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Anything-as-a-service
A technology operating
model for the cloud-
centric era
Contacts
Strategy& 2
Executive summary
The cloud, especially the public cloud, is now officially beyond hype. Supply options are real, as is enterprise buyer spend.
Increasingly, chief experience officers (CXOs) are using the cloud to solve the most important business and technology
challenges across all functions of the business, from speed and agility to innovation and cost advantage.
The cloud is becoming the core paradigm for delivering business technology, with an aspirational promise of zero
infrastructure anything-as-a-service.
To deliver on this promise, tech operating models will need to evolve and grow a new set of cloud-centric capabilities that
are very different from the old ways of IT:
A new, consultative approach to cloud demand and business relationship management
A retooled architecture, engineering, and operations capability, embracing such concepts as cloud orchestration tool sets, continuous
integration and deployment, and development operations (DevOps)
Strong controls for cloud consumption, performance, and vendor/partner management
Where to start, and where to focus, will depend on your industry. The journey will look different for players whose technology
is the product vs. less tech-centered mid-cap and large enterprises.
We offer a blueprint for a cloud-centric operating model, and a road map for how to get there.
Strategy& 3
After years of hype, public cloud services are now
reaching scale with dramatic growth ahead
$630 PaaS
+22% 107 +27%
$491
49 IaaS 13%
+26%
29% Observations
+4% 523
442
58%
What we see today is only a
Public cloud
Rest of IT
glimpse of what lies ahead
SaaS
+20%
Public cloud services are
2013 2017
dramatically outpacing general
IT spend (22% vs. 4% CAGR)
29% 28%
Note: Numbers are analyst estimates
17% 2013 6 6 and are not exactly comparable.
8% 8% 6% 2017 (forecast)
3%
Source: IDC; Forrester; Gartner;
Oracle IBM SAP Adobe Amazon Microsoft Oracle; Strategy& analysis
Strategy& 4
Cloud models have benefits beyond costs, but a number
of perceived and real inhibitors slow adoption
Expected benefits of Key inhibitors of cloud adoption
cloud operating models (% of respondents who mentioned)
Privacy 26%
Reliability 22%
Strategy& 5
The move to the cloud is creating a disruption
comparable to the shift from mainframe to client/
server architecture
Today Tomorrow
Custom-developed applications and stand-alone platforms Standard, cloud-based, integrated SaaS/PaaS solutions focus on
requiring onerous maintenance schedules configuration vs. code
Siloed development and operations functions managing lengthy release Continuous software delivery with accelerated time-to-market enabled
cycles by collaborative DevOps
Long lead times to provision IT components and code deployments On-demand provisioning of IT infrastructure services
Dedicated, high-touch infrastructure (data centers, server, storage, Zero infrastructure: low-touch, flexible, and scalable compute
mainframe) estate and store capacity
Focus on development and supporting operations IT for IT Orchestrator of services, focused on business enablement
IT for business
Device-driven, static-capacity end-user IT and supporting business
services Software-defined, auto-scalable end-user IT and supporting business
services
Big IT/CIO controlling the IT spend and resourcing
Shared funding and resourcing among IT, business, and partners
Source: Strategy&
Strategy& 6
Senior executives looking to adopt a cloud strategy
face substantial business and IT challenges
Strategy& 7
Transitioning to the cloud requires a mix of new and
enhanced traditional operating model capabilities
Holistic view: Components of an ideal cloud-centric operating model
CMO: sales and marketing Cloud solution Cloud-first Multi-cloud/hybrid Strategic cloud Public cloud solution
CPO: product value chain evangelism and architecture design cloud operations solution sourcing vendors
consulting (zero infrastructure Vendor relations and Private/hybrid cloud solution
Other CxOs: analytics, aspiration)
financial reporting, HR Portfolio assessment innovation exchange vendors
benefits administration, etc. focused on cloud SLA and vendor Ancillary cloud management
DevOps discipline and tooling for continuous
adoption planning performance providers
integration, deployment, and multi-cloud
operations management
Cloud cost and consumption management: Disciplined metering, tuning, and reporting for
consumption-based cost charge-back model
Workforce/talent management: Continuous talent pool mix and skill set development to
support cloud-focused organization
Cloud security and risk management: Cloud risk vs. benefits assessments, security policy
setting, and audits
Strategy& 8
Demand for cloud services is largely driven by needs
of stakeholders outside the IT domain
Key stakeholder strategic objectives Digital agenda implications
Faster time-to-market and increased agility Enable advanced analytics through cloud-based
Innovative sales and marketing powered by solutions
CMO
cloud solutions Digitize customer engagement platforms
Enhanced user and customer experience
Innovative service and/or product design Digitize technology service stack for product
component customization based on rapidly customization
CPO evolving customer needs Define architecture standards for product
Product value chain digitization and development
innovation
Cost control and allocation Establish cloud consumption and cost control
Capex to opex shift for increased operational mechanism
Cloud demand
CxO agility and economies of scale Develop strong-form vendor management
Back-office process automation Digitize back-end and support processes and
functions Source: Strategy& analysis
Strategy& 9
Cloud IT architecture is constantly evolving, standards
are rare, and new technologies keep rolling out
Trends in cloud architecture stack technologies
Platform
Service assurance Service billing and
Service catalog
and SLA management consumption control
Technology stack
Release management tool kit
Code repository, software configuration management, build/deploy coordination across environments
Security controls
Security policies, compliance audits, and risk management
Cloud architecture
and engineering
Orchestration QA orchestration
Automated testing, test case
management Operations monitoring Service metrics Growing list of commercial and
Monitoring, alerts, and backups Consumption and cost metrics open-source solutions provide a range
Orchestration of continuous to ensure quality of service level for metering and reporting of alternatives to manage the cloud
integration and deployment purposes technology stack.
Integration and App container and orchestration can be
deployment pipes managed through a number of platforms.
Resource orchestration
Resource stacks, payload allocations (storage, computer power, network), Fierce competition within public
images (instances and failovers/disaster recovery) cloud space is driving prices down.
Private cloud and on-premise VM
providers are expanding into hybrid
Infrastructure solutions.
Public cloud A Private cloud C
Cloud supply
Strategy& 10
A cloud-centric delivery model requires a new,
more fluid, DevOps-style take on service deployment
and operations
Cloud deployment and operations considerations
Security controls
Strategy& 11
Organizations can set the path toward a zero
infrastructure footprint by employing a four-step asset
reduction process
Four steps toward a zero infrastructure footprint
Performance and utilization should be consistent boundary conditions across the steps Cloud operations
Strategy& 12
The cloud service supplier landscape is diverse,
and maturity varies across technology and domains
Cloud supplier landscape and maturity
SaaS
PaaS
Cloud supply
IaaS
Strategy& 13
Sourcing cloud services through a central VMO function
allows organizations to leverage scale and expertise
Strategy& 14
A number of cost models providing varying levels of
cost transparency are available to organizations
Cost transparency
model options Benefits Whats required to get there?
1. Consumption-based Accurate level of cost allocation A defined services catalog with associated cost drivers to allocate IT
cost allocation based on per-unit metric costs in business-relevant terms that reflect the services provided
consumption
Good, granular data and supporting systems to track and manage
cost allocations
2. Product-level cost More granular level of cost
A change in organizational behavior to adopt consumption-based billing
transparency transparency to inform business
and charge-back model
group product strategy
Ability to conduct product support Embedded financial acumen across roles within the organization (i.e.,
cost-benefit analysis to identify service managers) to actively manage and fine-tune consumption-based
ways to positively impact P/L costs
Increasing
level of Cloud cost and consumption
transparency Example management
Strategy& 15
Implementing a cloud-first organization requires a
service-oriented transformation in the talent and
delivery model
Today Tomorrow
IT-enabled
IT for IT
business
Partners IT Partners
Functional Service
IT orientation orientation
Business
Knowledge and skills in todays workforce Knowledge and skills in tomorrows workforce
Traditional development methodologies Fit-for-purpose development methodology
Custom-developed applications agile, DevOps
Strategy& 16
to identify and retain the right skills for tomorrows
workforce
Enterprise and Project and Business Quality Vendor Prototyping User experience Security
technology program requirements assurance management design
architecture management management
Workforce/talent management
Strategy& 17
Organizations must adapt to stay competitive as
the benefits of cloud adoption continue to outweigh
security risks
Establish cloud security capability to manage the risks of cloud adoption, avoid collecting and
processing un-curated data in the cloud, and develop a response plan in the event of a breach
Strategy& 18
A cloud transformation entails establishing a business
case, strategy, operating model, and target-state
architecture
0. 1. 2. 3. 4. 5.
Baseline Value assessment Strategy and Cloud Readiness and Target-state service and
assessment and business case road map development operating model maturity assessment architecture development
Baseline Determine the Enable organizations to Define the processes, Assess cloud adoption Define cloud functionality to
infrastructure and business value of the develop a unified cloud organization structure, readiness based on meet business objectives,
application portfolio cloud solution chosen strategy that aligns roles, skills, and infrastructure, develop architecture to
estate to determine by an enterprise and business vision, values, governance required to governance, and achieve these
feasibility of the evaluate it through the and objectives with a effectively operate in a process maturity functionalities, and design
organizations cloud lenses of cost, cloud solution cloud environment capabilities to manage
adoption aspirations usability, functionality, cloud services
and agility
Strategy& 19
An organizations cloud transition play depends
on its tech affinity and size
Strategy& 20
Each organization should decide how far it
needs to push the operating model choices
Cloud operations
Strategy& 21
We offer a full range of cloud-centric services to
help clients move to an IT platform of the future
Strategy to execution
1. 2. 3. 4. 5. 6.
Cloud Cloud Cloud Cloud Cloud Cloud
strategy architecture operations business transformation governance
services services services services services services
Value assessment Service and Service optimization Risks, controls, Program management Governance model
Strategy and road architecture Service management and compliance Stakeholder Operating model
map development development optimization Implementation awareness and Financial management
Application assurance alignment
Business case Organization and talent and charge-back
readiness and Controls design review
development optimization Regulatory compliance Organizational change Supplier management
migration planning assessment management
Readiness and Public cloud brokerage
maturity assessment Vendor analysis and Integrated security Private cloud
selection compliance
Third-party assurance
implementation
Public cloud
integration Taxation
Permanent establishment
issues
Federal research credits
State data center credits
and incentives
Sales and use tax
equipment exemptions
VAT implication analysis
Source: Strategy& analysis
Strategy& 22
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