The document discusses how to determine which cloud is needed and how to transition workloads to the cloud. It begins by explaining how server virtualization led to cloud computing and the need to quantify the costs and benefits of public versus private cloud. The presentation then walks through steps to calculate total cost of ownership, adjust for risk factors, and account for potential rewards to determine the most economical cloud option. It emphasizes starting with easy workloads and using tools to migrate and manage hybrid cloud environments. A case study of Harley-Davidson Dealer Systems considering a cloud transition is also presented.

1. The Economics of vCloud: Which Cloud Do I Need
and How Do I Get There?
Chris Colotti, VMware
Jenny Fong, VMware
Mike Kohn, Harley-Davidson Dealer Systems
PHC5732
#PHC5732

2. 2
Agenda
 Which Cloud Do I Need?
Jenny Fong, Senior Product Marketing Manager
 How to Get to Cloud
Chris Colotti, Senior Technical Marketing Manager
 Customer Case Study
Mike Kohn, Harley-Davidson Dealer Systems
 Q&A

3. 3
Server Virtualization Started a Transformation Journey
*Source: IDC 2012 Virtualization and the Cloud MCS
CapEx Savings
Through
Consolidation
OpEx Saving
Through
Automation
Game Change
Through
IT as a Service
IT Production Business Production IT as a Service
Cloud
Virtualization
Abstract. Pool. Automate. Empower.
2008
47%
New Apps*
2012
71%
New Apps*
Goal
99+%

4. 4
The math for virtualization was clear…
8 servers 1 server
Server consolidation was an easy sell…
(relatively)

5. 5
Server Virtualization ROI / TCO Calculator
Example) 100 physical servers  9 virtualized servers
Hardware Savings = $168,649
Rack/Power/Cooling Savings = $334,600
Labor Savings = $334,494
Downtime Savings = $487,893
TCO = CapEx + OpEx + Downtime Costs

6. 6
The math for cloud seems…well…cloudier…
Cloud:
• Time savings?
• Easier to manage?
• Agility?
• ? ? ? ? ?
1 virtualized server

7. 7
It depends on the kind of cloud you are going to…
VMware vCloud
Hybrid Service
On-Premise Off-Premise
VMware vCloud Suite
Existing & New Apps
Seamless Networking
Common management
One Support call

8. 8
NEW! VMware vCloud Hybrid Service General Availability
Santa Clara, CA Las Vegas, NV Sterling, VA
Just Announced!
• vCloud Hybrid
Service General
Availability
• Opening of 2 more
data centers
• New features and
capabilities

9. 9
Cloud-Adjusted TCO: New Metric for Defining Cloud
Economics
 Going to a public cloud service might give you:
• Improved agility
• Geographic scale
• Reduced Time-to-Market
• Secondary data center
 But it also means:
• Understanding the risks involved
• Loss of control
 Key is finding quantifiable criteria that impact the risk and rewards
of cloud computing

10. 10
Step 1: Start with Total Cost of Ownership
CapEx
Server Hardware $52,992 $0
Storage Hardware & Software $1,020,000 $0
Networking & Security Hardware $44,444 $0
VMware Software + SnS $445,327 $0
OpEx
Administration $540,000 $316,800
Power & Cooling $47,469 $0
Rack Space & Office Space $42,000 $0
Subscription Costs $0 $1,770,003
Downtime
Downtime Costs $360,000 $379,513
TOTAL COST OF OWNERSHIP $2,552,233 $2,466,316
PUBLICPRIVATE
TCO = CapEx + OpEx + Downtime Costs
Two Retail Examples:
1) Deploying a new
web app to expand
market segment
2) Deploying a new
ERP inventory app
to support market
expansion

11. 11
Consider Economic Impact of Risk Criteria
Availability
• How does downtime affect employee &
customer productivity?
• How does downtime affect revenue?
• Are there any legal/regulatory fines
associated with downtime?
Governance & Compliance
• What standards do you have to meet and
can those be met?
• What happens if you are not compliant?
• Are there geographical restrictions?
Security & Privacy
• How does a security breach affect
customer productivity?
• How does a security breach affect
revenue?
• What is the impact on brand/goodwill?
Business Relationship Management
• What happens if you need to exit?
• What is the longevity of the
contract/solution?
• What happens if the service terms or
software changes?

12. 12
2. Adjust for Risk Criteria (Risk Adds to TCO)
1) Deploying a new
web-based product
selector app to
expand market
segment
1) Deploying a new
ERP inventory app
to support market
expansion
Impact
Magnitude
Likelihood of
Occurrence On-
Premise
Likelihood of
Occurrence Off-
Premise
Availability Medium Medium Low
Governance &
Compliance
Low Low Medium
Security &
Privacy
Low Low Medium
Business
Relationship
Management
Medium Low Medium
Impact
Magnitude
Likelihood of
Occurrence On-
Premise
Likelihood of
Occurrence Off-
Premise
Availability Medium Medium Low
Governance &
Compliance
High Low Medium
Security &
Privacy
High Low Medium
Business
Relationship
Management
High Low Medium
+ + +
+ + +

13. 13
Reward Criteria
Accessibility
•What if you could access anywhere, any time,
any device?
•What if you could have multi-geographic site
redundancy?
Business Responsiveness
•What if you could deploy IaaS, PaaS, and SaaS
rapidly?
•What if you could reduce Time-to-Market (TTM)
for new applications?
Scalability
•What if you could scale capacity on demand?
•What is the value of offloading Test/Dev to less
critical tiers of infrastructure?
•What is the value of BCDR plans?
Cost & Resource Accounting
•Am I CapEx or OpEx constrained?
•Do I have the personnel to support this?
•Do I have the real estate and budget to support
this?

14. 14
3. Calculate Upside Opportunity from Reward Criteria
1) Deploying a new
web-based product
selector app to
expand market
segment
1) Deploying a new
ERP inventory app
to support market
expansion
Impact
Magnitude
Likelihood of
Occurrence On-
Premise
Likelihood of
Occurrence Off-
Premise
Accessibility High Low High
Business
Responsiveness
High Low High
Scalability High Low High
Cost & Resource
Accounting
Medium Low High
Impact
Magnitude
Likelihood of
Occurrence On-
Premise
Likelihood of
Occurrence Off-
Premise
Accessibility None Low High
Business
Responsiveness
Low Low High
Scalability None Low High
Cost & Resource
Accounting
Medium Low High
- + +
+ +

15. 15
RESULT: Cloud-Adjusted TCO with Upside Opportunity
1) Deploying a new
web-based app to
expand market
segment
1) Deploying a new
ERP inventory app
to support market
expansion
TCO = $2,558,533
Upside = ($6,300)
TCO = $1,946,316
Upside = $606,000
TCO = $2,394,233
Upside = $158,000
TCO = $2,437,616
Upside = $114,700
Private Public
Private Public

16. 16
Introducing the Cloud Compass Tool

17. 17
These Criteria Will Change Over Time….
 Consider:
• An application moving from Test/Dev/QA into Production
• An application maturing over time
• A company changes or expands their business model
 VMware provides both cloud solutions to address different needs
under a common management framework

18. 18
How Do I Get There?
Some things to think about

19. 19
Let’s Go Back in Time

20. 20
History Is Always Bound To Repeat Itself
 Think Back….
• What did you virtualize first?
• Test/Dev
• File/Print
• Application Servers
• Basic Infrastructure
• Why those workloads?
• Easy?
• “Low Hanging Fruit”?
• Someone told you to?
• What were the business reasons?
• Aging Hardware?
• Legacy Applications (Windows NT)
• Someone told you to?

21. 21
Virtualization Tools – A Quick Review Of the Past
 What Did We Use to Decide On What To Virtualize
• VMware and Partner Professional Services?
• Capacity Planner?
• Windows Task Manager?
 How Did We Actually Virtualize Workloads?
• VMware Converter
• Platespin
 How Did We Learn?
• How to Right-size Virtual Machines
• Not everything is as it seems
• Ongoing Capacity Planning
• Resource allocation
• Resource Pools
• Admission Control

22. 22
Let’s Look to The Future

23. 23
Prepare to “Cloudify” Your Datacenter
 Understand Your Applications
• Technical Interdependencies
• User accessibility
• Application’s capability to “Grow” and Scale on demand
 Examine the “Low Hanging Fruit”
• Of your virtualized server what can you Identify Now?
• What are the easy things to move?
• Easy network changes
• Easy end users to work with
• Less impactful to your business
 Reclaim Expensive Resources
• Workloads using your capital infrastructure
• Get local resources back for internal use

24. 24
What’s Your Virtualization Policy?
 What Percentage Virtualized are you?
• 25%
• 50%
• Over 80%
 Do you have a Virtualization First Policy?
• Could this be considered a Cloud First Policy now?
 “What can I run in vCloud Hybrid Service?
• What CAN’T you run?
• It’s vSphere under the covers
• Anything you run today
 Which Model do I choose?
• Dedicated Cloud (More Control to you)
• Virtual Private Cloud

25. 25
Start to “Cloudify” Your Datacenter
 Consider the Tools of the Future
• vCloud Connector (V2C is the new P2V)
• Network Virtualization
• vCloud Automation Center
• vCloud Networking & Security
• vCenter Operations Manager
 New Skillsets May be Needed
• No longer just vSphere Admins
• Networking Expertise
• Traffic connectivity
• Security Knowledge
• Firewall rules

26. 26
Don’t Miss These vCloud Hybrid Service Breakout Sessions!
 vCloud Hybrid Service Jump Start Series
1. vCHS Architecture & Consumption Principles (PHC5070) - Monday, 12:30pm
2. vCHS Networking & Security Basics (PHC5409) - Tuesday, 12:30pm
3. vCHS Advanced Networking & Security (PHC5488) - Tuesday, 2:00pm
4. Identifying and Deploying Workloads in vCHS (PHC5045) - Wed, 12:30pm
5. Hybrid Cloud Management (PHC5561) - Thursday, 10:30am
 Other Interesting Sessions:
• A Parallel Between vCHS and AWS (PHC5123) – Tuesday, 5pm
• How to Build Your Hybrid Cloud… (PHC4783) – Wednesday, 8am

27. 27
EAP Customer: Harley-Davidson Dealer Systems
Industry
Headquarters
Background
Supports 500+ Harley-Davidson Dealerships in North America
• Currently supporting custom PoS application on-premise locally at
dealerships
New Opportunities
• Want to take advantage of available transaction and customer
data and perform data analytics
• Want to offer complementary web based products on a global
basis
Key Decisions
• Should we deploy this in house?
• Additional storage or new SAN? New SAN Switches?
• Upgrade networking infrastructure?
• Upgrade Bandwidth?
• Capital expenditure
• Should we use a cloud service?
• Bandwidth is cost effective; not sharing with office workers
• Global presence is required
• Predictable billing directly to application owner
PROFILE
Retail System Support
Cleveland OH
EXISTING VMWARE FOOTPRINT
• vSphere 5.1 Enterprise Plus
• 95%+ virtualized today supporting
both back office and developer
environment
• Deployed Lab Manager in 2009 for
self-service test/dev; now vCloud
Director 5.1

28. 28
Thank you!
Any Questions?

29. 29
Other VMware Activities Related to This Session
 HOL:
HOL-HBD-1301
vCloud Hybrid Service - Jump Start for vSphere Admins
HOL-HBD-1302
vCloud Hybrid Service – Networking & Security
HOL-HBD-1303
vCloud Hybrid Service – Manage Your Cloud

30. THANK YOU

32. The Economics of vCloud: Which Cloud Do I Need?
Chris Colotti, VMware
Jenny Fong, VMware
Mike Kohn, Harley-Davidson Dealer Systems
PHC5732
#PHC5732