Although the definition of cloud computing is still evolving, it hasn’t slowed the adoption of applications being deployed in the cloud. Looking back five years, Ajay Srivastava, VP of Product Management and Strategy at Oracle Managed Cloud Services, recalls early conversations with other IT industry executives about client server computing as the advent to a new era of a shared computing model. Discussions quickly gave way to utility computing and heralded what has been known as cloud computing.
Ajay predicts that organizations looking to deploy a new application are now automatically considering a cloud-based solution, considering past investments as sunk costs. This is a change that can now be felt across nearly every enterprise.
Vikrant Karnik, Senior VP and Head Of Sales: Enterprise Cloud Services at Capgemini, shares a similar view. “Two to three years ago, enterprises were somewhat reluctant to take cloud seriously. But now cloud has become a fact of life.” After seeing positive results from initial application deployment, enterprises are asking what else can be changed.
Cloud Computing Today
What was once unfeasible is now possible.
Every enterprise has a cloud agenda with CFOs asking CIOs to explain their cloud strategy.
Take the case of a large energy producer in the utilities industry who could not justify the cost of additional computing power. By adopting outsourced cloud computing resources, “they can now turn on and off the extra computing capabilities they need,” cites Karnik.
Oracle has seen many use cases as well across a broad set of industry verticals. “Customer Relationship Management and Talent Management are just two applications that are easily pulled off of legacy systems,” explains Srivastava. No one wants to own assets they don’t have to.
Evolution to Cloud Brokerage and Integration
The cloud market brought with it a host of new acronyms and terminology as well new ways to harness computing power. To understand the newest concept of cloud brokerage, it’s important to look holistically at cloud architectures in play today.
- Public cloud. The first cloud offerings in 2009 were web-based, relatively cheap units of computing power. Oracle’s Srivastava explained that this model appealed to IT organizations because it offered not only low cost but shifted capex to opex, provided rapid provisioning and the illusion of infinite capacity.
- Private cloud. Enterprises turned to this model in 2010 as it solved some of the security and complexity issues of public cloud while also boosting computing power managed by internal IT resources. Core ERP and other analytical applications now had extra resources to operate more efficiently and cost effectively.
- Hybrid. This model originally grew out of the need for transient computing power or handling bursting applications. IT organizations looked to hybrid clouds as the perfect solution for test environments where resources were needed for a specific period of time and could be taken up and down as warranted.
By utilizing all three of these models, CIOs reaped the benefits of flexibility and cost. But by selecting best of breed providers, someone has to take responsibility for integration.
Cloud brokerage brings together public and private clouds, formalizing the hybrid model. As the public market matured, suggested Srivastava, “CIOs realized that opting for a public cloud many a time resulted in a choice between performance and flexibility, out-of-the-box and ease of integration with other clouds. CIOs have to now become the system integrator between these various cloud options to satisfy the core application needs of a company.”
Need for Integration
CIOs spent years integrating and breaking down application silos within their internal IT infrastructure. With the growing adoption of private, public and hybrid cloud computing models, CIOs are facing a new integration challenge—to integrate across clouds and heterogeneous application environments.
The complexity has ratcheted up a notch with multiple premises and processes demanding integration. “CIOs need to handle integration at various levels, from IT, application and business processes,” says Srivastava.
Capgemini executive Vikrant Karnik recommends that it is better to start taking on an integrator role now rather than wait. “Leaky integration points need protection. Even though standards are lacking, there are many opportunities.”
Role of Cloud Broker/Integrator
According to Gartner Group, cloud services brokerage offers three capabilities:
- Cloud Service Intermediation: An intermediation broker provides value added services on top of existing cloud platforms, such as identity or access management capabilities.
- Aggregation: An aggregation broker provides the “glue” to bring together multiple services and ensure the interoperability and security of data between systems.
- Cloud Service Arbitrage: A cloud service arbitrage provides flexibility and “opportunistic choices” by offering multiple similar services to select from.
Market Size, Players
CIOs can look to a growing number of providers to help them integrate their cloud services. According to MarketsandMarkets, the Cloud Brokerage Enablement market will grow from $225.42 million in 2013 to $2.03 billion by 2018, at a CAGR of 55.3 percent.
Cloud Brokerage Enablers are software platforms that enable such services. The overall, global Cloud Brokerage market will grow from $1.57 billion in 2013 to $10.5 billion by 2018. This represents a CAGR of 46.2 percent from 2013 to 2018.
Nearly every major computing, consulting and outsourcing provider has jumped into the water along with niche cloud service providers. Waves of offers can easily drown CIOs as providers look to get a piece of the pie. “Discipline from cloud orchestration and a trusted provider are key,” recommends Karnik from Capgemini.
Enterprises Leading the Way
With many pieces already being outsourced, driving bigger and bigger cloud deals, enterprises in several verticals are taking Karnik’s advice and initiating cloud brokerage and integration services.
High-touch customer facing applications are a great place to start. He has seen significant strides made by financial service providers to improve customer experience management. “By migrating client data on premise to the cloud, a large insurance provider was able to shift their typically negative interaction with clients who have been involved in an accident to a much more positive engagement,” says Karnik.
Similar migrations are occurring in financial services as well as telecom, healthcare and retail. Consumer product retailers are improving their brand and position to stand out in crowded distribution channels.
Addressing the Complexity
With so much activity implementing front-end and back-end applications in public and private clouds, complexity has grown at every level—business, application, transaction and regulatory.
Business transactions span multiple clouds and therefore it is necessary to integrate clouds at the transaction level. “Mapping out transactions from the bottom up will guide CIOs in implementing cloud brokerage services at the right level and avoid cloud silos,” suggests Srivastava. Business transaction monitoring is a standard part of Integration as a Service. Integration and validation need to happen in the background. “We’ll see early models of services integrated across Public and Private clouds in 2014,” predicts Srivastava. He also expects that within three to five years most of the information in the cloud will be accessible through mobile. Simple transaction level integration is here today, but complete cloud connectivity and interoperability between multiple clouds will take at least a couple of years to mature.
“APIs will be one way enterprises can address the complexity,” states Capgemini’s Karnik. Identifying the key applications migrating to the cloud and mandating a structured deployment is another way CIOs can stay afloat.
To generate meaningful results, enterprises need to address three key challenges in 2014:
- Governance. Ensuring that services deployed in the cloud are protected is critical. Sharing can create leaks that cannot be tolerated. Putting strong governance programs in place will protect enterprises and their data.
- Risk tolerance. Every enterprise should assess their tolerance for pitfalls such as lost data and application outages. As Information as a Service and Integration as a Service evolve, enterprises will see risks reduced.
- Regulations. Lobbying for regulations and standards are predicted to be a key step to ensure cloud integration.
Riding the Wave
The CIO’s role has changed dramatically, from apps integration to outsourcing infrastructure to cloud integrator.
Both Srivastava and Karnik agree that today’s CIO understands the business much deeper. CIOs have taken on business integration in addition to managing the company’s IT assets. Early hybrid cloud services will likely be static, engineered around integration between an internal private cloud and a public cloud service for certain functionality or data. More deployment projects will emerge as brokers evolve, including private infrastructure as a service (IaaS) offerings that can leverage external service providers based on policy and utilization.
Moving to this level, taking charge of cloud brokerage and integration is the best way to ride the wave into 2014.
About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, BPO, IT Outsourcing, and Cybersecurity Managed Services. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides valuable insights and guidance to buyers and managed services executives. Contact him at [email protected].