This document discusses strategic dimensions for network and IT service providers entering the cloud computing market. It conducted a survey of experts on both the demand and supply sides of the industry. The survey found that cloud computing is seen as a good opportunity for both network and IT service providers to expand into. Experts said the top benefits of cloud computing are flexibility, scalability, cost savings, and business continuity. However, security and data confidentiality were cited as major concerns. The document provides recommendations on strategic positioning in areas like value proposition, branding, and customization to differentiate in the cloud computing market.

1. Anil Kumar Sharma (2007SMN7080)
DMS, IITD
5/7/2010 1

2. Abstract
Introduction
Literature review
Research Objective
Design & Methodology
◦ Problem Identification
◦ Selection of experts
◦ Administration of Questionnaire
◦ Survey Analysis
Findings
◦ The Strategic Benefits of Cloud Computing
◦ What to expect: Associated risks and challenges
◦ Strategic dimensions for Telecom/Network service providers
entering into cloud computing market.
◦ Telecom/ Network provider’s competitive advantages
◦ Strategic enablers for IT service providers
Conclusion
References
5/7/2010 2

3. A paradigm shift is taking place in the IT industry. Whereas
customers who wanted to support their business processes
with IT used to face having to buy all the necessary hardware,
operating systems and other components and decide on a
software platform, there is now the realistic vision of
obtaining the functionality they require under a pure leasing
model where they merely pay for what they use. IT will be
delivered as a service in future.delivered as a service in future.
The purpose of this research is to find strategic dimensions
and recommendations for Network & IT service providers to
enter into cloud computing market. This research is
conducted based on some publications & case study analysis,
and survey with some senior people in industry, both from
demand and supply side, and using IT industry experience.
5/7/2010 3

4. Cloud computing is a model for enabling
convenient, on-demand network access to a shared
pool of configurable computing resources (e.g.,
networks, servers, storage, applications, and
services) that can be rapidly provisioned and
released with minimal management effort or
service provider interaction.service provider interaction.
This cloud model promotes availability and is
composed of five essential characteristics,characteristics,characteristics,characteristics, three
service modelsservice modelsservice modelsservice models, and four deployment modelsdeployment modelsdeployment modelsdeployment models.
(Definition by NISTDefinition by NISTDefinition by NISTDefinition by NIST-National Institute of standards and Technology)
5/7/2010 4

5. For all the reasons, it is easy to see why cloud computing is
an attractive potential service offering for any business
looking to enhance IT resources while controlling costs.
However, it should be noted that along with the benefits
come security and risk concerns that must be considered.
Cloud computing service and deployment model
◦ Cloud computing Service Models
◦ Cloud Computing Deployment Models
◦ Cloud computing essential characteristics◦ Cloud computing essential characteristics
(SourceSourceSourceSource: Publication by ISACA on “Cloud Computing –Business benefits and security issues”-year 2009)
Many major IT outsourcing service providers are investing
heavily to lay the groundwork for this potentially disruptive
market shift.
From Merrill Lynch, which is estimating the cloud computing
market to reach $160 billion by 2011.The estimate includes
$95 billion in business and productivity applications.
Earlier this year, Gartner pegged the market at $150 billion by
2013.
5/7/2010 5

6. Cloud computing Service ModelsCloud computing Service ModelsCloud computing Service ModelsCloud computing Service Models
Service ModelService ModelService ModelService Model DefinitionDefinitionDefinitionDefinition To be consideredTo be consideredTo be consideredTo be considered
Infrastructure as a service
(IaaS)
Capability to provision processing
storage, networks and other basic
computing resources. It offers
customers the ability to deploy
and run arbitrary software, which
may include operating systems
and applications. IaaS puts these
IT operations in the hands of third
party.
Options to minimize the impacts if
the cloud provide has a service
interruption.
party.
Platform as a service
(PaaS)
Capability to deploy onto the
cloud infrastructure customer-
created or acquired applications
created using the programming
languages and tools supported by
the provider
-Availability
-Confidentiality
-Privacy and legal liability in the
event of a security breach (as
databases housing sensitive
information will now be hosted
offsite)
-Data ownership
-Concerns around e-discovery
Software as a service
(SaaS)
Capability to use the provider’s
applications running on the cloud
infrastructure. The applications
are accessible from various client
devices through a thin client
interface such as a web browser.
-Who owns the applications?
-Where do the applications reside?
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7. Cloud computing Deployment ModelsCloud computing Deployment ModelsCloud computing Deployment ModelsCloud computing Deployment Models
Description of DeploymentDescription of DeploymentDescription of DeploymentDescription of Deployment
ModelModelModelModel
Description of DeploymentDescription of DeploymentDescription of DeploymentDescription of Deployment
ModelModelModelModel
To be consideredTo be consideredTo be consideredTo be considered
Private Cloud -Operated solely for an
organization
-May be managed by the
organization or a third party
-May exist on-premise or off-
premise
-Cloud services with minimum risk
-May not provide the scalability and agility
of public cloud services
Community Cloud -Shared by several organizations
-Supports a specific community
that has shared mission or interest
-May be managed by the
-Same as private cloud, plus:
-Data may be shared with the data
of competitors
-May be managed by the
organizations or
a third party
Public Cloud -Made available to the general
public or a large industry group
-Owned by an organization selling
cloud services
-Same as community cloud, plus:
-Data may be stored in unknown locations
and may not be easily retrievable.
Hybrid Cloud A composition of two or more
clouds (private, community or
public) that remain unique entities
but are bound together by
standardized or proprietary
technology that enables data and
application portability (e.g. cloud
bursting for load balancing between
clouds)
-Aggregate risk of merging
different deployment models
-Classification and labeling of data
will be beneficial to the security
manager to ensure that data are
assigned to the correct cloud type.
5/7/2010 7

8. Cloud computing essential characteristicsCloud computing essential characteristicsCloud computing essential characteristicsCloud computing essential characteristics
CharacteristicsCharacteristicsCharacteristicsCharacteristics DefinitionDefinitionDefinitionDefinition
On-demand self
service
The cloud provider should have the ability to automatically provision
computing capabilities, such as server and network storage, as needed
without requiring human interaction with each service’s provider.
Broad network
access
According to NIST, the cloud network should be accessible anywhere, by
almost any device (e.g. smart phone, laptop, mobile devices, PDA)
Resource pooling The provider’s computing resources are pooled to serve multiple
customers using a multitenant model, with different physical and virtual
Resource pooling
customers using a multitenant model, with different physical and virtual
resources dynamically assigned reassigned according to demand.
Rapid elasticity Capabilities can be rapidly and elastically provisioned, in many cases
automatically, to scale out quickly and rapidly released to scale in
quickly. To the customer, the capabilities available for provisioning often
appear to be unlimited and can be purchased in any quantity at any time.
Measured service Cloud systems automatically control and optimize resource use by
leveraging a meeting capability (e.g. storage, processing, bandwidth and
active user accounts). Resource usage can be monitored, controlled and
reported, providing transparency for both the provider and customer of
the utilized service.
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9. 5/7/2010 9

10. The research objective is to find strategic
dimensions and recommendations for
Network and IT service providers to enter into
this market.
5/7/2010 10

11. Delphi techniqueDelphi techniqueDelphi techniqueDelphi technique is used to capture the experts opinion on
different parameters related to customers expectations on
services and benefits using a web based survey followed a
discussions. Also, some related technical articles and industry
practices are referred.
Problem IdentificationProblem IdentificationProblem IdentificationProblem Identification
To identify the strategic dimensions for Cloud Computing market.
Selection of expertsSelection of expertsSelection of expertsSelection of experts
Selected people belong to different communities including both
Providers and Business users.
Selected people belong to different communities including both
Providers and Business users.
Administration of questionnaireAdministration of questionnaireAdministration of questionnaireAdministration of questionnaire
A survey is created using 3C's Model3C's Model3C's Model3C's Model of Ohmae for strategic look
needed for success factor of this business model.
The Corporation
The Customer
The Competitors
The survey URL isThe survey URL isThe survey URL isThe survey URL is
http://www.surveymonkey.com/s.aspx?sm=ZVHVL7T40PD4UkrrYio
Cqg_3d_3d
5/7/2010 11

12. Up to what extent you think as cloud will be a successful model
including for big enterprise (rate 1 to 5, where 1 is least and 5 is
most)
◦ 77%
Do you think that it will be a good opportunity for Network service
providers (like orange) to enter into this market or expand? (rate 1
to 5, where 1 is least and 5 is most)to 5, where 1 is least and 5 is most)
◦ 78%
Do you think that it will be a good opportunity for IT service
providers (like IBM, HP, TCS etc..) to enter into this market or
expand ?(rate 1 to 5, where 1 is least and 5 is most)
◦ 82%
5/7/2010 12

13. 45
100
90.9
36.4
9.1
63.6
72.7
72.7
63.6
36.4
Remove economic/expertise barriers impeding to…
Avoiding capital expenditure in hardware, software,…
Flexibility and scalability of IT resources
Increasing computing capacity and business…
Diversification of IT systems
Local and global optimisation of IT infrastructure…
Business Continuity and Disaster recovery capabilities
Assessing the feasibility and profitability of new…
Adding redundancy to increase availability and…
Controlling marginal profit and marginal costs
Series1
•What are the reasons behind your possible engagement in the Cloud computing area if you
need to take decision for moving your company's IT on cloud?
72.7
63.3
81.8
45.5
9.1
0 10 20 30 40 50 60 70 80 90
Individual software packages (SaaS)
Complete operating system and software…
Just infrastructure services such as storage,…
Security services in the cloud
Other (please specify)
Series1
45
0 20 40 60 80 100 120
Remove economic/expertise barriers impeding to…
•Which “layer” of the Cloud would you be most likely to approach?
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14. ◦ What are your main concerns in your approach to Cloud Computing?
45.5
18.2
27.3
18.2
36.4
72.7
Lack of liability of providers in case of…
Inconsistency between trans national laws…
Unclear scheme in the pay per use approach
Uncontrolled variable cost
Cost and difficulty of migration to the cloud…
Intra-clouds (vendor lock-in) migration
27.3
27.3
54.5
81.8
9.1
45.5
45.5
0 10 20 30 40 50 60 70 80 90
Privacy
Availability of services and/or data
Integrity of services and/or data
Confidentiality of corporate data
Repudiation
Loss of control of services and/or data
Lack of liability of providers in case of…
Series1
5/7/2010 14

15. Majority of experts (78%) feels that this business model is not
limited to SMBs which may go to cloud because of lack of IT
infrastructure and expertise, but big enterprises will also use this
model starting from different components and the overall
transition will be done in phased manner.
Majority (80%) think that Existing Network and IT service provider
can look forward for providing this business using their existing
capabilities.
Top reasons for selection cloud service are
◦ Avoiding capital expenditure in hardware, software, IT support, Information◦ Avoiding capital expenditure in hardware, software, IT support, Information
Security by outsourcing infrastructure/platforms/services.
◦ Flexibility and scalability of IT resources.
◦ Assessing the feasibility and profitability of new services (i.e. by developing
business cases into the Cloud).
◦ Business Continuity and Disaster recovery capabilities
The demand of services like Infrastructure as Service (IaaS) 82%
and Software as Service (SaaS) 73% is more.
However, there are some concerns on using this service primarily
for security reasons where “Confidentiality of data” is the major
concern by 82% population.
5/7/2010 15

16. The Strategic Benefits of Cloud ComputingThe Strategic Benefits of Cloud ComputingThe Strategic Benefits of Cloud ComputingThe Strategic Benefits of Cloud Computing
Cost containmentCost containmentCost containmentCost containment
The cloud offers enterprises the option of scalability without the serious
commitments required for the infrastructure purchase and maintenance.
There is little to no upfront capital with cloud services. Services and storage
are available on demand and are priced as a pay-as-you-go service.
Additionally, the cloud model could assist with cost savings in term of
wasted resources.
ImmediacyImmediacyImmediacyImmediacy
Many early adopters of cloud computing have cited the ability toMany early adopters of cloud computing have cited the ability to
provision and utilize a service in a single day. This compares to
traditional IT projects that may require weeks or months to order,
configure and operationalize the necessary resources. This has a
fundamental impact on the agility of a business and the reduction of
costs associated with time delays.
AvailabilityAvailabilityAvailabilityAvailability
Cloud providers have the infrastructure and bandwidth to
accommodate business requirements for high speed access, storage
and applications. As these providers often have redundant paths,
the opportunity for load balancing exists to ensure that systems are
not overloaded and services delayed.
5/7/2010 16

17. ScalabilityScalabilityScalabilityScalability
With unconsidered capacity, cloud services offer increased flexibility
and scalability for evolving IT needs. Provisioning the
implementation is done on demand, allowing for traffic spikes and
reducing the time to implement new services.
EfficiencyEfficiencyEfficiencyEfficiency
Reallocating information management operational activities to the
cloud offers businesses a unique opportunity to focus efforts on
innovation and research and development. This allows for business
and product growth and may be even more beneficial than the
innovation and research and development. This allows for business
and product growth and may be even more beneficial than the
financial advantages offered by the cloud.
ResiliencyResiliencyResiliencyResiliency
Cloud providers have mirrored solutions that can be utilized in a
disaster scenario as well as for load-balancing traffic. Whether there
is a natural disaster requiring a site in a different geographic area or
just heavy traffic, cloud providers say they will have the resiliency
and capacity to ensure sustainability through an unexpected event.
5/7/2010 17

18. Associated risks and challengesAssociated risks and challengesAssociated risks and challengesAssociated risks and challenges
Security is the biggest concern.Security is the biggest concern.Security is the biggest concern.Security is the biggest concern.
In cloud computing, server, network, and storage are provided to the
enterprise as a service. In turn, data is delivered to the cloud. Whether
it’s private customer information, business data, intellectual property,
trade secrets, or legal documents, IT leaders are understandably
sensitive for an organization.
Availability and reliability must meet enterprise expectationsAvailability and reliability must meet enterprise expectationsAvailability and reliability must meet enterprise expectationsAvailability and reliability must meet enterprise expectations.
IT systems that support key enterprise applications need to be stable,
reliable, and highly available. Theoretically, on-demand computing should
offer a high degree of reliability since the cloud distributes compute,
network, and storage functions across a substantially larger pool of physical
and virtual resources, making it more tolerant of individual hardware failures.
Control of environments in the cloud is a concernControl of environments in the cloud is a concernControl of environments in the cloud is a concernControl of environments in the cloud is a concern.
By their very nature, cloud computing service models involve transferring
some control to a trusted service provider. If certain areas of functionality
are deemed so essential that they must remain in-house under the direct
control of IT, then other considerations may have to take a back seat.
5/7/2010 18

19. -Value based positioning
(quality, performance &
Image)
-Product, brand elements
and price positioning are
highly standardized
Pioneering strategy helps
to differentiate from
Strong corporate
values
Trust with
Elements of
existing marketing
strategy for other
services
Existence of
similar
transnational
customers
Competitors like
Web market
leaders (Amazon &
Google)
Critical Internal Factors Critical External Factors
Typical elements of a
standardization strategy
of cloud market
to differentiate from
competition
(SLAs and platform
independence)
-High end segments are
natural target market
-Add-on service and as
an entry
Trust with
Customers and
operational
capabilities (SLA)
Balancing of
profitability and
risk considerations
Google)
Prospects of
integrating with
existing services
Focus on cost
reduction and
energy saving by
corporate-Adaptation of non core elements
(Packaging of offerings, sales
promotion-B2B)
-Creative selection (product/service
mix, advertising –B2B)
Area of mechanism
adaption
5/7/2010 19

20. Clouds will increase network traffic and utilization and thus
transport revenues.
In physically delivering cloud-based services, telecom carriers have
an opportunity to extract two revenue streams from the same
function.
Telecom/ Network provider’s competitive advantagesTelecom/ Network provider’s competitive advantagesTelecom/ Network provider’s competitive advantagesTelecom/ Network provider’s competitive advantages
Trusted relationshipsTrusted relationshipsTrusted relationshipsTrusted relationships
Existing association with enterprises with capabilities like 24x7
operation.
Reliable operations that scaleReliable operations that scaleReliable operations that scaleReliable operations that scale
Existing certification process and engineered to provideExisting certification process and engineered to provide
99.999% service availability
Service level agreements (SLAs) with real impactService level agreements (SLAs) with real impactService level agreements (SLAs) with real impactService level agreements (SLAs) with real impact
Meaningful SLAs and clear matrices.
Vendor independenceVendor independenceVendor independenceVendor independence
Existing infrastructure components, easy to integrate with other
IT systems
Global presence and market commitmentGlobal presence and market commitmentGlobal presence and market commitmentGlobal presence and market commitment
Global customer base and reach to cover global market with
ease.
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21. Strategic enablers for IT service providersStrategic enablers for IT service providersStrategic enablers for IT service providersStrategic enablers for IT service providers
The value proposition of cloud computingThe value proposition of cloud computingThe value proposition of cloud computingThe value proposition of cloud computing
By enhancing the existing IT infra management and hosting
model.
WebWebWebWeb----based applications promote IT independencebased applications promote IT independencebased applications promote IT independencebased applications promote IT independence
Promoting web based applications as solution to serve
globally positioned customers of organization.
Growing managed services market produces revenue.Growing managed services market produces revenue.Growing managed services market produces revenue.Growing managed services market produces revenue.
By promoting their capability of being end to end solutionBy promoting their capability of being end to end solution
provider to enterprise users.
Increasing carriers' data center efficiency and operationsIncreasing carriers' data center efficiency and operationsIncreasing carriers' data center efficiency and operationsIncreasing carriers' data center efficiency and operations
By reducing no. of servers, storage, applications platforms
using technology like virtualization.
Differentiating service providers from the packDifferentiating service providers from the packDifferentiating service providers from the packDifferentiating service providers from the pack
Using approach like pay-as-use for end to end service,
instead of different units for different IT services.
5/7/2010 21

22. The research outcome indicates the benefits of cloud
computing for business and challenges for service providers.
Moving to a cloud-based platform poses challengeschallengeschallengeschallenges and
concerns for service providers. Dealing with standards,standards,standards,standards,
security, performance, data compliancesecurity, performance, data compliancesecurity, performance, data compliancesecurity, performance, data compliance aligned with
procedures and operationsoperationsoperationsoperations, and availabilityavailabilityavailabilityavailability issues are just a
few of the organizational and technical challenges they'll have
to address to make cloud computing a true value proposition.
Service providers can leverageleverageleverageleverage their reputationsreputationsreputationsreputations and solid
performances to offer reliable, comprehensive and secure
cloud services. Most importantly, service providers can showcloud services. Most importantly, service providers can show
valuevaluevaluevalue by strongly emphasizing that cloud computing allows
enterprises to focusfocusfocusfocus on other aspects of their businessesaspects of their businessesaspects of their businessesaspects of their businesses
without having to concentrate resources on IT, server
updates, and maintenance issues -- a win-win service
offering for both service providers and their customers.
And last but certainly not least, by ensuring the value ofvalue ofvalue ofvalue of
services deliveredservices deliveredservices deliveredservices delivered via cloud computing, service providers not
only deliver business valuebusiness valuebusiness valuebusiness value to their users but increase and
extend their sustainabilitysustainabilitysustainabilitysustainability.
5/7/2010 22

23. Cloud services core to the strategy
Firms like Dell and IBM are extremely focused on the impending disruptive
change that the growth of the cloud services market will cause. These firms,
IBM in particular, are also the most aggressive in generating and protecting
cloud-related intellectual property.
Aggressive strategy for cloud services growth
Firms like Accenture, HP, and Wipro are aggressive to have a few more
existing clients than firms that are still developing cloud services as a broad
commercial offering that supplement traditional outsourced services.
Managed growth into cloud servicesManaged growth into cloud services
Firms like Atos Origin, CSC, and Siemens IT Solutions and Services, and TCS
all offer some cloud services and have intent to grow their offerings for
enterprise clients. These firms are treating cloud more as a key service add-
on to their existing portfolios.
Cloud service alliance partner
Capgemini is taking a focused position as the consultant and service
integrator in place to plan, sell, implement, and manage the cloud services
developed by other firms like Amazon, Google and Symantec.
(Source:(Source:(Source:(Source: Market Overview Of Cloud Service Strategies From Global IT Providers from - by Paul Roehrig, For Sourcing &
Vendor Management Professionals-June 2009)
5/7/2010 23

24. Draft NIST Working Definition of Cloud Computing v15,
http://csrc.nist.gov/groups/SNS/
Cloud-computing/cloud-def-v15.doc
Publication by ISACA on “Cloud Computing –Business benefits
and security issues”-year 2009
Cloud Computing – A Classification, Business Models, and
Research Directions,
Business & Information Systems Engineering 5 | 2009
www.alcatel-lucent.com – Strategic discussionswww.alcatel-lucent.com – Strategic discussions
Paper on “Building theories from case study research” by
Eisenhardt, Kathleen M.
Academy of Management. The Academy of Management Review;
Oct 1989; 14, 4; ABI/INFORM Global
Market Overview Of Cloud Service Strategies From Global IT
Providers from - by Paul Roehrig, For Sourcing & Vendor
Management Professionals-June 2009
Cloud Computing – Business Models, Value Creation Dynamics
and Advantages for Customers Siemens IT Solutions and ServicesIT Solutions and ServicesIT Solutions and ServicesIT Solutions and Services
5/7/2010 24

25. 5/7/2010 25