1. Digibiz 09, London
Cloud Computing: business models and
commercial opportunities
Open clouds, open standards and open source
Dr. Chris Francis
IBM
June 2009
Jun
© 2009 IBM Corp o ra tion

2. Open clouds, open standards and open source
Cloud Computing
C loud computing is a ‘new’ c o n s u m p ti o n
a n d d e li v e ry m o d e l ins pired by cons umer Internet s ervices . C loud
computing exhibits the following key characteris tics :
•On-demand s elf-s ervice
•Ubiquitous network acces s
•L ocation independent res ource pooling
•R apid elas ticity
© 2009 IBM Co rp o ra tio n

3. Open clouds, open standards and open source
Cloud Computing: A “N ew” and Disruptive Idea
 Provides massively scalable computing resources from anywhere
 Simplifies services delivery
 Enables rapid innovation of new business models 2009
 Implements a Dynamic Infrastructure for
next generation data centers Cloud Computing
Software as a Service
1990 Grid Computing
Application
Server Utility Computing
Providers
© 2009 IBM Co rp o ra tio n

4. Open clouds, open standards and open source
The Exam Question – Why now?
IT infras tructure is reaching a breaking point.
85% id le 1. 5x 7 0 ¢ p e r $1
In dis tributed computing E xplos ion of information 70% on average is s pent
environments , up to driving 54% growth in on maintaining current IT
85% of computing s torage s hipments infras tructures vers us
capacity s its idle. every year. adding new capabilities .
$4 0 b i ll i o n 33%
C ons umer product and retail 33% of cons umers notified
indus tries los e about $40 of a s ecurity breach will
billion annually, or 3.5 percent terminate their relations hip
of their s ales , due to s upply with the company they
chain inefficiencies . perceive as res pons ible.
© 2009 IBM Co rp o ra tio n

5. Open clouds, open standards and open source
Public Cloud Supplier(s) Enterprise Cloud
Private Data/Applications
Sector or Supply Chain Cloud
Government Cloud
© 2009 IBM Co rp o ra tio n

6. Open clouds, open standards and open source
Opencloud Manifesto
www.openscloudmanifesto.org
1. W o rk to g e th e r to e n s u re th a t th e c h a l le n g e s to c lo u d a d o p ti o n
tog the tha tio
(s e c u ri ty , i n te g ra tio n , p o rta b i l i ty , i n te ro p e ra b i l i ty ,
tio tab
g o v e rn a n c e /m a n a g e m e n t, m e te ri n g /m o n i to ri n g ) a re a d d re s s e d
ter
th ro u g h o p e n c o l l a b o ra ti o n a n d th e a p p ro p ri a te u s e o f s ta n d a rd s .
the tan
2. D o n o t u s e th e i r m a rk e t p o s i ti o n to l o c k c u s to m e rs i n to th e i r
the tom
p a rti c u l a r p la tfo rm s a n d l i m i t th e i r c h o i c e o f p ro v i d e rs .
the
3. U s e a n d a d o p t e x i s ti n g s ta n d a rd s w h e re v e r a p p ro p ri a te . T h e IT
tan
i n d u s try h a s i n v e s te d h e a v i l y i n e x i s ti n g s ta n d a rd s a n d s ta n d a rd s
try tan tan
o rg a n i z a tio n s ; th e re i s n o n e e d to d u p l ic a te o r re i n v e n t th e m
tio the
4. W h e n n e w s ta n d a rd s (o r a d j u s tm e n ts to e x i s ti n g s ta n d a rd s ) a re
tan tme tin tan
n e e d e d , w e m u s t b e j u d i c i o u s a n d p ra g m a ti c to a v o i d c re a ti n g to o
tic too
m a n y s ta n d a rd s . W e m u s t e n s u re th a t s ta n d a rd s p ro m o te i n n o v a ti o n
tan tha tan tio
a n d d o n o t i n h i b i t i t.
5. A n y c o m m u n i ty e ffo r t a ro u n d th e o p e n c l o u d s h o u l d b e d ri v e n b y
the
c u s to m e r n e e d s , n o t m e re ly th e te c h n i c a l n e e d s o f c l o u d p ro v i d e rs ,
tom th tec
a n d s h o u ld b e te s te d o r v e ri fi e d a g a i n s t re a l c u s to m e r re q u i re m e n ts .
tes ted tom
6. C lo u d c o m p u ti n g s ta n d a rd s o rg a n i z a ti o n s , a d v o c a c y g ro u p s , a n d
tan tio
c o m m u n i tie s s h o u l d w o rk to g e th e r a n d s ta y c o o rd i n a te d , m a k i n g
tie tog
s u re th a t e ffo rts d o n o t c o n fli c t o r o v e rl a p .
tha ffo
© 2009 IBM Co rp o ra tio n

7. Open clouds, open standards and open source
Enough to share?
Merril Lynch:
The Cloud Wars : $100bn dollars+
The analysts write that by 2011 the
volume of cloud computing market
opportunity would amount to $160bn,
including $95bn in business and
productivity apps (email, office, CRM,
etc.) and $65bn in online advertising.
© 2009 IBM Co rp o ra tio n

8. Open clouds, open standards and open source
IBM's View of Cloud Computing
Com
 Business benefits
Bus ben
– Cost savings
– Employee mobility
– Speed and agility in delivering new
solutions
 IT benefits
ben
– Allows IT to shift focus to business
solutions instead of infrastructure
– Grants economies of scale to the IT
infrastructure
– Is flexible in allowing use of private,
public, and hybrid computing
resources
© 2009 IBM Co rp o ra tio n

9. Open clouds, open standards and open source
Free budget for new investment and speed deployment of new
capabilities
V IR T U A L I Z A T IO N
+ S T A ND A R D IZ A T IO N
+ A U T O MA T I O N
= C os t
F l e x i b i li ty
© 2009 IBM Co rp o ra tio n

10. Open clouds, open standards and open source
An Internal IBM Example
Without Cloud With Cloud  B u s i n e s s C a s e R e s u l ts
 A n n u a l s a v i n g s : $3 . 3 M (8 4 % )
$3. (84 $3 . 9 M
$3.
100% to $0 . 6 M
New
100% Development Liberated funding
 P ayback P eriod: 73 days
for new
 Net P resent Value (NP V): $7.5M
Strategic
Software development,  Internal R ate of R eturn (IR R ): 496%
Costs Change R eturn On Inves tment (R OI): 1039%
transformation 
Capacity
investment or
Power Costs
direct saving
Current Deployment (1-time)
IT Labor Costs
Software
Spend (Operations and
Costs
Maintenance)
Hardware,
Power Costs labor & power
(88.8%)
savings
Hardware Costs Labor Costs
reduced
(annualized) ( - 80.7%) annual cost of
Hardware Costs
operation by
( - 88.7%) 83.8%
Note: 3-Year Depreciation Period with 10% Discount Rate
© 2009 IBM Co rp o ra tio n

11. Open clouds, open standards and open source
Virtualisation is a set of concepts and
techniques that allow efficient
implementations of clouds.
Linux is a particular operating system that
both provides virtualisation and can itself
be virtualised.
© 2009 IBM Co rp o ra tio n

12. Open clouds, open standards and open source
IBM Blue Cloud – Announced in N ovember, 2007
lou
© 2009 IBM Co rp o ra tio n

13. Open clouds, open standards and open source
Virtualisation is Magic
lis gic
 An application running elsewhere can appear to be
running on your desktop. Appearance
 Your entire desktop could be running elsewhere with
only inputs and output displays handled locally.
 What might appear to be dedicated hardware might
actually be virtualised software images swapped in
and out as needed.
 Your hardware can be kept busier and you can use
less of it.
 You can save money.
 New modes of use.
Reality
© 2009 IBM Co rp o ra tio n

14. Open clouds, open standards and open source
Virtualisation: Common Elements of Success
lis
 Increases Hardware Utilization
Inc Ha
– Leverage hardware investment Appearance
– This is how it all started in the '60s
 Saves Energy
Sav
– Consolidate workloads onto smaller set of
hardware resources
– Reduce “server sprawl”
 Reduces Administrative Costs
Adm ost
– Better planning of downtime, avoidance of
downtime, greater automation and mobility of
workloads
Reality
© 2009 IBM Co rp o ra tio n

15. Open clouds, open standards and open source
What's Special about Linux?
 Linux supports multiple hardware platforms
supports ple tfor
orm
– Spanning from embedded devices to supercomputers
– Speed of support for new platforms
– Availability of skills, portability of applications
– Scale-out through clustering as well as scale-up through SMP
 Linux has an affinity with virtualisation
ha
– Supported on all major hypervisors,
– Ability to be paravirtualised
 Linux is flexible
is fl ble
– Modular and customizable, with flexible usage licensing
 Linux is developed by an open community
is de oped open omm
– Sharing skills and resources, leading to faster development
© 2009 IBM Co rp o ra tio n

16. Open clouds, open standards and open source
Virtual Linux Desktops
skt
 Linux saves costs on the desktop
sa osts the
– This is the primary reason for adoption
– With free and open source productivity suites, this is a very viable option
 Virtual Linux desktop solutions can help reduce desk-side and help desk
olu ons he
support costs
ppor ost
– Instant client updates, rapid problem resolution, simplified application
deployment and backup
– Significantly reduced threat of data loss through component failure or theft
 For many, such a solution is a very tangible
olu ble
example of the power of Linux, virtualisation,
ple pow on,
and cloud computing acting in concert.
oud ompuput onc
© 2009 IBM Co rp o ra tio n

17. Open clouds, open standards and open source
The Future of Cloud Computing
 Real interoperability through open
standards
 Increasing number of workloads
transitioning to the private and public
clouds
 New workloads and business opportunities
arising from and running on clouds
 Adoption of the hybrid cloud model
 Greater use of Linux on desktops and in
datacenters
© 2009 IBM Co rp o ra tio n

18. Open clouds, open standards and open source
Parting ideas
 Cloud computing gradually increasing in applicability and scope –
prepare through centralization, harmonization and virtualization.
 Cloud computing will be significant on both the server and the
desktop.
 Linux will be especially important for cloud computing because of its
security, scalability, flexibility, reliability, and portability.
 Traditional enterprise and desktop computing will not vanish
overnight.
 “Open” & real interoperability is essential for market adoption
 Complementary licensing is a must.
 Regulatory barriers – tariff & non-tariff barriers
© 2009 IBM Co rp o ra tio n

19. Digibiz 09, London
Cloud Computing: business models
and commercial opportunities
Open clouds, open standards and open source
Dr. Chris Francis
IBMp
June 2009
Jun
© 2009 IBM Corp o ra tion