SOURCE CLOUD EXPERTS COMMENTS INTERVIEWS CLOUD DEBATE.

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1 November 2012 SOURCE CLOUD Guide to the impact of cloud computing on global sourcing of services EXPERTS COMMENTS INTERVIEWS CLOUD DEBATE

2 SOURCE CLOUD ALL THAT YOU WANTED TO KNOW ABOUT CLOUD ADOPTION By Smriti Sharma Copious researches have highlighted that buyers of cloud pay percent more than their requirements, due to inefficient management. Success of cloud adoption, much like any other service, is a repercussion of impeccable planning, cost effective implementation efficient management, and employing people with the correct skill set. One size fits all is definitely not for cloud. The various stages encapsulate meticulously studying the business case, then zeroing upon the application and finally choosing cloud platforms to achieve the target benefits. Expert advice is highly prescribed. Solely pining out the appropriate platform is not sufficient. For making cloud adoption a success it is imperative to comprehend de facto that implementation architectures (both for applications and deployment) could make or break the cost effectiveness of cloud. Copious researches have highlighted that buyers of cloud pay percent more than their requirements, due to inefficient management. In order to extract full value from cloud adoption, what is needed is an evaluation of investing in various tools and training the staff, or even outsourcing it to a managed service provider. One of the leaders in this segment, Accenture believes that the combination of BPO services and cloud computing has the potential to yield greater scalability, agility and cost savings for clients as well as reduced time to bring services online and greater transparency and cost control. For example, Accenture is working with a global financial services company, providing software-as-a-service to deliver Procure to Pay services through the Ariba 18 November 2012 GlobalServices

3 CLOUD ADOPTION Optimizing application architectures and cloud deployment architectures for performance is often neglected or at best done using a DIY approach, which leads to the issues later. MILIND KHIRWADKAR associate vice president, cloud solutions, Symphony Teleca Corp Network.(The Ariba Network is a collaborative commerce system that delivers the capability for the client s suppliers to deliver invoices electronically, eliminating the need for paper and eliminating manual processing time and errors.) e-invoicing is coupled with automated invoice workflow and matching and the end-to-end process is more robust and delivers improved controls, reduced cycle time, and tighter working capital management. Additionally, Accenture built and piloted the Accenture BPO Navigator a central portal that provides real time visibility into a client s business performance, including operational and contractual metrics and analytics that is delivered in their private cloud. Dr Gavin Michael, chief technology officer for BPO, Accenture, explained, This tool provides clients with both a snapshot and detailed view of their business performance and the dashboard shows metric thresholds, trends and compares data across business unit or country. Through analytics, we can analyze this data to provide insights to aid key business decisions. Companies can adopt one of two approaches to Cloud technologies - reactive or pro-active. Explaining this further, Milind Khirwadkar, associate vice president, Cloud Solutions, Symphony Teleca Corp. articulated, The reactive approach entails looking at the Cloud to solve cost and agility issues when these start affecting an organization. Under this approach, a serious consideration of Cloud technologies is recommended if percent of IT budgets are locked in maintenance, there is a GlobalServices November

4 SOURCE CLOUD backlog of development projects and IT budgets are exceeding 1-3percent of revenue. He added Similarly, an ISV with a flat license revenue growth or facing threats from SaaS competition would do well to look at cloud platforms (PaaS or IaaS). However, the proactive approach suggests using SaaS/Cloud as a disruption or a game changer, and anytime is a right time to introduce cloud based innovative solutions. There are number of industry examples where cloud has been successfully used to collaborate with customers/suppliers, tap new markets and provide new services. In fact, the true power of cloud lies in the latter approach. Services that should be the first ones to move to cloud depends on the state of maturity of an enterprise in terms of cloud adoption. Dhiman Basu Ray, director & global practice head, cloud and application transformation business, Happiest Minds Technologies states, In case it is early days and still not really convinced about the advantages/benefits and probably doing some proof of concepts, then non-core functions like HR, Payroll might be the ones to be moved first. In the process one gets to figure out the actual challenges, benefits and the readiness factors as well. If the state of maturity is higher in terms of Cloud adoption, one should look at a private cloud implementation for core Applications first before moving on to the core Applications on a public or a hybrid model. Private Cloud shields quite a few popular apprehensions about Cloud and this way it just gives enough confidence for all the stakeholders who are supporting the Cloud journey, he added. A typical well planned Cloud adoption should not run into issues but some of the key temporary challenges as highlighted by Ray can be in the following areas: Process decommissioning and gap in transition of the Applications/Assets Data mismatch post transition Training and knowledge adequacy in the new system especially in the operations Cash flow optimization is one of the key business benefits cloud provides. This is generally prefixed by a transformation cost, over a period of 1-2 years, the operations optimization is so impactful that a break-even is achieved very soon and then customers soon start getting the benefits of cloud. DHIMAN BASU RAY director & global practice head, cloud and application transformation business, Happiest Minds Technologies Social backlash as a result of IT role consolidation Increased latency in case of real time transactions especially for public Cloud implementations Watch Out For Performance and availability are the top cited issues apart from security, but fortunately both are addressable. Explaining this further, Khirwadkar enunciated, Optimizing application architectures and cloud deployment architectures for performance is often neglected or at best done using a DIY approach, which leads to the issues later. Similarly building the most cost effective redundancy and failover mechanisms in cloud deployments can in effect provide availability beyond the uptime guarantees as promised by the providers. This is a lesser known fact which deters many customers from 20 November 2012 GlobalServices

5 CLOUD ADOPTION migrating mission critical applications to cloud though it need not be so. One relatively unknown issue which surfaces, Khirwadkar further explained, is change in development processes post migration, especially for software vendors. The release cycles become shorter so agility becomes a de facto engineering process. Non-functional requirements become stringent and hence performance, scalability, availability and security testing practices have to be strengthened. Professional services and support, hitherto performed by partners, become ISVs responsibility and need investments to build these capabilities. Considering all these aspects many companies entrust the transitions to external providers till such time they don t become equipped to handle these in house. The Two C s Cloud and Cost Every Cloud adoption is generally substantiated by a very elaborate business case. There is no denying that cash flow optimization is one of the key business benefits cloud provides. Ray pointed although this is generally prefixed by a transformation cost, but over a period of 1-2 years (depending on the complexity of portfolio), the operations optimization is so impactful that a break-even is achieved very soon and then customers soon start getting the benefits of Cloud. We see the next generation of BPO evolving in the marketplace where cloud computing will become pervasive in our offerings and will allow our clients to realize increased flexibility, stronger industry and analytical capabilities and greater economies of scale through standardization of the process and the technology. DR GAVIN MICHAEL chief technology officer for BPO, Accenture The business case is specifically blue printed so as to accurately determine the roadmap which makes commercial sense. The non-commercial intangible benefits like process optimization, simplified provisioning leads to efficiency and indirect cost reduction right from day one. Though there are research reports claiming up to 80% reduction in the TCO. Symphony Teleca has seen up to 40 percent savings being achieved rather consistently in their cloud engagements. Khirwadkar mentioned that the new business value generated through cloud innovations by and large outweigh the cost savings. The ROI and TCO calculators have yet to evolve to capture this accurately. Two Interesting Cloud Strategies Accenture Accenture sees the next generation of BPO evolving in the marketplace where cloud computing GlobalServices November

6 SOURCE CLOUD CLOUD ADOPTION THOUGH THERE ARE RESEARCH REPORTS CLAIMING UP TO 80% REDUCTION IN THE TCO. SYMPHONY TELECA HAS SEEN UP TO 40 PERCENT SAVINGS BEING ACHIEVED RATHER CONSISTENTLY IN THEIR CLOUD ENGAGEMENTS. THE NEW BUSINESS VALUE GENERATED THROUGH CLOUD INNOVATIONS BY AND LARGE OUTWEIGH THE COST SAVINGS. THE ROI AND TCO CALCULATORS HAVE YET TO EVOLVE TO CAPTURE THIS ACCURATELY will become pervasive in their offerings and will allow their clients to realize increased flexibility, stronger industry and analytical capabilities and greater economies of scale through standardization of the process and the technology. Their aim is to provide their clients with all of this, delivering business processes as a service an on-demand, standardized service that provides global support, data protection and the quality delivery for which Accenture BPO is renowned. In this next generation, their clients will also benefit from pay-per-usage and a business outcomebased fee structure, along with the ability to scale up and down services as their businesses demand it. Symphony Symphony Teleca s Cloud Strategy helps clients realize the business value from cloud through a combination of tools, best practices and business models. With no interest in providing our own cloud services, Symphony Teleca provides impartial cloud planning and offers to manage the cloud life cycle till the client realizes expected business outcomes. Our cloud maturity model helps us in devising an optimal cloud strategy for our clients without over engineering and associated costs. Another important aspect of our strategy is to cross leverage other offerings like mobility and analytics as these converge well with cloud to provide end-to-end solutions. The Cloud Rx Milind Khirwadkar, associate vice president, Cloud Solutions, Symphony Teleca Corp. We recommend buyers to have a clear cloud strategy and roadmap in place on priority. This can be followed by a proof-of-concept to test the assumptions and subsequently action the strategy as necessitated by the business case. This is a long cycle and starting late could hurt. Similarly cloud service providers need to continuously work on top inhibitors to cloud adoption. Our top most asks are more transparent SLAs and addressing the vendor lock-in issue by adopting Open virtualization formats as soon as possible. Dr Gavin Michael, chief technology officer for BPO, Accenture The cloud is simplifying some aspects of IT, while making others more complex. While some kinds of services are advertised as being as easy as turning on the lights, customers often need more than just raw power. Therefore, the various levels of service needed in the new cloud environment will inevitably result in a kind of shakeout within the outsourcing industry itself, resulting in a range of providers offering alternative value propositions at a variety of price points. Given the challenges companies face with cloud services such as security, data integrity and service 22 November 2012 GlobalServices

7 CLOUD ADOPTION availability, the important integration role played by some outsourcing providers isn t going away anytime soon. The ability to advise companies on the proper design of their business models based on multiple service providers, and to help them harness the potential innovations arising from the interaction of these providers, will likely usher in a totally new era of outsourcing. The introduction of the cloud model means that IT departments now have to manage an even more complex, hybrid environment consisting of externally provided cloud services along with their own internal systems and legacy applications. From a business process perspective, integration points between different functions and processes need to be carefully managed, since a utility cloud provider most likely will not have a clear grasp of client s overall business goals. Dhiman Basu Ray, director & global practice head, cloud and application transformation business, Happiest Minds Technologies Recommendations for Cloud Buyers Look out for a Cloud Services Broker who can be the single point of contact responsible for aggregation, integration and customisation. Cloud is otherwise a very componentized offering Engage in business outcome based model either based on price or efficiency Choose the right set of products forming the Cloud stack, arrive at separate benchmarks for Application and infrastructure Avoid any stickiness in this respect Although cloud ensures, on-demand scaling, a proper sizing is suggested so that the TCO follows the predicted business case Most of the providers have consumption based pricing buckets Adopt SaaS services for non-core functions or functions where data can be easily exported or imported and is only key element in the process, workflows are pretty standardized Ensure you achieve a shared services model once you have adopted cloud Recommendations for Service Providers Provide an end to end integrated services right from Consulting to Operations Bring assets and accelerators at every stage of Cloud adoption Position your offerings with specific industry flavour so the benefits are much more tangible Transformation should be the main theme; Cloud is an agent which helps catalyze the same Integrated Delivery capabilities for Enterprise Mobility, Analytics and Social on Cloud Offer Integrated pricing to customers. GlobalServices November

8 SOURCE CLOUD means information stored on a cloud computing service that requires a password or similar information to access and is attributable to an individual, which may include allowing a customer of the cloud computing service to have multiple accounts; and (14) the term `cloud computing service means a service that enables convenient, on-demand network access to a shared pool of configurable computing resources (including networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or interaction by the provider of the service. Section 3 defines the presumed loss and their value. It reads- Section 1030 of title 18, United States Code, as amended by section 2(a), is amended by adding at the end the following: (l) If an offense under this section involves a protected computer that is part of a cloud computing service, the value of the loss of the use of the protected computer for purposes of subsection (a)(4), the value of the information obtained for The proposed Cloud Computing Act 2012 is emphasized on defining the Cloud, presumed losses and their values. AMY KLOBUCHAR Democrat Senator, Minnesota purposes of subsection (c)(2)(b)(iii), and the value of the aggregated loss for purposes of subsection (c)(4)(a)(i)(i) shall be the greater of-- (1) the value of the loss of use, information, or aggregated loss to 1 or more persons; or (2) the product obtained by multiplying the number of cloud computing accounts accessed by $500. SEC. 5. Annual study and report on international cooperation regarding data privacy, retention, and security and sec. 6. Annual federal information technology and cloud computing procurement forecast. It also provisions that the Administrator shall make each 3-year forecast submitted under subsection (b) available to the public via an Internet website. Eric Goldman, Santa Clara University School of Law, in Forbes article states how the proposed act is nothing more that a way closer to make things more complex. Eric says, the definition of Cloud Computing Service is incoherent which sounds more like a vendor s sales pitch than a basis for criminal prosecution. Now the question remains, will this act be a way towards moderating technology services around the world. A new way of regulatory exceptionalism, creating rules for subsets of the Internet ecosystem- effort to legislate the Internet. 26 November 2012 GlobalServices