructure) delivered via Internet technologies in a pay-per-use, self-service way.* Source: Wipro 8 Entire contents © 2010 Forrester Research, Inc. All rights reserved. *September 9, 2009, “Best Practices: Infrastructure-As-A-Service (IaaS)” Forrester report
  9. 9. Step1: What comes as a service? Cloud service management I M A I P N I P N R F D P F O R D L O C A L I R E S E C M S T W A A S R A T T E U R I I S C E O O T N N U S R E Typical “cloud computing resources” New resources 9 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  10. 10. Step2: What is the level of sharing? Level of sharing Cloud service management 10 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  11. 11. Forrester’s full cloud taxonomy Level of sharing Public IaaS PaaS SaaS BPaaS PURE cloud CLOUD @ global MARKET provider Virtual private Dynamic Integration- Dynamic Dynamic cloud infrastructure as-a-service apps BPO @ dedicated provider services services services EXTENDED CLOUD Infrastructure Middleware Apps BP MARKET Private cloud virtualization virtualization virtualization virtualization @ in-house tools tools tools tools data center Infrastructure Middleware Applications Business Business processes value 11 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  12. 12. Forrester’s cloud taxonomy and example vendors Level of sharing Public IaaS PaaS SaaS BPaaS PURE cloud Amazon EC2 Force.com Salesforce CRM On Demand CLOUD @ global Rackspace Rackspace (soon) Oracle- Process as a S. provider Google AppEngine CRM On Demand Meetingexpectations MARKET Cordys Google Apps+Voice PayPal Virtual private Dynamic Integration- Dynamic Dynamic cloud infrastructure as-a-service apps BPO @ dedicated services services services provider Cable&Wireless SIS, T-Systems Boomi.com Hubspan Oracle E-Business Suite On Demand On demand portion of BPO, e.g., Wipro EXTENDED CLOUD Private Infrastructure Middleware Apps BP MARKET cloud virtualization virtualization virtualization virtualization @ in-house tools tools tools tools Oracle VM and Oracle Fusion Middlew. Fujitsu FlexFramefor SAP Tools used in Shared data center Assembly Builder* vSphere-Spring FluidOps.com VMware Service Center Cisco ITMS Vendors BPM IBM Cloudburst Infrastructure Middleware Applications Business Business processes value 12 Entire contents © 2010 Forrester Research, Inc. All rights reserved. *Oracle Assembly Builder is part of the ongoing Oracle Fusion Middleware 11g roll-out
  13. 13. Forrester’s cloud taxonomy mapping to vendors’ portfolios Level of sharing Public IaaS PaaS SaaS BPaaS PURE cloud CLOUD @ global provider $460m $120m $9.0b $100m MARKET Virtual Dynamic Integration- Dynamic Dynamic private infrastructure as-a-service apps BPO cloud @ dedicated services services services provider $6b $35m $4.8b $9b EXTENDED CLOUD Infrastructure Middleware Apps BP MARKET Private virtualization virtualization virtualization virtualization cloud @ in-house tools tools tools tools data center $2.1b $150m $3.3b $2.1b Infrastructure Middleware Applications Business Business processes value 13 Entire contents © 2010 Forrester Research, Inc. All rights reserved. *Emerging service provider, rarely existing today.
  14. 14. End user perspective of offerings Level of sharing Public IaaS PaaS SaaS BPaaS Human PURE CLOUD cloud Centric @ global MARKET provider IT Service Business Service Virtual private (pay per use) Dynamic Integration- Dynamic Dynamic Markets cloud Infrastructur as-a- Apps BPO (pay per @ dedicated e Service Services Services use) EXTENDED provider Services CLOUD InfrastructureMiddleware Apps BP In-house MARKET Private cloud IT Tools VirtualizationVirtualizationVirtualization Virtualizatio process @ in-house Tools (licensed) Tools Tools n chargeing data center Tools Infrastructure Middleware Applications Business Business processes value 14 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  15. 15. Service cost and performance aggregation becomes a core skill Service provider Client company ecosystem LoB LoB LoB SP 1 SP 2 SP 3 Internal service aggregation External service aggregation IT organization SP 4 SP 5 SP 6 • Cost and performance management across end-to-end service delivery • Coordinated across all stakeholders and constituencies, internal and external • Requirements capture and new project initiation • Balanced responsibility between in-house IT and external service providers 15 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  16. 16. Defining IT financial management Forrester defines IT financial management as: The discipline of planning, budgeting, monitoring, and controlling the use of a firm's total IT budget (operations/maintenance and new projects/investments). IT financial management software provides an application that allows companies to support and automate the process of IT financial management. This is done by applying general cost accounting principles to IT. 16 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  17. 17. IT financial management – Why now? IT users and IT departments are experiencing an accelerating need for IT financial management because: • Cloud & virtualization are driving additional IT adoption at a rapid rate • Business units are demanding IT cost visibility and predictability • Profit pressures demand businesses to manage IT cost vs. business performance tradeoffs and alternatives like never before • IT process maturity (e.g. ITIL) has moved many IT organizations from a chaotic to a stable state so they are now better prepared to add IT financial discipline • Data availability and accuracy (through discovery) has improved greatly 17 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  18. 18. Key capabilities of IT financial management software 18 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  19. 19. Emerging trends: IT financial management software • The IT financial management software market will exceed $500 million annually in 2012. 19 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  20. 20. IT financial management adoption s-curve Understand IT costs Manage IT costs Manage IT demand Full Ongoing corporate Advanced Basic product integration cost visibility chargeback definitions/ Service Basic catalogs integration Maturity Basic Of IT chargeback Financial Change Process Management models User IT budget behaviour Implementations review Service Activity models Service based Based Ad-hoc BU Costing (ABC) cost visibility costing projects Cost Cost Price models benchmarks benchmarks 20 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  21. 21. IT financial management – Best practices • Create a governance structure and revamp your organization • Deploy service definitions/service catalogs • Develop cost and service models • Optimize delivery through right sourcing • Invoice customers to rationalize behaviors 21 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  22. 22. Thank you Dr. Thomas Mendel, Ph.D. tmendel@forrester.com http://blogs.forrester.com/vendor_strategy/ www.forrester.com 22 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
  23. 23. IT Cloud Financial Management March 2010 Yisrael Dancziger CEO & President Digital Fuel
  24. 24. Managing the Cost of Cloud Services
  25. 25. Where to Start: Build A Cost Model Application Cloud Infrastructure Cloud Process Cloud
  26. 26. Cost Model Enables You to know: • Total Service Cost and Usage • Usage based cost allocation • Underlying Cost Drivers cost • Unit Cost • Calculate key metrics: – Cost per headcount – Cost per revenue – Capex vs Opex – Many others
  27. 27. IT Cloud Cost Model Managing the Cost of Cloud Services What can you do with this knowledge?
  28. 28. Proactive Cloud Cost Control • Cost trends at all levels • Track Actual vs Budget • Automatic observations • Root cause • What if planning
  29. 29. Business Unit Cost Visibility and Predictability • Detailed periodic invoices – Cost and Usage • Forecast • Reforecast • Compare to alternatives • What if analysis
  30. 30. Cost Value Optimization • Mix and match, Compare between: – Vendor and internal options – Different service offerings – Delivery models – Cost models • Meter usage, Identify: – Virtualization candidates – Consolidation candidates – Standardization options – Defer upgrade potentials – End-of-life potentials
  31. 31. Usage based IT Cost Allocation • Allocations must be: – Automated – Consistent and ongoing – Justifiable – Audit trail – Standard • Pass in “flying colors”: – Tax audits – Stock market reporting – Regulator audits
  32. 32. Accurately Plan and Budget – Based on Facts • Actual Historically based unit cost: – For every IT service and cost driver • Actual Historically based usage: – Accurate demand forecasting • Demand & driver information – Sophisticated calculator – Applies the historically calculated costs, drivers, and usage – Automatically produce a proposed IT budget
  33. 33. Summary IT Cost management enables realization of cloud benefits!
  34. 34. Thank you! Questions? Please enter your questions in the Q&A panel located in the lower right section of your screen Presented by: Thomas Mendel Yisrael Dancziger Forrester Digital Fuel tmendel@forrester.com ydancziger@digitalfuel.com

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