The Why of Hybrid Cloud: 5 Use Cases, and Where to Start

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1 The Why of Hybrid Cloud: 5 Use Cases, and Where to Start January 2016 A research report prepared by:. Publication sponsored by:

2 TABLE OF CONTENTS TABLE OF FIGURES Introduction 1 Characterizing Hybrid Cloud 1 Planning for Hybrid Cloud and an Optimized Infrastructure 2 Use Cases for Hybrid Cloud 4 Getting Started 6 Sponsor Perspective: We are Hands-on, you can be Hands-free 8 Figure 1: Survey Data Shows Hybrid Cloud Blending Over Time 1 Figure 2: Which Business and IT Improvements Drive Cloud Adoption? 3 Call-Out: Public or Private? 3 Call-Out: A Note on Hybrid Cloud Suitability for Legacy Workloads 6 About this Report Saugatuck Technology, an ISG business. is solely responsible for the content of this report. Unless otherwise cited, all content, including illustrations, research, conclusions, assertions and positions contained in this report were developed by, and are the sole property of, Saugatuck Technology, an ISG business. The research and analysis presented in this report includes research from ongoing Saugatuck Technology research programs, including our global survey and interview work with user enterprise business and IT leaders, briefings with providers, and analysis of publically-available market information from multiple sources. The publication of this report was funded by Dimension Data. About Saugatuck Technology Saugatuck Technology, an ISG business, provides subscription research and advisory consulting services focused on key market trends and disruptive technologies driving change in business computing. For more information, please visit or call i

3 Introduction The question of whether or not a business enterprise of any type or size will use some form(s) of hybrid Cloud IT for its systems, software, and operations is already answered, and the answer is an emphatic Yes. Research by global business IT advisory and consulting firm Saugatuck Technology indicates that between two-thirds and three-quarters of user enterprises today either have in place at least one multi-cloud IT environment, or expect to within 24 months. Now, the question is, how do we do Hybrid Cloud the right way, so that we position ourselves in the best way possible for whatever business, technology, or market change comes at us? This positioning paper by Saugatuck Technology builds on data and insights from our global survey and interview programs to explain the core nature of Hybrid Cloud, to provide examples of where and why hybrid is effective in improving the ability to do business, and to offer first steps toward enabling the optimal hybrid Cloud environment for your business. Characterizing Hybrid Cloud Hybrid means much more than simply using multiple Clouds. A hybrid environment typically spans two or more of three infrastructure types traditional on-premises, public Cloud, and Private Cloud - typically with one or more application workloads dispersed across them. And while, as noted above, our research indicates a large and growing percentage of firms utilizing at least one type of Hybrid Cloud environment, that research also indicates that the scope and shape of Hybrid Cloud is changing, and will change. Figure 1 uses our latest research data to show the changing nature of Hybrid Cloud from 2015 through Figure 1: Survey Data Shows Hybrid Cloud Blending Over Time Source: Saugatuck Technology 2015 global infrastructure survey; n=317 1

4 We see not only growth and change in what hybrid means over time; we also see the need for increasingly comprehensive Cloud management. Hybrid Cloud environments are unlikely to get simpler over time, as the range of resources used within these environments will shift and grow as business and market needs shift and grow. Even in environments where only a few Cloud-based resources are used, the dynamic nature of these environments will be beyond the ability and resources of most user enterprise IT organizations to manage effectively - so we also see a rapidly increasing need for managed services to address the resulting needs for resources and skills, while enabling the firm s ability to innovate and reduce costs. Planning for Hybrid Cloud and an Optimized Infrastructure Planning for something that already exists in many enterprises may seem like closing the door after the horses have left the barn. The reality is that Hybrid Cloud is still very much in its infancy in most cases. While we do see a substantial majority of enterprises reporting some Hybrid Cloud in use, what we find when digging into the data is that today s Hybrid Cloud use tend to be very limited. We mostly see trial efforts, proofs of concept, and a few function- or department-specific instances. Hybrid Cloud is not, yet, part of the overall IT or business strategy and plan. The first thing to accomplish in developing your Hybrid Cloud strategy and plan is to understand why and how Hybrid should be part of your overall infrastructure approach and path. More than 10 years of Saugatuck Cloud IT research tells us that there are three typical entry points into any organization s Cloud IT migration, as follows: Substantial change in business processes requiring IT infrastructure change; Wholesale end-to-end upgrade of IT structure and organization to optimize infrastructure(s), using Cloud or traditional IT where appropriate; and Tactically strategic IT investments that solve some problems right now while laying paths for long-term capabilities and improvements. It s helpful to note that an enterprise may start at one and move to another, mostly because of the relative newness of the Cloud phenomenon as a core and critical aspect of enterprise IT. That being said, through the next few years at least, we do expect to see more the tactically strategic Cloud approaches than wholesale changes. This is a very typical migration approach followed by adopters of almost every major form of IT when that IT is relatively new. Frankly, as of 2015, almost any implementation of new IT should include evaluation of a Hybrid Cloud environment. And in Saugatuck s view, no IT leader today should consider any change to their IT infrastructure without including Cloud, as long as they want or need to optimize their IT infrastructure to enable the technological and business speed, adaptability, and agility that is increasingly required to compete in almost any marketplace while increasing the ability of the IT organization to serve the enterprise, at the lowest possible cost. 2

5 Figure 2: Which Business and IT Improvements Drive Cloud Adoption? Public or Private? Source: Saugatuck Technology 2015 global infrastructure survey; n=317 In a Public Cloud, whether for SaaS, PaaS or IaaS, multiple organizational entities can access and execute IT workloads on a common underlying hardware and software infrastructure. In a Private Cloud, only one organizational entity can access and launch workloads on the infrastructure. Figure 3 provides a summary table to help illustrate key differences that should help IT and business leaders make their choices. Figure 3: Public and Private Cloud Archetypes Source: Saugatuck Technology, an ISG business 3

6 Use Cases for Hybrid Cloud Not surprisingly, the typical use cases for Hybrid Cloud tend to follow this combination of tactically strategic adoption methods on paths toward both IT and business improvement. While each of these can provide significant IT and business improvement up front, they also enable valuable long-term positioning and capabilities and provide training for future, more core-business-oriented Hybrid adoption and management environments. Five Hybrid Cloud use cases that we frequently encounter are as follows: 1. Bridging and extending heritage systems and workloads. We often see this in enterprises with traditional ERP or other large-platform business management software, but also with smaller divisions or subsidiaries for which that traditional software is simply too much. A two-tier Hybrid Cloud approach enables the smaller entity to link with the larger, corporate system, either directly or via Cloud-based solutions architected to interoperate with the corporate system. We also see Hybrid Cloud used to enable traditional systems access to Cloud-based services that enhance or extend their capabilities and lifespans (e.g., advanced data analytics/big Data). Using a Private Cloud in these environments enables advanced security and greater reliability, while providing flexible and adaptable expansion and extension of systems. Saugatuck has worked with global heavy equipment manufacturers and beverage distribution firms that utilize varying combinations of Private and Public Cloud-based infrastructure and software to enable more controllable access to critical data processing and storage, unified financial reporting, and resource management with subsidiaries in both advanced and emerging economies, and in large cities or small remote locations. 2. Trial workloads/proofs of concept. The combination of Cloud-enabled speed and power with the increasingly wide availability and relative affordability of Cloud-based business IT resources enables more firms to attempt more new and different ways of doing business, or of creating new businesses entirely, than ever before. For example, since 2010, Saugatuck has worked with several global financial services and social media firms to develop Cloud-based advanced analytics trials that in turn lead to the creation of new Digital Businesses, and the creation of new and improved communications with partners, customers, investors, and regulators. Combinations of Public and Private Cloud services deliver these firms a range of cost-effective and secure access to multiple types of IT resources that grow or change at unpredictable levels, depending upon trial or project needs and timeframes. One of the largest US-based family healthcare and consumer goods providers has been dynamically reshaping its Hybrid Cloud environment since 2012 to enable a shifting and growing range of internal pilot programs that include advanced data analytics, consumer environment simulations, and drug interactions. They credit their Private Cloud providers with helping to manage and optimize their vigorous and shifting resource requirements. 4

7 3. Cloudbursting/Flexible system requirements. One of the chief challenges in IT investment and management for decades has been the requirement for adequate compute and storage capabilities for peak loads that may only occur a few times per year. Traditionally, retail and some manufacturing sectors have been the poster children for such requirements. But given the increasingly global nature of business opportunity and competition, every industry from consumer goods to health care has become more reliant upon increasingly-variable compute and storage resources. On-demand Cloud-based capabilities provide the best sources for these; Hybrid Cloud environments provide the greatest possible flexibility and control. For example: Hybridized, on-premises-plus-private Cloud environments deliver integrative, predictable processing and storage capabilities that help gas/oil/electrical energy producers in the US and Europe manage logistics and delivery while providing predictive analytics regarding peak and off-peak demand periods. In some cases, additional Public Cloud capabilities provide these companies with combinations of additional compute power and management software enhancements/features for specific instances that occur temporarily, sometimes unpredictably. 4. Agile software development/devops. The ability to code, test, and distribute business software quickly as needed has been a goal of developers for decades. Flexible, Hybrid Cloud resources enable this cost-effectively in secure, internal sandboxes and in public-facing (often open source) environments. The accelerating move toward DevOps makes Hybrid Cloud an even more advantageous approach, by enabling both tightly-integrated and loosely-coupled collaboration and integration between systems, software libraries, developers, and business function leaders. Well-managed Private+Public Cloud environments provide DevOps practitioners within and across enterprises with the benefits of rapid build, iteration, and deployment; faster, streamlined delivery to more entities and environments; and maintaining a highly-integrated, collaborative team through easily-coupled workspaces and interfaces. 5. Data security/regulatory requirements. One of the faster-growing applications of Hybrid Cloud, especially using Private Cloud services and associated security and managed services, is in compliance with government regulations, especially those regarding data security. Where country-specific data security and location requirements exist, hybridized Cloud-plus-on-premises approaches enable storing and utilizing data where required by local/national regulation while making the relevant business applications/workloads globally available. Private Cloud capabilities are also used by large and small firms to make their own data securely available in multiple locations across partner systems and operations. For example, Saugatuck has worked with a European-based financial services firm that utilizes a US-based partner s Private Cloud-based 5

8 A Note on Hybrid Cloud Suitability for Legacy Workloads accounting and analytics software and infrastructure to streamline and speed up its own quarterly and monthly closings while complying with European data privacy and control requirements. This is an area where the expertise and ability of forward-thinking Cloud services providers is critical. In Saugatuck s experience, not every existing IT workload is suitable for Cloud, and vice-versa. As recently as 2014, few than 40 percent of existing user IT workloads were deemed to be good candidates for movement to either Private or Public Clouds. The key reasons for this are relatively simple: (a) Until recently, few business software applications or associated workloads were architected to take advantage of the variable, off-premises, network-linked capabilities of Cloud; and (b) The costs of revising these applications was often prohibitive, especially when the workloads were optimized to run in certain ways at certain times in certain conditions. Conversations with progressive CIOs who have done the hard work of assessing their portfolios and determining what makes sense from an ROI perspective suggest that the most sophisticated IT organizations have found that 15 percent to 25 percent of their existing workloads represent a realistic and achievable range for Cloud migration or extension. That being said, since 2012 we have seen a veritable explosion of Cloud-first software development and adaptation among all types and sizes of user enterprises, resulting in a rapidly-growing number and range of legacy, Cloud-suitable workloads. Additionally, advances are being made almost weekly in user interface (UI) and application programming interface (API) development and optimization that enable vastly-improved capabilities. And finally, advances by leading providers of Cloud services availability, security, and associated managed services ensure that most user firms will be able to benefit substantially from Hybrid Cloud workloads. Getting Started In this paper, we ve only been able to provide a relatively high-level set of examples and important parameters for considering and building the business case for Hybrid Cloud. We strongly suggest that readers familiarize themselves with two sets of characteristics: Suitability of workload and Cloud type; and Capabilities of Cloud providers. We laid out the basics of workload/cloud suitability above. Much more information and guidance specific to workloads, environments, organization types, and markets is available from several sources. The best types of sources for this information and insight include the following: Independent IT research and analysis firms focusing on leading-edge enterprise IT development and adoption; Independent IT consulting firms familiar with rapidly-emerging and innovative Cloud adoption and adaptation in your market(s); and Cloud services providers specializing in Hybrid Cloud and associated managed/management services. Independent research firms such as Saugatuck perform a variety of roles for all parties involved, but are most valuable as sources of peer adoption trends, critical challenges, and guidance insights in the early stages of Hybrid Cloud 6

9 consideration. Independent IT consultancies (including VARs and SIs) are valuable sources of market-, provider-, and function-specific knowledge and insights relevant to your business IT environments. And while we understand that buy-side cynicism may dismiss some of the value of Cloud services providers as sources of Hybrid Cloud insight and guidance, there are no other entities in the marketplace with as much knowledge regarding Cloud adoption, usage, value, and challenges. Obviously, any provider has to develop and prove substantial trust with its clients (and partners) in order to be taken seriously as a source of credible information and guidance. The best providers have done this through years of Cloud services development, adaptation, delivery, and reliability. We do not (yet) include peer groups as primary sources of useful information in circumstances like this because of the relative newness of Hybrid Cloud as a standard source of enterprise IT infrastructure and operations. To be frank, while the vast majority of your peers are adopting some form of Hybrid Cloud, at this stage it is most likely that they are making a fairly wide range of initiatives that are unique to their business situations, and they are most likely to be early in the learning process. To sum up, we recommend the following Hybrid Cloud approach for all user enterprises: Determine your core IT approach and the reasons for this. Are you looking toward a wholesale change of business process requiring a core IT infrastructure change; an end-to-end change of IT structure and organization to optimize infrastructure(s), using Cloud or traditional IT where appropriate; or a more tactically-strategic, incremental path toward a hybridized future as you develop knowledge and expertise? Based on this core approach, determine which type(s) of Cloud make the most sense for your business and associated IT (e.g., infrastructure, applications, interfaces, etc.). Use the information in Figure 3 to help understand the basics of Cloud type suitability. Next, dig into the relative suitability of your existing, on-premises software and associated workloads for Cloud deployment and optimization. This is likely to be the most resource-consuming task regarding Cloud adoption and migration, and will be beyond the costeffective capabilities of most firms. This is also where a qualified consultancy or Cloud services provider will truly earn your trust, by realistically assessing your business capabilities and needs versus changing on-premises and Cloud-based software and infrastructure requirements and capabilities and the Hybrid Cloud managed services that will enable long-term optimization in all circumstances. 7

10 SPONSOR PERSPECTIVE: WE ARE HANDS-ON, SO YOU CAN BE HANDS-FREE Whether you require private, public or hybrid cloud, Dimension Data Cloud Services is the preferred destination for enterprise production applications and workloads offered in OpEx models. Dimension Data Cloud Surround is a portfolio of service delivery platforms and managed service delivery platforms and managed services that leverages our deep heritage in networking, storage, security, advanced automation, end user computing and mobility to deliver enterprise production applications and workloads to the cloud. Organizations can now free up resources to drive greater growth. Dimension Data brings cloud and managed service solutions to the market by leveraging global service delivery capabilities, 18 global data centers across five continents with local and proven technical expertise. 25,000 people in more than 50 countries across six continents Local language capabilities, with local in-country support services Dimension Data employees fulfill local client requirements with management of multi-vendor, multi-cultural environments Dimension Data Cloud Meets Client Needs, Today and Tomorrow Organizations are realizing the benefits of cloud. IT transformation in the digital economy enables organizations to extract even greater value so they can drive growth and innovation in their business. Business wants greater agility; offering the right cloud delivery platforms, managed services in an OpEx model that helps achieve their goals now Shadow IT is shifting responsibility to IT to deliver enterprise production applications and workloads due to lack of skill set, resources and risk Placing selected enterprise production applications and workloads on cloud continues and private is the preferred model IT is automating and improving efficiency of managing mode 1 and looking to cloud for mode 2 speed is the need for the digital enterprise Dimension Data addresses client needs today providing automation and efficient management of the in place infrastructure and the agile, resilient cloud in all models for companies embracing digital to enhance relationships with customers and improving employee productivity. Dimension Data provides the right cloud all in an OpEx model with optimal security. Dimension Data Strengths Client-centric with proven track record Proven and scalable cloud delivery platforms and managed services leveraging infrastructure components from EMC, Cisco and F5 Global footprint that addresses the needs of multi-national organizations for compliance and security Purpose built clouds for core systems from partners like SAP and Oracle Dimension Data combines vertical expertise our extended portfolio of products and services achieving a digital strategy, our strategic alliances our record for excellence in global service delivery to provide our clients with the best business outcomes. 8

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