Why Cloud isn’t for everybody right now

This blog post came about from various clients and partners I work with asking why there isn’t a bigger uptake of Cloud? Over the past 2 years, Cloud and Software As A Service (SaaS) has had strong growth of 18-20%, so demand is high, and in this post I will start with identifying the constraints I have observed in my experience, then outline where I see the benefits of Cloud in smart organisational strategy.

Even though my company, Infinite Networks, offers a form of Cloud Hosting (Virtual Servers as a VMware vCloud provider utilising High Availability server clusters and SANs), I still see a reluctance to move to the cloud around cost benefit and reliability. In the past and currently, it is more likely for new companies with rapid growth and no existing infrastructure to operate in the cloud. The notion of moving everything to the cloud for established companies is not always the right choice simply because the CEO has read an article about ‘Cloud’ from a reputable publisher such as the AFR.

Constraints

Reliability

It’s not as though small cloud providers such as my own company, larger national providers such as Netregistry, or even globals such as Amazon AWS, provide a lack of competitive pricing or reliability of uptime. It’s more around how organisations are connecting to the cloud, particularly around uptime and reliability. As the NBN rollout has stalled for various reasons, mainly political, there is still a high cost associated with getting a reliable Internet connection into a lot of commercial areas in Australia. Even our clients on Service Level Agreements still incur the risk of an outage due to disruption from physical issues which require a redundant solution, usually on a different medium such as copper or wireless.

That said, the real target of cloud computing is Small to Medium Enterprise, who generally do not invest in approximately a $1000+/month Internet connection due to cost. The micro businesses of 5 employees or less are in a better position to leverage cloud as they can switch to mobile data for a short period of time during an outage, or change their location easily as a result of being more flexible, but any business that succeeds doesn’t end up staying at this size for very long.

This can be overcome by having a redundant connection, be it through another provider, or a different medium such as wireless or mobile. Regardless, connectivity costs and solutions are what needs to be considered if your organisation is cloud only.

Legacy systems

Established organisations generally have existing IT systems that don’t lend themselves to a cloud deployment. This is usually due to industry-specific software that runs natively inside Windows or MacOS utilising MsSQL, Access or Filemaker databases. While technically some of these software solutions can be run in the Cloud, they don’t utilise its full benefits and sometimes incur additional costs around licensing or come with complex network requirements for branch sites to communicate with each other.

Another factor that makes Cloud deployment difficult is that some software is flexible while others are not. This calls for a hybrid solution which is not always offered by Cloud Providers as it sometimes requires a unique VPN or MPLS solution for it to work efficiently. The costs associated with complex network configurations to allow legacy systems to talk to the cloud offerings, whether it be SaaS or Virtual Server solutions, are simply not worth the investment.

As companies move towards using SaaS solutions, and existing software systems are upgraded or replaced to work in a Cloud enabled environment, don’t expect Cloud to just happen overnight.

Under contract

Established organisations and heavy users of IT systems often have their current physical hardware (Tin) and other resources under contract such as co-location, network, or dedicated machines which only renew every 2-3 years. The added complexity of this situation is that not all systems have the same anniversary date, as deploying cloud is generally a whole solution involving the completion of an Internet connection contract agreement before the end of physical hardware leases.

Intellectual Property, Privacy and Trust

One of the biggest constraints I see in the new world of ‘Cloud’ is who owns your data? When it’s on your own equipment you know where the data physically resides and you are the only one who can access it, but with 60 page terms and conditions and complex international free trade agreements, many organisations blindly utilise SaaS and Cloud services from many different providers.

When uploading a video onto Youtube, the Youtube Community technically owns the intellectual property, leaving your organisation’s content open to video mash-ups, be they positive or negative. In Australia, the Privacy Act has recently been revised and now states that if any provider you use has a privacy breach, you too may be liable if any of your customer data was exposed, so it’s advisable that you consider this as part of your wider information strategy. The big one I recommend for anyone moving to the ‘Cloud’, be it SaaS or Virtualised environment, is to do your research on the company and ensure you ‘Trust’ them.

  1. Do they have a physical office location which they freely advertise?
  2. Can you call and speak to a real person?
  3. Do they disclose the location of where the data is stored? eg. Sydney Zone
  4. What are their backup policies? Is it your responsibility to keep active backups of your data in case of data loss and how long do they keep backups for?
  5. Can you easily obtain a copy of your data in the form of an export?
  6. I would recommend choosing a provider that manages their own network and has their portable IP range.
  7. Lastly if the service disappeared overnight, what would you do to restore your data and services?

One of my favourite commentaries on this is the Dilbert Cartoon below. “You lost our data center?”

Dilbert Comic Strip July 5, 2013

Soure: http://dilbert.com/strips/comic/2013-07-05/

Benefits

Financial

A huge advantage of cloud is capital expenditure vs operational expenditure. Organisations that need to scale quickly due to project work can cost out their IT infrastructure per user or per instance for a period of time without a capital expenditure investment such as physical on premise equipment.

Many of the established client’s I deal with have seasonal projects or outcomes that don’t require long term IT infrastructure. They need the ability to fire up infrastructure on demand to deliver an outcome quickly, enabling them to deliver services faster and better than their competitors. This is where Cloud can be leveraged through organisational strategy, and is where I witness hesitation to utilise Cloud as part of the wider and overall strategy, resulting in slowed non-existent growth as they’re unable to deliver solutions to their clients quickly as competitors.

Scalability

This is a big one people overlook. Not every organisation grows rapidly, and growth is certainly not always a consistent variable. Since the GFC, and following several natural disasters, purchasing infrastructure has become erratic.  Once you finally get the executive or management to finally accept your project build for new infrastructure, and then order your equipment, it is becoming quite common for there to be a 6-8 week wait on manufacturing builds or for distributors to import what you require, which can be very frustrating. In the cloud you fire up your instance and get it working within hours, not weeks.

Now what happens if your organisation has a rapid growth spurt and requires additional capacity or capability? The common scenario is, management will be frustrated as they don’t understand that the solutions they approved previously will not be suitable moving forward. This sometimes requires re-engineering the solution, then purchasing and configuring the equipment. As mentioned above, this can be delayed by various things. In a cloud scenario you can fire up new instances and instantly get to work delivering a solution for your end users.

Power and location

Power costs money and its getting more expensive. Whether it’s in your office or in the data centre, don’t underestimate the value of co-location or virtual servers in the data centre. If you would like to house your own infrastructure in your office you need to think about three things; power, heat, and security. Older offices are not equipped with these facilities and you have capital and operating expenditures to install a rack and/or secure room, suitable power distribution and Uninterruptible Power Supply (UPS), and 24/7 air conditioning to ensure the equipment operates inside its efficient temperature range.

By the time you add these costs up over a 3-5 year period, cloud infrastructure or co-locating your physical tin can actually be a really smart investment purely from economy of scale, not to mention higher standards of service.

Summary

All the commentary above is through my experience of early adoption of utilising ‘Cloud’, my involvement is providing ‘Cloud’ services, and developing SaaS applications for my clients. A common conversation I have with various clients and colleagues in the industry is ‘How can I utilise the Cloud?‘ or ‘I don’t think Cloud is everything people claim it to be‘. Both  have certain truths, but moving forward, and with economy of scale driving cost efficiency, ‘Cloud’ is here and will grow in the future,  enabling new companies to disrupt traditional industries. This is already happening as ‘Cloud’ savvy executives move through the ranks of established businesses, and transition their systems to the cloud.

In my next post I’ll write about the dangers of selecting multiple SaaS offerings for point solutions without a long term strategy of making them all talk together, and the best way to evaluate solutions for your organisation.

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