Cloud Computing – Hot Air or Business Reality?

Thanks to Microsoft for reminding me of a paper by Ted Schadler of Forrester Research. He advised CFOs to take a close look at cloud computing for email, collaboration and enterprise applications.

The points are equally valid today, though Ted focused principally on benefits. So let’s look at both the pros and cons

Key Benefits

Ted mentioned three key benefits:

1. Speed: Accelerate a project roll-out

Cloud services (SaaS, PaaS & IaaS) are hosted remotely. Typically quicker to get through budget approval, and no need to wait for delivery of hardware etc. But for SaaS, which involves packaged software, don’t be fooled by statements that all you need to do is pay monthly fee and forget about help with set-up, project management, change management, training etc. These need to match those of an equivalent on-premise solution, whether you start with a pilot or a full-scale implementation. A requirements specification is also recommended, at least to establish which SaaS system(s) should be trialed.

2. Focus: Outsource non-core competencies to a service provider

Let the “specialists worry about the nuts and bolts so that you don’t have to” is a compelling argument, especially for small and medium-sized businesses that often struggle to do the basics in back-up, disaster recovery and general systems administration. It can help release IT staff for better things in larger organisations.

3. Funding: Pay as you go rather than pay up front.

This is also compelling for any application, but especially when the services offered would be completely unaffordable to run in-house. However less money up-front to the supplier reduces what they can spend on quality pre-sales work, and raises the risk of suppliers going out of business (compared to traditional package software houses) unless they are well funded.

Further benefits for Software as a Service (SaaS cloud)

Continuing this article focusing on SaaS cloud, various other useful papers have been published. These take a more balanced view of pros and cons. These include “The business case for Software as a Service” by Intellect (representing UK IT vendors) and “Cloud Computing – a guide for business managers” by the IT faculty of the ICAEW (representing users). From these documents and my own experience I’d like to add five more principal benefits to those highlighted by Forrester:

1. Functionality can be shared from any location with an internet connection, from any device with a compatible internet browser. This allows remote access from multiple sites, by mobile workers, and collaboration with third parties (including customers and suppliers)
2. Regular upgrades provide new functionality more quickly, without the hassle of installing them. However there are issues with upgrades in multi-tenant systems (see below).
3. Easy to increase usage when needed (but not so easy to reduce it)
4. Easier to pilot an application, and withdraw quickly if necessary at lower cost and embarrassment!
5. Better backup and disaster recovery than a typical on-premise installation, certainly for smaller  businesses

Cons, Pitfalls & Risks

Turning to the “cons”, this is my take from 10 years using SaaS systems for ecommerce, email, ebanking and other purposes. As Intellect says “While the SaaS model offers significant advantages over on-premise, it does carry potential risks that must also be considered”:

1. Top of my list is reliance on an internet connection. As Andy Scott says “Loss of Internet = loss of information systems. PERIOD.” At each place of use, it is a must to have at least two totally independent reasonably high-speed internet connections, either broadband + 4G, 2 different 4G services, or some other combination.
2. Top of most people’s concerns is security. "Security" covers a multitude of sins, from internet reliance (as above), user access, encryption, vendor staff, leavers/transferees, to back-up and disaster recovery. This all needs to be within compliance with the relevant Data Protection legislation (e.g. for FCA). There may in fact be an improvement using SaaS by comparison to your existing on-premise solution, but needs a careful look.
   
3. Security is closely related to data ownership. What’s in the vendor’s contract? Do you have (or can you quickly get) your own data back-ups, and the ability to move to another service if and when you need to?
4. As mentioned above, upgrades are both an advantage and potentially a critical issue, depending on the SaaS vendor and how it operates. Issues exist around timing, testing, user procedures, training, etc
5. SaaS solutions can usually be configured, can often be integrated with other systems, but can rarely be customised as easily as on-premise solutions. What you see is what you get!
6. Contingency planning is vital. Any lack of a credible contingency plan for a business critical application needs careful consideration, depending on the circumstances.

Ever "positive but cautious"

The quality (and indeed acceptability) of a specific supplier and its offering for a specific application is fundamental to the success of your cloud adventure. There’s no escaping proper due diligence! Assuming the cloud is an acceptable approach for the specific application, given the available offerings, it’s a question of which cloud.