Cloud computing: An opportunity for blue sky thinking. New frontiers paper PRIMARY SATELLITES: SECONDARY SATELLITES: SECONDARY SATELLITES:

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1 PRIMARY SATELLITES: PRIMARY SATELLITES: SECONDARY SATELLITES: SECONDARY SATELLITES: SECONDARY SATELLITES CAN BE USED IN VARIOUS FORMS: Transparency options are: Normal Multiply Soft Light PRIMARY SATELLITES: SECONDARY SATELLITES: PRIMARY SATELLITES: PRIMARY SATELLITES: Cloud computing: An opportunity for blue sky thinking New frontiers paper SECON SECONDARY SATELLITES: SECO CAN B Trans Nor Mul Soft

2 Contents Foreword 3 What is cloud computing? 4 Benefits of cloud computing 5 What are the types of cloud? 6 A step change for the air transport industry 7 A community cloud 8 Conclusions 10 2

3 Foreword The buzz around cloud computing is considerable, but the good part is that it is real, and starting to deliver what is claimed. It provides a compelling vision. Cheap and easy, on-demand access to unlimited IT infrastructure and applications, anytime, anywhere, and from any device that can access the Internet. For the air transport industry, it represents a unique opportunity to break free from the shackles of legacy technology and embrace the benefits afforded by digital technologies and high-speed, high-capacity computing power. The Total Cost Ownership (TCO) savings on IT infrastructure are a strong draw using a third party provider means it can be achieved without the need for large scale investment in data centres but the future of cloud computing is not just about saving money. It ignites a new dynamic that promises something far more valuable to businesses in a highly competitive industry. It is about agility, flexibility and speed the ability to deploy new services and applications in hours rather than months; the ability to rapidly scale IT resources up and down to match peaks and troughs in demand. It is about tapping into the potential of emerging technologies in ways that cannot be done with traditional IT infrastructure. It is about creating new opportunities to differentiate faster, before the rest of the pack. That will drive a shift in thinking. IT investments will be driven by their value not the mechanics. The CEO question will no longer be can we do this?, but when can we do this? This ability to plug and play with IT resources will enable the industry to embrace a new wave of innovation and invention on a scale and at a speed that has never been possible before. Nevertheless, it is still in its early stages and there is a way to go before IT can genuinely be viewed as a utility. This New Frontiers Paper looks five years ahead at how the air transport industry can best approach and leverage cloud computing to deliver a step change in operational efficiency and the provision of IT services. SITA

4 What is cloud computing? In simple terms, cloud computing is the provision of IT services over the Internet. It has been rapidly adopted by consumers. Millions of people already use public cloud services in their personal life. Facebook has over 500 million users worldwide, while Skype averages over 120 million users per month. Smart mobile devices such as the ipad which provide easy access to services from the cloud, even when on the move, will take it to a new level. Only recently Amazon launched a cloud music player that allows users to upload their catalogue of songs to store and play them through a web browser 1. Cloud service delivery models: Infrastructure-as-a- Service (IaaS) IaaS provides the ability to provision processing, storage, networks and other fundamental computing resources where the customer is able to deploy and run software, which can include operating systems and applications. Some airlines are considering using IaaS for IT security services such as scanning and intrusion prevention services, as well as application development hosting. From the business perspective, cloud computing can be more complex. It comes in different flavours and can mean different things to different people. But essentially it provides a scalable computing platform, utilizing virtualization technology. Users can access common business applications online through web browsers while the software and data are stored and processed on remote servers managed in-house or by third parties. It is widely seen as the next evolution of IT services, replacing the client server environments common in businesses today. It offers the vision of infinite computing resources available on demand, with the elimination of upfront commitment from users, and payment for only the computing resources used. In this regard, the analogy to the way we receive electricity is very apt and in an earlier incarnation, this form of IT on demand was termed utility computing. The main characteristics of cloud computing widely referred to are: On-demand self-service A customer can unilaterally provision computing capabilities, such as server time and network storage as needed, automatically, without requiring human interaction from the service provider. Pay-as-you-go IT resources consumed are paid for based on usage. ip network access Capabilities are available over the IP network and accessed through a wide variety of end user devices such as desktop PCs, laptops, mobile phones and PDAs. Rapid elasticity Capabilities can be rapidly and elastically provisioned, in some cases automatically, to quickly scale up, and released to quickly scale down. Measured Service Resource usage is metered meaning it can be monitored, controlled and reported, providing transparency for both the provider and user of the cloud computing service. The driver for uptake of IaaS is the agility and flexibility it offers, according to the 2011 Airline IT Trends Survey results. Nearly 90% of airlines put this factor in the top three reasons for doing it, compared to 61% for lower costs. Nevertheless, 84% of airlines want to keep control of their IT assets by using a private or community cloud. 4 SITA 2011

5 Benefits of Cloud Computing There are signs that cloud computing is fast replacing the client-server delivery mechanism. In fact one of the biggest proponents of cloud computing is the US government. Since December 2010 it has operated under a cloud-first policy, meaning that its Federal agencies must first try to incorporate some type of cloud computing into projects. Studies support that this is the direction businesses are heading. A Cisco Internet Business Solutions Group (IBSG) study in 2010 estimated that nearly 12% of enterprise workloads will run in the public cloud by the end of So what is everybody buying into? Improved cash flow Cloud computing is a pay-as-you-go approach to IT that avoids the need for upfront capital investment by the customer. Costs are incurred based on usage and therefore increase and decrease in line with consumption of IT resources. In this way, cash flows better match actual cost incurred. The elimination of capital expenditure can significantly lower the risk premium of projects. This both lowers the costs of starting an operation and lowers the cost of failure or exit. A server or application can be decommissioned with no further expense or write-off. Lower unit IT costs IT resources in the data centre are pooled using virtualization technology, leading to higher utilization rates and lower unit costs. With a multi-tenanted cloud these are further reduced through economies of scale achieved from spreading the fixed costs over a large number of customers. Scalable Cloud computing offers elastic resources that can be rapidly expanded to meet the IT demands of users, while paying only for what is used. Elasticity is a game-changer because it allows a business to rapidly accomplish tasks that were previously prohibited by cost or time constraints. For example, renting one server for 1,000 hours will cost the equivalent to renting 1,000 servers for 1 hour in the cloud. Being able to both scale up and scale down resources instantly will lead to a step change in the speed of development and innovation by allowing projects to be completed in less time, with less risk and lower administrative overhead than previously. Rapid implementation By having self-service provisioning through a simple web portal, cloud computing can avoid the long procurement processes and times that accompany in-house IT departments. With a wide selection of services, tools and features, using cloud computing can help technology projects get started much faster. For example, in times of unexpected disruption, an airline or airport could set up an emergency call centre, whereby a large number of agents could be quickly mobilized to work while at home, using cloud technology. The set-up could be easily disconnected when it is no longer required. Increased effectiveness Cloud computing frees IT departments from the finer details of IT system configuration and maintenance, enabling them to spend more time on mission-critical tasks and less time on IT operations and maintenance. Anecdotal evidence suggests as much as 80% of an IT budget can be spent on maintaining existing services and infrastructure. This limits the resources available for innovation or addressing new business requests. Cloud computing will free up significant resources that can be redirected to innovation. Anywhere, anytime access Cloud computing enables any application to be delivered to any end-user device no matter where they are located, giving a consistent customer and employee experience. Simultaneously it reduces the complexity inherent in managing both the data centre, and myriad of end-user devices and applications. A software upgrade for checkin kiosks for instance or a new wireless application for employees could be rolled out immediately to every corner of the world in minutes without the need for site visits to perform the upload. Encourages standardization The virtualized data centres used for cloud computing typically operate a standardized environment running open source software. This brings significant benefits in terms of additional purchasing power and ongoing maintenance of the infrastructure. SITA

6 What are the types of Cloud? While the benefits for cloud computing are substantial, the extent to which they can be realized depends very much on which type of cloud computing model is deployed. There are essentially two main models public and private. Public cloud A public cloud is one in which a service provider makes resources, such as applications and storage, available to the general public over the Internet via a web browser. The customer accesses pooled computing resources with different physical and virtual resources dynamically assigned and reassigned according to demand. Examples of public clouds include: Amazon Elastic Compute Cloud (EC2), IBM s Blue Cloud, Sun Cloud, Google AppEngine and Windows Azure Services Platform. Private cloud Private cloud services are an evolution of the build out of new generation data centres based on virtualization technology and using a private IP network. The infrastructure and computing resources are not shared and generally managed by the organization it serves. Cloud service delivery models: Software-as-a-Service (SaaS) SaaS effectively is an extension of the Application Service Provider (ASP) type model already widely used in the air transport industry. As a SaaS service, the application is hosted in cloud infrastructure a new generation data centre exploiting the benefits of virtualization with the applications accessible through any Internet enabled device using an interface such as a web browser. Advantages and disadvantages Public cloud services by definition are openly available and use shared infrastructure. That brings huge economies of scale advantages, such as lower unit costs, that are not possible through the use of private clouds. However, public clouds raise legitimate concerns over data privacy, security and corporate oversight. Gartner analyst Tom Bittman wrote in his blog that a poll he had conducted with data centre managers on the top concerns of public cloud computing found the weighted score for security and privacy was more than the score for the next three concerns combined 3. Quality of service is also a major issue. Leading researchers consistently find availability and performance making up the top three objections to public cloud services, along with security. Private clouds offer most of the benefits of public cloud computing such as increased utilization rates, elastic capacity, rapid dynamic provisioning of environments and devices, while mitigating some of the risks organizations associate with the public cloud mentioned above. Private clouds can also reduce potential network latency issues and because the resources are not shared, it allows for a highly customized environment, making it useful for critical business systems or proprietary technology. The disadvantage of private clouds is the customer has to acquire, design, build and manage the infrastructure from scratch. The possibility to transform an existing legacy data centre into a centrally managed private cloud with fully virtualized infrastructure, self-service provisioning and chargeback systems is just not viable. And as a single tenant, the economies of scale from a shared environment are lost, essentially undermining the economic business case that makes public cloud computing a compelling concept. Beyond industry applications some airlines are starting to move commoditized applications such as , document management and simpler back office business applications that do not require customization to the cloud. According to the 2011 Airline IT Trends Survey, SaaS is the delivery model airlines feel the most comfortable outsourcing non-critical applications to a third party cloud. 6 SITA 2011

7 A step change for the air transport industry Internet based technologies have already reshaped the operations of air transport, driving tremendous value. E-ticketing alone is estimated to save the industry more than US$3 billion each year. However, their adoption has largely been restricted to customer facing processes, such as websites for reservations and ticketing. Back-end airline systems are now starting to get the same treatment. According to the 2011 Airline IT Trends Survey, 55% of airlines have already moved onto new generation IT infrastructure by implementing virtualization in their data centres 4. That figure will become almost universal over the next few years with only 6% of airlines having no plans to migrate. So how will cloud computing help the industry? Underpins growth Air transport is a growth industry. By 2020 there will be an extra billion passengers flying compared to the 2.5 billion today. Capturing a slice of that growth will determine the winners and losers. In particular, cloud computing is suited to the business needs of start-up and smaller airlines, where growth prospects can be hindered by tight cash constraints. Cloud computing will allow them to access sophisticated software and new generation infrastructure to raise their game without the need for large capital outlays. Tier two carriers can also use cloud computing to compete more effectively. It provides the mid-market with the agility and speed of smaller carriers and the level of data and processing power of a Tier one player. Simplification of business processes The bolting of new technologies and processes, such as kiosks, Internet and more recently mobile devices, onto old technology, has created complexity in underlying processes and infrastructure. That complexity impedes efficiency and inhibits innovation. By pushing the use of Internet technology all the way back to the core systems and infrastructure, the industry will be able to simplify its business processes into a single workflow. Focus on core business Cloud computing will allow airlines and airports to focus on their core business and avoid large scale investment in IT next generation infrastructure such as data centres, when this service provision can be handled more efficiently by other means. Easier management of increasing mix of end user devices The wide variety of end user devices now used to perform tasks within the industry such as desktop terminals, kiosks and wireless devices can be much more easily managed using cloud computing. Staff get fast access to the applications they need, while new check-in counters and entire airports can be brought online instantly from any location with an Internet connection. In particular working within a cloud framework makes it is much easier to support intelligent mobile devices by providing access to different information feeds in real time. Faster product and services development In today s world, competitive advantage is a time limited commodity. It is therefore critical to deploy new products and services into the marketplace as quickly as possible. By providing virtually unlimited access to IT resources ondemand, cloud computing speeds up product and services testing and development. The flexibility derived from virtualized data centres means new complex processes utilizing multiple types of data, such as yield management, logistics optimization and event driven scenarios, can be developed much faster. SITA Lab, the research and development arm of SITA, has started using this approach to develop some of their applications. Improved business intelligence The move to cloud computing will allow airlines and airports to unbundle processes and reassemble them in a different way to drive increased value. One benefit of this will be improved real time analytics of data, creating better business intelligence. In turn that should lead to better revenue and yield management, as well as customer loyalty. Quicker rollout of new services Cloud computing can reduce barriers to entry into new business opportunities, such as new routes for airlines or retail services for airports, that require large capital investments in server farms and software applications. Energy efficiency With the spotlight on the carbon footprint of air transport there is considerable pressure to reduce unnecessary energy consumption. Multi-tenanted cloud services can create opportunities to increase the utilization of data centre infrastructure and reduce the overall power needs. SITA

8 A community cloud The case for industry adoption of cloud services is compelling. The question therefore becomes not whether to adopt cloud computing but which approach public or private to use. The public cloud is where the full cost benefits can be realized but high profile outages, such as that of Amazon s EC2 cloud platform in April 2011, have underlined the belief that public infrastructure is not secure and reliable enough for the high end computing needs of air transport. The 2011 Airline IT Trends Survey found that as many as 78% of airlines showed a preference to access IT infrastructure from within their own private cloud 5. So how can the industry capture the significant benefits of scale and higher utilization rates offered by public cloud services while retaining the security and reliability of a private cloud? A cloud exclusively designed and built for the needs of the air transport community represents the opportunity the industry needs. Based on secure, shared infrastructure meeting industry standards and policies, it provides the cost and service management advantages of shared infrastructure with the protection and dependability of a private cloud. Shared infrastructure Airlines have been using shared infrastructures for network connectivity and airport-based operations for many years. The application service provider (ASP) channel is also something airlines are well aware of. Many of the world s major airlines receive reservations, inventory, departure control and other software services from trusted third party providers. The main attraction of shared infrastructure is the lower unit costs achieved through scale and the simpler service management which becomes the problem of the infrastructure provider. The economies of scale that a community cloud could deliver cannot be ignored. A Microsoft paper on the economics of the cloud 6 reported that the TCO per server of a 100,000-server data centre could be as much as 80% lower than that of a 1,000-server data centre. With that level of TCO reduction it is difficult to envisage that an in-house IT operation building out its own private cloud could be cost competitive at the same level of service as a dedicated industry cloud could. Sharing infrastructure among a closed industry community brings benefits beyond just cost savings. Cloud users can access industry applications that are pre-connected to organizations and sites across the breadth of the industry, such as airports and suppliers. This can dramatically increase the agility of a company by speeding up its ability to respond to business needs, as well as deriving the benefits from the application, faster. Consistent global performance Achieving reliable and consistent IT performance levels over a distributed route network for critical operations, such as check-in, is a major headache for airlines and it is one that a public cloud cannot readily address. Cloud style computing is heavily dependent on the reliability and resilience of the Wide Area Network (WAN) supporting it and data centre locations. Many of the applications used in air travel need to reside close to the end-user to handle the constant refreshing of data in an acceptable time-frame. Public cloud offerings can be based too far away from the end users and its underlying public telecommunication network does not have the robustness on a global scale to meet this need for high speed processing. Even with private clouds it can be prohibitively expensive for airlines to ensure consistent levels of service across their entire route network. In some cases, latency issues have forced airlines to build local hosting centres for some applications close to where the end-user requires them usually at the airport. The strong diversification benefits of an industry cloud would lead to a more predictable bandwidth requirement and as a result a more deterministic latency to cope with peaks in demand plus a margin of error. This would ensure that standardized performance levels could be achieved across the industry. SITA currently works on response times of no more than 100ms between the data centre and end-user. This degree of over-provisioning can be achieved far more cost effectively at the industry level than for an individual business with a private cloud, where the capacity would sit idle for most of the time. 8 SITA 2011

9 Security By their nature, public clouds are often in a different country from where the IT resources are needed. Data can be stored in a variety of locations worldwide. National, regional and international variations in regulations on passenger data security and storage can therefore make using a public cloud a compliance minefield. Airline data can be compromised if it ends up being hosted in a jurisdiction with poor privacy laws or government access rights that are inconsistent with an airline s home country obligations to protect data. A dedicated industry cloud can address this by having compliance built in enabling customers to fulfil corporate data security and customer privacy obligations as securely as a private cloud. That could include the use of mini data centres installed within airports for airlines that need to be closer to servers and storage in order to comply with national and international data security laws. Data privacy issues are not the only security concern. Airlines, in particular, prefer to keep control over customer processes and data deemed sensitive from a competitive standpoint and are therefore wary of their critical databases residing and running on the same server as those of other cloud clients. It is a legitimate worry, but one that may be borne out of a lack of experience and knowledge of cloud services. A Lockheed Martin Cyber Security Alliance white paper entitled Awareness, Trust, and Security to Shape Cloud Adoption 7 found that the more cyber security professionals gained understanding and experience with cloud computing, the less concerned they are about the security aspect. There is even evidence to suggest the cloud computing is more secure. A US Government Accountability Office (GAO) report released in 2010 concluded that cloud computing could increase the security of information systems because data is stored centrally with continuous monitoring and control, so security testing is easier to administer 8. Incident investigation can also be easier, making response times faster. For example, with a Platform-as-a-Service, systems are automatically patched and updated by an expert software specialist, increasing the security of all data and applications hosted on it. It raises another question on the ability of organizations with private clouds to handle service management issues. Virtualized infrastructure requires new specialized skills and expertise, which are not widely present in today s IT organizations. An industry cloud would have a dedicated team of skilled IT Service Management (ITSM) professionals in the background responsible for making sure the service provided is available on a 24x7 basis. A hybrid cloud as the starting point? Over the next five years, it is likely that many businesses within air transport will use what is termed a hybrid approach to cloud computing a composition of both private cloud and a third party cloud in which both exist separately. It allows the business to keep its critical processes and systems in-house, while using third-party cloud providers for non-core commodity services like messaging. It also gives organizations the chance to build competencies and experience by piloting and testing shared cloud services to monitor system performance, stability and network latency. A hybrid approach provides a good starting point for the industry. It allows adoption of a shared cloud delivery model, where the benefits are greater, to occur at a natural point in a company s IT replacement cycle. However, at least initially, there can be greater complexity involved. For a start migration is not straightforward. It requires a skilled team that can integrate complex industry IT on a number of different levels to achieve end-to-end solutions. Those levels include integrations of the different cloud services, such as Software-as-a-Service, Desktop-as-a-Service and Infrastructure-as-a-Service, as well as integration of cloud with legacy infrastructure and with industry applications. It therefore eases the process if the third party provider has standardized technology that adheres to industry requirements and policies, and with the integration capabilities necessary, to enable data and application portability. Customers can then easily move systems and processes between the two as experience, knowledge and trust is gained. Cloud service delivery models: Platform-as-a-Service (PaaS) Under this service model the customer can host on the cloud provider s infrastructure proprietary or third party applications. The customer does not manage or control the underlying cloud infrastructure including network, servers, operating systems or storage, but has control over the hosted applications. SITA

10 Conclusions Over the next five years, the maturing of cloud-enabled technologies will provide a compelling value proposition for the air transport industry to divest itself of the legacy IT infrastructure that is dragging on its operational efficiency and ability to innovate. Next generation data centres optimized with virtualization technologies will enable a different paradigm for delivering infrastructure, application platforms and software in a service oriented way. New opportunities to increase agility, lower costs and reduce the IT footprint will help airlines and airports achieve their business goals better, faster and cheaper. The normal choice of cloud computing models public or private - is not open to the industry. Public cloud infrastructure cannot be depended on for reliability, resilience or performance. Furthermore, it does not meet the industry requirements for data privacy, security and corporate oversight. Without a viable choice, many air transport businesses have opted to build private clouds. But it is a compromise solution that reduces the potential and significantly undermines the financial case that makes cloud computing so appealing. An effective way forward that combines the cost advantages of shared infrastructure with the security and consistency of service needed to run global air transport operations is a community cloud. It could also evolve as an integrated hub connecting the IT of industry partners, as well as provide a platform for independent service vendors to distribute their applications and services to the industry. The consumer world with online apps stores underlines how this can work and add massive value to customers in ways not yet thought of. The community cloud, acting as a brokerage type service would provide end users with the reassurance that each service or application meets industry standards and policies. A community cloud would be particularly appealing for medium and smaller airlines. By having access to next generation IT resources and sophisticated solutions at a fraction of the cost of building out in-house operations, it would enable them to stretch their IT budget to compete far more effectively with larger airlines backed by much larger financial resources. New check-in counters and even entire airports can be made operational at speeds not possible today. Staff can get fast access to the applications they need from any location with an Internet connection. Nevertheless, cloud computing only works as well as an organization manages it. It brings its own complexities in terms of network communications, service management and support capabilities needed to deliver a truly end-to-end solution. Extracting the full benefits requires an integrated, centralized IT Service Management system run by skilled IT experts in demand management, capacity management and critically, service integration. For further information about Cloud computing, visit 10 SITA 2011

11 SITA Where innovation is a tradition Notes and references Note 1, page 4: Note 2, page 5: Note 3, page 6: Source: Note 4, page 7: Source: 2011 Airline IT Trends Survey. Highlights available at Note 5, page 8: 2011 Airline IT Trends Survey can be downloaded at Note 6, page 8: The Economics of the Cloud: November Available at Note 7, page 9: CloudComputingWhitePaper.pdf Note 8, page 9: Source: GAO report on Information security new.items/d10855t.pdf SITA is the world s leading specialist in air transport communications and IT solutions. We deliver and manage business solutions for airline, airport, GDS, government and other customers over the world s most extensive network, which forms the communications backbone of the global air transport industry. We innovate collaboratively with the air transport industry, and the industry itself drives the company s portfolio and strategic direction. We are the only IT and communications company to run annual, industry-renowned IT surveys for airlines, airports and passenger self-service. Our portfolio includes managed global communications, infrastructure and outsourcing services, as well as services for airline commercial management, passenger operations, flight operations, aircraft operations, air-to-ground communications, airport management and operations, baggage operations, transportation security and border management, cargo operations and more. In addition, we sponsor.aero, the toplevel internet domain reserved exclusively for aviation. We are one of world s most international companies. Our global reach is based on local presence, with services for over 500 air transport industry members and 3,200 customers in over 200 countries and territories. Set up in 1949 with 11 member airlines, today we employ people of more than 140 nationalities, speaking over 70 different languages. SITA had consolidated revenues of US$1.46 billion in For further information, please visit SITA

12 For further information, please contact sita by telephone or East & Central Europe Latin America & Caribbean Middle East & North Africa info.mena@sita.aero North America info.nam@sita.aero North Asia & Pacific info.nap@sita.aero North Europe & Sub-Sahara Africa +44 (0) info.nesa@sita.aero South Asia & India info.sai@sita.aero South Europe info.seu@sita.aero Printed by Pureprint Group using their pureprint environmental print technology. Vegetable based inks were used throughout. Pureprint Group is a CarbonNeutral company and is registered to the environmental management systems, ISO and EMAS, the Eco Management and Audit Scheme. SITA 11-THW All trademarks acknowledged. Specifications subject to change without prior notice. This literature provides outline information only and (unless specifically agreed to the contrary by SITA in writing) is not part of any order or contact.