IT Portfolio Management & Cloud Computing

1. IT Portfolio Management in
g
the World of Shared Services
& Cloud Computing
Babak Hosseinzadeh / CTO / New Bridge Strategy
Architecture World ‘09
IT Architecture Firm

2. Overview
Background Information
Quick Overview of Cl d C
Q i kO i f Cloud Computing
i
IT Portfolio Management - Definition & Context
Impact of Cloud Computing on IT Portfolio Management
p p g g
Summary
Architecture World ‘09
IT Architecture Firm

3. A quick review in the
enterprise…
enterprise
Decentralized
Computing
exity
Centralized
Comple
Computing
(shared services,
Centralized
shared
Computing
infrastructure…)
1970 2005
3
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4. 1970 2005
Focus on “Data Processing” IT-led business innovation & transformation
The role of IT in the organization was simple Increasing demands, expectations, and business reliance on IT
Few standalone apps in select departments Different types of solutions throughout the enterprise
A few internal users mostly in the same Internal users in different locations & geos, work
usiness
location arrangements, habits… + external interactions over different
channels
Bu
Users had limited IT skills The business community is increasingly IT savvy
Business operation used to be 9 – 5 (M-F) 24x7 connectivity, availability, and reliability
Controlled & predictable workload Less controlled & unpredictable workload
System availability & reliability requirements Service Level Objectives are much more complex and impact
were simple and only impacted the enterprise the value chain
Small set of vendors Different types of vendors and solutions
Simple technology stack Complex technology stacks
A few low level languages and tools
g g Different high level languages, multiple tools (i.e. CASE,
g g g p (
Technology
y
SLDC repositories, sophisticated compilers, interpreters…)
Simpler solution approach, architecture, and “Enterprise Architecture”, multiple layers, distributed
implementation computing, exponential data growth, OO, SOA, EDA, Grid…
A few IT roles Multiple new roles, titles, and specialized skills
Central development with in-sourced resources Distributed development teams & hybrid sourcing models
IT operation & management used to be simple IT operation and management is much more complicated
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5. Since 2005, New Models of IT
Sourcing & Computing…
S i C ti
"Service“
Service Oriented Architecture
Service Oriented Infrastructure
Service Oriented Integration
Service Oriented Enterprise
Service Oriented E
S i Oi d Economy
...
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6. Common Questions
What is Cloud Computing?
How
H mature i i ?
is it?
How is it used in my industry?
What are the specific opportunities for my business?
p pp y
Conversely, is it a threat to my business?
What is the adoption roadmap?
What are the key issues & risks?
What is the business impact?
What are the key metrics and best practices?
…
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IT Architecture Firm

7. What is Cloud Computing?
p g
A pool of highly scalable, abstracted infrastructure, • Scalable, abstracted
capable of hosting end-customer applications, that is infrastructure
billed by consumption. • Hosting environment
• Utility-based billing
• Style of computing A style of computing where massively scalable IT-related
• Massively scalable functions and information are provided "as a service" using
f ti di f ti id d " i " i
• “Shared services” Internet technologies, potentially to multiple external
• Internet accessible
customers.
Cloud Computing an emerging IT development,
deployment and delivery model, that enables Cloud
• IT development,
Services.
deployment, & delivery
p y , y
model
Cloud Services: Consumer and Business products, • Dynamic provisioning
services and solutions that are delivered and consumed in
• Cloud Services
real-time over the Internet
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7

8. Cloud Computing Model Solution
Business Capability
Control
Flexibility
Customization
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8

9. Cloud Computing Vendor
Landscape
Note: Sample list of vendors
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10. Cloud Computing Responsibility
Matrix
Infrastructure Hosting IaaS PaaS SaaS
Provider
Data Center Hosting provider has the Subscriber has no idea… IaaS Subscriber has no idea… PaaS Subscriber has no idea… SaaS
Management overall responsibility. provider abstracts the provider abstracts the provider abstracts the
Customers may negotiate infrastructure.
infrastructure infrastructure.
infrastructure infrastructure.
infrastructure
location.
Infrastructure Hosting Provider has the IaaS provider handles the physical (1) PaaS may run its own (1) SaaS may run its own
Operation & overall responsibility. infrastructure, but the subscriber is infrastructure infrastructure or partner
Management Customers may negotiate responsible for image creation, (2) PaaS may partner with an IaaS (2) SaaS may offer its own PaaS
specific terms. operation and management. provider or partner
In both cases, it is abstracted from In both cases, it is abstracted from
the subscriber. the subscriber.
Infrastructure Hosting Provider offers a pre- Subscriber creates virtual images PaaS provider offers some N/A - There is typically no
Configuration / defined menu, but customers and manages the configuration & capabilities for application infrastructure customization
Customization have the option pay for customization configuration & deployment
customization
Infrastructure Hosting Provider offers basic Typically, infrastructure support is N/A – PaaS provider offers N/A - There is typically no
Support support. Additional support provided through forums. support for PaaS typically infrastructure customization
can be negotiated. Premium support can be obtained, through forums.
but Subscribers ultimately handle
infrastructure support.
Application N/A – Customer is responsible. N/A – Subscriber is responsible N/A – Subscriber is responsible SaaS provider offers the solution
Development
Application N/A – Customer is responsible. N/A – Subscriber is responsible N/A – Subscriber is responsible SaaS provider offers some
Customization customization capabilities. 3rd
p
parties offer services.
Application N/A – Customer is responsible. N/A – Subscriber is responsible N/A – Subscriber is responsible SaaS provider handles
Maintenance maintenance for all subscribers
Application N/A – Customer is responsible. N/A – Subscriber is responsible N/A – Subscriber is responsible Typically forums
Support
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11. Sample IT Bill from Amazon
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12. IT Portfolio Management
An IT management practice
Smart IT investments and financial management decisions
Covers the entire IT lifecycle (select, build, deploy, monitor, optimize)
Builds on existing methods (i.e. TCO, ROI, NPV)
Leverages existing frameworks (i.e. Val-IT, COBIT, ITIL)
Val IT,
Integrates with other IT management practices (i.e. Asset Management,
Project Portfolio Management, Application Portfolio Management,
Service Portfolio Management)
g )
Objective:
Better visibility and management of IT investments
Managing IT investments holistically as a set of related portfolios
directly aligned with business objectives
Continuous optimization of IT investments to maximize value &
create new opportunities
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13. IT Portfolio Management Context
Note: In EA, above Application domain, we are
talking about SOA services not ITIL…
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14. Why Should You Care?
IT has been under financial scrutiny for the last decade. According to
analyst surveys, majority of business users are unhappy with IT costs, the
length of time it takes to get anything done, etc and demand better value.
Since the recession, there were significant cutbacks in IT budget. IT is
expected to do the same (or more) with existing financial resources.
Business i putting more pressure on IT b requesting service l l that
i is i by i i levels h
are hard to maintain (i.e. 99.99% availability…). The old “throw more
hardware at it” isn’t financially feasible.
In some mature companies IT is deep in innovation value chain It is
companies, chain.
necessary to have a better level of financial visibility (and predictability)
to make sound IT investment decisions.
In some companies the reporting structure has changed The CIO is
companies, changed.
reporting to the CFO. There is higher expectation to manage “IT as a
business”.
Overall, LoB executives expect better IT financial transparency &
, p p y
reporting.
Architecture World ‘09
IT Architecture Firm

15. Typical Barriers to Portfolio
Management
Awareness
Skills
Skill
Tooling
IT Governance Maturity y
Organizational Culture
Management Support
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16. Business Value Disciplines
Strategic Focus IT-Enabled Value
Operational Excellence
O ti l E ll • Effi i
Efficiency
• Automation
• Integration
• Agility
Customer Intimacy • Integration (360˚ customer view)
• Customer relationship management
• Predicting customer needs
• Agility
•…
Product/Service Leadership • IT/Business innovation
• Service Delivery
• Service Provisioning
•…
Source: The Discipline of Market Leaders
- Michael Treacy & Fred Wiersema
Architecture World ‘09
IT Architecture Firm

17. IT Portfolio Management by
Investment Type
Source: IT Governance: How Top Performers Manage IT Decision Rights for Superior Results
p g g p
Peter Weill & Jeanne W. Ross – USED WITH PERMISSION.
Architecture World ‘09
IT Architecture Firm

18. Impact of Cloud Computing on IT
Portfolio Management
Domain Impact of Cloud Computing
Financial • Subscription billing – This alone will provide a significant improvement into financial visibility and transparency to the
Management enterprise . (N.B. Many offer up-to-the-minute usage information.)
p ( y p g )
• Financial evaluation – It is much easier to evaluate the costs (i.e. TCO) of a Cloud based solution than an enterprise solution,
as majority of the variables associated with indirect costs (which are often difficult to fully capture & calculate) no longer exist
• Financial reporting – CC drives down the costs & efforts of capturing financial metrics
• IT budget planning – CC should simplify IT budget planning in most enterprises – There are some considerations that
management needs to pay attention here.
• IT charge back – CC can reduce the efforts in charge backs, but the benefit varies from enterprise to enterprise due to the
charge-back charge-backs
unique requirements
Project Portfolio • Project Funding – It is much faster to start a Cloud-based project, because the costs can be determined quickly and the costs
Management are substantially lower than the traditional methods
• Project Initiation :
• Wi h CC access to compute resources i i
With CC, is instantaneous and very cost effective
d ff i
• For IaaS & PaaS, majority of the software is already pre-loaded. For SaaS, the solution is already out there, but it may
need customization / integration. So, in general, ramp-up is much faster than the traditional model.
• Project Tracking/Reporting – CC providers, by virtue of their business model, the provide many up-to-the-minute reports
available, so it makes it easier for PMs to manage the projects.
Service Portfolio • P tf li Analysis & Tracking – CC billing makes it easy to track deployed services, understand who’s using them, how
Portfolio A l i T ki billi k t t kd l d i d t d h ’ i th h
Management often they are used, and calculate the average costs. Also, CC providers offer operational metrics which helps measure SLAs for
internal users. These are all huge benefits that remove operational issue at many organizations
Application Portfolio • The same benefits from Service Portfolio Management apply here.
Management
Asset Management • The same benefits from Service Portfolio Management apply here.
• In addition, CC removes the hassles associated with asset audit, renewal, configuration, distribution, etc….
Vendor/Contract • Vendor management / Contract negotiations are substantially facilitated in Cloud Computing.
Management Architecture World ‘09
IT Architecture Firm

19. Summary
IT Portfolio Management is a process with touchpoints from
idea inception validation post i l
id i i lid i implementation
i
IT Portfolio Management provides financial visibility and
transparency. This is essential for value creation.
p y
Cloud Computing brings positive change in many different
aspects to the enterprise It enables business to experiment
enterprise.
with different ideas quickly, and cost-effectively.
Cloud Computing is inherently fast and metrics-oriented.
Capturing results, f db k and analytics are super easy &
C i l feedback, d l i
fast.
Architecture World ‘09
IT Architecture Firm