Clearing the Clouds about Cloud Computing

This article originally appeared in SME WORLD June 2013 Issue. 

Every technology blog is talking about Cloud and it is really clouding the judgment of small enterprises that are anyway overwhelmed by the IT jargons sprouting like beans. But Cloud computing is really taken the world by storm. KPMG's Global Cloud Pulse Survey highlights that 41% of business executives are skeptical but willing to explore and discuss cloud computing.  We, at SME WORLD thought of making it easy for our time-constrained readers to grab the aura of Cloud computing in a nutshell. To move into cloud solution is secondary, first you need to know what you want and where to look for and most important – ask the right questions.

Cloud computing is the latest Information Technology trend that is gaining rapid momentum world-over. Every passing day throws up some extension of this innovation.  Luth Research and Vanson Bourne recently published a survey (report available on CA Technologies site) of companies using cloud applications. The study found that close to 100% users are satisfied with improvements in cost, revenue and performance. The report also pointed to the finding that the benefit of cloud is realized as it is used over an extended period of time.

As the fundamental definition and the boundaries of cloud computing evolves, it is redefining a lot of paradigms. It is serving more efficient options to customers, creating newer and cost-effective business opportunities for entrepreneurs, changing the speed of deployment for start-ups and providing a more refined platform for software companies to implement their solutions for clients.  Even the hardware companies and mobile handset manufacturers are embedding cloud-based apps and features to enhance the customer delight factor.
Evernote is a “note keeping” application which allows users to access their notes from using mobile phones, tablets or their workstation located just about anywhere. It has some amazing features to store information in the cloud using even routine emails. This is one simple example from the horde of cloud-based services.  Dropbox is another file management application that is based on cloud technology. It allows you to upload all types of files on the cloud and access them anywhere.

What is Cloud Computing?

Cloud computing is basically an Internet-based service that provides all IT related solutions to enterprises or iniduals while functioning as a single organized whole. The central idea is sharing of resources and efficient flexibility.  The Hotmail email service which we started using is one of the earliest forms of cloud – based solutions. The clients who adopt cloud computing are freed from the worry of creating and managing the IT infrastructure or any risks and responsibilities of scaling up or down.

“We are at the beginning of the age of planetary computing. Billions of people will be wirelessly interconnected, and the only way to achieve that kind of massive scale usage is by massive scale, brutally efficient cloud-based infrastructure.”  ~ Dan Farber, Editor in Chief CNET News

There are three layers in Cloud Computing which enterprises can choose from to customize their solutions:

IaaS – Infrastructure is the base of Cloud Computing. The servers, storage devices and other network-based infrastructure fall under this category. Amazon Web Service is a glowing example of IaaS. Amazon Elastic Compute Cloud (EC2) is an excellent pay as you use server solution.

PaaS – Platform is the middle layer where the operating system and other applications are stored and managed. In case of ERP solutions, this is where the database and the analytical tools are installed, monitored and managed. Chennai based OrangeScape is offering business application development services on cloud.

SaaS – This is the layer where the front – end applications are stored and accessed. Usually, the interface that we see on our computer screens is the Software layer. Login screen of Google Drive is one common example.

These cloud solutions can be either public, private of hybrid. The public cloud is available to all across the board. Private clouds are created by companies for specific enterprises by constructing boundary conditions using firewalls etc.  These are managed and handled by the client and the cloud service provider. Hybrid cloud as the name suggests is a combination of features from public and private cloud.

What businesses can gain by adopting Cloud Computing?

It is abundantly clear that companies are not moving in horde towards cloud computing to keep up with a trend. Software companies are offering their product aligned with cloud based services for greater customer satisfaction. There are some clear and strong benefits of Cloud Computing. 

·         Cost advantage, Financial Gains – Companies who have started adopting cloud solutions are seeing substantial dip in their costs of acquiring and managing software. Conservative statistics suggest that 70 – 75% of SAP customers comprise of SME players. These customers want lean solutions which are do not dent their pockets. SAP is making some serious investment and inroads into cloud based solution of their products. SAP HANA is one recent addition. SAP Business ByDesign is also a cloud-based solution. This is a clear case of better ROI.

It is imperative that SMEs have to adopt smarter technology solutions but the challenge is keeping up with the changes, managing costs and overcoming obsolescence. In this scenario, cloud is a promising solution. It helps companies start small and grow with times. KPMG’s Global Cloud Pulse Survey[i] reiterates the point of cost advantage. 

·    Efficient Scalability – Companies get the benefit of structured scalability by moving towards cloud solutions as they do not have to go “big-bang”. The incremental changes are easy on the financials of the SMEs. One clear advantage is the lower Total Cost of Ownership in SaaS models which is their USP. The speed of deployment is also faster in cloud based applications. Support is centralized and does not require local administration. Scalability is critical for sales and marketing function as well as HR.

·      Building Competitive Advantage – Focusing on the core business, as a business owner, the resources can be most efficiently deployed. Companies can concentrate on doing what they do best and outsource the rest to domain specialists. Imagine the advantage of not having to bother about database uptime or implementing new security patches on a routine basis. This also helps keep resources free from being tied up in non-value addition areas. Organizations can cut down on waste and function in a lean manner. Deploying cloud solutions for sourcing and procurement can create tremendous competitive advantage and stream line the supply chain for organizations. SAP’s Ariba with its business-networked cloud-based applications can help unify buyers and sellers from across the world.

·     Disaster Management – The centralized support, maintenance and upgradation solutions that cloud services provide to its clients will help in averting disaster of data loss or infringement. There are good quality failover solutions and facility for redundancy and clustering that come as an infrastructure package which is otherwise a costly affair for companies to own individually. VMware’s Disaster Recovery to the Cloud Services is designed for cloud computing scenario with very simple to use system and pay per use mode which is economical.

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[i] Source: http://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Documents/PDF/Advisory/kpmgs-global-cloud-pulse-survey.pdf

The Security Concern

One of the most nagging issues that hinder cloud solutions from increasing its stronghold is security. There is a serious lack of proper standards and framework which creates a black box for SMEs from going ahead full steam.

What is the responsibility, accountability and liability of the cloud service provider in case of data loss due to viruses, hacking, espionage, mishandling, insufficient level of service, confidentiality etc. Will the client company have the freedom to move to a better service provider? If yes, at what costs? What about political issues and embargo in case of servers located in particular countries?

A Forbes article[i] (Every Application Under The Sun Now Ripe For Cloud, Survey Shows) points that “security is the # 1 reason for not moving something into cloud.”

According to BSA Global Cloud Scorecard 2013[ii] report there are issues with overall policy for cloud computing. The report says “Troublingly, potentially cloud-inhibiting policies continue to emerge despite efforts in many venues to promote a global approach to cloud computing. Countries continue to propose geographic restrictions on data and other limits on the outsourcing of work or data.”

Fortunately, certifying bodies like TÜV Rheinland have developed cloud computing certification standards to help cloud providers exude trustworthiness. Another not-for-profit organization Cloud Security Alliance offers certificate of Cloud Security Knowledge and helps in promoting assurance of cloud security.

A Gartner analysis has highlighted that SaaS market is growing and will continue to grow faster in the next 3 – 5 years horizon. Another report has pointed that public cloud service is growing in the range of 25 – 30%. There is a huge potential both for service providers and customers. Sectors like Education, Legal, Healthcare, Marketing Analytics, Banking, ICT, Security, Capital Markets, Logistics, Security Solutions and Government Agencies will move faster towards cloud applications thus outsourcing their non-core functions. The whole enigma of big data storage and analytics will be driven by Cloud Computing.

KPMG’s Global Cloud Pulse Survey state that 67% of adopters need help with assessment and sourcing.  The future is promising once the modalities and framework of operation is streamlined. Thanks to cloud computing we will soon be living in a world of “Desktop Anywhere”.  As more people move to cloud solutions, lessons will be learnt, verified results will be produced and adoption will become faster. 

The over-all point is that new technology will not necessarily replace old technology, but it will date it. By definition. Eventually, it will replace it. But it's like people who had black-and-white TVs when color came out. They eventually decided whether or not the new technology was worth the investment. ~ Steve Jobs

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[i] Source: http://www.forbes.com/sites/joemckendrick/2013/05/22/every-application-under-the-sun-now-ripe-for-cloud-survey-shows/?ss=cloud-computing

[ii] Source: http://cloudscorecard.bsa.org/2013/assets/PDFs/BSA_GlobalCloudScorecard2013.pdf