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© 2012 IBM Corporation
Cloud Computing
in the context of Outsourcing Henrik HasselbalchCloud Leder, IBM Danmark
4.500successful cloud projects
4.5Mdaily client transactions
through public cloud
>1Mmanaged virtual machines
80 %revenue Growth in 2012
© 2012 IBM Corporation
Mobility, social media, increasing digitization and new analytics capabilities are conspiring to drive broad 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
Major Technology Trends driving Business Change
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’s business enablers
© 2012 IBM Corporation
IT is Being Challenged by Business
Business Opportunity
Time to Operations of IT
LOST BUSINESS
© 2012 IBM Corporation
The Current It Challenge - Sprawl
© 2012 IBM Corporation
Is IT ready for the challenge?
* 2012 IBM Global Data Center Study
68% of IT operating costs in 2013 will be
for management and administration
Only 1 in 5
organizations allocate more than 50% of IT budget to new projects
2013
68%29%
1996
* IDC; Converged Systems: End-User Survey Results presentation; September 2012; Doc #236966
New server spendingPower & cooling costsServer mgmt & admin costs
© 2012 IBM Corporation
Danish CIOs 10 top priorities in 2013 1. Implementing new solutions: 27.3 procent
2. Support multiple platforms and operatingsystems: 26.8 procent
3. Modernise the infrastructure and/or applications: 26.4 procent
4. Improve and automate IT processes: 25.9 procent
5. Adjust IT-systems to changes business requirements: 23.6 procent
6. Reduce cost: 23.2 procent
7. Improve service: 19.5 procent
8. Secure a secure infrastructure: 17.3 procent
9. Optimise business processes by using IT: 16.8 procent
10. Keep old systems running: 10.9 procent
Kilde: IDC
© 2012 IBM Corporation
Cloud harnesses the capabilities born out of these trends to empower six potentially “game changing” business enablers
Source: IBV Analysis
Cloud’s Business Enablers
Cost Flexibility
1
Shifts fixed to variable cost Pay as and when needed
Business Scalability2
Provides limitless, cost-effective computing capacity to support growth
Masked Complexity4
Expands product sophistication Simpler for customers/usersContext-driven
Variability 5
User defined experiences Increases relevance
Ecosystem Connectivity 6
New value nets Potential new
businesses
Market Adaptability
Faster time to market Supports experimentation
3
Cloud’s business enablers
© 2012 IBM Corporation
Organizations are leveraging cloud to enhance, extend and invent new customer value propositions
8
Customer Value Proposition
Enhance Extend Invent
Cloud Enablement Framework
Xerox’s “Mobile Print” cloud-based service enables customers to print documents remotely without installing printer drivers and without a direct connection
Retain/attract customers for existing products and services through enhanced user experience.
Animoto’s Cinematic Artificial Intelligence technology leverages cloud to affordably analyze and edit user multimedia content from a myriad of potential sources yet retain simple self-service.
Generates new revenue by appealing to novice/ intermediate computer users entering market and drawing customers away from traditional commercial software
Apple has used its iOS platform to create a new need and a market for a range of office productivity tools, gaming and entertainment options and various other applications on a mobile device like a tablet or phone.
The Apple iOS brings together an ecosystem with a radically different value proposition that has allowed Apple to generate entirely new revenue streams and dominate the market
ExtendExtend InventInventEnhanceEnhance
Cloud Enablement Framework
© 2012 IBM Corporation
Organizations can be classified across three archetypes using the Cloud Enablement Framework: Optimizers, Innovators, and Disruptors
Positioning a Cloud initiative on the framework involves understanding the impact of the resulting Cloud business model.
Organization
North Carolina State University
Virtual Computing Lab
3M
Visual Attention Service
Comcast
XCloud-based Television Platform
Impr
ove
Tra
nsfo
rmC
reat
e
Enhance Extend Invent
OptimizersOptimizers
DisruptorsDisruptors
InnovatorsInnovators
Val
ue
Ch
ain
Customer Value Proposition
Cloud-enabled Business Model archetypes
© 2012 IBM Corporation
IBM’s Cloud-enabled Business Model Accelerator aims to help clients envision new business models using cloud’s game changing enablers
The objective of this engagement is to identify business model innovation opportunities for your organization that are enabled using the ‘game-changing’ attributes of the cloud.
Our approach includes Discussions with key stakeholders Presentations and education sessions Workshop based brainstorming Joint analysis guided by insights from IBM Synthesis and recommendations
Key takeaways from this engagement are a prioritized set of opportunities for cloud-enabled business model innovation and recommended next-steps.
ObjectiveObjective
ApproachApproach
TakeawaysTakeaways
Cloud-enabled Business Model (CeBM) Accelerator
© 2012 IBM Corporation
13%
41%21%
28%38%
21%
Today 3 yrs
Cloud is widely recognized as an increasingly important technology; adoption is expected to accelerate rapidly in the coming years
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
Piloting
Adopting
SubstantiallyImplemented
+215%
+33%
72%
91%
What is Your Organization’s Level of Cloud Adoption?
% of Respondents
The Global Cloud Computing Market is Forecast to Grow 22% per year through 2020
$0B
$50B
$100B
$150B
$200B
$250B
2011 2015 2020
$241B
$41B
$150B
Source: Sizing the cloud, Forrester Research, Inc., April 21, 2011
© 2012 IBM Corporation
Cloud Computing in the context of Outsourcing
© 2012 IBM Corporation
The market will continue to grow across all categories of cloud services
Hosted communication and collaboration is the fastest growing cloud service category in Europe with a CAGR greater than 57%.
SaaS applications will be the largest cloud service category by 2015, reaching €7.4B.
Across all cloud services, an average of 40% of European SMBs are considering adding each in the next 3 years
Web hosting is used by more than 50% of SMBs that have a website, and more SMBs plan to add it.
Source: Parallels SMB Cloud Insights™ (EUNA regional), 2012
Highest penetration
Highest penetration
Largest in 2015
Largest in 2015
Fastest GrowingFastest
Growing
© 2012 IBM Corporation
Growth is not equal, however, and market composition is changing
The SMB cloud services market in Eastern and Southern Europe is growing 2x faster than in Northern and Western Europe
2012 % of market
23%
35%
8%
34%
CAGR2015 %
of market
Source: Parallels SMB Cloud Insights™ (EUNA regional), 2012
Northern
Western
Eastern
Southern
23%
20%
45%
46%
19%
26%
11%
44%
© 2012 IBM Corporation
Parallels estimates the SMB cloud market in Denmark is about kr 830M and will grow to kr 1.6B by 2015
kr 830M($144M USD)
33% CAGR
2015
25% 3yr CAGR
25% 3yr CAGR
Source: Parallels SMB Cloud Insights™ (EUNA regional) 2012
kr 1.6B($280M USD)
46% CAGR
9% CAGR
27% CAGR
2012
© 2012 IBM Corporation
IBM ourselves looked at a 4 tier approach
Our application portfolio is segmented into four tiers
We are migrating as many of the Tier 4 applications as possible and valuable to a production cloud
Lowest-risk, lowest service applications are being moved first. Apply lessons learned to subsequent migrations
Tier 2
Tier 4
Tier 1
Tier 3
Availability
100%98.5%95% 99.7%
Key Most Critical applications: 5% of total
24x7 Support
30% of total24x7 Support
21% of totalPrimary hours support
44% of totalLimited support
Production
© 2012 IBM Corporation
Cloud value varies by workload and deployment model
Where you are coming from is as important as where you want to be
• Don’t forget the journeyCloud is about reducing costs and
increasing flexibility
Cloud is not rocket science, but it is computer science
The fundamentals of cloud value …
Cloud value
© 2012 IBM Corporation
Does cloud always result in lower cost?
“ … cloud computing does not always save money. In fact, it can drive cost up if it is used simply to replace on-premises work with an exact duplicate of that work in the cloud. Knowing when to redesign or when to use cost savings as a justification for
cloud computing is critical." -- “The (Not So) Future Web”, Gartner Inc.
Whether cloud saves money for the service consumer is a function of
• The value they get from the cloud
• What it takes to move their workload into the cloud
• Other things they’ll need to provide if they move into the cloud
• The cost for all the above
With most private clouds the enterprise takes on the provider role
• Like traditional hosting, the enterprise owns the risk to balance supply and demand … and the costs associated with that
• True cost should be measured at the enterprise level
Reduced Cost
Increased Flexibility
Cloud value
© 2012 IBM Corporation
The “other benefit” of cloud
“… All the emphasis (with cloud) is on cheaper and efficient ways to deliver IT. In reality it's also a way of delivering new industrial value -- that's the more exciting
thing." Erich Clementi, IBM's Hidden Cloud on Forbes.com
“… All the emphasis (with cloud) is on cheaper and efficient ways to deliver IT. In reality it's also a way of delivering new industrial value -- that's the more exciting
thing." Erich Clementi, IBM's Hidden Cloud on Forbes.com
The “other” benefit of cloud -- the increased flexibility it provides – enables a new way of delivering IT• In some applications, it may be the biggest (or only) benefit• Enables quicker time-to-value, or new applications, shorter project lifecycles, etc.• Industry analysts: The ability of cloud to enable speed to deliver will be bigger than cost savings in
driving adoptionCloud will be a foundational mechanism in the “as-a-service" transformation of IT delivery
Reduced Cost
Increased Flexibility
Cloud value
© 2012 IBM Corporation
Source: IDC
The future is Hybrid Sourcing
© 2012 IBM Corporation
IBM SmartCloud represents the IBM vision for cloud computing
Common Open Standards Technology and Industry Ecosystem
DeployDesign
Business Process as a Service
Software as a Service
Platform as a Service
Infrastructure as a Service
Consume
Enables private/hybrid cloud service delivery and management
Cloud Enablement
TechnologiesSecure and scalable cloud managed
services platform
Managed Cloud
ServicesPre-built Cloud SaaS business
applications and solutions
Cloud Business
Solutions
Proven Strategy Consulting, Migration, & Management Expertise
© 2012 IBM Corporation
IBM provides operating system and tool licenses
Fully managed
An enterprise-grade IaaS is the foundation for our Cloud services incl PaaS and SaaS.
Rapid access, multi-tenant solution scaled and priced based on usage.
Robust multi-tenant solution, including managed production services.
Workloads
Operating system
Management level
Availability
Security
Software usage
Pricing
Ideal for developing and deploying new application designs
Ideal for migration of traditional and higher availability applications
Linux, Windows Windows, Linux, AIX
Self Service with advanced premium support
99.9% 99.9%
Virtual and some physical isolation Multiple levels of isolation
Bring your own / pay as you go / free developer use
Hourly usage-based with reserved options Monthly usage-based and fixed contract
© 2012 IBM Corporation
29,000 employees in EMEA
60 Data Centres (99.000 sqm - Gross) managed by IBM
25 Strategic Data Centres, 11 European cities
99.9960% Data Centre Availability (with 99.9999% for strategic DCs)
65,000 servers, z, p, i, x Series; 118,000 logical partitions
Hosting about 155 petabytes of data for our clients
49,5% of the logical server images virtualised
880 000 devices have remote and on-site support
Serving clients - Our Capabilities
3.3M electronic software distributions p/ year
2.1M client initiated software distributions p/year
60,000 network devices managed in Europe
42 European countries covered
4 million mobile users with secure access
1.2 million contacts to service desks per month
23 languages
400 applications
20 different desktop images
CLOUD Healthcare
© 2012 IBM Corporation
Our delivery model balances risk, cost and operational efficiency
Globally IntegrateAchieves the optimum combination of quality, stability and skills
India Bangalore Pune Delhi Chennai Hyderabad
China Shenzhen Shanghai Dalian Beijing
North America Boulder Columbia Dubuque East Fishkill Raleigh Canada
All follow uniform, best-practice service management processesAll follow uniform, best-practice service management processes
Latin America Buenos Aires Costa Rica Hortolandia Sao Paolo
Central Europe Brno Székesfehérvár Wroclaw
Global
Service that can be standardized to achieve maximum savings
Ongoing operations
Monitoring
Development
Local
Service that needs to be delivered from the same country
Processing of sensitive data
Legal restrictions
Onsite
Service that requires a physical presence at the client location
Consulting
Front-end analysis
Regional
Service that needs to be delivered from the same continent
Similar time zone
Similar culture
Malaysia
New
New
© 2012 IBM Corporation
In SO Service Delivery, we execute on our strategy by investing in innovative technologies, processes and skill portfolios
Standardize: Implement standard solutions for all services, maximizing economies of scale and ease of enhancement
Globally Integrate: Source the right skills at the right time globally
Automate: Eliminate manual tasks to drive up quality and reduce error
We are continually investing in key innovations and intellectual property to differentiate our services
through exceptional quality outcomes
© 2012 IBM Corporation
Energy Efficient Data Centers AwardedIBM awarded participant status in the European Union Code of Conduct. Largest portfolio of data centers from a single company to receive the recognition (January 2012)
The area of submission 27 Data Centers
15 Countries70749 m² RF
Same best practices and controls
Austria2Belgium 2Germany 2Denmark 3Spain 1Finland 1France 2Hungary 1Ireland 1Italy 1Netherlands 1Poland 1Portugal 4 Sweden 2UK 3
EU Code of Conduct - created in response to increasing energy consumption in data centers and the need to reduce the related environmental, economic and energy supplysecurity impacts.
-aim is to inform and stimulate data center operators and owners to reduce energy consumption in a cost-effective manner without hampering the mission critical function of data centers.
- achieves this by improving understanding of energy demand within the data center, raising awareness, and recommending energy efficient best practice and targets.
© 2012 IBM Corporation
Infrastructure-as-a-Service
Platform-as-a-Service
Software-as-a-Service
Servers Networking Storage
Middleware
Collaboration
Financials
CRM/ERP/HR
Industry Applications
Data Center Fabric
Shared virtualized, dynamic provisioning
Database
Web 2.0 ApplicationRuntime
JavaRuntime
Development
Tooling
The 4 catagories of ”Cloud Services”
Business Process-as-a-Service
Employee Benefits Mgmt.
Industry-specific
Processes
Procurement
Business Travel
Layer 1
Layer 2
Layer 3
Layer 4
© 2012 IBM Corporation
F&A
HR
SCM
CRM
Industry-specific
TAUNTON
SAINT JOHN
TORONTO
TULSA
RTP BEAVERTON
BOULDER
SAN JOSE
GREENVILLE BRAGA
DUBLIN
CAIRO HORTOLANDIA
BUENOS AIRES
MONTEVIDEO
MUMBAI
SOFIA
COVENTRY
KRAKOW
SHANGHAI
PUNE
KOLKATA
VIZAG
CHENNAI
MANILA
BRISBANE
TOKYO
SAPPORO
JEONJU
DALIAN
BALLARAT
TUCSON
DALLAS
DALEVILLE
ATLANTA
EDICOTT
SAO PAULO
BUDAPEST
CHANDIGARH
ISTANBUL
PARIS
GREENOCK
NEWCASTLE
BANGALORE
ANTANANARIVO
BRATISLAVA FREETOWN
KAMPALA
OKINAWA
FUKUOKA
QUEENSLAND
SYDNEY
MELBOURNE
DELHI
GURGAON
FOSHAN BERLIN
SWANSEA
KASAI
IBM Global Process Services takes a balanced-shore approach
© 2012 IBM Corporation
The need: Skype, initially a free, Internet-based communications service, built a portfolio of services offered at a fee. Because of Skype’s rapid growth, it did not have the infrastructure, processes, governance or corporate structure to deliver satisfactory levels of customer support. Skype recognized that efficient and effective customer service was critical to the growth of its fee-based services and sought a business process operations provider that could manage its email customer service operations.
The solution:IBM GPS analyzed the client’s needs and created a service and response plan whereby IBM global resources would provide email and live chat support for customer queries, service complaints and billing concerns. IBM divided its activities among 3 sites to support the company’s international customer base: Cairo; Boulder, Colorado; & Manila, Philippines. IBM provides email support in 7 languages and live chat support in English. In addition IBM provides web content support for Skype Customer Services from our delivery centre in Bratislava.
The benefits: Skype customers experienced a significant improvement in customer services levels: email responses that
once took up to 24 hours now take 2 hours or less.
At the beginning of the contract 85% of Skype customers corresponded through email. Today up to 50% prefer the quicker response time & resolution rates of chat services. The expansion of live chat greatly improved the speed of problem resolution.
When IBM secured the contract, its initial point of contact resolution performance was 70%. As of April 2012, the resolution rate has increased to more than 80%.
As a result of the improvements in customer support and cross-selling by IBM Skype has experienced a 50% increase in its fee-based service web pages.
And for We do AP, Payroll and TravelExp Mgt
© 2012 IBM Corporation
© 2012 IBM Corporation
Unilever Europe: A global CPG company
The need:This global consumer products company needed to simplify its complex finance organization across 24 (100) countries and 18 ERP systems. It also needed to achieve cost efficiencies to generate revenue for greater focus on its brand.
The solution:IBM implemented standardized finance processes and innovative technology under an award-winning joint governance model. Leveraging asset-based process models and global delivery capabilities, this transformational solution helped integrate the company and create a more flexible operating and financial model.
Why IBM?“The successful partnership between IBM and Unilever Europe along with an ambitious transformation agenda will continue delivering significant and sustainable benefits for Unilever Europe.”
Solution components: Accounts payable Travel & expense Bill to cash Record to report
The benefits: New, centralized “One-Unilever” finance organization for greater efficiency and
operational savings contributing to €700M annual savings for the company
End-to-end process ownership and standardized processes and technology for enhanced data quality, tighter controls and greater speed of information
Pan-European service management, including greater visibility and access to information for decision making and continuous improvement
Flexible, agile delivery model to meet Unilever’s evolving business environment and drive greater benefits from economies of scale
IBM provided managed business process services on a three-
tier delivery model from its facilities in
Krakow, Poland; Braga, Portugal; Bangalore, India; and
Manila, Philippines.
© 2012 IBM Corporation
© 2012 IBM Corporation
© 2012 IBM Corporation
© 2012 IBM Corporation
© 2012 IBM Corporation
© 2012 IBM Corporation
© 2012 IBM Corporation
© 2012 IBM Corporation
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