Leveraging the Cloud for your Business

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1 Leveraging the Cloud for your Business Save money and time by moving to the cloud Learn how Moving to the Cloud 3 from small and mid-sized businesses (SMBs) to Enterprise Companies. What problems can cloud 5 computing solve? As consumers who utilize the services of companies such as Amazon, Facebook, Apple, or Google, we experience the cloud every day. As we shop, communicate, express our creativity or share content, upload photographs, and download music or videos, cloud computing allows us to enhance our personal lives almost effortlessly. Now a similar shift is happening in the workplace: cloud-based systems such as hosted software, marketing services, and virtual private servers are being leveraged by companies in order to generate new business, improve customer relationships, meet regulatory and compliance standards, and find cost-effective and flexible solutions to operations and information technology (IT) challenges. An Internet connection and a monthly subscription to a cloud service provider can provide business people with advanced computing services that require little attention from in-house IT teams, therefore saving money and time.

2 Categories of cloud services each offer its own unique set of benefits for businesses. SaaS, IaaS and PaaS are all examples of the cloud. Types of Cloud Services Gartner, a highly regarded IT research and advisory firm, broadly defines the cloud as a style of computing where scalable and elastic ITenabled capabilities are delivered as a service to customers using Internet technologies. 1 Three categories of cloud services have evolved in the past several years, and each offers its own unique set of benefits for business customers. Software as a Service (SaaS), perhaps the most familiar of categories, offers software for common work functions such as (using POP mail or Microsoft Exchange mail); desktop applications (such as Microsoft Word and Excel); and for specialized functions such as accounting, payroll, or customer relationship management (CRM). Infrastructure as a Service (IaaS) offers businesses remote access to IT resources such as servers, CPUs, storage devices, and other hardware and networking equipment. The business owner and in-house IT team are freed from managing this hardware and maintaining proper environmental conditions. A Gartner report cited in April 2011 by Zacks Investment Research forecasts this segment of cloud service to grow globally from $3.7 billion in 2011 to $10.5 billion by Platform as a Service (PaaS), is a cloud service providing shared resources including hardware and software that are available on demand. Businesses leverage PaaS to develop and host their customized web-based applications for internal use or as part of their strategy for enabling

3 SMB Cloud Adoption e-commerce and web-based marketing. When combined with the benefits of IaaS, this category of services lets subscribers download and manage the software of their choice for application design, development, testing, and deployment. Moving to the Cloud from Small and Mid-Sized Businesses (SMBs) to Enterprise Companies The SMB cloud market rose to $15 billion in revenue in Survey results published by major research institutions evidence the trend: companies of all sizes are leveraging hosted services to achieve business goals. A 2010 Yankee Group report tracks the rapidly growing use of cloud services by organizations founded within the past ten years: 80% of larger enterprise businesses surveyed report extensive use of cloud computing, with more than 40% of their total IT infrastructure either already on or moving to cloud platforms. Meanwhile, 66% of recently founded SMBs spend up to a fifth of their IT budget on cloud services for core business functions, from research and development to sales and marketing. Of these respondents 13% say they plan to expand their use of cloud IT so that within the next 24 months a full 50% of their spending will be on cloudbased services. 3 According to International Data Corporation s (IDC) 2010 Digital Universe Study, the use of cloud computing among enterprise companies has surged so that, currently, more than 75% of companies with at least

4 500 employees use hosted or virtual services, with half of them running productionlevel, mission-critical applications in the cloud. 4 SMBs surveyed say buying cloud services from a provider with local presence is critical. 5 82% of SMBs say buying cloud services from a provider with a local presence is critical. The overall trend reveals a significant shift from earlier forms of hosted computing, when multinational corporations like IBM and GE installed mainframe computers or large clusters of centralized servers so their employees around the globe could access these resources over private networks. These days, business decision-makers have increasingly embraced the cloud as a secure, costeffective option, and IT departments see the cloud s value in reducing the complexity of their own inhouse computing environments. Previously, small and mid-sized businesses had been prevented from sharing in these benefits but the availability of affordable equipment and high bandwidth has allowed cloud service providers to build successful business models centered on offering SMBs a full array of hosted services. And although many cloud service providers concentrate on reaching customers in the global market, a recent Microsoft study shows that 82% of the What Problems Can Cloud Computing Help Solve? Availability Having constant access to business applications and reliable, secure computing resources is essential for companies to operate effectively, and virtualization is gaining ground as a tool to serve this purpose. Search Data Center s article State of Virtualization and Cloud Computing: shows an increase from 2010 in the number of businesses running web server, database, network services, and on virtual machines. SMBs know the impact of uncontrollable events that alter environmental conditions such as flooding or long periods of electrical outages and typically don t have the IT staff to create a plan for disaster recovery. IT professionals in larger companies seek alternatives to the high price and extensive time commitment of putting in place resources that serve as back up for such occasions.

5 By taking advantage of hosted cloud services, the small business owner can enjoy the benefits of the disaster recovery plan their cloud service provider has implemented. Corporate IT teams will gain the crucial time necessary to establish new, or improve existing, practices centered on disaster recovery for any of the computing resources they have maintained inhouse. The Search Data Center survey shows that nearly 60% of the 1,000 respondents note the use of server virtualization and of those 43% indicate they are using it for disaster recovery and availability an increase from 41% in The 2010 Yankee Group survey on cloud adoption also shows evidence of the growing trend for businesses to rely on virtualization to achieve increased availability of computing resources. Of those surveyed, more than a third of the enterprise companies founded within the past ten years show that 50% to 80% of their IT budget is earmarked for cloud services over the next two years, with service availability ranked as top attribute for choosing a cloud provider. Security Keeping business data and customer information secure has become increasingly demanding given the current diversity of endpoint equipment such as servers, desktops and laptops, the proliferation of mobile devices, and the challenge of securing web applications and complex networks. For those who imagine that securing data is at odds with using cloud services, consider the following two cases. IBM recognizes market demand for security and has positioned their relatively new offering, SmartCloud, to big companies with one of the major value propositions of offering this cost-effective data analysis, supply chain management and sales management tool on a secure and reliable cloud Keeping business data and customer information secure has become increasingly demanding. platform. Zacks Investment Research s April 7, 2011 Analyst Blog on SmartCloud sees this key differentiator as significant in winning business from large corporations that have stayed away from cloud services due to security and governance concerns. The June 2010 Yankee Group report that probed reasons why various business segments choose cloud providers showed that the legacy segment traditional Fortune 1,000 companies showed 61% of the roughly 560 firms surveyed showed security as their top attribute for choosing a cloud provider. The U.S. Defense Information Systems Agency (DISA) is charged with providing the network, computing infrastructure, and enterprise services to support more than 16,000 users around the globe, and allow users to

6 exchange information with partners appropriate to the mission at hand. In a 2011 article, DISA s chief technology officer attributed the agency s success in facilitating a secure joint communications program for the Army, Navy, Air Force, and Marines to the adoption of cloud computing. 7 Maintaining in-house firewalls, intrusion prevention systems, antivirus software, and web-filtering technologies are expensive and time-consuming, and additional pressure is put on organizations as they attempt to comply with federal and state legislation. Rules around Customer Proprietary Network Information, Health Insurance Portability and Accountability Act, Freedom of Information Act, and other regulatory measures impact business practices regarding storage and safety by continually detailing new requirements such as maintaining data across multiple platforms to ensure security and redundancy. The IDC Digital Universe Study forecasts that the amount of digital data being stored will increase by a multiple of 44 growing from the 2009 volume of.8 zettabytes (ZB) to over 35 ZB in 2020 (1 ZB = 1 trillion gigabytes). Some consider this an outrageous growth trajectory, but the study convincingly predicts exponential growth in demand from individual consumers as well as regulation requiring businesses to store data for longer durations and in multiple facilities. Though burdened by these new challenges and by a constantly changing landscape of security threats, cloud computing offers SMBs hope: according to the 2011 Cyber Security Watch Survey conducted by CSO magazine, unintentional exposure of private or sensitive information has significantly declined, with only 31% of respondents experiencing an incident in 2011 versus 52% in results that seem to correlate with the increased use of cloud services. Stored digital data will increase by a multiple of 44 by Flexibility An increasing number of employees spend most of their workday away from the office, and the ranks of employees who work from home are growing rapidly. According to a study 9 examining national trends related to small business broadband deployment, half of small business employers currently allow telecommuting to reduce demand on office space and accommodate employee schedules. This trend seems to be welcomed as more than a quarter of these employers are interested in having even more employees telecommute. With cloud services available for hosted , desktop files, and collaboration, as well as hosted phone service,

7 the ability to accommodate flexible work arrangements for these work-from-home and remote employees is not only possible, but also affordable and secure. Reduced costs Many businesses have responded to the current economy by either flattening or outright declining budgets for information technology. Gartner s 2011 CIO Agenda survey shows reducing cost as the third most importantly ranked strategy among IT decision-makers, with many planning to increase their use of cloud services as a way to reduce overall departmental expenditures. 10 In Federal Cloud Computing Strategy, a 2011 report 11 from U.S. Chief Information Officer Vivek Kundra and in Kundra s subsequent interview in CIO online magazine, 12 the significant results in various federal agencies of savings, cost avoidance, and speed of deployment can be seen: The General Services Administration realized a $15 million savings by migrating 17,000 users to hosted and the Department of Agriculture saved $27 million by migrating 120,000 users to hosted . The Department of Defense avoided a legacy system upgrade expense of $1 million by implementing a cloud solution costing only $54,000. The Department of Health and Human Services has reaped the benefits of cloudbased document sharing by implementing Electronic Health Records, and has reduced the time to bring this service to market from over one year to only three months while supporting more than 100,000 primary care practitioners. As decision-makers leverage cloud services for their businesses, they are better able to reduce costs, enhance the security of private company and Reducing cost is one of the highest ranked strategies for IT decision makers. customer information, increase the availability and quality of computing resources, and offer their employees more productive and flexible work environments. And with the many types of cloud services available today, companies have the freedom to migrate as few or as many of their computing resources to the cloud. Given all the benefits to working with a cloud service provider, there has never been a better time to investigate the options for your business.

8 About CornerStone CornerStone delivers advanced communications solutions to organizations of all sizes, in all industries. Enjoy the benefits of our SkySphere product line of cloud voice and cloud computing services, and use our high-bandwidth Cable Access Transport (CAT) service to connect to the cloud. Our credentials include SAS 70 Type II and SSAE 16 SOC II certifications as well as a robust carrier-grade voice and data network. SkySphere, only from CornerStone, is a Microsoft Gold Certified Partner; meets the stringent requirements to become an Intuit-Authorized Commercial hosting company; is a ZixCorp Diamond Partner; and works with technology platforms and providers such as Cisco, Citrix, Blackberry, Barracuda, Mozy and Sonian for best-in-class solutions. Let us help you assess how to best leverage hosted , hosted desktops, virtual private servers, and a full range of products and services from a single, trusted advisor. References 1. Data Center Consolidation: Trends and Best Practices, William J. Malik, CISA, Gartner, Inc. 2. Smart Cloud to Boost IBM s Cloud, Zacks Investment Research, April 7, For Cloud, Age and Size Do Matter, Yankee Group Research, Inc., June A Digital Universe Decade Are You Ready?: The IDC Digital Universe Study, sponsored by EMC, May Microsoft Survey Reveals 39 Percent of SMBs to Pay for Cloud Services Within Three Years, Microsoft Corp. press release, March 24, State of Virtualization and Cloud Computing: 2011, Stephen J. Bigelow, July 2011, Tech Target.com DISA Outlines Major Network and Enterprise Initiatives, Government Information Group, April Cybersecurity Watch Survey: Organizations Need More Skilled Cyber Professionals to Stay Secure, January 2011, CSO magazine in conjunction with the U.S. Secret Service. 9. The Impact of Broadband Speed and Price on Small Business, by Columbia Telecommunications Corporation for SBA Office of Advocacy, November Reimagining IT: The 2011 CIO Agenda, Gartner, Inc. 11. Federal Cloud Computing Strategy, Vivek Kundra, U.S Chief Information Officer, Feb 14, 2011, Federal Government s Cloud Plans: A $20 Billion Shift.

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