Cloud report q4 2011

Cloud report – Q4 2011

”How to take advantage of new cloud business
opportunities using the Azure cloud ecosystem”

For more information, please contact:
Mathias Ekman, mathias.ekman@softronic.se

Softronic a Cloud Partner

Executive Summary

We are now in the middle of a technology shift and the IT landscape is undergoing comprehensive
change. Cloud services and solutions are enabling new agile and cost-effective solutions that will
radically improve our ability to be significantly more effective in our delivery. The cloud market is still
in an immature state and attracts a large number of new players every month. In the ongoing shift, it
is vital that the Enterprise organisation understands its position within the market and how to take
advantage of the new opportunities. In this paper, the following actions are suggested:

Spend time understanding the true possibilities that cloud computing offers when realised using
Platform as a Service (PaaS) offerings, rather than just migrating to Infrastructure as a Service (IaaS).

Re-think and re-design architectural patterns and recommendations in order to embrace the world of
continuous services and connected devices. Move from traditional development of Line-of-business
applications towards people-centric and device-centric services.

Identify the Entreprise position in the new information ecosystem and the possibility of delivering
new services.

Align internal IT infrastructure and deployment models with the public cloud in order to take
advantage of cloud bursting and new PaaS offerings.

To take advantage of the SaaS-ification, the organisation must use more standardised and unified
processes. All non-competitive process may be changed in order to provide a better fit with the
processes within the selected SaaS-offering.

The Enterprise can no longer be designed for intra-organisational solutions and it is time to update
the federation and information strategy to reflect the current situation.



CLOUD COMPUTING – IaaS, PaaS, or SaaS

Cloud computing has according to Gartner passed the “peak of inflated expectations”. Yet it is still
possible to come across some rather confusing ideas as regards what it actually is. You hear about
public clouds, private clouds, even terms like partner clouds and various forms of X-as-a-Service
(XaaS). Regardless of what you call it, there is no doubt we are in the middle of a transformation
which has all the ingredients necessary to be described in the future as a paradigm shift.

So where did this confusion originate from? One term is probably “service”.

A service is an activity or function that adds value to a recipient, serves it, without in itself meaning
that a lasting physical object with an intrinsic value is conveyed to the recipient – translated from the
Swedish definition of ‘service’ in Wikipedia.

Linked to clouds, we often use the term service but with significantly different meanings.

 One can purchase something where the business model is usage-based, i.e. as a service
 One can deliver/purchase software as a service over the internet (SaaS)
 One can build systems that utilise resources or services when they are required and it is
possible to have the perception of an “unboundedly scalable” resource and service pool.

Note that none of these points in themselves requires any of the others, but it is when all three are
combined that something really exciting happens.

“Cloud Computing is characterised by two important properties: perceived unbounded resources and
payment per resource usage. The service that is offered by the cloud is called ‘Utility Computing’,
which is similar to the resource utilisation of electricity or water for example” … “Cloud Computing



can therefore be considered to consist of the services ‘Utility Computing’ and ‘Software as a Service’”
– From the IASA’s definition of Cloud Computing

If you were to take your web application and purchase some virtual servers from a hosting provider
and have customers pay per user, is that “the cloud”? I don’t believe it is, but what if you were to
purchase those virtual servers from Amazon instead? Well, in many cases the software that is
executed cannot utilise the scalability; it should then be classed more as the outsourcing to an
external supplier of infrastructure operation and storage; it would certainly sound more exciting to
say that it is the cloud, and perhaps it is, but it is a little like the emperor’s new clothes. If the
company Amazon works with the cloud, yes, definitely! But perhaps primarily as a supplier of
Infrastructure as a Service (IaaS).

In order to make it ”unboundedly scalable” and at the same time only pay for what you use in a cost-
effective way, we must coordinate the use of resources, particularly resources from a hardware and
system software perspective. This has resulted in a very advanced virtualisation technique which the
various cloud providers use. As a result of this, an oft-heard phrase is “we don’t know where our data
is”.

There is nothing in the technique itself which means that we cannot set up the structure so that we
can say at which data centre the information is being stored, to which other parts it can be mirrored,
etc. This is a question for the supplier of the data centre rather than a property of the cloud. If it is
important from a compliance perspective that data is archived and processed within the EU for
example, you should choose a provider that can handle this aspect. Here, Microsoft Azure is an
excellent example which can describe how this is solved.

Although the market remains relatively immature, there is a distinct trend for IaaS in the public cloud
to become the most commoditised segment in the cloud today. This trend indicates that
developments are following Moore’s law, i.e. the price drops by 50% and performance improves by
100% every 18 months. The general pricing concerning IaaS is currently a fixed price, but if we
compare this situation with other market segments which have undergone the same transformation,
the end goal is a spot market with margins under pressure.

The area that is most mature is the SaaS (Software as a Service) market. Here, we can also see a clear
trend where traditional IT consultancy companies are expanding their existing products and services
out into the cloud market, e.g. by becoming a retailer for SaaS providers and offering integrations
with existing systems on-premise.

In the middle of 2009, Cloud Computing – molnets påverkan på konsultbranschen (‘Cloud Computing
– the effect of the cloud on the consultancy sector’) proposed a different path, where consultancy
companies could take on a completely different role and where there is an opportunity to increase
the margins through joint investments with one’s clients. In order to achieve this position, a start in
the “Venture” position and a passage via the role of “Cloud expert” was proposed.



Sadly, most of the examples and discussions have focused on moving on-premise applications to the
cloud as-is and the various possibilities for running virtual machines, rather than solutions built on
top of Platform as a Service (PaaS). PaaS according to Forrester:

“A complete application platform for multitenant cloud environment that includes development tools,
runtime, and administration and management tools and services. PaaS combines an application
platform with managed cloud infrastructure services.”

Why is a PaaS strategy important? With the right choice of Paas one will quickly gain cloud’s benefits.
Without the PaaS, cloud development and deployment is too difficult, and the benefits of cloud will
flow slowly. Using a PaaS makes it easier to focus on the business application and not on platform
technologies. The ISV of tomorrow need to evaluate if there SaaS application is only based on cloud
infrastructure or if it will actually leverage of services form a PaaS vendor.

The main concern of today is the lack of interoperability between the leading PaaS vendors. For
many ISV the selection of a PaaS platform is a lifetime bet since cost of re-development will be too
high. The PaaS market is a fast-changing and rather immature market; in fact the major platform
vendors have only recently entered the market, making the choice even harder.

We are now in the middle of a technology shift and the IT landscape is changing comprehensively.
Cloud services and solutions are enabling new agile and cost-effective solutions that will radically
improve our ability to be significantly more effective in our delivery. In that sense, the past five years
have been breath-taking. But the next five years will bring about yet another inflection point when
the shift in apps and infrastructure truly begins.

Recommendation: Spend time understanding the true possibilities that cloud computing offers
when realised using Platform as a Service (PaaS) offerings, rather than just migrating to
Infrastructure as a Service (IaaS ).



Windows Azure – The PaaS thought leader

According to Forrester the two leaders in the PaaS market as of today is Microsoft and Salecfore.com. These two has rather
different approaches. The PaaS of Salesfoce.com (Force.com) is a separation of the platform from the SaaS CRM application
that the company initially delivered and then they have recently invested in the platform Heroku. Microsoft on the other
hand has delivering a new set of services and a PaaS wich supports multi programming languages and continues delivering
new value and service on top of Windows Azure every quarter.

The Windows Azure Platform is a Microsoft cloud platform that is used to build, host and scale web applications and
services through Microsoft data centres. Windows Azure Platform is classified as ‘Platform as a Service’ (PaaS) and forms
part of Microsoft's cloud computing strategy. The platform consists of various on-demand services. Perhaps the best-known
sub-brands are Windows Azure (an operating system providing scalable computing and storage facilities), SQL Azure
(relation database capabilities as a service) and Windows Azure AppFabric (a package of services supporting applications
both in the cloud and on-premise).

Windows Azure was announced during the PDC (October 2008) and followed relatively soon after by yet another
announcement of SQL Azure (March 2009). This was followed up by yet another exciting initiative - Datamarket, a.k.a.
“Codename Dallas” (CTP November 2009). In the ongoing CTP related to AppFabric (June 2011), a lot of new functionalities
are introduced related to the AppFabrc Service Bus.

As of to-day (Q3 2011), the services can be divided into eleven categories, as defined at
http://www.microsoft.com/windowsazure/features/

For those familiar with Microsoft’s history, certain similarities are apparent with the initiative that was codenamed “Oslo”.
Originally, in 2007, the "Oslo" name encompassed a broad set of technologies including updated messaging and workflow
technologies in the next version of BizTalk Server and other products. This is addressed in an initial version with the CTP of
Appfabric.



The legacy of today and the dawn of a new world

Over the past few decades, significant progress has been made in the way business functions and
processes are automated. As the process was automated and codified, it became possible to apply
lean principles across the business to remove redundant and manual operations. In many situations,
this was made possible by introducing enterprise software applications that provided tools and
capabilities for the specific business area. The side-effect of this legacy is that data is now contained
in these systems, which are often isolated and scattered across multiple data stores.

Few people have dared to change their view of architectural patterns and the way in which IT
support for users should be realised. One of today’s challenges is perhaps the way in which current
systems are constructed and structured.

The ecosystem of today has a rather complex structure, as its building blocks include a world of
devices, a world of websites, and a world of apps and business data spread across a large number of
devices, websites and vendors. Perhaps the number one challenge today is the way in which
knowledge (in relation to information) flows in and out of the enterprise and how it is presented to
the user.

 Today’s enterprise applications, their processes, and the data are functionally isolated and
mainly accessible only by experts. The majority of employees are not experts or licensed users
of line-of-business applications. Extracting insights across fragmented data sources is both
difficult and time-consuming. This limits their productivity and participation in business
processes, making it difficult to gain a broad and deep insight into performance and correlate
symptoms with far-removed causes.
 The challenge for the modern infrastructure is to make the above work seamlessly for the
user, for the information and for the knowledge. In fact, many of the unstructured processes
that are knowledge-rich and people-intensive are typically executed independently of
structured data and business processes. Establishing good solutions for knowledge flow is one
of the upcoming challenges when the information flow is automated. Without this support, it
is hard to capture and manage the learning and reuse within the organisation and the
ecosystem.
 These systems and its architecture were primarily designed for intra-organisational processes.
Over time, the complexity of these solutions has increased. Competitive requirements have
driven IT departments to build new functions on top of this complex core, making it more and
more fragile. The ecosystem has also changed and there is now a need for cross-border and
global solutions and the number of devices that appear and disappear is comparable with the
situation in the customer market.

In order to handle this situation, and the fact that new business models are appearing, a simpler
conceptual model is taking shape. This is the world of continuous services and connected devices.



These continuous services are always available and have an unbounded scalability by virtue of the
fact that they rely on the different aspects of cloud computing. These information-rich services are
constantly collecting and analysing data both outside and inside the ecosystem, and in doing so they
are connecting and bringing together the different players in the ecosystem in a new way.

The devices of tomorrow will be built in the knowledge that they should be instantly usable,
interchangeable and trivially replaceable without loss. The storage of information will shift towards
being more cloud-centric rather than device-centric, as these new devices are by design more
appliance-like. In order for this to be true, it is vital that the organisation defines at an early stage a
strategy for managing the master of information, i.e. how to make this device, system and vendor
non-specific.

This, combined with the fact that Telematics is changing from vision to reality and the fact that
information is becoming increasingly accessible to users as a result of using these new devices,
speaks its own clear language - now is the time to act and take advantage of the situation and
opportunities!

As Ray Ozzie said:

“Let there be no doubt that the big shifts occurring over the next five years ensure that this will
absolutely be a time of great opportunity for those who put past technologies & successes into
perspective, and envision all the transformational value that can be offered moving forward to
individuals, businesses, governments and society. It’s the dawn of a new day – the sun having now
arisen on a world of continuous services and connected devices.”

In order to face the world of continuous services and connected devices, the modern enterprise must
redesign its architecture. It must also re-examine its ongoing contribution to the creation of new and
differentiated values. From an IT perspective, the business solution will be a combination of On-
Premise solutions, SaaS-applications and “Apps” downloaded from different App Stores, and these
applications and systems will be executed from a number of different locations.



The trend we can see in the ecosystem is for:

 The price for storing information to drop rapidly and move towards zero in the cloud
 Information to be released and become increasingly accessible, which results in the cost that
can be charged for distributing raw data falling rapidly
 New types of service to be created to ensure the quality of the data or to enrich the
information with information from other sources - From Gartner’s hype cycle, we see new
technologies such as ”Context-Enriched Services” or ”Big data”
 AppStores transforms to Marketplaces – A good example is Azure Marketplace, which handles
both applications and information quantities which provide a platform for a new information
ecosystem
 The App behaviour transforms to Social behaviour – Windows Phone 7 with the impending
update by the name of ‘Mango’ is a clear example of this trend
 New business models appear, of which one of the more promising ones is the cloud broker
model, which take advantages of cloud bursting

Recommendation: Re-think and re-design architectural patterns and recommendations in order to
embrace the world of continuous services and connected devices. Move from traditional
development of Line-of-business applications towards people-centric and device-centric services.

Identify the Entreprise position in the new information ecosystem and the possibility of delivering
new services.



How to build an information ecosystem on top of Windows Azure Marketplace DataMarket

In the new information ecosystem it will be of great important to address questions regarding how to find and expose
information in a reliable, scalable and future proof way. Microsoft has addressed many of these issues with their initiative
Windows Azure Marketplace DataMarket (aka Codename Dallas).

Windows Azure Marketplace, which is an online service for purchasing cloud-based data and applications. DataMarket
enables content providers to make premium, syndicated, commercial and other data available in the cloud and
programmatically accessible through standardized API, such as RESTful or OData requests.

The DataMarket section of Windows Azure Marketplace includes data, imagery and real-time web services from leading
commercial data providers and authoritative public data sources. Customers will have access to data sets such as
demographic, environmental, financial, retail, weather and sports data. DataMarket also includes visualisations and
analytics to facilitate insight on top of data.

An example of what can be established for these services is the portal www.offentligadata.se, which offers organisations
that need to comply with the PSI Directive an excellent, cost-effective solution for doing so. By using the various
characteristics of the PaaS package, the following solution is created:

Early adopters are looking to deliver platforms and applications such as telematics services for vehicles through the App
Market. This pattern can, of course, be extended into industrial equipment, field assets and various other mobile devices.
Manufacturing companies are using these capabilities in highly innovative mash-up style applications, e.g. for tracking
goods and transportation assets, market segmentation, demographics overlays for visualisation, and so on.

The Applications section of the Windows Azure Marketplace is including listings of building block components, training,
services, and finished services/applications. These building blocks are designed to be incorporated by other developers into
their Windows Azure platform applications.



The cloud broker model and cloud bursting

As mentioned in the first section the PaaS market is rather immature while the IaaS segment is
becoming rather commoditised. In fact, this may be a window of opportunity for large IT-department
or traditional outsourcing partners. In many of today’s large IT-departments there exist a lot of
unused infrastructure. For the brave CIO that transforms the internal structure and deployment
models in a way that become more cloud alike may take advantages of the new opportunities in
relation to cloud bursting. Forrester defines cloud bursting as follows:

Cloud bursting is the dynamic relocation of workloads from private environments to cloud providers
and vice versa. A workload can represent IT infrastructure or end-to-end business processes.

As time evolves the PaaS vendors may try to bridge the gap between the on-premise environment
and the one in the cloud. When that occurs the true benefits of cloud bursting will occur, i.e. it is
possible maximize the usage of internal resources and hence lower cost even further.

Cloud bursting and Windows Azure AppFabric

In order to take advantage of cloud bursting between the public cloud and the private environment the vendor need to
deliver some kind of middleware for developing, deploying and managing an application.

Windows Azure AppFabric provides a comprehensive cloud middleware platform for developing, deploying, and managing
applications on the Windows Azure platform. It delivers additional developer productivity, adding higher level platform-as-
a-service (PaaS) capabilities on top of the familiar Windows Azure application model. It also facilitates the bridging of
existing applications to the cloud through secure connectivity across network and geographic boundaries and by providing a
consistent development model for both Windows Azure and Windows Server.

In addition, Microsoft will in time provide parity between AppFabric across on-premises (Windows Server), cloud (Windows
Azure), and appliance (Windows Azure Appliance), enabling developers to write applications in the same way and make a
deployment decision as to whether they want to deploy it in either of these environments or in a hybrid model across these
environments.

Finally, Windows Azure AppFabric also bridges existing applications to the cloud through secure connectivity to LoB systems
across network and geographic boundaries and by enabling a consistent development model for both Windows Azure and
Windows Server.

Recommendation: Align internal IT infrastructure and deployment models with the public cloud in
order to take advantage of cloud bursting and new PaaS offerings.



Challenges for the modern and brave CIO

It is not just technical aspects that a CIO will have to deal with in the future. The purchasing
behaviour of the business operation and influences from the consumer market will become
increasingly marked. What new driving forces exist today for an IT manager within the public sector
for example? Three tasks that have become clearer over the past twelve months are:

 Put IT in the service of the inhabitant
 Contribute information to the ecosystem concerning Public sector data (driving force also the
PSI Directive)
 Work together to establish more efficient cross-border processes

A major challenge with these three aspects is that they are customer-driven, which leads to a picture
of expectation and change inclination which resembles that of the consumer market. As the “App”
generation grows up and we move towards a world full of 24-hour services, we will also expect
similar services from the companies/organisations/authorities with which we interact. Above all,
those that hold information which represents my personal information or which I have the right to
use.

The trends that this leads to are for:

 The proportion of IT that is classified as business IT to increase
 The proportion of the total IT budget that is purchased as a service to increase

To ensure that this transformation does not take place in an uncontrolled manner and creates
business value in the long term, the role of CIO must have control over the way in which the transfer
takes place. This work requires a close collaboration with roles such as (in addition to the business
operation) HR (in some cases, we will be transferring personal information concerning the
employees), compliance and legal, as well as the head of security, in order to understand what
should/can be purchased as a service and in what order they should be purchased.



The way in which this work is carried out will determine whether or not in a few years we will
describe “the cloud” as the saviour or as the emperor’s new clothes. If we do not also ensure that the
suppliers with which we choose to enter into relations understand the paradigm shift that is taking
place and the way in which the new technology should be utilised, there is a considerable risk that
the promised benefits will not be realised and that new costs will be incurred instead. A comparison
can be drawn with a completely different sector, that of rental properties, where the modernisation
and refurbishment of properties results in the tenants facing a rent increase.

The part of this area that is perhaps most immature is change of supplier and the transfer of data. A
supplier who claims in the sale situation that one of the advantages of services is that it is easy to
switch should probably be examined a little more thoroughly. I would want to say that in cases
where your own software is installed on physical hardware, it is just a question of going and getting
the server and putting it somewhere else. Transferring data and finding a new e-service that the
company can switch to seamlessly would be considerably more challenging.

Simple initial steps (in relation to SaaS) in order to take control over the transfer are to:

 Update your information classification so that it can be used for SaaS services
 Categorise SaaS suppliers and explain why certain suppliers are not suitable for certain
information classes
 Identify what quantities of information should be included in a “master data” scenario, i.e.
even if they are stored in a SaaS service, the information also needs to exist within the
organisation
 Inform the business operation of the risks they could expose their company to if they purchase
services in an uncontrolled manner
 Establish or update the strategy for federative collaboration to reflect the world of today
 Start working towards more standardized an unification of processes in order to minimize the
changes that needed within the chosen SaaS application

For the moment the journey to the cloud for the CIO is in the second step. The maturity has
increased since 2009 and is now labelled as Medium. The aim of the work is to lay the foundations
for the third step, that of “Business development in the cloud”. In order for this to be successful,
close collaboration will be necessary between the business operation and the IT side. A key
ingredient for this collaboration is a common framework to base discussions on.



During this work, it is vital to understand the various aspects that the current trend concerning ’SaaS-
ification’ involves. In many cases, this implies that an organisation must question the way in which
non-differentiated processes are carried out. For these processes, the starting point should be that
the gaps that exist between the way in which we work today and the way in which the chosen SaaS
solution works should be closed through configuration. If this gap is too wide, a new supplier should
be investigated.

Recommendation: To take advantage of the SaaS-ification, the organisation must use more
standardised and unified processes. All non-competitive process may be changed in order to provide
a better fit with the processes within the selected SaaS-offering.

The Enterprise can no longer be designed for intra-organisational solutions and it is time to update
the federation and information strategy to reflect the current situation.



Federation and SQL Azure Sync

In order to meet the requirements that our present and future impose, the internal enterprise must relate to the outside
world, i.e. tomorrow’s IT support consists of a mixture of solutions and services that exist on-premises, in private clouds or
in the public cloud. Three key aspects are connectivity, access control and data synchronisation.

In the world of today the modern enterprise is storing and using information from a lot of vendors but still need to secure it
and control who is accessing the information. Hence, it is important to create or update a strategy that addressing the need
for a federative approach.

With Windows Azure Connect, you can use a simple user interface to configure IPsec protected connections between
computers or virtual machines (VMs) in your organisation’s network, and roles running in Windows Azure. After you
configure these connections, role instances in Windows Azure use IP addressing like that of your other networked
resources, rather than having to use some form of external virtual IP addressing

Access Control provides an easy way to provide identity and access control to web applications and services, while
integrating with standards-based identity providers, including enterprise directories such as Active Directory, and web
identities such as Windows Live ID, Google, Yahoo! and Facebook

Finally, SQL Azure Data Sync (currently in CTP) is a cloud-based data synchronisation service built on Microsoft Sync
Framework technologies. It provides bi-directional data synchronisation and data management capabilities, allowing data
to be easily shared between multiple SQL Azure databases and between on-premises and SQL Azure databases.


Cloud report q4 2011

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