Expected Social and Economic Impact and Application of Cloud Computing in Japan

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1 OECD/ICCP Foresight Forum Expected Social and Economic Impact and Application of Cloud Computing in Japan October 14, 2009 DR. Makoto Yokozawa Nomura Research Institute Professor of MOIS Labo., Kyoto University BIAC ICCP Vice Chair.

2 Vélib, a Cloud of Bicycles in Paris 2

3 Focused Issues Different Styles of Clouds Cloud Markets in Japan Issues of Cloud Computing on Advanced Networked Society

4 Different styles of Clouds Cost Benefit by Scale Why use Cloud? Layered Business Model Cross Cutting the Cloud How to Earn Sufficient Scale of Cloud to be Cost Efficient? Roadmaps 4

5 Cross Layer Convergence among Software Industry Solution Application Middleware Hardware Network Sector-independent Horizontal Cloud Solution Application Middleware Hardware Network Vertical Cloud

6 Layers Horizontal Cloud and Vertical Cloud Horizontal Cloud General Use Salesforce,com Google Apps Industry Use Financial Vertical Cloud Logistics Inter- Cloud Platforms Payment Platform Authentication Platform Oracle Cloud Windows Cloud Hadoop Contents Delivery Platform Amazon EC2 HDTV GPS RFID Sensor NFC

7 Cloud Computing Roadmap How to find the Best Optimized Sharing of IT functions Horizontal? Vertical? Granurality? Market SaaS More Industry Use PaaS,HaaS SaaS Applications CRM/SFA Google Gears Horizontal Cloud HR/Finance/BI SAP Sector Use of Cloud Vertical Cloud SaaS Expansion To BPO Services PaaS HaaS Expansion of Paas/Haas Emerging of Paas/Haas Microsoft Amazon Google Development Tools EC2 IBM Blue Cloud Yahoo! SLA 7

8 Cloud Market in Japan Overall Cloud Computing will be the next innovation in ICT based Society and IT industry in Japan Applications are expected in 1) Anti-Global-Warming, 2) e- Governments, 3) Energy (Smart Power Grid), 4) Intelligent Traffic Systems and Other Society-based Information Systems Market Forecasts Expected market growth to be ~20B USD by 2012 ( ~ 100B USD Global Market Forecasted) Core Cloud Business will be, 1)Data Center, 2)ASP-Saas Application, 3)Shared Outsourcing and 4) Server/Storage/Middleware/Network Services Public Service Clouds for everyone and Digital ID issues The Kasumigaseki Cloud for Ministries and Agencies National e-p.o. Box Clouds for SMEs 8

9 Size of the Cloud Computing Market The global cloud computing service market projected to reach approx. 10 trillion in value in 2011 (Merrill Lynch estimated) Forecasted scale of Japanese domestic cloud market in 100Million Yen Data Center Services Server/Storage/Middleware + Network Shared Use Outsourcing ASP/SaaS Applications Reference: Global Internet router market forecast Global router market expected to triple between 2007 to 2013 Domestic market will grow to nearly 2 trillion yen by 2012 Source: RHK forecast, 2008 Source: ASPIC 9

10 System A 1 System A 2 System A 3 System B 1 System B 2 System B 3 System C 1 System C 2 System C 3 System D 1 System D 2 System D 3 Development of the Kasumigaseki Cloud 10 Gradually migrate to e-government using cloud computing technologies Drastic reduction of administrative costs and elimination of waste (Drastic reduction of operational costs and developmental costs for government information systems) Kasumigaseki Cloud Do not need to maintain each system individually Computer resources can be used as much as needed Coordination of data Coordination of data Ministry A Ministry B Ministry C Ministry D

11 The National Electronic Post Office Box Plan What is the National Electronic Post Office Box Plan? Upon request, individuals (or businesses) are provided with a secure, exclusive account electronic post office box that can be used to view and manage personal information (e.g., pension records) in cyberspace and access a wide range of convenient, one-stop government services, achieving the world s most effective personal e-government. Now Numerous administrative procedures for major life events Moving house: Up to 26 procedures & visits to 7 organizations 13 documents to be submitted Improved convenience One-stop services Local government office School Retirement: Up to 10 procedures & visits to 6 organizations 15 documents to be submitted Future Regional transport bureau etc. Administrativ e agencies National and local governments given equal to discussion development of a plan for unified action Procedures completed with one click No need submit documents Cost reduction (total for private/public sectors): Approx. \100 million for moving Approx. \120 million for retirement Transparent administration Pension records, etc. checked on paper Submit documents for employee tax or employment procedures for each relevant local government or place of business Pensioner Records can be checked at any time Eliminating social security/public services notifications would reduce costs by 460 billion yen City B Company A Administrative Data Sharing Support Center Electronic post office box Burdens on companies reduced City A Bulk transmission of employee data One-stop processing of income tax filing would reduce costs by approx. 170 million City C Copyright C 2009 Nomura Research Institute, Ltd. All rights reserved. Source: Outline Development of necessary infrastructure BPR of administrative procedures (general optimization) Establish a government CIO To oversee all aspects of egovernment (The US Obama administration has established the position of Chief Technology Officer) Develop shared infrastructures Infrastructure using cloud technologies to be shared by the central and local governments 11 of New Strategies for New Digital Age: Three-Year Emergency Plan (IT Strategic HQ, April 9, 2009)

12 Public-use Cloud Cases in Japan Kofu-City s Taxpayers Refunding Management System Japan Post Office s Customer s Inquiry Response System Japan Government s Eco-POINT Application System UI CRM/SFA Business Logics Database Kofu City Japan Post Eco-Point Force.com (Platform as a Service) Usability/Scalability/Security/Productivity/Integrity 12

13 Maturity Model of Business IT Utilization Cloud Computing Service for SMEs Expected Difficulty in Cross-Division Communication Difficulty in Cross-Company Collaboration Cross-Company Utilization of IT Initial Introduction of IT Intra-Division Utilization of IT Intra-Enterprise Utilization of IT 30% of companies In Stage 3 and 4 Stage 4 Total Introduction optimization across industry of IT systems Stage 3 Partial optimization by IT across a company Stage 1 Primary usage of IT Stage 2 Partial optimization by IT within each division 70% of companies In Stage Productivity Gain by IT usage Source) METI Japan 13

14 Issues of Cloud Computing on Advanced Networked Sciety (Technology) NGN / Mobile Cloud (System) Dependable Clouds (Institutional) Law Systems and Rules 14

15 R&D on Secure Cloud Networking Technology 15 Establish a new market as early as possible to achieve high-security, high-speed and advanced interoperability between clouds by addressing various issues that currently exist in today s cloud market. Health care Home network Security/ Disaster prevention Elderly care Monitoring Music distribution E-application Medical care Word processing Groupware Web conferencing ERP SCM SFA Finance/ accounting Storage CRM Human resources Energy control Diverse application services Cloud networking environment using virtual servers, etc. SCM Logistics Cloud service interoperability technology Develop platform technology for interoperability between clouds Other company s cloud Finance/accounting Transport ation IP NGN Other company s cloud Access network Core network 電 子 申 請 User A SCM User B Intelligent distribution processing technology Other company s cloud Other company s cloud Develop technology for real-time processing via interoperability in a distributed environment Cloud-synch IP NGN infrastructure technology 15

16 R&D on Dependable Data Center and Related Technology Conduct empirical research and develop various technologies for the next generation data centers which achieve higher dependability and security for business uses. (example) Air conditioning using the open air Verify dependability, cooling capacity and factors for the stable operation UPS with Photovoltaics Verify energy saving and performance of battery under photovoltaics Real time geographically distributed data back up Verify the load factor of network, usability and security Visualization and integration of log data of servers Verify security of user data Resource balancing technology Control and re-arrangement of resource Virtual resource management system Maximize resource usage while keeping service level 16

17 Software System Dependability and Cloud Computing Device Access Network Edge Network Core Network Server Dependable Cloud Administrator Console Log and Monitored data Log and Monitored data Log and Monitored data Log and Monitored data Traceability for Problem Determination Log and Monitored data Base feature Monitor/Measurement Authentication / Authorization Secure Logging Secure Boot Secure Boot Secure Boot Secure Storage Device Network Server 17

18 18 Notes for the Future 18 Global Rules need to be established Relationship between corporate compliance (auditing procedures) and external storage of data, etc. Ownership of intellectual property rights (e.g., data, service, log) on clouds Advance notification of termination (cancellation) of services, return of data to owners, proof of data deletion Need for the establishment of global rules on personal information protection (e.g., operations based on the relevant use of personal information policy) Reference: Interim Report : Strengthening Efforts to Enhance Dependability and Security of Information System Software (May 2009) It is very important to enhance the SLA for cloud computing to be fully utilized in enterprise activities in the future. It is important to form a certain social consensus on to what extent dependability/security is ensured or accountability is fulfilled by the service providers in accordance with the application of cloud computing, while considering to what extent risks are accepted by the users.

19 19 Notes for the Future 19 Harmonizing with Domestic Rules How should we understand the relationship between global rules and domestic laws, considering that data centers established to provide cloud services are subject to the laws of the countries in which they are located? Other Important Issues Interoperability Dependability Capacity Building (Fix/Wireless Broadband Network)

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