Are you ready for the private cloud? [WHITEPAPER]

WHITE PAPER: KVH Cloud Services

Are you ready for the
private cloud?

Key considerations when assessing the private
cloud and how to know whether it's right for
your business.

Table of Contents
2 Introduction
3 Why Adopt the Private Cloud
5 Step-by-step decision process
7 What requirements do you have of your service provider?
9 Summary
10 Case Study – Financial Private Cloud
11 About KVH

Copyright© 2012 by KVH Co. LTD

All Rights Reserved. Not to be copied or reproduced without express permission of KVH Co LTD

Page 1 of 12

Are you ready for the private cloud?

scalability required to support business growth and
Introduction fluctuations in product demand.

The amount of data generated globally is doubling However, the Internet boom and this
every two years, creating immediate and strong consumerization together have introduced a
demand for reliable systems that enable businesses multitude of new security threats to businesses, and
to process and protect their data. Simultaneously, the rise of social media has created even more
CIOs are being put under extreme pressure to meet channels for these threats to spread and grow
these new technology needs with tightly restricted throughout an employer’s network. Consequently,
IT budgets. Gartner’s Amplifying the Enterprise: The data security and privacy, particularly for
2012 CIO Agenda recently found that IT budgets businesses with mission-critical data such as those in
are expected to increase by a mere 0.5% in 2012, the financial services sector, has become a high
although 46% of CIOs believe their actual spending priority and concern for many businesses. This has
will exceed their budget restraints. led to the evolution of the private cloud, where
businesses can use their own infrastructure in an
The emergence of cloud computing1 has isolated cloud environment, while also leveraging
introduced new ways for businesses to address the high-quality hosting, security, network, and
these needs by storing their data on off-site managed services of their service providers.
machines accessible over the Internet and/or Unfortunately, with the influx of businesses entering
private connectivity to significantly decrease this space and with the technology constantly
infrastructure and maintenance costs. Therefore, as advancing and evolving, a lot of terminology
cloud computing enables enterprises to more surrounding cloud computing has become
cost-efficiently manage their IT environments, it is confused, and many businesses are still unaware of
not surprising that CIOs have reported “Cloud exactly what the cloud can offer them and
computing (SaaS, IaaS, PaaS)” as one of their three whether or not they should be adopting this new
highest technology priorities for 2012. technology.

With the consumerization of IT, cloud services Data and technology trends show that almost all
enable users to access their data from anywhere at businesses will need to adopt cloud computing in
any time to improve business productivity, and with some form or another eventually.
the continuously changing IT and business needs of
organizations, the cloud provides the flexibility and For businesses looking to adopt the private cloud,
this whitepaper aims to explain its potential benefits,
and how to make the right decisions when
1 Cloud computing is a model for enabling ubiquitous,
choosing to make the shift and when selecting a
convenient, on-demand network access to a pool of
configurable computing resources (e.g. network, servers, service provider.
storage, etc.) that can be rapidly provisioned and delivered
with minimal management effort.

Copyright© 2011 by KVH Co., Ltd. All Rights Reserved

Page 2 of 12


of new malware using the internet as its primary

Why Adopt the Private Cloud? attack vector, there is now a serious need among
organizations for reliable and thorough security
solutions that cover the company’s entire
This section outlines the key IT challenges
operations. Particularly, for companies with highly
enterprises are currently facing, how the private
confidential data, such as those in the financial
cloud can address these challenges, and how
services, data leaks or security breaches can be
businesses can sufficiently prepare and plan to
detrimental to their success and reputation.
effectively experience these benefits once their
private cloud is up and running. As each business Internet-based access for public cloud
will vary in their existing IT systems, internal resources, environments increases the risk of contamination of
staff skill-sets, and data service needs, the extent to data from unknown, outside sources. On the other
which each company will experience these hand, private cloud environments ensure your
benefits will heavily depend on their capacity to infrastructure run on separate networks and servers
smoothly migrate to the private cloud, as well as from other companies in a secure environment.
their service provider’s capabilities in supporting These private cloud environments lead to minimal
the migration and addressing the company’s risk of being tainted or affected by other customers’
particular challenges and needs.
environments and deliver guaranteed
performance of the infrastructure.
Security and Privacy

Maximize Cost-Efficiency
Global IP traffic is multiplying in volume every year,
and is expected to multiply five times by 2013. In
IT budgets are becoming increasingly restricted as
addition to this growth, social media, desktop
businesses are desperately looking for more
virtualization, and the consumerization of IT are
cost-effective ways to manage their IT needs by
introducing a plethora of new ways for malware to
doing “more with less”. For most, this means finding
spread through employers’ networks, and with 85%
ways to cut the costs of their hardware, software,


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and information security services, while increasing effectiveness of a private cloud environment, while
business productivity. also shifting your CAPEX to OPEX for optimal
long-term cost-efficiency.
Most cloud computing environments contain server
orchestration capabilities that provide centralized Increased Control
management of the server resource pool, including
billing, metering, and chargeback for consumption. Private cloud is ideal for businesses that want a high

Server orchestration also defines the policies and level of control over their IT environment. This could

service levels through automated workflows, be applicable to companies with high security

provisioning, and change management, thereby concerns or that deal with highly confidential or

creating an application-aligned infrastructure that mission-critical data. As a private cloud is highly

can be scaled up or down based on the needs of customizable, it allows businesses to set up their

each application. Considering that servers in servers and networking gear at their desired

legacy environments are heavily underutilized, specifications to meet their unique requirements.

effectively running at 15-20% capacity, server Whether these requirements stem from specific

orchestration can reduce the number of idle regulatory or compliance issues, or whether they

servers and drive overall server utilization to over have been imposed from an overseas HQ, the

80%. For example, it is feasible for a particular set of private cloud environment can be customized to

servers to be provisioned at night to run a set of these needs and, in many cases, this would extend

applications and reimaged in the morning to run a beyond server specifications to specialized

set of completely different applications. Such reporting, monitoring, and supported server

re-use of underutilized resources not only reduces images.

capital expenditures, but also decreases energy
consumption by 70-80% and yields reductions in Moreover, since the environment is not shared with

power costs and server maintenance. other customers, private cloud adopters can
access and change their environment as it is

For in-house private cloud adopters, the total cost running and adjust their settings as they wish, while

of ownership of a private cloud environment can also benefiting from the 24x7 monitoring and

be extremely high without the experience or technical support, as well as the on-demand

expertise internally to help identify where cost professional consulting of their data center service

savings can be made while still developing a providers.

solution that meets the business’ specific
requirements. Private Cloud System Integrators Scalability and Flexibility

(SIers) have professionals with the right skill-sets,
Private cloud services enable businesses to scale
business partners with the most cost-effective
their IT infrastructure according to their business
equipment, and high-performance and highly
needs. For businesses launching a new product
secure infrastructure that can boost the


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with unforeseeable demand in the marketplace, organizations assess the potential impact of a
they can increase or decrease the amount of IT cloud service on their internal architecture, though
resources they are using depending on actual 71% of organizations are either currently in some
demand after it is launched, which significantly stage of a network re-architecture project or
saves on cost in cases of low demand and expect to be within the next 24 months. Without
efficiently supports business growth in cases of high making this critical assessment, it is almost certain
demand. Also, as business needs change regularly that businesses will face unexpected problems
with evolving customer demands and markets when developing, customizing, and implementing
trends, the flexibility to provision services enables their private cloud, not to mention the difficulties
businesses to seamlessly change their IT that will arise when monitoring the cloud services
environments without negatively impacting their and measuring their effectiveness.
business workflow.
Furthermore, shifting to the cloud requires a major
change in the way a company functions and its
Step-by-step decision process core internal processes. If each department in an
organization is not appropriately prepared to make
With all the capabilities of the private cloud, it can this change, the project could not only fail, but it
be tempting to sign up with the first service provider could potentially raise problems and issues among
that promises the aforementioned benefits. teams that will further delay the company from
However, it is important to recognize that certain reaping the cost and efficiency benefits cloud
service providers will be more suitable to particular computing can offer. In particular, silos within a
businesses and industries than others, and that the company, such as a particular department or
extent of benefits received will depend on the team that is not working collaboratively or
capabilities of the service provider to meet your effectively with the rest of the organization, could
business needs. The following are some basic become a major hurdle in the process of shifting to
considerations to keep in mind when deciding on the private cloud. It is important to assess the
whether to make the shift to the private cloud, and company’s organizational structure and existing
how to choose the best service provider for your internal processes to decide whether or not it is
business when the time is right. ready for a company-wide adoption of the private
cloud.
Structurally, can your company handle this
change? Is your internal staff prepared?

Cloud migration can involve significant Who is going to run this internally? Is there the
architectural changes to a company’s IT systems skill-set and expertise internally that can efficiently
and networks. The InformationWeek 2012 State of manage this project on an ongoing basis? It is
Cloud Computing Survey found that only 28% of IT highly beneficial to have an internal person or


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team, depending on the size of the company, who they may rely on a public cloud to handle excess
has the technical background as well as a deep data flow. Before adopting a private cloud service,
understanding of the business, to work effectively it is important to assess whether a public or hybrid
with the service provider to implement the private solution may better suit your needs.
cloud, manage any issues that arise, and actually
understand any changes that need to be made to Where will you house it?

the environment as the business changes. In
addition, the service provider should be able to By managing and maintaining a private cloud

demonstrate their expertise in running private cloud environment in-house, it ensures the company has

environments as well as an understanding of their complete control over the environment, and that

customers’ core business and the challenges that the security risks involved are, theoretically,

they face. If your staff are not sufficiently trained, or minimized since it is isolated from other cloud

if the service provider cannot make up for the gaps environments and networks. For some businesses,

in your staff’s skill-sets, moving to the private cloud this may seem like a strong reason to host their own

will be significantly more time consuming and private cloud, though the impacts that this will

costly than necessary. have on other areas of the business should also be
kept in mind.

Are public or hybrid options better suited to your
business model? For example, if the private cloud is hosted
on-premise, are there people with the necessary

For businesses looking to utilize a great number of skill-sets available to attend to the cloud

servers and for those that are using hosting solutions, environment on a 24x7 basis in cases of outages, or

the public cloud would be better suited as it when hardware needs to be added or changed?

provides a low-cost service that can handle high Businesses considering this option for security

volumes of data. Meanwhile, as mentioned reasons would need to ensure their infrastructure is

previously, for businesses that have strong security being monitored at all times with the highest level

concerns or strict compliance and regulatory of security services and professionals who can act

factors to consider, the private cloud can better quickly and efficiently when needed. Furthermore,
meet these requirements. the in-house facility and internal staff would need
the capabilities to support and manage
However, it is becoming increasingly apparent that uninterrupted power supply systems (UPS, building
with the unpredictable nature of data growth and generators, etc.) that are required in case of power
Internet traffic, many businesses will inevitably outages and mandated building-wide power tests.
begin to adopt a “hybrid cloud” solution, which is a
combination of both the public and private cloud. Also, unless infrastructure management is a core

For example, a business may use a private cloud for component of your business, spending the time,

a certain application, and during spikes in demand money, and resources on developing and


Page 6 of 12


maintaining a private cloud environment could be assessments. To meet security compliance needs,
wasted efforts. What will be saved from a security ISO certifications will determine whether a
and privacy perspective could be lost from a provider’s infrastructure meets domestic and
business productivity and cost-efficiency international security standards.
perspective. Private cloud service providers that
specialize in this space would not only be able to
offer a customized, low-cost solution to meet their
customers’ security, data volume, and budget What requirements do you
requirements, but their professional services and have of your service provider?
consulting capabilities will ensure that their range
Before selecting a service provider, ensure you
of capabilities are effectively leveraged to
have a clear proposal of what challenges you
implement the project as seamlessly as possible.
hope to overcome and what goals you anticipate
With all that is saved in time and money by
reaching by adopting a private cloud. This will help
outsourcing, customers can focus their resources
determine the kind of service most appropriate to
and efforts on strengthening their core business
your business and what kind of service provider will
competencies.
best be able to meet your needs.

Is compliance an issue for your business?
Firstly, confirm your performance goals, which

Strict compliance issues can cause great difficulty could include processing needs and response

for businesses trying to develop and manage their times. This will influence the geographical proximity,

own private cloud environments. When assessing network performance needs within and outside the

service providers, these kinds of businesses, cloud environment, and the choice of computing

especially those in the financial industry, should be resources regarding CPUs, disks, and storage

aware of their provider’s ITIL2 competency, as well devices.

as their TIPA and ISO certifications. Providers that
Secondly, assess whether you need a
have implemented ITIL training and procedures
Software-as-a-Service (SaaS), Platform-as-a-Service
across their organization will be able to align and
(PaaS), or Infrastructure-as-a-Service (IaaS) solution.
integrate their support procedures more effectively.
As most providers will either specialize in one area
ITIL competency can be measured via TIPA
or have a combination of these capabilities to a
certain extent, you will need to choose the
provider that can offer the best services in the field
2
ITIL (Information Technology Infrastructure Library) provides a
cohesive set of best practices, drawn from the public and
you need. The type of solution will also affect the
private sectors internationally and supported by a roles of your internal/end-customer IT support staff.
comprehensive qualifications scheme, accredited training
organizations, and implementation and assessment tools. For
more information, visit the official IT website at: Thirdly, question whether you need an SLA and, if so,
http://www.itil-officialsite.com/


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which cloud provider can offer it guaranteed. Your throat to choke” if there are any issues, reducing
SLA will influence the requirements you place on the number of relationships, support processes, and
the cloud provider and the architecture needed skills that would be required internally to manage
for the solution. Internal staff or the cloud provider’s multiple vendors.
Professional Services will need to have the
capabilities to design a system architecture based How well does your provider understand your

on the building blocks available from the cloud needs?

provider.
The type and volume of data being generated

Does your cloud provider own and manage and handled will differ across the financial, media,

networks as well? carrier, and manufacturing industries, and will
further differ depending on the size, location,
Private cloud hardware and infrastructure costs growth patterns, and products of each company.
include networks, switches, circuits, servers, and As such, the service providers that manage, store,
more. Providers that develop these products as process, and protect the data of each of these
well as offer cloud services will most likely try to sell companies and industries will need to be able to
all of their products in a single offering. While this demonstrate their capabilities and experience in
greatly benefits the provider, this can often limit the these fields. Your service provider needs to
cost savings and quality of service for the customer. understand your industry, your core business area,
Similarly, while some providers may specialize in a and the challenges that you are facing with your
particular product and be able to offer that data, to ensure that the contracts and conditions
product at a significantly low price, the customer of the provided services are agreed upon in a
would still need to find other vendors that can common technical language.
provide the remaining missing pieces of their
private cloud. Also, for businesses that have operations across
several international offices, the service provider
Alternatively, service providers that have system needs to be able to offer services in multiple
integration capabilities can combine languages to streamline communication between
high-performance, best-in-class devices from the provider and customer, as well as minimize
various vendors to offer lower end-to-end cost for a downtime in times of crisis or when changes need
significantly higher quality service. Furthermore, to be made to configurations in a timely manner.
with the high level of network sophistication
involved in cloud services, the best providers are What is the value-add?

those than can offer integrated cloud and
networking solutions that have comprehensive SLAs Every private cloud service provider will claim they

across the environment. These providers will ensure offer the best service available in the industry, but

better integration with legacy systems and “one the key differentiating factor between them and


Page 8 of 12


their competitors will be the value they can add to level of control over their IT environment. This would
your business beyond the basic service. be applicable to companies with high security
concerns or that deal with highly confidential or
As well as multilingual support capabilities, mission-critical data. As a private cloud is highly
best-in-class infrastructure, highly regarded expert customizable, it allows businesses to set up their
consulting, and solid ITIL implementation among servers and networking gear at their desired
other certifications, what else can they offer? Do specifications to meet their unique requirements.
they offer networks, security, managed services, Private cloud environment can be customized to
proximity services, and backup capabilities? Assess these needs and, in many cases, this would extend
how your service provider can support your private beyond server specifications to specialized
cloud environment, while also meeting your other IT reporting, monitoring, and supported server images
needs. and applications.

There are many factors to consider when selecting
Summary
your external IT services provider. What level of
SLA do you require and is your cloud service
With the amount of data generated globally provider capable of providing a one-stop solution
doubling every two years and CIOs under extreme in being able to manage networks as well? What
pressure to meet these new technology needs with degree does the service provider understand your
tightly restricted IT budgets, the adoption of cloud industry and are there specific compliance
computing environments is moving into the main considerations that need to be understood and
consciousness of most businesses. Cloud factored into the implementation? What
computing represents a shift away from traditional professional services capabilities does the provider
IT consumption models to delivering IT as a service. offer that will allow you to implement this project as
While the benefits of cloud computing in terms of smoothly as possible and position you best to
flexibility, speed of deployment, and reduced receive the full anticipated benefits?
capital and operating costs are proven, there are
various types of cloud deployments, such a Moving to a private cloud environment, whether a
“public,” “private,” and “hybrid” to choosing from. significant IT migration or a smaller deployment, is
Selecting the most appropriate cloud will be not easy for most companies. Selecting the right
dependent upon such factors internal policies for service provider with the appropriate infrastructure,
security and compliance, level of desired technical expertise, and service portfolio will allow
customization, and internal technical skills and businesses to overcome their technical and
infrastructure for managing and hosting the resource challenges and to implement a solution
environment. that is most appropriate to their specific needs.

Private cloud is ideal for businesses that want a high


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Case Study – A Closer Look at a Financial Private Cloud

Challenges in Financial Services

Businesses in the financial services sector need to meet strict industry standards (such as Basel III for banks),
reach low latency levels to stream market data feeds and/or conduct high-frequency trading, and
effectively protect their confidential and mission-critical data with highly reliable systems. Some of the key
challenges these businesses face include maintaining modern security levels that address the needs of
the entire company and the range of current and emerging security threats, managing robust
infrastructure with lower IT budgets, and finding ways to focus purely on their core competencies in
finance rather then spending time and resources on maintaining their IT systems.

A leading global financial services company was faced with the above challenges, as well as the
difficulties of not having the internal resources and skill-sets to effectively migrate their entire IT systems to
the private cloud. With several thousand applications that needed to be hosted on several hundred
servers in a secure and private cloud environment, and a range of upcoming demands for trading
solutions, reliable data backup, and significant cost reduction, they decided to leverage the expert
consulting and high-performance infrastructure and networks of a private cloud service provider.

Solution – The Private Cloud

The customer adopted a secure, private Infrastructure-as-a-Service (IaaS) environment of Application
Servers with Dedicated WAN connections to their data center, as well as a remotely accessible Control
Center through which they could efficiently manage their IaaS environment. They also leveraged their
service provider’s Professional Services, Project Management Services, and Private Cloud Consulting
professionals to provide performance analysis of their private cloud environment, and also to conduct a
thorough analysis of their requirements to assist in creating the customer’s internal business case for
outsourced application grid server farms.

They received the highest level of security through their service provider with ISMS-ISO 27001 Certification
for data center services, SAS70 and FISC Compliance, Caged data center environments, secure and
dedicated WAN lines direct to the customer’s data center locations, Due Diligence Auditing, and Control
Center Software developed in-house by the provider for the sole operation of the customer.

Benefits - Maximize Control and Cost-Efficiency


Page 10 of 12


The solution enabled the financial services company to significantly decrease TCO of their infrastructure
with greater scalability and flexibility in payment and delivery options, meet their extensive security needs,
and also reach a high level of control over their Private Cloud environment through their Control Center, a
server management software service that uses the latest web technology. The Control Center allows the
customer to personalize their display based on server status, control their server power, provision machines,
and share status updates with other customers of the service provider.

Furthermore, the service provider offered disaster recovery (DR) planning, a back-office
Desktop-as-a-Service (DaaS) solution to increase flexibility for employees, and a global network of low
latency connectivity to enable the monitoring, analyzing and optimizing of market data feeds. The overall
solution not only met the initial needs of the customer, but also provided added value and support to the
core areas of their business, allowing the financial services company to save time, money, and resources,
while improving the way their IT systems are managed and maintained and focusing on the services that
generate profits for their business.


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About KVH

KVH was established in Tokyo in 1999 by Fidelity Investments as a Japan focused IT / communications
service provider. As an information delivery platform that allows enterprise customers to store, process,
protect and deliver their vital business information, KVH offers integrated cloud and network solutions that
include infrastructure-as-a-service, managed services, data center services, professional services, data
networking, internet access, and voice services. KVH operates the lowest latency network in Japan, and
with over 450 financial services customers, is the leading provider of ultra low-latency network and
proximity hosting solutions to the high-frequency trading community in Tokyo and Osaka. KVH also offers
low-latency connectivity services between major financial markets in the Asia/Pacific region and the US
including Tokyo, Chicago, New York, Singapore, Hong Kong, Shanghai, and Sydney.

More information on KVH can be found at www.kvh.co.jp/en/


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Are you ready for the private cloud? [WHITEPAPER]

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