Private Cloud IaaS in Canada

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1 IDC Technology Spotlight Private Cloud IaaS in Canada Sponsored by: TELUS Adapted from research conducted by IDC's Canadian Strategic Sourcing and Cloud Continuous Information Service July 2015 INTRODUCTION For a leading financial services firm, the decision simply came down to dollars and cents. "We are all in on cloud," the CIO recently said. "But public infrastructure as a service [IaaS] was a dead stop for us. We're handling significant amounts of very sensitive and very personal data. There are compliance requirements to consider, but more importantly our brand [image] to consider, so we built our own private cloud." The CIO went on to detail the steps the firm took, the investment in hardware, software and the effort to virtualize the infrastructure assets and re-platform their core systems. Six months in, his team was as busy as ever. IT was now supporting two environments and the energy to manage their private cloud was putting the CIO in a difficult position: having to move project timelines, delay the introduction of new products, and having to confront morale issues with the team. Eventually it came down to simple economics. "I sat down with the CFO and we went through the numbers. The bottom line is that we weren't saving any money." Many Canadian companies that create their own private cloud share similar experiences. On paper, it looks great, but in reality, on-premise private cloud isn't relieving management effort or delivering on the expected benefits of agility, access to state-of-the-art technologies, and cost savings. IDC is seeing a reversal and shift from self-managed, on-premise cloud to hosted private IaaS. Recent IDC research found that on-premise and hosted private models are currently being used by roughly the same amount of organizations in Canada. Over the next year, though, hosted private is projected to expand at twice the rate as on-premise private IaaS. This IDC Technology Spotlight provides an overview of the cloud market in Canada and the trends in private IaaS. The document also discusses the uses and advantages of private IaaS and provides an overview of TELUS' new private cloud IaaS offering. July 2015, IDC #CAN05X

2 PRIVATE CLOUD IAAS IN CANADA When Canadian business and technology decision makers think of cloud, they typically think about public cloud services. Just a simple The hosted private IaaS search on Google or IDC's own website shows that public cloud has market is 70% larger than the attracted much more attention than private cloud. Public cloud public IaaS market and offerings such as Microsoft Office 365, Salesforce.com, and other projected to grow by close to software-as-a-service (SaaS) products have been the main drivers of Canada's cloud market growth of more than 30% in 2014, enabling 20% over the next five years. the market to close in on the C$2.5 billion mark. In the infrastructureas-a-service (IaaS) market, public offerings have also grabbed most of the headlines. However, the reality is that businesses and vendors have built a significant base of dedicated private IaaS environments in Canada. The hosted private IaaS market is already 70% larger than the public IaaS market. IDC is projecting the segment to grow by close to 20% over the next five years compared with the overall IT market growth of 3.2% and the management infrastructure services market growth rate of 3%. There is a shift occurring in the market toward hosted private IaaS due to a number of drivers: Self-managed private clouds are losing favour. Self-managed private clouds delivered out of a company's own datacentre are losing favour primarily because they are failing to simplify IT and reduce cost. Leading technology executives are shifting from managing infrastructure themselves and exiting the datacentre business, realizing their time and effort are better invested in working with the business to drive better results. Looks like public but it is private. Hosted private IaaS products have undergone dramatic change in the last year. From what was essentially managed hosting offerings, private IaaS solutions have evolved to become true cloud solutions fully scalable, on-demand, and utilitylike. Service providers are quickly introducing features normally associated with public cloud into their private IaaS offerings (such as click-through contracting and self-serve management portals), to the point where it will become increasingly difficult to distinguish between the two. Unlike public IaaS, private IaaS is dedicated to a single client, delivering a higher level of security, assurance of in-canada residency, and the ability to meet regulatory requirements. These advantages come at a cost hosted private IaaS typically has a higher price tag than similarly configured public IaaS offerings. Private IaaS has evolved from a short-term silo solution. Over the past two years, private and public IaaS have expanded from siloed and discrete solutions for test/dev and hosting (and solely being in the domain of the developer community) to supporting enterprise and production systems at many companies. The next step in unlocking the benefits of cloud will be wide-scale integration between internal and external systems, software and hardware, management of multiple cloud providers, and the creation of a platform that ties corporate data together regardless of technology, location, and device. This is hybrid cloud. Over the past year, businesses and vendors alike have been more focused on reaching the goal of interoperability between IaaS platforms and on-premise technologies. The shift from on-premise to hosted private, the advancement in features and functions of private cloud, and its importance in the hybrid cloud framework have created significant momentum for hosted private IaaS in Canada, which is expected to continue. In IDC Canada's annual cloud study (May 2015), we found that currently both on-premise and hosted private IaaS had equal adoption but that two-thirds of the firms that plan to adopt private IaaS will use a third-party provider (see Figure 1). As the benefits of hosted cloud are realized, IDC expects the shift to hosted private IaaS to accelerate to the point where the majority of firms will use third-party offerings IDC #CAN05X 2

3 FIGURE 1 Private Cloud IaaS Deployment Intentions Q. What are your organization's plans for the following server capacity on-demand models internally deployed/private on-premise cloud? On-Premises, Internally Managed Private IaaS Hosted Private IaaS 25% 25% 60% 15% 50% 25% Currently in use Plan to deploy in the next 12 months Longer term/no plans Source: IDC, 2014; n = 109 WHY PRIVATE CLOUD IAAS Canadian organizations are creating hybrid environments where public and private IaaS work in concert with on-premise environments. Leading CIOs are deploying workloads in either the public or private platforms based on the following best practices: Regulatory compliance. Private IaaS becomes critical in heavily regulated industries and businesses that deal with highly sensitive information and data. Private IaaS is dedicated to a single client and configured to be isolated from other users, allowing access by third-party auditors. In addition, the vast majority of private offerings used by Canadian firms are delivered in Canada, ensuring data residency is addressed. In the end, private IaaS provides firms with the ability to meet government and industry regulations and public IaaS cannot. Security. Infrastructure-based cloud services are, for the most part, delivered out of highly secure, state-of-the-art datacentres. Commercial datacentres employ both physical and virtual security systems that are well beyond what is typically deployed by Canadian businesses. And while both public and private IaaS are designed with security and resiliency in mind, hosted private IaaS is, by its nature, built to a higher standard. While the facilities and resources are solidly locked down, ensuring the security of the information is still largely dependent on the client. How hardware and network resources are deployed, as well as the encryption techniques and data protection used, will ultimately have a larger impact on breaches, data theft, and downtime than anything an IaaS provider can do IDC #CAN05X 3

4 Configuration. Canadian businesses are realizing the benefits of IaaS: agility, flexibility, capacity, and cost savings. While organizations are using public and private IaaS for similar purposes, private IaaS can typically be configured and customized to meet specific needs including the performance demands of Big Data as well as production systems which are core to the business. WHAT TO LOOK FOR IN A PRIVATE CLOUD IAAS OFFERING Midsize firms rank security and the features and qualifications of datacentre facilities as the top selection criteria for hosted private IaaS. This includes certifications such as SAS70 and SSAE (safeguards for transaction processing and the securing of data), CSAE (compliance, security, and access of data), and PCI (retail and commerce) as being key in comparing one provider's private IaaS offering from another. Clients also value quality and cost-effective services, and they want it delivered in-canada. When it comes to vendor preference, midmarket buyers said their number one choice is telecom-based providers. This was followed by large multinationals, then boutique cloud-only vendors followed by cloud-centric providers. Telecom carriers, through acquisitions and investments, have quickly become leaders in the Canadian hosting market. Today, telecoms operate well over 50% of the commercial datacentres in Canada and have become a go-to provider of infrastructure services for a number of reasons, including: Midmarket buyers said their number one choice is telecom-based providers. Quality infrastructure inclusive of the strength in the network, investments in security, and state-of-the-art datacentres End-to-end services which range from dedicated managed hosting to cloud services Wide sales and support coverage which extends across Canada TELUS' NEW PRIVATE CLOUD IAAS SOLUTION With close to C$12 billion in revenue and over 40,000 employees, British Columbia based TELUS is the second-largest telecommunications carrier in Canada. TELUS is also a top 10 Canadian IT service provider and a leading Canadian security services provider. Its IT services revenue exceeds C$550 million, 30% of which is generated by hosting services. When related vertical services such as healthcare and public sector are included, TELUS' IT and associated revenues exceed C$1 billion. TELUS is also Canada's largest managed hosting provider with one of the largest and widest datacentre footprints in Canada. It has over 12,000 servers and 12 petabytes of storage under management. It operates a portfolio of eight facilities across Canada, with over C$100 million invested recently in two "mega" datacentres. These two sites one in Rimouski, Quebec, and the other in Kamloops, B.C. are built to tier 3 specifications. This secure, cross-country network and portfolio of state-of-the-art datacentres are the foundation for its IT solutions which extend from managing on-premise technologies through to private, public, and hybrid solutions, packaged under the TELUS Cloud Services umbrella. TELUS is making significant investments to enhance its cloud services portfolio with hybrid in mind. Along with the new facilities and upgrading its existing datacentre assets, TELUS is making a long-term commitment in people, processes, and tools to make its cloud services true-hybrid ready. Clients will be able to seamlessly move workloads, data, and applications 2015 IDC #CAN05X 4

5 between TELUS' public and private IaaS cloud services. Clients are also provided with the choice between managed and self-managed operational models. TELUS Cloud Services launch set for later this summer will introduce the flexibility of selecting from various IaaS cloud deployment models public, private, and hybrid. The cloud IaaS portfolio will offer multiple connectivity options. In addition, TELUS will be offering Cloud Professional Services aimed at simplifying the complexity of deploying cloud services and accelerating cloud adoption. A cornerstone of TELUS' Cloud Services is TELUS Private Cloud IaaS. TELUS first introduced private IaaS in The initial offering was strong and TELUS was rated as a leader, the highest position, in IDC MarketScape: Canadian Dedicated Private Infrastructure as a Service 2014 Vendor Assessment (IDC #CA1SSC14, March 2014). TELUS introduced an array of new tools to its cloud IaaS services over the past year and many more are planned for its Private Cloud service this summer. Many of these improved technologies have focused on automation and orchestration: making it easier to deploy and manage cloud environments and integrating various cloud offerings into a single view. Tools such as 's UCS and UCS Director, for example, provide an intuitive front end to configure cloud platforms and effectively manage resources. There have been additional improvements made in backup and recovery technologies and the advancement in software-defined networks, which enable firms to quickly design and reallocate resources to meet the demands of today's business. The best of these technologies have been applied by TELUS to develop its enhanced version of Private Cloud. TELUS' Private Cloud IaaS is offered in two models, representing a dramatic improvement from just a year ago. These two models are: Managed Platform. Part of it standard Private Cloud IaaS service, Managed Platform is a comanaged offering. TELUS implements and manages the underlying infrastructure while providing its customers with the flexibility to build and configure virtual machines, storage, and network, as well as manage their own operating systems and applications. Managed Platform also provides fully orchestrated Symantec NetBackup Self Service through the TELUS Cloud Management Portal. With the implementation of UCS tools, the TELUS Cloud Management Portal is fully automated and orchestrated, providing transparency and agility to users. Managed Operations. Managed Operations is a fully managed solution, including support for the OS, backup, and recovery. The original version of Managed Operations has been redesigned to provide vastly more configuration options as well as embedded, value-add services for DNS and active directory setup and monitoring. The improvements provide customers with more options, flexibility, and transparency of utilized resources. With the changes to the service catalogue, allowing users to configure server and storage resources, TELUS can now scale up to meet high peak demands and scale down to support even the smallest workloads. This design has major ramifications for the market. Until recently, Private Cloud technologies have mostly been in the hands of large, enterprise businesses. TELUS Private Cloud IaaS changes the economics and eliminates the barriers to entry for enterpriseclass cloud services for large and midsize firms as well as smaller ones that have intensive IT workloads or specialty hardware requirements IDC #CAN05X 5

6 FIGURE 2 TELUS Private Cloud IaaS Your IT Team Web Portal Firewall TELUS Data Centre: BC TELUS Data Centre: AB TELUS Data Centre: ON TELUS Data Centre: QC VMWare Hypervisors VMWare Hypervisors VMWare Hypervisors VMWare Hypervisors NetApp UCS Nexus NetApp UCS Nexus NetApp UCS Nexus NetApp UCS Nexus Source: Designed based on information provided by TELUS, 2015 While private IaaS is similar to public IaaS, it provides data residency assurance and can be configured to meet the unique demands of the business. Use cases for TELUS Private Cloud IaaS include: Mission-critical applications: production and core applications like ERP and CRM systems that need a secure 24 x 7 managed environment for greater reliability. Application/workloads/data: regulated environments such as financial institutions that require in-country data residency and auditability. High-performance computing for Big Data and IoT solutions: these solutions require the storage and analysis of large volumes of data. Backup/business continuity/disaster recovery: replicate data and applications for disaster recovery on discrete equipment, dedicated to the use of a single customer. Capacity: the ability to scale or burst and leverage an expanded geographic footprint to meet both the Canadian and international requirements. The new TELUS Private Cloud IaaS is built with the understanding that cloud is not an all or nothing proposition. Leading CIOs will leverage a portfolio of cloud services that will include both private and public as well as on-premise technologies. Cloud also will not be built on a single hypervisor. Users will want a choice of location and management options which may depend on the use case, the maturity of the user, and the cloud vendor. As part of the TELUS Cloud Services portfolio, TELUS Private Cloud IaaS has been designed to provide clients with choice. It was also created with a hybrid vision in mind. With enhancements being made to its public and private IaaS solutions, TELUS' Cloud Services will 2015 IDC #CAN05X 6

7 allow for hybrid capabilities of workload portability and orchestrated management from a single pane of glass. The richness of the design provides TELUS' clients with the ability to better align the use of IT and the cloud model, whether private or public, with the needs of the business. TELUS Private Cloud IaaS is only available directly from TELUS' sales channel. Pricing models are based on the number of blades deployed and charged on a monthly basis. CHALLENGES TELUS' redesigned its private IaaS offerings to provide clients with a robust, secure infrastructure with more flexibility, transparency, and choice, but it is not without limitations. TELUS faces a number of challenges in this highly competitive market. Market awareness. TELUS is well known in the Canadian market as a telecom provider. To establish itself as a leading provider of cloud IaaS services, it has to increase its brand awareness and service perception in the cloud services market. TELUS robust communication network and its extensive portfolio of datacentres are key enablers of its cloud offerings. Also, TELUS needs to promote the fact that it has been running datacentres for well over 20 years and that it has the expertise and solutions to support the cloud needs of Canadian businesses. Mixing messages. Many cloud providers are promoting the value proposition centred around simplifying IaaS. Cloud computing, particularly private IaaS and hybrid cloud solutions, can be complicated. Taking out the technicalities and complexity in managing these platforms will resonate with many IT and line-of-business decision makers. Yet the devil is in the details and buyers will quickly get to the point of wanting to know how TELUS makes cloud simple, flexible, and less costly than doing it themselves. TELUS and other providers need to demonstrate through case studies how they have been able to help their clients meet their cloud computing goals. Professional services. Professional services are critical in helping organizations determine how IT and cloud can help meet their business requirements. TELUS has a strong services team with expertise across cloud, network, datacentre and security domains, and does a good job in supporting its clients. TELUS will need to continue to invest in people and build an even stronger body of best practices and tools as hybrid practices advance. TELUS' professional services will be critical in helping clients develop technology roadmaps that align with their strategy and further drive thought leadership in the cloud market. CONCLUSION AND ESSENTIAL GUIDANCE Cloud offers tremendous benefits such as agility, flexibility, and cost savings, which changes and improves the way IT is delivered. More importantly, cloud is an enabler of significant improvements to the business. There is a wide variety of options and choices when it comes to cloud, from public, private, to the emerging hybrid model. When it comes to private IaaS, businesses have started to move away from self-managed private clouds and toward hosted delivery models. And with increasing frequency, midsize businesses are leaning toward telecom-based providers such as TELUS as their primary vendor for infrastructure-based solutions. Managed services, of which hosting and private IaaS are a sub-segment, are critical in the strategic shift of the IT department from provider to service aggregator. While other models cut cost and provide a degree of resiliency, private IaaS really sets the stage for higher IT performance IDC #CAN05X 7

8 The path is not easy and it will not occur overnight or on its own. CIOs need to prioritize their applications, couple them with the most appropriate cloud model, and build a roadmap that fully leverages the advantages of cloud. Additional best practices include: Aligning your efforts. The shift to a more business-focused IT department is already underway. More progressive CIOs have built closer ties and better integrated IT with the business. By focusing on what solutions are needed rather than how they are delivered, CIOs are creating IT departments that will look very different to traditional IT but are much more flexible, responsive, and effective. Planning. Planning starts with the needs of the business, how IT can support the business' goals, and what options are available for IT to do its job better and more cost effectively. Cloud changes how IT gets done, sometimes supplementing, and in other situations replacing, how services are delivered. Companies need to reassess their IT strategy and determine if and when traditional technologies and tasks such as test/dev and backup and recovery can be moved to the cloud. This new IT strategy cannot sit on the shelf. Planning should be a continuous process that aligns the use of internal and third party services with the needs of the business. Scaling quickly. In today's uncertain economy, leading CIOs are driving toward a sustainable, low-cost framework that enables their companies to expand and shift strategies as the business dictates. Infrastructure-based cloud technologies are enabling top Canadian companies to take advantage of the current climate. There is too much at stake, and Canadian companies need to move quickly to take cloud off the drawing board and into production IDC #CAN05X 8

9 A B O U T T H I S P U B L I C A T I ON This publication was produced by IDC Custom Solutions. The opinion, analysis, and research results presented herein are drawn from more detailed research and analysis independently conducted and published by IDC, unless specific vendor sponsorship is noted. IDC Custom Solutions makes IDC content available in a wide range of formats for distribution by various companies. A license to distribute IDC content does not imply endorsement of or opinion about the licensee. C O P Y R I G H T A N D R E S T R I C T I O N S Any IDC information or reference to IDC that is to be used in advertising, press releases, or promotional materials requires prior written approval from IDC. For permission requests contact the Custom Solutions information line at or Translation and/or localization of this document require an additional license from IDC. For more information on IDC visit For more information on IDC Custom Solutions visit Global Headquarters: 5 Speen Street Framingham, MA USA P F IDC Canada 33 Yonge St., Suite 420 Toronto, Ontario Canada, M5E 1G4 idc-insights-community.com Click here to enter text.

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