New Business Models in Cloud

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1 New Business Models in Presentation at TAC 14 Barcelona, 26 Jun

2 computing as already seen in the 60s at MIT Computing may someday be organized as a public utility just as the telephone system is a public utility. Each subscriber needs to pay only for the capacity he actually uses, but he has access to all programming languages characteristic of a very large system [ ] Certain subscribers might offer service to other subscribers [ ] The computer utility could become the basis of a new and important industry. Professor John McCarthy MIT s centennial celebration,1961 Source: MIT 2

3 The already improving and disrupting our economy Improvement: From traditional check-in to selfservice Before After Disruption: From DVD rental business to VOD Before After Growth constrained by limited access at airport Time consuming check-in procedures Need for more IT support Need to shorten queues and increase customer satisfaction Scalability. increase check-in thoughput buy 75% in asset constrained airports Need for fewer and fewer IT staff Rapid provisioning of new services (eg. better seating) Cost savings while improving customers service Inflexible model. Slow to scale number of users. Need to order DVDs by mail Cunbersome provisioning: need physical documents High IT/logistics support required Difficult to move into new/adjacent businesses Scalability. Can increase/decrease # of users instantly Instant provisioning, users sign up instantly Instant provision of new content IT operated by 3rd party, now Opex Ease of entering other business such as audio content Source: Frost and Sullivan 3

4 comes in 4 main service layers Service layer Services type examples BPaaS: Business Process-as-a- Service Business processes delivered as a service using architecture Human resources E-commerce Payment processing Document mgmt. Other (e.g., industry specific) SaaS: Software-as-a-Service Applications accessed via web browser Office CCC 1 CRM SCM HR Sourcing, Other PaaS: Platform-as-a-Service Platforms to develop & market apps and online services Platform IaaS: Infrastructure-as-a-Service Virtualized, highly scalable pool of IT resources (storage, processing) Infrastructure Mainly enterprise users Enterprise & consumer users 1. CCC = Content, Communications and Collaboration (e.g., enterprise content management, web conferencing) 2. DCC = Digital content creation (e.g., digital imaging, digital video) Source: Gartner, BCG 4

5 The services with the highest foreseen growth Services Office Suites 49.1 Database Management Systems 48.5 Compute 42.6 Business Intelligence Platform 38.8 Storage 36.4 Digital Content Creation 34.0 Application Development 22.4 Project and Portfolio Management 22.2 Supply Chain Management 21.5 Other Application Software 18.4 CRM 16.3 Industry Operations 14.7 E-Commerce Enablement 13.6 Payments 12.8 Customer Management 12.8 Web Conf., Team Platform, Social Software 10.9 F&A Supply Management HR Print 31.5 Application Infrastructure and Middleware 28.0 Business Intelligence Applications 27.4 Enterprise Content Management 25.9 ERP BPaaS SaaS PaaS IaaS Note: Refers to public cloud services Source: Gartner (February 2013) Estimated 5-year CAGR (%) 5

6 also comes into different Private vs. Public flavours Control Within Enterprise External to Enterprise Current IT infrastructure Private Enterprise Private Hybrid Public Access Enterprise Network / VPN VPN Internet Model Maintain "core" applications on dedicated infrastructure Achieve "" benefits with standardized / modern architecture 2 Share data, applications, inf. with "trusted parties" or outsourcer Source highly standard applications at lower cost Examples Estimated % of activity by 2017 Storage of latest R&D designs Banking platform SAP Retail application (customised) eprocurement SAP (HR, Finance, Procurement) Mail CRM Backup / archival < 10% 30%-50% 20%-50% 10%-20% Source: BCG 6

7 How are companies embracing? already implementing within next 1-3 years beyond 3+ years Business Process Standardized business processes HR / Finance / Back Office "Greenfield" Software Platform Infrastructure Shared applications / platforms Data centres Packaged applications SAP/Oracle core ERP MS Azure/Google Apps Analytics Collaboration Development & test infrastructure Backup HR, CRM, Procurem. CRM Storage Compute on demand Private Hybrid Public Source: BCG interviews to CIOs 7

8 How are providers positioning themselves in the? Business Process SaaS experts Enterprise SW Software Web giants Platform SIs / IT outsourcers Hosters Infrastructure Telcos Datacenter/Network Source: BCG Consumers SME Large enterprises Industries 8

9 What business models to seize the opportunity? Bus. Model Definition Examples Advertising Users can store and exchange information in the cloud for free, thanks to advertising Pay-as-you-go Pay-as-you-grow Subscription Freemium Bundle Drive usage Customer pays according to his growth, scaled-up in the providers solutions Customer can access to the cloud service for a monthly or yearly fee Free service for basic usage / capacity then paying is offered for free in a bundled service such as mobile subscription Stimulate communication usage through offering of cloud services Telco offer in Residential Telco offer in Enterprise

10 Orange Spain delivering solutions since 2003 Orange Empresas SaaS IaaS Virtual Switchboard storage Virtual service which solution emulates functions of a Securely conventional fix hosted in Spain switchboard (Oficina Plus). Contact Includes: &Calendar Personal assistant: backup corporate directory Ballena and Centralized call Delfin tariffs management tools includes 25GB Assistant Manager: free storage which calls are and 500MB answered/diverted data allowance Configuration and service Administration 2003 tools Virtual Private Network Secure access to corporate network from any site/device Orange Residencial Mobility applications and services for Enterprises Selected examples Localization: to know where the fleet is, optimizing routes Data input: to replace paper worksheets, automating processes Sales Forces: to increase sale team productivity through process automation Storage: to share information in a secure environment and in an efficient way 10

11 Closing thought: may computing be the base of our economy in 50 years from now? A group of MIT students create Tidbit, a proof-of-concept for Bitcoin-harvesting With Tidbit, websites could let their visitors help them mine Bitcoins instead of serving up ads After Tidbit won the most innovative award in a recent hackathon, the State Attorney General of New Jersey demanded the students to turn over their set of documents, code and information 11

12 Thank-you

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