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1 Project acronym: Project name: Project code: NEBULA A novel vocational training programme on cloud computing skills LLP GR-LEONARDO-LMP Document Information Document ID name: Nebula_WP4_D4.3.1_Learning_Material_and_Content_2015_30_04 Document title: Nebula VET program learning material and content Type: Slides Date of Delivery: 30/04/2015 Work package: WP4 Activity D Dissemination level: Public Document History Versions Date Changes Type of change Delivered by Version /04/2015 Initial Document - UCBL and INSA of Lyon Version /06/2015 Edition Modifications according to feedback provided by partners UCBL and INSA of Lyon Acknowledgement The persons of UCBL in charge of producing the course are Parisa Ghodous, Catarina Ferreira Da Silva, Jean Patrick Gelas and Mahmoud Barhamgi. The persons from UCBL involved in preparing, translation and review are Hind Benfenatki, Gavin Kemp and Olivier Georgeon. The persons of INSA of Lyon in charge of producing the course are Frédérique Biennier, Nabila Benharkat. The persons from INSA of Lyon involved in preparing, translation and review are Francis Ouedraogo and Youakim Badr. Disclaimer The information in this document is subject to change without notice. All rights reserved. The course is proprietary of UCBL and INSA of Lyon. No copying or distributing, in any form or by any means, is allowed without the prior written agreement of the owner of the property rights. This publication reflects the views only of the author, and the Commission cannot be held responsible for any use, which

2 Module 2 objectives The aim of this module is to provide the student with the capabilities to understand the cloud business models and the economic impact of these models Note: due to intellectual property reasons, the logotype of UCBL must remain in all utilisation of this course content, as well as the note copyright DUNOD mentioned in some slides with figures.

3 OVERVIEW Part 1: Cloud service model Part 2: Business model enactment Part 3: Integration of contractual relationships Transversal part: Communication and interpersonal relationships

4 Economicmodelimpactand cloud management PART 1: Cloud service model

5 According to you, What do you pay for when you buy a Cloud offer? Can you define exactly what is the offer you buy and why you ve bought it? What is the industrial organisation behind the Cloud service production? How can you characterise the Cloud value chain?

6 According to you, How can you characterise a Cloud service? In this part you will Learn basic elements to characterise Cloud context to be able to select an adapted Cloud offer Learn how to organise a Service production system Learn how to characterise a Cloud value chain

7 PART 1 OVERVIEW 1. Context 2. Services and service production 3. Organisation of the value chain

8 1. CONTEXT

9 According to you, How can you select a Cloud offer? Can you define what cloud is? How can you classify Cloud models? Do you know some Cloud providers? How can you describe some providers offers?

10 According to you, How can you select a In this part you will Cloud offer? Learn basic elements to characterise Cloud services Get an historical perspective on Cloud Computing Get information on different Public Cloud offers Apply this knowledge to define a target Cloud offer

11 Cloud computing? Cloud computing A down to earth reality Principle : resource sharing (storage, processing ) available through the network On demand possible reconfiguration A set of technologies Virtualization Creating a logical machine (virtual machine) deployable on a physical machine. Requires a specific layer to manage virtual machines on top of the operating system. Communication On-demand billing

12 Models in the cloud Cloud covers different things Features Elasticity On-demand Service Measurable services SaaS (Software as a Service) Service model PaaS (Platform as a Service) IaaS (Infrastructure as a Service) Deployment model Public Private Community Hybride

13 Why does the Cloud emerge now? Conjunction between Organization strategy of Information Systems Seen as a cost Can be outsourced Industrialization of Information Systems Middleware De facto Standards Development of communication tools Decreasing and low costs Internet has become a de facto standard

14 Evolution of computer architectures Years 60 / 70: File management systems / hierarchical databases Centralization Repetitive activities Years Relational databases -> May be opened / SQL interoperability? PC Distributed architectures Apparition of large scale software packages Years 95 / 2000 Back to centralization ERP Paradox: Centralization of the information system vs distributed decision Today Web 2.0, SOA Distribution / externalization Industrialization Cloud Computing

15 Evolution of needs Years 60-70: Programing is an art! High ownership costs Development of languages, databases, files systems Industrial organization of IT production. First attempts towards multi-media Years Relational databases -> openness provided by SQL Object Oriented Programing Software packages and on the shelf offers First step to industrialize of software production Years 95 / 2000 Large scale software packages Minor purchasing costs Major parametrization costs Proprietary environments Framework development Start industrialize software production environment Now Communication costs decrease Middleware logics Pay per use Open source software development (see figure) Mutation towards a service-oriented environment

16 Public Cloud: the offers Several offers by the major internet actors Exploit their unused resources. Scaled for peeks of demand World wide management exploits time zone differences Company business positioning Professionalization of the Web Web service architectures Capturing clients and users Management of free to use services Bargain on the activity growth Captive customer vision Software specificity (data ) Example: Google App engine, Amazon, Microsoft

17 Typology of offers (1) Historical actors Offer built to sell hardware IBM, HP Rationalize hosting platforms Public or private Secured data centers management Purely proprietary solutions Actors with professional ambition Aim at making a software model profitable Microsoft IaaS/ PaaS/ SaaSoffers Saleforce PaaS/ SaaS offers

18 Typology of offers (2) Other Clouds of constructors DELL IaaSOffer Launching of a VMWareplatform Abandon of public cloud in May 2013 Launching of private cloud with SUSE in 2013 Offer to support your Cloud Objective of selling hardware Selling added value services for the management of IaaStype platforms

19 Typology of offers (3) (Big) actors of the Internet Google PaaS solution Google Apps Engine Traditional tools (Python, Java, PHP ) But a personal data model» NoSQL» decommissionning problem SaaS Solution Google Apps» Mail, storage, agenda collaborative vision A unique model Free for basic (mass) use Pay per use Contract of service very reduced for the client

20 Typology of offers (3) (Big) actors of the Internet Yahoo An offer Sherpa NoSQL data storage REST services An evolving offer Dropbox At the beginning: accessible memory stick Offer extension towards directory management Data storage Free or on subscription Management of collaborators

21 Typology of offers (4) (Big) actors of the Internet Storage, MicroBlogging Social network dimension For the wider public To set a showroom for the company Facebook Twitter API publication The stakes Data = Oil of the third millennium Data conservation e.g.storage in Sweden «green» version for Facebook

22 Typology of offers (5) Sovereign Clouds Face the Patriot Act Support from the government Business intelligence stakes Make the existing infrastructures profitable Telecom operators Internet actors Land planning? Keep data centers in different areas Maintain local activity Enforce communication hubs

23 Typology of offers (6) Sovereign Clouds CloudWatt Orange and Thales with government support (Andromède project) Offers (under development) IaaS(openstack) Data Storage Collaborative space What is sold Target VM or storage Cloudwatt box(collaborative space) Companies or general public Intention of reversibility and openness

24 Typology of offers (7) Sovereign Clouds Numergy Owned by SFR (47%)/ Bull (20%)/ Caisse des dépôts (33%) Offer IaaS Data storage What is sold VM or storage in one of the 3 data centers Security Exploitation Bandwidth In fact: a Lego to build your Cloud Address big organizations Package offers for SaaS hosting

25 Typology of offers (8) New actors IaaS/ PaaS/ SaaSsector Suppliers: Software service companies Small business/ startups in software development Follow their clients demand» SaaS: Business area dependent ERP, workflow...» PaaS: provide their development environment» IaaS: Make secured data centers profitable Software affiliate companies seek to increase their benefits Community vision Banks, supply chain Actors of the Internet

26 Application: Identification of the type of target offer Use case presentation: based on the migration use case, try to identify the target cloud

27 Public cloud or private cloud? Public cloud Resources offered by the host No (or rather poor) control on the localization Outsourcing logic Private cloud Private use of resources provided by hosting companies Allows to control the location Use the company s resources as a cloud Allows optimizing their use Increase operating safety

28 New stakes XaaS strategies X for Infrastructure Platform Software Data Pay per use Avoid initial investment Automatic adjustment to consumption Risks according to scale factor Extension of the notion of operator New outsourcing logics

29 Motivations for a private could Exploitation Allows to centralize the infrastructure Reduces the number of physical equipment Eases swapping management Profitability Organizes the infrastructure as a service Allows hosting other services Scaling gain on Investments Exploitation Consumptions Human resources for exploitation

30 Motivations for public cloud Exploitation Benefits from a protected hardware environment Allows adjusting necessary resources Exploitation outsourcing Versioning management/ upgrades Profitability Avoid investments Reduced costs? Depends on requested size of the system Risks Data sharing? Decommissionning?

31 Motivations according to the service IaaS PaaS level (1) Transform investment into operating costs for outsourcing strategies Industrialised organization of operation Better availability Separate hardware costs from operating costs Complies with EA frameworks Facilitates the creation of a development environment Takes advantage of the platform s behaviors Risks of locks caused by data management

32 Motivations according to the level of services (2) SaaS Avoids all investment costs (hardware and software) Improved sharing abilities for collaborative business Risks on the data BPaaS Avoids configuration costs Community approach Risks on the data

33 2. SERVICES AND SERVICE PRODUCTION

34 According to you, What do you pay for when you select a Cloud offer? Do you buy a product, a service or a mix? What are the key elements to take into account to produce services? What is the client implication in the service production? What should be taken into account to size the system?

35 According to you, What do you pay for when you select a Cloud offer? In this part you will Learn basic elements on product-service systems Learn basic characteristics of service production system (names servuction) Get information on service production management Apply this knowledge to set a Cloud service production system

36 Tentative definition of a service Definition by opposition with Tertiary sector Do not belong to the primary sector: agriculture and fishing Do not belong to the secondary sector: industry Product vs service Tangible vs intangible Software and information Product: «tangible» goods : hard / soft / telecom Services: intangible goods Data Specific studies 36

37 Product service organization Product Shostack Matrix (1977) Salt Carbonated drinks TV-HIFI Ready to wear Caterer Fast food restaurant Tailored clothes Oil change IT adaptation Produit On-the-shelf software Family PC X-Play offer Professional PC Mainframe ERP Services Education Specific development Services

38 Servuction: production of services Servuction = Production system to produce services Integrates the role of the client Separate front office Contact with the client Hardware and staff Internal organization Can be industrialized Rational process organization Based on Eiglier and Langeard s model (in 1987) Integrate the service concept in a production logic

39 Servuctionin the IT context (1) Parameters to take into account Client relation Where is achieved the service At the client s place In the service company Level of expertise of the service Low High: need headquarter support Repeatable process? Process standardization Possible industrialization?

40 Servuctionin the IT context (2) Front office / back office separation Front office: interacts with the client Studies TMA at the client s place Development done at the client s place Back office Expertize center Remote maintenance Remote development Industrial rationalization of the back office Outsourcing Offshoring

41 Client s implication Service is defined as an interaction between the service company and its client Commercial relation Contractual dimension Can be separated from the execution Services meeting (defined by Czepeil in 1980) During the production of a service Interaction with the system of service (staff/equipment) Different types of relation Dominant Dominated Different types of participation Active Passive

42 Client s role (1) Different roles Definition of the service Promotion Innovation (demand of new services) Control of the service provision Realization (partial) Consumption Benefits for the client Match the needs Cost Appropriation?

43 Client s role (2) Management of functions 2 dimensions to take into account: Co-production Who achieve the work» Lowco-production whenthe client or the provider achieveseparatelythe (quasi) full work» Strong co-production when the client and the provider collaborate to produce the service Co-steering Who control the system» Lowco-steeringwhenthe control isachievedonlyby the client or by the provider» Strong co-steering when the client and provider collaborate to control the system Mangement of conflicts risks

44 Management of servuction Different problems Back-office organization Possible industrialization Sub-contracting Balance amongst the different missions Front office Organization Pressure from the client Possible to standardize? Demand management Just in time organization Is it possible to organize some client storage?

45 Production management logics Production managent Inventory based management: seasonal variation Pushed flow management: know the demand Just in time A service is ephemeral Cannot be stored Just in time logics Resource management? Act upon the demand Yield management Suppliers? Staff» Competencies Management of relations» outsourcing» Depend on contracts Required Resources time

46 Offer of Information Technology (IT) services Typology of IT companies (adapted from Vogler 2004: Management stratégique des services p. 49) Applications (what) Flat rate software Facilities Mgt Organization Specialized resellers Flat rate Small business Industrial Group Other ICT Clients (Who) Technologies (How) Project team

47 Cloud and servuction Different problems Back-office organization: Operation Choice of technologies Optimization of resource use Management of operation teams Front office organization Packaging of offers Elasticity Access to support Demand management Contact point for the services One-time SLA BLA are more complex BUT: do not forget to take the client s connection into account!

48 Sizing Take the needs into account Average Consumption peeks Saturation points Increasingly powerful processors but Bottlenecks Memory and swap areas Bottlenecks for QoS Disk access Network Stakes Charge balancing Optimized management of resources

49 Case study Construct a production system to support a IaaS offer Identification of necessary resources What do we offer to the client? What area do we cover?

50 Infrastructure management (1) Data center Hardware hosting Electric supply Air conditioning Racks Or units in Racks! Network connection Reserved bandwidth per client IP address management Host s private network Operation staff On-call duty organisation

51 Infrastructure management (2) Hardware Servers Computational power and available memory Access Persistence Disk type SSD for high speed access Think about the number of axis Volume is not everything Connection of equipment Fiber channel, Mirroring: possible or not Be aware of the capacity limits

52 3. ORGANIZATION OF THE VALUE CHAIN

53 According to you, How can you evaluate a service value? Do you know some value-chain models? How can a provider evaluate the value chain of its offers? Is the value evaluation similar for a client?

54 According to you, What do you pay for when you select a Cloud offer? In this part you will Learn basic elements on value chain models Learn how to integrate the service production process in the value analysis Get information on the elements to integrate in a Cloud service value chain Apply this knowledge to analyse a Cloud service value

55 Value chain Porter s model (defined in 1985) Company s static organization through the value chain A combination of 9 generic activities Bring value to the client Complete process analysis Demand Well identified Stable Looking for efficiency Cost reduction Problems Agility? Other efficiency criteria? Price adjustment? Towards a network model Support activities Base activities Supply logistics Company s infrastructure Human resource management Research and development Fabrication Purchase Logistics marketing Marketing and sells Services Mark-up

56 Towards a networked value model Introduced by Allee in 2002 Key points Competition based upon: Performance (cost/ speed ) Quality Business process driven by the value perceived by the client Centered on client Principal flow from the client towards the supplier More «volatile» demand The process is controlled by the user Encourage innovation General optimization Transparent and partnership-oriented Take exchanges into account Not one-way exchanges Tangible and intangible value creation Give great importance to knowledge

57 Value analysis (1) Traditional approach Cost analysis Add a margin Centered on the clients For what are they ready to pay? Impact on their «process» Exact answer to their needs Assessment covering all the actors Evaluate necessary customization Niche market Product with different variants

58 Value analysis (2) General analysis of different value chains Assessment according to the process Logics based on flows Analysis of waste points Analysis of flows convergence and synchronization Flow pulled from the client to the raw material Analyze the size of lots Identify the waste points Continuous improvement Re-synchronize the process, the size of lots,

59 Organization of the servuctionprocess Organization step carried out after the analysis of the value chain Identification of the object Organization of the flow including design, order, and the product itself Globally rethink the process Avoid the sources of wastes Deploy quality function by function Integrate support processes Organize the process Continuous flow Management of task complexity Smoothed schedule

60 Organization of global chain Cloud or Clouds Distributed system Access by the client Distribution of resources Different offers Hardware Platform Software brick Multiples actors Limits of responsibility Vision of the client Depends on the area covered by the supplier Advice obligation of the provider

61 Software bricks to build a cloud (1) At the beginning Manage the virtual machines Hypervisor Supervision «by hand» But also manage the resources and the provisioning Orchestration of resources Cloud operating systems The infrastructure is seen as a software system Tools for composition and provisioning Help for deployment Integration of middleware to support the platform Create an intermediary level

62 Software bricks to build a cloud (2) How to access the resources in the cloud? Importance of the network Between the client and the provider Between the nodes of the provider Bricks providing added value Security Management of supervision charges Support Importance of integrating the wall connection chain From the client s computer to the cloud resource Visibility on the quality of service/ quality of experience

63 Case study Analysis of the offer global chain

64 Analysis of an offer Identify what is looked for Sold object Level of service Obligation of service Identify how to carry it out Choice of technologies Impact on the means Evaluation of the value For the client and for the supplier

65 Cloud computing offers: attention points (1) Target performance level Cost of virtualization Possibilities of connections Ease to deploy Confidentiality management Who owns the hosted data? Access protection Different protection depending on the physical location Reversibility Interoperability of data Management of recuperation

66 Cloud computing offers: attention points (2) Cost management Related to the specificity of the development Logics of the Pay-per-use model Duration of the subscription Pricing policy Hidden costs Transferring / Getting back data I/O vsstorage Threshold on users number, bandwidth Evolution in the SLA Connection to the resources Management of subscription Limits of bandwidth on the client side

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