Leveraging the Cloud for Your Business by CornerStone Telephone Company 2 Third Street Troy, NY 12180
As consumers, we enjoy the benefits of cloud services from companies like Amazon, Google, Apple and Facebook. We use them to shop, communicate, exercise creativity and share content as we post updates, share photographs, and download music and videos with great ease. In our work environments, we can also leverage these services from hosted software to virtual private servers to generate new business, enhance relationships with existing customers, meet regulatory and compliance standards, and secure costeffective and flexible solutions to address operations and information technology (IT) challenges. Our access to the cloud for business use can also be accomplished with relative ease. An Internet connection and a monthly subscription can provide access to computing resources that are housed off your premises and that casually require an in-house IT team keeping the cost to you down. 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 IT-enabled capabilities are delivered as a service to customers using Internet technologies. Three broad classifications of cloud services have evolved in the past several years, and each offers its own set of benefits for business customers. 2
Software as a Service (SaaS), perhaps the most familiar of categories, offers software for common work functions such as e-mail (using POP mail or Microsoft Exchange mail), desktop applications (such as Microsoft Word and Excel), and for more specialized functions such as accounting, payroll or customer relationship management (CRM). Infrastructure as a Service (IaaS) is a class of cloud services that 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 recently cited by Zack s Investment Research considers current demand and forecasts this segment of cloud service to grow globally from $3.7 billion in 2011 to $10.5 billion by 2014. Platform as a Service (PaaS), is a cloud service providing shared resources including software that are available on demand. Businesses leverage PaaS to develop and host their customized web-based applications that could be used for internal use or might be part of their strategy for enabling e-commerce and web-based marketing. Added to the benefits of IaaS, this category of services lets subscribers download and manage the software of their choice as they work on application design, development, testing and deployment. 3
Moving to the Cloud from the Enterprise to Small and Midsized Businesses (SMBs) 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 on cloud computing tracks the rapidly growing use of cloud services by organizations founded within the past 10 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 the recently founded SMBs spend up to 20% of their IT budget on cloud services for core business functions from research and development to sales and marketing. 13% of these respondents 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 cloud-based services. According to a recent International Data Corporation (IDC) study, the use of cloud computing among enterprise companies has surged so that, currently, over 75% of companies with 500+ employees use hosted or virtual services with half of them running production-level, mission-critical applications in the cloud. The overall trend reveals a significant shift from earlier forms of hosted computing, when corporations like IBM and GE installed mainframe computers 4
or large clusters of centralized servers for employees around the globe to access these resources over private networks. Business decision makers now have increasing confidence in the cloud as a secure, cost-effective option, and IT departments now want to reduce the complexity of their own in-house computing environments. Small and midsized businesses has been prevented from sharing in these benefits until affordable equipment and the availability of high bandwidth created the right conditions for companies 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 SMBs surveyed say buying cloud services from a provider with local presence is critical. What Problems Can Cloud Computing Help Solve? Availability Counting on in-house facilities to avoid disruptions to computing resources is an expensive and time-consuming endeavor. Unexpected however temporary, loss of power, events outside of our control, such as flooding or air conditioning failures, that change in environmental conditions and downtime needed for server maintenance and software upgrades are just a few of the many instances in which your computing resources become unavailable. 5
By taking advantage of hosted cloud services, the freeing-up of time spent managing equipment costs, software license fees, and utility bills, allows inhouse IT teams the freedom to establish new, or improve existing, practices centered on disaster recovery. A 2009 Forrester survey showed that the number of firms considering outsourcing had grown to 44% by 2007, with resiliency as their third most important item. That trend has continued, with large corporations finding more reliable disaster recovery to be one of the many benefits of consolidating their server footprint. A more recent survey of enterprise companies showed that, by the end of 2010, 1.7 million physical servers would host 7.9 million virtual machines, with reliable disaster recovery listed as one of the top reasons for leveraging virtual technology. Security Keeping business data and customer information secure has become increasingly challenging with the increasing 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. In Computer World s 2010 Forecast of IT Priorities, a survey of IT professionals found security cited as the most critical technology to their business organizations. For those who imagine that securing data is at odds with using cloud services, a case to consider in which the two coexist effectively is the U.S Defense 6
Information Systems Agency (DISA). In a 2011 article, DISA s chief technology officer pointed to cloud services as having been an effective way of sharing information across the Army, Navy, Air Force, and Marines to facilitate joint information sharing. Maintaining in-house firewalls, intrusion prevention systems, antivirus software and web-filtering technologies is expensive and time consuming, and additional pressure is put on organizations attempting to comply with federal and state legislation. The 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 released in 2010 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, SMBs can apparently be hopeful. According to the 2011 Cyber Security Watch Survey, 7
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 2010 results that seem to correlate with the increased use of cloud services. Flexibility An increasing number of employees spend most of their workday away from the office, and there is a growing percentage of employees working from home. 67% of companies in a recent survey say employees increased productivity by reducing commute time. Many companies have adopted polices that offer employees one or two work-from-home days on a weekly or monthly basis. With cloud services available for hosted e-mail, desktop files and collaboration, as well as hosted phone service, the ability to accommodate flexible work arrangements for these work-from-home and remote employees is now affordable and secure. Reduced costs Many businesses have responded to the current economy with flat or declining budgets for information technology. Gartner s 2011 CIO Agenda survey shows many IT decision makers planning to reduce overall departmental costs by increasing their use of cloud services. 43% outline their budgets as changing 8
over the next four years and show the intention to shift half of their entire IT budget to cloud-based services in order to minimize costs. In enterprise firms, 66% of the CIO s budget has historically been consumed by the cost of running the IT department. Now, technologies such as cloud computing are expected to cut costs by up to 50%. In Federal Cloud Computing Strategy, a 2011 report from U.S. Chief Information Officer Vivek Kundra and in his subsequent interview in CIO online magazine 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 e-mail and the Department of Agriculture saved $27 million in savings by migrating 120,000 users to hosted e-mail. The Department of Defense avoided legacy system upgrade expense of $1 million by deploying a cloud solution that cost only $54,000. The Department of Health and Human Services has reaped the benefits of cloud-based document sharing and has reduced the time to bring its service to market from over one year to only three months while supporting over 100,000 primary care practitioners. 9
It s clear that businesses are leveraging cloud services to help reduce costs, to greatly enhance the security of private company and customer information, to increase the availability and quality of computing resources, and to offer employees more productive and flexible work environments. With many types of cloud services available, and, the flexibility to migrate as little or as much of computing resources to a cloud service provider, there s only an upside potential to be gained by investigating your options. 10
References For Cloud, Age and Size Do Matter, Yankee Group Research, Inc., June 2010. Digital Universe Study, International Data Corporation with EMC 2, May 2010. DISA Outlines Major Network and Enterprise Initiatives, Government Information Group, April 2011. http://defensesystems.com/articles/2011/03/29/cover-story-disa-charts-cloudstrategy.aspx?s=ds_060411&admgarea=tc_defense Smart Cloud to Boost IBMs Cloud, Zack s Investment Research, April 2011. http://www.zacks.com/stock/news/50831/smart+cloud+to+boost+ibm%27s+c loud Federal Government s Cloud Plans: A $20 Billion Shift. http://www.cio.com/article/671013/federal_government_s_cloud_plans_a_20 _Billion_Shift 11
Cybersecurity Watch Survey: Organizations Need More Skilled Cyber Professionals to Stay Secure, January 2011, CSO magazine in conjunction with the U.S. Secret Service. Federal Cloud Computing Strategy, Vivek Kundra, U.S Chief Information Officer, Feb 14, 2011, www.whitehouse.gov 12