Reference no: EM132293045

Case Study: DTGOV

DTGOV is a public company that was created in the early 1980s by the Ministry of Social Security. The decentralization of the ministry's IT operations to a public company under private law gave DTGOV an autonomous management structure with significant flexibility to govern and evolve its IT enterprise.

At the time of its creation, DTGOV had approximately 1,000 employees, operational branches in 60 localities nation-wide, and operated two mainframe-based data centers. Over time, DTGOV has expanded to more than 3,000 employees and branch offices in more than 300 localities, with three data centers running both mainframe and low-level platform environments. Its main services are related to processing social security benefits across the country.

DTGOV has enlarged its customer portfolio in the last two decades. It now serves other public-sector organizations and provides basic IT infrastructure and services, such as server hosting and server colocation. Some of its customers have also outsourced the operation, maintenance, and development of applications to DTGOV.

DTGOV has sizable customer contracts that encompass various IT resources and services. However, these contracts, services, and associated service levels are not standardized-negotiated service provisioning conditions are typically customized for each customer individually. DTGOV's operations are resultantly becoming increasingly complex and difficult to manage, which has led to inefficiencies and inflated costs.

The DTGOV board realized, some time ago, that the overall company structure could be improved by standardizing its services portfolio, which implies the reengineering of both IT operational and management models. This process has started with the standardization of the hardware platform through the creation of a clearly defined technological lifecycle, a consolidated procurement policy, and the establishment of new acquisition practices.

Technical Infrastructure and Environment

DTGOV operates three data centers: one is exclusively dedicated to low-level platform servers while the other two have both mainframe and low-level platforms. The mainframe systems are reserved for the Ministry of Social Security and therefore not available for outsourcing.
The data center infrastructure occupies approximately 20,000 square feet of computer room space and hosts more than 100,000 servers with different hardware configurations. The total storage capacity is approximately 10,000 terabytes. DTGOV's network has redundant high-speed data links connecting the data centers in a full mesh topology. Their Internet connectivity is considered to be provider-independent since their network interconnects all of the major national telecom carriers.

Server consolidation and virtualization projects have been in place for five years, considerably decreasing the diversity of hardware platforms. As a result, systematic tracking of the investments and operational costs related to the hardware platform has revealed significant improvement. However, there is still remarkable diversity in their software platforms and configurations due to customer service customization requirements.

Business Goals and New Strategy

A chief strategic objective of the standardization of DTGOV's service portfolio is to achieve increased levels of cost effectiveness and operational optimization. An internal executive-level commission was established to define the directions, goals, and strategic roadmap for this initiative. The commission has identified cloud computing as a guidance option and an opportunity for further diversification and improvement of services and customer portfolios.

The roadmap addresses the following key points:

• Business Benefits - Concrete business benefits associated with the standardization of service portfolios under the umbrella of cloud computing delivery models need to be defined. For example, how can the optimization of IT infrastructure and operational models result in direct and measurable cost reductions?

• Service Portfolio - Which services should become cloud-based, and which customers should they be extended to?

• Technical Challenges - The limitations of the current technology infrastructure in relation to the runtime processing requirements of cloud computing models must be understood and documented. Existing infrastructure must be leveraged to whatever extent possible to optimize up-front costs assumed by the development of the cloud-based service offerings.

• Pricing and SLAs - An appropriate contract, pricing, and service quality strategy needs to be defined. Suitable pricing and service-level agreements (SLAs) must be determined to support the initiative.

One outstanding concern relates to changes to the current format of contracts and how they may impact business. Many customers may not want to -or may not be prepared to-adopt cloud contracting and service delivery models. This becomes even more critical when considering the fact that 90% of DTGOV's current customer portfolio is comprised of public organizations that typically do not have the autonomy or the agility to switch operating methods on such short notice. Therefore, the migration process is expected to be long term, which may become risky if the roadmap is not properly and clearly defined. A further outstanding issue pertains to IT contract regulations in the public sector-existing regulations may become irrelevant or unclear when applied to cloud technologies.

Roadmap and Implementation Strategy

Several assessment activities were initiated to address the aforementioned issues. The first was a survey of existing customers to probe their level of understanding, on-going initiatives, and plans regarding cloud computing. Most of the respondents were aware of and knowledgeable about cloud computing trends, which was considered a positive finding.

An investigation of the service portfolio revealed clearly identified infrastructure services relating to hosting and colocation. Technical expertise and infrastructure were also evaluated, determining that data center operation and management are key areas of expertise of DTGOV IT staff.

With these findings, the commission decided to:

1. choose IaaS as the target delivery platform to start the cloud computing provisioning initiative

2. hire a consulting firm with sufficient cloud provider expertise and experience to correctly identify and rectify any business and technical issues that may afflict the initiative

3. deploy new hardware resources with a uniform platform into two different data centers, aiming to establish a new, reliable environment to use for the provisioning of initial IaaS-hosted services

4. identify three customers that plan to acquire cloud-based services in order to establish pilot projects and define contractual conditions, pricing, and service-level policies and models

5. evaluate service provisioning of the three chosen customers for the initial period of six months before publicly offering the service to other customers

As the pilot project proceeds, a new Web-based management environment is released to allow for the self-provisioning of virtual servers, as well as SLA and financial tracking functionality in realtime. The pilot projects are considered highly successful, leading to the next step of opening the cloud- based services to other customers.