Evolving the Enterprise Datacenter along the Journey to Cloud Computing with VMware

The Business Opportunity Cost of IT

The rst decade of the twenty- rst century has been marked by radical changes in the requirements for business competitiveness. Companies have had to innovate rapidly to stay ahead of their competition. The pressure to innovate and deliver cost leadership has been further ampli ed by developments in technology and business process. The proliferation of the Internet has enabled new products and services to be created and has driven cost pressure to existing ones. New business practices such as supply chain management, agile development, continuous build and deployment have also encouraged companies to move faster and shrink their product development lifecycles dramatically. These pressures will only continue to grow, and obstacles to innovation and cost leadership will have signi cant opportunity cost to businesses. The increased pressure on companies has naturally owed into increased requirements for IT organizations. Chief Information O cers are struggling with legacy IT infrastructures that are expensive to maintain and slow to respond to rapidly changing business requirements. On one hand, CIOs are being asked to deliver more to the business more technology services, higher availability and other service levels, and faster response times to requests. Lines of business are accelerating their business processes to respond to the increasing demands of their respective industries. Their own acceleration translates into an expectation from IT to accelerate and innovate as well. Unfortunately, survey research today indicates that IT organizations are spending upward of 70 percent to 80 percent of their budgets purely on maintenance activities, leaving thin resources for the business to expand new capabilities and services. On the other hand, CIOs are also facing strong pressures to reduce their costs. Chief executives are asking IT departments unfair questions such as Why does it cost so much for us to deploy a server when external cloud service providers will rent us a virtual machine for 2 cents an hour? As external service providers set new cost and agility benchmarks and renewed interest in outsourcing looms, internal IT departments are seeking a path to achieve similar gains. The initial response from IT to these increasing demands for cost e ectiveness and agility has been to try to optimize existing operational processes and tools. Initial exploration of IT planning and management processes allowed IT to better characterize their demand and deliver services against them at much higher service levels than before. Although these initial investments have delivered some returns, there remain additional challenges for IT. IT organizations need a new approach for delivering competitive service to their lines of business. This new approach requires a technological innovation at its core that can both dramatically reduce the cost of delivering services and increase agility to rapidly changing requirements. Said di erently, what if lines of business should be able to procure IT services as easily as ordering something like wireless cell phone service? What if users could go to the website of the provider, see the di erent types of services available, and make a choice, pay the bill, and have the service in hand? However, the only approaches that will be successful in implementation are ones that are both pragmatic and retain control for IT. Executing on a new evolutionary, controlled approach can not only deliver operational gains for the IT organization but also address what is becoming a major opportunity cost for the business.

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A New Era in IT Cloud Computing
Over the last 40 years, information technology has undergone many revolutions in how computation has been delivered to end users. In the mainframe days, the computation architecture was highly centralized and end users consumed these resources on a shared basis. A desire for greater exibility and lower cost computing led to Client/Server architectures. The downside of these architectures has been low utilization 5-10% in the physical world. Now, a new model for IT is nally emerging: Cloud Computing. Cloud computing, simply put, is an approach to computing that does two things: Improves IT efficiency by leveraging efficient pooling of an on-demand, self-managed virtual infrastructure Enables the agility for end users to consume IT services on demand in a frictionless way

As an architectural approach, cloud computing takes the abstraction of virtualization to a whole new level. This new abstraction is that of the application or service layer from the underlying infrastructure or resource layer. By isolating the deployment of applications from the management and procurement of the resources needed to operate them, an extraordinary level of exibility is introduced into the data center. Resources like servers and storage can be procured in bulk quantities and capacity decisions can be driven by the aggregate needs of an organization. By setting resource capacity levels to meet aggregate needs, utilization levels are dramatically higher in cloud environments. This increase in utilization delivers an immediate impact to cost reduction. As a service consumption approach, cloud computing applies standardization and automation to applications to enable rapid provisioning of services. Instead of waiting for manual IT procurement and provisioning processes, lines of business are able to consume the services exactly when they need it. Meanwhile, IT retains control over policies and billing that govern the usage of those services. By empowering lines of business to access and return IT services as they are needed, cloud computing delivers agility to the business. Cloud computing is delivered to the enterprise through various con gurations. Cloud infrastructure built inside of the enterprise rewall is called a Private Cloud. Cloud infrastructure hosted at a service provider for enterprise access is called a Public Cloud. Federated infrastructures bridging resources both inside and outside of the rewall are typically called Hybrid Clouds. Irrespective of con guration, cloud computing allows enterprises to evolve to an on-demand, highly available and highly secure computing model that immediately delivers cost efficiency and business agility. Enterprises are eager to explore the benefits of cloud computing for many reasons. First, although enterprises are seeing great cost reductions associated with virtualization, its clear that there remain gaps in achieving competitive costs. Second, despite the adoption of IT management processes to boost service level agreements, there is still a high degree of in exibility inherent in executing to demand from lines of business. Traditionally, most enterprise applications and services are built on top of tightly coupled technology stacks. Provisioning a new email server or business intelligence engine often requires waiting for hardware to be purchased and system images to be configured. Enterprises are looking for ways to break these boundaries and evolve to a more efficient and flexible model for computing. However, the efficiency and flexibility introduced by cloud computing is also an area of concern for IT organizations. By removing the architectural barriers that prevented the cost-e ectiveness and agility of cloud computing, IT organizations are concerned about how they will achieve availability, security, and compliance. For all of these reasons, IT organizations need an evolutionary pathway to cloud computing that not only prevents a loss of control but also strengthens it.

VMware Virtualization is the foundation for Cloud Computing

Since its inception, VMware has brought unparalleled solutions to the world of IT. Over the past decade, VMware has helped more than 150,000 enterprises drive down costs and improve business agility by Virtualizing their IT infrastructure. VMwares Cloud Computing technology and vision is about taking customers to the next level.

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VMware customers have found that the path to cloud computing occurs in three distinct phases. It starts with the rst phase IT Production, proceeds to Business Production, and then graduates at the nal stage, IT as a Service, that is delivered for private cloud.

COST EFFICIENCY Stage Sponsorship IT Production

QUIALITY OF SERVICE Business Production

BUSINESS AGILITY IT as a Service (ITaaS)

Business Value

Cloud Readiness

Pooling = Abstraction + Shared Resources

Control = Service De nition Service Assurance

Zero-Touch Infrastructure

The IT Production phase is focused almost entirely on cost efficiency. The first step for most companies, lies in reducing costs by transitioning from underutilized physical infrastructure to efficient, shared pools of virtualized infrastructure. The next phase, Business Production, is focused on improving quality of service. CIOs seek to increase control and ensure policy-based levels of security, compliance, fault tolerance, and availability in an automated way. The nal phase, IT as a Service, is focused on gaining business agility, while further reducing both capital and operating costs. Virtualization is clearly an essential component for enabling this path to cloud computing. At its core, virtualization aggregates datacenter resources into large, shared, elastic pools of computing power. This aggregation and consolidation has saved enterprises billions of dollars by driving up utilization of infrastructure. VMware vSphere is the industrys leading virtualization platform for building cloud infrastructures. Leveraging more than a decade of industry-leading technology and experience, vSphere delivers agility with uncompromised control in the most efficient manner while fully preserving customer choice. IT organizations have achieved gains in utilization and automation from virtualizing Tier 1 applications and introducing a more methodical approach to resource management and provisioning. A case example is Independence Blue Cross, the largest health insurer in Philadelphia, with 3.4 million members. We needed a cost-e ective solution that would manage server sprawl and ensure we had a high-performance application environment that could handle our business as it grew, says Michael Garber, director of distributed infrastructure at Independence Blue Cross. VMware met these needs. In fact, the performance of many of our Microsoft applications has actually improved since we started running them on the VMware platform. The product has paid for itself in less than 16 months and helped us avoid more than $1 million in hardware costs. We now have 386 virtual machines running on 48 physical hosts. Weve increased our processor utilization from 5 percent to 75 percent, and we still have extra horsepower to add more virtual machines. As companies increasingly virtualize greater portions of their data center, management tools became necessary to organize, monitor and con gure the sprawl of virtual machines through a single interface. VMware vCenter is a management suite for managing technology as a service with highly automated, policy-driven administration of operations from self-service requests through chargeback. VMware o ers a comprehensive set of management capabilities to ensure compliance with established con guration standards, to right-size every element in the environment, to predict and manage capacity, and to allocate the costs back, as appropriate to the user. With VMware vCenter products, IT is able to simplify the amount of management and maintenance, and take the next step towards cloud computing with zero-touch infrastructure.

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VMware Enables an Evolutionary Path to Cloud Computing
Signi cant opportunity remains to address cost and service beyond just pure consolidation. A data center that has implemented virtualization still requires IT support to provision virtual machines to end users. Policy and process veri cation is often handled manually by IT administrators. The cloud computing approach addresses this challenge by standardizing and automating the services delivered out of a virtualized pool of resources. This standardization and automation gives end users the freedom to deploy applications whenever they need them and frees them from the constraints of how and when the underlying infrastructure is deployed. The cloud computing approach gives end users a new level of agility and exibility by empowering them with the accountability for determining how much IT services they want. VMware is working on a range of new technologies to enable cloud computing, delivered through both Public and Private Clouds. Speci cally, private clouds built on VMware solutions yield improved IT efficiency and agility, while enhancing security and choice. Private Clouds enable IT to efficiently deliver multi-tenant infrastructure to internal organizations as virtual datacenters, enabling a significant reduction in cost from higher pooling of resources and increased automation. A virtual datacenter is a new level of infrastructure abstraction, built on top of the basic resourcing pooling provided by vSphere that consolidates IT assets into tiered service pools. Deploying resources through a private cloud is expected to reduce IT costs by an additional 20% over and above the cost reductions experienced through virtualization alone. The primary driver for this additional cost savings is the new level of standardization and automation associated with cloud computing. What often kills day-to-day operations is the heterogeneity of their environments. Too many components are custom built today and that heterogeneity creates issues when it comes to troubleshooting, provisioning, etc. Standardization is the key to introducing more automation in the data center. Cloud computing allows common services to be delivered through standardized infrastructure in a central catalog. By creating tiers of standardized service o erings, IT can simplify troubleshooting, patching, and change management with minimal variation. This simpli cation eliminates a large portion of the administrative maintenance tasks that IT is burdened with today. Provisioning can be automated as well through policy-based work ows that empower validated users to deploy pre-con gured services with a click of a button. This new level of standardization and automation immediately translates into an opportunity for line of business end users. By reducing service provisioning time, IT responsiveness is immediately increased thereby allowing end users to procure IT resources exactly when they need them. VMware has introducing a new concept called the virtual datacenter. Virtual data centers are resource pools with well-de ned quality of service characteristics that can be automatically tied for policies, to the di erent standardized services that an infrastructure shop provides. Virtual datacenters can be con gured so that each line of business organization is granted access to all of the resources allocated to that virtual datacenter. This allows the long cycle times of IT provisioning to be nearly eliminated using a Private Cloud approach. Of course, although end users will be empowered to self-provision services, IT will still retain control over the health of the underlying infrastructure. Securing applications and data in the cloud is one of the primary concerns expressed by enterprises evaluating the move to cloud computing. Companies expect assurance that their applications and data can be properly segmented for compliance and that trust zones can be maintained. Many companies also have requirements to keep data in speci c jurisdictions. VMwares solutions address these concerns. VMwares cloud solutions not only o er the ability to ensure security, but in fact o er the promise of signi cantly enhancing security. The vSphere platform has unique introspection abilities that provide comprehensive access to security controls, obviating the need for security agents in each virtual machine. The introspection capabilities of vSphere are to security what CAT-scanners are to medical diagnostics: they can help identify hard-to-detect problems precisely and efficiently. VMware security solutions also overcome another big challenge the traditional tug of war between velocity of change and security. VMware leads the way in making security change-aware, and enabling customers to leverage dynamic capabilities such as live migration, while being assured that the security policies are Always On and will follow virtual machines seamlessly. VMware o ers a comprehensive cloud security framework for protecting all elements of the private cloud host, network, application, data and endpoint while reducing the complexity of security implementation and management, and accelerating the path to IT compliance. Perhaps the most powerful aspect of using VMware to power an internal Private Cloud is the ability to leverage existing investments and ensure interoperability in the future. By building a Private Cloud on top of VMware virtualization, applications require no re-writing or re-deployment to

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function in the cloud. Enterprises can literally lift existing applications, encapsulate them in a virtual machine, and shift them to the new infrastructure model of cloud computing. VMware is also working with hosting and service providers to enable compatible Public Cloud infrastructures. Through federation and common management services between clouds, VMwares approach presents an evolutionary path to the highly scalable, high-performance public clouds being built by the top service providers on the VMware platform. This enables enterprises to stretch the logical boundaries of their data center, and also leverage third-party cloud computing services, based on VMware vCloud technologies. Ultimately, this approach enables internal and external resources to be bridged into hybrid clouds that help businesses achieve the full exibility and bene ts of cloud computing.

What Is Going to Be Di erent?

The gradual evolution to cloud computing will involve changes to some of the traditional tenets of IT management practices today. When Ford Motor Company invented the model of mass production in early 20th century, many changes to manufacturing management were necessary to adapt to the new model. Likewise, private clouds enable companies to move from a model where everything is custom to one where almost everything is standardized. The notion of delivering service shifts from one of responding to a highly uncertain stream of tickets to one of having prepackaged services on the shelf for customers to consume at their discretion. Management in such an environment is no longer about avoiding change but embracing and enabling it to meet the needs of the business as quickly and efficiently as possible. Service Standardization The move to private clouds does literally represent a sort of industrial revolution for information technology. It is about applying industrial manufacturing techniques to the provisioning of IT services; in other words, it is about standardization and automation. Just as the industrial revolution displaced handcrafted bespoke products with mass customization, cloud computing is a transformation from one-o custom-built infrastructure con gurations to mass, standardized infrastructure products. The efficiency and pooling of private cloud infrastructure facilitates this return to standardization. Automated provisioning of recurring applications, such as development and test environments, from a templatized catalog of prede ned infrastructure products can be done in a matter of minutes, instead of weeks. Meanwhile, the centralization of availability, fault tolerance, network management and security also drives gains in standardization. What will be very important here from a management perspective is that enterprises invest time in understanding what services satisfy the needs of their internal customers in order to reduce that complexity and heterogeneity to a few known quantities exposed for a service catalog. The management notion of demand planning, which is very familiar to the manufacturing world now, must be introduced to IT organization. IT will need to evolve passive business analysts who reactively document requirements in response to business needs into more active business partners who are managing the service catalogs that their respective lines of business can order from. By investing in this proactive assessment of business demand and de nition of standardized catalogs, IT can both eliminate the costs associated with heterogeneity and improve the agility for lines of business. Application Delivery Model Delivering information technology as an on-demand service also requires new management practices. Fundamentally, the private cloud is about being user-centric and meeting the needs of internal customers. By decoupling the consumption of applications from the provisioning of resources required to support it, the private cloud model bifurcates application delivery into two areas of focus. First, there must be a focus on de ning application requirements in a way that is agnostic to the infrastructure. Second, there must be a focus on understanding capacity and utilization of infrastructure in a way that is agnostic to the applications running on them. A great analogy of this bifurcation occurred in the US manufacturing world during the early 2000s. As manufacturers sought to decrease labor costs through outsourcing, entire production stacks were moved to lower cost geographies like China and Taiwan. This move had a profoundly negative impact on service to retailers in the United States who were unable to get products shipped when they needed them. Ultimately, manufacturing companies split the production process to have standardized base products manufactured o shore and then postpone nal production to be done locally near retail customers, often times on demand. This split between the production of the standardized base and ful llment of nal product on

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demand allowed manufacturers to achieve both lower costs and improved service. But clearly this approach required changes to manufacturing management practices. In a similar way, the agility of private cloud infrastructure separates the ful llment of applications to customers from the details of the underlying base on which the applications run. Management in the private cloud, therefore, must also be split by the two distinct needs: ensuring that each application meets the needs of each unique line of business, and providing the pool of base resources to meet the aggregate needs of the organization in the most efficient and responsive way possible. This split may be a slightly unfamiliar one for IT organizations that are accustomed to managing fully integrated technology stacks. IT will need to reorganize their application delivery models into a split between application ful llment capabilities and resource procurement capabilities. By doing so, enterprises will be able to achieve the difficult balance of both lower costs and improved service. Security Model Managing a cloud environment e ectively requires addressing the challenges imposed by the velocity of change on security. Traditional approaches to protecting the operating system and applications have relied exclusively on agents, which are vulnerable themselves, o er protection only within limited layers of the application + OS stack, and create sprawl and management/update issues on a large scale. As IT organizations grow the sizes of their data centers, the challenges of security have essentially scaled with that growth. An example of this challenge in the physical world is that of home security. In the traditional model, home security was enforced with neighborhood police that would periodically patrol each street of a neighborhood to identify break-ins. But much like technological agents, police were not always reliable and they certainly did not scale in growing neighborhoods. The solution to this challenge was the invention of automated home security services. Home security service providers would constantly monitor your home through unique introspection tools to identify potential problems. By creating this automated and scalable abstraction layer, the level of security provided was actually increased from the traditional model. Likewise, a virtualization-based security model provides many of the same advantages for an IT organization. Capabilities like introspection and change awareness allow IT administrators to ensure comprehensive security across infrastructure without running agents on each virtual machine that is created. Management, therefore, becomes abstracted at a higher-level virtualized layer instead of at the level of each provisioned machine. Administrators of clouds will need to acquire this new skillset around managing security. Instead of being an adjunct capability of IT, security will now become an integrated function in the delivery of cloud computing architecture. By acquiring these skillsets, enterprises will be able to maintain a signi cantly sharper level of security than before.

Where to Start
Fundamentally, VMware believes that the path to cloud computing is not about a single technology purchase or about an abrupt disruption to the business. The path to cloud computing is an evolutionary one that customers can follow based on their state of evolution today. Before an enterprise achieves the full evolution of cloud computing, there are de nitely tangible immediate steps that can be taken to start the process of this evolution. For production architectures where service maximization is most important, VMware indicates that expanding virtualization of Tier 1 applications is the best next step toward turning IT into a service. As more Tier 1 applications are virtualized, service levels around high availability, disaster recovery, and other performance measures will naturally rise. Capturing this increase in service is the most important cloud computing priority for production systems today. Meanwhile for ad hoc workloads where rapid provisioning is most important, VMware believes that enabling self-service will be the best next step. Speci cally, it is most common to start moving a few key types of applications to the cloud:

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1. Transient apps Applications that will have a rapid rate of provisioning, cloning, or reallocation, e.g., a stage or preproduction environment 2. Elastic apps Applications where the demand for resources will vary greatly over time; e.g., scientific computation or anything with seasonal transactions 3. The long tail of apps Applications that never get prioritized by IT organizations; e.g., a customized Web farm for an extranet Customers have prioritized these types of applications for self-service due to their high rate of change experienced with these applications. Unlike permanent production applications that have relatively stable resource requirements, ad hoc workloads cause the biggest headaches for IT. Applications such as these will bene t the most from being served out of a private cloud environment and can drive immediate value to the business.

Summary
Enterprise IT organizations need to evolve their infrastructures and processes in order to avoid opportunity costs for the business. Lines of business do not have the luxury of waiting to become competitive and this pressure is clearly transferring over to IT. An evolution is necessary and the technology to ful ll that evolution is nally here in the form of cloud computing. The cloud computing approach of resource pooling and on-demand consumption of services can be enabled through a secure, pragmatic and gradual path using VMware technologies. VMwares vSphere suite provides the industrys leading platform for virtualization to deliver pooling, higher utilization, and cost e ectiveness. VMwares vCenter suite provides management tools to deliver automation and quality of service on top of virtualization. And VMwares vCloud technologies provide the standardization and self-service that drive agility for lines of business. By driving efficiency through utilization, automation, and business agility with IT control, VMware is providing the foundation for enterprises to transform information technology.

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