Data Centre. Transformation. The Route to Business Service Optimisation SUNGARD AS SURVEY. in association with

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1 SUNGARD AS SURVEY Data Centre Transformation The Route to Business Service Optimisation

2 Infographic Summary PAGE 01 Summary of Research Can cloud service providers be trusted to handle responsibility for internal service and OS management? Time spent performing on/off premises data centre management tasks 7% 15 hrs a week 13% 10 hrs a week 43% Every Every day day Yes No Not sure 29% 43% 30% 41% (64% among companies 20,000+) Organisations feel in-house IT skills could be better deployed 24% 19% (36% among companies 20,000+) 14% 37% 5 hrs a week Maintaining current systems Developing improved systems for internal usage Developing new systems to exploit/ expand commercial opportunities Switching to more customer facing roles

3 Introduction PAGE 02 Full Data Centre Optimisation Potential Unrealised The survey provides an overview of data centre and server farm usage within today s enterprise environment, providing insight into both existing practice and future development. It shows that there is still considerable scope for many organisations to improve the operational efficiency of their data centres and server farms, despite the widespread implementation of optimisation projects having already taken place. Further consolidation and virtualisation benefits exist wherever IT departments continue to host and run applications and services on dedicated, physical servers for example, with specific performance intensive workloads yet to be virtualised. Opportunities to reduce or eliminate the complex management overhead associated with the on-going supervision and maintenance of data centre hardware, software and facilities also present additional time and cost savings potential. Confidence in in-house skills remains overwhelmingly high, but a majority of organisations nevertheless feel that IT staff would contribute more to the business if they were not required to spend significant portions of their day fire fighting or keeping the lights on. Rather, their collective expertise could be better directed towards the conception and development of improved tools and processes for either internal usage and/ or as the basis for commercial, customer facing projects which set the stage for the establishment of new revenue streams for their employers. That potential can only be realised should alternative provision for daily data centre operations and management be found, yet large numbers of IT departments remain uncertain that third party data centre hosting companies or service providers can be trusted to assume that responsibility on their behalf. Specifically, they worry that moving data centre workloads into either offpremises hosted environments, or devolving management for on-premises systems, will lead to a loss of control that will adversely affect application and service performance, reliability and security, and reduce their ability to accurately monitor utilisation to aid future capacity planning and provisioning. Preferences for specific types of management tools online portal or onpremises systems management - are split equally, demonstrating that irrespective of the format in which they are supplied it is the ability to gain instant, detailed visibility into applications and service availability and usage that remains of utmost importance. Despite the continuing ambivalence towards third party data centre management demonstrated by the majority of respondents, many are either already, or are considering increasing, their use of IT outsourcing in 2013/2014.

4 Scope PAGE 03 Successful Optimisation Initiatives Lay Foundation for Broader Service Migration Forrester predicted that resiliency and disaster recovery will drive most new virtualisation projects with backup, recovery, snapshot, replication and archiving platforms specifically designed for virtualised environments most likely to deliver return on investment (ROI). Organisations must also consider whether it makes more sense to upgrade their existing data centre estate to support new workloads or outsource that responsibility to a third party. They should also assess the feasibility of implementing hybrid cloud platforms to deliver this new wave of applications and services to their users, with many cloud service providers having already invested heavily in the integration of new hybrid cloud technology stacks into their hosted services. Almost half (49%) of organisations have already completed some form of data centre consolidation and optimisation project. A further 41% are either implementing (28%), piloting (7%) or planning similar initiatives and only 22% report no current plans to do so. In many cases improved utilisation of underlying CPU and storage resources have already been demonstrated by initial server consolidation and virtualisation projects, and this success has laid a solid foundation for the migration of additional applications and services into virtualised environments which are now better understood by enterprise IT departments. Research firm Gartner1 suggests that server virtualisation stood at around 50% in 2012 with rival Forrester2 predicting that six out of ten workloads would be run in virtual machines by the end of These figures indicate that up to 40% of data centre/server farm environments still rely on physical servers, the removal or upgrade of which could form the cornerstone of additional data centre optimisation initiatives. Having tested the water with web, office and some CRM/ERP applications for example, many organisations will now have the confidence to consider whether more applications and services - backup and recovery, security and business critical production databases requiring high performance support for example - can be run more efficiently as virtual workloads either within on-premises or hosted cloud environments. 49% Completed (64% among companies 22% No plans (33% among companies 20,000+) under 1,000) 1 Gartner Hype Cycle for Cloud Computing, Server Virtualization Predictions - Driving Value Above And Beyond The Hypervisor, Forrester 2013 Has your organisation completed data centre/server farm consolidation/optimisation projects?

5 In-House Skills PAGE 04 Virtualisation and Data Centre Management Skill Requirements Constantly Changing In-house server, storage and network virtualisation skills are rated as either excellent or good by 82% of respondents, suggesting either well placed confidence or a degree of complacency which risks missed opportunities for organisations insufficiently agile to quickly adapt to changing requirements. Skill requirements are constantly changing and expanding as hardware and software vendors introduce new product sets and revise and enhance old ones. All this whilst IT departments earmark additional workloads for migration from physical to virtual environments which can put pressure on employers to either recruit additional expertise or spend time and money training existing IT staff. Whereas virtualisation platforms used to be limited to a choice of either VMware ESX or Microsoft Hyper-V for example, more hypervisor stacks have emerged as viable enterprise contenders in recent years. Xen, KVM, and alternative open source distributions of hybrid cloud operating systems such as OpenStack, CloudStack and Eucalyptus also present new options for companies looking to explore more efficient on-demand internal application and service delivery models. The skills required to manage virtualised server and storage platforms, maintain virtual images, plan and execute capacity provisioning, update and patch operating systems, applications and device drivers are widely available and understood but others remain at a premium. Some IT recruitment agencies report that specific expertise around multi-tiered virtual application environments, database and storage technologies, security virtualisation, identity management, and authentication and regulatory environments is in particularly short supply. In-house skills around server/ storage/network virtualisation and data centre management rated highly by most Any immediate lack of in-house expertise can lead to missed commercial opportunities if appropriate skills cannot be quickly acquired or drafted in from elsewhere, particularly in the case of new customer project work, mergers and acquisitions and broader company expansion into new markets or regions for example. In-house IT staff are also less likely to have on-site engineers able to deal with emergency situations caused by power outages or other events. 16% 2% 39% 43% Excellent Adequate Good Unsuitable

6 Management Overhead PAGE 05 Data Centre Complexity Keeps on Growing Centralised control remains one of the most important perceived advantages associated with virtualised data centre environments, but one that substantially increases the management overhead. The survey suggests that IT departments spend a lot of time provisioning, configuring, managing and monitoring data centre applications, services, physical and virtual hardware and software within both on-premises facilities and hosted or cloud based platforms, with 43% of respondents estimating this to represent a daily activity. Running multiple servers with a mix of operating systems, hardware, network devices and applications represents a considerable workload, a burden which increases further if and when internal IT staff must travel between multiple sites depending on data centre/server location. Increased use of server/storage/network/desktop virtualisation helps with consolidation and standardisation of components but also adds more complexity into the mix at the hypervisor configuration and management level. Where in-house data centre facilities and IT systems are expensive, complex and difficult to expand due to in-building space constraints, organisations should consider Time spent performing on/off premise data centre management tasks whether switching data centre provision and management to a third party provider offers better value for money and flexibility. Though they may split their time across multiple customers simultaneously, data centre and cloud service providers offer scalable certified hosting facilities protected by full time security staff and backup power supplies negotiated with electricity suppliers. They also employ on-site engineers and IT support staff familiar with virtualised hardware and software available 24/7 to ensure hosted systems are given adequate attention, with precise levels of management control outlined within SLAs. 43% Everyday

7 Staff Redeployment PAGE 06 Daily Operations Burden Can Limit IT Department Business Contribution Whilst 43% of respondents believe IT staff would contribute more to the business by maintaining current systems, the majority feel that they would be better suited to developing improved systems for internal usage, developing new systems to exploit commercial opportunities or switching to more customer facing roles. This naturally adds weight to the theory that many would benefit from outsourcing daily IT and data centre management operations to a third party provider. That figure grows according to the size of the business (36% of those working for companies employing 20,000 or more feel that IT staff would contribute more by switching to developing applications and services that could be used to expand the business) with the sheer scale of the IT overhead in larger organisations representing a more substantial burden shared by a bigger number of in-house IT staff. A KPMG sponsored survey State of Outsourcing Study - conducted by HFS Research and published in January 2013, found that many of the 399 organisations polled had plans to increase their outsourcing activity across application development and maintenance (39%) and IT infrastructure (29%), with 60% of respondents considering their use of outsourced IT services to be either mission critical or important in forcing a change to their business. Emerging enterprise class Platform-asa-Service (PaaS) options also present a significant opportunity for in-house software developers to build, test and distribute new applications efficiently using on- or offpremises cloud-based architecture which can form the nucleus of customer-facing, revenue generating projects for their employer. In some cases, a shift to outsourcing IT and data centre operations and management can help drive a broader transformation to a more That shift matches internal IT requirements more closely to business demand and helps to create a more service orientated culture which can be harnessed for more efficient commercial project delivery. 14% 24% 19% 43% Many organisations feel inhouse IT skills could be better employed Switching to more customer facing roles Developing improved systems for internal usage Developing new systems to exploit/expand commercial opportunities Maintaining current systems

8 Trust PAGE 07 Service and OS Management Kept Close to Home Cloud service providers and data centre hosting companies have some way to go in convincing organisations that they can be trusted to manage mission critical applications and services efficiently on their behalf, with 59% of respondents either unsure or not convinced that the task is beyond the capabilities of third party outsourcers. That figure appears to vary according to the availability of in-house IT staff (rising to 64% for companies employing 20,000+ people) indicating that bigger companies with large-scale IT operations have from necessity come to rely on, and therefore have more trust in, outsourced services than others. It also indicates that for many companies, outsourcing any part of their IT estate to a managed data centre environment requires a leap of faith which can only be initiated by a greater familiarisation with the processes and technology involved. Hosting pilot projects on a small scale can help to allay potential customer trepidation; simple tours of available data centre facilities may prove the tipping point for others. Providers able to demonstrate that they have the secure facilities, management expertise and robust hosted platforms to efficiently and reliably handle responsibility for running, maintaining and upgrading virtualised servers, storage and networks have a significant opportunity to attract more business onto their managed data centre services. But they must back these up with flexible SLAs which offer a degree of customisation to meet the specific needs of individual organisations, plus regular performance reviews and audits of application and service delivery. Many enterprises remain uncertain that external cloud service providers can handle responsibility for internal service and OS management These should include defining exactly which hardware and software components are covered and which are not; the setting of specific uptime or utilisation thresholds, recovery deadlines and application or server response times; data location, encryption and security breach notices; exceptions to normal operations; compensation or penalties if terms of the contract are broken, and early contract exit terms in the event of a dispute. 29% No NOT SURE 30% NO 41% YES

9 Control PAGE 08 Trust is Achievable by Delivering Complete End User Control Of those surveyed, 92% felt it was either critical, very important or important for their employers to have complete visibility and absolute control of any applications and services running within the data centre at all times. Many organisations worry that moving data centre workloads off-premises and into hosted environments, or switching responsibility for the management of on-premises data centres to third parties, will compromise their ability to see what applications and services their employees are using, where data is being stored, whether security breaches are occurring and obscure other usage metrics crucial to the support of accurate capacity planning and provisioning. This lends considerable advantage to thirdparty-managed data centre service providers which can deliver visibility assurances to their customers as a means of gaining their trust. Desirable end user controls may envelop anything from remote provisioning, patching, decommissioning and auditing of virtual systems and applications, alongside vulnerability management, firewalls, intrusion prevention services, content filtering and other threat detection and security services. Access to security audit logs and backups, which list who made what changes to data when and where, help to demonstrate both regulatory compliance and adherence to the terms of internal security policies and service level agreements. Equally important is the ability to perform forensics on hosted infrastructure should systems be compromised. Where hosted services are connected to on-premises data centres within hybrid cloud environments, network monitoring tools that analyse layers 1-7 can provide vital insight and troubleshooting of application performance and availability problems, and avoid unnecessary requests to service provider helpdesks and engineer callouts. Resultant bandwidth analysis and port utilisation statistics aid capacity planning and provisioning schedules, whilst application reporting and usage tools are able to record which end users use which applications and services. Complete visibility and absolute control of outsourced applications and services is paramount 52% Critical 27% 13% Very Important Important

10 Management PAGE 09 An equal number of organisations prefer to manage cloud-based services and applications via an internet portal compared to established on-premises systems management tools such as HP OpenView, Microsoft Systems Center Configuration Manager, IBM Tivoli, Oracle Enterprise Manager and others. This reinforces the idea that it is not the method used but the quality of the control and visibility that each respective management tool provides which is the more important factor. Internet Portals Rival On-Premises Software for Cloud Service Management The granularity of the detail that internet portals are able to provide varies significantly from one managed data centre and cloud service provider to another. But at a very base level these should deliver self-service application and service provisioning, monitoring, reporting and billing. Some providers go further in offering environmental monitoring (including temperature, power and physical security); change management; server CPU, RAM and disk utilisation and network availability metrics; and real time hardware monitoring which logs the status of storage area networks (SANs), RAID arrays, network interface cards, local area network (LAN) switches, routers and other devices, often integrating alerting and reporting systems into help desk tools which support online engineer requests and interactive problem resolution platforms. Having a sufficient quantity and quality of secondary and tertiary support services - call centre support and engineer/technician access for example - behind knowledge Internet Portal Cloud based services and application management preferences On-premises systems management software bases and other online helpdesk resources is critical to effective cloud service management and building trust between the customer and the provider. Managed on-premises data centre environments require an equal or better ability to control heating, ventilating and air conditioning (HVAC) and physical security measures and potentially link into data centre infrastructure management (DCIM) software that reports on a broad range of environmental and facilities management metrics alongside the IT hardware and software estate, as would be available if the organisation was managing the environment for itself. 38% 38%

11 Future PAGE 10 Data Centre Outsourcing Undergoing Transformation Of those surveyed, 39% reported that their employer was either actively looking, or would consider looking, to increase its use of all forms of outsourcing during , a figure which rose to 50% for larger companies made up of over 20,000 employees. This tallies with predictions from analyst firms which suggest that worldwide spending on all IT outsourcing services will expand significantly during the next four years following a period of relatively flat growth. Major changes are afoot however, with the traditional IT outsourcing model set to be largely usurped by a more cloud orientated approach likely to be centred around the idea of IT as a service, placing greater emphasis on cloud-based service management systems and common platforms which span on-premises and off-premises IT infrastructure. Data centre outsourcing specifically is set to undergo a period of transformation as more customers switch to replacement services delivered under cloud based IaaS/SaaS models that host on-demand applications in both on-premises and off-premises virtualised environments and provides server CPU and storage resources to handle temporary fluctuations in demand (cloud bursting). Customers will demand more customisable SLAs tailored to individual business requirements that look to derive maximum value from short term contract and transactionbased, pay as you go pricing structures and flexible resource utilisation which are tied more closely to governance initiatives and regulatory compliance. Is your organisation looking to increase its use of IT outsourcing within the next two years? Yes More enterprise organisations are likely to test out the service integrator model, in which one managed data centre or cloud service provider is trusted to manage multiple cloud-based resources from different suppliers on their behalf. This may present a considerable challenge for service providers tasked with migrating customer workloads between different infrastructure platforms and locations until interoperability initiatives guaranteeing seamless, secure transition are proven and which will need to demonstrate sufficient added value to prevent customers demanding they switch providers based solely on price. 50% among companies 20, % 50% among companies 20, % Under construction

12 PAGE 11 Conclusion The survey indicates that many enterprises will revise their data centre hosting and management provision during 2013/2014. Resilience and disaster recovery initiatives are predicted to drive a large portion of new data centre virtualisation projects, with backup, recovery, snapshot, replication and archiving platforms increasingly designed specifically for on- and off-premises cloud-based virtualised environments. Data centre complexity will continue to grow as hardware and software vendors revise and update existing platforms and introduce new ones, with emerging virtualisation management, security and cloud operating systems placing additional skills requirements onto inhouse IT staff which will come under increasing pressure to expand and apply their knowledge of regulatory compliance to data storage initiatives. Where that sort of expertise is in short supply, it will make sense for some IT departments to outsource data centre operations to a third-party-managed data centre or cloud service provider with certified hosting facilities, security and IT skill sets already in situ. This could allow internal staff to focus on development roles which utilise PaaS and other cloud-based resources to support the creation and testing of new software for either internal use or as the basis for customer facing projects. IT outsourcing as a whole appears set for healthier growth in 2013 after a difficult year in 2012 especially in Europe, though regional forecasts vary considerably and cloud computing services specifically look set to command the greater share of any expansion. Before that can happen however, data centre service providers must pay particular attention to reassuring potential customers that they can be trusted to handle service and application hosting and management on their behalf, and facilitate what for many is a leap of faith by offering deep visibility into hosted workloads, small scale pilots and tours of data centre facilities for example. Detailed SLAs which go some way beyond the standard terms and conditions will also prove essential to gaining that trust, with more organisations looking to extract maximum value from their service providers via short term contracts and transactionbased, pay as you go services which will see the increasing dominance of on- and offpremises cloud-based hosting, management, security and data storage. Flexibility and customisation will be crucial, backed by granular cloud based service management portals and secondary/tertiary support resources. The traditional outsourced data centre hosting and delivery model itself is likely to undergo substantial transformation supplemented by increased opportunities for service integrator model that sees one managed data centre or cloud service provider trusted to manage multiple cloud based resources from different suppliers for their customers.