Building For The Future: What The New World Of Cloud IT Means For The Network

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1 A Thought Leadership Paper Commissioned By XO Communications And Juniper Networks Building For The Future: What The New World Of Cloud IT Means For The Network Maximize Cloud Services With An Intelligent And Unified Hybrid Network For Performance, Security, And Scalability September 2013

2 Table Of Contents Executive Summary... 2 Cloud Services Enable IT To Align More Closely With The Business... 3 Reaping The True Value Of Cloud Services Remains Elusive... 6 A Scalable, Agile, And High-Performing Hybrid Network For A Cloud World...10 Key Recommendations...14 Appendix A: Methodology...15 Appendix B: Supplemental Material...15 Appendix C: Endnotes , Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to [1-M51SOH] About provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit Page 1

3 Executive Summary By leveraging innovative cloud services in their approaches to IT, enterprises can take advantage of new resources that maximize economies of scale and agility investments that can give them a distinct advantage over competitors that come to web services from a traditional IT foundation. In this environment, infrastructure and operations (I&O) teams will realize how different cloud environments are from traditional IT infrastructures. Even though individual cloud infrastructures are standardized, each cloud service such as backup-as-a-service, infrastructure-as-a-service, software-as-a-service, business-process-as-a-service, and platform-as-a-service provides customers with a unique and widely varied set of services. In May 2013, XO Communications and Juniper Networks commissioned to evaluate what enterprises need to maximize the value of their various cloud investments and services. surveyed 154 IT decision-makers from enterprises in the United States and found that the majority of organizations have embraced cloud services, but that their networks have kept them from realizing the full potential of their cloud investments. Companies will have to examine their network infrastructure portfolio for readiness, align it with their business and IT strategy, and start to build out a new network infrastructure that integrates internal networks with external network services to enable a scalable, high-performing, cost-effective, and agile cloud intelligent services network. This will ensure that businesses will have a network infrastructure that can support hybrid cloud environments as they plan to move more services to the cloud. Enterprises don t plan on shifting all their applications to the cloud just certain ones like business-to-business ecommerce while they re bringing others back into their data centers. Application developers and business decision-makers want to pursue cloud services that complement their internal infrastructure services. To enable this, leading-edge companies should bring in strategic partners who have the expertise in weaving together services and platforms in a multitenant environment. Key Findings To maximize competitive advantage, businesses are meshing together internal and external resources. Our findings show that: A majority of businesses have embraced at least one cloud service. After testing the waters with simple tasks, they re shifting advanced applications and services from internal resources, such as data centers, to cloud platforms. What it means to the network: Besides accounting for traffic that once traversed 1 GbE, 10 GbE, and 40 GbE links on the LAN, these connections will have to meet business-level performance requirements. Application developers and business stakeholders are pushing IT decision-makers to create a hybrid cloud infrastructure so that business organizations within the enterprise can take advantage of the most-efficient set of IT resources. What it means to the network: The network will have to become a sophisticated set of internal and external network services that interweave threads of data flows and services to multiple internal and external platforms. Page 2

4 The value of cloud services can only be attained when network initiatives align with cloud strategy and migrations. What it means to the network: Networks will require multiple types of upgrades and architectures to become scalable, agile, secure, and cost-effective platforms. Cloud Services Enable IT To Align More Closely With The Business Cloud provides I&O the epinephrine shot that they dearly needed. As businesses face immense pressure to respond to their customers needs faster and faster, they need an IT foundation that can keep up with them. Organizations tell Forrester Research that I&O gets chained down with:1 Budgeting processes and procedures. For the past 20 years, the dollar amount allocated to IT has remained pretty flat. With a limited set of resources, IT doesn t have the capability to calculate the cost of a new service in order to charge it back to the business. Consequently, deployment times get dragged out as I&O teams try to determine who is responsible for different portions of the service and where the resources will be pulled from to accommodate the new request. Balancing time-to-market against traditional IT governance. IT is stuck in a Catch-22 between controlling IT spend and being responsive to the business. A father-knows-best mentality. Even though most employees find the technology at home better than at work, there still exists a strong culture within IT that says technologists should be making technology decisions. Compounding the situation, department leaders often come to IT with requests that don t have budget approval, that they can t convey in technology speak, or that don t have a fully baked business case, hoping IT can squeeze them in. The reality is that a lot of resources get spent trying to agree on what is actually needed and the amount of infrastructure that will need to be deployed to enable the new service. Leading web and cloud services companies have built their businesses around innovative new approaches to IT delivery. These providers have perfected the art of running a simple and standard environment that is optimized to each specific workload and automated as much as possible. IT decision-makers have a new resource available to them that maximizes the economies of scale and increases the speed of response for the enterprise I&O, which enables a much more agile organization. All cloud providers need to get started is some form of payment. Even though cloud has been on the radar for more than half a decade, enterprises were initially hesitant to take advantage of cloud services due to concerns ranging from security to maturity. As cloud resources mature and comfort levels increase, enterprises have started to embrace cloud platforms, moving services out to them and creating new ones. The cloud is now mainstream. More than three-quarters of IT decision-makers indicated that they leverage cloud resources, are planning on doing it, or are in the process of expanding their current set services (see Figure 1). And as advertised and theorized, more than two-thirds of IT decision-makers who have used or are in the process of expanding their cloud services say that cloud provides them flexibility and manageability (see Figure 2). Page 3

5 Figure 1 More Than Three-Quarters Of Enterprises Are Using Cloud Or Plan To Use Some Type Of Cloud Resources What best describes your organization s current use/implementation of cloud services? (May include SaaS, PaaS, IaaS) Software-as-a-service 78% Storage/backup-as-a-service 75% Disaster-recovery-as-a-service Data/business-intelligence/analytics-as-a-service Desktop-as-a-service Security-as-a-service 70% 67% 67% 65% Business-process-as-a-service 62% Compute-as-a-service/infrastructure-as-a-service 62% Platform-as-a-service 60% Implemented, expanding, or planning to implement Base: 154 US IT decision-makers at 500+ employee companies Source: A commissioned study conducted by on behalf of XO Communications and Juniper Networks, July 2013 Page 4

6 Figure 2 More Than Two-Thirds Of IT Decision-Makers Who Have Used Or Are Expanding Their Use Indicate That The Cloud Provides Them Platform Flexibility How important were the following in your firm s decision to adopt software-as-aservice/infrastructure-as-a-service? Improved IT infrastructure manageability and flexibility 68% 52% Lower total cost of ownership for servers Improved disaster recovery and business continuity 48% Faster time to market with new business capabilities 48% On-demand capacity and scalability 46% Lower capital expenditures by purchasing services instead 46% 44% Ability to use as peak capacity for times of high usage Improved power and cooling efficiency Provides developers with fast, easy resources for test and development Temporary or project-based capacity needs 36% 34% 32% Very important Base: 50 US IT decision-makers at 500+ employee companies that have implemented SaaS/IaaS Source: A commissioned study conducted by on behalf of XO Communications and Juniper Networks, July 2013 In the early days of cloud, it was prudent for enterprises to start out by testing cloud platforms with applications that had been around for a while and didn t need much management, such as Internet web services. Other organizations leveraged the on-demand compute and quick turn-around for content and data analysis, since it saved them from acquiring new hardware during consolidation periods for IT. As these cloud experiments proved out, these platforms became an increasingly viable option for a growing set of enterprise workloads. Business-aligned developers are aggressively leveraging public cloud platforms to build and deploy new elastic applications and to extend legacy capabilities. Over the next 12 months, IT decision-makers have plans to shift batch jobs, application testing and quality assurance testing, mobile sites, and business-to-business ecommerce sites into the cloud (see Figure 3). Nothing better validates the comfort level that enterprises feel with cloud than their putting revenue-generating resources in the cloud. Fifty percent of respondents in the survey plan on moving business-to-business ecommerce sites to cloud environments. Page 5

7 Figure 3 Business-Critical Applications Are Starting To Shift To Cloud Environments Base: 154 US IT decision-makers at 500+ employee companies Source: A commissioned study conducted by on behalf of XO Communications and Juniper Networks, July 2013 Reaping The True Value Of Cloud Services Remains Elusive From a pharmaceutical enterprise migrating a genomics application to an IaaS platform, to a media and entertainment client shifting post-production processes to the cloud, I&O teams are reporting some huge cost savings. If only it were that easy. The reality is that very few enterprises have seen values outside of cost savings. Only 20% of organizations indicated that the cloud services provided developers with a fast, easy set of resources for testing (see Figure 4). Many aspects of the infrastructure, configuration, and operations of the enterprise that application developers take for granted aren t found in the cloud. Page 6

8 Figure 4 Low Satisfaction Rates With Cloud Services Base: 120 US IT decision-makers at 500+ employee companies that have implemented cloud services Source: A commissioned study conducted by on behalf of XO Communications and Juniper Networks, July 2013 In particular, network services ranging from bandwidth to load balancing are often overlooked. The teams who procured CRM software-as-a-service didn t include the networking team in the process and didn t take into account they were moving the links from gigabit connections to T3. Sales got upset with us about the poor user experience. (Network and telecom manager at a global retail company) Many of the web and hosting providers themselves haven t offered network monitoring, WAN optimization, or load balancers until recently.2 This is not a new phenomenon with using cloud services. Past studies conducted by Forrester Research and client interactions revealed that data center virtualization and branch office consolidation efforts were being undertaken without consideration of the new stresses placed on the network and how they would affect I&O efficiency, let alone user experience. And not much has changed. According to this study, IT decision-makers prioritize five other IT initiatives (server upgrades, pursuing public cloud services, storage refresh, PC refresh, and updating security environments) over network upgrades or refreshes (see Figure 5). Page 7

9 Figure 5 Almost Half Of Enterprises Are Using Cloud Or Will Use Cloud Resources Which of the following IT initiatives did your organization undertake over the last three years? Server upgrade/refesh 56% Pursue cloud-based services such as IaaS, SaaS 54% PC refresh 52% Storage upgrade/refresh 51% Upgrade/refresh your security environment 48% Upgrade/refresh network 47% Consolidate IT infrastructure 44% Improve disaster recovery/business continuity 39% Increase our use of BI and decision-support tools and services 34% Implement or expand use of collaboration capabilities 34% Implement or expand desktop virtualization 34% IT energy efficiency 33% Consolidate or rationalize enterprise application portfolio Deployed new data centers Converged storage onto the network 25% 25% 23% Base: 154 US IT decision-makers at 500+ employee companies Source: A commissioned study conducted by on behalf of XO Communications and Juniper Networks, July 2013 Just replacing network components won t overcome the challenges organizations have with reaping value from cloud infrastructures. It might be a big step forward if organizations were only using one platform where traffic was pushed and pulled from one location with relatively known frequencies and amounts, but this isn t the case. More than 50% of IT decision-makers indicated they will be using four or more cloud platforms. I&O organizations will complement their internal environments with external cloud services. In order to optimize applications specific to our business, we connect users to a variety of cloud services accounting software-as-a-service, infrastructure-as-a-service for our data analysis, and backup-as-service for the data. (Director of IT at biomedical testing company) The pressure for hybrid cloud comes from the business leaders who have direct connection to application developers. Seventy-two percent of IT respondents surveyed said application developers want a hybrid cloud environment, because application developers want to compose business services across multiple platforms, intermixing in-house resources and data with externally hosted resources and data as indicated to improve the efficiency of IT. Tying these cloud services together with internal data centers is a daunting task. Up to 88% of respondents believe each of these services will cause an impact on their network services (see Figure 6). The situation grows exponentially more complex as cloud platforms and vendors are mixed together. Today, infrastructure teams are at a roadblock regarding hybrid clouds that embrace more than two cloud platforms. At the top of their struggles to support cloud is integrating a cloud infrastructure with an internally owned data center (see Page 8

10 Figure 7). Forrester clients have told us during inquiry calls that their network doesn t have the ability to scale out on demand or is not agile enough to burst on demand. They highlight that network designs and certifications were based on a hub-and-spoke design, where all users get funneled back to an active data center that served up compute and storage in place. Figure 6 All Cloud Services Impact The Network Base: 154 US IT decision-makers at 500+ employee companies Source: A commissioned study conducted by on behalf of XO Communications and Juniper Networks, July 2013 Page 9

11 Figure 7 Low Satisfaction Rates With Cloud Services Base: 154 US IT decision-makers at 500+ employee companies Source: A commissioned study conducted by on behalf of XO Communications and Juniper Networks, July 2013 A Scalable, Agile, And High-Performing Hybrid Network For A Cloud World To improve the value of their cloud services and accommodate the impact of cloud services on the network, 78% of IT decision-makers had to upgrade one or more aspects of the network (see Figure 8). Close to half of the respondents had to make changes to security settings or upgrade the bandwidth. Other organizations had to bring in load balancers and WAN optimizers. This is why network performance is critical. Traffic that once traversed data center 10 GbE links is now moving across a shared wide-area network (WAN) environment. Organizations expanding or implementing cloud services have taken these lessons to heart. Many of the initiatives that have been undertaken over the past few years have caused IT to refresh or upgrade substantial portions of the network. Server virtualization has initiated wholesale changes within the data center networks. Instead of going back and fixing the issues as had previously been done, survey respondents placed upgrading the network at the top of their list to support the company s cloud strategy and migration plan. Page 10

12 Figure 8 Enterprises Adjusted Network Components So They Could Support Cloud Service After your firm started to use cloud services, what alterations did you have to make to your infrastructure? We bought more bandwidth or more links 47% We had to invest in new security services 46% We had to deploy load balancers 26% We didn t change anything 22% The types of WAN connections changed 18% We had to roll out WAN optimization controllers 18% We bought cloud gateways (storage accelerators) Outsourced network services 14% 2% Base: 154 US IT decision-makers at 500+ employee companies Source: A commissioned study conducted by on behalf of XO Communications and Juniper Networks, July 2013 Figure 9 Upgrading The Network Is A Top Initiative To Support A Cloud Migration Plan What are you doing to support your creation of a comprehensive strategy and migration plan for public cloud and other as-a-service offerings? Upgrading the network 48% Meeting with business users to determine requirements 44% Creating an inventory of IT infrastructure 41% Completing a cloud ROI assessment 37% Implementing cloud pilot(s) 36% Evaluating our WAN services 33% Creating an inventory of existing cloud usage 32% Undertaking a virtualization maturity assessment 31% Creating a dedicated cloud team with cloud skills, training and/or certification 29% Engaging external consultants on trends or cloud strategy development 27% Undertaking a sourcing assessment to determine application fit 21% Undertaking an application portfolio rationalization 21% None of the above 4% Don t know 1% Other 1% Base: 154 US IT decision-makers at 500+ employee companies Source: A commissioned study conducted by on behalf of XO Communications and Juniper Networks, July 2013 Page 11

13 Increasing bandwidth or upgrading the network is the first small step. The major task that enterprises need to tackle will be the architecture. Cloud platforms not only shift LAN traffic to the WAN, but the volume and variety of connections to them will change as well. Consequently, I&O organizations will have to manage their network portfolio very differently in a cloud environment. There won t be clear demarcation between internal and external networks. The network will look much like hybrid cloud (an internal data center and at least one cloud service provider seamlessly integrated together). The transition to hybrid networks is already occurring. Seventy-nine percent of those surveyed have two or more links per site with two more transport network technologies (see Figure 10). Eighty-four percent of respondents have implemented and/or are expanding their Internet, while 77% of IT business decision-makers also have implemented and/or are building out their MPLS network. Having MPLS and Internet connections at each site isn t about price, but enabling more innovate services in a more timely manner. (VP of IT at financial services company) Besides considering all the connections to multiple platforms, network design will also be affected by: Mobility and consumerization of IT. I&O can t funnel everything back to one location like the traditional network hub-and-spoke architecture. For optimal user experience, they will need to connect the resource using the most efficient path. Seventy-nine percent of IT decision-makers are leveraging multiple types of technologies to connect to cloud resources. Fusion of personal and business environments. The new business environment has narrowed the period between changes; data, users, and applications are in constant motion; personal and business resources are no longer separate platforms; and now there are mobile, web, traditional, and hybrid applications traversing the network delivering services from internal infrastructures and cloud platforms. Thus, providing a network infrastructure that can handle all of these elements is extremely complex. Gone are the days of simple hub-and-spoke designs where all control is centralized and dedicated links send everything back to one active data center. Scalable, high-performing, and cost-efficient networks will need to interweave an immense amount of network services and flows. This is not a task that can be undertaken with enterprise I&O shops. They don t have the expertise, and Forrester has seen an exponential increase in inquiries from enterprises asking which strategic partners have the expertise to help create a flexible, scalable, cost-efficient network infrastructure that can meet tomorrow s business and IT strategy. Page 12

14 Figure 10 Organizations Leveraging Multiple Connection Technologies Base: 154 US IT decision-makers at 500+ employee companies Source: A commissioned study conducted by on behalf of XO Communications and Juniper Networks, July 2013 Page 13

15 KEY RECOMMENDATIONS At its best, cloud is about improving I&O services and employee productivity while driving down cost, thus increasing efficiency. Cloud services enable a slew of new communication methods. Large applications will splinter into collections of discrete, redundant functions that communicate via service. Thousands if not millions of connections will need to be made at any one time across public and private networks. The end result is workflows that look more like network cloth with an infinite set of network services woven together than a hub-and-spoke network design of the past. This fabric of connections will require an agile, high-performing, and scalable intelligent network. To enable this, technology professionals should: Define your network strategy in tandem with your cloud strategy. It s safe to assume that cloud computing will help you raise your organization s responsiveness to business change and improve its economics, but you must ensure the network can support all initiatives. Start with a vision of how your network fits in your IT strategy during the next three to five years. Move your network investment to the forefront of your IT initiatives. Besides cloud, other initiatives, like server virtualization and consolidation, have stumbled because of new and sometimes unintended stresses on the network. The network touches everything and was created on past principles. Work with a strategic partner. An agile, scalable, and high-performance network requires an expensive team of system engineers and scientists. Enterprises can t afford to support infrastructure research and development centers. Instead of tackling this all in-house, look for partners that connect users, data, and applications across networks as their core competency. These strategic vendors focus on consolidating component subsystems into a whole system and ensuring that those subsystems function together seamlessly. Remember that everything will affect the network. Traditionally, network designs have been myopic. Discussions and designs have been centered on data centers (data center networks), cloud (WAN), or consumerization of IT (WLAN). How users connect and what they re using crosses all those boundaries since the data and applications can be located in multiple areas. To create a network that serves the business and optimizes user experiences, all those transformations need to be taken into account. Page 14

16 Appendix A: Methodology In this study, Forrester conducted an online quantitative survey of 154 US IT decision-makers at organizations with 500+ employees to evaluate issues that they have run into as they build cloud-aware or cloud-centric networks. Survey participants included senior manager+ level IT professionals with responsibility for network or data communications. Questions provided to the participants asked about what applications they are shifting from internal resources to the cloud, the top challenges they face in leveraging cloud services, and the impact on the network. Respondents were given a small incentive as a thank you for time spent on the survey. The study began in May 2013 and was completed in July Appendix B: Supplemental Material Related Forrester Research Fuse Business Acceleration Technologies To Optimize User Experiences, Forrester Research, Inc., May 8, 2013 Make The Cloud Enterprise Ready, Forrester Research, Inc., June 1, 2012 Appendix C: Endnotes 1 Source: Make The Cloud Enterprise Ready, Forrester Research, Inc., June 1, Source: Market Overview: Public IaaS Clouds, Q4 2011, Forrester Research, Inc. Page 15

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