Cloud-based Services: To Move or Not To Move. Seminar Internet Economics Cristian Anastasiu & Taya Goubran

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1 Cloud-based Services: To Move or Not To Move Seminar Internet Economics Cristian Anastasiu & Taya Goubran

2 Agenda Motivation What is Cloud Computing Cloud Service Market Dimensions and Factors of the Cloud Conclusion

3 Motivation Cloud computing is the new hype in the IT market A lot of compelling arguments to move a cloud subscription model We want to analyse all the arguments which should lead to a good decision regarding the migration to a cloud model

4 The Cloud then...

5 ... and now

6 The cloud hype - facts (1/2) Searching the Term Cloud Computing in Google from 2004 Searching the Term Cloud Computing in Google Scholar from 2004

7 The cloud hype - facts (2/2)

8 What defines Cloud Computing? Resource pooling Share infinite resources Rapid elasticity Leverage capacity when needed Measured service Pay only for used resources and services Broad network access Standard web browser to access the user interface without any OS requirements On demand self-service Manage service without the service provider

9 What is Cloud computing? Applications Middleware Database Operating System Virtualisation Server Storage Networking

10 What is Cloud computing? Applications Middleware Database Operating System Virtualisation Server Storage Networking IaaS

11 What is Cloud computing? Applications Middleware Database / Storage PaaS Operating System Virtualisation Server Storage Networking IaaS

12 What is Cloud computing? Applications Saas Middleware Database / Storage PaaS Operating System Virtualisation Server Storage Networking IaaS

13 Cloud deployment models Private cloud Hybrid Public cloud

14 Global Market 44% 25% worldwide public it cloud services revenue in %

15 Forecast 2017

16 Cloud adoption trends by layer Percentage of buyer responses (2012) SaaS (N=81) Percentage of buyer responses (2013) Saas (N=94) 57% 56% 28% 22% 10% 15% PaaS (N=73) PaaS (N=88) 38% 25% 27% 35% 30% 18% Iaas (N=78) Iaas (N=88) 31% 26% 26% 33% 25% 16% 14% 11% 29% already adopted adopt in near future adopt in distant future

17 Cloud adoption trends by workloads /collaboration (N=91) E-commerce and online tools (N=85) 41% 26% 21% 26% 14% 31% Web apps/websites (N=91) 38% Business intelligence/analytics (N=88) 15% 16% 19% 27% 36% CRM/marketing automation (N=75) 32% 12% 29% ERP - Supply Chain Management (N=73) 14% 11% 29% Application development/ testing environment (N=90) 30% 21% 23% 14% 11% 29% already migrated currently migrating future migration planned

18 Fastest areas for cloud growth Today in 2 Years Public Cloud Private Cloud Application Development / Testing Messaging Integration 38% 39% 49% Application Development / Testing 52% Core Business Applications (ERP, CRM, HCM) 34% 41% 43% Data Storage and Retrieval 50% High performance Computing (Analytics) 39% 38% 49% 47% Data Storage and Retrieval Mobile Services 39% 46% 48% 54%

19 Why move to the cloud? Pinterest is no stranger to rapid growth, expanding from 50,000 users to 17 million in 9 months. Now at 48 million users, Pinterest was able to scale its business because it was built on Amazon Web Services (AWS). With a company of fewer than 12 employees, Pinterest didn t want to dedicate staff time to managing a data center. Instead, Pinterest uses AWS to manage a high-performance social application that stores more than 8 billion objects and 400 terabytes of data in the AWS Cloud using Amazon Simple Storage Service(Amazon S3), and 225,000 instance hours a month with Amazon Elastic Compute Cloud (Amazon EC2). (Amazon EC2 Success Stories)

20 Why (don t) move to the cloud? Service and Outage S3 outage: authentication service overload leading to unavailability S3 outage: Single bit error leading to gossip protocol blowup AppEngine partial outage: programming error Gmail: site unavailable due to outage in contacts system Duration Date 2 hours hours hours hours

21 Which factors count? Technological Economical Organizational

22 Technical factors Availability Functionality Reliability Maintainability Security / Isolation Interoperability Performance APIs Scalability Customizability Flexibility Portability

23 Economical Factors Pay as you go Contracts and SLAs CAPEX vs. OPEX Subscription costs TCO reduction license costs

24 Organisational factors Decision factors Organizational agility Size of organization Techn. Resources inhouse

25 Shift of decision inside organisation The CMO has become a key stakeholder in the adoption process as various workloads that are earmarked for cloud migration are directly linked with sales and marketing operations Corporate IT more involved in decisions related to workloads that are closer to physical infrastructure, or those that do not directly touch revenue generation

26 Dependency between factors Technical Economical Availability Reliability Contracts and SLAs Security / Isolation Subscription costs Performance

27 Case Study Case study was done by OVUM on contact centers of three different sizes (50, 300 and 750 seats) having different technology footprints Low impact (basic call routing and IVR) Medium impact (basic call routing, IVR, and WFO tools such as call recording, quality monitoring, and workforce management.) High impact (advanced call routing, IVR, all of the workforce apps, and outbound predictive dialing) TCO was calculated and compared (cloud vs on premise) on a period of 5 years

28 Case study (2) Comparision for small technology footprint

29 Cloud study (3) Comparision for medium technology footprint

30 Cloud study (4) Comparision for large technology footprint

31 Case study (5)

32 Conclusion There is no golden rule. Moving to the cloud depends on a lot of factors, some can be quantified (technical and economical), some not (organisational). When is it cost advantageous to move to the cloud? It depends... Cloud service costs Application complexity Company size (# users) Use cases

33 Discussion Do you use the cloud for private or business reasons? What is your experience with it?

34 Discussion Can you think of any other measures that could be used to limit the disadvantages of the cloud?

35 Discussion Do you see the cloud as a reliable business in the next 10 years?

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