M 01 Res 01

Copyright 2013 EMC Corporation.
All rights reserved

Copyright 2013 EMC Corporation. All Rights Reserved.
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trademarks of EMC Corporation in the United States and other countries. All other trademarks
used herein are the property of their respective owners. Copyright 2013 EMC Corporation.
All rights reserved. Published in the USA.

Revision Date: 04-22-2013
Revision Number: 1.01 MR-1TN-NPITBLIN

Copyright 2013 EMC Corporation. All rights reserved
Businesses are increasingly challenged to provide better services to their clients, keep ahead of
the competition, decrease spending while increasing profits, and work more efficiently. Many
companies, both traditional and non-traditional, are effectively using technology to develop
innovative ways to do or support their business. This course shows business leaders how their
organization can leverage technologies and service-centric delivery methods, such as cloud
computing and IT-as-a-Service (ITaaS), to facilitate this drive for innovation and efficiency
enabling IT to serve the business better, while offering strategic value. This course will also help
the business leaders determine if their business is ready for this transformation, how to
determine an appropriate starting point, and how to measure the transformations level of
success.

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Whether youre in government or a not-for-profit or a big company or a small company, these are your
two challenges. You want to increase your revenues and become more efficient and lower operating
costs and become more intimate with your customers.

In a recent study from Forrester, most organizations spent over 73% of their IT budget maintaining
existing systems with 27% going into investment areas that can differentiate the business. We need to
shift that investment mix and spend less money on maintenance and more money differentiating the
business and growing revenue.

Citation Notes:
The majority of IT budget funding will be allocated toward maintaining existing infrastructure.

When asked to consider their 2012 IT budgets and assign a percentage breakdown of spending that
would go towards maintaining existing infrastructure as opposed to spending on net new technology
projects, respondents indicated that nearly two-thirds (63%) of the typical 2012 IT budget will be
earmarked for the upkeep of existing infrastructure. The numbers do fluctuate when analyzed by an
organizations IT purchasing patterns, with leading-edge organizations anticipating allotting 43% of their
2012 IT budget to new technology projects, while average and laggard consumers expect to apportion
34% and 35% (respectively) of next years funding to net-new technology initiatives and ventures.
ESG, 2012 IT Spending Intentions Survey, January, 2012.

This is improving: 2010 Forrester ran a study that showed 73% maintain and 27% invest.

http://one.emc.com/clearspace/docs/DOC-48468
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Our EMC IT organization has access to world-class IT technology (and technologists)
We have grown as an organization despite our constant budget and unvarying use of physical
space
We use this timeframe because 2004 was when we started our virtualization journey using
VMware ESX technology.
We are a very different company from 2004:
Our revenues and number of employees have grown dramatically
Weve acquired a lot of companies during this timeframe and added a lot to our product
portfolio as well as entered new markets
We have greatly expanded our business footprint outside of developed economies
The data that we manage has grown 10x in this period
This growth has caused added demand on IT
We have 5 data centers:
Our two Enterprise Data Centers are in: Hopkinton, MA, Durham NC
The Westboro data center will be decommissioned by the end of 2012
Our Regional Data Centers: Cork, Ireland & Santa Clara, CA
KEY POINT: In a span of 7 years we have gone from having a 100% physical infrastructure to
achieving a remarkable 92% infrastructure virtualization in our IT environment.
Along our Journey we have won some awards and recognition

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KEY POINT: we are at 90% virtualization today. Our ultimate goal is to be 100% virtualized.
Phase 1: IT Production the focus was on Infrastructure
We started in 2004 with dedicated physical infrastructure
Every application that came into the datacenter was designed from the ground up
We brought in EMCs professional services organization and they helped us design highly consolidated
SANs
Our decision early on in this Journey to standardize on the Intel x86 architecture has helped us achieve
our virtualization efforts thus far
Phase 2: Business Production the focus moved to virtualizing mission critical applications
We went from a consolidated architecture to a shared architecture by building a large VMware cluster so
we could offer a shared, compute resource
This enabled us to provision resources to applications as needed
We deployed more and more apps on virtual servers / virtual machines
We are now at Phase 3: Run IT-as-a-Service
The first two phases focused on the technology aspect, and was really about building out a virtual,
consolidated, tiered infrastructure that has allowed us to save a lot of money, become more agile and
scalable
Now that we had virtualized our infrastructure, we need to change our service delivery model
IT as a Service is important even though we may already seem optimized, because perception is IT still
remains hard to do business with
Looking back, clearly the focus shifted from technology to a people and process perspective
The technology part was easy, changing our service delivery model changing the people and processes
to fit this new model and truly market our services to the business will be more difficult
There are multiple dimensions to the cloud, technology cannot stand alone you can be 100% virtualized
and still not be in the cloud if your people and processes have not evolved along the Journey
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EMC is and continues to be a great user of our own technology. As this chart shows over the
course of the last few years, we have moved from about 20 percent to about 40 percent of our
IT budget being spent on new applications and taken the time it provisions new applications
down from 90 days to approximately a dayliving proof of the power of the private cloud and
of the hybrid cloud.
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This transformation has resulted in EMC IT deriving a number of benefits.

Decisions on IT spend are now more value based since the business can better correlate value
to the spend. The opportunity to standardize and simplify the underlying infrastructure as well
as the rationalization of tools and applications has resulted in an agile capability delivery model
with new roles and competencies. The transformation has also resulted in some solid bottom
line numbers such as the $157M Capex savings and $66M Opex savings not to mention the
green savings to the tune of 100M pounds of CO2 that has been reduced.
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As discussed, the transformation has also resulted in new roles such as the cloud architect,
converged infrastructure specialist, service manager etc. It is extremely important to impart
education and training to be successful in the transformation. Every IT employee was
encouraged to attend the Cloud Infrastructure Services (CIS) course and get certified. This was
to ensure that everyone understood the journey we were on and could relate to change as it
happened.
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Copyright 2013 EMC Corporation. All rights reserved 9
Businesses are increasingly challenged to provide better services to their clients, keep ahead of
the competition, decrease spending while increasing profits, and work more efficiently. Many
companies, both traditional and non-traditional, are effectively using technology to develop
innovative ways to do or support their business. This course shows business leaders how their
organization can leverage technologies and service-centric delivery methods, such as cloud
computing and IT-as-a-Service (ITaaS), to facilitate this drive for innovation and efficiency
enabling IT to serve the business better, while offering strategic value. This course will also help
the business leaders determine if their business is ready for this transformation, how to
determine an appropriate starting point, and how to measure the transformations level of
success.
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This module is divided into three sections.
The first section focuses on the challenges that businesses face, companies who are using
cloud computing and IT-as-a-Service (ITaaS) to rise above these challenges by evolving IT to
serve as a strategic business partner.
The second section provides some basic terminology and concepts for leveraging cloud and
ITaaS to create a service-centric model for IT to deliver business value.
The final section, provides a strategy for using these technologies and transforming IT.
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Lets look at a sample business scenario. A media company successfully implemented a new
delivery model which replaces traditional brick and mortar providers. However, over time
customers expectations changed, they wanted immediate access to media, rather than waiting
for it to arrive via mail and new competitors where emerging.
The company was forced to re-invent their business model in order to survive. They
successfully leveraged technology to not only provide immediate access to media, but also
improve the customer experience by providing recommendations for items that fit within the
customers typical viewing profile. These innovations complemented the existing service and
satisfied customer needs. They were so successful that the company became responsible for
30% of North American web traffic.
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Currently, businesses are faced with an unstable economic climate where they have to stay
ahead of competition by offering innovative products quicker, while offering outstanding
customer service. They must achieve revenue goals, while also spending it efficiently. They
must be flexible enough to respond to changing needs and make the best use of their people.
But, they must also contend with the challenges of increased risk, the need to provide real-
time information, and cultural trends (e.g., social media, usage of multiple devices by
customers and employees). All these challenges dramatically impact organizations, who are
looking for better ways to do business.
The key themes that emerge from these challenges are for businesses to be more competitive
in existing and new markets, be more innovative in their products and services by utilizing new
sources of information, and be more efficient by reducing costs and using their employees
strategically.
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Lets look at some companies that have leveraged cloud-based IT transformation to capitalize on the opportunities.
To be more competitive:
Netflix originally offered DVD rentals via mail. With the growth of high-speed Internet, customers wanted to watch
movies immediately rather than wait for DVDs to arrive. Netflix had to quickly create an Internet-based product that
would still provide the quality and reliability of DVDs. Netflix leveraged the cloud to introduce an innovative streaming
media service, complementing their DVD rental business. Their streaming service currently has more subscribers than any
other competitor primarily because they were able to cater to changing customer needs, quickly and efficiently.
Corning manufacturing had been grappling with supply chain issues, loss of market share, and softening of the display
technologies market. They leveraged ITaaS to optimize their internal resources and develop a sustainable process to
introduce specialty products more quickly. This enabled them to address new markets and expand their business.
To be more innovative:
Amazon started as an online bookstore and evolved into a conglomerate that is a distribution channel for a massive
number of businesses and productsincluding their own content. They also became a product technology developer (e.g.,
tablets and e-Readers), and a Service Provider who supports other companies by renting technology assets.
Sanofi pharmaceuticals manages an enormous R&D organization, with a diverse pipeline of vaccines and medications for
diabetes, cancer treatment, and orphan diseases. Their success depends on creating new products that can be brought to
market through clinical trials. To do this more effectively, they replaced their existing technologies with cloud-based
solutions for clinical data collection, management and reporting, and performance-enhancing analytics. This has
accelerated product timelines, while minimizing costs and risk.
To be more cost efficient:
To address rising infrastructure costs, Emory healthcare needed alternative solutions to manage infrastructure growth. By
leveraging a Service Providers cloud, Emory reduced network-related expenses by 50%, hardware expenses by 30%, and
data storage costs by 60%. This also enabled them to shift staffing to more strategic initiatives, resulting in the rapid
addition of new patient features, such as Electronic Health Records (EHR).
The US government's official web portal, USA.gov, is an award winning interagency website that connects local, state, and
federal governments through a central, linked resource, providing information and services to the public. It receives over
100 million visits daily. To manage this volume, the website and its resources were migrated to the cloud. This migration
provided several benefits. For example, it eliminated idle server costs, while still accommodating huge traffic spikes. The
website now processes user requests in real-time, while also supplying increased security.

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Weve shown examples of ways both traditional and cutting edge technology companies
leveraged technology to make strategic improvements to their business. Now, lets look at what
you might want to do in your organization to make it more competitive, innovative, and
efficient.
For example:
To be more competitive - the sales team may want to provide a demonstration of
software that is too complex to install or incompatible with the mobile devices used by
the sales team. What if the business could install new software from a vendor or a
demo of their own software using on-demand resources.
To be innovative and improve market share - the business may want to use social media
data to monitor how a new product is performing in the market or how customers are
responding to a new advertising campaign. By combining social media site data with
corporate data, product marketing can use the media sites to measure the success of
new products. Or, the business may want or introduce new product features in quick
succession. By leveraging cloud services, new versions can be implemented daily (or
more frequently) to see how customers use new features and how they respond to
them on the primary site or through social media.
To be more efficient - the business may want to find new ways to reduce costs without
cutting functionality. By using on-demand IT or service provider resources, a sales
department might substantially reduce the cost of saleswithout sacrificing capabilities
provided by IT. Another possibility is that the business lacks the financial resources to
have a disaster recovery site. However, with a cloud service provider they can reduce
the risk of critical information loss , while maintaining systems availability to the
business.
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Given the current challenges and the goals to become competitive, innovative, and
efficientthe question becomes, How can you get there?
There are new technologies available, such as cloud computing, which help the business
function more efficiently. However, it is not about technology alone. Its about moving toward a
new way of approaching IT with business outcomes in mind. And, using internal and/or
external resources to operate smarter, utilizing human resources differently, and finding ways
to serve the business betterall while offering strategic value.
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In most IT departments today, resources and budgets are constrained. Business executives lack
confidence in ITs ability to support the objectives of the business. Because of this, they often
closely monitor IT spending, inhibiting ITs ability to respond to business needs. Business
executives have difficulty in seeing the business value derived from large capital expenditures
and operating expenses. They are uncertain about why so much money is spent on IT or why it
takes so long to complete projects. IT is often viewed as bureaucratic, unresponsive, and
controlling.
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To better meet business objectives, IT should transform itself from a cost center to a strategic
business partner within the organization. This is done through the evolution from a
technology-centric organization to a service-centric organization. With an IT-as-Service
model, IT views itself as a business responsible for cost, efficiency, and revenue. IT builds
products and services that support business objectives like revenue growth, competitive
advantage, customer retention, market share growth, and regulatory compliance that
customers see value in and pay for. The focus changes from the delivery and management of
assets to managing the supply and demand of business services. Also, linking initiatives to
business outcomes enables IT to effectively communicate whats working and whats not.
This can be accomplished by being flexible, responsive, and providing good service. IT value
and accomplishments should be communicated in terms that matter to business executives.
IT should cultivate relationships with the Lines of Business to better understand their needs.
Lastly, it is important for IT to understand that they are competing with public cloud
offerings. In order to compete, IT must compare their cost structures, service levels, and
ability to respond to business demands with those of public cloud competitors. In doing so, IT
must understand the public cloud market offerings, capabilities, and price. In the end, after
examining what can be accomplished effectively in-house, it sometimes makes better
financial sense to utilize public cloud offerings for certain business functions (i.e., email,
collaboration, etc.), enabling IT to concentrate on core functions to the business.
When IT embraces its role as a broker of services and reigns in shadow IT projects in the
public cloud, it provides increased security and compliance. Also, depending on the number
of shadow projects that may be utilizing cloud services, IT may have better collective
bargaining power to negotiate cheaper rates with the service provider(s).

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In response to these challenges, companies are looking to evolve their IT organizations from
serving as a support function to becoming a strategic business partner. As a strategic business
partner, it delivers services in a similar manner to an external service provider, offering
standardized services with associated pricing and guaranteeing service levels. In many cases, IT
organizations also use external service providers for non-core functions, thereby tapping into
the providers speed and capabilities. This frees IT to focus on the overall strategy and
challenges facing the business.
Through this transformation, businesses leverage both internal and external resources in a
centralized way. This helps the business meet the goals of being competitive, innovative, and
efficient, as well as, more secure and compliant. As shown in the chart (from the CIO Executive
Board), IT organizations are increasingly offering some level of services using the new service-
oriented model.
Organizations are leveraging technology, including cloud computing and IT-as-a-Service (ITaaS),
to address business challenges and evolving user needs. In the next section, well look at how
to use these technologies to address business needs and offer strategic value. Throughout the
discussion, keep in mind that transformation isnt just about technology, its a way of doing
business.
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To fully understand the implications of the business transformation, it is important to define
each of the terms as they relate to the step in the transformationstarting with virtualization
and evolving toward ITaaS.
The following are benefits of each:
Virtualization improves efficiency through consolidation and high resource utilization.
Other virtualization attributes include: workload portability, highly automated
maintenance, and improved availability.
Virtual Data Center (VDC) - improves efficiency through highly optimized resource
allocations based on trust, SLA, and capability. From a business perspective, the VDC
represents a key shift for the businessmoving from a model that dedicates hardware
to specific applications or departments toward a model which acts as a highly-
standardized utility, designed to run all of the business applications.
Cloud Computing reduces time-to-market, making the business more competitive.
Cloud also promotes innovation through the use of resource for short tests, while only
paying for what is used. This significantly reduces the cost and time associated with
building out data center resources. Businesses gain efficiency by optimizing resource
utilization. This model also provides cost and value transparency via a charge-for-
services-used model.
IT Service(s) improves user experience through self service. This further reduces the
total cost of service. IT services are usually aggregated to present more useful business
functions to the end users.
IT-as-a-Service (ITaaS) - improves competitiveness, innovation, and efficiency through
the delivery of services to the business users.
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Lets plot a strategy for making this transformation, starting with virtualization.
From a business perspective, virtualization provides the benefit of consolidating resources. It
facilitates the consolidation of highly underutilized physical servers (often experiencing
workloads under 20-25%). Through virtualization, some companies can reduce the number of
servers needed by as much as 10-20x. This can only happen if the platforms are all standardized
on one service platform, such as an Intel-based x86 architecture. Additionally, all other
resources, such as storage, must be accessible by and common to all the servers.
This foundation of standardization is a key element in the steps towards IT becoming more
agile and responsive as well as predictable and consistent. From an efficiency perspective,
there are space savings derived by reducing the footprint of the servers in the data center;
there are also cost reductions for cooling and power.
Without this foundation, the next steps are nearly impossible to accomplish because the
standardization and savings free up both technology and talent resources needed for cloud and
ITaaS program success.
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IT and technology are always evolving. It is critical to understand the trends as they relate to how
information is created and consumedboth today and in the future. Many believe that we are moving
towards the post-PC era, where the client-delivery model is a mobile interface.
In the data center, there was a shift from the mainframe (in the 70s and 80s) through client/server (in
the 90s) to the latest platform, cloud computing.
In the post-PC era, several themes are emerging:
Choice computing the user becomes the center of the IT universe. Users choose their own
applications and devices (e.g., tablets, smart phones, non-standard PCs), rather than IT making
those choices. This enables users to work in a way that they feel is most comfortable, intuitive,
and productive.
Data growth - while data centers are consolidating across multiple organizations, the data itself
is becoming disaggregated. Users often have multiple devices with information replicated
across them. This data can be stored in the cloud or onsite. As a result, there is a need for a
consistent set of data policies, regardless of its location. There needs to be a cohesive way to
manage this data, as well as, allow the company to leverage it, while still being aware of specific
regulations and laws.
Emerging roles new roles are focused on enhancing user experience and productivity:
Developer use technology to enhance the user experience. For example, Netflix
developers orchestrate the infrastructure as an integral part of the code they write.
Cloud Architect ensures information is accessible. For example, Sanofi uses cloud
architects to define and assist in the building of their ITaaS offerings.
Data Scientist ensures that users have the data that they need. For example, Amazon.com
leverages Data Science in their recommender system.
These themes have profound implications for the architecture, technologies, and best practices that
organizations use.
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The term cloud computing has different meanings to different people. Many experts view the cloud computing
definition by the National Institute of Standards and Technology (NIST), a US Government standards authority, as
a good working definition. NIST defines five key principles for cloud:
Rapid elasticity Provides the agility to immediately respond to changing business requirements. For example,
prior to major holidays, retail companies require significant amounts of extra processing power to respond to
the spike customers shopping for gifts. They need the flexibility to automatically and elastically expand its data
center capabilities to deal with the short-term need and then give those resources back as sales return to
normal levels.
On-demand and self service Provides agility, but also increases efficiency for the business. On-demand means
that IT systems are available on short notice, at any scaleand users only pay for the services consumed. This
can range from raw computing resources to a complete CRM application. For example, a business wants to
experiment with a new software product; they could temporarily install it on the on-demand cloud and test
itwithout having to purchase, install, or maintain any of the infrastructure. Self service enables the business
to leverage IT services as needed. This includes provisioning, using, and de-provisioning services.
Resource pooling Provides efficiency through resource sharing. This reduces costs and maximizes value. For
example, when businesses purchase and deploy individual servers for a specific application, such as a web
server, it often results in very low utilization. Resources can be optimized by leveraging virtualization to pool
resources, servers, networks, and storage.
Broad network access Enables mobilization and globalization so that the business can connect anyone to
anything from anywhere. For example, a customer should be able to use the companys online resources from
anywhere in the world using any device they have.
Measured service Provides a billing mechanism that shows the customer how much of a resource they
consumed and its associated cost. This helps users develop a better sense of accountability for resources they
consume as well the cost of those resources.
Source: http://csrc.nist.gov/publications/nistpubs/800-145/SP800-145.pdf

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The service models outlined in the NIST definition include.
Infrastructure-as-a-Service (IaaS) Provides scalability of compute, storage, memory,
and network resources. It is the foundation layer in any data center. These resources
can be either company or service provider managed. The location of the resources is
unimportant to the business user; the primary concern is service levels, cost, and
functionality. Note: The abbreviation CDN refers to a Content Delivery Network.
Platform-as-a-Service (PaaS) Provides scalability in the application infrastructure. It is
the layer used by developers that includes development environments, such as: Oracles
Java, Microsofts .NET, and many open environments.
Software-as-a-Service (SaaS) Provides scalability of users and licensing. This layer
resides on top of the IaaS and PaaS layers. It presents the application or service to the
end user. SaaS offerings vary from simple email applications (e.g., Gmail and Hotmail) to
fully functional Customer Relationship Management (CRM) systems (e.g.,
Salesforce.com).
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The service deployment model (Private, Public, and Hybrid) determines who controls the environment.
Private clouds are managed by the company. Cloud resources may reside on premise or with a service
provider. It is a private cloud because the company manages the infrastructureregardless of where it
resides. Many companies choose to use the firewall as a line of demarcation. For example, EMC IT
wanted to place some of its outbound systems closer to the providers network, so they placed systems
on premise at the providers data center. These systems were still managed and maintained by EMC IT.
Public clouds are managed by providers. Public providers such as Amazon, Rackspace, and Verizon
provide various services, which may include infrastructure (IaaS), full development environments (PaaS),
or applications such as Salesforce or NetSuite. A company might decide not to develop (or even run) a
CRM package in-house. They might use a cloud provider, like Salesforce, to supply CRM services; in this
case, the company can only add data to it, as well as, decide the level of employee access to the various
functions.
Hybrid clouds include both public and private clouds presenting a seamless service or application to an
end user. This type of service requires a deep understanding of the cloud services that are going to
become connected between the company and a service provider. In this model, the public portion can be
leveraged for commodity applications, scale, and workload changes while the private portion can provide
higher SLAs and data protections. An example would be to take the web side of an application and place
it on the public provider, allowing the company to scale resources as needed based on connections. The
back-end part of the application may be just a database, which resides internally on the companys
private cloud and is linked to the public cloud for the web services portion.
Community clouds are public clouds usually owned and managed by a specific community; they are
designed to bring together separate groups or companies with a common requirement or interest. For
example, a regional healthcare cloud could be constructed to have insurance companies, caregivers, and
hospitals work together and share the burden of cost and support. This community would also be HIPAA
and/or HITECH compliant to satisfy the compliance requirement of protecting shared patient data. Note:
In this example, the community cloud resides in a public cloud, but that is not a requirement of
community clouds.


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In the progression towards overcoming business challenges and meeting the goals of being
competitive, innovative, and efficient, the next step is evolving to ITaaS.
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ITaaS is the new IT business operating model. ITaaS leverages virtualization and cloud
computing to offer services that align to business needs. This is supported by standardization
and optimization. It includes simplified consumption through self service and transparent
pricing models that increase value awareness and guarantee support levels. This means that
consumers know exactly what they are getting. For this to occur, IT re-evaluates the services
they have traditionally offered and look for ways to partner with external providers. In this way,
IT can offer a catalog of services that leverages resources effectively, while meeting business
needs.
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Traditional IT processes designed to align to customer projects and specific applications tend to
be monolithic and multi-year, making them complex. As a result, it is hard for IT to innovate. IT
is often constrained by a strict budgeting process as well as resources that are dedicated,
though often underutilized. IT internal customers (e.g., Lines of Business) want to be more
responsive and agile in developing existing, as well as going after new business.
ITaaS provides a business-centric approach, focusing on services aligned to business outcomes,
improving competitiveness, innovation, and operational efficiency. It optimizes service
production and consumption, based on business requirements.
With ITaaS, governance determines which services will offer the most business benefit. These
services are delivered to users via a self service portal, on-demand. It leverages a virtualized
infrastructure as shared resources for efficiency. One of the benefits of services built on a cloud
platform is that they can often be used immediately.
With ITaaS, ITs role shifts from a cost center to a provider and a broker of services, who
provides strategic business value. IT assists the business by developing a strategic set of
services specifically designed to enable the business leverage external service providers. IT
becomes a service provider internally by creating an a-la-cart menu of services that are self-
service, have clear prices and Service Level Agreements (SLAs), and provide accurate billing
back to the business. For the external providers IT has to develop expertise in managing service
providers and serve as the liaison to those providers.
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Weve already talked about the changing business landscape and the technologies that can
assist in addressing the challenges, now lets consider how to incorporate those changes into
the plan implementing cloud and ITaaS.
In this next section, well discuss the steps the to take and how to get started. Well begin by
looking at some key areas that need to be addressed, and a starting point for change.
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There are four key areas that are the focus for the transformation of IT to ITaaS: governance,
finance, organization, and technology. Lets look at each of these areas in more detail.
31
Services governance provides a process to manage the services lifecycle from end-to-end. This
includes the oversight for developing new services, deploying them, and retiring them when
appropriate. By design, it distributes responsibility across the Lines of Business and IT to ensure
that the services provide optimal value. It also measures compliance and ensures
accountability.

From the business perspective, service governance ensures that services provide optimal value
to the business. These services should be categorized and created in a way that makes it easy
for consumers of the services to understand and use them.

From an IT perspective, services should not only align to the business needs, but also provide
innovation solutions to help the business maintain competitive advantage. To be effective, the
services governance function ensures that decision-making such as IT serving as both a
provider and a broker, is managed taking risk and corporate goals into account.
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To support the financial aspect of delivering ITaaS, IT must deliver greater transparency by:
including all the costs associated with delivering services, providing side-by-side comparisons
with competitive offers, and showing consumption relative to capacity. Both the business and
IT need to implement changes to realize financial benefits when using ITaaS.

The business must move away from a project-based budgeting model that allocates specific
resources to a percentage of the IT budget, which is then cross-charged to the business. The
new model focuses on operating expenses, which are based on consumption using Pay-As-You-
Go (PAYG). PAYG charges the business only for actual resource usage. This business may choose
to only have a model that is partial PAYG and pass through some costs using a percentage
allocation to accommodate work on legacy systems. PAYG model provides the business with a
more accurate picture of usage, this enables the business hold itself accountable when actual
consumption does not match the originally planned usage. Additionally, this information
facilitates planning for future consumption; the business can revise up or down future resource
needs.

IT must change its pricing models and billing strategy to make expenditures more predictable
so that the business can budget accordingly. IT must be thorough, including all the elements
that make up the price so that the comparison with providers is based on equal pricing models.
Pricing can include other aspects that differentiate the service to the business, (e.g., SLA or
trust), which may also be key objectives to the business. Accurate pricing models also help IT
plan for demand and supply. Accurate resource planning is key for IT to ensure sufficient
capacity for the projected demand. If a resource is scarce, prices can be increased to drive
demand down.
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The goal for this transformation is to evolve organization into an agile, service-centric model,
increasing efficiency rather than being dedicated to specific applications that cause poor
resource utilization. This brings a cultural change that delivers innovation and entrepreneurship
by offering services that benefit the company overall in being competitive and efficient in the
marketplace. It positions the organization for the future, by identifying the trends in the
markets and developing new skills and talent that can keep the company competitive.

The business impact of this transformation is that the consumers receive a high-value
engagement with IT, where they get strong advice and guidance on IT services, efficient
support, and alignment to business needs thereby fostering a culture of agility and innovation.
These are core differentiators that enable companies to stay competitive in the marketplace.

From an IT perspective, the transformation positions the organization for the future by
expanding skill sets, encouraging talent, and utilizing available resources in an efficient manner
by providing valuable services, as needed. This improves the organizations vitality, since it
empowers and sparks interest with the employees to ensure sustainable growth.
34
There are several goals for transforming to a cloud-based ITaaS environment. The first goal is to
implement, or validate, a virtualized technology infrastructure. This provides the underlying
framework for the services provided to consumers. Second, implement cloud automation and
orchestration tools to provide the interaction between the portal and the underlying
infrastructure. Lastly, present the services that have been configured in a catalog to consumers
via a self service portal.

A well-configured ITaaS environment ensures that services are designed with their actual costs,
identifying hidden expenses and is flexible enough to sustain multiple support and service
levels.

IT must change the way they utilize technology, eliminating resource silos and instead creating
pooled environments that can support the various services. This helps IT to operate more
efficiently.
35
Lets begin to address the key focus areas as the business evolves through the major milestones of
virtualization, cloud computing, and ITaaS. It is important to remember that communication, change
management, and training support these efforts throughout the entire transition.
Governance In each phase, define new roles and policies. When implementing cloud computing,
determine which items are appropriate to place in the public cloud and which should remain
within the private could. Set policies to ensure data security relative to the use of common
resource pools within the data center. It is also very important to understand Service Provider
(SP) terms of service, service levels (SLAs), and security policies. For ITaaS, there needs to be an
overarching process, which provides oversight for services lifecycle management.
Finance Initially, there are reduced operating costs as a result of consolidation. Next, evaluate
internal costs and compare them with competitors to develop a pricing strategy. Pricing may be
adjusted based on other business factors. Develop a chargeback system to charge based on
usage, this provides the funding for capacity expansion and future service development. Use
reporting to show the business not only what has been used, but also the business value derived
from that usage.
Organization Create a services-based organizational model with roles to support business needs
(e.g., sales, marketing, product management, professional services) and provide a liaison to the
SPs.
Technology Standardize platforms and processes, as well as, consolidate using resource pools to
free up resources. This provides the foundation for the transformation to cloud and ITaaS. The
next phase is to leverage cloud platforms, by turning the Virtual Data Center (VDC) into a private
cloud. Finally, with ITaaS implement on-demand self services using a service catalog that users
can access via a portal. Automate basic tasks, such as upgrades and resource adjustments, and
add orchestration to address complex workloads. This increases efficiency.
36
The key measures of success for the business as a result of moving to ITaaS include:
Competitiveness can be measured in a number of ways, one measure is a decreased
time-to-market and increased customer value for new offerings (or new markets). For
example, if it normally took two months to provision a new offering on the web and the
business can now provision it in a day, that provides the business with a competitive
advantage.
Innovation and agility the time-to-value measurement is a good indication success.
For example, if the proportion of what IT spends moves from an 80/20 ratio of
maintenance/new offers to a 40/60 ratio (or better), this indicates improved agility.
Customer experience - improves when the business is more responsive. Offering more
competitive products or services, responding more quickly to product improvements,
and shifting the focus from maintenance to new development will all improve customer
retention and overall satisfaction.
Winning business (both internally as well as externally) - When business needs are not
met, it looks to other providers for its services (shadow IT). This may solve an
immediate business problem, but often has long-term impacts, such as: increased cost
of doing business, misalignment with company governance, and increased risk.
Value based decisions enables the business better understand the costs (money,
service, risk, time-to-market) and how those translate into value for the business, so
that they make more effective decisions.

37
Once the decision has been made to go forward with the transformation to ITaaS, there are some key next steps to help
ensure success.
Opportunities:
Remember that ITaaS can help provide the business with opportunities to be more competitive, innovative and agile
in the ever-changing market place. This is often accomplished by developing new and sustainable capabilities such as
quicker time to market with products, ability to close sales with lower costs etc.
It is also an opportunity to invest in new technologies such as cloud computing and become more efficient in the use
of resources.
Alignment:
It is important to develop services that offer tangible value to the business and are aligned to the business strategy
and goals of the organization. To ensure success of the new services, it is also important to focus on a simplified user
experience, removing complexity in ordering and consuming these services.
Strong executive support is required to enable this transition and ensure that everyone is invested enough in it. It is
also a good idea to have evangelists that can highlight the benefits of this transition and provide thought leadership
throughout the organization to ensure that all efforts are aligned in the strategic direction.
Change:
By developing a culture of innovation and entrepreneurship, the business can invest in new opportunities, such as
competing in new markets, quickly bringing new products to market, and developing efficiency in the existing
services provided.
An effective change management strategy is essential given that any transition can be stressful on individuals and
teams. This requires over-communicating the key messages so that talent can adjust their mindset to new roles and
a new way of operating. It also means investing in skill development.
An evolutionary approach is required to be successful. This means initially taking on small projects, making
incremental changes, iterating and adjusting throughout the process, and building on successes.
Plan:
Evaluate where the business is today. Then, develop a plan that enables IT to quickly demonstrate success. This will
ensure buy-in from staff and management, as well as, help mitigate any negative perceptions of the change.
The financial model changes to a chargeback model, which may require adjustments in budgeting and accounting.
Similarly, preparatory steps will need to be taken for creating the new governance model.

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