Cloud Computing - Technologies and Trends

Cloud Computing:
Technologies and Trends
Marcelo Sávio
IT Architect – IBM
www.linkedin.com/in/msavio

© 2012 IBM Corporation

Talking about trends....

2 © 2012 IBM Corporation

Some definitions…


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 Specific

4 Cloud Computing - Strategic View © 2012 IBM Corporation

Cloud exhibits a set of well-defined characteristics

Cloud Characteristic Details
Advanced virtualization IT resources -from servers to storage, network and applications- are
pooled and virtualized to provide an implementation independent,
efficient infrastructure

Self service through Uniform offerings readily available from a services catalog based on
Standardized offerings public interfaces
Elastic scaling Resources scale up and down by large factors as the demand
changes
Flexible pricing Utility pricing, variable payments, pay-by-consumption and
subscription models make pricing of IT services more flexible

Rapid provisioning IT and network capacity and capabilities are – ideally automatically,
via Self Service capabilities – rapidly provisioned using Internet
standards without transferring ownership of resources


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 services

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.


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

Customer
Operational Exp Capital Exp Agility Timeline Compliance
Service


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 enterprise


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-Service


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 based


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

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 assets

DELIVERY 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 graphics

ARCHITECTURAL 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 infrastructure

Trends for Cloud Computing


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, 2011


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, cio.de, IBM MD Germany, IBM MI, HorizonWatch

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 investments
Source: (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 of
cloud technology adoption today and which do you expect will best describe it in three years?
Sizing the cloud , Forrester Research, April 21, 2011; http://www.cio.com/article/684338/Survey_CIOs_Are_Putting_the_Cloud_First

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 Revenues
Source: (1) 2011 joint IBV/EIU Cloud-enabled Business Model Survey of 572 business & IT leaders, Q4, n=363


The IT Perspective


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 2011


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 2010


Cloud helps business and IT create and deliver value
in fundamentally new ways.

Build enduring customer Deliver IT without boundaries
relationships Unlock the value of new IT and business
Gain customer insight and use it to improve processes that break down traditional silos,
products and services, fostering trust and simplify access to information and connect
loyalty among constituents. people across your ecosystem.

Improved speed and dexterity Transform the economics of IT
Optimize and accelerate the delivery Speed delivery of new offerings and
of IT computing resources and services services with new models of self-service
and serve them with new, flexible and deployment.
business models.


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 budg

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 Chamberlin
24 January 11, 2012 © 2012 IBM Corporation

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
Management
on 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
...


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

= Flexibility


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 users


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 Gartner


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 & Devices
for migration Processes & Systems
Transactions Business
Processes
Batch
Regulation Infrastructure
Processing
Sensitive Compute

A Survey…
http://www.ibm.com/services/c-suite/cio/study.html


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 employees

Note: Growth Markets include Latin America, Asia Pacific (excluding Japan), Central and Eastern Europe, Middle East and Africa


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 years

Getting 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
Communications
Risk 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, USA
Source: 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)

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 2011
Source: 2011 CIO Study, Q12: “Which visionary plans do you have to increase competitiveness over the next 3 to 5 years?”(n=3,018)


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, UK
Source: 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 up


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.


The Business Perspective

Cloudnomics: The Power of Cloud
Driving Business Model Innovation


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 Important

Source: 2011 IBM/EIU Cloud Survey Results, Q5: How Important are the Following Objectives for Adopting Cloud?, n= 572


While only a few visionary businesses today are using cloud
for 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 organization's cloud technology adoption strategy ? n (today) = 572; n (in 3 years) = 572

Mobility, social media, increasing digitization and new analytics
capabilities 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 management

Source: IBV Analysis


Cloud harnesses the capabilities borne out of these trends to
empower 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 Analysis

Cloud business enablers are already driving innovation across
company/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 Proposition

What 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?

Enterprises are leveraging cloud to enhance, extend and
invent new customer value propositions

Cloud Enablement
Framework


Enhance 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 revenues

Cloud is also being leveraged to improve, transform and
create 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 collaboration


Organizations can be classified according to the extent to which their
use 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



Organizations should determine how and to what degree
cloud can be used to enable their business model

These categories map closely to IBM’s innovation classifications,
which characterize the spectrum of business innovation
IBM’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 Innovation


There are strong correlations between cloud business enablers and
types of innovation identified on the cloud-enablement framework
Types of Innovation
Product and Operational
Service Innovation ------- Business Model Innovation -------
Innovation
Business Model Enablers
Enterprise Revenue Industry Model
Model Model Innovation
Innovation Innovation
Cost Flexibility
Shifts fixed to variable cost
Faster payback & higher ROI
Business Scalability
Elastic resource provisioning
No scale economy limitations
Market Adaptability
Faster time to market
Supports innovative ideas
Masked Complexity
Expand product sophistication
Simpler for customers/users
Context-driven Variability
User defined experiences
Increases relevance
Ecosystem connectivity
New value nets
Potential new businesses

Optimizers, innovators and disruptors each face
strategic 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 advantage


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