Transforming Your Business Management with Cloud Computing
Transforming Your Business Management With Cloud Computing May 17, 2012
Agenda • What is Cloud Computing • Key Drivers for Cloud Solutions • Benefits vs. Risks of Going to the Cloud • Cloud Computing Trends • How to Assess a Cloud Solution
IT Options Application SW Compute Application SW Storage Compute Cloud Networking Storage & SaaS Space, Power Cooling Networking "By 2012, more than 66% On-Premise Co-location of independent software “DIY” vendors (ISVs) will offer some of their applications optionally or exclusively as SaaS.”
On-Premise • Software developed internally or purchased via a perpetual license • An up-front capital expense • Software that runs entirely within the hardware systems of its owner or licensee • The consumer is responsible for the management of the software installed • Customers may be on many different releases of the software
Co-Location • Provisioning of computing services in a third-party co-location center • Software developed internally or purchased via a perpetual license • An up-front capital expense • The consumer is responsible for the management of the software installed • Customers may be on many different releases of the software
Cloud Computing Cloud computing is Internet-based computing, whereby shared resources, software, and information are provided to computers and other devices on demand, like the electricity grid. Requires no end-user knowledge of the physical location or configuration of the system that delivers the service. ―Source: Wikipedia
Cloud Deployment Models • Community Cloud – Shares infrastructure between several organizations from a specific community with common concerns (e.g., security, compliance, jurisdiction), whether managed internally or by a third-party and hosted internally or externally. • Public Cloud – The cloud infrastructure is provisioned by the cloud provider for open use by the general public. It may be owned, managed, and operated by a business, academic, or government organization, or some combination of them. • Private Cloud – Infrastructure provisioned solely for a single organization, whether managed internally or by a third-party and hosted internally or externally. • Hybrid Cloud – A composition of two or more clouds (private, community, or public) that remain unique entities but are bound together, offering the benefits of multiple deployment models. It can also be defined as multiple cloud systems that are connected in a way that allows programs and data to be moved easily from one deployment system to another.
Cloud Service Models• Software as a Service (SaaS) – Employs the provider’s applications running on a cloud infrastructure. The applications are accessible from various client devices through either a thin client interface, such as a web browser (e.g., web-based email), or a program interface. The provider manages or controls the underlying cloud infrastructure with the possible exception of limited user- specific application configuration settings.• Platform as a Service (PaaS) – Consumer-created or acquired applications supported by the provider are deployed onto the cloud infrastructure which the provider manages or controls. The consumer has control over the deployed applications and possible configuration settings for the application-hosting environment.• Infrastructure as a Service (IaaS) – The consumer provisions processing, storage, networks, and other fundamental computing resources where the consumer is able to deploy and run arbitrary software, which can include operating systems and applications. The provider manages or controls the underlying cloud infrastructure while the consumer has control over operating systems, storage, and deployed applications; and possible limited control of select networking components (e.g., host firewalls).
On-Premise Holds the Business BackTypical IT Budget Allocation9% Innovation Current 66% on old 91% versions 12 Maintenance Source: ERP in SME, Aug 2010
Version Locked Business Management Softwareis a Liability in a Sea of Change Changing Greater need financial for business reporting visibility Local salesShrinking IT tax changes resources Increasingly Launching distributed new subs and business geos New business More selling models channels
What Businesses Are Looking for in Their Next ERP ImproveNeed a system business with better visibility scalability 9% 7% Reduce overallRequire more IT maintenancesophisticated costs functionality 23% 12% Better support a Need to distributed Streamline cross organization functional 17% business processes 32%N=809
Productivity Benefits Cited as Key Drivers for Cloud ERP Speed of deployment 3% Streamlined Lower cost of business ownership processes 14% 31% Access data from anywhere at anytime Lower upfront 38% expenditure 4% Instant access toN=805 new functionality 10%
Cloud Enables the Distributed Organization Todays organizations are increasingly distributed Ideal for inherently distributed activities: – Financial Planning – Selling and Order Taking – Distributed finance team Facilitates off-shoring / shared services Easily supports temporary and home workers Real time view into centralized data #1 Benefit of Cloud Computing Reported by Finance Executives
Keys to Cloud ERP Success: ERP that Improves Organizational EfficiencyTrait Business BenefitQuote to cash integration Reduce cycle time and overheadProcure to pay integration Eliminate spreadsheetsWeb based T&E management Improve employee productivityComprehensive audit trail Reduce audit times and improve complianceSelf service Reduce time spent “hunting”dashboards & reporting Collaboration and “actionableOne view of the customer Improve team collaboration, reduce redundancy
Keys to Cloud ERP Success: ERP that Supports GrowthTrait Business BenefitSupport multi-sub and COAs Manage consolidation times as business growsCountry specific tax and accounting Eliminate need to add ERP toregulations support local needsAutomated sales tax management Calculate sales taxes across channels and geosDrill down from corporate Ensure straight line visibility fromto subsidiaries HQ to geosMulti-language management Ensure you can localize solution to geo needs
Keys to Cloud ERP Success: ERP that Supports Business FlexibilityTrait Business BenefitComprehensive Integrate with suppliers, channels,web services integration and servicesGraphical workflow management Empower line of business to automate business processManaged customization layer Ensure that customizations will not “version lock” applicationMobile and anywhere access Support the distributed organizationIndustry functionality “Future proof” applicationand ecosystem
Software as a Service Ideal for the Downturn/Upturn Low Cost Rapid Deployment Transparency Subscription-based Deploys in Weeks Pricing, Uptime, Training, Pricing Option to Self-Implement Support and Trials All Eliminates IT Costs Online Ease Of Use Accountability Innovation 24x7 Web-based Access Renewal-Based Model More Frequent Product Browser-based Interface High Customer Satisfaction Releases, Automatic Upgrades
Challenges and Opportunities • Compliance/Governance • Availability and Reliability • Performance • Security/Data Privacy • Cloud Lock In • Software Licensing
Today’s Regulatory Environment And it just keeps coming!!! SOX (Sarbanes Oxley) – IT General Controls HIPAA (Health Insurance Portability and Accountability Act) – Data Security Graham-Leach-Bliley Act – Financial Privacy Rule S&P (Standard & Poor’s) – Risk Assessment PCI (Payment Card Industry) – Data Security Standards IFRS (International Financial Reporting Standards) – Updated reporting standards Etc, Etc, Etc!!!!!
SAS 70 / SSAE 16 Reports • Report issued by a CPA firm that attests to the internal controls implemented at the service provider and their operating effectiveness • The cost is incurred by the service provider • Provides reasonable assurance that the required IT General Controls required for compliance are met
Applications: Pros • Cost Savings – Lowers the upfront cost to buy the application • Lowers upfront implementation costs and time to deploy • Less complex processes • Monthly licenses fees • Savings on software maintenance costs – SaaS pricing models provide great flexibility • Easy to start small and grow with your needs
Applications: Cons • Cost Increases – Doesn’t lower overall cost of ownership • Additional cost to integrate onsite applications • Additional training for mandatory upgrades – one code base – SaaS pricing models based on users/transactions • For larger entities, pricing model may not provide required bandwidth – Reporting across SaaS and on premise data sources can require additional reporting tools and data sets
Infrastructure: Pros • Cost Savings – Reduces upfront cost to purchase hardware – The management, support, and upgrading of the software and the infrastructure that supports it is the responsibility of the solution provider – Employs highly sophisticated security technology and spreads the cost over all customers
Infrastructure: Cons • Cost Increases – Loss of productivity due to: • Internet going down without notice • Solution provider outages – Difficulty in integrating to applications and data sources that are on premise due to: • Mandatory upgrades • Lack of integration tools
Additional Advantages • Secure data access through Web Access – anytime, anywhere without the IT hassle • Great for Collaboration-internal & external • One code base means fewer bugs • Ability to standardize processes • Built-in backup for your applications and infrastructure • Can be part of your disaster recovery plan
Additional Disadvantages • Many SaaS applications offer fewer built-in features than comparable non-SaaS applications • Building and maintaining interfaces to other applications can be costly • Mandatory upgrades • Loss of unique processes or data requirements • 100% dependent on the Internet • Speed and response time dependent on Internet
Important to Note • Most of the solutions are geared towards small/medium entities but moving upstream • Share common processes with multiple entities • 100% reliant on the internet; have a backup pipe/plan • PC must be sufficiently equipped • Good implementation is required for good results – DON’T skimp on professional services and support
Purpose and MethodologySurvey Sample Survey MethodField Work Dec. 20, 2011 – Collection Online Questionnaire Jan. 12, 2012 Number of 53 (incl.Total 1,682 Questions demographics)RespondentsMargin of Error +/- 2.19%Audience Base CIO, Computerworld, CSO, Network World, InfoWorld and ITworld sitesSurvey GoalTo measure cloud computing trends amongtechnology decision-makers including usage andplans across various cloud service anddeployment models, investments, business driversand impact on business strategy and plans.
Private Cloud Most Readily Adopted RapidGrowth Expected to ContinueQ. Approximately, how much of your organization’s data presently resides in the public, private and hybrid clouds, and will in 18 months?
Long-Term Outlook Shows One Quarter WillHave Majority of IT Ops in the CloudQ. Which of the following best describes your long-term expectations for cloud computing at your organization over the next 5 years?
Long-Term Savings Anticipated but Calculating a ChallengeQ. Please rate your level of agreement with the following statements.
Hurdles for Cloud Computing: Security, Accessand GovernanceQ. What are the top three challenges or barriers to implementing a cloud computing strategy at your organization?
How to Assess SaaS Providers 1. True Multi-Tenancy 2. Regularly Delivered, Vendor-Managed Updates 3. Seamless Integration on Demand 4. Business Driven Configurability 5. World-Class Data Center and Security 6. High-Performance Sustainable IT Infrastructure 7. Predictable Total Cost of Ownership (“TCO”) 8. Faster Deployment 9. Complete Control of Data 10. Liberation from Non-Strategic IT Issues
How to Assess SaaS Providers • Require a SAS70/Type II or SSAE16 SOC1/Type 2 report • Try before you buy – it’s in the cloud!