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Cloud Computing - Technologies and Trends


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An overview of Cloud Computing technologies and tr

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Cloud Computing - Technologies and Trends

  1. 1. Cloud Computing:Technologies and Trends Marcelo Sávio IT Architect – IBM © 2012 IBM Corporation
  2. 2. Talking about trends....2 © 2012 IBM Corporation
  3. 3. Some definitions… © 2012 IBM Corporation
  4. 4. Cloud is a new Consumption & Delivery Model that relies on the industrialization of delivery for IT supported Services “Cloud” is: “Cloud” enables: a new consumption and Self-service delivery model inspired by Sourcing options consumer Internet Economies-of-scale services. “Cloud” represents: “Cloud” can be: The Industrialization of Private, Public and Hybrid delivery for IT supported Workload and/or Services Programming Model Specific4 Cloud Computing - Strategic View © 2012 IBM Corporation
  5. 5. Cloud exhibits a set of well-defined characteristicsCloud Characteristic DetailsAdvanced virtualization IT resources -from servers to storage, network and applications- are pooled and virtualized to provide an implementation independent, efficient infrastructureSelf service through Uniform offerings readily available from a services catalog based onStandardized offerings public interfacesElastic scaling Resources scale up and down by large factors as the demand changesFlexible pricing Utility pricing, variable payments, pay-by-consumption and subscription models make pricing of IT services more flexibleRapid provisioning IT and network capacity and capabilities are – ideally automatically, via Self Service capabilities – rapidly provisioned using Internet standards without transferring ownership of resources5 © 2012 IBM Corporation
  6. 6. Major factors driving cloud Infrastructure Virtualization of Drives lower capital Leverage Hardware requirements Utilization of Virtualized environments only get benefits of scale if Infrastructure they are highly utilized Reduced complexity, increased Standardization of automation possible; reduced Workloads admin burden Leverage Labor Automation of Take repeatable tasks and Management automate Clients who can “serve Self Service themselves” require less support and get services6 © 2012 IBM Corporation
  7. 7. Standardization, Automation and Self Service have changed many other industries become more efficient. Telcos automate traffic through switches to assure service and lower cost. Manufacturers use robotics to improve quality and lower cost. Banks use automated teller machines to improve service and lower cost.7 © 2012 IBM Corporation
  8. 8. Cloud computing is more than the sum of the parts… Cloud Computing Virtualization + Standardization + Automation + Self Service With With With With Enables flexibility Simplification Low human involvement User in control Increase utilization Few configurations Rapid deployment & mgt Cost and usage choices Energy efficient Enables automation Repeatable configuration Increased visibility Soft configuration Easier support Improves compliance IT/Business alignment Infrastructure abstraction Without Without Without Without Physically constrained Physically constrained Manually intensive Dependency of availability of data centre staff Capital intensive Many configurations Skill dependent Lack of awareness Hard configuration Error prone Linked to PO process Costly CustomerOperational Exp Capital Exp Agility Timeline Compliance Service 8 © 2012 IBM Corporation
  9. 9. So what’s different about Cloud? Capability From To Server/Storage 10-20% 70-90% Utilization Cloud accelerates business value across a wide variety Self service None Unlimited of domains. Provisioning Weeks Minutes Change Management Months Days/Hours Release Management Weeks Minutes Metering/Billing Fixed cost model Granular Payback period for new Years Months services Legacy environments Cloud enabled enterprise9 © 2012 IBM Corporation
  10. 10. Cloud Service Models Employee Procurement Benefits Mgmt. Industry Specific Business Travel Processes Business Process-as-a-Service Financials CRM/ERP/HR Industry Specific Collaboration Applications Software/ Application-as-a-Service Web 2.0 Applications Development Middleware Tools Runtime Database Desktop Platform-as-a-Service Data Center Servers Networking Storage Fabric Consolidated, standardised, virtualised, shared, dynamically provisioned, automated Infrastructure-as-a-Service10 © 2012 IBM Corporation
  11. 11. Cloud deployment options Private Hybrid Public IT capabilities are Internal and IT activities / provided “as a service,” external service functions are over an intranet, within delivery provided “as a the enterprise and behind methods are service,” over the firewall integrated the Internet Enterprise Users Enterprise Enterprise Enterprise data center data center A B A B Private cloud Managed Hosted private Member cloud Public cloud private cloud cloud services services Private Third-party operated Third-party owned and Mix of shared and dedicated Shared resources On client premises Client owned operated resources Elastic scaling Client runs/ manages Mission critical Standardization Shared facility and staff Pay as you go Packaged applications Centralization Virtual private network (VPN) Public Internet Security access High compliancy Internal network Subscription or membership Internal network based11 © 2012 IBM Corporation
  12. 12. Cloud Computing Reference Architecture (The Open Group) Cloud Service Cloud Service Provider Cloud Service Consumer Creator Cloud Services Common Cloud Service Business Service Management Platform Manager Manager Component Developer Consumer End OSS – Operational Support BSS – Business Support user Existing & Services Services BP Mgmt Interfaces 3rd party API services, BPaaS Service Partner Customer Service Service Composer Service Delivery Catalog Cloud Service Account Offering Offering Integration Ecosystems Management Catalog Management Tools Service Development Portal & API Service Consumer Portal & API Service Automation Management Contracts & Service Offering Order Software Mgmt Agreement Request Manager Service Management Interfaces Management Management API Integrator SaaS Service Change & Image Request Configuration Lifecycle Management Management Management Subscription Entitlement Service Creation Consumer Pricing Business Incident & IT Service Management Management Tools Manager Provisioning Problem Level Management Management Service Platform Mgmt Management Interfaces API Consumer In- PaaS Monitoring & IT Asset & Capacity & Metering Rating Billing Development Event License Performance Tools house IT Management Management Management Business Processes Service Runtime Service Management Clearing & Accounts Accounts Platform & Virtualization Management Settlement Payable Receivable Development Tools Mgmt Interfaces Applications Infrastructure API IaaS Software Middleware Service Provider Portal & API Development Tools Infrastructure Deployment Transition Operations Security & Customer Architect Manager Manager Risk Manager Care Image Creation Tools Consumer Administrator Inf rastructure Security, Resiliency, Performance & Consumability 12 Governance © 2012 IBM Corporation 2011
  13. 13. Summary so far CLOUD SERVICES Business Process as a Customers consume business outcomes (Back Office Acctg) via Web-centric Service Service (BAAS) Integration on multi-tenant and shared infrastructures, without the need to own the assets. Software as a Service Customers use applications from multiple client devices through a Web browser on multi- (SAAS) tenant and shared infrastructure without the need to own the assets Platform as a Service Customers use programming languages, tools and platforms to develop and deploy (PAAS) applications on multi-tenant, shared infrastructure without owning underlying resources Infrastructure as a Customers use processing, storage, networks, other computing resources with ability to Service (IAAS) rapidly and elastically provision & control resources without the need to own/manage assetsDELIVERY MODELS Service provider makes resources, such as applications and storage, available to the public Public Clouds over the Internet. (i.e. rented by the hour, month etc.). A Cloud Architecture (end user provisioned, provider managed, consumption based) behind Private Clouds the firewalls of an enterprise Cloud Architecture tailored to meet the needs of an enterprise. (i.e. some service like trade Hybrid Clouds promotions validation executed in the firewall with external on demand services like graphicsARCHITECTURAL COMPONENTS Delivery Services, Delivery services, technologies business services in support of cloud computing that are required to help companies build deploy and integrate cloud computing architectures within Software and Hardware their existing IT infrastructure13 © 2012 IBM Corporation
  14. 14. Trends for Cloud Computing © 2012 IBM Corporation
  15. 15. What is coming? In 2021, cloud computing is simply computing, corporate office parks are senior housing facilities and the IT organization of the future has been absorbed by the business. Internal IT becomes an internal cloud. IT becomes a services broker. IT will become a function of the business. Gartner, 201115 © 2012 IBM Corporation
  16. 16. What are general trends in the IT industry? Gartner Gartner IBM Horizon Technology Business Forrester IDC Ovum Watch 2012 Cloud Computing Increasing Enterprise Smart Computing Cloud IT Security Cloud Mobile Growth Empowerment Computing in the Data Computing Applications & Attracting and Cloud Computing Datacenter Management Virtualization Media Tablets Retaining New IT as Business Public Cloud Business Social Business Next-Generation Customers Technology Services Analytics Mobile Analytics Reducing Enterprise Mobile Enterprise Platform-as-a- Mobility Computing Social Analytics Costs Apps Service Datacenter Big Data Social Creating New Disruption-as-a- Enterprise Transformation Analytics Communications Products and Service Mobility Cloud IBM Watson & Collaboration Services Free SW, Open Computing HW-SW- Human / Video Improving Business Appliances Source Collaboration Computer Context-Aware Processes BPM Platforms Next-Gen IT and Interaction Computing Implementing and Analytics BI and Analytics Sustainability Security Ubiquitous Updating Business Enterprise Data IT and Drive IT as Sustainability & Computing Applications Sustainability Social Media Business Green IT Storage Class Improving Technical Social Media Smart Devices Context-Aware Consumerization Memory Infrastructure Computing of IT Fabric-Based Improving Enterprise Infrastructure and Efficiency Computers Improve Operations Improving Business Continuity, Risk and Security Source: Gartner,, IBM MD Germany, IBM MI, HorizonWatch16 © 2012 IBM Corporation
  17. 17. Cloud is recognized as an increasingly important technology;adoption is expected to accelerate rapidly in the coming years What is Your Organization’s Level of The Global Cloud Computing Market is Cloud Adoption? Forecast to Grow 22% per year through 2020 % of Respondents 91% $250B $241B Piloting 21% 72% $200B $150B Adopting $150B 38% 28% +33% $100B Substantially 21% Implemented $50B 41% +215% $41B 13% $0B Today 3 yrs 2011 2015 2020 Source: Sizing the cloud, Forrester Research, Inc., April 21, 2011 Nearly half (48%) of CIOs surveyed evaluate cloud options first, over traditional IT approaches, before making any new IT investmentsSource: (1) 2011 joint IBV/EIU Cloud-enabled Business Model Survey of 572 business & IT leaders; Q4. Which of the following most accurately describes your organisation’s level ofcloud technology adoption today and which do you expect will best describe it in three years?Sizing the cloud , Forrester Research, April 21, 2011; © 2012 IBM Corporation
  18. 18. Today, at least two thirds of companies of all sizes are actively either experimenting with or implementing cloud What is Your Organization’s Level of Cloud Adoption? % of Respondents; Today 82% 76% 67% 43% Piloting 44% 32% 21% Adopting 22% 34% 14% Substantially 10% Implemented 5% <$1B $1B - $20B >$20B Company Annual RevenuesSource: (1) 2011 joint IBV/EIU Cloud-enabled Business Model Survey of 572 business & IT leaders, Q4, n=36318 © 2012 IBM Corporation
  19. 19. The IT Perspective © 2012 IBM Corporation
  20. 20. IT and Business are attracted to cloud for different reasons. Rethink IT. • Rapidly deliver services • Integrate services across cloud environments • Increase efficiency Transformation Efficiency Reinvent business. • Initiate new revenue streams • Drive faster time to market for new services • Meet changing customer expectations **Source: Gartner, Cloud Computing Services, Virtualization Top CIO 2011 Wish Lists Jan 24 201120 © 2012 IBM Corporation
  21. 21. IT and Business are attracted to cloud for different reasons. IT is drawn to cloud’s cost, efficiency and control… of CIOs plan to use cloud— up from 33% two years ago. Transformation Efficiency of business executives believe cloud enables business transformation and leaner, faster, more agile processes. …while business users are drawn to cloud’s simplified, self-service experience and new service capabilities. 2011 IBM CIO Study, London School of Economics, December 201021 © 2012 IBM Corporation
  22. 22. Cloud helps business and IT create and deliver value in fundamentally new ways.Build enduring customer Deliver IT without boundariesrelationships Unlock the value of new IT and businessGain customer insight and use it to improve processes that break down traditional silos,products and services, fostering trust and simplify access to information and connectloyalty among constituents. people across your ecosystem.Improved speed and dexterity Transform the economics of ITOptimize and accelerate the delivery Speed delivery of new offerings andof IT computing resources and services services with new models of self-serviceand serve them with new, flexible and models.22 © 2012 IBM Corporation
  23. 23. How does IT develop from a quantitative perspective? Meeting the insatiable demand for new services… 32.6 million servers worldwide Between 2000 and 2010 85% idle computer capacity Servers grew 6x (2000-2010) 15% of servers run 24/7 without being actively Storage grew 69x (2000-2010) used on a daily basis Virtual machines grew 51% CAGR (2004-2010) 1.2 Zetabytes (1.2 trillion gigabytes) exist in the “digital universe” Data centers have doubled their energy use in the past five years 50% YTY growth 18% increase in data center energy costs 25% of data is unique; 75% is a copy projected Internet connected devices growing 42% per year an 1% per year... ets are growing less th … …while IT budg23 © 2012 IBM Corporation
  24. 24. Trigger for transformation The 3rd phase of the internet “colliding” with the 3rd generation of computing platform Phases of the Inter net Internet Web2 .0 Web Mobi 3.0 (C le, So loud, cial) 1964 1981 1994 2003 2008 2012 2020... s, phone (Smart evices Generations of M obile Dc) t s, e Tablet Computing Platforms er/PC Client Serv ame Mainfr Source: HorizonWatch: Top Technology Trends To Watch In 2012, Bill Chamberlin24 January 11, 2012 © 2012 IBM Corporation
  25. 25. IT Strategy for the next decade: an evolution of today‘s focus topics IT as Service Provider “IT as a function of the business“ Data ... Management SOA Service Appliances Big Data Managementon demand Virtualization Cloud Analytics Consolidation Mobility Collaboration Automation Cost Pressure Operational Excellence Service Quality Open Source Cyber Crime Social Media Data Center Optimization Prevention IT Security Smart Devices ...25 © 2012 IBM Corporation
  26. 26. Cloud Computing deployment became part of the existing IT optimization strategy and roadmap Dynamic Standardize and automate Standardize services Virtualize Reduce deployment cycles Remove physical Enable scalability Consolidate resource boundaries Flexible delivery Increase hardware Reduce infrastructure utilization complexity Reduce hardware Reduce staffing costs requirements Simplify deployments Manage fewer things better Lower operational costs Cost = Flexibility26 © 2012 IBM Corporation
  27. 27. Key IT aspects for a Cloud strategy Check Cloud readiness – do relevant processes, procedures as well as 1 roles & skills exist to manage the expected hybrid cloud delivery models Analyze workloads and select delivery models – which workload is Efficiency 2 suitable for which cloud model; which service levels are needed Cloud based on business requirements; what happens to “legacy“? Cloud Service Cloud Service Provider Cloud Service Consumer Creator Cloud Services Common Cloud Servic e Bus iness Servic e Management Platform M anager Manager Component Developer Define and develop Cloud Computing Cons umer End OSS – Operational Sup port BSS – Business Support user Existing & Services Serv ic es BP Mg mt Interfaces 3 rd party API s ervices, BPaaS Servic e Partner Service Delivery C atalog Customer Service Service Composer Cloud Servic e Account Offering Offering Ec osy stems M anag em ent C atalog Management Integ ration 3 To ols Service Development Portal & API Service Automation Management Service C onsumer Portal & API C ontracts & Service Order Offering Software Mgm t Ag reement Req uest Manager Servic e Management Interfaces M anag em ent M anag em ent API Integrator SaaS Service Change & Imag e Request C onfiguration Lifecycle M anag ement M anag ement Management Service Creation architecture; design blueprint Subscription Entitlem ent C onsumer Pricing Bus iness Incident & IT Service M anag em ent Management Tools M anager Provisioning Problem Level M anag em ent Management Service Platform Mgmt Managemen t Interfaces API PaaS Metering R ating Billing Development Consumer In- M onitoring & IT Asset & Capacity & Event License Performance To ols house IT M anag ement M anag ement Management Bus iness Proc es ses Service Runtime Serv ice Management Clearing & Accounts Accounts Platform & Virtualization Management Settlement Payable R eceivable Development Tools M gmt Interfaces Applic ations Infrastructure (processes, technology, organization) API IaaS Software Middleware Service Provider Portal & API Dev elopment Too ls Infras tructure Deployment Transition Operations Security & C us tomer Arc hitec t Manager M anager Ris k Manager C are Imag e Creation Too ls Consumer Adm inistrator Infras tructure Security, Resiliency, Performance & Consumability Governance 4 Establish management procedures to manage the different cloud models like a homogeneous environment 5 Define and publish a service catalogue for all relevant services to enable simple access to all services and disguise complexity of service delivery for customers / end users27 © 2012 IBM Corporation
  28. 28. The realities of cloud versus hype Reality Today Cloud Hype Future Reality So, no “BIG BANG” ! ≠ Trad. SO Trad. SO Everything in the Internal IT plus 3rd party cloud and all at once Sourcing mixture - for some things retain legacy, plus private/hybrid, public Source: Market Insights and Gartner28 © 2012 IBM Corporation
  29. 29. Some workloads are ready for cloud delivery Sensitive Analytics Data Information Intensive Ready Infrastructure Storage for Cloud Highly Customized Isolated Industry Workloads Applications Not yet Collaboration Virtualized Mature Workloads Development 3rd Party SW & Test May not yet be ready Workplace, Desktop Complex Pre-Production & Devicesfor migration Processes & Systems Transactions Business Processes Batch Regulation Infrastructure Processing Sensitive Compute29 © 2012 IBM Corporation
  30. 30. A Survey… © 2012 IBM Corporation
  31. 31. The CIO Vision Results from more than 3,000 face-to-face CIO interviews 71 countries 18 industries All organization sizes 16% 28% 15% 22% 6% 43% 26% 39% 35% 12% 33% 6% Japan 35% Europe 12% Communications 25% Industrial 28% <1,000 employees 16% North America 43% Growth markets 15% Public 26% Distribution 33% >10,000 employees 22% Financial Services 39% 1,000 to 10,000 employeesNote: Growth Markets include Latin America, Asia Pacific (excluding Japan), Central and Eastern Europe, Middle East and Africa31 © 2012 IBM Corporation
  32. 32. CEOs and CIOs are both focused on insights, clients and people skills CEO focus over the next 5 years CIO focus over the next 5 yearsGetting closer to customer 88% Insight and intelligence 79%People skills 81% Client intimacy 71%Insight and intelligence 76% People skills 66% 57% Internal collaboration & 64%Enterprise model changes CommunicationsRisk management 55% Risk management 50%Industry model changes 54% Enterprise model changes 48%Revenue model changes 54% Industry model changes 39% Revenue model changes 35% “Business Intelligence will provide information to the company that no one in the industry has ever seen, and will open up opportunities that were not previously considered.” Utilities CIO, USASource: 2010 CEO Study Q13: “Which of the following dimensions will you focus on more to realize your strategy in the new economic environment over the next 5 years?” (n=1,523); 2011 CIO Study, Q13: “Where will you focus IT to help your organization’s strategy over the next 3 to 5 years?” (n=3,018)32 © 2012 IBM Corporation
  33. 33. CIO visionary plans are evolving Most important visionary plan elements (Interviewed CIOs could select as many as they wanted) 83% Business Intelligence and analytics 83% Mobility solutions 74% 68% Virtualization 68% 75% Cloud computing 60% 33% Business process management 60% 64% 58% Risk management and compliance 71% 57% Self-service portals 66% 55% Collaboration and Social Networking 54% 2009 2011Source: 2011 CIO Study, Q12: “Which visionary plans do you have to increase competitiveness over the next 3 to 5 years?”(n=3,018)33 © 2012 IBM Corporation
  34. 34. CIOs are focusing on the benefits of global integration Changing the mix of capabilities, knowledge and assets within the organization Both Maintain the Deeply change current mix 14% 20% 66% the mix “Gradually, the insight has grown that the organization cannot continue doing everything in house.” Media and Entertainment CIO, Belgium Partnering versus doing everything in-house Both Do everything Partner in-house 17% 18% 65% extensively “Our focus is on best of breed partners and strategic alliances rather than outsourcing.” Government CIO, UKSource: 2011 CIO Study, Q7: “To benefit from global integration will your organization do the following?”(n≤1,214); some responses may add to over 100% due to rounding up34 © 2012 IBM Corporation
  35. 35. CIOs are changing the delivery…. How to excel Are you essential? Enable state-of-the-art collaboration What leading edge collaboration tools have Evaluate and adopt tools to strengthen you implemented across the enterprise to enterprise-wide collaboration and exchange of help integrate technology with business? data. How deeply are your internal customers Tighten business and technology involved in your key planning and decision integration Increase two-way transparency processes? by involving internal clients in planning and What is your plan to engage partners to decision-making. outsource information technology functions? Focus on the core Rely on trusted partners Which persistently inefficient processes can to handle non-strategic IT functions. you eliminate or improve to increase Simplify, automate, integrate Implement customer satisfaction? advanced business process management. How do you work with internal customers to Advance the metrics Provide sophisticated ensure dashboards measure enterprise-wide dashboards through more advanced types of key performance indicators? analytics.35 © 2012 IBM Corporation
  36. 36. The Business PerspectiveCloudnomics: The Power of CloudDriving Business Model Innovation © 2012 IBM Corporation
  37. 37. In addition to enhancing internal efficiencies, organizations clearly intend for cloud to improve their business capabilities How Important are the Following Objectives for Adopting Cloud? % of Respondents Increased collaboration with external partners 35% 27% 62% Competitive/cost advantages thru vertical integration 28% 29% 57% New delivery channels/markets 30% 26% 56% New/enhanced revenue streams 25% 29% 54% Competitive differentiation thru specialization 29% 22% 51% Rebalanced mix of products/ services 31% 15% 46% Flexible pricing models 26% 17% 43% Business Capabilities Internal Efficiencies Important Very ImportantSource: 2011 IBM/EIU Cloud Survey Results, Q5: How Important are the Following Objectives for Adopting Cloud?, n= 57237 © 2012 IBM Corporation
  38. 38. While only a few visionary businesses today are using cloudfor business innovation, the number will multiply in three years What is the Primary Focus of Your Organization’s Cloud Adoption Strategy? % of Respondents 42% 5% New business 4% New industry 17% Redesign industry 16% 2% 3% 3% Change 16% industry role 8% Today 3 yrs Close to half (42%) of organizations surveyed plan to harness cloud for radical business model innovation within three years Source: 2011 IBM/EIU Cloud Survey Results, Q8 : What is the primary focus of your organizations cloud technology adoption strategy ? n (today) = 572; n (in 3 years) = 57238 © 2012 IBM Corporation
  39. 39. Mobility, social media, increasing digitization and new analyticscapabilities are conspiring to drive broad business change Major Technology Trends driving Business Change Mobile revolution Connectivity, access and participation are growing rapidly Smart devices are becoming the primary route to get connected Devices are getting smarter as they are increasingly enriched by mobile apps Social media explosion Social media is quickly becoming the primary communication and collaboration format GenY’s or “digital natives” use of technology and social media platforms is accelerating adoption Enterprises are adopting social media but are struggling to realize the value and manage risk Hyper digitization Digital content is produced and accessed more quickly than ever before Internet traffic is growing globally driven by consumer use of video, mobile data, interconnectedness An increasing number of connected devices and sensors is further driving growth The power of analytics New capabilities for real time analysis, predictive analytics and micro-segmentation are emerging Top performing companies use analytics to drive action and business value Analytics are making information “consumable” and is transforming all parts of the organization, from customer intimacy to supply chain managementSource: IBV Analysis39 © 2012 IBM Corporation
  40. 40. Cloud harnesses the capabilities borne out of these trends toempower six potentially “game changing” business enablers Cloud’s Business Enablers Business 2 Scalability Cost Provides limitless, cost- Market 1 Flexibility effective computing capacity 3 Adaptability to support growth Shifts fixed to variable cost Faster time to market Pay as and when needed Supports experimentation Ecosystem Masked 6 Connectivity 4 Complexity New value nets Expands product sophistication Potential new businesses Context-driven Simpler for customers/users 5 Variability User defined experiences Increases relevance Source: IBV Analysis40 © 2012 IBM Corporation
  41. 41. Cloud business enablers are already driving innovation acrosscompany/industry value chains and customer value propositions What is my role in the value chain? What to do and when to rely on others? Value Chain Where to specialize and how to set up interdependent networks? Cloud Enablement Framework How will I do what I do? What kind of delivery structures? Which operating model? What is the cost structure? Customer Value PropositionWhat is my customer value Which customers am I serving? How do I generate revenue? proposition? Which customer segments? Which pricing models? What mix of products and What type of relationships to How and where to capture services? maintain? value? Which customer needs are Which channels? being satisfied?41 © 2012 IBM Corporation
  42. 42. Enterprises are leveraging cloud to enhance, extend andinvent new customer value propositions Cloud Enablement Framework Customer Value Proposition Enhance Extend InventEnhance Extend Invent Improve current value Extend value proposition to Construct radically different value proposition to retain/attract attract customers to different proposition to create a new customers for existing products products and services “need” and own the market and services Attract existing or adjacent Form new customer segments Appeal to existing customer customer segments Generate entirely new revenue segments Generate significant new streams Garner incremental revenue revenues42 © 2012 IBM Corporation
  43. 43. Cloud is also being leveraged to improve, transform andcreate new organization and industry value chains Create Create Build a new industry value chain or disintermediate an existing one Radically change industry economics Value Chain Transform Cloud Enablement Transform Framework Change organizational role within the industry or enter a different industry value chain Develop new operating capabilities Improve Enter adjacent industries Improve Increase efficiency and effectiveness of the organization Increase partnering, sourcing, and collaboration43 © 2012 IBM Corporation
  44. 44. Organizations can be classified according to the extent to which theiruse of cloud impacts value chains and value propositions Cloud Enablement Framework Disruptors create radically different value Disruptors Create propositions, generate new customer needs and segments. They disintermediate existing industries or even create new ecosystems Innovators significantly extend customer Value Chain Transform Innovators value propositions resulting in new revenue streams and transform their role within their industry or enter a different industry ecosystem Improve Optimizers Optimizers use the cloud to incrementally enhance their customer value propositions while improving their organization’s efficiency Enhance Extend Invent Customer Value Proposition Organizations should determine how and to what degree cloud can be used to enable their business model44 © 2012 IBM Corporation
  45. 45. These categories map closely to IBM’s innovation classifications,which characterize the spectrum of business innovationIBM’s Innovation Classifications Disruptors Industry Model Business Model Innovation Innovation Revenue Model Innovation Innovators Enterprise Model Innovation Product and Service and Operational Innovation Product and Service Innovation Optimizers Operational Innovation45 © 2012 IBM Corporation
  46. 46. There are strong correlations between cloud business enablers andtypes of innovation identified on the cloud-enablement framework Types of Innovation Product and Operational Service Innovation ------- Business Model Innovation ------- InnovationBusiness Model Enablers Enterprise Revenue Industry Model Model Model Innovation Innovation InnovationCost Flexibility Shifts fixed to variable cost Faster payback & higher ROIBusiness Scalability Elastic resource provisioning No scale economy limitationsMarket Adaptability Faster time to market Supports innovative ideasMasked Complexity Expand product sophistication Simpler for customers/usersContext-driven Variability User defined experiences Increases relevanceEcosystem connectivity New value nets Potential new businesses46 © 2012 IBM Corporation
  47. 47. Optimizers, innovators and disruptors each facestrategic opportunities and significant risks Organizational Major Opportunities Major Risks Classification Deepen customer relationships by Realization of limited revenue expanding value or market share gains Increase partnering by applying cloud Increased dependency on Optimizers Reduce costs by leveraging cost partners flexibility Potential industry disruption Increase overall efficiency from less risk averse player Expand ability to move into adjacent Rapid replication of innovation market or industry spaces by competitors Combine previously unrelated elements Value capture may not be Innovators of the value chain and value proposition sustainable to increase total value Gain competitive advantage Capture unique competitive edge Untested business models may through creation of new or disruption of not succeed existing industry Fast followers are often more Disruptors Invent new customer needs or define successful than first movers entirely new markets Take advantage of and sustain first mover advantage47 © 2012 IBM Corporation