This IDC white paper discusses the adoption of cloud services across Australia and New Zealand. Based on IDC's current research, the paper provides an overview of cloud computing; key drivers for adoption; major inhibitors; current usage status of cloud services; potential workloads that could be migrated into the cloud; and, a road map for cloud deployment.

1. WHITE P APER
The CIO's Dilemma: Maximising the Benefits of Cloud
Services
In association with: HCL Technologies Infrastructure Services Division (HCL ISD)
Raj Mudaliar
Doc # AU29011T- March 2011
EXECUTIVE SUMM ARY
Recent volatility in the global economic environment has created operational
challenges for businesses.. Additionally, emerging technologies coupled with the
proliferation of devices such as smart phones, media tablets, for example the iPAD,
better Internet connectivity, and the fast growing influence of social networking
www.idc.com
platforms are challenging CIO's to constantly innovate and think afresh their IT
strategies.
Cloud computing has emerged as one of the most disruptive service delivery models
that will alter the consumption of IT services. Cloud services genuinely offer flexibility,
P.65.6226.0330
ease of use and faster delivery of services at a significant lower cost of entry. Interest
has moved from the 'why' to the 'how?'. How can cloud services be operationalised?
What type of cloud solutions should be adopted public / private / hybrid? What
workloads can be shifted into the cloud? What should the migration plan look like?
How can the virtual infrastructure be managed?.
Asia/Pacific Headquarters: 80 Anson Road, #38-00 Singapore 079907
IDC's Asia/Pacific (Excluding Japan) Cloud Computing Survey 2010 indicates,
Australia is one of the leading countries in the region for the adoption of cloud
services. The survey reveals around 35% of Australian respondents currently use
cloud services, 7% are actively researching or testing cloud computing now, and
another 15% have plans to use it in the next 6 to 12 months. On the whole,
organisations in the Asia/Pacific (excluding Japan) region currently believe that a
private cloud environment is more suitable for almost all applications, with the
exceptions being VOIP and collaborative applications.
IN THIS WHITE P APER
This IDC white paper discusses the adoption of cloud services across Australia and
New Zealand. Based on IDC's current research, the paper provides an overview of
cloud computing; key drivers for adoption; major inhibitors; current usage status of
cloud services; potential workloads that could be migrated into the cloud; and, a road
map for cloud deployment.
SITUATION OVERVIEW
In general, business confidence is bullish this year. However, with ever-increasing
competition and the need to leverage competitive advantage to grow market share,
organisations must look to improve current business processes, enhance productivity,
while simultaneously lower costs.
Based on IDC's Forecast for Management Survey 2010 (please refer to the Appendix
for detailed information on the survey methodology), Figure 1 provides an aggregated
view of ANZ respondents' top CIO challenges for 2010 vis-à-vis previous years. Not
surprisingly the ranking of 2009 and 2010 priorities are similar – particularly the top 4.
© 2011 IDC

2. FIGURE 1
Top CIO Challenges in ANZ
Source: IDC Forecast for Management Survey, 2006-2010
ִ Reducing costs: Successful CIOs were those who managed to control or
reduce spending, whilst making the most of existing assets through balancing
business demand and maximising ICT for efficiency and productivity gains.
ִ Recruiting and retaining staff: This is partly related to the retirement of the
‘baby boomers’, who carry many mainframe skills, and the specialised type of
network and virtualisation, IP skills in demand today.
ִ Meeting user expectations: Users expect enhanced functionality and better
ease of use from their IT assets. This is being driven by the proliferation of
devices such as smart phones, media tablets (the iPAD) and the growing
influence of social networking sites. Customers today demand a similar
experience in their day to day business transactions.
It is imperative for organisations to reconsider the design of their underlying IT
architectures in order to enable customers and growing communities to access their
services any time anywhere. As a response, organisations are upgrading their
infrastructure and networks, whilst continuously improving business processes
knowing that the customer can always churn to an alternative provider.
Interestingly, from a business point of view, the number one priority for organisations
is to improve infrastructure to increase productivity (Figure 2). Other considerations,
like exploiting market conditions efficiently and speed to market have also gained
greater importance. Cost cutting is ranked lower in organisational priorities versus this
time last year; however it is a still a key concern. .
2 ©2011 IDC

3. FIGURE 2
Key Business or Organisational Priorities in ANZ
Source: IDC Forecast for Management Survey, 2010
Cloud Computing: Key drivers / inhibitors
Organisations are now realising the value of cloud services. Cloud computing holds
the potential to substantially improve IT productivity and over the next five years, IDC
expects strong investments in the cloud as a result.
At a high level, cloud services can be described simply as consumer and business
products, services and solutions delivered and consumed in real-time over the
Internet. Some of the main drivers for cloud computing include:
ִ Continued shift in funding of IT from a capex to an opex basis: The pay-as-
you-use functionality built in cloud based services helps better align with
fluctuating business requirements, without necessitating major capital IT
investments. Organisations are reviewing their current IT infrastructure with an
intent to identify opportunities where they can leverage advantages of a cloud
based offering as well as move to an opex model to consume these services.
ִ Growth: Organisations need to be nimble and fast, exploiting growth
opportunities as they arise in the market, while having the operations and
infrastructure resources at the back end to take advantage of any existing
situation. Cloud-based services enable this. Cloud services scale easily, provide
the latest technology available (with upgrades) and allow more manageable
3 ©2011 IDC

4. version control across the organisation resulting in faster deployment of Go-To-
Market strategies.
ִ Trend towards outsourcing: A shortage of skilled IT workers in ANZ and the
high costs of managing an internal IT workforce is leading organisations to
consider outsourcing. Cloud-based services allow an organisation to outsource
internal IT operations and infrastructure to a competent third party. The service
provider brings in the required skills, technical competencies and expertise to
deliver the services, relieving to a great extent the staffing pressures on the client
organisation.
The major inhibitors to cloud services include:
ִ Security: Business critical and sensitive information that sits outside of the
company remains a sticking point for many organisations. That said, this issue is
well known in the vendor community, and they are releasing solutions and
services with increased security measures to assuage these concerns.
ִ Performance and availability: Organisations are likewise concerned about the
ability to access information in the cloud when it is needed. Linked to this, is the
ability of the cloud service vendor to provide for any necessary 'surges' in
demand, increasing capacity to the organisation without impacting performance.
Adopting Cloud Services: Where are we on
the journey?
IDC's Asia Pacific (Excluding Japan) Cloud Computing Survey, 2010 indicated that
the overall trend in the region to adopt cloud services is positive. The survey was
conducted across six countries that included Australia, China, India, Korea,
Singapore and Hong Kong. Based on the responses, 24% of organisations in the
region are currently using cloud and 6% are actively researching or testing cloud
services.
FIGURE 3
Usage of cloud Services and Technologies
n=600
Source: IDC Asia Pacific (Excluding Japan) Cloud Computing Survey, 2010
4 ©2011 IDC

5. A further 23% of respondents are planning to use cloud services over the next 12
months. The remaining 47% of organisations in the region have plans to use cloud
services at some point after the next 12 months.
At the country level, Australia is one of the leaders, with 35% of the respondents
currently using cloud services, 7% actively researching or testing cloud computing
now, and another 15% planning to use it the next 6 to 12 months.
To illustrate this point, the Australian Government, with an estimated ICT spend of
$4.3 billion per annum, released a Cloud Computing Strategic Direction paper in
January 2011. The main objective of the paper was to develop a pathway for
Government agencies to rationalise their ICT asset base and adopt cloud computing
where appropriate. Some of the agencies have already commenced small pilots and
proofs of concept to evaluate the potential of platform and infrastructure cloud
computing.
Expected Application Types in Private and
Public Cloud for Private Cloud Users
Workloads remain the critical pivot point when deciding on public versus. private
cloud deployments. Organisations within the Asia Pacific (excluding Japan) region
currently believe a private cloud environment is more suitable for almost all
applications, with the exceptions being VOIP and collaborative applications (Figure 4)
FIGURE 4
Expected Application Types in Private and Public Cloud
n=109 for public cloud, n=366 for private cloud
Source: IDC Asia/Pacific (Excluding Japan) Cloud Computing Survey, 2010
Organisations are significantly more comfortable utilising a private cloud environment
rather than public one for business/transactional applications, IT infrastructure and
storage/storage management.. With regards to workload distribution, organisations
are more likely to use the public cloud for applications (CRM, ERM, email and
5 ©2011 IDC

6. collaborative), while using the private cloud more for infrastructure. The workload
within the private cloud will be more heavily utilised for Web infrastructure, IT
infrastructure and storage/storage management.
Types of External Vendor Used for Private
Cloud Implementation
There are a number of service-level issues related to cloud services, which require
careful consideration. For example, Business Continuity, Disaster Recovery (BCDR),
data security, vendor continuity, among others. The management said services, each
with different commercial terms, service levels and pricing models, can be a complex
matter. This requires mature vendor-management capabilities in-house.
For Australia, the most common cited external vendor for implementing a private
cloud within the organisation (see Figure 5) is an ISP or Telco provider (32%),
followed by an infrastructure technology vendor (29%), and systems Integrator or
professional services provider (25%).
FIGURE 5
Type of External Vendor Used for Privat e Clou d
Implementation in Australia
n=28
Source: IDC Asia Pacific (Excluding Japan) Cloud Computing Survey, 2010
Road Map for Deploying Cloud Services
Assessing the suitability of an application for cloud deployment has dimensions
beyond technology. Rather than delivering the project with the traditional waterfall
approach of Design, Build, Deploy and Run - Cloud Services require a more iterative
delivery model, which follows:. (seeFigure 6) :
ִ Readiness Assessment
What business benefit are you looking to achieve by using a cloud-
computing model?
What are the application characteristics and its demands for elasticity?
What set of cloud capabilities are required to achieve the objectives for
which the solution is designed?
6 ©2011 IDC

7. ִ Cloud Strategy Development
What does a risk analysis reveal?
Can you source the service from the Public Cloud or build a Private Cloud?
ִ Implementation and Transformation
How will you design, develop, and test the solution?
What operational mechanisms are needed to support either public or private
solutions?
ִ Change Management
How will you manage the governance of the solution?
How will you pay for it, and are costs satisfactorily predictable?
ִ Ongoing Management
What will be the ongoing service level management / IT service
management criteria for evaluation?
What type/nature of structure would be required for Internal Support?
FIGURE 6
Deployment Road Map for Cloud Services
Source: IDC, 2010
HCL ISD's Role in the Cloud
HCL Technologies Infrastructure Service Division (HCL ISD) is the fastest growing
line of business of HCL Technologies and is part of a $5.7 billion HCL Enterprise. Its
scale of Infrastructure operations involves centralised management of globally
distributed assets of over $1 million devices across 31 countries resolving over 10
million helpdesk calls per annum. HCL ISD's team of over 15,000 professional’s
service more than 250 infrastructure services customers, including 17 Fortune 100
companies across 9 industries.
HCL has a strong belief in its 'advise to execute' philosophy, where it looks at long
term and mature partnerships with its customers. Hence, HCL looks at a cloud
journey in an integrated and cohesive fashion whereby the complete life cycle
7 ©2011 IDC

8. (assessment, implementation and migration operations) is delivered in an integrated
fashion to yield maximum benefits for customers.
Cloud management being a major area of focus, HCL has been able to drive
innovation across LOBs and develop intellectual property around infrastructure
monitoring and management, SaaS (Software as a Service) enablement, private
cloud deployment and provisioning, metering and billing and cloud gateways for
public clouds.
HCL's strategy focuses on providing two types of cloud services that will assist CIO's
to maximise the full benefits from the cloud, primarily in the role of Cloud Enabler and
Cloud Provider:
ִ Cloud Enabler: As a service integrator through its broad range of offerings
including: Cloud Consulting & Assessment services, Cloud implementation &
migration and Cloud Management and Operations.
Cloud consulting and assessment: HCL’s Cloud Assessment Framework
helps customer in mapping their IT landscape, business and cloud
requirements into a single perspective. In other words, it helps customers
identify the applications or specific IT environment, which can be moved to
cloud and to what type of cloud to move to (public / private / hybrid); as well
as develop a business case (TCO & ROI plans).
Implementation example: Client is a large product development company.
HCL has closely worked with their IT division and has undertaken feasibility
analysis for a large set of applications to migrate them on Windows Azure
Platform.
Cloud implementation and migration: HCL leverages its expertise and
experience in areas such as infrastructure virtualisation, data center hosting
and migration services to provide implementation and migration of
customers from their existing environments to Public / Private / Hybrid cloud.
Leveraging its SI strengths, HCL collaborates with its strong partner
ecosystem, which includes VMware, Cisco, EMC, HP, BMC, and CA to offer
best of breed solutions to its customers.
Implementation example: An international bank employing more than 80,000
people in 72 countries and with presence across multiple geographies. HCL
has provided deployment and testing as a service on a Public Cloud
(Amazon) for the bank's applications both in production and a non-
production environment. This has resulted in several advantages, including a
90% reduction in deployment time, higher flexibility, and significant TCO
reduction.
Cloud management and operations: For customers who adopt cloud
computing models, HCL offers cloud service aggregation services where it
provides single throat to choke to ensure 24X7 monitoring and management
services for the hybrid and private cloud computing environments. HCL has
developed its own IP tools and processes such as MTaaSTM MyCloud for
managing cloud environments.
TM
HCL's MTaaS MyCloud is a cloud-based offering that brings flexibility and
scale for CIOs to orchestrate their physical, virtual and hybrid infrastructure
environment. It helps them both to manage the operations of the cloud
(MyCloud Control & Watch) and the service lifecycle. It’s a one-stop solution
for managing virtual infrastructure, especially capable of giving visibility into
operational and system performance. It is designed and built with features of
8 ©2011 IDC

9. high orientation towards iTaaS, and gives quick turnaround on integration
with enterprise products such as Remedy ITSM and SAP among others.
HCL MTaaS™ MyCloud is designed to help CIOs industrialise their IT
management by creating service management, governance, and
performance layers across their IT silos. The industrialisation can then help
the CIOs offer services that are elastic and agile to the business needs of
their companies.
Implementation example: A large regulated electric delivery business in the
U.S. It supplies electricity to approximately 7.5 million consumers. HCL
provided a private cloud based enterprise management platform, helping the
client to better control, improved quality, have better visibility and unified
reporting.
FIGURE 7
HC L MyCloud - Cloud Ser vice Man agement and A ggregation
MyCloud
MyCloud
Govern
Demand & Service Assure
Portfolio Mgmt
Service Level Management
Compliance and risk Mgmt
Contract Management
Agile Apps & Service Dev
Supplier Management
Business Continuity & DR
Self -Service
MyCloud
Meter Control & Monitor
Watch
Orchestrate
MyCloud
MyCloud
Secure
Service Ops
User access control
Change & Release Federated identity mgmt.
Configuration & CMS DLP
Incident & Problem
Source: HCL Technologies
ִ Cloud Provider: HCL's cloud service offerings include:
9 ©2011 IDC

10. Infrastructure as a Service (IaaS) – IaaS is for selected areas such as
computer storage as well as back up and for providing IaaS to its clients
from HCL's datacenters across the globe.
Platform as a Service (PaaS) – PaaS will include hosting, infrastructure, an
integrated development environment, software development kits, testing
tools and frameworks and HCL's best practices frameworks and intellectual
property (IP) for development and testing.
Software as a Service (SaaS) – HCL will play the role of an integrator that
provides true business applications in the cloud, which will largely be vertical
applications for specific functional areas.
FUTURE OUTLOOK
ִ Cloud computing addresses key concerns for enterprise decision makers,
providing the ability to synthesise IT assets while sharing resources, lowering
costs, standardising IT processes across the enterprise, and providing a more
stable pricing model. IDC believes that cloud computing will slowly, but surely,
make a large impact on the server market. The outlook for both private and
public cloud computing in Australia is positive.
ִ Engineering of a private cloud will likely prove more complex, especially as early
adopters realise that much more than virtualisation of resources is needed to
deliver the expected ROI. IDC expects major challenges for users as they
attempt to standardise services across the enterprise, having to fight users that
have become used to custom processes for their own business functions.
Without service standardisation, service automation is much more time
consuming and thus expensive and makes the goal of self service difficult to
achieve.
ִ IDC predicts that in 2011, as enterprises embark on strategic reviews on how to
take advantage of the cloud they would require advice around cloud assessment,
planning, workload migration, security best practices, governance, and test case
procedures. Being able to provide workable reference architecture coupled with
an appropriate solution has taken each of the cloud service providers some
months to bring to market. It is just the beginning, because with solutions now
falling into place, the next step for enterprises is evaluating costs and
understanding total cost of ownership (TCO)/return on investment (ROI).
CONCLUSION
With any new technology solution, including cloud services, there will be multiple
challenges. It's undoubtedly an exciting time. Organisations can select best of breed
solutions from a range of service providers. The compelling value proposition of
adopting cloud services is that it is easy, fast, flexible, and an organsiation can have a
scalable usage at a lower cost. All of these factors make cloud a compelling value
proposition for any organisation.
For CIO's to maximise the benefits of cloud services requires careful planning,
design, and testing of the appropriate solution. Understanding commercial terms and
arrangements, total cost of ownership and physical locations of datacenters are other
important aspects that require consideration. All organisations have to adapt and
change to keep ahead of its competition. Leveraging technology is key to this
process.
10 ©2011 IDC

11. APPENDIX
METHODOLOGY
The Forecast for Management Survey 2010 is an annual IDC study that provides
valuable research into the attitudes and intentions towards the use of IT in
organisations across Australia and New Zealand (ANZ) markets.
Research data for the Forecast for Management Survey 2010 was compiled from
written responses to a survey completed by CIOs and IT Managers from March and
April 2010. Responses were received from 400 organisations in the private and public
sectors across ANZ.
Scope
The scope of this study encompasses the most important areas of responsibility for
ICT management:
ִ ICT spending and the economy: including IT budget allocation and spending,
the potential impact of the National Broadband Network (NBN) on business,
business outlook, purchasing preferences, return on investment (ROI)
expectations and more.
ִ CIO challenges and priorities: Including CIO challenges,
business/organisational priorities, and IT investment priorities for ANZ
enterprises.
ִ The ICT department and application of IT: Including CIO reporting lines,
composition of the IT department, spending on staffing, top skills in demand; as
well as the current and future use of different applications such as datacenter
consolidation, virtualisation and social networking software.
Geographic Segmentation
The Forecast for Management Survey 2010 was carried out for organisations in both
Australia and New Zealand. For 2010, 60.8% of the respondents were employed by
organisations with headquarters located in Australia, with the remaining 39.2% based
in New Zealand.
Enterprise Size Segmentation
The executives responding to this Forecast for Management Survey were asked to
indicate the size of their organisation by the number of staff they employed. To reflect
industry trends by company size, the responses were combined into three grouping
relating to the number of employees in the organisations. These groups are standard
IDC definitions of enterprise size: small (1-99 employees), medium (100-499
employees) and large (500+ employees) The ANZ totals for these enterprise
categories were: small at 46.5%, medium at 29.7% and large at 23.6%.
Vertical Market Segmentation
The executives responding to this Forecast for Management Survey were asked to
categorise their businesses by their vertical markets in which they primarily operate.
The largest sectors nominated by survey respondents were business services
manufacturing, retail and wholesale and government (see Table 3).
11 ©2011 IDC

12. T ABLE 1
Responses by Vertical Market Segmentation
Vertical Market Response Rate (%)
Banking, financial markets and Insurance 7.8
Business services 9.8
Communications and media 8.0
Construction 7.8
Education 7.3
Government 8.8
Health 7.5
Manufacturing 11.0
Resources 7.0
Retail and wholesale 10.3
Transportation 7.4
Utilities 7.3
n=400
Source: IDC Forecast for Management Survey, 2010
Key Attributes of Cloud Computing
IDC attributes cloud services with the following characteristics to distinguish cloud
services from traditional on-demand services and online services. The key
characteristics are as follows:
ִ Shared or standard service: built for a market (public), not a single customer
ִ Turnkey solution: Integrates all required resources
ִ Self-service: ongoing administration, provisioning; but may require some 'on-
boarding ' support
ִ Elastic scaling: dynamic and fine grained
ִ Usage-based pricing: supported by service metering
ִ Accessible via the Internet/IP: ubiquitous (authorised) network access
ִ Standard user interface (UI) technologies: browsers, rich Internet application
(RIA) clients and underlying technologies
ִ Published service interface/application programming interface (API): for
example , Web services APIs
These attributes are crucial to maximise the value of cloud services which provides
easy, fast, flexible and scalable usage at a lower cost.
12 ©2011 IDC

13. About This Publication
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13 ©2011 IDC