Cloud Services. Deep Dive. Create your own cloud computing strategy SPECIAL REPORT JUNE 2011

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1 SPECIAL REPORT JUNE 2011 Cloud Services Deep Dive Create your own cloud computing strategy Copyright 2011 InfoWorld Media Group. All rights reserved. Sponsored by

2 2 Running your business in the clouds Look closely at your IT needs and limitations before you determine which cloud services are right for you i By David S. Linthicum THE HYPE ABOUT CLOUD COMPUTING would lead you to believe it supplies the magic beans we ve all been waiting for to fix our past and future mistakes. But the truth is, rather than introduce elaborate new technologies or solutions, cloud computing tends to concentrate on changing the way we consume them. Cloud computing refers to an almost infinite variety of services, from browser-based spreadsheets delivered by Google to the computing infrastructure for a 48-hour actuarial calculation. To fall under the rubric of the cloud, these services must have several characteristics. First, cloud services must be self-service: If you can t go to a Web form, set up an account, and start provisioning the service you want, then it s not a cloud service. Second, cloud services must scale transparently: If you need more horsepower, you needn t worry about provisioning physical servers, because a virtualized server infrastructure reallocates virtual machines as needed. Along the same lines, that infrastructure is shared different accounts use the same pool of physical servers and storage, with secure logical boundaries to protect data. Some large companies have the resources to build cloud services themselves the so-called private cloud. But if small and medium-sized businesses want cloud services, they must rely on the public cloud: subscriptionbased or pay-per-use services that, in real time via the Internet, extend IT s capabilities. TO CLOUD OR NOT TO CLOUD Cloud services sound attractive, particularly if your resources are limited. You don t need to pay up front for software licensing or server hardware, so you re faced with operational expenses rather than capital investment. Increased business agility may be the biggest payoff. Using the variety of cloud computing known as SaaS (software as a service), for example, you can decide to adopt a sales management system at 8 a.m. on Monday and be up and running at 9 a.m. the same day. Applications that would typically cost hundreds of thousands of dollars to select, install, and deploy can be had for less than $100 per month, per seat. The same nimbleness applies to storage, compute, and even application development and testing. In many cases, the cloud provides an agile, cost-effective alternative to purchasing, installing, and configuring your own hardware and software. As your business changes, you can change IT along with it using cloud-based systems that have little to no deployment latency. Such agility can directly enhance a business s ability to enter new markets. The potential to scale capacity and provide access to new services on demand can provide a clear strategic advantage. Small businesses typically don t have a great deal of cash for IT. When you avoid capital expenditures, you lower risk and free up money that can be used to grow the business. But switching from internal IT to the cloud has its own risks not the least of which is switching itself. There are always hazards when changing your technology. These include not meeting the scalability requirements of the business, opening up security issues, or adopting new cloud-based systems that do not meet expectations. For instance, some businesses have found that certain SaaS applications suffer from performance issues that can affect productivity. Then there s the lock-in problem. When you move data and applications to a cloud provider, it may be hard to move to other cloud providers or back to an on-premises infrastructure. This problem arises because many cloud computing providers, in their haste to get to market, use proprietary mechanisms to deploy applications

3 3 and store data. You may discover you don t like your cloud solution, but it may be too difficult or costly to go elsewhere. Another point about cost: In many instances, cloud computing providers are actually more expensive than on-premises systems when you look at overall costs across a long period of time. Amortized capital expenses look great in the out years; on the other hand, pay-peruse or subscription fees always rise and may jump when users adopt tantalizing new extra-cost features. Finally, you need to consider compliance. There are many regulations about how data, such as patient data and financial data, is stored, protected, and managed. For example, in many European countries it s illegal to send some financial data outside of the country s borders, so you need to make sure your cloud computing provider is not replicating to remote data centers. Moreover, there are very strict laws about the management of patient information. If data is mismanaged and not secured in the ways as specified by the law, you could find yourself in a great deal of hot water. DECIDING WHICH CLOUD SERVICES TO ADOPT By itself, the question of moving to the cloud makes little sense. What exactly do you wish to move and what are the specific risks and rewards? And if a cloud solution seems attractive, you must always compare it against the equivalent locally installed solution, whether ERP or . Finally, when you choose to adopt, best practices in each functional area can help ensure a smooth transition. ENTERPRISE APPLICATIONS Enterprise applications are the low-hanging fruit of cloud computing. These SaaS applications provide an affordable way for small businesses to reap the benefits of high-end enterprise software, such as ERP and CRM applications, which would otherwise require installations costing half a million dollars and up if the customer licensed the software and deployed locally. The classic example is Salesforce.com, which was a pioneer in SaaS and has been one of the leading players in CRM for years. But today, you can find robust SaaS applications across all enterprise software categories, from ERP to SCM to asset management. All of these apps deliver their functionality through a browser-based UI just as most locally installed enterprise apps do today, so the user experience is quite similar. The practical difference is that SaaS providers shoulder the burden of deploying and maintaining the software, servers, and storage instead of the customer. Often, the provider charges some minimal up-front fee for provisioning or migration, but thereafter, the customer pays on a subscription basis, typically per seat. Set up the user accounts and you re ready to roll. Enterprise SaaS providers push out updates on a regular basis, so all customers get the latest functionality without having to go through the pain of upgrading locally. At the same time, customers can typically configure their applications to adapt to their needs, and within certain restrictions, those customizations still function when updates occur. In addition, many enterprise SaaS providers have open APIs, so customers can develop extensions to the core applications. But cloud-based SaaS applications are still applications. When selecting any software, you need to consider your requirements first and then evaluate the applications that are available, whether on demand or installed locally. Consider the costs associated with these solutions across a five-year span. BEST PRACTICE: Understand your core requirements and the cost/benefit trade-offs of adopting enterprise SaaS applications in the cloud. Keep in mind that, over time, you may pay more to a SaaS provider than you would pay for locally deployed hardware and software. IN THE CLOUD Most of us already have at least one account in the cloud through Gmail, Hotmail, or Yahoo Mail so may be the easiest cloud computing application for businesses to understand. In fact, many small businesses already shun the hassle of maintaining mail servers and have chosen either free accounts or have established paid, low-cost enterprise accounts with the likes of Google or Microsoft. Even large organizations, such as the city of Los Angeles, have moved to cloudbased to save millions of dollars over time. The enterprise versions of cloud systems typically come with SLAs that guarantee 99.9 percent uptime. They also have much higher storage limits and,

4 4 of course, get rid of those annoying ads. Moreover, the clients often integrate with other cloud-based applications, such as calendaring, document sharing, or browser-based office productivity suites. The core value of cloud-based is to allow enterprises to escape from the licensing costs of Microsoft Exchange Server and from paying administrators to maintain the company system (sometimes a surprisingly difficult task). There will still be some administrative activities required with cloud-based , just no hardware and software to maintain. Part of the reason locally maintained has gotten so difficult is the steady increase in requirements over the last decade. Enterprise cloud providers offer all the modern amenities: archiving, spam blocking, malware protection, and a range of compliance features. If you have special compliance requirements, make sure your provider or one of its partners can accommodate them. Otherwise, you may have to stick with a mail server in the back room. BEST PRACTICE: Understand your needs and examine all aspects of cloud-based systems, such as monthly costs, SLAs, the amount of administrative time required, and special features such as archiving and compliance features. OFFICE PRODUCTIVITY APPLICATIONS Office productivity suites from Google, Zoho, and others including most recently Microsoft itself with Office Web Apps provide free SaaS alternatives to Microsoft s venerable Office software. As with SaaS , enterprise versions of these apps are available for a minimal cost per seat (or, in Microsoft s cases, a Microsoft Office license). The real value of SaaS productivity applications is not in the apps themselves but in the collaborative possibilities they offer. It s actually quite useful to work on the same spreadsheet or presentation in real time via the Web with remote users. Indeed, entire companies rely on Google Apps or similar services, with employees near and far collaborating as if they were all sitting together in the same room. But can SaaS versions of office productivity suites actually replace Microsoft Office or even its open source clones, IBM Symphony and OpenOffice? Not if you want the full range of advanced features, nor if you want complex Microsoft Office documents to be viewable and editable in all cases. That s why most people use SaaS productivity suites as a complement to Microsoft Office, not a replacement. That said, there is change afoot. Many companies are tired of the high licensing fees incurred by Office and the retraining demanded by Office 2007 rubbed many businesses the wrong way. As Google, Zoho, and others add features and enhance Office compatibility, some small businesses may seriously consider making the leap to the cloud, especially for employees with both lightduty requirements and a persistent need to collaborate. BEST PRACTICE: Consider the core business functions, the needs of the end-user, and the distribution of the team. DEVELOPMENT AND TESTING When companies large or small discuss using the cloud, development and testing generally appear at or near the top of possibilities. Organizations that build and deploy applications typically have huge hardware and software costs that include maintaining development platforms as well as platforms for all aspects of application testing including performance, integration, and stability. PaaS (platform as a service) cloud computing providers have emerged over the last few years to provide application development and testing services. Although Google App Engine is the best-known PaaS player, other major players include Salesforce s Force.com and Microsoft s Azure cloud computing platform. Beyond PaaS, there are many IaaS (infrastructure as a service) providers that provide complete development and testing platforms on demand typically open source environments. Again, the idea is that the cloud provider supplies the hardware and software development tools as a service, typically replacing dozens of on-premises systems and licensing fees. Why such an interest in development and testing in the cloud? Mainly because these activities have a beginning and end point. In this day and age, you don t want to provision infrastructure for a temporary activity only to have that infrastructure lie fallow until the next workload comes along. Here, cloud computing s pay-per-use model is particularly cost-effective. Determining whether your development and

5 5 testing project is right for the cloud is simply a matter of understanding your own requirements and selecting a PaaS or IaaS to match. From there, it s rather inexpensive to do a quick prototype to see whether the use of cloud computing is practical. If you need to develop in an environment that includes licensed software, make sure you take any potential costs for that into account. BEST PRACTICE: Consider the types of applications being developed and the testing requirements. Evaluate both PaaS and IaaS solutions and make sure to do at least one prototype before moving to the cloud. BACKUP AND RECOVERY Using the cloud as a DR (disaster recovery) platform has some clear cost and technology advantages. Those who need to ensure that their business continues no matter what and must do so on a budget will quickly learn that cloud computing platforms (typically IaaS providers that supply storage as a service) are prime contenders for inexpensive places to replicate data. These cloud-based DR sites can be used as redundant data storage locations, for the simple backing up of files, or as hot standby sites, ready to provide the core location of data processes until the primary data center is restored. Like development and testing, DR is often high on the list of cloud possibilities. Shared platforms, which charge only for the storage and compute resources that you use, are almost always cheaper than creating a remote DR site, which typically means paying for servers and data center space you ll probably never access. Larger companies may be able to afford their own DR sites, but for many smaller businesses, a cloud-based solution may be the only affordable way to engage in sound DR practices. The cloud provides a good alternative to both traditional backup and recovery services as well as use of a geographically different site for those services. If you lose your data center due to a hurricane in Florida, your cloud provider with points of presence all over the world should be able to keep your data safe. Also, you have the option of building systems and managing data in the cloud to create a failover site should core on-premises systems fail or be destroyed. When considering the use of DR with cloud computing, frame your decision in the context of your overall DR or business continuity strategy. The simple act of copying files and data to the cloud is not enough to ensure success. The cloud is simply an inexpensive alternative to remote wholly owned systems, but all clouds and their ability to support DR services are not the same. BEST PRACTICE: Create a larger DR plan don t just jump into the clouds as a DR strategy. Make sure to consider the reputation of the cloud provider, as well as security and privacy. BUSINESS INTELLIGENCE Small- to medium-sized businesses typically can t afford business intelligence software licensing and infrastructure costs. Here, the cloud is really opening up new frontiers. The core idea behind cloud-based business intelligence is to allow those shut out of big-ticket, on-premises BI systems (such as those from IBM or Oracle) to gain more basic but nonetheless valuable business intelligence on demand. Many cloud systems provide the ability to manage huge amounts of data, well into the petabyte range, thanks to the cloud s ability to leverage any number of provisioned servers and through new approaches to big data management such as MapReduce using open source products such as Hadoop. Suddenly, smaller companies can use massive amounts of data to make business decisions, such as the ability to plan for inventory levels based on tracking with specific market indicators, or sales-by-this and sales-bythat reporting. The cloud lends itself to using intensive resources for short amounts of time, and business intelligence applications fit perfectly into that model, allowing small to medium-sized businesses finally to understand the true meaning of their data. All that doesn t change the fact, however, that obtaining a deeper understanding of your data through business intelligence typically requires specialized expertise and pricey consulting. You ll also need to select a cloud-based database that can handle the amount of data you re looking to mine and ensure that you have the reporting and analysis tools you need to gain meaningful insight. BEST PRACTICE: Look closely at the features of the cloud provider when moving to business intelligence in the cloud. Look at the all in costs, including the consulting talent that may be required to get running.

6 6 IS THE CLOUD RIGHT FOR YOU? Or should the question be, is the cloud a good option for you, considering the nature of your business and the limited ducats you re able to spend? The cloud is bringing applications to smaller players who were once out of reach, and it s quickly changing the playing field in terms of who can access and utilize enterprise-level cloud applications and infrastructure. There are other factors you need to consider as well, including how to synchronize data now stored in the cloud back into your on-premises systems. Most of those who move to the cloud will do so in segments, so integration is going to be a persistent problem. Also, make sure to keep security, privacy, and performance on your radar. Despite what the naysayers are spouting, these are typically easy problems to solve, but you need to do some advanced planning. The best way to proceed is to understand your existing limitations first and map that to the core needs of your existing IT solution. There is always something desired that has not been affordable in the past, from CRM to calendar sharing. Now is a great time to reevaluate the affordability of those systems, given the new opportunities in the cloud. Second, make sure to do your homework about the true ROI of using cloud computing for some of your IT needs. Look at costs and benefits across a three- to five-year horizon. That s a good indicator of value. In certain cases, cloud computing systems could be more expensive than on-premises systems, despite the cloud computing hype crowd telling you otherwise. The truth is somewhere in the middle, and it depends upon your organization. Finally, stay on top of cloud computing developments as part of your strategy. If no cost-effective solutions exist today in the cloud, chances are a few will show up next year or the year after. Cloud computing is evolving rapidly, and cloud computing providers should get better and cheaper as time progresses. Cloud computing is an evolution in thinking, technology, and the way we consume IT resources. There are no magic beans here, but some real opportunities now and in the future, particularly for smaller enterprises that can t afford big-ticket, in-house solutions. i

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