Cloud computing has many benefits, but the key advantage may be its ability to address unpredictable application demand on the data center. Cloud is especially well-suited to the following four scenarios:Managing applications with sharp, unpredictable usage spikesHandling frequent, repeatable IT interactionsControlling IT assets centrally rather than by department or applicationIncreasing business agility to address new products, customers, and selling situationsCloud provides compelling economics by fueling top-line growth and improving the bottom line.Top-line growth comes from a host of enhancements:Improved business agility, reach, and scalability, including faster provisioning (from 90 days to minutes, according to Savvis—see chart on this slide) and 10X audience scaling.New services innovation, which helps transform IT from a cost center to a business enabler and allows many organizations to level the competitive playing field (e.g., Amazon, Netflix, Intuit, Apple).Competitive differentiation through adoption of new technologies: mobility, video, sensors, business intelligence, and social computing.Improved business resiliency through better data center and application uptime.Bottom-line impact is driven by the following factors:The ability to pay only for what you consume, when you need it, which increases transparency and supports more direct revenue-to-cost operating models.Improved employee productivity resulting from a consistent user experience and access to state-of-the-art applications (e.g., knowledge workers save up to four hours per week through use of SaaS collaboration applications).IT-specific benefits, including TCO reductions of greater than 50 percent (see chart on this slide); more efficient resource utilization (at Cisco, improvement from 9 percent to 37 percent, with a goal of 50 percent); and an 8 percent reduction in IT TCO for collaboration applications (from 15 percent to 23 percent, according to Cisco CSG).Note: Regarding TCO reduction, the numbers on this slide are based on the following scenario: (1) Traditional platforms without virtualization have a quarterly unit TCO of >$3,500 / quarter; (2) real-world execution of virtualization without changing the hardware or the design leads to a 37 percent reduction in average unit TCO; adoption of unified computing and automation leads to an additional 27 percent reduction in average unit TCO.
There are several reasons for cloud computing’s burgeoning adoption across both enterprises and small and medium-sized businesses (SMBs).First, by fostering business agility and delivering compelling economics, “the world of many clouds” provides “certainty in uncertain times.” Cloud computing enables enterprises to conserve cash by encouraging a transition from CapEx to OpEx. In addition, because a volatile economy places a premium on agility, demand is growing for new IT consumption models such as cloud computing.In addition, clouds enable new business and technology capabilities that are attractive to the emerging digital workforce and fit today’s changing workplace. This new workforce requires a consistent experience across multiple environments: mobile, social, visual, and virtual. According to Cisco IBSG, 70 percent of mobile users expect to consume cloud-delivered services in the next one to two years.Finally, given cloud computing’s escalating adoption, it’s essential for businesses to act now to avoid losing ground to their competitors. According to a recent Cisco IBSG study, 50 percent of enterprises began cloud migrations in 2011, and at least 12 percent of all enterprise workloads will run on clouds (public, private, hybrid, community) globally by 2013.− Unhindered by legacy infrastructure, SMBs are using the public cloud to level the playing field against larger competitors. In fact, according to a recent Cisco IBSG survey, half of SMBs will spend more than one-third of their IT budgets on cloud/managed services by 2013.Aiding cloud’s adoption is the understanding that it’s a proven model with multiple options (public, private, hybrid, community) and a choice or providers.
A workload is the amount of processing a computer or a server undertakes to execute an application and support a number of users interacting with the application. As computing is increasingly abstracted from the end user device to remotely located server(s) along with migration of workloads from premise-based networks to cloud networks, they create new network requirements in both traditional and cloud data center environments. Traditionally, one server carried one workload. However, with increasing server computing capacity, there has been increasing virtualization—multiple workloads per physical server. Cloud economics includes server cost, resiliency, scalability and product lifespan (et al.). These considerations often lead to organizations to move from traditional data centers to cloud data centers. This enables the migration of workloads across servers—both inside the data center and across data centers (even in a different geographic area). Often times an end user application could be supported by several workloads distributed across servers – this would lead to generation of multiple streams of traffic within and between data centers in addition to the end user. Here’s a major milestone: 2014 is the first year where the balance of Workloads shifts towards cloud for the first time – 51% of total workloads will be in cloud environment vs. 49% in the traditional IT space.Overall Workload growth from 2010 – 2015 – 2.7 timesCloud Workload growth from 2010 – 2015 – more than 7 times In 2010, 79% of business workloads are processed by traditional IT; 21% are processed in the cloud. By 2015, 43% of business workloads will be processed by traditional IT; 57% will be processed in the cloud. Rate of virtualization:In the traditional IT space, we see that the virtualization of servers ranges in 6-8% of servers during the forecast period For cloud, the virtualization ratio in 2010 is 40% ramping up to 54% in 2015 – includes grid computing public cloud environments such as Google, etc. which have low to no virtualization. Average Workloads per server:Workloads per installed traditional server will increase from 1.4 in 2010 to 2.0 in 2015.Workload per installed cloud server will increase from 3.5 in 2010 to 7.8 in 2015 CAGR 2010-2015Total Cloud CAGR = 48% over forecast periodEnterprise Non-Cloud CAGR = 8% over forecast period
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