The Implementation of Cloud Computing

1. INTRODUCTION

The German Roto group, established in 1935 by the inventor and entrepreneur Wilhelm Frank, comprises two divisions: Window and Door Hardware as well as Roof and Solar Technology. The concern, both divisions together, employs around 4,000 employees worldwide and generates a turnover of 620 million Euro. The division Roto Roof and Solar Technology, which is focused in this report and mentioned ‘Roto', is characterised by 1,200 employees, 3 manufacturing facilities and 20 sales offices in Europe. The headquarters is located in Bad Mergentheim (Germany) and employs about 700 people including approximately 75 sales representatives.

Key products and services

Rotobelongs to theworld's leadingmanufacturersofroof windows (PVC and timber), accessories and solar systems. Appendix 2 presents the varied product range of Roto which is focused on an innovative portfolio of energy saving, energy recovery and comfort on the pitched roof.

The corporate structure of Roto is concentrated on an ultra-modern manufacturing and future-oriented, lean production control. The affiliated logistics centre provides ‘just-in-time deliveries' to the authorised dealers. Organisation and management of the company include the fields of accounting, construction, human resources, IT support, purchasing department, sales and service centres. The integrated modern training centre ‘RotoCampus' qualifies Roto partners by theoretical seminars and practical workshops.

In addition, the powerful value chain at Roto is complemented by a specifically customer orientation and superior service. For instance, the Roto Dialogue Centre has the main task

to offer qualified product advices to private customer by phone and email. On the other hand, the technical service complaints processing for private customer as well as roofing trade professionals. A significant value illustrates the Roto ProfiLiga, an exclusive customer club for efficiency oriented roofer. The participation includes a membership fee and the bonus and benefits system is based on the number of installed Roto products by the member.

Business strategy

Roto products are marketed on the three-step distribution channel (Business-to-Business)

The entity is consistently oriented on the professional partnership with authorised specialised dealers, professionals in the roofing and solar trade such as roofers and carpentries, public housing associations, building promoter as well as architects.

In May 2010, Roto has been able to call itself ‘Best Factory in Germany 2010' after winning

a major industrial award and the final decision was made by a panel of industry experts as well as trade journalists.

Relationship with external partners and facilities

In the context of product marketing and training activities, Roto cooperates with a number

of roofing associations, master schools and guilds associations.

Even in terms of the production-technical and logistics management, the entity collaborates with a variety of suppliers such as the Hein transport company, a regional carrier for national and international logistic systems. QCells and Hilti are involved at the completion of products in the fields of solar technology. In addition, federal and country-specific sponsors provide financing opportunities for solar systems in opposite to private customers. It should also be mentioned that Roto produces the flashing materials for other solar manufacturers. Further business relations in the fields of the roof windows production exist with Saint-Gobain Glass or the profile manufacturer Rehau. In relation to the IT Infrastructure, Roto maintains an internal contact to the other business division in terms of the Siebel CRM system. Further associations exist with the companies ‘RocketMedia' as well as ‘Eggheads' in the fields of product information management and cross-media publishing.

The homepage URL of Roto is: https://www.roto-frank.com

Authorisation

Hannes Katzschner requested this report on 13 April 2011. Based on an analysis of the existing IT infrastructure at Roto and its significant role within the business processes, the report describes the strategy of cloud computing as a solution for a cost-efficient, flexible

and adequate usage of information technology in future.

Scope of the report

The report consists of the following three scopes: an inventory of the existing Roto IT infrastructure considering of internal and external utilization, the presentation of cloud computing including its benefits, product specific characteristics as well as recommendations for the integration of cloud computing in the future strategic direction of the IT infrastructure at Roto. The analysis is based on provided information by Roto, research findings from online IT materials and expert knowledge of cloud computing, in particular, providers such as IBM.

In addition, figures, tables and statistics enhances the IT processes at Roto and illustrate the varied possibilities and applications of cloud computing.

2. THE IMPACT OF INFORMATION TECHNOLOGY ON THE

DAILY BUSINESS PROCESS

2.1The infrastructure components of information technology at Roto

Roto possess a centralized corporate structure. The combination of manufacturing as well

as organisation and management results in financial benefits in terms of the production development, market cultivation and commercial exploitation. As a consequence, different specific requirements within the entity suggest various applications in information technologies. For a detailed overview about the Roto infrastructure system, see Appendix 3.

The data management relies on the IBM database DB2. This relational database enables Roto to adapt its analysis and required business information to the changing market conditions. The actual technical advantage can be used immediately as an economic advantage. However, the basic requirements for a meaningful and processing use of the data will be generate by the knowledge of the ‘Structured Query Language (SQL)', the appropriate database design and its clear documentation. Today, SQL is one of the most frequented data manipulation languages and in connection with a database management system (DBMS) this specialised language is used to ‘add, change, delete, and retrieve the data in the database' (Laudon and Laudon 2010, p. 245). Furthermore, this ‘language contains commands that permit end users and programming specialists to extract data from the database to satisfy information requests and develop applications' (Laudon and Laudon 2010, p. 245).

Important IT infrastructure component: Enterprise Software Applications

The SolidWorks 3D-Construction software, which is used by the Roto construction department, supports the planning and creation of products. The CAD functions (computer-aided design) contribute to design detailed product solutions in a quick and inexpensive way. Furthermore, the results are used for component parts lists, installation manuals, technical documentations and planning sheets. The compressed data of the CAD drawings are available on the Roto website and can be downloaded from architects and Roto partners.

As a window manufacturer, Roto is using the application of the 3E-Look Window software for capacity planning, production controlling and assembly planning. At the end of the production process, the cost will be determined by a post-calculation. The powerful window software is compatible with all windows-based Enterprise Resource Planning-systems (ERP) and the MS Access as well as MS SQL bases.

The SAP (ERP) applications are the most significant IT tools at Roto and affect the cross-departmental business processes sustainably. Appendix 4 illustrates the usage of SAP in selected Roto departments. However, in spite of the efficient process optimisation, the SAP applications include limitations such as possible erroneous data and the accounting control by the workflow takes a long time and requires intensive research on the price verification. Based on the cost intensity and restricted licensing, the access to the SAP system is restricted and a limited number of employees are be able to work with this application.

A further common application at Roto is the Customer Relationship Management (CRM)

by Siebel. The figure below represents the architecture, systems and interfaces.

Siebel Web Client	Siebel Server	SAP ERP
Siebel Mobile Client		MS Access
Lotus Notes		SAP Business Information Warehouse (BW)

(Adapted from internal information, Roto 2010 at www.slideshare.net)

At a high level, the Siebel architecture consists of ‘Web clients that access the business data,

a web server that handles interactions with the Web clients, servers that manage the business data and provide batch and interactive service clients as well as a relational database and file system that store business data' (<https://www.slideshare.net/MICLADE/05-ess-architecture-presentation>, 2008). For the implemented Siebel components at Roto, see Appendix 5.

Roto sales representative will be supplied with information about customers, number of

sales and revenue figures. On the other side, they are responsible to report all relevant customer data and activities to the Roto management in relation to the view of the market, competition assessment, budget and acquisition planning. Siebel as a ‘customer contact manager' supports also the Roto service centres in the daily operating processes. Based on

the compatibility with other IT systems, Siebel offers the option to access the MS Access database and associated merge function in MS Word by using the Open Data Base Connectivity (ODBC). The data export from Siebel contributes to the preparation and execution of planned marketing campaigns. On the contrary, the technical service uses the CRM system for its customer service management and the documentation of service requests in the system. Finally, in relation to the complaint processing, the integrated knowledge data base is a valuable support.

2.2Further variations of information technology within the Roto organisation

The product information management system (PIM) cmi24 as a media-neutral database manages all relevant Roto product data such as images, text and technical specifications.

The data will be directly input from existing database systems via export and import routines or automatically from existing set of files such as InDesign. The cmi24 database is mainly used in the marketing department, the PIM system illustrates a central tool of the product management. The implementation of cmi24 and involvement in the realisation of print materials has led to significant cost savings in opposite to external service providers.

Lotus Notes contributes to improving and simplifying Roto`s internal work processes. In addition to the available email usage, the calendar function, conference management and integrated database plays an essential role. The marketing department uses the integrated database for the storage and transfer of enormous printing and image data.

3. CLOUD COMPUTING - ADEQUATE AND COST-EFFICIENT

INFORMATION SERVICE

3.1 Definition and service tools

Roto has a multifaceted IT infrastructure and in relation to accomplish more data storage capacity, the management of extensive customer data as well as the acquisition of further upgrades often lead to cost-intensive and time-consuming challenges. In regard to an optimal solution, effective and efficient IT processes combined with appropriate automation of deployment and services are necessary. Cloud computing as a strategic IT concept opens Roto new methods to master the requirements of reducing operating costs and improve service quality.

Cloud computing means the flexible, customised, cost-efficient and customer-oriented usage

of IT services from the ‘cloud'. The term cloud computing ‘gets its name as a metaphor for the Internet' (Velte et al. 2010, p. 3). In essence, ‘cloud computing is a construct that allows you to access applications that actually reside at a location other than your computer or other Internet-connected device; most often, this will be a distant datacenter' (Velte et al. 2010,

p. 4). Cloud computing are integrated, scalable applications for business processes and encompasses on-demand infrastructure (computers, storage, networks) and on-demand software (operating systems, applications, middleware, management and development tools).

The on-demand infrastructure and its technical basis components	Software-as-a-Service (SaaS)
	Web 2.0 capabilities
	Social Networking
	Cloud-based software development
	Cloud-based service hubs that provide such as billing, administration and other complementary services

SaaS is a software distribution which ‘must be able to interact with other data and other applications in an equally wide variety of environments and platforms' (Rittinghouse and Ransome 2010, p. 50). Two other web service tools should not remain unmentioned: Infrastructure-as-a-Service (Iaas) and Platform-as-a Service (PaaS). IaaS ‘leverages significant technology, services, and data center investments to deliver IT as a service to customers' (Rittinghouse and Ransome 2010, p. 34). In contrast, ‘IaaS is centered around

a model of service delivery that provisions a predefined, standardized infrastructure specifically optimized for the customer`s applications' (Rittinghouse and Ransome 2010,

p. 34). In addition, ‘IaaS providers manage the transition and hosting of selected applications on their infrastructure' (Rittinghouse and Ransome 2010, p. 34).

On the other hand, the ‘PaaS model makes all of the facilities required to support the complete life cycle of building and delivering web applications and services entirely available from the Internet, all with no software downloads or installation for developers, IT managers, or end users' (Rittinghouse and Ransome 2010, p. 48).

Furthermore, ‘PaaS'offerings include workflow facilities for application design, application development, testing, deployment, and hosting, as well as application services such as virtual offices, team collaboration, database integration, security, scalability, storage, persistence, state management, dashboard instruments etc.' (Rittinghouse and Ransome 2010, p. 49). Appendix 6 demonstrates that, in particular, Hardware capacity (processing power and storage space), email and business applications are mainly outsourced to the cloud.

3.2 Benefits and cloud variants

As a fundamental strategic IT concept, cloud computing would open Roto new perspectives

to accept upcoming challenges. Strategies for successful business development can be implemented by the integration and linking of different provided models. Roto benefits from

a high scalable pool of resources and can expand the limitations of their own virtual data centre. In addition, the system provides many available services such as applications, development, testing and storage services via social network and Web conferencing by an external backup service. Cloud computing will help Roto to answer the question in relation

to the own capacities in its IT. Furthermore, Roto`s investment in new hardware and software can be reduced while the capacity of the system will increase. Services from the ‘cloud' offer the IT at Roto and individual users much more freedom to conduct a business as well as applications and providers. Finally, cloud computing accelerates the implementation of new business models and business processes such as mergers and acquisitions.

Clouds can be classified in three different types:

Public cloud	Private cloud	Hybrid cloud
Cloud computing services are made available to the general public on payment demand. The access takes place by the Internet. Several companies use the services of the cloud provider on a common platform.	Is used when the cloud infrastructure company want to deploy by themselves inside their company firewall and company perform the management of in-house cloud by itself. The access is limited to a defined group of users within the company.	An enterprise can keep their critical, confidential data, information and applications within their firewall, while hosting the non critical information ones on a public cloud.

(Adapted from Aslam et al. 2010, p. 400)

3.3 Providers of cloud services

The cloud computing technology has the task of helping companies to optimise and manage dynamically their IT infrastructure. Appendix 7, basedon astudyby U.S. market research

enterpriseBTCLogic, shows the Top10 cloud computing providers of 2011.

As a result, Amazon and IBM are characterised as the leading providers of cloud computing.

The figure below shows the relationship between users and providers of cloud computing.

It is focused on cloud computing effects on cloud providers and SaaS privders/cloud users.

Appendix 8 presents the benefits and disadvantages of the main cloud computing providers.

3.4 The costs of cloud computing

Infrastructure-as-a-Service (IaaS) is one of the most important market segments for cloud computing. Thus, Roto has the opportunity to purchase the required infrastructure resources such as computing power in the form of virtual servers and storage in a short-term. The company would pay only for the resources (usually per hour or gigabytes) which actually used within a period of time. A direct comparison with different cloud services is quite difficult. In addition, relevant price criteria in terms of computing, license, memory and storage are required to calculate the financial effort in detail. Every IT leader will be familiar with these essential information which also include technical background and IT specific knowledge. However, the following table shows where CIOs underestimate costs:

Cloud Computing	Enterprise Computing
Ÿ Bandwidth requirements for remote access to applications	Ÿ Opportunities lost through commitment of capital
Ÿ Monitoring (may require custom development)	Ÿ Risk of being overtaken by cloud start-ups with lower overhead
Ÿ Integration with legacy systems	Ÿ Operating and capital expenditures
Ÿ Migrating applications	Ÿ Investments in failed deployments
Ÿ Ensuring capacity in a shared model	Ÿ Software upgrades, testing and rollout
	Ÿ Hardware upgrades, replacing servers
	Ÿ System administration
	Ÿ Storage, backup, disaster recovery

(Adapted from Carr, DF 2011, p. 20)

In addition, Appendix 9 shows an example of a cost comparison between the two IaaS providers IBM and Amazon and is focused on the cost and type of the virtual server.

3.5 Data protection and data security

Many decision-makers recognize security concerns as a main reason if they are sceptical of cloud computing. Furthermore, a ‘Global Risk Survey conducted by IBM's institute for Business Value found that cloud computing raised serious concerns about the access to and use and control of data: 77% of respondents believe that adopting cloud computing makes protecting privacy more difficult; 50% are concerned about a data breach or loss; and 23% worry about a weakening of corporate network security' (IBM 2010). Risks which were previously in the user`s own sphere of influence are shifting by working with an external service provider. Thus, security combined with cloud computing possesses a high relevancy and an important decision criterion. IBM offers its customers a cloud security strategy such

as safety function or security tools which includes also measures for the public cloud services. The company ‘aims to help both users and providers of cloud computing more easily navigate security challenges through new cloud security planning and assessment services, managed services tohelp clients secure their clouds, and the introduction of several technology innovations from its global research labs' (IBM 2010, p. 5).

4. RECOMMENDATIONS OF CLOUD COMPUTING ADAPTION

Before the adaption of cloud computing can be realised, it is important to identify the own benefits and costs of each approach. At the same time, the question should be asked what

cost advantages resulting from the integration of existing systems in a cloud.

4.1 Analysis of the usageand planned measures within the IT infrastructure

Based on the available IT infrastructure and business strategy of Roto for the coming years,

it is significant to define the objectives, necessary capacities and measures. The strategic planning should consider an analysis of the financial investment, time-consuming expenses and additional personnel resources which were previously required for new applications, updates or changes in existing systems. The analysis must include the deficits at present, for instance, how often the DB2 database has been extended for additional storage capacity due to increasing the amounts of data or how often the function of the server was significantly limited by the transfer of large amounts of data. In addition, it should be questioned which planned updates in the Siebel CRM system could not be implemented due to limited financial resources. Finally, the capacity in system administration and expenditure on external IT service providers must also be considered.

The analysis should also include the unforeseen financial measures needed to be made,

which planned IT measures are not or only limited realised yet and which investments in

IT infrastructure are provided in the following five-year business strategy. For instance, an email interface in Siebel has not been realised yet because the standard interfaces of the

CRM system are concentrated to Microsoft Outlook instead of Lotus Notes. Another example is the missing interface between Siebel and SAP for the exchange of customer data and product data. There is no doubt that limited server capacities as well as the usage of SAP and Siebel illustrate a significant cost factor within the IT budget. These applications in combination with new service tools are the basis for a well-structured and effectively operating cloud.

Based on the previous described IT infrastructure it can be seen that Roto uses a number of applications which could be covered with an appropriate IBM cloud package. The cloud provider supports the development of an appropriate strategy by a component analysis (based on the current in the Roto IT infrastructure determined values), makes recommendations in relation to the right cloud type and illustrates best practice methods which were used successfully in other companies. In addition, an important key element for the functional design of a cloud strategy is to select the optimal IT deployment models for various IT services, the degree of standardisation of business processes, applications and infrastructure. IBM as a cloud provider supplies an appropriate support to establish a service-oriented infrastructure with a service-based management which offer transparency, control and automation.

4.2 Adaption of cloud computingsupports Roto and business partners

In relation to a well-structured cloud it is important to clarify which IT tools will be used by the business partners and how an adaption could be made. For example, Roto uses the server access (FTP) of print companies and publicity agencies to exchange extensive print data.

In addition, the material purchase orders to suppliers will be partly conducted by SAP.

In spite of existing different systems, for example, a private cloud would help Roto and its business partners to exchange relevant data and services, which are required to complete

the business activities, on an efficient and safe way. Both sides profit by a reduction of the personnel costs for configuration, a significant lowering of licence expenses, a fast data transfer and a professional management infrastructure. IBM offers a private cloud, which also includes all the characteristics of the public cloud and, in addition, the security of the corporate firewall. In comparison to capital and licensing costs in the past, significant savings can be achieved. Independently, the structured cloud services lead to a reduction of software defects which are often caused by incorrect configurations and inadequate modelling.

4.3 Competitive advantages by cloud computing

In relation to the question of a successful IT-based business strategy and the required tools, it is recommended to consider information about the IT infrastructure of the direct competitor (Velux). Although the individual components are not accessible to the public, the distribution channel ‘customer, suppliers and cooperation' can be used to obtain the desired information. In cooperation with ‘Brosig online team', the competitor has developed a Germany-wide Internet ordering system for a business-to-business application. This project is already under discussion at Roto but due to the additional costs and resources capacity it was not realised so far. The establishment of ecommerce and the direct merchandising of Roto accessories products via the Internet might be considered in the adaption of cloud computing. Goodburn and Hill (2010, p. 35) add that: 'Cloud is bringing about transformational change in value chains, enabling companies to respond much more effectively to customer demand.'

With the combination of SaaS and the cloud platform ‘GROUP Live' the provider IBM offers especially in opposite to medium-sized enterprises the opportunity to benefit from the trade by ecommerce. The consideration of highest security standards does not only result in a competitive advantage in the dynamic markets but rather a large number of customers will be guaranteed by a maximal reliability and scalability. Finally, an implementation of the required software by the cloud and the involvement of business partners such as builder`s merchants benefits the acquisition of new customers.

5. CONCLUSIONS

5.1 Summary of findings

The report has analysed that IT organisations are increasingly confronted with new economic challenges. In addition, the IT infrastructure burdens the annual IT budget with costs more than 80 per cent. At present, the reduction of operating costs, capital expenditures and risks is combined with an improvement of service quality and growth of further innovations. The analysis of the existing IT infrastructure and used IT components at Roto have illustrated that ideal conditions exist for the implementation of cloud computing. In addition, most of the described problems in the report, which are caused by cost and capacity-related aspects, can be solved with services from the cloud. The report presents that IBM is the only one provider in Germany whereby a genuine public cloud service can be found and the receipt of infrastructure resources are uncomplicated, flexible and available on demand. The research has shown that IBM and Roto have similarities in relation to the common usage of the database DB2, Siebel, SAP and Lotus Notes. Furthermore, the provider guarantees an implementation of the cloud computing solution within a short-term. High security measures and a cloud computing centre in Germany are further aspects which argue for IBM as a suitable partner of Roto. In comparison to the competition such as Amazon, IBM is not a low price cloud provider but reliability and perfect scores within the international ranking are positive indicators for this IT specialist. In cooperation with other business partners, for instance, the private cloud illustrates the perfect entry into the cloud system.

5.2 Limitations of the report

This report has been prepared to highlight resources as well as technical capabilities to improve the cost transparency and service quality in the IT infrastructure of Roto by investing in cloud computing.

Keine Preisauskunft von IBM gegenüber Privatpersonen

Exakte Preiskalkulation erfordert das detaillierte Wissen der IT Spezialisten

IT Infrastruktur des direkten Wettbewerbs nicht ermittelbar

Zeitaufwand zur Implementierung nicht ermittelbar

Based on the IBM sales strategy ‘business-to-business', details about costs

for IBM cloud strategies cannot be ascertained by private consumer.

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