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CHANGE
about

A Guide to finding your Cloud Power

 A Conversation about Change
Every business has unique and dynamic needs. I am sure yours is no different. Being constantly connected yet
maintaining security, increasing productivity and agility, reducing capital expenses – the demands from IT are
changing. Now, it’s not just about doing the same things in a new way but about a new way of doing
new things.

A recent Gartner poll found that by 2012, 80% of Fortune 1000 enterprises will be using some form of cloud or
off-premises computing services, and 20% of businesses will own no IT assets. We believe that the answer is in
the cloud; and it’s going to change the way you do business.

Consider how fast we have shifted online as users – to store data, connect with friends and using apps on our
personal mobile devices. Your workplace undoubtedly stands to gain by integrating with this ‘consumerisation’.
With the most comprehensive IT solutions of the cloud on earth, we now bring you the power to take control
of this change - develop and host applications with infinite scalability (Windows Azure), stay secure with your
We believe private cloud (Windows Server Hyper-V), enable productivity and real-time collaboration (Office 365) and
that the get better customer connection (Microsoft Dynamics CRM Online). With investments worth US $2.3 billion in
answer is in cloud infrastructure, over 30,000 dedicated engineers and more than 9000 Microsoft Partners, the Microsoft
the cloud; cloud is Enterprise-ready.
and it’s going
to change the I invite you to explore more of the cloud to experience the benefits of the change that the cloud brings -
way you do being ready for anything, but paying only for actual results; being able to scale as high or low as you want;
business. save energy, space and yet be omnipresent.

As a technologist, our cloud opens up a world of choices for you. With solution-specific benefits, a
whitepaper on the ‘Economics of the Cloud’ and business impact studies of organisations that have
moved to the Cloud, this handbook will help you start a conversation of change within your
organisation.

This is an exciting journey for any business interested in being what’s next.
We call it cloud power, and it’s yours for the taking.

Warm Regards,
Sanket Akerkar,
Managing Director,
Microsoft India
www.cloudpower.in

Your Guide to
Navigating the Cloud
THE CLOUD POWER PACK 1 - 13
Explore the areas in which IT can change your business for the better
CREATE a real-time collaboration hub 2
Enable people to work across time zones and locations with
Microsoft Office 365
CONNECT PEOPLE without making them meet 4
Drive productivity by communicating with Microsoft Online Services
in the Cloud
KNOW what your customers want 6
Respond faster with better customer intelligence with
Microsoft Dynamics CRM Online
SCALE Applications to near infinity 8
Build applications flexibly on the familiar Windows Azure platform
DRIVE greater control and IT efficiency in your Private Cloud 10
Transform IT services for greater business intelligence with
Microsoft System Center and Windows Server Hyper-V
What Cloud Power holds for You 12
Benefit from working with Microsoft Cloud Services application on Windows Azure
contents
RESOURCES 14 - 50
Explore and share the power of cloud in business with
whitepapers and real-life case studies
The ECONOMICS of the Cloud 15 - 30
Read this Microsoft Whitepaper to understand the long-term
vision of the underlying economics of cloud computing
CASE STUDIES of Cloud Power @ Work 31 - 50
Seamless migration @ 31
30,000 employees migrate to the Cloud without interrupting
business or daily operations
Improved Productivity @ 37
A simplified user experience improves collaboration and
cuts IT costs by 30%
Efficiency in the Private Cloud @ 41
120 servers become 20 with data center budgets getting
cut by 40%
IT as a Service @ 45
A global company builds an online Visual Attention service
The most comprehensive
solutions for the cloud. On Earth.
The Microsoft Cloud for Businesses

Infrastructure as a Service Platform as a Service Software as a Service

The Microsoft Cloud for Consumers

Windows Live
TM

TM
Hotmail

Windows Live TM

Windows
Messenger Update
PICK YOUR CLOUD POWER FOR IT PROFESSIONALS
On-demand computing with the
Here’s what the Cloud means for everyone in your organisation
right Infrastructure to actively
With the cloud, you can create a flexible IT ecosystem that addresses needs as they arise,
host, scale and manage all your
backed by the confidence that you always have the ability to do so.
The Microsoft technologies that you have already invested in is a great place to start. services with ease and speed. Plus
the choice to keep high-value
applications on-premises and move
commodity workloads to the cloud.
CREATE a Real-time collaboration hub | Pg 2 CONNECT without having to meet | Pg 4

KNOW what your customers FOR DEVELOPERS

want | Pg 6
Easy scalability and reduced time to
market for developing applications
on the Windows Azure Platform.
Our family of on-demand services
provides a familiar deployment
experience that helps focus on
coding and reduces complexity.

SCALE Applications to near infinity | Pg 8 FOR INFORMATION WORKERS

TRANSFORM IT services in your Enterprise | Pg 10 Productivity from any location
from the PC, phone and web
with familiar Applications, now
on the cloud. Our powerful
communication and collaboration
tools provide security-enhanced
connectivity and federated access
control.

1
 create
a real-time
collaboration hub
Connect your information workers
across time zones and geographies to share
information and work together in real time
Power up
collaboration by
Analysts' View
“Cloud-based email and
collaboration services will
see 10% penetration of
the enterprise email and
messaging market by
2012 and will near 65%
penetration by 2020.”
Gartner
Read More>>
2
Connecting across
devices and versions
Make it easy to access, edit and share
Office documents, presentations and
spreadsheets from the PC, phone or
browser using Microsoft Office 365.
Users can collaborate across different
platforms (PC or Mac), different
Microsoft Office versions and even
without have Microsoft Office on
their computers (from any web
browser).
Cloud Power @ Work
”Infosys is going to use Office Web
Apps extensively, and we expect it to
drastically reduce the time it takes to
complete RFPs and budgets.”
Vivek Bharathan,
Lead Technology Specialist, Infosys,
on overcoming document version
compatibility across 100,000
Microsoft Office users
Read More>>
Making the most of new
opportunities
Ensure reliability and connectivity for
all users - from colleagues located
around the world, to temporary
employees to people from a new
acquisition. With no server purchases
or deployments on SharePoint
Online, empower a small satellite
office, interim staff, or a newly
acquired business to work better
together right from the start.
Cloud Power @ Work
“Departments are getting
information out to stores faster,
because SharePoint Online is so easy
to use. We are excited to start using
workflows to automate common
processes such as onboarding new
employees.”
Rhonda Cobb,
Information Technology Manager,
REEDS Jewelers
Read More>>

Work with what you know
The familiar interface of Microsoft
Outlook and Office applications is
now extended online with Office 365
for Enterprises. Meaning no learning
curve plus now online productivity
features for your employees.
Cloud Power @ Work
“The speech-to-text features will be
great for our 20,000 or so mobile
device users because they will be
able to access their voice-mail
messages even if they can’t call into
the system.”
Dean Sepstrup,
Product Manager for Exchange,
Boeing on the Voice-Mail Preview
that’s helping drive employee
productivity
Read More>>
Enabling knowledge
sharing quickly
A unified enterprise content
management system can help
employees easily share best
practices and expertise with
blogs, wikis, search, surveys and
RSS feeds. Users can also easily
create and maintain collaborative
workspaces using meeting and
team site templates.
Cloud Power @ Work
“Together with Microsoft, we
hit the overall goal in 142 days
and helped Aviva achieve the
deployment in around one half of
the cost of the original budget”
Toby Redshaw,
CIO, Aviva, on creating 1 intranet
in 12 languages for 60,000
employees
Read More>>
Know More
Sharing data
reliably without
infrastructure costs
All documents and files saved
online are hosted on Microsoft
servers maintained by our own
trained experts. Patches and
security updates are supplied in real
time, ensuring that users always
work on the latest, most up-to-date
versions of applications.
Cloud Power @ Work
“Moving to Online Services
will enable us to reduce our IT
operational costs by roughly 30%
of what we’re currently spending.
The ability to introduce a variable
cost subscription model for these
collaborative technologies allows us
to more rapidly scale or divest our
investment as necessary.”
Alastair Robertson,
VP, Information Workplace
Read More>>
3
 connect
People without
making them meet
Help information workers meet and stay updated
from any location with secure online communication
services for email, conferencing, chat and networking
Power up
connectivity with
Analysts' View
“Exchange Server 2010
(is) an upgrade worth
considering. Look
for improvements in
three areas: back-end
improvements largely
connected to storage;
benefits to information
workers; and built-in basic
archiving capabilities.”
Forrester Research, Inc.
Read More>>
4
Real-time meetings
without the travel
Connect with colleagues and
engage customers in real-time
meetings, trainings or events on
Microsoft Live Meeting. Interact by
sharing applications or desktops
and using the multiple video and
VoIP audio capabilities. Whiteboard
tools and high-fidelity recording
also help keep notes.
Cloud Power @ Work
“Our goal in the long term is to
replace many of the PBX systems.
The enhanced voice capabilities
simplify everything, cost less, and
give people more functionality. I
don’t see a downside.”
John Tschannen,
Director of IT and User Services,
Energizer, on deploy the voice over
IP (VoIP) capabilities of Microsoft
Office Communications Online
Read More>>
An always-connected
remote workforce
Employees on the move can easily
stay in touch with presence, instant
messaging (IM), and PC-to-PC
audio and video calling with Office
Communications Online. Availability
can also be shown through
embedded presence in Microsoft
Outlook.
Cloud Power @ Work
"We have improved our
organizational efficiency by
30 percent. We have senior
management using Windows Mobile
devices who needs messages ‘on
the go’, mobile users who need to
access email from any connectivity
framework and sales personnel who
work from cyber cafes and access
email using Outlook Web Access.”
Mani Mulki,
Vice President-IT,
Godrej Industries Limited
Read More>>
Increased email
reliability and security
Moving to the cloud helps your
IT team provide multiple filters
and virus-scanning engines
using Microsoft Forefront Online
Protection to protect from spam,
viruses and phishing scams. A
central administration console
helps manage subscriptions,
provision users, reset passwords,
and configure services from any
location with Internet access.
Cloud Power @ Work
”In moving from Exchange Server
2007 to Exchange Server 2010,
the big driver will be the changes
to service availability…. We can
design a system that will have a
much higher level of uptime.”
Steven Presley,
IT Engineer - Staff, Qualcomm on
cutting email recovery time from
10 minutes to less than 30 seconds
Read More>>
Seamless online migration
With Exchange Online, users
can acess their familiar Outlook
account online without needing a
VPN connection. You can migrate
all mailbox content including
e-mail, calendar items, contacts,
and tasks.
Cloud Power @ Work
”In a five-month timeframe, we
migrated roughly 30,000 people
to a hosted solution, without
impacting their business or
interrupting their day-to-day
operations.”
Esat Sezer,
CIO, Coca Cola Enterprises
Read More>>
Know More
Familiar tools that can
be used by all
Mobile access to Exchange Online
is available from all email-ready
phones, spanning Windows Phone,
the iPhone, Android, Palm, Nokia,
and Blackberry devices. Choose
between on-premises and online
mailboxes depending on what
users want.
Cloud Power @ Work
”I’ve been able to provide equal
or better email service at a much
lower cost, which is a big win
for Godiva. We’re looking at a
$250,000 annual savings from
eliminating Notes.”
Steve Whitelam,
Director of Information Technology,
Global Shared Services, Godiva
Chocolatier on productivity gains
from moving to Microsoft Online
Services
Read More>>
5
 Know Ensuring rapid
what your user adoption
Inflexible software and a poor user
CUSTOMERS want experience often hamper usage
of CRM applications. Microsoft
Dynamics CRM Online provides
Strengthen customer interactions, an entire suite of marketing, sales
improve marketing and boost sales and service solutions within the
with easy online access to information familiar interface of Microsoft
Office Outlook on the PC or when
accessed online, ensuring rapid
user adoption and fast results.
Power up customer Cloud Power @ Work
relations BY
“We know that salespeople find
the new system much easier to
Analysts' View use. The rate of responses in our
“Microsoft Dynamics new system has increased by 30
CRM shines by offering to 45 percent over what it was in
flexibility for large and Salesforce.com.”
midsized organizations… Aisha Thomas,
Offering buyers the Marketing IT Manager, Unico
‘Power of Choice’ so that Read More>>
companies may choose
how to deploy, how to
pay, and how to use the
application.”
The Forrester Wave
6
Closing
deals faster
Give sales professionals instant
fast access to customer data and
history when connected to the
Internet and even when offline.
Sales prospects and customers
can be informed of new product
and service offerings with wizard-
based communication tools.
Cloud Power @ Work
“It would have taken 70 hours a
month to get the pre-opportunity
data that now is just there in the
system. Our efficiency has soared
by well over 100 percent with
Microsoft Dynamics CRM Online.”
Jeff Kiely,
Vice President of Sales and
Marketing, Trion
Read More>>
Generating
great demand
Understand your customers
better and target your resources
to the areas of highest return
with a comprehensive set of
marketing capabilities. Marketing
professionals can increase
marketing effectiveness and track
key performance with intuitive
data segmentation tools, campaign
management features and
marketing analytics, all available
online.
Cloud Power @ Work
“Using Marketing Automation in
Microsoft Dynamics CRM, we now
deliver over 5,000 birthday emails a
day to participants, reminding them
to celebrate their birthdays with us.”
Heather Dorr,
Senior Manager of Marketing
Information Systems, Cold Stone
Creamery which has enrolled over
15 lakh Birthday Club participants
with thousands of new members
joining everyday
Read More>>
Better information
sharing
Ensure customer loyalty with
consistent, efficient service by
empowering customer service
personnel with the right information.
Customer data can be made
available as and when needed -
through the user interface, online or
as an exported web file. The intuitive
configuration capabilities can be
tailored to fit your business needs by
quickly adding or modifying fields,
forms, workflow and reports.
Cloud Power @ Work
“Microsoft Dynamics CRM has been
essential to helping us improve
our customer satisfaction levels
and implement an effective sales
management process. It provides a
single version of our customer data
to all our sales staff.”
Umair Chaudhary,
COO, Barclays Bank LP, UAE and
Gulf on increasing customer
satisfaction by 15 percent
Read More>>
Try it Now
Growing with your
business needs Know More
Easy-to-use wizards and point-
and-click customization tools help
you customise and connect your
CRM data with existing business
system data in real-time. The pay-
per-user model delivered online,
makes setting up quick to scale as
required without any server setup
or expensive hardware upgrades.
Cloud Power @ Work
“By switching to Microsoft Dynamics
CRM Online from Salesforce.com,
we’re saving nearly $13,000 each
month with 160 users.”
Joel Friedman,
CIO, Century Payments
Read More>>
7
 SCALE
APPLICATIONS
TO NEAR INFINITY
Offer your developers a flexible and familiar
environment to easily create and host
cloud-based applications with Windows Azure
GET THE POWER TO
Analysts' View
“Just as Windows played
a significant part in
earlier shifts, Windows
Azure is poised to take an
important role in this new
world. If you're responsible
for charting your firm's
path, understanding and
evaluating the Azure
environment makes
good sense.”
David Chappell &
Associates
8
Easily scale your
Applications
While running applications in the
Cloud, you don’t have to worry
about scalability or performance
issues. If there is a sudden
demand or load expected on the
servers, the performance can be
boosted easily by just increasing
the processing capabilities.
Cloud Power @ Work
“Windows Azure helps 3M
customers take advantage
of complex algorithms that
encapsulate 30 years of research
and get simple, powerful results
from their browser, almost
instantly.”
Terry Collier,
Marketing Manager, 3M
on creating and launching a web-
Based Visual Attention service for
customers on Windows Azure
Read More>>
Develop
without boundaries
Creating in the cloud means
no more worries about servers,
storage or hardware. Your
developers can focus on the
code with a test bed always at
hand and go from a test server
to a production server almost
immediately.
Cloud Power @ Work
“By running manageCarbon
(HCL’s new carbon-data
management application) on
Windows Azure, our customers
can be up and running in one-
quarter of the time that it took
with an on-premises model.”
Rajesh Babu Suraparaju,
Product Manager, HCL
Read More>>

No more data maintenance
With SQL Azure, you can easily
provision and deploy multiple
databases without having to
install, setup, patch or manage
any software. High-availability
and built-in fault tolerance
makes physical administration
obsolete.
Cloud Power @ Work
“By using these tools to rapid
by build applications and
services and migrate them to
the Windows Azure platform,
we will be able to help our
customers quickly react to
market changes without major
capital expenditures.”
Chandra Surbhat,
Global Head of Microsoft
Business Solutions, Wipro
Technologies
Read More>>
Avoid training costs
The interoperable Azure platform
integrates with what you already
have. Visual Studio developers can
start building applications in no
time and also work across SOAP,
REST, XML and PHP platforms
from a single location.
Cloud Power @ Work
“The software distribution system
we built with Windows Azure is 10
times cheaper than our previous
solution... Most of our developers
are experienced with Visual Studio
tools. That was a good argument
for using the Windows Azure
platform, because we can use the
same development environment.”
ELMAR STOECKER,
Director Portfolio Management,
Siemens IT Solutions and Services
Read More>>
Try it Now
A Secure Framework
Use the security framework
you are familiar with many of
the Windows Azure services Know More
using the core .Net libraries,
keeping much of the security and
encryption details the same. A
firewall mechanism enables you
to allow or prevent connections
from various sources, right down
to specifying IP addresses or IP
range.
Cloud Power @ Work
“Windows Azure gives IT
departments, incredible flexibility
and efficiency in deploying new
services. As a trusted third party,
VeriSign adds a layer of (online)
security to those environments.”
RYAN WHITE,
Product Marketing Manager
for SSL, VeriSign on adding
VeriSign® SSL Certificates on
Windows Azure.
Read More>>
9
 TRANSFORM
IT SERVICES
IN your ENTERPRISE
Drive efficiency through
greater flexibility and control of IT
services in your own private cloud
Power up BUSINESS
AGILITY with
Analysts' View
“For most organisations,
virtualisation will provide
the foundation and the
stepping-stone for the
evolution to private cloud
computing… Security must
become adaptive to support
a model where workloads
are decoupled from physical
hardware and dynamically
allocated to a fabric of
computing resources.”
Thomas Bittman, Gartner
analyst
Read More>>
10
Efficiency through
Rs.
automation
Build a flexible and efficient
private cloud infrastructure using
Windows Server 2008 R2 Hyper-V
and System Center. By automating
data resources management and
following a self-service model,
you can save on operational costs
in physical administration and
troubleshooting.
Cloud Power @ Work
”We have trimmed our physical
server holdings from 120 to
merely 20 servers. The expenses
on server boxes have dropped
drastically by 40 percent of our
data center budget.”
Sandeep gandhi,
Sr. Manager, Data Center
Operations, KPIT Cummins
Read More>>
End-to-End Management
Control
Automation and migrating online
doesn’t mean loss of control. In
fact, you can now manage your
entire IT infrastructure spanning
physical on-premises and virtual
cloud environments from a single
screen.
Cloud Power @ Work
“We chose Windows Server 2008
R2 Hyper-V because we have
standardized our IT setup on
Microsoft technologies. Moving to
a new platform would have meant
lack of predictability and increased
costs”
SHYAM CHANDRAMANI,
Unit Manager - Global Server
Team, Mphasis Limited
Read More>>

Freedom to focus
on business
Simplifying IT management and
the assurance of security means
more time for you to focus on
developing solutions that would
have not been possible before.
Cloud Power @ Work
“Microsoft has invested billions of
dollars in cloud technologies,
which gives us peace of mind...
confidence at the Associated
Press that our data is secure, even
though it is off-premises.”
Pramod Anchuparayil,
Software Architect, Associated
Press on hosting its Breaking
News API on Azure
Read More>>
Faster
time to market
With its flexibile setup, private
cloud technology accelerates
development times for custom
applications and lets IT respond
quickly to changing business
needs. The private cloud can inte-
grate with existing toolsets and
provide symmetry with your on-
premises or cloud database.
Cloud Power @ Work
“You simply plug in and use the
relevant resources... The ability
to receive these resources as a
service made it possible for us to
considerably speed up the process
of reaching customers. Plus, we
avoided spending US $50,000 on
hardware and a hosting facility.”
NIR HAGSHURY,
Chief Technical Officer, TicTacTi
Read More>>
Try it Now
Maximise your IT
investments
Leverage your existing assets and Know More
skill sets - across identity (Active
Directory), management (System
Center) and developer technolo-
gies (.Net, SQL Server and Visual
Studio) - to work on private and
public cloud environments.
Cloud Power @ Work
“With Windows Azure, we didn’t
have to make changes to the ar-
chitecture of our solution to get it
running. To start up quickly - that
is really big for us.”
RAIK DITTRICH,
Innovation Manager, T-Systems
Read More>>
11
 What Cloud Power
holds for you
Benefit from working with Microsoft Cloud Services
the most comprehensive set of solutions for the cloud

Pay for what happens
IT costs are now flexible – just
pay per user per month on
any application as a service.
Different usage models also
help you accurately predict
costs.
Don’t throw
anything away
Move only what you want
to the cloud with a hybrid
model of on-premises and
off-premises resources. Build
on your existing IT assets
and connect them to online
services.

12

No more
maintenance
Always use the latest software
without worrying about
upgrades and patches. The
cloud automatically updates
to the latest versions.
No training required
All your users can easily move
to and from the cloud, using
their skill sets and familiarity
with the products they
currently use. Get a consistent
experience across all devices.
15 years of experience
When you work in the
Microsoft Cloud, you leverage
the knowledge and expertise
of 15 years, ranging from
applications (Hotmail) to
search (Bing) and platforms
(Xbox Live)
Help at hand
Our ecosystem of 9,000
partners - spanning ISVs, value-
added resellers and systems
integrators - choose from
our ecosystem to help you in
migration, hosting services
and creating customised
applications.
Develop faster
Build applications faster than
ever with a million-strong
developer base writing to
Microsoft platforms and
more coming through our
interoperability support of
third-party solutions.
Stay secure
Your data is stored on a global
network of 200+ enterprise-
class data centers with SAS
70 and ISO 27001 security
certifications audited by an
independent third party.
Always available
All the resources needed for
a robust cloud computing
infrastructure - a global reach,
a commitment to security, 99.9
percent uptime SLA with 24/7
service and support.
Lower costs
No more paying for hardware
and facility expenses. Cut down
on maintenance and operational
overheads by paying for service.
13
 RESOURCES Why the Cloud makes Business Sense
Thousands of companies are discovering why making their IT an enterprise-
ready service makes business sense. Explore more with our whitepaper and see
how global companies are seeing business benefits in the Microsoft Cloud.

The Economics of the Cloud | Pg 15 Seamless migration at Coca Cola Enterprises | Pg 31

Improved Productivity at GlaxoSmithKline | Pg 37

Efficiency in the Private Cloud at KPIT Cummins | Pg 41

IT as a Service at 3M | Pg 45

14
 Computing is undergoing a seismic shift from client/server to the

cloud, a shift similar in importance and impact to the transition from

THE
mainframe to client/server. Speculation abounds on how this new

era will evolve in the coming years, and IT leaders have a critical

ECONOMICS OF need for a clear vision of where the industry is heading. We believe

THE CLOUD
the best way to form this vision is to understand the underlying

economics driving the long-term trend. In this paper, we will assess

the economics of the cloud by using in-depth modeling. We then use

this framework to better understand the long-term IT landscape.

For comments or questions regarding the content of this paper, please contact Rolf Harms
(rolfh@microsoft.com) or Michael Yamartino (michael.yamartino@microsoft.com)

15

Introduction
W
hen cars emerged in the
early 20th century, they were
initially called “horseless
carriages”. Understandably, people
were skeptical at first, and they viewed
the invention through the lens of the
paradigm that had been dominant for
centuries: the horse and carriage. The
first cars also looked very similar to
the horse and carriage ( just without
the horse), as engineers initially failed
to understand the new possibilities of
the new paradigm, such as building
for higher speeds, or greater safety.
Incredibly, engineers kept designing
the whip holder into the early models
before realizing that it wasn‘t necessary
Horseless Carriage Syndrome anymore.
16
Initially there was a broad failure to fully comprehend the new paradigm. Banks
claimed that, The horse is here to stay but the automobile is only a novelty, a fad”.
Even the early pioneers of the car didn‘t fully grasp the potential impact their work
could have on the world. When Daimler, arguably the inventor of the automobile,
attempted to estimate the long-term auto market opportunity, he concluded there
could never be more than 1 million cars, because of their high cost and the shortage
of capable chauffeurs1.
By the 1920s the number of cars had already reached 8 million, and today there are
over 600 million cars – proving Daimler wrong hundreds of times over. What the early
pioneers failed to realize was that profound reductions in both cost and complexity of
operating cars and a dramatic increase in its importance in daily life would overwhelm
prior constraints and bring cars to the masses.
Today, IT is going through a similar change: the shift from client/server to the cloud.
Cloud promises not just cheaper IT, but also faster, easier, more flexible, and more
effective IT. Just as in the early days of the car industry, it‘s currently difficult to see
where this new paradigm will take us. The goal of this whitepaper is to help build
a framework that allows IT leaders to plan for the cloud transition2. We take a
long-term view in our analysis, as this is a prerequisite when evaluating decisions and
investments that could last for decades. As a result, we focus on the economics of cloud
rather than on specific technologies or other driving factors like organizational change,
as economics often provide a clearer understanding of transformations of this nature.
In Section 2, we outline the underlying economics of cloud, focusing on what makes it
truly different from client/server. In Section 3, we will assess the implications of these
economics for the future of IT. We will discuss the positive impact cloud will have but will
also discuss the obstacles that still exist today. Finally, in Section 4 we will discuss what‘s
important to consider as IT leaders embark on the journey to the cloud.
1
Source: Horseless Carriage Thinking, William Horton Consulting
2
Cloud in this context refers to cloud computing architecture, encompassing both public and private clouds.
ECONOMICS OF THE CLOUD
Economics are a powerful force in shaping industry transformations. Today‘s discussions
on the cloud focus a great deal on technical complexities and adoption hurdles. While
we acknowledge that such concerns exist and are important, historically, underlying
economics have a much stronger impact on the direction and speed of disruptions, as
technological challenges are resolved or overcome through the rapid innovation we‘ve
grown accustomed to (Fig. 2). During the mainframe era, client/server was initially viewed
as a toy technology, not viable as a mainframe replacement. Yet, over time the client/
server technology found its way into the enterprise (Fig. 3). Similarly, when virtualization
technology was first proposed, application compatibility concerns and potential vendor
lock-in were cited as barriers to adoption. Yet underlying economics of 20 to 30 percent
savings3 compelled CIOs to overcome these concerns, and adoption quickly accelerated.
The emergence of cloud services is again fundamentally shifting the economics of IT. Cloud
technology standardizes and pools IT resources and automates many of the maintenance
tasks done manually today. Cloud architectures facilitate elastic consumption, self-service,
and pay-as-you-go pricing.
The massive aggregate scale of these mega DCs will bring considerable and ongoing
R&D to bear on running them more efficiently, and make them more efficient for their
customers. Providers of large-scale DCs, for which running them is a primary business goal,
are likely to benefit more from this than smaller DCs which are run inside enterprises.
Cloud also allows core IT infrastructure to be brought into large data centers that take
advantage of significant economies of scale in three areas:
Fig. 2: CLOUD OPPORTUNITY
Source: “How convention shapes our market”
longitudinal survey, Shana Greenstein, 1997.
• Supply-side savings. Large-scale data centers (DCs) lower costs per server.
• Demand-side aggregation. Aggregating demand for computing smooths overall variability, allowing
server utilization rates to increase.
• Multi-tenancy efficiency. When changing to a multitenant application model, increasing the number
of tenants (i.e., customers or users) lowers the application management and server cost per tenant.
fig. 3: BEGINNING THE TRANISATION TO CLIENT SERVER TECHNOLOGY
Source: Microsoft
2.1 Supply-Side Economies of Scale
Cloud computing combines the best economic properties of mainframe and client/server
computing. The mainframe era was characterized by significant economies of scale due
to high up-front costs of mainframes and the need to hire sophisticated personnel to
manage the systems. As required computing power – measured in MIPS (million instructions
per second) – increased, cost declined rapidly at first (Fig. 4), but only large central IT
organizations had the resources and the aggregate demand to justify the investment. Due
to the high cost, resource utilization was prioritized over end-user agility. Users‘ requests
were put in a queue and processed only when needed resources were available. With the
advent of minicomputers and later client/server technology, the minimum unit of purchase
was greatly reduced, and the resources became easier to operate and maintain. This
modularization significantly lowered the entry barriers to providing IT services, radically
improving end-user agility. However, there was a significant utilization tradeoff was, resulting
in the current state of affairs: datacenters sprawling with servers purchased for whatever
needed existed at the time, but running at just 5%-10% utilization4.
Cloud computing is not a return to the mainframe era as is sometimes suggested, but in fact
offers users economies of scale and efficiency that exceed those of a mainframe, coupled
with modularity and agility beyond what client/server technology offered, thus eliminating
the tradeoff.
The economies of scale emanate from the following areas:
Cost of power: Electricity cost is rapidly rising to become the largest element of total cost
of ownership (TCO),5 currently representing 15%-20%. Power Usage Effectiveness (PUE)6
tends to be significantly lower in large facilities than in smaller ones. While the operators of
3
Source: Dataquest Insight: Many Midsize Businesses Looking Toward 100% Server Virtualization. Gartner, May 8, 2009
4
Source: The Economics of Virtualization: Moving Toward an Application-Based Cost Model, IDC, November 2009.
5
Not including app labor. Studies suggest that for low-efficiency datacenters, three-year spending on power and
cooling,including infrastructure, already outstrips three-year server hardware spending.
6
Power Utilization Effectiveness equals total power delivered into a datacenter divided by critical power – the power needed
to actually run the servers. Thus, it measures the efficiency of the datacenter in turning electricity into computation.The best
theoretical value is 1.0, with higher numbers being worse.
17
 small data centers must pay the prevailing local rate for electricity, large providers can pay
less than one-fourth of the national average rate by locating its data centers in locations
with inexpensive electricity supply and through bulk purchase agreements7. In addition,
research has shown that operators of multiple data centers are able to take advantage of
geographical variability in electricity rates, which can further reduce energy cost.
Fig. 4: Economies of Scale (Illustrative)
Source: Microsoft
Infrastructure labor costs: While cloud computing significantly lowers labor costs at
any scale by automating many repetitive management tasks, larger facilities are able to
lower them further than smaller ones. While a single system administrator can service
approximately 140 servers in a traditional enterprise,8 in a cloud data center the same
administrator can service thousands of servers. This allows IT employees to focus on higher
value-add activities like building new capabilities and working through the long queue of
user requests every IT department contends with.
Security and reliability: While often cited as a potential hurdle to public cloud adoption,
increased need for security and reliability leads to economies of scale due to the largely
fixed level of investment required to achieve operational security and reliability. Large
commercial cloud providers are often better able to bring deep expertise to bear on this
problem than a typical corporate IT department, thus actually making cloud systems more
secure and reliable.
Buying power: Operators of large data centers can get discounts on hardware purchases
of up to 30 percent over smaller buyers. This is enabled by standardizing on a limited
number of hardware and software architectures. Recall that for the majority of the
mainframe era, more than 10 different architectures coexisted. Even client/server included
nearly a dozen UNIX variants and the Windows Server OS, and x86 and a handful of RISC
architectures. Large-scale buying power was difficult in this heterogeneous environment.
7
Source: U.S. Energy Information Administration (July 2010) and Microsoft. While the average U.S. commercial ratesome
locations offer power for is 10.15 cents per kilowatt hour, as little as 2.2 cents per kilowatt hour
18
With cloud, infrastructure homogeneity enables scale economies. Going forward, there
will likely be many additional economies of scale that we cannot yet foresee. The industry
is at the early stages of building data centers at a scale we‘ve never seen before (Fig. 5).
2.2 Demand-Side Economies of Scale
The overall cost of IT is determined not just by the cost of capacity, but also by the degree
to which the capacity is efficiently utilized. We need to assess the impact that demand
aggregation will have on costs of actually utilized resources (CPU, network, and storage)9.
In the non-virtualized data center, each application/workload typically runs on its own
physical server10. This means the number of servers scales linearly with the number of server
workloads. In this model, utilization of servers has traditionally been extremely low, around
5 to 10 percent11.
Fig. 5: RECENT LARGE DATA-CENTER PROJECTS
Source: Press Releses
Virtualization enables multiple applications to run on a single physical server within
their optimized operating system instance, so the primary benefit of virtualization is that
fewer servers are needed to carry the same number of workloads. But how will this affect
economies of scale? If all workloads had constant utilization, this would entail a simple
unit compression without impacting economies of scale. In reality, however, workloads
are highly variable over time, often demanding large amounts of resources one minute
and virtually none the next. This opens up opportunities for utilization improvement via
demand-side aggregation and diversification.
8
Source: James Hamilton, Microsoft Research, 2006.
9
In this paper, we talk generally about resource utilization. We acknowledge there are important differences among resources.For
example, because storage has fewer usage spikes compared with CPU and I/O resources, the impact of some of what we discuss
here will affect storage to a smaller degree.
10
Multiple applications can run on a single server, of course, but this is not common practice. It is very challenging to move a running
application from one server to another without also moving the operating system, so running multiple applications on one operating
system instance can create bottlenecks that are difficult to remedy while maintaining service, thereby limitingagility. Virtualization
allows the application plus operating system to be moved at will.
11
Source: The Economics of Virtualization: Moving Toward an Application-Based Cost Model, IDC,November 2009.
We analyzed the different sources of utilization variability and then looked at the ability
of the cloud to diversify it away and thus reduce costs.
We distinguish five sources of variability and assess how they might be reduced:
1. Randomness: End-user access patterns contain a certain degree of randomness.
For example, people check their email at different times (Fig.6). To meet service level
agreements, capacity buffers have to be built in to account for a certain probability that
many people will undertake particular tasks at the same time. If servers are pooled, this
variability can be reduced.
Fig. 6: RANDOM VARIABILITY (EXCHANGE SERVER)
Source: Microsoft
2. Time-of-day patterns: There are daily recurring cycles in people‘s behavior: consumer
services tend to peak in the evening, while workplace services tend to peak during the
workday. Capacity has to be built to account for these daily peaks but will go unused
during other parts of the day causing low utilization. This variability can be countered
by running the same workload for multiple time zones on the same servers (Fig. 7) or by
running workloads with complementary time-of-day patterns (for example, consumer
services and enterprise services) on the same servers.
Fig. 7: TIME-OF-DAY PATTERNS FOR SEARCH
Source: Bing Search volume over 24-hour
period
3. Industry-specific variability: Some variability is driven by industry dynamics. Retail
firms see a spike during the holiday shopping season while U.S. tax firms will see a peak
before April 15 (Fig. 8).
Fig. 8: INDUSTRY-SPECIFIC VARIABILITY
Source: Alexa Internet
There are multiple kinds of industry variability - some recurring and predictable (such
as the tax season or the Olympic Games), and others unpredictable (such as major
news stories). The common result is that capacity has to be built for the expected peak
(plus a margin of error). Most of this capacity will sit idle the rest of the time. Strong
diversification benefits exist for industry variability.
4. Multi-resource variability: Compute, storage, and input/output (I/O) resources are
generally bought in bundles: a server contains a certain amount of computing power
(CPU), storage, and I/O (e.g., networking or disk access). Some workloads like search use a
lot of CPU but relatively little storage or I/O, while other workloads like email tend to use a
lot of storage but little
CPU (Fig. 9).
Fig. 9: MULTIRESOURCE VARIABILITY
(ILLUSTRATIVE)
Source: Microsoft
While it‘s possible to adjust capacity by buying servers optimized for CPU or storage,
this addresses the issue only to a limited degree because it will reduce flexibility and
may not be economic from a capacity perspective. This variability will lead to resources
going unutilized unless workload diversification is employed by running workloads with
complementary resource profiles.
19
 5. Uncertain growth patterns: The difficulty of predicting future need for computing
resources and the long leadtime for bringing capacity online is another source of low
utilization (Fig. 10).
Fig. 10: DIVERSIFYING RANDOM VARIABILITY
Source: Microsoft
For startups, this is sometimes referred to as the TechCrunch effect. Enterprises and
small businesses all need to secure approval for IT investments well in advance of
actually knowing their demand for infrastructure. Even large private companies face this
challenge, with firms planning their purchases six to twelve months in advance (Fig. 10).
By diversifying among workloads across multiple customers, cloud providers can reduce
this variability, as higher-than-anticipated demand for some workloads is canceled out by
lower-than-anticipated demand for others.
A key economic advantage of the cloud is its ability to address variability in resource
utilization brought on by these factors. By pooling resources, variability is diversified
away, evening out utilization patterns. The larger the pool of resources, the smoother the
aggregate demand profile, the higher the overall utilization rate, and the cheaper and
more efficiently the IT organization can meet its end-user demands.
We modeled the theoretical impact of random variability of demand on server utilization
rates as we increase the number of servers12. Fig. 11 indicates that a theoretical pool of
1,000 servers could be run at approximately 90% utilization without violating its SLA. This
only holds true in the hypothetical situation where random variability is the only source
of variability and workloads can be migrated between physical servers instantly without
interruption. Note that higher levels of uptime (as defined in a service level agreement or
SLA) become much easier to deliver as scale increases.
Clouds will be able to reduce time-of-day variability to the extent that they are diversified
20
amongst geographies and workload types. Within an average organization, peak IT usage
can be twice as high as the daily average. Even in large, multi-geography organizations,
the majority of employees and users will live in similar time zones, bringing their daily
cycles close to synchrony. Also, most organizations do not tend to have workload patterns
that offset one another: for example, the email, network and transaction processing
activity that takes place during business hours is not replaced by an equally active stream
of work in the middle of the night. Pooling organizations and workloads of different types
allows these peaks and troughs to be offset.
Fig.11: DIVERSIFYING RANDOM VARIABILITY
Source: Microsoft
Industry variability results in highly correlated peaks and troughs throughout each firm
(that is, most of the systems in a retail firm will be at peak capacity around the holiday
season (e.g., web servers, transaction processing, payment processing, databases)13. Fig.
12 shows industry variability for a number of different industries, with peaks ranging from
1.5x to 10x average usage.
Microsoft services such as Windows Live Hotmail and Bing take advantage of multi-
resource diversification by layering different subservices to optimize workloads with
different resource profiles (such as CPU bound or storage bound). It is difficult to quantify
these benefits, so we have not included multi-resource diversification in our model.
12
To calculate economies of scale arising from diversifying random variability, we created a Monte Carlo model to simulatedata centers of various
sizes serving many random workloads. For eachsimulated DC, workloads (which are made to resemble hypothetical web usage patterns) wer
successively added until the expected availability of server resources dropped below agiven uptime of 99.9 percent or 99.99 percent. The
maximum number of workloads determines the maximum utilization rate at which the DC‘s servers can operate without compromising
performance.
13
Ideally, we would use the server utilization history of a large number of customers to gain moreinsight into such patterns. However, this data is
difficult to get and often of poor quality. We therefore used web traffic as a proxy for the industry variability.
Some uncertain growth pattern variability can be reduced by hardware standardization
and just-in-time procurement, although likely not completely. Based on our modeling, the
impact of growth uncertainty for enterprises with up to 1,000 servers is 30 to 40 percent
overprovisioning of servers relative to a public cloud service. For smaller companies (for
example, Internet startups), the impact is far greater.
So far we have made the implicit assumption that the degree of variability will stay the
same as we move to the cloud. In reality, it is likely that the variability will significantly
increase, which will further increase economies of scale. There are two reasons why this
may happen:
• Higher expectation of performance: Today, users have become accustomed to
resource constraints and have learned to live with them. For example, users will
schedule complex calculations to run overnight, avoid multiple model iterations,
or decide to forgo time-consuming and costly supply chain optimizations. The
business model of cloud allows a user to pay the same for 1 machine running for
1,000 hours as he would for 1,000 machines running for 1 hour. Today, the user
would likely wait 1,000 hours or abandon the project. In the cloud, there is virtually
no additional cost to choosing 1,000 machines and accelerating such processes. This
will have a dramatic impact on variability. Pixar Animation Studios, for example runs
its computer-animation rendering process on Windows Azure because every frame
of their movies takes eight hours to render today on a single processor, meaning it
would take 272 years to render an entire movie. As they said, We are not that patient.
With Azure, they can get the job done as fast as they need. The result is huge spikes
in Pixar‘s usage of Azure as they render on-demand
Fig 12: INDUSTRY VARIABILITY
Source: Microsoft, Akexa Internet, Inc.
• Batch processes will become real time: Many processes — for example, accurate
stock availability for online retailers — that were previously batch driven, will move
to real-time. Thus, multi-stage processes that were once sequential will now occur si-
multaneously, such as a manufacturing firm that can tally its inventory, check its order
backlog, and order new supplies at once. This will amplify utilization variability.
We note that even the largest public clouds will not be able to diversify away all variability;
market level variability will likely remain. To further smooth demand, sophisticated pricing
can be employed. For example, similar to the electricity market (Fig. 13), customers can
be incented to shift their demand from high utilization periods to low utilization periods.
In addition, a lower price spurs additional usage from customers due to price elasticity of
demand. Demand management will further increase the economic benefits of cloud.
Fig. 13: VARIABLE PRICING IN ELECTRICITY
Source: Ameren Illinois Utilities
2.3 Multi-tenancy Economies of Scale
The previously described supply-side and demand-side economies of scale can be
achieved independent of the application architecture, whether it be traditional scale-up or
scale-out, single tenant or multitenant. There is another important source of economies of
scale that can be harnessed only if the application is written as a multitenant application.
That is, rather than running an application instance for each customer – as is done for
on-premises application and most hosted applications such as dedicated instances of
Microsoft Office 365 – in a multitenant application, multiple customers use a single
instance of the application simultaneously, as in the case of shared Office 365. This has
two important economic benefits:
• Fixed application labor amortized over a large number of customers: In a
single-tenant instance, each customer has to pay for its own application management
(that is, the labor associated with update and upgrade management and incident
resolution). We‘ve examined data from customers, as well as Office 365-D and
21
 Office 365-S to assess the impact. In dedicated instances, the same activities, such as
applying software patches, are performed multiple times - once for each instance. In
a multi-tenant instance such as Office 365-S, that cost is shared across a large set of
customers, driving application labor costs per customer towards zero. This can result
in a meaningful reduction in overall cost, especially for complex applications.
Fig 15: ECONOMIES OF SCALE
IN THE CLOUD

Fig.14: UTILIZATION OVERHEAD

Source: Microsoft

Source: Microsoft
• Fixed component of server utilization amortized over large number of
customers: For each application instance, there is a certain amount of server
overhead. Fig. 14 shows an example from Microsoft‘s IT department in which intraday
variability appears muted (only a 16 percent increase between peak and trough)
compared to actual variability in user access. This is caused by application and
runtime overhead, which is constant throughout the day. By moving to a multitenant
model with a single instance, this resource overhead can be amortized across all
customers. We have examined Office 365-D, Office 365-S, and Microsoft Live@
edu data to estimate this overhead, but so far it has proven technically challenging
to isolate this effect from other variability in the data (for example, user counts and
server utilization) and architectural differences in the applications. Therefore, we
currently assume no benefit from this effect in our model.
Fig. 15 shows the output for a workload that utilizes 10 percent of a traditional server. The
model indicates that a 100,000-server datacenter has an 80% lower total cost of ownership
(TCO) compared to a 1,000-server datacenter.
This raises the question: what impact will the Cloud Economics we described have on
the IT budget? From customer data, we know the approximate breakdown between the
infrastructure costs, costs of supporting and maintaining existing applications, and new
application development costs (Fig. 16). Cloud impacts all three of these areas. The supply-
side and demand-side savings impact mostly the infrastructure portion, which comprises
over half of spending. Existing app maintenance costs include update and patching labor,
end-user support, and license fees paid to vendors. They account for roughly a third of
spending and are addressed by the multi-tenancy efficiency factor.
Fig 16: IT SPENDING BREAKDOWN

Applications can be entirely multitenant by being completely written to take advantage

of these benefits, or can achieve partial multi-tenancy by leveraging shared services
provided by the cloud platform. The greater the use of such shared services, the greater
the application will benefit from these multi-tenancy economies of scale.

2.4 Overall Impact

The combination of supply-side economies of scale in server capacity (amortizing costs
across more servers), demand-side aggregation of workloads (reducing variability), and
the multi-tenant application model (amortizing costs across multiple customers) leads to Source: Microsoft
powerful economies of scale. To estimate the magnitude, we built a cost scaling model
which estimates the long term behavior of costs.

22
New application development accounts for just over a tenth of spending14, even though
it is seen as the way for IT to innovate. Therefore IT leaders generally want to increase
spending here. The economic benefits of cloud computing described here will enable this
by freeing up room in the budget to do so. We will touch more on this aspect in the next
paragraph as well as in Section 3.
2.5 Harnessing Cloud Economics
Capturing the benefits described above is not a straightforward task with today‘s
technology. Just as engineers had to fundamentally rethink design in the early days
of the car, so too will developers have to rethink design of applications. Multi-tenancy
and demand-side aggregation is often difficult for developers or even sophisticated IT
departments to implement on their own. If not done correctly, it could end up either
significantly raising the costs of developing applications (thus at least partially nullifying
the increased budget room for new app development); or capturing only a small subset of
the savings previously described. The best approach in harnessing the cloud economics is
different for packaged apps vs. new/custom apps.
Packaged applications: While virtualizing packaged applications and moving them to
cloud virtual machines (e.g., virtualized Exchange) can generate some savings, this solution
is far from ideal and fails to capture the full benefits outlined in this Section. The cause is
twofold. First, applications designed to be run on a single server will not easily scale up
and down without significant additional programming to add load-balancing, automatic
Fig.17 CAPTURING CLOUD BENEFITS
Source: Microsoft
14
New application development costs include only the cost of designing and writing the application and excluding the cost of hosting .them on new
infrastructure. Adding these costs results in the 80% / 20% split seen elsewhere
failover, redundancy, and active resource management. This limits the extent to which
they are able to aggregate demand and increase server utilization. Second, traditional
packaged applications are not written for multi-tenancy, and simply hosting them in the
cloud does not change this. For packaged apps, the best way to harness the benefits of
cloud is to use SaaS offerings like Office365, which have been architected for scale-out
and multi-tenancy to capture the full benefits.
New/custom applications: Infrastructure-as-a-Service (IaaS) can help capture some of
the economic benefits for existing applications. Doing so is, however, a bit of a horseless
carriage in that the underlying platform and tools were not designed specifically for the
cloud. The full advantage of cloud computing can only be properly unlocked through a
significant investment in intelligent resource management. The resource manager must
understand both the status of the resources (networking, storage, and compute) as well
as the activity of the applications being run. Therefore, when writing new apps, Platform
as a Service, most effectively captures the economic benefits. PaaS offers shared services,
advanced management, and automation features that allow developers to focus directly
on application logic rather than on engineering their application to scale.
To illustrate the impact, a startup named Animoto used Infrastructure-as-a-Service
(IaaS) to enable scaling - adding over 3,500 servers to their capacity in just 3 days as
they served over three-quarters of a million new users. Examining their application later,
however, the Animoto team discovered that a large percentage of the resources they
were paying for were often sitting
idle - often over 50%, even in a supposedly elastic cloud. They re-architected their
application and eventually lowered operating costs by 20%. While Animoto is a cloud
success story, it was only after an investment in intelligent resource management that
they were able to harness the full benefits of cloud. PaaS would have delivered many of
these benefits out-of-the-box without any additional tweaking required.
23
 IMPLICATIONS
In this section, we will discuss the implications of the previously described
economics of cloud. We will discuss the ability of private clouds to address
some of the barriers to cloud adoption and assess the cost gap between
public and private clouds.
3.1 Possibilities & Obstacles
The economics we described in Section 2 will have a profound impact on IT. Many IT
leaders today are faced with the problem that 80% of the budget is spent on keeping
the lights on, maintaining existing services and infrastructure. This leaves few resources
available for innovation or addressing the never-ending queue of new business and user
requests. Cloud computing will free up significant resources that can be redirected to
innovation. Demand for general purpose technologies like IT has historically proven to be
very price elastic (Fig. 18). Thus, many IT projects that previously were cost prohibitive will
now become viable thanks to cloud economics. However, lower TCO is only one of the
key drivers that will lead to a renewed level of innovation within IT:
Fig 18:
PRICE ELASTICITY OF
STORAGE
Source: Coughlin Associates
1. Elasticity is a game-changer because, as described before, renting 1 machine for
1,000 hours will be nearly equivalent to renting 1,000 machines for 1 hour in the cloud.
This will enable users and agencies to rapidly accomplish complex tasks that were
previously prohibited by cost or time constraints. Being able to both scale up and scale
down resource intensity nearly instantly enables a new class of experimentation and
entrepreneurship.
2. Elimination of capital expenditure will significantly lower the risk premium of
projects, allowing for more experimentation. This both lowers the costs of starting an
operation and lowers the cost of failure or exit – if an application no longer needs certain
24
resources, they can be decommissioned with no further expense or write-off.
3. Self-service Provisioning servers through a simple web portal rather than through a
complex IT procurement and approval chain can lower friction in the consumption model,
enabling rapid provisioning and integration of new services. Such a system also allows
projects to be completed in less time with less risk and lower administrative overhead than
previously.
4. Reduction of complexity. Complexity has been a long standing inhibitor of IT
innovation. From an end-user perspective SaaS is setting a new bar for user friendly
software. From a developer perspective Platform as a Service (PaaS) greatly simplifies
the process of writing new applications, in the same way as cars greatly reduced the
complexity of transportation.
These factors will significantly increase the value add delivered by IT. Elasticity enables
applications like yield management, complex event processing, logistics optimization,
and Monte Carlo simulation, as these workloads exhibit nearly infinite demand for IT
resources. The result will be massively improved experience, including scenarios like
real-time business intelligence analytics and HPC for the masses. However, many surveys
show that significant concerns currently exist around cloud computing. As Figure 19 shows,
security, privacy, maturity, and compliance are the top concerns. Many CIOs also worry about
legacy compatibility: it is often not straightforward to move existing applications to the cloud
Fig 19: PUBLIC CLOUD CONCERNS
Source: Gartner CIO survey
• Security and Privacy CIOs must be able to report to their CEO and other executives
how the company‘s data is being kept private and secure. Financially and strategically
important data and processes often are protected by complex security requirements.
Legacy systems have typically been highly customized to achieve these goals, and
moving to a cloud architecture can be challenging. Furthermore, experience with the
built-in, standardized security capabilities of cloud is still limited and many CIOs still
feel more confident with legacy systems in this regard.
• Maturity and Performance Cloud requires CIOs to trust others to provide reliable and
highly available services. Unlike on-premises outages, cloud outages are often highly
visible and may increase concerns
• Compliance and Data Sovereignty – Enterprises are subject to audits and oversight,
both internal and external (e.g. IRS, SEC). Companies in many countries have data
sovereignty requirements that severely restrict where they can host data services.
CIOs ask: which clouds can comply with these systems and what needs to be done to
make them compliant?
While many of these concerns can be addressed by cloud today, concerns remain and are
prompting IT leaders to explore private clouds as a way of achieving the benefits of cloud
while solving these problems. Next, we will explore this in more detail and also assess the
potential tradeoffs.
3.3 Private Clouds
Microsoft distinguishes between public and private clouds based on whether the IT
resources are shared between many distinct organizations (public cloud) or dedicated to
a single organization (private cloud). This taxonomy is illustrated in Fig. 20. Compared to
traditional virtualized datacenters, both private and public clouds benefit from automated
management (to save on repetitive labor) and homogenous hardware (for lower cost and
increased flexibility). Due to the broadly-shared nature of public clouds, a key difference
between private and public clouds is the scale and scope at which they can pool demand.
Fig 20:
COMPARING VIRTUALIZATION, PRIVATE CLOUD,
AND PUBLIC CLOUD
Source: Microsoft. Shaded
checks indicate an
optional characteristic
• Private clouds move beyond virtualization. Resources are now pooled across the
company rather than by organizational unit,15 and workloads are moved seamlessly
between physical servers to ensure optimal efficiency and availability. This further
reduces the impact of random, time-of-day, and workload variability. In addition, new,
15
Aggregation across organizational units is enabled by two key technologies: live migration, which
moves virtual machineswhile remaining operational, thereby enabling more dynamic optimization;
and self-service provisioning and billing.
cloud-optimized application models (Platform as a Service such as Azure) enable
more efficient app development and lower ongoing operations costs.
• Public clouds have all the same architectural elements as private clouds, but bring
massively higher scale to bear on all sources of variability. Public clouds are also the
only way to diversify away industry-specific variability, the full geographic element of
time-of-day variability, and bring multi-tenancy benefits into effect.
Private clouds can address some of the previously mentioned adoption concerns. By having
dedicated hardware, they are easier to bring within the corporate firewall, which may ease
concerns around security and privacy. Bringing a private cloud on-premise can make it easier
to address some of the regulatory, compliance and sovereignty concerns that can arise with
services that cross jurisdictional boundaries. In cases where these concerns weigh heavily in
an IT leader‘s decision, an investment in a private cloud may be the best option.
Private clouds do not really differ from public cloud regarding other concerns, such as
maturity and performance. Public and private cloud technologies are developing in
tandem and will mature together.
A variety of performance levels will be available in both public and private form, so there
is little reason to expect that one will have an advantage over another.16
While private clouds can alleviate some of the concerns, in the next paragraph we will
discuss whether they will offer the same kind of savings described earlier.
3.4 Cost Trade-Off
While it should be clear from the prior discussion that conceptually the public cloud has
the greatest ability to capture diversification benefits, we need to get a better sense of the
magnitude. Fig. 21 shows that while the public cloud addresses all sources of variability
the private cloud can address only a subset. For example, industry variability cannot be
addressed by a private cloud, while growth variability can be addressed only to a limited
degree if an organization pools all its internal resources in a private cloud. We modeled all
of these factors, and the output is shown in Fig. 22.
.Fig 21: DIVERSIFICATION BENEFITS
Source: Microsoft.
16
Private clouds do allow for a greater degree of customization than public clouds, which couldenhance
performance for a certain computational task. Customization requires R&D effort and
expense, however, so it is difficult to make a direct price/performance comparison .
25
 Fig 22: COST BENEFIT OF PUBLIC CLOUD
.
Source: Gartner CIO survey
The lower curve shows the cost for a public cloud (same as the curve shown in Fig. 15).
The upper curve shows how the cost of a private cloud. The public cloud curve is lower
at every scale due to the greater impact of demand aggregation and the multi-tenancy
effect. Global scale public clouds are likely to become extremely large, at least 100,000
servers in size, or possibly much larger, whereas the size of an organization‘s private cloud
will depend on its demand and budget for IT.
Fig. 22 also shows that for organizations with a very small installed base of servers (<100),
private clouds are prohibitively expensive compared to public cloud. The only way
for these small organizations or departments to share in the benefits of at scale cloud
computing is by moving to a public cloud. For large agencies with an installed base of
approximately 1,000 servers, private clouds are feasible but come with a significant
cost premium of about 10 times the cost of a public cloud for the same unit of
service, due to the combined effect of scale, demand diversification and multi-
tenancy.
In addition to the increase in TCO, private clouds also require upfront investment to de-
ploy - an investment that must accommodate peak demand requirements. This involves
separate budgeting and commitment, increasing risk. Public clouds, on the other hand,
can generally be provisioned entirely on a pay-as-you-go basis.
3.5 Finding Balance Today: Weighing the Benefits of Private Cloud
against the Costs
We‘ve mapped a view of how public and private clouds measure up in Figure 23. The
vertical axis measures the public cloud cost advantage. From the prior analysis we know
public cloud has inherent economic advantages that will partially depend on customer
size, so the bubbles‘ vertical position is dependent on the size of the server installed base.
26
The horizontal axis represents the organization‘s preference for private cloud. The size of
the circles reflects the total server installed base of companies of each type. The bottom-
right quadrant thus represents the most attractive areas for private clouds (relatively low
cost premium, high preference).
Fig 23: COST AND BENEFITS OF
PRIVATE CLOUDS
Source: Microsoft
We acknowledge that Figure 23 provides a simplified view. IT for is not monolithic within
any of these industry segments. Each organization‘s IT operation is segmented into
workload types, such as email or ERP. Each of these has a different level of sensitivity and
scale, and CIO surveys reveal that preference for public cloud solutions currently varies
greatly across workloads (Figure 24).
Fig 24: CLOUD READY WORKLOADS (2010)
Source: Microsoft Survey Question 'In the next
12-24 months, please indicate if a cloud offering
would augment on-prmise offering or completely
replace it
In additional factor is that many app portfolios have been developed over the past 15-
30 years and are tightly woven together. This particularly holds true for ERP and related
custom applications at larger companies who have more sizable application portfolios.
Apps that are more isolated‘ such as CRM, collaboration, or new custom apps may be
more easily deployed in the cloud. Some of those apps may need to be integrated back
to current on-premises apps. Before we draw final conclusions, we need to make sure we
avoid the horseless carriage syndrome and consider the likely shift along the two axes
(economics and private preference).
 3.6 The Long View: Cloud Transition Over Time
As we pointed out in the introduction of this paper, it is dangerous to make decisions
during the early stages of a disruption without a clear vision of the end state. IT leaders
need to design their architecture with a long term vision in mind. We therefore need to
consider how the long term forces will impact the position of the bubbles on Fig. 23.
We expect two important shifts to take place. First, the economic benefit of public
cloud will grow over time. As more and more work is done on public clouds, the
economies of scale we described in Section 2 will kick in, and the cost premium on
private clouds will increase over time. Customers will increasingly be able to tap into the
supply-side, demand-side and multi-tenancy savings as discussed previously. As shown
in Fig. 27 this leads to an upward shift along the vertical axis.
Fig 27: EXPECTED PREFERENCE SHIFT FOR PUBLIC AND PRIVATE CLOUD
Source: Microsoft
At the same time, some of the barriers to cloud adoption will begin to fall. Many tech-
nology case studies show that, over time, concerns over issues like compatibility, security,
reliability, and privacy will be addressed. This will likely also happen for the cloud, which
would represent a shift to the left on Fig. 27. Below we will explore some of the factors that
cause this latter shift.
Cloud security will evolve
Public clouds are in a relatively early stage of development, so naturally critical areas like
reliability and security will continue to improve. Data already suggests that public cloud
email is more reliable than most on-premises implementations. In PaaS, the automatic
patching and updating of cloud systems greatly improves the security of all data and
applications, as the majority of exploited vulnerabilities take advantage of systems that are
out-of-date. Many security experts argue there are no fundamental reasons why public
clouds would be less secure; in fact, they are likely to become more secure than on premises
due to the intense scrutiny providers must place on security and the deep level of expertise
they are developing.
Clouds will become more compliant
Compliance requirements can come from within an organizational, industry, or government
(e.g., European Data Protection Directive) and may currently be challenging to achieve
with cloud withouta robust development platform designed for enterprise needs. As cloud
technologies improve, and as compliance requirements adapt to accommodate cloud
architectures, cloud will continue to become more compliant, and therefore feasible for
more organizations and workloads. This was the case, for example, with, e-signatures, which
were not accepted for many contracts and documents in the early days of the Internet.
As authentication and encryption technology improved and as compliance requirements
changed, e-signatures became more acceptable. Today, most contracts (including those for
opening bank accounts and taking out loans) can be signed with an e-signature.
The large group of customers who are rapidly increasing reliance on public clouds - small
and medium businesses (SMBs) and consumers of Software as a Service (SaaS) - will be
a formidable force of change in this area. This growing constituency will continue to ask
governments to accommodate the shift to cloud by modernizing legislation. This regulatory
evolution will make public cloud a more viable alternative for large enterprises and thus
move segments along the horizontal axis toward public cloud preference.
Decentralized IT (also known as ‘rogue IT’) will continue to lead
the charge
Many prior technology transitions were led not by CIOs but by departments, business
decision makers, developers, and end users - often in spite of the objections of CIOs. For
example, both PCs and servers were initially adopted by end users and departments before
they were officially embraced by corporate IT policies. More recently, we saw this with the
adoption of mobile phones, where consumer adoption is driving IT to support these devices.
We‘re seeing a similar pattern in the cloud: developers and departments have started using
cloud services, often without the knowledge of the IT group (hence the name rogue clouds).
Many business users will not wait for their IT group to provide them with a private cloud; for
these users, productivity and convenience often trump policy.
It is not just impatience that drives rogue clouds; ever-increasing budgetary constraints can
lead users and even departments to adopt cheaper public cloud solutions that would not be
affordable from traditional channels. For example, when Derek Gottfrid wanted to process all
4TB of the New York Times archives and host them online, he went to the cloud without the
knowledge of the Times‘ IT department17. Similarly, the unprecedented pricing transparency
that the public cloud offers, will put further pressure from the CEO and CFO on CIOs to move
to the public cloud.
http://open.blogs.nytimes.com/2007/11/01/self-service-prorated-super-computing-fun/
17
27
 CIOs should acknowledge that these behaviors are commonplace early in a
disruption and either rapidly develop and implement a private cloud with the same
capabilities or adopt policies which incorporate some of this behavior, where appropriate, in
IT standards.
Perceptions are rapidly changing
Strength in SaaS adoption in large enterprises serves as proof of changing perceptions
(Fig. 28) and indicates that even large, demanding enterprises are moving to the left on
the horizontal axis (i.e., reduced private preference). Just a few years ago, very few large
companies were willing to shift their email, with all the confidential data that it contains, to a
cloud model. Yet this is exactly what is happening today.
for cars by giving rise to the commuting professional class. This behavioral change repre-
sented a massive positive feedback loop that inexorably made the automobile an essential,
irreplaceable component of modern life.
Similarly, we believe cloud will be enabled and driven not just by economics and qualitative
developments in technology and perception, but by a series of shifts from IT professionals,
regulators, telecom operators, ISVs, systems integrators, and cloud platform providers. As
cloud is embraced more thoroughly, its value will increase.

Fig 28: INCREASING ADOPTION OF SOFTWARE

AS A SERVICE (SAAS)

Source: Gartner.

As positive use cases continue to spur more interest in cloud technology, this virtuous cycle
will accelerate, driving greater interest in and acceptance of cloud.

In summary, while there are real hurdles to cloud adoption today, these will likely diminish
over time. While new, unforeseen hurdles to public cloud adoption may appear, the public
cloud economic advantage will grow stronger with time as cloud providers unlock the
benefits of economics we discussed in Section 2. While the desire for a private cloud is mostly
driven by security and compliance concerns around existing workloads, the cost effectiveness
and agility of the public cloud will enable new workloads.

Revisiting our 'horseless carriage' analogy, we see that cars became a huge success not
simply because they were faster and better (and eventually more affordable) than horse-
drawn carriages. The entire transportation ecosystem had to change. Highway systems,
driver training programs, accurate maps and signage, targeted safety regulation, and a
worldwide network of fueling infrastructure all had to be developed to enable this
transition. Each successive development improved the value proposition of the car. In the
end, even people‘s living habits changed around the automobile, resulting in the explo-
sion of the suburbs in the middle part of the 20th century. This created net new demand

28

THE JOURNEY
TO THE CLOUD
Because we are in the early days of the cloud paradigm shift, there is much confusion
about the direction of this ongoing transformation. In this paper, we looked beyond the
current technology and focused on the underlying economics of cloud to define the
destination - where all of this disruption and innovation is leading our industry. Based
on our analysis, we see a long-term shift to the cloud driven by three important
economies of scale: (1) Larger datacenters can deploy computational resources at
significantly lower cost than smaller ones; (2) Demand pooling improves the utilization
of these resources, especially in public clouds; and (3) Multi-tenancy lowers application
maintenance labor costs for large public clouds. Finally, the cloud offers unparalleled levels
of elasticity and agility that will enable exciting new solutions and applications.
For businesses of all sizes, the cloud represents tremendous opportunity. It represents an
opportunity to break out of the longstanding tradition of IT professionals spending 80
percent of their time and budget keeping the lights on, with few resources left to focus on
innovation. Cloud services will enable IT groups to focus more on innovation while
leaving non-differentiating activities to reliable and cost-effective providers. Cloud
services will enable IT leaders to offer new solutions that were previously seen as either
cost prohibitive or too difficult to implement. This is especially true of cloud platforms
(Platform as a Service), which significantly reduce the time and complexity of building new
apps that take advantage of all the benefits of the cloud.
This future won‘t materialize overnight. IT leaders need to develop a new 5 to 10
year vision of the future, recognizing that they and their organizations will play a
fundamentally new role in their company. They need to plot a path that connects where
they are today to that future. An important first step in this is to segment their portfolio
of existing applications (Fig. 29). For some apps the economic and agility benefits may
be very strong so they should be migrated quickly. However, barriers do exist today, and
while we outlined in section 3 that many of them will be overcome over time, cloud may
not be ready for some apps today. For tightly integrated apps with fairly stable usage
patterns, it may not make senseto move them at all, similar to how some mainframe
apps were never migrated to client/server. While new custom apps don‘t have the legacy
problem, designing them in a scalable, robust fashion is not always an easy task. Cloud
optimized platforms (Platform as a Service) can dramatically simplify this task.
Fig 29: SEGMENTING IT PORTFOLIO
Source: Microsoft
This transition is a delicate balancing act. If the IT organization moves too quickly in
areas where the cloud is not ready, it can compromise business continuity, security, and
compliance. If it moves too slowly, it can put the company at a significant competitive
disadvantage versus competitors who do take full advantage of cloud capabilities, giving
up a cost, agility, or value advantage. Moving too slowly also increases the risk that different
groups or individuals within the company will each adopt their own cloud solution in a
fragmented and uncontrolled fashion (rogue IT), wresting control over IT from the CIO. IT
leaders who stay ahead of the cloud trend will be able to control and shape this transition;
those who lag behind will increasingly lose control.
To lead the transition, IT leaders need to think about the long term architecture of their
IT. Some see a new role emerging, that of a Cloud Services Architect, who determines
which applications and services move to the cloud and exactly when such a move takes
place based on a business case and a detailed understanding of the cloud capabilities
available. This should start by taking inventory of the organization‘s resources and policies.
This includes an application and data classification exercise to determine which policy or
performance requirements (such as confidential or top secret data retention requirements)
apply to which applications and data. Based on this, IT leaders can determine what parts
of their IT operation are suitable for public cloud and what might justify an investment in
private cloud. Beginning in this manner takes advantage of the opportunity of cloud while
striking balance between economics and security, performance,
and risk.
To accomplish this, IT leaders need a partner who is firmly committed to the long-
term vision of the cloud and its opportunities, one who is not hanging on to legacy IT
architectures. At the same time, this partner needs to be firmly rooted in the realities of
today‘s IT so it understands current challenges and how to best navigate the journey to the
29
 cloud. IT leaders need a partner who is neither incentivized to push for change faster than is
responsible nor to keep IT the same. Customers need a partner who has done the hard work
of figuring out how best to marry legacy IT with the cloud, rather than placing that burden
on the customer by ignoring the complexities of this transformation.

At Microsoft, we are 'all in' on the cloud. We provide both commercial SaaS (Office 365) and
a cloud computing platform (Windows Azure Platform). Office 365 features the applications
customers are familiar with like Exchange email and SharePoint collaboration, delivered
through Microsoft‘s cloud. Windows Azure is our cloud computing platform, which enables
customers to build their own applications and IT operations in a secure, scalable way in the
cloud. Writing scalable and robust cloud applications is no easy feat, so we built Windows
Azure to harness Microsoft‘s expertise in building our cloud-optimized applications like
Office 365, Bing, and Windows Live Hotmail. Rather than just moving virtual machines to
the cloud, we build a Platform as a Service that reduces complexity for developers and
IT administrators.

Microsoft also brings to the cloud the richest partner community in the world. We have over
600,000 partners in more than 200 countries servicing millions of businesses. We are already
collaborating with thousands of our partners on the cloud transition. Together we are
building the most secure, reliable, scalable, available, cloud in the world.

Over the last three decades, Microsoft has developed strong relationships with IT
organizations, their partners, and their advisors. This offers us an unparalleled understand-
ing of the challenges faced by today‘s IT organizations. Microsoft is both committed to the
cloud vision and has the experience to help IT leaders on the journey.

Microsoft has a long history of bringing to life powerful visions of the future. Bill Gates
founded Microsoft on the vision of putting a PC in every home and on every desktop in
an era when only the largest corporations could afford computers. In the journey that
followed, Microsoft and our partners helped bring PCs to over one billion homes and
desktops. Millions of developers and businesses make their living on PCs and we are
fortunate to play a role in that.

Now, we have a vision of bringing the power of cloud computing to every home, every
office, and every mobile device. The powerful economics of cloud drive all of us towards
this vision. Join Microsoft and our partners on the journey to bring this vision to life.

30

selects Microsoft SharePoint Online to advance productivity
Overview
Country or Region: Worldwide
Industry: Consumer goods Retail
Customer Profile
Coca-Cola Enterprises (CCE) is the world’s
largest marketer, producer, and distributor
of non-alcoholic beverages, which it
delivers with the industry’s most effective
marketplace execution.
Business Situation
CCE’s increasing competition was resulting
in declining revenues. This required
company executives to launch a new
strategic direction, mandating a platform
to communicate and engage with all
employees.
Coca-Cola Enterprises
Solution
CCE implemented a Microsoft-based
hosted worldwide intranet with messaging
and collaboration tools, which are
accessible to all employees from any
device, enabling employees to boost
productivity and time with customers.
Benefits
• Productivity and customer focus
• Companywide intranet
• IT transformation
• Effective remote teams
• Deskless worker access
Microsoft gave us an
incredible platform that
allows us to do a number
of things, beyond hosting
our portal. It provides
workflow management and
team collaboration across
geographies and time zones.
John Key,
Assistant Director Communication
and Collaboration
Technologies, CCE
Coca-Cola Enterprises (CCE) employs
approximately 72,000 people in
431 facilities around the globe.
Much of its workforce is mobile
with 55,000 vehicles and 2.4 million
coolers, vending machines, and
beverage dispensers. With increasing
competition in the marketplace,
CCE needed a more effective way to
collaborate with its employees, to
increase its productivity, to enable
better flow of information and to
create more time for sales persons to
engage with customers. Its worldwide
presence required employees and
executives to spend numerous hours
on the road every week, travelling to
internal meetings. With Microsoft®
Online Services technologies, CCE can
save travel expenses through online
meeting tools and collaboration
platforms that span time zones and
geographies.
31

Our CEO challenged us to find
better ways to connect all of our
employees, SharePoint Online
addressed those challenges and
helped us launch from a legacy
infrastructure to a solution which
provided better business value to
all of our people.
Kevin Flowers,
Director of Enabling Technologies, CCE
32
Situation
Coca-Cola Enterprises (NYSE: “CCE”) is
the world’s largest marketer, producer,
and distributor of Coca-Cola products.
Coca-Cola Enterprises’ growing product
portfolio includes the world’s greatest
brands and beverages which it delivers
with the industry’s most effective
marketplace execution. Today, it serves
419 million consumers, throughout North
America, the U.S. Virgin Islands, other
Caribbean islands, Belgium, France, Great
Britain, Luxembourg, Monaco, and the
Netherlands. It employs approximately
72,000 people and operates 431 facilities,
55,000 vehicles, and 2.4 million coolers,
vending machines, and beverage
dispensers.
Coca-Cola Enterprises faces strong
competition from other beverage
companies and needed a way to work
more effectively with its customers and
partners. This required innovation and a
new way of communicating within the
corporation. In 2008, CCE acknowledged
that its current communications platforms
were no longer enabling the innovation
and collaboration required to take it to the
next level to compete in an increasingly
demanding economic environment.
CCE required a centralized platform
on which to promote the company’s
initiatives. Its messaging was based largely
around e-mail, which was unable to reach
its largely mobile workforce. Chairman
and CEO John Brock and CIO Esat
Sezer agreed that in order to evolve the
company culture and improve customer
relationships at CCE, the leadership team
needed the ability to communicate
with all CCE employees, especially those
managing day-to-day operations in the
field. Most of the diverse CCE personnel
work in a distributed manner. Employees in
manufacturing facilities had limited access
to the corporate network. Its mobile,
customer-facing employees, who are on
the front line, making sales and positioning
the CCE products in store environments,
also lacked convenient access to company
content. Additionally, CCE needed
to drive action and information to all
employees in its business by role. CCE’s
infrastructure did not allow for this,
making it difficult for employees to locate
appropriate content in a timely manner.
Kevin Flowers, Director of Enabling
Technologies, says, “John Brock, our CEO,
challenged us to find better ways to
connect all of our employees. He asked us
to create a unified way to reach all of the
field resources for more than 400 locations
in the U.S. alone. SharePoint Online
addressed those challenges and helped
us launch from a legacy infrastructure to
a solution which provided better business
value to all of our people.”
Taking on a new project like building
a corporate intranet was exciting yet
daunting as IT resources were engaged
on many other initiatives as part of their
transformation journey. IT considered
using partners to address its messaging
needs and wanted to expand this to
include development of its corporate
intranet. Both solutions needed to support
mobile devices to reach employees in
manufacturing facilities and the field.

Solution
With many older systems, CCE had
several partners providing dozens of
communication and collaboration
solutions. CCE saw an opportunity to
optimize its infrastructure by broadening
its relationship with Microsoft. With
the implementation of Microsoft Online
Services, which includes Microsoft
SharePoint® Online, Microsoft Exchange
Online, Microsoft Office Communications
Online, and Microsoft Office Live Meeting,
CCE consolidated and streamlined its
IT partnerships and enhanced its focus
on providing value to the business.
CCE deployed its corporate intranet
on SharePoint Online as its primary
collaboration platform, which included
content management, enterprise search,
workflow, line of business integration, and
rights management capabilities.
In its assessment of whether to upgrade
its current platform or transform the
company to a hosted model, CCE
considered options presented by several
major software and service providers.
CCE desired a partnership where it could
utilize its enterprise software on premises
with integrated software services in the
cloud, and turned to Microsoft to execute
upon its objectives. Planning for the
project began in mid January 2008 and
was completed by mid May. Microsoft
Exchange Online and Microsoft SharePoint
Online received “service acceptance” by
July and user migration for both began in
September. By the end of 2008, 23,000
users had been migrated to Exchange
Online, 30,000 users were on SharePoint
Online, and 10,000 users had migrated
from IBM Sametime to Microsoft Office
Communications Server for instant
messaging. It added Microsoft Office Live
Meeting for Web and video conferencing
in April 2008.
Security
Initially, Tim Smith, the Chief Information
Security Officer at CCE needed to be
convinced that Microsoft would provide
security measures that matched or
exceeded CCE’s stringent requirements.
Visiting the Tukwila data center, Smith
was impressed by the virtual and physical
security provided by Microsoft, as well
as the third-party SAS 70 audit reports
that Microsoft uses to monitor security
compliance. Tim Smith, CCE Chief
Information Security Officer, says, “Step
one in getting comfortable with giving our
data to Microsoft was visiting one of their
data centers. To understand the physical
nature of what they’re doing to safeguard
not only their own information, but also
CCE’s, gave us a great sense of comfort
that Microsoft has thought of all the right
things.” We had a massive change
agenda that we were trying to
A fundamental shift occurred in how CCE communicate to the organization….
viewed Microsoft services and capabilities We had a lot of objectives, but the
running in Microsoft data centers, not two primary ones were a better
as an outsourcing arrangement, but as a way to communicate with our
security-enhanced extension of CCE’s own employees while at the same time
enterprise network. driving effectiveness and efficiency.
Lauren Sayeski,
Communications, CCE
33

To have one source of the truth is
very important as teams start to
form across the globe. You want to
be sure you always have the latest
version of the document you’re
working on. SharePoint Online
makes that possible.
John Key,
Assistant Director Communications
and Collaboration Technologies, CCE
34
The Right Information
at the Right Time
CCE decided to use Microsoft integrated
communication and collaboration tools to
streamline communication across its entire
organization. A critical component of the
corporate intranet portal at CCE was the
integration of SAP user role information
into its on-premises Active Directory®
service and its Microsoft SharePoint
Online environment. This will allow CCE to
target the right information to the right
employee based on roles outlined in SAP.
By integrating SAP data into SharePoint
sites, CCE employees can access data
through recognizable Microsoft Office
programs, giving employees the ability to
make information for business operations
easy to find, share, and update. Previously,
CCE did not have a common solution
that enabled document management.
Documents that needed to be shared
with colleagues were housed in shared
folders on network drives, sent via e-mail,
or stored in team rooms, all of which were
limited in access, version control, and
searchability.
Ease and Effectiveness of Collaboration
Seeing the business need and the ability
to increase its communication and
collaboration capabilities, CCE was able
to move very quickly to execute the
migration. Lauren Sayeski, Public Affairs
and Communications Manager, says,
“We had a massive change agenda that
we were trying to communicate to the
organization. We had a lot of objectives
with this project, but the two primary
ones were a better way to communicate
with our employees while at the same
time driving effectiveness and efficiency.”
Content management features on
SharePoint Online include version
management, workflow management,
and rights management, all of which
enable seamless collaboration across
geographies and time zones. John Key,
Assistant Director of Communication and
Collaboration Technologies, says, “To have
one source of the truth is very important
as teams start to form across the globe.
You want to be sure you always have the
latest version of the document you’re
working on. SharePoint Online makes that
possible.”
Knowledge Sharing and
Social Networking
CCE’s executive communication prior to
its new corporate intranet was historically
top-down. With its Microsoft SharePoint
Online intranet solution, it now has open
dialogue with employees communicating
to leadership and with each other. Sayeski
says, “We focused on ways for employees
to comment back to the organization as
well as communicate with each other. Now
we have the ability to post comments on
the intranet and create team sites. We’re
finding that employees are talking to each
other and using each other’s resources,
sharing knowledge. We launched our first
CEO blog last year and in the first five
minutes had more than 40 responses back.
That’s just the beginning; we know that the
intranet can be so much more powerful as
a place of action.”
Benefits
Productivity and Customer Focus
The Microsoft solution enabled CCE to
bring new technologies to everyone in
the company, providing them with the
information they need, where and when
they need it most. Microsoft SharePoint
Online has been embraced by employees
across the company. Within four weeks of
enabling users to create team sites, there
were over 800 requests for sites focused
on business priorities and customer-
facing business teams. Tom Barlow, Vice
President of Business Transformation, N.A.,
says, “From a business transformation
perspective, we have a lot of projects
underway which focus on revenue
generation and cost savings. Through
the use of SharePoint Online, we’re
able to educate our team so that they
can find information and establish
interdependencies across the different
projects. SharePoint allows us to code and
manage information so
that we can get it very quickly.”
Worldwide Collaboration
CCE now has a robust intranet portal to
support worldwide collaboration and
communication of corporate strategy.
Sapient Consulting and Slalom Consulting
designed the custom intranet and
collaboration solution on top of Microsoft
SharePoint Online. Sapient created the
compelling visual design with a user-based
enterprise portal workflow. Slalom designed
and developed custom SharePoint features
in accordance with Microsoft development
standards and best practices, as well as
provided guidance to CCE regarding the
deployment and configuration options
available in SharePoint Online. Sayeski
says, “When you have a workforce like
ours, 72,000 strong and geographically
dispersed, that may or may not have access
to technology, it can be a challenge to
ensure that the message of the organization
is getting through with the clarity and the
speed that you want it to. We focused
heavily on the use of video, particularly
with our CEO, to ensure that some of our
most critical messages were being captured
in a way that the audience immediately
understood. So combining the power of
video with the intranet gave us the ability to
touch many more people.”
Powerful Search with Enterprise
Content Management
The corporate intranet also serves as a
central location for things like CCE’s HR
process improvement and self-service HR
portal and provides a communication
platform for CCE’s desk-based workers. CCE
has also increased employee engagement
and education around corporate
responsibility and sustainability through
the portal content, thereby addressing
the cultural change initiative. Sayeski
says, “There have been some particular
areas where we’ve seen that concept of
two-way dialogue playing out very well.
One is in our corporate responsibility and
sustainability efforts where employees are
sharing - actively sharing their own ideas
and their own solutions within their own
facilities about ways they’re generating
energy effectiveness.” There was huge excitement
and energy around the CCE
Through the intranet, CCE employees are partnership with Microsoft.
eager to be part of the company direction This has been one of the best
and dialogue. Brett Kirkland, Collaboration IT partner projects CCE has
Architect, says, “The SharePoint Online experienced and we have the
search engine is ten times better. It allows added value of a longer IT
us to make items more discoverable, roadmap with Microsoft....
to check them in and out, and surface Kevin Flowers,
particular items that we consider pieces Director of Enabling Technologies, CCE
of content that should rise to the top. The
SharePoint solution also gives IT more
control and governance over what content
is published and how it is ranked and
profiled in search.”
35
 Key says, “Microsoft gave us an incredible BlackBerry users.
platform that allows us to do a number Kevin Flowers concludes, “There was huge
of things, beyond hosting our portal. It excitement and energy around the CCE
provides workflow management and team partnership with Microsoft. This has been
collaboration across geographies and time one of the best IT partner projects CCE has
zones.” experienced, and we have the added value
of a longer IT roadmap with Microsoft than
The Road Ahead if CCE had built the solution on premises.
In phase II, CCE will be expanding the This project has exceeded our expectations
Microsoft footprint to reach an additional from an IT standpoint, showing how well
42,000 deskless workers who work in the an organization can lay a foundation and
field or in sales/distribution facilities. These transform the way people communicate in
employees do not have computers but a large company.”
will be enabled in phase II to have access
to the intranet via Microsoft SharePoint
Software & Services Online through computer workstations at
Microsoft Exchange Online their facilities. Additionally, Microsoft is
Microsoft SharePoint Online co-developing a sales force automation
Microsoft OfficeCommunications Online system that will further take advantage
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36

Overview
Country or Region: Global
Industry: Pharmaceuticals
Customer Profile
Second largest pharmaceutical company
in the world, GlaxoSmithKline supplies a
quarter of the world's vaccines and produces
some of the leading prescription medicines
and consumer healthcare products.
Business Situation
GlaxoSmithKline needed to improve
collaboration with partners, to improve
effectiveness in growing markets, to
move away from customized solutions,
and to lower the cost of operations and
investments.
GlaxoSmithKline
leads the Way With Microsoft Online Services
Solution
GlaxoSmithKline chose to deploy Microsoft
Business Productivity Online Suite -
including Microsoft® Exchange Online,
Microsoft® Office SharePoint Online,
Microsoft® Office Communications Online,
Microsoft® Office Live Meeting and the
Microsoft® Deskless Worker Suite.
Benefits
• Reduce Operational Costs
• Drive Innovation
• Improve Collaboration
• Simplify User Experience
We have chosen Microsoft
Online Services because
it promises to deliver a
simple intuitive Information
Workplace that should
not only bring value to
the company through
simplification, but provide an
improved user experience
and ultimately create a more
productive GSK.
Bill Louv,
Chief Information Officer, GlaxoSmithKline
GlaxoSmithKline (NYE: GSK) is a
pharmaceutical industry leader:
supplying a quarter of the world’s
vaccines, spending over $13 million
each day to research new medicines,
and providing many of the world’s
leading prescription medicines and
consumer healthcare products. It
is estimated that GlaxoSmithKline
makes up seven percent of the world’s
pharmaceutical market, and it is one
of the few companies committed to
researching vaccines for the World
Health Organization’s three priority
diseases – HIV/AIDS, tuberculosis, and
malaria. Yet, an internal strategic review
of their IT systems outlined a need to
take a new approach to collaboration,
support growing markets, and address
costs. Illustrating its industry leadership,
GlaxoSmithKline found its solution in
pioneering Microsoft Online Services
solutions.
37
 Situation
In 2001, after the merger of
GlaxoWellcome and SmithKline Beecham,
GlaxoSmithKline had to integrate
two complex IT systems. In order to
successfully make this merger, they
chose the Notes platform SmithKline had
strongly invested in over the Exchange
platform Glaxo utilized. This provided
a single communications channel and
B2E platform across the global company.
By using several in-house developed
solutions, GlaxoSmithKline supported
collaboration and Lotus Notes Sametime
for instant messaging. In conjunction
We wanted to build the with the Lotus Notes and Domino system,
business case first so that GlaxoSmithKline also used Google’s Postini
it would really be a slam mail filtering service.
dunk in the approval
process After an internal strategic review in
Bill Louv, 2007, GlaxoSmithKline recognized
Chief Information Officer, several points of needed improvement:
GlaxoSmithKline the ability to collaborate with external
partners, effectiveness at supporting
growing markets outside of the UK and
USA, a requirement to move away from
customized solutions, and a decrease in
38
the operating and investment costs. The
review also noticed that the current Notes
platforms were reaching their refresh
cycles, necessitating action and renewed
investment for the next three years. To
research their options, GlaxoSmithKline
constructed a cross-functional team of
representatives from the various global
IT organizations, partners in the business
units, and major growth markets.
Solution
GlaxoSmithKline evaluated a number of
data points before making a decision.
“The team reviewed, in detail, what
services were being offered at what
service levels around the globe, how
our existing technologies were used as
application platforms,” says Ingo Elfering,
VP of Information Technology Strategy,
GlaxoSmithKline, “and how the various
tools worked together to create an
integrated collaboration environment
now and in the future.” GlaxoSmithKline
conducted several user studies, but the
focus wasn’t just on the present. The future
of changing pharmaceutical user profiles,
devices, and software was also a strong
factor.
In the conservative industry of
pharmaceuticals, GlaxoSmithKline was
looking to put together the facts. While
GlaxoSmithKline was looking for a
productivity and collaboration increase
from the switch, the first priority was to
build a strong business case. “We wanted
to build the business case first so that
it would really be a slam dunk in the
approval process,” says Bill Louv, Chief
Information Officer, GlaxoSmithKline. The
approval process considered the risk of
patient safety and confidential data, but a
strong business case led to the approval of
innovative cloud services with Microsoft.
GlaxoSmithKline chose to replace the
Lotus Notes, Domino, and Postini services
with the Microsoft Business Productivity
Online Suite – including Microsoft®
Exchange Online, Microsoft® Office
SharePoint Online, Microsoft® Office
Communications Online, Microsoft®
Office Live Meeting and the Microsoft®
Deskless Worker Suite to deploy to all of its
employees worldwide. Everything would
be hosted by Microsoft at Microsoft data
centers around the globe.
Through Online Services, Microsoft
offers the ability to have fully functioning
applications with a lean presence. The
software will operate in the same capacity
in a hosted solution as it would if it were
implemented on-premise. By deploying
the Business Productivity Suite with the
Deskless Worker Suite, GlaxoSmithKline
is able to offer total functionality to its
entire spectrum of information workers.
This suite offers those who don’t have a
laptop the ability to go to a Web kiosk. It’s
a lighter version and a more manageable
option for the sales force at a lower
cost to GlaxoSmithKline. The Deskless
Worker Suite will be deployed for 15,000
of GlaxoSmithKline’s employees, and
unlike Google Apps, this enables both the
full-service Online Services and Deskless
Worker Suite to be managed in a central
location determined by the
company itself.
BENEFITS
The global implementation of Microsoft
Online Services at GlaxoSmithKline is
intended to have numerous advantages
for the company including: reducing
operational costs, driving innovation
and collaboration, expanding external
collaboration, and simplification of user
experience. This solution is much more
effective than the Notes and Google Apps
combination in driving lower costs, more
collaboration, and greater accessibility.
Reduce Operational Costs
The use of Microsoft Online Services
offers a dramatic yearly reduction in costs.
“Moving to Online Services will enable
us to reduce our IT operational costs
by roughly 30% of what we’re currently
spending. The ability to introduce a
variable cost subscription model for these
collaborative technologies allows us to
more rapidly scale or divest our investment
as necessary,” confirms
Alastair Robertson, VP of Information
Workplace. The difference for
GlaxoSmithKline means putting more
money back into the business.
Drive Innovation
While GlaxoSmithKline is able to
reduce costs with Microsoft Online
Services, productivity is not harmed, but
enhanced. Through Microsoft Online
Services, GlaxoSmithKline can utilize the
IT department for key projects instead
of tasking them with managing the
infrastructure software
or servers.
The model allows for increased innovation
where it counts. “The team needed the
ability to focus internal IT on driving
further innovation that differentiates GSK
in the market while offloading innovation
around communication and collaboration
to Microsoft. This ensures that we can
focus on our core competencies and also Moving to Online
that we have an ‘evergreen’ IT strategy Services will enable us to
where the latest technologies are always at reduce our IT operational
our disposal via the cloud,” says Elfering. costs by roughly 30%
of what we’re currently
The Microsoft Online Services model spending…. A variable cost
drives this innovation as well as allows the subscription model for these
increased flexibility in moving forward. collaborative technologies
The subscription service can be tailored to allows us to more rapidly
fit growing and changing needs. So that scale or divest our
when GlaxoSmithKline adapts to changing investment as necessary
market, its software adapts too. Alastair Robertson,
VP of Information Workplace
39

GlaxoSmithKline has
approximately 100,000
employees, hundreds of
business partners, and
locations around the world,
so effective collaboration
is critical to our business.
We have chosen Microsoft
Online Services…
Bill Louv,
Chief Information Officer,
GlaxoSmithKline
40
Expand External Collaboration
GlaxoSmithKline is aggressively driving
a more externally collaborative business
through all practices: research and
development, manufacturing, and sales.
With Microsoft Online Services, this effort
can be maximized without compromises
in the security and integrity of sensitive
information. The information is stored
in the cloud, allowing for a more direct
form of access than if it were stored
directly on an internally maintained
server. Also, as Louv notes, the Microsoft
brand is more common and therefore
easily interfaced than its competitors. This
supports collaboration between partners
and GlaxoSmithKline, allowing for a more
innovative and competitive business.
Simplification of User Experience
Moving away from the customized
solutions environment, GlaxoSmithKline
was looking for a simple solution that
would effectively extend to the many
branches, regions, and employee types
internally. The company needed a solution
that would also translate externally to
increase collaboration and the resulting
innovation. That is why GlaxoSmithKline
chose the Microsoft solution.
“GlaxoSmithKline has approximately
100,000 employees, hundreds of business
partners, and locations around the world,
so effective collaboration is critical to our
business,” says Louv, “We have chosen
Microsoft Online Services because it
promises to deliver a simple intuitive
Information Workplace that should not
only bring value to the company through
simplification, but provide an improved Software and Services
user experience and ultimately create a Products
more productive GSK.” Microsoft Data Centers Services
Services
Microsoft Exchange Online
Microsoft SharePoint Online
Microsoft Office Communications
Online
Microsoft Office Live Meeting Online
Microsoft Deskless Worker Suite

Overview
Country or Region: India
Industry: IT Services
Customer Profile
KPIT Cummins is a global IT consulting
and product engineering partner
company focused on the Manufacturing
(Automotive, Industrial and Hi-Tech) and
Diversified Financial Services industries.
Business Situation
KPIT Cummins wanted to cut capex and
opex expenses, reduce the number of
physical servers it operated, and optimize
system flexibility and maintenance to best
serve its business requirements.
KPIT Cummins
shrinks 120 servers to 20, reduces costs
and cuts energy usage with virtualization
Solution
To optimize the growing data centers
operations, KPIT Cummins implemented
a virtualization solution centered on
Windows Server® 2008 Hyper-V™
technology to consolidate hardware,
minimize rack space and ownership and
software cost.
Benefits
• Consolidates multiple servers
• Reduces power consumption
• Reduces opex and capex cost
• Improves service quality
Virtualization has helped
to reduce the provisioning
time for new applications by
almost 6-8 weeks helping us
to deploy applications within
4 hours on the virtualized
platform.
MANDAR MARULKAR,
Head, Technical Infrastructure Management
Services, KPIT Cummins
Headquartered in Pune, India, KPIT
Cummins is an emerging leader in
providing consulting, solutions and
services in the fields of finance, accounts
and manufacturing. It is one of the
world’s first few companies to achieve the
BS25999:2007, ISO9001, ISO 27001:2005,
CMMI- level 5 certifications. With
accumulation of servers, it was becoming
increasingly difficult for the company to
manage costs and handle issues like high
expenditure on technology hardware,
software licensing, power consumption,
and physical space. Hence, KPIT Cummins
decided to migrate operations to
Windows Server® 2008 with Hyper-V™
technology to take advantage of server
virtualization efficiencies. With its new
optimized infrastructure, the company
can grow faster and dramatically reduce
IT costs. The company has virtualized 120
of its physical servers to 20 servers and
thus has optimized space and power use.
41

We have trimmed our physical
server holdings - from 120 to
merely to servers. Currently the
entire setup is running on 20
infrastructure servers virtualized
on Microsoft Hyper-V Server
2008. The expenses on server
boxes have dropped drastically
by 40 percent of our data
center budget.
Sandeep Gandhi,
Sr. Manager, Data Center Operations,
KPIT Cummins
42
Situation
Founded in 1990, KPIT Cummins
specializes in consulting in Governance
and Regulatory Compliance, high end
transactional BPO/KPO and Enterprise
Support to global customers. The
company is focused on co-innovating
domain intensive technology solutions for
manufacturing corporations in automotive,
industrials, hi-tech verticals and diversified
financial services. It has established state
of art eco friendly facility equipped with
advanced technologies, processes, and
equipment - complying with international
standards.
With 4500 employees worldwide and
more than 95 active global clients, the
company has offshore centers in Pune
and Bangalore in India. Besides, it has
onsite presence in United States, United
Kingdom, Germany, France, Japan,
Singapore, South Africa and Poland.
KPIT Cummins operates multiple data
centers in its Pune and Bangalore centers.
To help meet the needs of more than
5000 users across the globe, the company
manages more than 200 servers, storage
area networks and business applications
such as SAP R/3 ERP, Microsoft Exchange
Server 2007 with unified communication.
In addition, it manages configuration
management servers, project management
applications, intranet and portal
applications, development and testing
servers supporting customer projects.
The company has a network operations
centre that takes care of network and
perimeter security and client services
which takes care of desktop and peripheral
devices support.
KPIT Cummins realized that more than
150 servers had reached the end of their
life, they had hardware which was older
the 3 years. At the same time, there were
more than 50 servers that had less than 30
percent utilisation. Initially the managers
planned to replace some of them by
new hardware and renew the annual
maintenance contract (AMC) of remaining
servers, but these options required
considerable capital and operating
expenses. “Our goal was to deploy Green
IT solutions, reduce and opex expenses
by at least 15 percent and improve asset
utilization by 20 percent,” explains Mandar
Marulkar, Head, Technical Infrastructure
Management Services, KPIT Cummins.
“The growing number of servers, however,
was resulting in more energy consumption
and increased data centre energy
consumption.”
With growing server network, the
company was incurring huge costs for
technology hardware, software licensing,
and power consumption. It recognized
that its IT environment had become
too large and complex to be managed
effectively and efficiently in a traditional
manner. The company also wanted to cut
back on the number of physical servers it
operated, improve server performance,
and optimize system flexibility and
maintenance to best serve its business
requirements.
Solution
KPIT Cummins recognized that it could
use virtualization technology to reduce
the number of physical servers in its data
center, and enhance the availability of ap-
plications and services. Shrikant Kulkarni,
CIO, KPIT Cummins concluded that rather
than paying for many under-utilized server
machines or less efficient server machines,
each dedicated to a specific workload,
server virtualization would allow consoli-
dating all the workloads onto a smaller
number of more fully used machines. Not
only this, he convinced the business users
the benefits of this technology.
The IT team at KPIT Cummins evaluated
several products, including the Hyper-V™
technology included with the Windows
Server® 2008 operating system, VMware,
and others. Considering the business
requirement, licensing model, cost factor
and technical support available, the
company ultimately decided to deploy
Hyper-V as it provides all the functionality
needed and meets all the requirements.
Deployment took place in Pune
and Bangalore centers. The process
commenced in April 2009 and was 90
percent completed by Oct 2009. The
implementation dramatically prune its
physical server holdings, from 120 to 20
systems. The company can now efficiently
deploy, scale, and manage a virtualized
server infrastructure without the extra cost
of a third-party solution.
Initially the team faced some issues to
understand the technology, manage
virtualized setups and convince the
business users to move the application
on virtualized platform. But later on, after
3-4 application migrations, the team
was quite comfortable in migrating the
applications without any down times
and dynamically allocating appropriate
resources. “Virtualization has helped to
reduce the provisioning time for new
applications by almost 6-8 weeks helping
us to deploy applications within 4 hours
on the virtualized platform,” says Mandar
Marulkar, Head, Technical Infrastructure
Management Services, KPIT Cummins.
BENEFITS
By using Hyper-V technology to virtualize
its physical servers, KPIT Cummins
optimized its server environment, cut
hardware costs and power consumption,
enhanced server reliability and utilization,
and reduced maintenance and
support costs.
Consolidates Multiple Servers
KPIT Cummins decided to use Microsoft
Hyper-V solution for virtualization instead
of paying for many under-utilized server
machines. Consolidations helped in
running multiple applications on the
same server in single operating system by
eliminating some of the servers. By using
Hyper-V to virtualize servers, the company
is able to significantly reduce hardware
costs and decrease the hardware footprint
at its data centers. Now the IT department
can support the business with less
hardware, which means lower equipment
costs, reduced electrical consumption for
server power and cooling, and less By reducing the number
physical space. of physical servers with
the help of Microsoft
“We have trimmed our physical server Hyper-V solution, we are
holdings - from 120 to merely 20 servers. able to reduce the power
Currently the entire setup is running consumption enormously
on 20 infrastructure servers virtualized and thus helped the
on Microsoft Hyper-V Server 2008. The company going green.
expenses on server boxes have dropped Sandeep Gandhi,
drastically by 40 percent of our data center Sr. Manager, Data Center Operations,
budget,” elaborates Sandeep Gandhi,  Sr. KPIT Cummins
Manager, Data center operations, KPIT
Cummins.
43

Server virtualization has brought
in significant reduction in
capital expenditure. We have
consolidated physical servers by
more than 40 percent, reduced
physical rack space by 60 percent
resulting in savings of more
than 40 percent in data center
budget.
Mandar Marulkar ,
Head, Technical Infrastructure
Management Services,
KPIT Cummins
44
Reduces Power Consumption
The significant reduction in servers
contributes hugely to KPIT Cummins
“green” initiatives. “By reducing the
number of physical servers with the help
of Microsoft Hyper-V solution, we are
able to reduce the power consumption
enormously and thus helped the company
in going green,” says Sandeep Gandhi, Sr.
Manager, Data center operations, KPIT
Cummins.
Consolidation and virtualization has
aided the company in its objective to
deploy green data centre solutions by
reducing carbon footprint in turn giving
cost savings as a part of reducing energy
consumption. Along with reduced power
requirements, lesser cooling facilities need
to be deployed for the servers.
Reduces Opex and Capex Cost
The operating and capital cost of
deploying new servers, and maintaining
and running more than 200 servers is
much higher than fully utilizing 20 servers
for all the applications. Virtualization
has helped consolidating practically
10 servers into a single virtual server.
Loading different operating systems and
applications on a single virtual server has
resulted into improving the utilisation up deactivating some of the old development
to 70 percent of the less utilised servers.  and testing servers, thus improving the
“Server virtualization has brought in service. Consolidation, virtualisation and
significant reduction in capital expenditure. deactivation of the applications helped
We have consolidated physical servers by in reutilisation the existing servers more
more than 40 percent, reduced physical efficiently for critical applications avoiding
rack space by 60 percent resulting in new hardware investments. With reduced
savings of more than 40 percent in data hardware, lesser operating cost, the
center budget,” says Mandar Marulkar, company can offer better and competitive
Head, TIMS, KPIT Cummins. prices to its customers.
Improves Service Quality
“Consolidation and virtualization reduced
the time needed to provision servers from
several months to just 4 hour, restored
data in 10% of the time previously
required, and created a highly reliable
environment, improving its quality of
service,” says Mandar Marulkar, Head,
TIMS, KPIT Cummins.
The time taken in tracking the AMCs and
other issues with servers is now brought
down considerably. Fewer people are
required to mange the lesser number of
servers.
During the consolidation process, the
IT team got a chance to review all the
existing applications and this helped in

Overview
Country or Region: United States
Industry: Manufacturing - High tech and
electronics
Customer Profile
With 75,000 employees and operations in
more than 60 countries, 3M develops an
extensive range of consumer and industrial
products. Well-known 3M brands include
Scotch, Post-it, Thinsulate, and Scotch-Brite.
Business Situation
3M wanted to make its Visual Attention
Service (VAS) available to customers
as a Web-based application, with
high performance, scalability, and low
infrastructure and management costs.
3M Launches Web-Based
Visual Attention
service
to heighten design impact
Solution
3M used the Windows Azure™ platform
to deliver the VAS solution to customers,
taking advantage of Microsoft®
data center infrastructure and service
management to keep performance high
and costs low.
Benefits
• Easy, efficient deployment
• Lower costs, high scalability
• Excellent customer solution
A recognized world leader in technology
research and development, 3M wanted
to make its decades of expertise in the
workings of the human visual system
available as a service to customers.
Windows Azure helps Using the Windows Azure™ platform,
3M customers take 3M created a Web-based application
advantage of complex that gives designers the ability to
algorithms that invoke complex algorithms to analyze
encapsulate 30 years of the effectiveness of a design, based on
research and get simple, how the human eye will respond. By
powerful results from hosting its application in Microsoft® data
their browser, almost centers, 3M has made an innovative
instantly. service available to a global audience,
Terry Collier, while minimizing its investment in
Marketing Manager, 3M hardware infrastructure and ongoing
administration. The solution, which
permitted developers to evaluate
frequent iterations of the application,
helped the company speed time-to-
market for its service and achieve higher
quality results, faster than in a traditional
development environment.
45
 Situation
From well-known brands such as Post-it
products, Thinsulate insulation, and Nexcare
first aid, to high-strength bonding tapes,
industrial abrasives, and traffic safety
systems, 3M products are ubiquitous
around the world. Founded in 1902, 3M is a
science-based company and has developed
thousands of innovative products for a
broad range of markets. The company now
operates in 60 countries and its worldwide
sales in 2008 were more than U.S.$25
billion.
We knew there was a 3M supports more than 40 different
need to make the process technology platforms and has invested
for designing things years of scientific research in developing
that people interact with them. In fact, 7,000 of the company’s
visually more science- employees are dedicated solely to research.
based and iterative One area of research that is used in many
to bring about more 3M products - such as reflective materials
effective results used in roadway signage, emergency
Bill Smyth, exit markings, and display and graphics
Business Manager, 3M technologies - is the understanding of
how the human visual system works. The
company’s vision scientists, working in its
46
corporate research labs, study how the
human brain processes visual information
and have developed complex algorithms
for predicting what a person will notice in a
visual scene.
Bill Smyth, Business Manager at 3M,
says, "Our job, on the business and
marketing side, is to make the most of
these capabilities." To this end, Smyth and
his colleagues identified a use for these
predictive algorithms. "We knew there was
a need to make the process for designing
things that people interact with visually
more science-based and iterative to bring
about more effective results."
Terry Collier, Marketing Manager at 3M,
adds, "In our market research, we found
that designers spend a lot of time creating,
honing, and optimizing their images but
they can be challenged by the fact that
they don’t ever truly know how people are
seeing a design before it’s completed."
3M’s goal was to provide designers with
predictive measurements about how
their creations - from a logo design, to a
Web site layout, to the placement of an
electronic screen in a hotel lobby - would
be perceived by their audience. Also, it was
critical that this information be immediately
available. "We needed to be able to provide
designers with access to this information
directly from their computer desktop,
multiple times throughout the design
process, so they could alter their designs in
direct response to the analyses, rather than
engaging in lengthy focus group sessions
that happen after a design reaches a near-
final state of completion," says Collier.
The company developed a prototype of
a Web-based application, called the 3M
Visual Attention Service (VAS). The service
makes it possible for designers to test the
effectiveness of their content using visual
attention models, which are based on
algorithms that predict the elements of a
scene that a viewer is likely to see and to
remember. The prototype, a Web-based
application that was hosted on 3M data
center servers, enabled users to upload
photographs of a physical environment or a
graphic design to the VAS. The application’s
processing engine then evaluated the
image for its 'visual saliency' and returned
a map of the image that indicated, using
markings such as those seen on a heat map,
which areas of the image were most likely
to attract a viewer’s attention. (Figure 1.)
But 3M wanted the application to work
efficiently as part of its customers’ existing
design processes. To become a viable
offering, the VAS application had to be
Figure 1. 3M VAS image map indicating areas most likely to attract viewers’ attention
available to customers in real time, be
capable of processing images and returning
near-immediate results, of scaling rapidly
during peak design times, such as just prior
to holiday advertising deadlines, and it had
to carry a low up-front investment risk for
3M. "Especially in the current economic
environment, we have to be very careful
about how we invest our capital," says
Smyth."We didn’t want to invest in costly
data center infrastructure and capacity
that, much of the time, would sit idle and
unused."
Jim Graham, Technical Manager at 3M,
adds, "We needed to be able to provide a
high-performance application to customers
everywhere, without deploying data centers
around the world."
Solution
3M believed that the most effective
approach would be to operate the VAS
application from a "cloud computing"
environment, in which the solution would
be hosted and managed on the Internet
and reside in an external partner’s data
centers. The company evaluated hosted
infrastructure offerings from Microsoft and The similarities between
Windows Azure and our
current development
environment gave us a huge
advantage and made the
decision easy.
Jim Graham,
Technical Manager, 3M
47
 others, but, says Graham, "3M has for a
long time relied on Microsoft® tools and
technologies to support the development
of our technology. For this reason, 3M
chose the Windows Azure™ platform from
Microsoft." Windows Azure is a cloud
services operating system that serves as the
development, service hosting, and service
management environment for the Windows
Azure platform. Windows Azure provides
developers with on-demand compute
and storage to host, scale, and manage
Web applications on the internet through
Microsoft data centers.
SQL Azure is of great value
to 3M because it takes the From its experience with the Community
database management Technology Preview (CTP) of Windows
piece off our plate. Azure, a Microsoft program for early
Jim Graham, adopters to experiment with prerelease
Technical Manager, 3M technology, Graham’s team thought that
the solution was a good fit for 3M. "The
similarities between Windows Azure and
our current development environment
gave us a huge advantage and made the
decision easy," says Graham. 3M relied
on the Microsoft Visual Studio® 2008
48
development system to produce the VAS
application, including Microsoft Visual
Studio Team System 2008 Team Suite
and Microsoft Visual Studio Team System
2008 Team Foundation Server. It also used
Microsoft Expression Blend™ 3 design
software and Microsoft SQL Server® 2008
data management software. "We saw that
Windows Azure would work well with our
Visual Studio development environment.
We also saw the opportunity to take
advantage of a new technology platform
that would allow us to deploy in different
countries, with rapid scaling capabilities
and no up-front capital investment," says
Graham.
To prepare the VAS application for
commercial release, 3M built a new user.
interface. The timing coincided with the
CTP of Windows Azure, so Graham’s team
developed the interface to Windows Azure
specifications. "We developed the whole
user experience, from the ground up, on
Windows Azure," says Graham. His team
also used the Windows Azure development
fabric, which it used to simulate the
Windows Azure environment on local
computers, making it easy to run and test
the VAS application before deploying it.
VAS incorporates a number of unmanaged,
high-performance image-processing
software libraries developed by 3M. "The
Windows Azure development fabric
helped us perform quick iterations of code,
allowing us to overcome many of the
hurdles we might not have seen until we
had deployed to a more formal staging or
production environment," explains Graham.
The VAS interface, and the Web site where
users go to access it, was developed using
Microsoft ASP.NET 2.0, part of the Microsoft
.NET Framework. Graham’s team used the
Microsoft Silverlight™ browser plug-in to
build controls into the application that
enable users to edit and modify images
they submit to the VAS processing engine.
The Silverlight-enabled controls are
embedded into the ASP.NET application
framework, creating a seamless experience
for users. "Users don’t have to switch
between different interfaces to perform
certain functions," explains Graham.
The VAS application relies on the Access
Control Service feature of Windows
Azure to authenticate users to the system,
providing access to various components of
the service based on a user’s credentials.
3M used Microsoft SQL Azure, a cloud-
based relational database platform that
is built on SQL Server technologies, to
manage the images that users upload.
SQL Azure also is used to deliver analytical
results from the image processing engine.
SQL Azure, as part of the Windows
Azure platform, provides automated
management capabilities, including built-in
data protection, self-healing, and disaster
recovery - crucial for protecting customers’
data. "SQL Azure is of great value to 3M
because it takes the database management
piece off our plate," says Graham.
3M uses Windows Azure data storage
services to store image files and analysis
generated by the engine, and it uses the
Queue service feature to provide users with
high-performance and near-immediate
response times even when the application
is inundated with high traffic during peak
load times.
Figure 2. Diagram of 3M VAS deployed on Windows Azure
In short, explains Graham, "With Access
Control, we can create a pipeline from the
ASP.NET-based interface, to the Queue
service, to the VAS engine where the
analysis is performed using the algorithms
our scientists have developed." (Figure 2.)
Currently, VAS helps customers evaluate
any number of graphical or photographic
images that they choose to upload to the
application. In future versions, 3M plans to
provide customers with the ability to create
entire databases of test images, enabling
users to experiment with, for example, the
content of an advertisement in a variety of
design scenes - or, conversely, a number
of different types of advertising content in
one particular scene. 3M plans to release a
final version of the VAS application running We will be able to
on Windows Azure to customers by mid- deploy much faster on
November 2009. the Microsoft technology
platform through
BENEFITS Windows Azure than
Using the Windows Azure platform, 3M with any other cloud
developed a highly innovative Web-based solution we evaluated.
service that can dramatically alter and Jim Graham,
improve the process for designing images Technical Manager, 3M
and environments that rely on how the
human visual system responds. By using a
cloud service, 3M experienced an efficient
deployment and lowered its infrastructure
costs. The highly scalable Web-based
service will make it possible for 3M
customers to optimize designs in response
to scientific analysis, thereby helping to
make the most of their marketing dollars.
49
 Easy, Efficient Deployment
The close connection between Windows
Azure and the 3M Visual Studio
development environment helped the
company achieve a rapid deployment of
the VAS application. "We were able to wrap
our core technology into Windows Azure
3M VAS and Windows in less than eight weeks. It was very fast,
Azure will help our "says Graham. "The tools and technologies
customers spend their we were already using, for instance forms
marketing dollars more authentication, are fully supported in
wisely. Windows Azure. And, the Windows Azure
Bill Smyth, development fabric provided a great
Business Manager, 3M simulation environment in which we could
see our work in progress and incorporate
feedback- early and often. We rapidly
deployed interim releases to stakeholders
within the company. The Windows Azure
development fabric has been a significant
Software and Services time savings."
Windows Azure Platform
Windows Azure In addition, once the VAS application
Access Control Service development is complete and the service is
Microsoft SQL Azure made publicly available on Windows Azure,
Microsoft Server Product 3M will be able to quickly release product
Portfolio updates and enhancements. "We will be
Microsoft SQL Server 2008 able to deploy much faster on the Microsoft
Microsoft Visual Studio technology platform through Windows
Microsoft Visual Studio Team Azure than with any other cloud solution
System 2008 Team Foundation we evaluated," says Graham.
Server
Microsoft Visual Team System
2008 Team Suite
Microsoft Expression
Microsoft Expression Blend 3
Technologies
Microsoft ASP.NET 2.0
Microsoft .NET Framework
Microsoft Silverlight
50
Lower Costs, High Scalability
With Windows Azure, 3M capitalizes on a
pay-as-you-use pricing model to minimize
hosting costs and maximize profits. "With
Windows Azure, we get a highly scalable
environment, pay only for the resources
we need, and relieve our IT staff of the
systems management and administration
responsibilities of supporting a dynamic
infrastructure," says Graham.
3M found SQL Azure to be especially
beneficial because it can use it to offer
the VAS application to a global audience,
without the expense of establishing and
maintaining regional data centers. Graham
explains, "With SQL Azure, we can deploy
internationally without having to migrate
customer data from one region to another,
without having to replicate databases, and
without all of the service management
we would otherwise have to engage in."
Graham compares the time and cost
savings that result from the use of Windows
Azure as a cloud services platform to other
endeavors at 3M. "We have full-time staff
members who are solely dedicated to
managing our hosted solutions. Were we
to host the VAS application ourselves, we
would have to increase our support staff."
Excellent
Customer Solution
Most importantly, 3M used Windows Azure
to deliver a new technology that could
change the design process paradigm,
especially in areas where success hinges on
a viewer’s response to a scene. "Windows
Azure helps 3M customers take advantage
of complex algorithms that encapsulate 30
years of research and get simple, powerful
results from their browser, almost instantly,"
says Collier.
Graham says, "We wanted to make it so
simple for our users that they didn’t even
have to step outside of the workflow they
are used to. With the VAS application
running on Windows Azure, users can open
a Web browser and analyze any number of
files, straight from their computer." As VAS
becomes an integral, natural element of
the design process for 3M customers, the
company expects to "significantly reduce
the time and cost of design iterations -
while improving the overall impact of the
designs," says Graham.
"3M VAS and Windows Azure will help
our customers spend their marketing
dollars more wisely," explains Smyth. "In
our research, we found that customers
value having an analytical, science-based
assessment of their designs. It takes it out
of the ego space of subjective evaluations
from colleagues or from their own clients.
We believe that with the Windows Azure
- based solution, we can have a significant
impact on the financial aspects of
marketing-based design."
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 THE MOST COMPREHENSIVE
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52