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Cloud Computing Ebook


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Cloud Computing Ebook

  1. 1. Practical Cloud Computing Today—Private Cloud ERP in a Hybrid Cloud DeploymentAn Oracle Accelerate for Midsize Companies briefing—November 2011
  2. 2. Executive Overview Unlike competitors with narrow views of the cloud, Oracle provides the broadest, most complete, and integrated cloudCloud computing has been a hot topic for almost a decade, offerings in the industry.but adoption of cloud-based solutions—especially enterpriseresource planning (ERP)—is still not widespread. This briefing focuses on the current ERP cloud computing landscape from the perspective of Oracle midsize customersCloud computing is simply a usage-based IT deployment who have deployed cloud-based ERP when replacing legacymodel for companies that don’t want to acquire and maintain solutions.the resources needed to host—and often, manage—their ITapplications and related infrastructure. Each chose to deploy Oracle ERP in a hosted private cloud as part of comprehensive hybrid cloud strategy—a mix of publicMidsize companies in most global markets are currently in a cloud, private cloud, and On-premise solutions (see,major cycle of ERP replacement driven by economic “Understanding ERP Deployment Models”).conditions and increasingly complex operating requirements.With all the buzz around cloud computing, one would expect Guided by a new breed of IT management, these companiesto see a dramatic surge in the deployment of cloud ERP. are realizing the benefits of cloud computing while mitigating or eliminating operational concerns. Primary benefitsHowever, adoption of cloud ERP has stalled due to lingering include:concerns. Several of these concerns relate to the technicaland functional issues associated with cloud solutions in  The ability to redefine the cost structure of IT to a moregeneral, such as security and control. Others are worries that usage-based modelare simply associated with any potentially resource  The transformation of internal IT’s role from maintenanceconsuming IT project. functions to more strategic activitiesOracles strategy is to offer a broad portfolio of software andhardware products and services to enable public, private andhybrid clouds, empowering customers to choose the rightapproach for their unique requirements. 2
  3. 3. Understanding ERP The Cloud and the Current Cloud Computing Cloud Computing Changes Overcoming ERP Cloud Customer Case Deployment Models ERP Replacement Cycle Can Transform IT the IT Cost Structure Concerns StudiesUnderstanding ERP Deployment Models management services are provided for a fee by the cloud operator. Individual customers typically have a very limitedDetermining the optimal ERP deployment model for a specific role in application configuration and management. Overallorganization starts with understanding the options. costs per customer may be higher or lower than a traditionalTHE BASELINE: THE TRADITIONAL ON-PREMISE MODEL on-premise deployment, depending on many variables.In this traditional model, the customer purchases both the In the private cloud model, each cloud is operated solely forsoftware and the hardware. The software is installed along one customer. Each customer owns the hardware and thewith the necessary IT infrastructure on the customer’s software licenses. However, since a cloud provider commonlypremises. hosts multiple private clouds, the provider can quickly add hardware, personnel, and services as needed. SomeGenerally, midsize companies contract with the software infrastructure costs are spread across multiple customers.solution provider or consulting partners to set up the IT Each customer decides to what degree they will manage andinfrastructure, implement the applications, and train internal configure the applications, ranging from 100 percent withresources for post go-live activities. Often they retain a internal resources, to completely outsourcing these roles tocarefully measured and variable level of contracted services the cloud provider or a manage technical functions that don’t require a full-timeresource, and to augment internal bandwidth when needed. PRACTICAL TODAY—HYBRID CLOUD DEPLOYMENTSTRENDING UPWARD—CLOUD COMPUTING MODELS Hybrid cloud strategies are a blended approach—a combination of private, public, and even on-premiseEvery cloud computing model starts with the hardware deployments. This combination can vary greatly from oneinstalled and maintained off premise, removing that customer to the next, depending on needs and aspirations.responsibility from the end customer. The most successful hybrid strategies are those thatIn the public cloud model, customers share a common effectively take technology out of the decision-makinginfrastructure. Individual customers do not own the hardware process when additional solutions are being considered.or software licenses but instead pays ongoing fees based Ideally, business owners can have the ‘best-fit’ solutionsprimarily on level of usage. Application setup and without worrying about how they will be deployed. 3
  4. 4. Understanding ERP The Cloud and the Current Cloud Computing Cloud Computing Changes Overcoming ERP Cloud Customer Case Deployment Models ERP Replacement Cycle Can Transform IT the IT Cost Structure Concerns StudiesThe Cloud and the Current ERP Replacement complexity. These tenets align well with the typical goals ofCycle ERP replacement projects at midsize companies. Also, cloudCompanies in most global markets are currently in a major deployment models have matured to a level that most ITcycle of ERP replacement. Recessionary conditions worldwide leaders are at least talking about them.influenced many business leaders at midsize organizations topostpone major IT decisions. But some of them can’t waitany longer. The current improved—yet uncertain—economicclimate rewards companies that are flexible, agile, andinnovative. It punishes those that have stagnated.Emerging midsize companies compete in the same conditionsand for the same customers as large enterprises. For many,the ERP replacement cycle is being driven by the need toreplace outdated legacy systems not equipped to handle thedemands of global supply chains and multi-currency, multi-country operations.ERP replacement projects provide a logical opportunity toconsider not just new solutions but also new deploymentmodels. IT leaders at midsize companies looking to replace from, "2011 State of Cloud Survey” , Symantectheir enterprise applications want new solutions to be better,faster, easier, and cheaper. They also seek to insure that IT All in all, it makes sense that cloud models will be consideredresources fully meet the always-changing needs of employees in the ERP replacement strategies of some midsizeand customers. companies. Cloud ERP is most appropriate for companies where business leaders desire to change the cost structure ofCloud computing is founded on the principles of lower costs, IT and transition internal IT human resources to moreelasticity of resources, decreased time to value, and reduced strategic roles. 4
  5. 5. Understanding ERP The Cloud and the Current Cloud Computing Cloud Computing Changes Overcoming ERP Cloud Customer Case Deployment Models ERP Replacement Cycle Can Transform IT the IT Cost Structure Concerns StudiesCloud Computing Can Transform IT the situation is a bit different. The skills, talents, and learning abilities of each individual must be assessed in alignment withWhen midsize companies replace disparate legacy systems the plan. Midsize companies that switch to cloud-based ERPwith comprehensive cloud-based ERP solutions, the role of will almost always radically transform the roles of IT staff.internal IT resources must be reconsidered. Chances are, the Usually, it involves a shift in mindset from maintenance toIT staff has been focused on maintaining the status quo of enablement.outdated or inadequate systems. All hardware issues would now be handled by the cloudOnce the decision is made to consider cloud-based IT systems, provider. The organization would have greater access toexecutive leadership needs to make an assessment of managed services—a deep and talented bench of solutionorganizational readiness: experts. This would make it easier to build a team of third- With new systems in place, what do we want the role of IT party and internal resources managing applications and to be? middleware. The elasticity of managed services enables the team to accommodate spikes in demand and fluctuations in How will current resources fit into the new model? internal staff levels. What is our plan for retraining or reassigning resources? Ultimately, internal IT staff is positioned to become business What new skills do we need to acquire? analysts who match the needs of the organization with the capabilities of the IT solutions deployed. And perhaps the hardest question to ask: do we have the right IT leadership to guide our company through this “By moving to a private cloud environment hosted by transformation? Oracle, we’ve taken our focus completely away fromMidsize companies must bring in new, experienced leadership hardware and infrastructure maintenance. We areor challenge existing IT leadership to effectively answer these now internally 100% focused on business processmission-critical questions. optimization.” —Gary Marshall, CIO, Taconic FarmsThe larger the IT organization the easier it is to retrain andreassign resources. For companies with smaller IT groups 5
  6. 6. Understanding ERP The Cloud and the Current Cloud Computing Cloud Computing Changes Overcoming ERP Cloud Customer Case Deployment Models ERP Replacement Cycle Can Transform IT the IT Cost Structure Concerns StudiesCloud Computing Changes the IT Cost Structure The Oracle customers featured in this briefing purchased ERP software licenses in the same manner as in an on-premiseAs previously defined, cloud computing is a usage-based IT model. Some have also deployed subscription-based publicdeployment model. Cloud computing changes the structure cloud solutions such as Oracle CRM On Demand. Each hasof IT costs via several essential characteristics: considerably changed their IT cost structure via resource Resource pooling—the sharing of resources: pooling, elasticity, and measured services. o Physical—including facilities and hardware All facility, hardware, and technical maintenance activities are purchased via contracted services. Application maintenance o Human—including a broad range of roles such as and implementation cost models vary with each customer consultants, network administrators, database based on which services have been contracted to their administrators, and applications managers hosting provider or a partner. Elasticity –quick and ready access to human and physical These customers share the benefits of reduced capital resources that scale up or down based on need expenditures and more predictable IT costs tied to usage. Measured services —costs tied to usage They also are experiencing higher levels of service than they would be able to deliver with internal resources at a similarJust how much these characteristics change the cost cost.structure depends on the choice of cloud deployment modeland the degree to which customers contract for services. “The cost of cloud ERP is significant. But we are global organization that needs critical IT support 24/7 for 365 days.Unlike an on-premise model, cloud customers do not invest When you try to translate that need to an on-premisecapital in facilities or hardware for hosted solutions. deployment model the cost goes exponentially higher. You canDepending on the model, software may be purchased or have people on call but will they all have the necessary skills?subscribed to. In all models, the customer will most likely And what do you do with those people when you don’t needcontract for human resources to a much greater degree than those skills full time?”they would in an on-premise model. —SK Mohanty, Sr. Director of IS, OpenTV 6
  7. 7. Understanding ERP The Cloud and the Current Cloud Computing Cloud Computing Changes Overcoming ERP Cloud Customer Case Deployment Models ERP Replacement Cycle Can Transform IT the IT Cost Structure Concerns StudiesOvercoming ERP Cloud Concerns OVERCOMING CONCERNS—SECURITYThe current trend is for companies to experiment first with Security still ranks as a top barrier to cloud solution adoption.standalone or ‘point’ cloud solutions purchased by informal Most experts agree that this concern can easily be addressed.buyers without the knowledge of IT. Cloud ERP adoption has  “Organizations are not exposing themselves to greaterslowed due to lingering concerns relating to: security risks by moving data to the cloud. In fact, an Security organizations data is likely to be more secure in the cloud because the vendor is a technology specialist whose Upgrade control business model is built on data protection.“—Elisa Bertino, Industry functionality Research Director—Center for Education and Research in Information Assurance, from Channel Insider Solution integration In the United States, the generally accepted source of data Competing priorities center security requirements is the ANSI accreditedHowever, as the case studies in this briefing illustrate, cloud Telecommunications Industry Association (TIA). CompaniesERP can be a relatively simple and straightforward deploying public or private cloud ERP must choose a hostingdeployment option. Each featured customer has overcome partner matched to their organizational needs. Oracle datacloud ERP concerns by: centers carry a Tier 4 rating—TIA’s highest. Crafting a cohesive and comprehensive cloud computing Additionally, operational security should be addressed via strategy service level agreements with hosting providers and consulting partners to establish standards for avoiding data Choosing a ‘best of all worlds’ approach— breach or loss. o Top Tier ERP in a private cloud Before dismissing cloud computing options for security o An overarching hybrid deployment model reasons, IT leaders must ask: could we cost-effectively match internally the security and service level standards of top Selecting the appropriate hosting provider and partners quality data centers and consulting partners? 7
  8. 8. Understanding ERP The Cloud and the Current Cloud Computing Cloud Computing Changes Overcoming ERP Cloud Customer Case Deployment Models ERP Replacement Cycle Can Transform IT the IT Cost Structure Concerns StudiesOVERCOMING CONCERNS—UPGRADE CONTROL OVERCOMING CONCERNS—INDUSTRY FUNCTIONALITYWith public cloud ERP solutions, multiple customers share the ERP is complex, spanning a wide range of business processsame instance of the software. Upgrade policies and requirements. Cloud computing technologies are still in arequirements vary with each provider but, by design, all steep curve of maturation. ERP solutions built strictly forcustomers will be on the same software version. When public cloud deployment are in early development stagesupgrades are made to that instance, all customers must move when compared to established ERP suites that have beento the newer version. evolving for decades. “The desire to control upgrades has overtaken security as Growing midsize companies competing in global markets the biggest factor preventing the consideration of <public need the same deep and broad capabilities as large cloud> ERP.” –from Security Issues in Cloud ERP, enterprises. These capabilities may not be available in public, Oct. 6 2011 cloud ERP based on each customer’s industry and geographical needs.With private cloud ERP, each customer owns a single instanceof the software. Therefore, they have the freedom to take  “The biggest customer concern for NetSuite* is aeach upgrade when it makes sense—the same as if the functionality battle. Sometimes [companies] may get sosoftware had been deployed on-premise. big in an area that we do not have deep vertical functionality.” —Zach Nelson, CEO, NetSuite,Private cloud ERP often enables companies to take upgrades “Will businesses opt for SaaS in next ERP lifecycle?”,more frequently. Midsize companies with legacy on-premise, June 4, 2011deployments often fall behind on taking upgrades because ofthe time, money, and resources required. In a hosted model, Once again, private cloud ERP removes this concern becausecustomers would have greater access to skilled and customers are free to choose Top Tier enterprise applications.knowledgeable consulting services who could reduce or They would deploy the same applications in their privateeliminate those barriers. Upgrade decisions could then be cloud as they would if adopting an on-premise model.based strictly on an ROI analysis of cost vs. benefits. *NetSuite is a leading public cloud ERP provider 8
  9. 9. Understanding ERP The Cloud and the Current Cloud Computing Cloud Computing Changes Overcoming ERP Cloud Customer Case Deployment Models ERP Replacement Cycle Can Transform IT the IT Cost Structure Concerns StudiesOVERCOMING CONCERNS—SOLUTION INTEGRATION OVERCOMING CONCERNS—COMPETING PRIORITIESSuccessful global commerce is powered by flawless Business – The internal IT resources of companies considering an ERPto-Business (B2B) and Business-to-Consumer (B2C) replacement are typically focused on just keeping thingscommunication. B2B and B2C interactions usually require running. They rarely have excess capacity. Their skill sets andapplications outside of ERP that are unique to an individual experiences are matched to legacy solutions which are oftencompany’s industry segment or competitive differentiators. outdated, customized, or Tier 2 and 3 solutions with very limited corresponding talent pools.IT staff at midsize companies are accustomed to getting thingsdone with limited resources. Integrating disparate  “When IT rates its own performance… Keeping the lightsapplications across diverse deployment models may be the on? Top notch. In providing quality systems and keepingmost challenging issue they face. them running, 20% even say they’re excellent. With keeping costs down, it’s a similar story… But it goes “43% of 314 respondents are using SaaS applications. But downhill from there, as IT teams move away from when we asked them to rate their satisfaction with nine operational standards and more toward business and aspects of these apps, deployment simplicity came out on innovation goals.” —from, “Outlook 2011: IT Trends to top—and ease of integrating these services with on- Watch”, premises systems and data sources landed at the bottom of the list.”—InformationWeek Analytics 2011 Enterprise Deploying Top Tier ERP in a private cloud would open the Applications Survey door to a large pool of consulting and operational talent. Customers could match their implementation and managedTop Tier ERP providers build middleware solutions to handle services needs to the available services of their hostingthe most complex integration needs of their small, medium, provider and partners based on internal strengths andand large enterprise customers. Once more, by deploying bandwidth.Top Tier ERP in a private cloud, customers would be wellpositioned to leverage those complementary solutions. Post go-live, most technology and hardware activities wouldAdditionally, they would have direct access to consulting be handled by the hosting provider. Each customer couldresources who work with those middleware solutions on a full retain managed services for application and infrastructuretime basis. management based on their changing needs. 9
  10. 10. Understanding ERP The Cloud and the Current Cloud Computing Cloud Computing Changes Overcoming ERP Cloud Customer Case Deployment Models ERP Replacement Cycle Can Transform IT the IT Cost Structure Concerns StudiesTaconic Farms: Enabling IT Innovation via HYBRID CLOUD COMPUTING MODELCloud Computing Current  Oracle E-Business Suite (ERP) and Daily Business Hudson, NY, USA Intelligence Hosted by Oracle (Private Cloud) – Technology managed by Oracle ~1,000 employees – Applications by managed Taconic Life Sciences  Oracle CRM On Demand hosted by Oracle (Public Cloud) – Technology managed by OracleTaconic recently deployed Oracle ERP, Business Intelligence, and – Applications managed TaconicCRM solutions via Oracle On Demand as a major first step  Some legacy applications hosted and maintained On-toward transforming the role of IT within the organization. premise by Taconic until capabilities are transitionedEventually, all of Taconic’s applications solutions—including Long Termthose of 3rd party vendors—will be on a single framework of  Provide end users with a complete library of IT servicesOracle database and middleware technologies hosted by Oracle enabled by a limited number of SOA ApplicationsOn Demand. With Oracle responsible for all technology  Consolidate to a single Database and Middleware hostedmanagement and maintenance functions, Taconic’s internal IT and managed by Oracle in a Private Cloudstaff can increasingly focus on providing vision and guidance to  Outsource all IT infrastructure management to Oracle,business managers seeking business process innovation. including integrations to 3rd party solutionsStrategic Goals:  Manage application configuration with internal IT “one company; one set of processes” resources skilled in analysis and consulting Adopt industry leading practices enabled by SOA applications “The cloud is for my hardware provider to figure out. What Configure, not customize when leading practices don’t fit makes money for Taconic is using the applications. The value business needs proposition for IT is found in our ability to leverage the Transition IT staff from system support and maintenance to a capabilities of the applications to reorchestrate the business team of IT business analysts processes - do more things our customers want, while reducing costs, and increasing the speed and agility of doing business.“ —Gary Marshall, CIO 10
  11. 11. Understanding ERP The Cloud and the Current Cloud Computing Cloud Computing Changes Overcoming ERP Cloud Customer Case Deployment Models ERP Replacement Cycle Can Transform IT the IT Cost Structure Concerns StudiesOpen TV: Focusing Internal IT Resources on HYBRID CLOUD COMPUTING MODELIntegration and Enablement Current  Oracle E-Business Suite (ERP) hosted by Oracle On Demand Long Beach, CA, USA (Private Cloud) – Technology managed by Oracle ~500 employees – Applications managed by OpenTV High Technology  Public Cloud solutions for Payroll, HR, and CRM  On-premise solutions for non business applications such asOpen TV deployed Oracle E-Business Suite in the Summer of file sharing, desk top office products, and engineering2008, going live in less than 90 days. The aggressive project applications for a development platformdeployed 12 different modules, five sets of books, sixdifferent order types, and 48 different entities hosted by Oracle Long TermOn Demand. The IT team took this opportunity to establish a  Transition legacy On-premise solutions to best practicesflexible framework for application integration. As a rapidly solutions with a preference for Cloud based deploymentsgrowing High Technology firm, they need to be able to quickly  Maintain the integration support On-premiseadopt new solutions that offered best practices, especially inprocesses that had not yet been automated. The establishedframework allows business owners to pick the right solution for “It’s hard for companies with big investments in ITtheir needs without worrying about how it will be deployed. infrastructure to fully leverage the benefits of Public and Private Cloud deployments. The best time to build a flexibleStrategic Goals: framework for Cloud Computing is when a company is just Adopt solutions offering best practices without having to be starting out or replacing legacy ERP systems.” concerned about deployment model —SK Mohanty, Sr. Director of Information Systems Minimize the use of internal IT resources for the deployment and maintenance of enterprise applications Focus internal IT resources on strategic initiatives and integration strategies 11
  12. 12. Oracle On Demand Oracle Cloud ComputingOracle On Demand offers a broad hosting and managed Oracle’s strategy is to offer a broad portfolio of software andservices portfolio supporting database, middleware, and hardware products and services to enable public, private andenterprise and industry specific applications. We offer a hybrid clouds, enabling customers to choose the rightchoice of deployment options: approach for them. Remote management of customer On-premise solutions Learn more: Partner hosting and management Hosting and management at Oracle data centers On Demand has over 440 managed applicationscustomers world wide. Oracle Public CloudLearn more: The Oracle Public Cloud, announced in October of 2011, provides new services that give customers and partners subscription-based access to Oracle’s industry-leadingOracle Fusion Applications enterprise applications, middleware, and database.Designed from the ground up using the latest technology Read the Press Release:advances and incorporating the best practices gathered fromOracles thousands of customers, Oracle Fusion Applications 100% open-standards-based business applications that set Visit the Oracle Public Cloud website:a new standard for the way we innovate, work, and adopttechnology. 12
  13. 13. Oracle Accelerate for Midsize Companies THE ORACLE ACCELERATE DIFFERENCE Three major attributes distinguish Oracle Accelerate fromMidsize companies face the same challenges as large other enterprise software provider solutions:enterprises—global supply chains, multi-currency operations, Enterprise Class Applicationsand fickle customers to name a few. But they do so with  Flexible, Configurable, Scalablefewer resources so they need faster, cheaper  Deep Industry Capabilitiesimplementations that speed time to value.  Foundation for Innovation and GrowthWHAT IS ORACLE ACCELERATE? Implementation SimplicityOracle Accelerate—  Targeted, Fast, Efficient is Oracle’s approach to providing business software  Industry Leading Business Processes solutions to midsize organizations  Rapid ROI via Flexible Deployment OptionsOracle Accelerate Solutions— Expert Partner Ecosystem include Oracle’s enterprise-class software delivered with  Experienced, Focused, Connected Oracle Business Accelerators by expert implementers  Tailored Solutions for Midsize CompaniesOracle Business Accelerators—  Trusted by Thousands of Customers Globally are rapid implementation tools developed by Oracle and its partners to deliver industry-leading practices in low cost ORACLE ACCELERATE AND ORACLE ON DEMAND implementations Oracle Accelerate Solutions and Oracle Business Accelerators are often used by Oracle and its partners to deploy OracleORACLE AND MIDSIZE COMPANIES enterprise applications in hosted environments , both at Over 250,000 midsize companies run Oracle Database, Oracle data centers and partner hosting facilities. Middleware and Applications Over 37,000 midsize companies run Oracle Applications Find an Oracle Accelerate Solution for your industry and 162 Days average time to go live on Oracle ERP geography: Applications 13
  14. 14. Get Involved. Stay Connected. Learn More  Oracle’s Application and Technology for Midsize Companies  Oracle Accelerate Program  Oracle Accelerate Partner Solutions  Oracle Accelerate for Midsize Companies Blog  Search for “Oracle Accelerate for Midsize Companies”Copyright © 2011, Oracle and/or its affiliates. All rights reserved. Oracle is a registered trademark of Oracle Corporation and/or its affiliates. 14Other names may be trademarks of their respective owners.