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Cloud Computing

what does it mean for my business?

On demand server computing with Pay As You Go metered usage - and no worries about the location or nature of the hardware itself ... sounds too good to be true

Cloud Computing - Changing The Way That We Think About Servers

“Cloud computing is a style of computing in which dynamically scalable and often virtualised resources are provided as a service over the Internet. Users need not have knowledge of, expertise in, or control over the technology infrastructure in the "cloud" that supports them.” – Wikipedia

There is a lot of talk in the IT industry about cloud computing.  Much of it confused and confusing.  There are vendors already claiming to offer it as a service when in reality they are just pushing existing hosted technology solutions. 

For many hard pressed IT managers it seems to be yet another ‘IT solution looking for a problem’. Just another buzzword in a jargon-heavy industry...

So what is the truth behind the hype and what can it mean for your business?

What is cloud computing really?

A recent survey by NTT Communications* identified that 62% of the surveyed CIOs felt that definitions of cloud computing were unclear.  But whilst there is no general consensus on a definition, there are some early examples in the market that most people seem to agree exemplify what cloud computing is all about.

Google Docs is a service that allows people to privately share simple documents.  User 1 creates the document in the Google Docs environment and then invites others to view and edit it.  All of the users are looking and changing the same physical document in real time, but none of them has any knowledge of the actual location of the document (on which server in which country) or of the underlying technologies that are being used to deliver the view/edit service.

In the case of Google Docs it is a free service, but in cloud computing terms it would more normally be offered as a subscription service with either a monthly usage fee or Pay As You Go metering.  Examples of this can be found with service providers such as salesforce.com and NetSuite who provide fully-functional CRM systems via the internet on a rental-only basis.

For many users the model adopted by Google Docs, salesforce.com and NetSuite is a great way to solve the problem of processing and sharing information without the cost and risk overhead of setting up the environment yourself.  But for more commercially confidential users the concern over not knowing the location or technology base for the application can be a worry.  In these instances the concept of having a private cloud has evolved.

Private cloud computing offers users the same experience of using software without needing to know its location but within a tightly controlled and protected environment.  This environment would be created by the customer organisation itself or by outsourcing to a managed hosting provider like RapidHost.  Access to the cloud applications and services would be limited to registered users only and data archived to the organisation’s own standards.

Using a private cloud approach dilutes the principle benefit of cloud computing, that is not having to bear the cost and risk burden of setting up the systems, but does offer improved data security/confidentiality as well as more guaranteed uptimes.

It is perfectly possible to make use of both public and private cloud computing with each offering benefits for different application classes.

Why could cloud computing be of use in my business?

Cloud computing has a number of cost and efficiency benefits for businesses of all sizes.  Initial benefit areas cover online storage (primary and secondary), backup services, CRM, word processing and online email (favoured by over half of companies according to NTT Communications*).  However, further areas are being developed all of the time with new services being launched almost daily.

The logic behind delivering IT services within a cloud approach is compelling.  A specialist provider builds all of the infrastructure (servers, networks, software, support teams) on a large scale basis thus reaping the economies of scale for both cost and efficiency of operation.  Users then subscribe to use a scalable portion of that environment on some sort of Pay As You Go basis, and in doing so are benefitting from a more efficient and robust IT environment than they could otherwise afford to build themselves.

On the surface it is very much an elegant win-win solution to some complex, and often expensive, technical issues.

But there are downsides.  The principle one being centred on trust.  To choose to use cloud computing to manage genuinely business-critical systems requires a very high level of trust in the cloud service provider.  Not only is the robustness of the service a risk, so is the absolute protection of confidential information.

This is why the early adopting organisations are taking a piecemeal approach.  Initially they are using a cloud approach for low-risk applications where system unavailability or data security breach is not a major concern – using Google Docs to share certain information with suppliers and customers for example.

Where they have greater confidence in a service provider they will ‘risk’ further cloud solutions such as online data backup for their office servers and PCs, and online CRM.

This cautious approach is backed up by NTT Communications’* research, with those planning to adopt cloud computing with the next two years only committing 1-10% of their IT spend to it.

The ‘moral’ seems to be to adopt a very pragmatic approach to cloud computing and judge each service need on its individual cost/benefit merits whilst allowing for security and availability risk.

Who pays for cloud computing?

Ultimately the users pay for the service.  The same is true of most pooled services.

Sometimes the ‘payment’ is in the form of accepting advertising, like using Google’s search engine, and other times it is directly funded (such as salesforce.com and NetSuite).

The cost advantage that cloud computing will bring when adoption levels are greatly increased is that the service providers can purchase equipment, network bandwidth, support and management systems on a grand scale, thus the unit cost is very much lower.  Even allowing for the profit that the service provider needs to make, cloud computing will offer a lower cost computing environment than the equivalent Build It And Operate It Yourself for the majority of IT uses.

However, we are at the early stages of mass adoption which means that service providers are investing ahead of the revenue/profit return.  In the short term this could result in higher than optimum pricing and the risk of financial failure for overstretched providers.

Will cloud computing ever really catch on?

It has already caught on.  We all use cloud computing services today, but don’t necessarily use that terminology.  Google’s search engine is a cloud computing service.  The BBC’s website is a cloud computing service.  Microsoft’s automatic update service for their PC operating systems is a cloud computing service.

The real debate here is about when this approach to IT service delivery will break into mainstream business applications, like office productivity, accounting, design, manufacturing and so on.  Will there come a time when small, medium and large businesses have very little internal IT equipment and software beyond simple desktop devices?

Well it seems that a time like that will come … but not for a while.  Gartner Group* believe that it’ll take until 2017 before cloud computing becomes mainstream. However it is estimated that already around 60% of UK businesses are looking to invest in Software as a Service (cloud) solutions in the near future (source: NTT Communications*) so there is real movement going on.

RapidHost believes that cloud computing is the way forward purely because of the compelling financial and efficiency logic.  Once the industry has overcome the security and availability concerns that organisations naturally have, there will be very little reason to not adopt it, even if initial forays are using a mixture of public and private clouds.

If you’d like to know more about cloud computing then just give us a call and we’ll talk you through the current ‘state of the art’ and how it might benefit your business - no matter how large or small.

* NTT Communications – “Cloud or Fog?”, June 2009
* Gartner Group – “Hype Cycle for Emerging Technologies”, 2008