The Business Model for On Demand Computing

1
The Business Model for On Demand Computing

• Don LeClair
• SVP, RD
• April 23, 2006

2
Origins of On Demand Computing
3
The Problem
Server
Server
Server
Server
App
App
App
App
Server
Server
Server
DBMS
DBMS
DBMS
4
Measuring the Problem Circa 2003

• IT complexity increasing dramatically
• Growing quantities of hardware
• Utilization of Unix/Windows servers is lt25 over
  24-hours
• Business management often sees IT as a hindrance
  to the business
• Save money by outsourcing
• People and software are 50-75 of operations
  expense.

IT Doesnt Matter Nicolas Carr, HBR May 2003,
book 2004
5
What is On-Demand Computing?

• On demand computing is the ability for IT to
  operate in real-time responding to dynamic
  business needs by delivering the appropriate IT
  services in an automated way.
• On-demand computing results in increased
  efficiency, improved service, less risk, and
  improved ability to support business needs.

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Industry Trends On Demand
HIGH
Service-oriented architectures
Transformational Value
Asset optimization
Management as a discipline
LOW
2004 2005 2006 2007 2008 2009 2010
7
On Demand Computing Today
8
Top Management Priorities for 2006

• Aligning IT and business goals
• Business continuity/risk management
• Controlling IT costs
• IT-enabled process improvement
• Improving internal user satisfaction
• Staff development/leadership development/develop
  ing business skills within IT
• Improving project management discipline
• Ensuring privacy of customer and employee data
• Enabling/enhancing knowledge management/leveragin
  g intellectual assets
• Ensuring regulatory compliance

Source State of the CIO Study, CIO Magazine,
2005.
9
Changing Perspective on IT
Source State of the CIO Study, CIO Magazine,
2005.
10
Requirements for a Business Enabling (aka
Service) Focus
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Building Blocks of IT Services

• Users
• Casual
• Professional
• External
• Headless

Users
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Building Blocks of IT Services

• Assets
• Desktops / Laptops
• Servers
• Databases
• Networks
• Storage
• And all the software that runs on them

Assets
Users
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Building Blocks of IT Services

• Application Environments
• Applications
• SAP Oracle
• eMail
• Exchange Notes
• Middleware
• WebSphere, BEA, JBoss, NetWeaver
• Databases
• Oracle, DB2, SQL Server
• Custom applications
• .NET, J2EE
• Web services
• As available

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Building Blocks of IT Services

• Example eMail service at CA
• Exchange
• Blackberry
• WebMail
• 100 servers
• 15000 internal users
• SMTP gateways
• VPN servers and clients
• Outlook

Virtualization autonomic solutions lose
visibility at this level
15
IT Services Business Processes Support

• Business Processes
• Order to cash
• Procure to retire
• Return to refund
• Insurance claim to pay

16
Enterprise IT Management (EITM)

• The Wider World of On Demand

17
EITM Manage and Secure It All
Enterprise Systems Management
Business Service Optimization
Security Management
Storage Management
IT Processes Best Practices
Manage and Secure
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Formal Process Approach - ITIL
Business, Customers, Users
Service-Level Management
Incident Management
Service Desk
Network, Systems, DB and Operations Management
Availability Management
Problem Management
Change Management
Capacity Management
Customer Relationship Management
Release Management
Financial Management
Configuration Management
IT Service Continuity Management
Service Support
Service Delivery
Security Management
Transition from technology to service based
management
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Process-Oriented IT Management
Today
Future

• Management by function
• Manual workflows
• Manual data exchange among individuals

• Process-centric management integrated across
  functional boundaries
• Policy-driven execution and optimization
• Comprehensive management functions share data
• Value derived at incremental steps

Series of manual steps
Integrated IT Flows
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EITM Accelerators Deliver Value
Maturity Model
IntegratedIT Flows(IIFs)
CA Technology Services and Strategic Partners
Assessments and ROI Analysis
Address people, process and technology
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IT Management Maturity Model
4
BUSINESS-DRIVEN

• Real-time IT dynamically optimizes to support the
  business
• Transparent enterprise

• Business-relevant IT services
• Service level management
• Financial administration of IT

3
RESPONSIVE

• Standardized processes
• Automated responses
• Consolidated IT resources

2
EFFICIENT

• Respond to problems and faults
• Ad hoc, manual processes

1
ACTIVE
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Integrated IT Flows (IIFs)
IT Flow Instantiated in a Workflow Engine

• Reference process models based on best practices
  for IT management
• Processes instantiated in automated, policy-based
  workflows
• Workflows call upon management and security
  functions
• Based on a defined maturity model

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Integrated IT Flows Examples

• Provisioning to Identity Management
• Job Workload to Business Workflow
• Application Change Request to Deployment
• Asset Discovery to Optimization
• Event to Resolution
• Service Request to Financial Control
• Storage Optimization
• Vulnerability to Remediation
• IT Risk Identification to Control

Optimize IT processes for measurable business
value
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Major Credit Card Company
25
eBay
26
Harrahs
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On Demand and the Software Business Model
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Traditional Software Model

• Business
• Licenses software for maximum capacity
• Over purchase wasted money
• Under purchase unplanned expenses
• Vendors
• Up front revenue model
• Wall Street unforgiving
• Result Conflict

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Software On Demand Model

• Business metric pricing
• Formal auditable measurement policies,
  customers, etc
• Technical metric pricing
• Number of machines, jobs, etc.
• Challenges
• Business Sharing the growth risk
• Vendors Wall Street and revenue projections

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Examples On Demand Software

• Business Metrics
• Travel company number of reservations taken
• Airline based on passenger seat kilometers
  flown
• Wireless carrier based on the number of
  customers
• Auto insurance carrier number of policies in
  force
• Heath care insurer number of active members
• Retail store operation number of stores they
  have
• Technical Metrics
• Storage products number of Terabytes managed
• Job management number of jobs run in a
  specified period

No technology change required!
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Business Benefits of On Demand

• Reduce Cost and Complexity
• Operating expense
• Capital expense
• Mitigate Risk and Improve Compliance
• Security and data risk
• Compliance and governance
• Transparency for audit-ability
• Increase Agility and Responsiveness
• Deliver high quality products and services
  consistently
• Offer new products and services quickly
• Optimize IT Investments
• Optimize use of IT resources for business benefit

32
The Business Model for On Demand Computing

• Don LeClair
• SVP, RD
• April 5, 2006