When we were kids, we spent a lot of time with our heads in the clouds. We were dreamers, projecting what our future might be like and where we would be in 50 years. Those youthful days are now in the rear view mirror, and for those of us in a technology profession, it appears that we have come full circle! It's hard to not hear about "the cloud" when computer applications are discussed.
Definitions of "cloud computing" vary greatly. Steve Bobrowski, a Los Angeles-based technology guru who is a senior developer at salesforce.com, offers this simple definition: "A cloud is a place where IT resources such as computer hardware, operating systems, networks, storage, databases, and even entire software applications are available instantly, on-demand." In essence, the cloud is the core of an organizational network, and while centrally located or clustered, it's accessible on demand wherever or whenever a member of the organization needs it.
There are several types of clouds that are in vogue today with the most common being public, private, and hybrid clouds.
Public Cloud - A public cloud is one that anyone can access using the Internet. Someone else constructs, configures, manages, and monitors the guts of the public cloud in their data center(s). You manage your custom assets that operate within the cloud (data, apps, etc.), and pay only for what you use. Typically, there are no long-term commitments required to use a public cloud, so you are free to use the cloud for as long as you like. Private Cloud - As one would expect, not everyone is ready to ditch their private data centers and entrust the security of their IT operations and data to a shared public cloud. However, the allure of instant IT resource access that cloud technology provides has given rise to private clouds. A private cloud is cloud technology operating in a private data center to which only one organization has access. The organization must still maintain its own datacenter and staff, but IT resources within the cloud are available on-demand. Private clouds can also operate within a private segment of a public cloud. In this arrangement, an organization obtains all of the outsourcing benefits of a public cloud but with a level of security and privacy more similar to a private setting. Hybrid Cloud - Hybrid clouds are the blending of private and public clouds. When an application in a private cloud experiences times of abnormally high demand, the application scales out to use resources in a public cloud (or private segment of a public cloud). This type of scaling is known as "cloud bursting."
The big question then becomes this; if you are the decision maker for a small or mid-sized business, do you want to embrace this paradigm shift from what you have always known? Or do you want to stay with traditional methods that are known and comfortable?
Guess what? One answer to those questions is that you have already embraced the cloud for some of what you do both for business and personal use. Have you ever sent an email from AOL, Gmail, or Hotmail? Then you're a cloud user! Made a phone call with Skype? Posted, commented, or viewed a blog? Run your email through spam filters at Postini or MessageLabs? Shared pictures on SnapFish or Kodak Photo Gallery? These are all prime examples of the cloud. So in consideration of whether the cloud will ever be embraced, the answer is it already has.
Bringing the increased capabilities of the cloud will exponentially impact the SMB community especially as the economy keeps holding back on growth. The cloud can provide new methods of cost-savings, which in this era of belt-tightening are welcome additions to the small and mid-sized business toolboxes. In many cases, the applications and services that the SMB marketplace will adopt fall more in the public cloud realm. Realistically, the private cloud fits more of an enterprise-sized organization that can build out and maintain the data center that will be the hub of the corporate network.
If you are a small business manager, these new online tools can make life easier for you and your employees and enable your workforce to be mobile, seamlessly connected, and flexible. Cloud computing helps multi-tasking business owners transfer their efforts from IT maintenance to the areas where their true expertise lies; making their business more profitable and, by extension, making their lives more enjoyable.
Cloud computing completely transforms the way companies use technology to service customers, partners, and suppliers. Some mega-businesses, like Amazon, already have most of their IT resources in the cloud. These giants have determined that they can eliminate many complex constraints from the traditional computing environment including space, time, power, and cost. If you think about it, what business, regardless of size or type, wouldn't want to save time and resources? The answer increasingly is only the fearful and misinformed, many of whom won't survive their own ignorance of the future.
It's estimated that the worldwide cloud computing market is $8 billion, with the U.S. market accounting for approximately 40% of that. According to industry analyst Gartner's 2011 predictions, heading the list of Top Strategic Technologies is cloud computing. That's probably no surprise if you're still reading this! Gartner also predicts that the SaaS (Software as a Service) market will hit $14 billion by 2013. Gartner's analysis included this train of thought:
"Cloud computing services exist along a spectrum from open public to closed private. The next three years will see the delivery of a range of cloud service approaches that fall between these two extremes. Vendors will offer packaged private cloud implementations that deliver the vendor's public cloud service technologies (software and/or hardware) and methodologies (i.e., best practices to build and run the service) in a form that can be implemented inside the consumer's enterprise. Many will also offer management services to remotely manage the cloud service implementation."
Another recent survey of small businesses (under 100 employees) within the United States, UK, Germany, Italy, and Brazil shows that only 37% of small businesses have heard about cloud computing. Among those who have heard about cloud computing, 13% said that they did not know what it meant. 44% of the respondents think that cloud computing means subscribing to services such as servers or storage hosted by a third party, while 29% think that it means access to applications over the web. Even among the 29% of small business that use SaaS, not all of them have heard of cloud computing!
According to AMI-Partners recent study, "Small and medium business (SMB) spending in the U.S. on software-as-a-service (SaaS) will increase exponentially over the next 5 years, eclipsing growth in investments in on-premise software by a significant margin." AMI forecasts a 25% CAGR in hosted business application services spending through 2014.
Not everything will jump to the cloud immediately. More than likely, there will be a slight increase in other categories of on-premise software deployment. However, this cloud growth will probably not be uniformly spread across all potential hosted applications. Mature applications such as ERP, supply chain management, procurement, finance, and core human resources functions will turn over more slowly than those that are less saturated and have lower switching costs.
What are the applications and options you as an SMB decision maker should be looking at? There are a whole bunch of things to consider:
Evaluate the costs of a cloud-based service vs. a traditional desktop deployment carefully. Make sure the cost of the cloud annual renewal isn't the same or more than the network or desktop-based option. Business users that operate virtual offices or remotely on different machines depending on location need applications to be accessible from a web browser. This is one of the biggest advantages of cloud computing, and it's available wherever you have access to a computer and browser.If you are not connected and operating your laptop offline, does whatever program you're working with offer a way to run it offline and synchronize when you are connected again? Many apps have a mobile version or widget for download that allows you to run a lighter version of the software for use while disconnected from network resources. Do you use all the features of your desktop app? If not, a cloud computing application might offer a "forever free" plan that allows you to do the same work as a desktop application, but limited in some way. For example, a billing solution might let you run an unlimited number of invoices, but for only 2 separate clients. Many organizations are worried about the associated privacy and security risks that a cloud computing system brings when vital information is made accessible to a third party. Generally, if you operate in an industry that requires greater privacy or security standards and you find a cloud computing app vendor working with your industry, then they've likely developed for that standard requirement. However, check the details to fulfill any legal, financial, or ethical concerns. Make sure that your cloud computing vendor is stable and reliable. Are you sure you want to invest your cash in this particular cloud computing software vendor? How long have they been in business? How many customers do they have? Can you talk to users directly? Consider the uptime of your cloud computing applications. Most are in the range of 98-99.9%, which acknowledges that servers go down for maintenance or unexpected problems. How quickly do they fix the problem? This can be an issue for mission critical applications and you'll often see the highest uptimes for apps that are in this category. They know how important their service is to customers. These are often covered in what's known as Service Level Agreements (SLA) so read those carefully and discuss changes with the vendor, if needed. Be certain that they have true customer support. Is there an extra charge for support and maintenance or is that included in your monthly subscription fee? It is usually included, but like any purchase, be diligent and read the fine print. Check to see if you have access to a customer support team via phone, email, etc. Your cloud computing vendor should be flexible. You should be able to add and subtract users as needed (some call this "scaling" where you can increase your software license "seats" incrementally). Your monthly fees are dependent (usually) on how many users you have. Often, your capital outlay to "purchase" cloud based apps is lower than traditional on-premise or desktop apps. Evaluate your need for software upgrades. Cloud computing applications get updated and improved regularly and you benefit from every improvement without an additional direct cost and without the effort of downloading and configuring upgrades. Enhancements tend to happen more quickly and in shorter development cycles and often occur based on customer requests. Understand that cloud computing is not always the cheapest solution. If cash-flow is an issue, cloud computing applications may be a perfect option. On-premise software purchases often involve high upfront licensing costs. With cloud computing apps, there are usually no large up-front licensing fees requiring departmental or board approval. Most of the time, there are no annual maintenance fees either. Cloud computing applications are not always cheaper than on-premise desktop software. Gartner says it can be true that cloud computing solutions are less expensive during the first two years, but may not be for a five-year total cost of ownership (TCO). With no initial large investment into cloud based applications, that makes sense. They suggest that you should expect to see your TCO rising in the third year and beyond.
As you can see, there are factors galore in the decision to embrace the cloud. With new applications and services coming to market all the time, it makes for greater choices but also more confusion. The rewards of creating a more dynamic work environment with greater security and ability to recover from a disaster make it essential to give these concepts a try. It is time to march ahead and allow the bonds of traditional business to soar into the cloud and beyond!
