On the Case: HCL News Corp (News UK)

On the Case: HCL News Corp (News UK) HCL s feasibility assessment framework reduces cloud migration complexities Publication Date: 28 Nov 2014 Product code: IT0021-000045 Kedar Mohite

Summary Catalyst Newspaper, periodical, and book publishers are increasingly monetizing digital content to offset the impact of declining revenue streams from traditional print circulation and advertising. News Corp has been an early adopter of the paid content business model, with its digital media arm leveraging cloud services to enhance operational efficiencies and reduce the process costs of this change. Cloud infrastructure offers cost advantages (through converting Capex to Opex), increases storage, and provides agility, end-to-end automation, and mobility, but it comes with management and content structure risks. It is vital to mitigate these risks before migrating content to the cloud. In 2008, News UK partnered with HCL Technologies to streamline and transform its data center infrastructure, and add automated disaster recovery. This long-term data center transformation relationship led News Corp to choose HCL Technologies as the core partner for its "DC-3" strategic vision a project to create a virtual data center on its cloud platform. The global migration assessment program (part of News UK s cloud first strategy) was a natural extension of the DC-3 vision. It aimed to migrate 75% of the enterprise s applications to the cloud and reduce its data center footprint from 64 to 6. Ovum view The experiences of News Corp (including News UK) of working with HCL Technologies offers a powerful case study for traditional media enterprises looking to improve business agility, streamline processes, and reduce costs by migrating to the cloud. Cloud migration projects have traditionally witnessed high failure rates, highlighting the need for a strong investment case based on technical due diligence via a model view controller (MVC) framework, and for a long-term plan to mitigate content structure risks. HCL Technologies has secured a three-year cloud migration contract for News UK s EMEA business, asserting the growing penetration of Indian IT service providers into local European markets, and confirming the steady evolution of India-based vendors from providing entry-level infrastructure support services (first-generation IT service contracts) to offering high-value integrated portfolios (second-generation contracts). HCL Technologies cloud migration assessment framework determines the feasibility and cost of moving enterprise applications to the cloud, neutralizing the myth surrounding the non-feasibility of public cloud computing for large enterprises, though it primarily supports SME and start-up business environments. Cloud has traditionally been perceived as a complex process with high failure rates, due to the migration of non-feasible applications and miscalculated security and governance risks. The case of News Corp (including News UK) demonstrates a best-practice scenario to reduce these complexities. Key messages HCL Technologies tight relationship with Google, Microsoft, and Amazon allowed it to conduct deep-dive analytics to determine the cost of operating and maintaining a single application. This resulted in plans to migrate 40 core and non-core applications to the cloud by December 2014. 2014 Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 2

HCL Technologies will help News UK to migrate 89% of its enterprise applications to the public cloud by 2017. Globally, 83% of News Corp s applications portfolio will be on the cloud. HCL Technologies assessment of 2,000 enterprise applications across multiple locations will achieve proposed cost savings of $55 65m in the next three years. This is a strong reference point for HCL Technologies in the UK publishing market. Enterprises associate cloud computing technology with security and governance risks, but this case provides a best-practice approach to assessing the migration of applications to the cloud, using an MVC framework that encompasses multiple levels of data configuration and integration into a single repository, reducing the risks for media enterprises. Recommendations What type of customer could benefit from this IT service? In June 2011, the electronic version of The Sunday Times newspaper witnessed an exponential increase in online traffic of 150,000 subscribers, who were accessing it via desktop, ipad, and tablet PC devices. A lack of automatically scalable infrastructure to manage peak-time loads eventually prompted enterprises to adopt cloud-first strategic initiatives migrating their applications to the cloud from expensive on-premise infrastructure. Chris Birch, IT director of News UK, stated that "Post internal diligence, News UK needed technical validation and support, infrastructure feasibility insights, and cost analytics for the top management approval." Many publishing companies are focusing on real-time monetization of the data held in their premium digital content repositories, and are building online subscription access points on connected devices. These publishers can leverage HCL Technologies cloud services framework to analyze the feasibility of infrastructure to integrate enterprise applications on the cloud. The slow migration of media enterprises to cloud platforms in order to enhance operational agility is primarily due to a lack of cost analytics and reporting, as well as integration complexities. The industry-adapted MVC cloud migration assessment framework, which is similar to HCL Technologies assessment framework, reduces governance, content structure, and migration process mapping uncertainties. The following four key lessons can be learned from News Corp s experiences of using HCL Technologies to migrate its solutions to the cloud: The vendor should have a strong industry-specific IT services portfolio. This will enable the vendor to offer a prescriptive cloud migration process roadmap, which will reduce business discontinuity. End-to-end automation of enterprise applications compatibility testing facilitates a faster assessment cycle. The syndication of server and enterprise applications data into a single repository is the most significant process, constituting 40% of cloud migration assessment runtime (see Figure 1). It is essential for vendors to have a long-term relationship with the media enterprise in order to reduce data synthesis gaps and bottlenecks caused by a complex, single, enterprise-application ownership structure. In this particular case, HCL Technologies procured data from 125 application owners due to its long-standing infrastructure management services partnership with News Corp since 2008. 2014 Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 3

Post migration to the public cloud, poor project management can result in higher monthly costs hampering assessment synergies, due to pay-as-you-go overhead expenses (e.g. non-productive development environment runtime costs). Customer case file IT services data sheet: HCL News UK Table 1: Data sheet Vertical industry Media and entertainment Key SLAs Percent of enterprise applications migrated to public cloud (Dec 2014 2017); per application cloud "fitment" and costing reports (interim and final); zero business discontinuity; compliance and project management reviews Customer size Revenues (2014): $1,893m Employees (2014): 4,069 Key facts on ongoing support Multiple services: infrastructure support services for servers (Wintel and Unix); storage and backup; databases (SQL and Oracle); network security and monitoring; IT transformation support for moving SAP non-production services to public cloud (AWS) Priority issue Enterprise applications on Cloud migration roadmap public cloud; data center consolidation; a reduction in public cloud migration run-time through end-to-end automation of DNS, backup, restore, HA, and VPC Enterprise applications cloud fitment testing for North America and EMEA markets. Initiated public cloud migration of core enterprise applications in EMEA (May 2014) Type of service Cloud migration assessment for News Corp (including News UK, Harper Collins, and Dow Jones businesses). Length of contract Four months, followed by three-year public cloud migration contract for EMEA Source: Ovum Background News UK s flagship national daily newspaper, The Sun, has the largest print paid circulation in the UK at 2.019 million (as of September 2014, according to ABC), a decline of 8.6% on last year. News UK has a strong hold in the UK national newspaper market, with four core titles (The Sun, The Sun on Sunday, The Times, and The Sunday Times) controlling 33% of total domestic sales in June 2014. However, with an increase in consumer demand for consumption of news, information, and media content on multiple devices, News UK has had to invest to extend its footprint into mobile and web platforms. This has driven the purchase of premium digital sports rights for the English Premiership Rugby Union, English Cricket, Gaelic Athletic Association, and Uefa Champions League. This higher dependency on the distribution of high-value content via new media has laid the backbone for cloud computing, as it has facilitated the reusability and interoperability of metadata across diverse geographies. 2014 Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 4

The changing business environment and steep competitive pressures from peers such as The Daily Mail (online readership of 6.08 million) and The Guardian (online readership of 5.2 million) have led News UK to embark on a rapid data center streamlining and cloud migration program. News UK has a vertically diversified business model offering consumer and institutional product portfolios, along with third-party contract printing services. This operating complexity increases the challenge of assessing the process of migrating enterprise applications to the cloud. Consequently, News UK needed an IT services vendor with a mature industry-specific service portfolio, a scalable partnership with Amazon Web Services (AWS), and an extensive IT transformation ecosystem. HCL Technologies secured this contract despite healthy competition from other major players. HCL Technologies started the due diligence of applications and infrastructure data synthesis in close collaboration with News UK service applications owners. The multiple stakeholder ownership and data redundancy risks were initially neutralized by assigning a single point of contact per application. Implementation and results Traditionally, the core advantages of the cloud platform were faster go-to-market, access to third-party solutions and infrastructure, and streamlined business processes at lower initial capital expenditure. This is shifting toward media enterprises integrating cloud infrastructure and services as an integral part of their core technologies. News UK is riding the next wave of cloud, using the platform to streamline its business processes and develop new business, such as online subscription access points on connected devices. During the four-month cloud migration assessment contract, HCL Technologies took the following steps: It consolidated the majority of server and enterprise applications data into a single repository with automated tools (ADDM and Tideway). HCL Technologies also leveraged its "business as usual" team at News Corp (including News UK) to improve the reliability and validity of information. Using its MVC framework, it segmented the collated data into raw applications, business logic, and presentation metadata for News UK stakeholder validation. It used the Google Apps collaboration tool for the process. It devised an eight-layer cloud migration feasibility test for individual enterprise applications, with a strong emphasis on security and governance (hardware dependency, non-x86 dependency, storage and network latency, multicasting, compliance, desktop apps, virtualization support, and hardcoded). Amazon AWS acted as the support partner. In the reporting stage, it segmented enterprise applications into three core categories: feasible to move to cloud, feasible to move from physical to virtual infrastructure, and suitable to shift from legacy to new infrastructure. HCL reported the cost to run an application on a public cloud to News UK, using Google Apps and Microsoft Office as a presentation interface. 2014 Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 5

Figure 1: HCL s cloud migration assessment process map (with weightings) Source: Ovum and HCL The cloud migration assessment project was completed in the proposed timeframe of four months, but it faced interim challenges in three areas: Data unification In the initial phase of data synthesis, minor inaccuracies and intervals delayed the validation process. Collaboration tool limitations The collaboration tool struggled to seamlessly unify the huge volume of data from multiple locations under a single repository. For example, higher collaboration runtime was required for SAP analytics applications with an average size of 10TB. Changing cost estimates for running an application on cloud One of the core objectives of conducting cloud migration due diligence was to determine the cost per application to News UK. In February 2014, AWS drastically reduced the pricing of its S3 cloud storage service by 40%, delaying in the interim HCL s reporting of the cost per application. HCL s feasibility assessment provided News UK with comprehensive analytics of the feasibility of moving enterprise applications to the cloud. It subjected every enterprise application to the eight-layer cloud migration test (hardware, compliance, and storage feasibility), providing News Corp and News UK with pain points on a regional basis. For example, multi-casting was the primary migration challenge in North America, while the compatibility of hardware-based applications was the main challenge in EMEA. After successfully completing the due diligence project, and following its long-term data center consolidation relationship with News UK, HCL Technologies secured a three-year cloud migration contract in May 2014 for News UK and its sister companies Harper Collins and Dow Jones for the EMEA market. Figure 2 shows the strategic benefits of the cloud migration assessment and of moving 75% of enterprise applications to the public cloud. 2014 Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 6

Figure 2: News Corp (including News UK) cloud migration roadmap Source: Ovum and News UK Media enterprises are slowly increasing their investments in cloud technology, and this case highlights the importance of tightly integrating process-driven cloud migration due diligence with qualification of the compatibility of automated applications, and of working with an IT services provider with a strong partner ecosystem. Appendix Methodology This independent research report was prepared based on interviews with News UK and HCL Technologies executives. The following executives at these companies provided valuable insights to improve the depth and insight of this case study: Chris Birch, IT Director, News UK Atin Agarwal, Senior Delivery Manager, HCL Technologies Debabrata Dey, Relationship Manager, HCL Technologies Anuj Mehrotra, Senior Architect, HCL Technologies Further reading HCL extends service verticalization with launch of "Media Lab as a Service," IT0006-000246 (September 2014) Author Kedar Mohite, Senior Analyst, Media & Broadcast Technology kedar.mohite@ovum.com 2014 Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 7

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