Post on 08-May-2015
IT Cloud Financial Management
March 2010
Yisrael DanczigerCEO & President
Digital Fuel
Thomas MendelVice President &
Research Director
Forrester
Business Service Management And IT Financial Management In The Cloud
Dr. Thomas Mendel, Ph.D.
Vice President & Research Director
Forrester Research
March 2010
3 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
Agenda
• Understanding the cloud
• It’s time for IT financial management
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Cloud ClarityCloud Clarity
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What IS cloud computing? Give me three steps
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Source: Wipro
Understanding vendors cloud portfolios
Cloud computing is:
A standardized IT capability (services, software, or infrastructure) delivered via Internet technologies in a pay-per-use, self-service way.*
*September 9, 2009, “Best Practices: Infrastructure-As-A-Service (IaaS)” Forrester report
9 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
Cloud service management
Step1: What comes as a service?
INFRASTRUCTURE
MIDDLEWARE
APPLICATIONS
Typical “cloud computing resources” New resources
INFORMATION
PROCESSES
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Cloud service management
Step2: What is the level of sharing?L
evel o
f sh
ari
ng
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Infrastructure Middleware Applications
Privatecloud@ in-house data center
Virtual privatecloud@ dedicated provider
Publiccloud@ global provider
Business
value
Level of
sharing
Forrester’s full cloud taxonomy
Businessprocesses
PURECLOUD
MARKET
EXTENDEDCLOUD
MARKETInfrastructurevirtualization
tools
BPvirtualization
tools
Dynamicinfrastructure
services
Integration-as-a-service
IaaS SaaSPaaS BPaaS
Dynamicapps
services
DynamicBPO
services
Middlewarevirtualization
tools
Appsvirtualization
tools
12 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
Infrastructure Middleware Applications Business
value
Forrester’s cloud taxonomyand example vendors
Businessprocesses
Level of sharing
Force.comRackspace (soon)Google AppEngine
Cordys
Salesforce CRMOracle-
CRM On DemandGoogle Apps+Voice
On Demand Process as a S.
MeetingexpectationsPayPal
Amazon EC2Rackspace
Infrastructurevirtualization
tools
BPvirtualization
tools
Dynamicinfrastructure
services
Integration-as-a-service
IaaS SaaSPaaS
Dynamicapps
services
DynamicBPO
services
Middlewarevirtualization
tools
Appsvirtualization
tools
BPaaS
Boomi.comHubspan
Oracle E-BusinessSuite On Demand
On demand portionof BPO, e.g., Wipro
Cable&WirelessSIS, T-Systems
Oracle Fusion Middlew.vSphere-Spring
Cisco
Fujitsu FlexFramefor SAP
FluidOps.comITMS Vendors
Tools used in Shared Service Center
BPM
Oracle VM andAssembly Builder*
VMwareIBM Cloudburst
*Oracle Assembly Builder is part of the ongoing Oracle Fusion Middleware 11g roll-out
PURECLOUD
MARKET
EXTENDEDCLOUD
MARKETPrivatecloud@ in-house data center
Virtual privatecloud@ dedicated provider
Publiccloud@ global provider
13 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
Infrastructure Middleware Applications
Privatecloud
@ in-house data center
Virtual privatecloud
@ dedicated provider
Publiccloud
@ global provider
Business
value
Forrester’s cloud taxonomymapping to vendors’ portfolios
Businessprocesses
*Emerging service provider, rarely existing today.
Level of sharing
Infrastructurevirtualization
tools
BPvirtualization
tools
Dynamicinfrastructure
services
Integration-as-a-service
IaaS SaaSPaaS
Dynamicapps
services
DynamicBPO
services
Middlewarevirtualization
tools
Appsvirtualization
tools
BPaaS
$6b $4.8b $9b
$2.1b$150m$2.1b
$120m $9.0b $100m
$3.3b
$460m
$35m
PURECLOUD
MARKET
EXTENDEDCLOUD
MARKET
14 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
Infrastructure Middleware Applications Business
value
Level of
sharing
End user perspective of offerings
Businessprocesses
PURECLOUD
MARKET
EXTENDEDCLOUD
MARKETInfrastructureVirtualization
Tools
BPVirtualizatio
nTools
DynamicInfrastructur
eServices
Integration-as-a-
Service
IaaS SaaSPaaS BPaaS
DynamicApps
Services
DynamicBPO
Services
MiddlewareVirtualization
Tools
AppsVirtualization
Tools
IT Tools(licensed)
In-house process
chargeing
IT Service(pay per use)
Human Centric
Business Service Markets(pay per
use)
Privatecloud
@ in-house data center
Virtual privatecloud
@ dedicated provider
Publiccloud
@ global provider
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Service cost and performance aggregation becomes a core skill
LoB LoB LoB
IT organization
Internal service aggregation External service aggregation
SP 1 SP 2 SP 3
SP 4 SP 5 SP 6
Client companyService provider ecosystem
• Cost and performance management across end-to-end service delivery
• Coordinated across all stakeholders and constituencies, internal and external
• Requirements capture and new project initiation
• Balanced responsibility between in-house IT and external service providers
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Defining IT financial management
Forrester defines IT financial management as:
The discipline of planning, budgeting, monitoring, and
controlling the use of a firm's total IT budget
(operations/maintenance and new projects/investments).
IT financial management software provides an application that allows companies to support and automate the process of IT financial management. This is done by applying general cost accounting principles to IT.
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IT financial management – Why now?
IT users and IT departments are experiencing an accelerating need for IT financial management because:
• Cloud & virtualization are driving additional IT adoption at a rapid rate
• Business units are demanding IT cost visibility and predictability
• Profit pressures demand businesses to manage IT cost vs. business performance tradeoffs and alternatives like never before
• IT process maturity (e.g. ITIL) has moved many IT organizations from a chaotic to a stable state so they are now better prepared to add IT financial discipline
• Data availability and accuracy (through discovery) has improved greatly
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Key capabilities of IT financial management software
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Emerging trends: IT financial management software
• The IT financial management software market will exceed $500 million annually in 2012.
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IT financial management adoption s-curve
IT budgetreview
Full integration
Activity Based
Costing (ABC)
Processmodels
Service models
Basic product definitions/
Service catalogs
Basic chargeback
Cost models
Understand IT costs Manage IT costs Manage IT demand
Ad-hoc BU cost visibility
projects
Ongoing corporate cost visibility
Costbenchmarks
Pricebenchmarks
Advanced chargeback
Basic integration
Service based costing
ChangeUser
behaviour
Maturity Of IT
Financial Management
Implementations
21 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
IT financial management – Best practices
• Create a governance structure and revamp your organization
• Deploy service definitions/service catalogs
• Develop cost and service models
• Optimize delivery through right sourcing
• Invoice customers to rationalize behaviors
22 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
Thank you
Dr. Thomas Mendel, Ph.D.
tmendel@forrester.com
http://blogs.forrester.com/vendor_strategy/
www.forrester.com
IT Cloud Financial Management
March 2010
Yisrael DanczigerCEO & President
Digital Fuel
Managing the Cost of Cloud Services
Where to Start: Build A Cost Model
Application Cloud Infrastructure Cloud Process Cloud
Cost Model Enables You to know:
• Total Service Cost and Usage
• Usage based cost allocation
• Underlying Cost Drivers cost
• Unit Cost
• Calculate key metrics:
– Cost per headcount
– Cost per revenue
– Capex vs Opex
– Many others
Managing the Cost of Cloud ServicesWhat can you do with this knowledge?
IT Cloud Cost Model
Proactive Cloud Cost Control
• Cost trends at all levels
• Track Actual vs Budget
• Automatic observations
• Root cause
• What if planning
Business Unit Cost Visibility and Predictability
• Detailed periodic invoices
– Cost and Usage
• Forecast
• Reforecast
• Compare to alternatives
• What if analysis
Cost Value Optimization
• Mix and match, Compare between:– Vendor and internal options– Different service offerings– Delivery models– Cost models
• Meter usage, Identify:– Virtualization candidates– Consolidation candidates– Standardization options– Defer upgrade potentials– End-of-life potentials
Usage based IT Cost Allocation
• Allocations must be:– Automated– Consistent and ongoing– Justifiable– Audit trail– Standard
• Pass in “flying colors”:– Tax audits– Stock market reporting– Regulator audits
Accurately Plan and Budget – Based on Facts
• Actual Historically based unit cost:– For every IT service and cost driver
• Actual Historically based usage:– Accurate demand forecasting
• Demand & driver information– Sophisticated calculator
– Applies the historically calculatedcosts, drivers, and usage
– Automatically produce a proposed IT budget
Summary
IT Cost management enables realization of cloud benefits!
Thank you!
Questions? Please enter your questions in the Q&A panel
located in the lower right section of your screen
Presented by:
Thomas Mendel Yisrael Dancziger
Forrester Digital Fuel tmendel@forrester.com ydancziger@digitalfuel.com