This presentation provides an introduction to the area of cloud computing. The presentation discusses the evolution of Cloud Computing, along with its benefits, and how B2B integration benefits from being deployed across a cloud environment. Updated May 2014
Now many of today’s CIOs do not believe that cloud computing will be around for very long, or that it won’t add any value to their IT infrastructures, they think that cloud computing is just hype. However they are wrong, cloud computing environments are very real and they are becoming very disruptive, in a positive way, to how IT and B2B infrastructures are being deployed across the extended enterprise.
Companies can experience significant productivity gains from external trading partners as they can all share and access the same applications and resources, thus bringing a single view of business transactions across your extended enterprise
The cloud helps to address many B2B related challenges and allows ROI on newly deployed IT or B2B environments to be realised in a much shorter period of time.
Over the last 24 months, many CIOs have dismissed the cloud as being hype, when in fact it is fundamentally changing the way in which companies manage their IT and B2B infrastructures.
In 2008 the premium luxury car manufacturer Jaguar Land Rover were divested from their parent company Ford. JLR were faced with the challenge of separating and establishing their own IT and B2B infrastructures as quickly as possible. Their CIO at the time decided that the separation from Ford would be a good opportunity to move as many business applications as possible to the cloud.
His forward thinking vision has led to JLR moving 18Tb of emails from an old Microsoft exchange server to a Google email hosted service. In addition, JLR decided to move many other services to a cloud based environment, including the management of their b2b infrastructure which is now running via a GXS Managed Services environment.
To support the expected growth in cloud computing adoption by both consumers and enterprises around the world, many leading software and IT companies are starting to build huge data centres around the world.
Google investing nearly a billion dollars in its data centre infrastructure in the first quarter of 2011 alone, Microsoft investing half a billion in their European data centre in Dublin and Apple investing a billion dollars in a new data centre in North Carolina in the U.S. If rumours are to be believed then Apple built this particular data centre 50% bigger than it needed to be just to show its competitors that it has serious intentions of being one of the largest providers of cloud based environments in the world.
The area of business integration has been constantly evolving over the past twenty years. Changing economic conditions combined with a need to globalise business operations has changed the way in which companies both deploy IT infrastructures and integrate to back office business systems.
In the mid-90s many business applications were hosted on a central mainframe computer where users got access to applications via the infamous green screen VDU terminals. As business applications became more complex over the years, there was a need to improve the way in which applications were integrated and delivered to the end user. In the late 1990s many application service providers started to appear, these were third party vendors who offered fully hosted applications.
ASP environments then migrated to Software as a Service environments and this provided the first cornerstone of the three layer cloud computing environments that we know today. Cloud computing environments started to go mainstream in 2010 and according to the latest analyst studies they are going to be around for many years to come. The reason why cloud computing has become so popular is partly due to the underlying technology being used namely the ability to run multi-tenanted software environments and the virtualised nature of the actual server environments.
So let me discuss the three key layers that make up a cloud computing environment....
Cloud computing has become known by many different definitions, Platform as a service, integration as a service, computing as a service, hardware as a service and even everything as a service.
Now even though today’s cloud environments can contain many of these components, analyst firms around the world have been trying to provide a definition of cloud computing that encompasses all the functionality that cloud computing environments offer today.
Now I expect you could ask ten different people to provide a definition of what they think cloud computing is and I expect you would get ten completely different answers. So why would analyst firms be any different. Numerous definitions have been released over the last few years, here are just three of them.
Even though technically these all describe a cloud environment very well, I believe that the quote from Forrester provides one of the most succinct definitions available today, namely
A standardised IT capability (services, software or infrastructure) delivered via internet technologies in a pay per use, self service way.
Now rather than try to describe the cloud by way of a definition that no one can seem to agree on, why not define the cloud by its characteristics?
For example, a cloud environment needs to be
Dynamic – one of the keys to cloud computing is being able to size the on-demand provisioning
Massively Scalable – the service must either expand or contract depending on the changing needs of your business
Multi-tenant – cloud computing by its very nature delivers shared services to a global group of users
In addition cloud based environments offer
Self-service delivery of applications and content - so as a user, you can use the service as you require it
Per-usage based pricing model – which means that you should only ever pay for the amount of service you actually consume. This is extremely useful if you are working on a project by project basis, you can effectively use the service as and when you actually need to use it.
IP based architecture – cloud architectures are based on virtualised, internet based technologies, this alone has provided one of the key reasons why cloud computing environments have become so popular and has changed the way in which IT infrastructures are deployed.
Now over the last couple of years, there have been a number of ways in which cloud environments have been deployed, each having differing levels of security applied to them and each offering different services to the users who are connected to these particular cloud environments.
Public Cloud – Available to the general public or large industry group and is owned by an organisation selling cloud services
Community Cloud – Shared by several organisations and supports a specific community that has shared concerns
Private Cloud – Operated solely for an organisation or company
Hybrid Cloud – Combination of two of the above, they remain unique entities but are bound together by standardised technologies
Moving your IT or B2B infrastructure to the cloud does not happen over night and companies will make the move for various reasons.
For example rather than moving an entire company to a cloud based infrastructure, the CIO might make the decision to move on a department by department basis. May be deploying a cloud based HR or CRM service first to see how the environment operates and whether internal business processes need to be extensively modified in anyway.
In the second example a company may be looking to onboard new trading partners in a remote location or emerging market or alternatively they may be looking to establish a manufacturing or office facility in a new country and they need to get them online as soon as possible. The global nature of cloud based environments allows companies to scale up there businesses with ease. I will talk about this in more detail later.
Finally, a CIO may take the decision to place an entire business process into the cloud. For example a reverse logistics process to improve the way in which customers return faulty goods to a repair shop or retailer.
The way in which cloud environments are deployed is really down to the individual company concerned, there is no right or wrong way of doing this but it is possible to learn from companies such as GXS who have years of experience of deploying integration cloud platforms for many companies around the world.
So let me discuss the three key layers that make up a cloud computing environment....
Cloud computing environments typically comprise of three different layers.
Infrastructure as a Service - IaaS, essentially provides the core backbone infrastructure onto which the rest of the cloud environment is built. For example companies such as Amazon and EMC will provide extensive compute and storage facilities
Platform as a Service - PaaS, provides the infrastructure onto which the applications are developed, for example GXS Trading (the world’s largest integration cloud platform) is a good example of PaaS
Software as a Service - SaaS, provides the core business applications that effectively plug into the cloud environment. These are typically web based in nature and are heavily optimised for operating across the internet and cloud based environments. SAP’s Business by Design and GXS Active Logistics are godo example of SaaS based applications.
If we take a look at the first layer of the cloud computing stack, Infrastructure-as-a-Service
This area of the cloud environment essentially delivers the computer infrastructure, typically platform virtualisation as a service. It is an evolution of virtual private server offerings and includes:
Servers, memory and storage that allow a customer to scale up or down as required
Infrastructure can be used by customers to run their own software with only the amount of resource that is needed at a given moment in time
I guess you could compare Infrastructure-as-a-Service as the equivalent of utility supplies to a house, ie all houses need, gas, water, electricity connected to make them function correctly.
Then moving onto Platform-as-a-Service, this delivers the computing platform and/or solution stack as a service. The PaaS environment will often consume cloud infrastructure and will sustain cloud applications. PaaS environments :
Allow users to use the cloud to develop new applications without the need to have the software or infrastructure purchased in-house
Essentially provides anything to support how a company builds and delivers web applications and services in the cloud
Using the house analogy from the previous slide, PaaS could be considered as the foundations on to which you would then build your house.
Earlier this year the analyst firm Gartner released a report highlighting the importance of PaaS based environments and how by 2015 they are likely to have a huge impact on the way cloud based environments are built and deployed.
For example by 2015,
cloud-based solutions will be growing at a faster rate than on-premises solutions
most enterprises will have part of their run-the-business software functionally executing in the cloud, using PaaS
most enterprises using PaaS services or technologies will have a hybrid environment in which internal and external services are combined
The great thing about cloud based environments is that it allows both large and small software providers to compete in the market on an almost equal footing.
A number of software providers have moved their behind the firewall software applications into a hosted environment and they are able to offer a wealth of different solutions covering everything from business analytics, data integration, CRM, application security and much more.
The cloud has single handedley changed the way in which software solutions are designed and delivered to companies.
The final layer of the cloud, is the actual Software-as-a-Service application, essentially a fully hosted piece of software. SaaS has been around for a few years now and formed the first cornerstone of the cloud computing environments that we know today. They essentially deliver software over the internet without the need to install applications on the customer’s own computer. SaaS applications :
are run from one centralised location, which means that the software can be accessed from any location over the internet
The centralised management of applications helps to simplify maintenance
Applications are consumed on a pay-as-you-go basis
I suppose returning back to our house analogy one last time, SaaS applications could be considered as the various rooms that are built on the foundation of the house.
So let me discuss some of the benefits of cloud computing....
So how can cloud based B2B environments help manufacturing companies, well firstly
It provides Global accessibility, as all applications are hosted by a central provider it means that anyone in your company or across your trading partner community can get access to your B2B tools using nothing more than a web browser. It also means that users will get a consistent user experience as well.
Cloud environments also allow B2B infrastructures to be maintained much more efficiently, as applications are hosted centrally, it means that applications only have to upgraded once rather than on multiple servers, and everyone connected to the cloud platform then benefits from the newly upgraded environment.
Cloud environments can be deployed very quickly, once again as software and services are installed by a vendor at a central location then it means that new applications can be deployed in a very short time frame and new users can be added to the environment with ease. Cloud environments really allow you to build flexibility into your B2B environment, getting access to new functionality as and when you require it.
Cloud environments are low cost, rather than pay a software license fee, users pay on a month by month or project by project basis. This pay as you go way of working allows managers to get much better predictability of long terms IT or B2B related costs. Also, as you do not have to buy expensive servers to host any applications, it means that there is no capital expenditure and zero cost applied to your company’s balance sheet.
In these uncertain financial times, cloud based environments allow companies to scale up or scale down their B2B needs very quickly, may be as a result of winning a new contract and a need to onboard new trading partners very quickly or needing to scale down operations due to a product coming near to retirement.
Finally, cloud based environments provide an ideal way to manage a community of users with ease. Centralised management of usernames, passwords and contact details help to bring an extra layer of security to your B2B environment. In addition it allows users to be presented with just the information they need to do their work, ie a role based environment can be presented to a user depending upon their role and responsibilities within the business.
In terms of comparing traditional IT infrastructures with cloud based environments, there are a number of notable differences, let me highlight a couple of the more important ones in this table.
From a speed to market point of view, in the traditional IT environment, enterprise applications take months or years to design, code, test and deploy. From a cloud computing point of view the cloud provider is responsible for on-going development and clients simply use the most up to date application available.
From a speed to ROI point of view, even with significant capital investment, many companies never get to realise the expected ROI. In cloud computing, the subscription based model allows a client to pay for the service that they actually use and is a highly predictable operational expense.
From a Financial perspective, there are a number of differences between running on-premise versus hosted or cloud computing based environments.
From an Expenditure Type point of view: on premise IT is a capital expenditure whilst in the cloud it is an operating expense
Moving to Cash Flow: in a traditional IT environment servers and software are purchased up front whilst in the cloud payments are made as the service is provided
In terms of Financial Risk: in a traditional IT environment the entire financial risk is taken upfront, with uncertain return whilst in the cloud financial risk is taken monthly and is matched to return
On the Income Statement: traditional IT has maintenance and depreciated capital expenses whilst in the cloud there are maintenance expenses only
Finally on the Balance Sheet: Software and hardware are carried as a long-term capital asset whilst in the cloud nothing appears on the balance sheet
Cloud Computing environments offer many green benefits as well.
Lower power consumption requirements - As Cloud based environments are hosted by an external vendor, this not only helps companies remove the cost of supporting an in-house data centre or server infrastructure but more importantly it can help to significantly reduce a company’s carbon footprint by reducing the power consumed to run the supporting utilities related infrastructures.
Less computer/network equipment packaging to dispose of - Cloud computing based environments remove the need for buying and running extensive computer servers and other associated infrastructures. Therefore there is an opportunity to minimise the amount of wasteful packaging materials that are used to transport these pieces of equipment to an office or manufacturing location.
Minimises travel requirements for IT implementation teams - As Cloud computing environments are hosted by an outside provider and are typically very easy to deploy, you can, in most cases, remove the need to send employees half way around the world as these environments can be brought online and monitored remotely.
Increased availability of information on lower power devices - Cloud based environments allow users to access information using more power friendly mobile devices and also helps all trading partners to get access to one central source of information. This helps to minimize supply chain disruption and improve green related efficiencies of logistics carriers.
Less paper flowing across the supply chain - Cloud based environments significantly reduce the amount of paper flowing across the extended enterprise, at the same time it encourages less technically capable trading partners to participate in your B2B program.
So let me discuss the three key layers that make up a cloud computing environment....
The introduction of different layers of the cloud combined with the different types of cloud such as private and community, means that it is becoming important to think about how these different cloud based services will be integrated together.
The analyst firm Gartner introduced a concept known as Cloud Service Brokerage to help articulate how the different cloud services, enterprise IT systems and cloud consumers or users need to be connected to a centralised broker to ensure that communications within the cloud are routed to the correct location.
Now by routed to the correct location I mean that information is passed to the correct trading partner or business application. I suppose you could consider the CSB to be a form of black box with information going in one side, being processed and then being delivered to the correct user or business system.
So what does the cloud provide from a B2B perspective?
From a business perspective it allows companies to deliver a standard set of tools for use by users across the extended enterprise and it allows them to utilise a series of pre-defined document standards.
From a process orchestration point of view it allows you to improve information flow which in turn provides greater visibility into cross application transactions
Data flowing through the cloud integration environment can be introspected to check for data quality and ensure that business documents comply with certain business standards before entering an ERP environment
Finally as all users would be entering the cloud through a single environment, it means that authentication and security procedures can be standardised across the entire business
So from a B2B integration point of view the cloud :
Offers scalability and flexibility –
B2B environments can be expanded or contracted depending on the needs of the business
Allows new B2B functionality to be deployed very quickly from a central location
Global nature of cloud based B2B environments allows remote plants or offices to be brought online with ease
The cloud also helps to Simplify Connectivity
The cloud offers any-to-any mediation between different B2B communication or document standards
Modern and legacy standards can be utilised within the cloud
Regional standards can be embraced within the cloud, thus providing seamless connectivity anywhere in the world
The cloud also provides true end-to-end visibility
Cloud based B2B environments provide end-to-end visibility of global business transactions
Provides a single view of B2B transactions flowing between global trading partners
Customer shipments can be monitored seamlessly across multi-modal logistics networks and border control agencies
The cloud helps to improve Trading Partner Collaboration
All trading partners can be connected to the cloud with ease using a mix of quick to deploy, simple to use web tools
The cloud removes the collaboration barriers between trading partners in developed and emerging markets
All trading partners using the cloud environment can be administered through a central contact database
Finally the cloud helps to simplify integration to business systems
Integration to numerous business systems takes place through a single cloud environment
The quality of data entering ERP or other business systems can be proactively monitored via the cloud
Numerous implementation templates and best practices from previous integration projects can be delivered through the cloud