Lean Service Providing

Operating Models for the Cloud Computing Age

Bernd Jaster Detecon International 25.05.2011

Deutsche Telekom Group

A Break-up into Differentiated IT-Markets

The As-a-Service-Paradigm will evolve into two differentiated markets: Highly standardized infrastructure on the one hand and versatile software on the other.
Future Evolution Paths of Cloud Computing Services

Software Universe Infrastructure Utility

Industrialization of IT infrastructure and standard middleware Fully automated provisioning, management and invoicing Deterioration of prices and margins driven by economies of scale Consolidation of providers, emerging wholesale business PaaS IaaS SaaS Differentiation of applications and frameworks Decomposition of Platform and Application Architectures Growth of integration and orchestration platforms Diversity of software vendors ranging from one man companies up to global enterprises

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Breaking up the Value Chain

Driven by technology abstraction, integrated value chains will be broken up. Unbundled business models emerge.
Vertically Integrated Value Creation
Integrated IT Provider

Unbundled Business Models

Sales Company
Wholesale / Retail Channel, Cloud Resource Exchange,

Cooperation

Account Management

Service Company Segmentation of Value Chains

Infrastructure Aggregation, Value Added Operations

Assets Company
Datacenter Facilities
Datacenter and Network Operations, Infrastructure Lifecycle Management, Hardware Manufacturing and Maintenance

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IT Operations Services

Cooperation

Challenges in Cloud Computing Operations

Sourcing infrastructure services from IaaS providers causes a gap in the IT production depth. A new business model may fill in: The Lean Service Provider.
Closing the Operations Gap
Hosting Scenario Cloud Scenario
s

IT User
Demand Supply

IT User

Closes the gap between hosting and IaaS providing

Operations Support
(Backup, Restore,Billing)

Lean Service Provider

Surveillance
(Performance, Availability)

Offers operations Gapsupport on thirdin party infrastrucProduction tures Depth

s s

Supports multiple Iaas providers Provides highly automated operations workflows

Configuration
(Hardware, OS, Network)

IaaS IaaS Cloud IaaS Provider Provider Provider

Data Center
(Facilities)

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Hosting Provider

Options for Employing a Lean Service Provider

IT users have two major options for putting the Lean Service Provider model into practice: Either by external contracting or by using internal resources.
External Lean Service Providing
Contract external partner for Lean Service Provider role, e.g. Application Providers Small Hosting Providers New Market Entrants

Internal Lean Service Providing

Empower internal IT department to operate thirdparty infrastructure Refocus IT operations towards service delivery Avoid external placement of people and skills

s s s

Maintain established demand / supply split Leverage operations skills and toolset Benefit from economies of scale in operations staff and tools

s s s

Increase of flexibility in IT service design Reduction in contracting complexity Internal IT operations without capital expenditures

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Lean Service Providing Case Study

Cloud Computing services are economically attractive and technically feasible for a subset of use cases. Cloud based infrastructure requires changes in operating models.

Selection of Use Case

Cloud Computing Roadmap

Strategy for Non-productive Infrastructure

Operational Concept

Use Case Portfolio Roadmap

Benefit

Cost Case

Process Modeling
IT User Lean Service Provider IaaS Cloud Provider
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eF Tim

e ram

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Lean Service Providing Implementation View

End-to-end automation of operating procedures increases process performance. Control interfaces allow for direct interaction with the Cloud infrastructure.
End-to-end Process Automation
Operating Model
Business Unit, IT User IT Service Management

IT User

Workflow Tool

Automatization Depth

Lean Service Provider

Operating Staff

Universal API

IaaS IaaS Cloud IaaS Provider Provider Provider

Abstraction Layer
Control API 1 Control API N

IaaS Cloud Provider 1

IaaS Cloud Provider N

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Summary

Segmentation of the Cloud Computing Market

The as-a-service paradigm will develop into two differentiated markets.

Highly Standardized Cloud Infrastructure Services

Cloud infrastructure is provided as highly automated and standardized services.

Gap in the IT Production Depth

The change from classical hosting to Cloud operating models leads to a gap in the production depth.

Lean Service Providing closes the Gap

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Lean Services can be provided as internal or external business model.

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Significant Cost Saving Potentials

Lower cost can be achieved due to automation and multi-provider sourcing strategies.

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