Cloud Apps – Handling Upgrades

The way cloud apps are upgraded is very different from the equivalent on-premise packages. How upgrades are handled can be a key factor in selecting a cloud solution, and making the most of an existing one.

What are the advantages of cloud app upgrades? Are there any issues? What questions are worth asking suppliers?

This article written for the IT Faculty of the ICAEW explores these questions. How will the answers affect the way you use the cloud, now or later?

Cloud Computing – Inevitable?

This week someone asked me “Is cloud computing inevitable?” Will we only be using cloud systems in business and other organisations by say 2015?

This article written for the IT Faculty of the ICAEW provides a summary for management of the types and uses of cloud computing, together with the pros and cons.

Cloud Computing – How about Private Cloud?

Putting software applications “into the cloud” can mean different things. Often it means using software hosted by a third party on a shared, “public” basis, accessible via the internet, and paid for by some form of subscription.

But what if that isn’t practical for some technical or commercial reason?

On-premise software is increasingly being made available so it can be accessed via a web browser and/or a smartphone app. The software may or may not be available on a hosted basis. The functionality may be as good as, or perhaps better than, options available as public cloud. So such systems can still be a valid business solution implemented in-house.

Running such software in-house is often referred to as “private cloud” - though some people would prefer this term to only apply to specific technical set-ups more commonly used in public cloud installations.

Private cloud systems share some of the benefits of public cloud computing, notably a familiar browser-based look and feel that can be accessed from anywhere where there is an internet connection. But you would still have to buy the hardware and software, and it doesn’t provide other benefits of public cloud, such as delegating administration of the system to a professional partner (unless your business is big enough to use traditional outsourcing). 

Sometimes urgency means a public cloud system needs to be chosen, as this will be quicker to get the implementation started. But where possible, it’s worth comparing the functionality of on-premise and cloud applications, (together with the other pros and cons) to ensure the solution chosen is most appropriate to the needs and aspirations of the business.

Cloud Computing – Which Type? Does it Matter?

When putting your business applications such as accounting and CRM “into the cloud”, there are various ways this can be achieved.

In each case the server that stores your data and runs the centralised software is hosted by a third party, and you typically pay a form of subscription. This is therefore called “Software as a Service” (SaaS). The main methods are:

• “Pure SaaS”: Systems written specifically for the internet, accessible using a web browser. Usually adopt a multi-tenancy database whereby the various users share the server and software.
• Hosted traditional software: If a system can be run on-premise and accessed remotely through a comms link, it has the potential to be hosted in the cloud.
• Hosted systems that you access using software other than a web-browser. This allows the whole screen to be optimised for the application.
• Smartphone/tablet apps: Again you can access the hosted system using an app downloaded to the device

These methods are termed “public cloud”. There is also the concept of “private cloud”, whereby systems written for the internet are run on-premise (or hosted by your regular outsourcer).

Whilst some people would disagree whether all these methods qualify as “cloud”, they nonetheless share many of the benefits and risks. Each method then has its own pros and cons. For example “pure SaaS” is usually only suitable if you can work with the standard functionality that everyone is sharing. If you need any custom functionality, you’ll usually need to take a different approach.

When looking at a particular offering that is being called “cloud”, it is worth understanding exactly how it will work and the practical pros and cons. This can have a significant effect on which service you decide to use.

If you would like help in this assessment, do give me a call on 01628 632914 or send me an email.

Cloud Computing - Issues to Watch

Last week we looked at the key benefits of cloud computing and how to select a SaaS (Software as a Service) system.

In this article we will look at some of the issues to watch out for when selecting a cloud system. These need to be covered by the end-user, though in many cases with help from and dependency upon the provider. Some issues are highlighted in the “Code of Practice” recently published by the Cloud Industry Forum, to which section references relate:

A.1.4: Provider going out of business: What arrangements are in place if the hosting company goes out of business or has a major technical malfunction? What if one of the other parties in the supply chain goes under? For how long will these arrangements run? What contingency plans can be put in place that could be used within these timescales?

A.2.1: Commercial Terms: Worth understanding not only the basics now, but what happens on renewal of periodic contracts? What happens at termination? (further details in section A.2.4)

A.2.7: Information Security: Are arrangements for user access, password storage, the use of encryption and other security issues adequate for the specific system and data?

A.2.8: Data Protection and Other Legal Matters: Are data storage locations acceptable for Data Protection and other legal reasons, such as access by foreign government organisations?

A.2.9: Service Continuity: Backup and disaster recovery arrangements are often better with cloud services than are achieved with on-premise systems. But what are those arrangements, and are they good enough?

Functionality: It is usually easy to trial a SaaS system. This is important as it is not usually possible to change the software beyond the configuration options offered. It may be possible to link to independent bolt-on software, but what are the possibilities?

Software Upgrades: Do you get sufficient visibility of upgrades, chance to test them, and chance to amend staff guidance before they go live? When do upgrades take place, and can you choose when?

User Access to Internet: Are there practical contingency arrangements in place should the usual means of accessing the internet malfunction?

System Speed: This is not usually an issue, but are response times adequate for the specific application with the internet access available? At all required locations?

Whilst the benefits of using a cloud system can be significant, they can only be consistently achieved if matched by suitable arrangements in all the areas above.

If you’d like further guidance, do ring me on 01628 632914 or contact me by email.

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Thoughts from Business Cloud Summit 2010

Earlier today I attended the Business Cloud Summit in Hammersmith. Incorporating an exhibition and panel interview sessions, it provided a very positive view of the cloud as an option for organisations of all sizes.

But some aspects did strike me:

Two Types of Providers

There are two types of providers – those that look at their service from a customer perspective, and those that don’t.

Aspects like making it easy to leave to make it easier to join, through data export or no minimum commitment. Or by producing a “customer charter” - though beware the title matches the content!

Cloud or Outsourcing

The largest cloud-based system in the world, for HR, sounded very little different from any other form of outsourcing agreement. There are weekly meetings between provider and customer, and I suspect dedicated servers not the multi-tenanted systems usually provided. It also wasn't clear whether access was via the public interent or some private connection, as is common with other types of hosted HR and payroll apps.

That’s a very different situation from a typical cloud user, who may have little if any influence on the way the service runs.

Commercial Business Models

The majority of exhibitors were companies formed specifically to develop and market a SaaS cloud app. The main exception was Microsoft which has recently decided to embrace the cloud before someone else does it for them.

Other on-premise vendors who have cloud offerings were not there promoting them, reflecting their approach in other situations. The cloud business model is not especially attractive to on-premise vendors, and I fear is a major barrier to development and promotion of cloud offerings. Is the cloud too cheap?

Risks and Rewards

One of the industry representatives said the cloud “brings new risks and rewards”. Some of the new pitfalls and risks we’ve discussed in earlier articles.

Clearly cloud providers are no different from any other IT vendors in telling you all the benefits, but little if any of the issues. Choosing a cloud provider is certainly as much a minefield as on-premise. It’s best to be well advised.

If you’d like to discuss any aspect of this please contact me – details to the left.

SaaS Cloud Computing – Selection Tips

SaaS cloud offerings vary greatly in standards. Depending on the specific application (app) and how business critical it is, it's worth carefully considering the following aspects of SaaS before you select a system:

Functionality – As with on-premise systems, establish overall context of a system and your key needs from it. Even if you can do free trials, assess breadth of functionality and other aspects of offerings carefully alongside trialing. Take nothing for granted. A formal specification is worthwhile, even if very brief, to provide the vision for selection and subsequent implementation

Time to Implement – Selection and acquisition can be quicker, but implementation itself is likely to be comparable to on-premise systems due to similarities in data conversion, change management etc. See selection and implementation processes.

Pilot Testing – SaaS is typically cheaper and easier, and less embarrassing to stop and try another system

Remote Access – It’s you as the customer that has responsibility to ensure adequate contingency arrangements for internet access at each location, including home workers. Is what you can arrange adequate for this application?

Backup, Recovery and Disaster Recovery – Typically far better with SaaS, but: (a) What backup exactly does provider do? (b) What is their policy for recovery? Can they just recover your/another's data if only yours/another's gets screwed, or does it have to affect everyone?

Location of Servers and Backup Servers - Establish current server locations, physical security, and provider's rights to change locations. Assess Data Protection Act and other legal/regulatory issues in each territory

System Availability - Any contractual SLAs (service level agreement commitments)?

Access Security - In addition to username + password, is there some extra method(s) such as PIN, memorable question, etc? If important to you, is access logged and auditable?

Encryption - Is data being sent to/from the server encrypted? Also consider whether data can be encrypted on the server, if you need it

Integration with Other Systems - Take nothing for granted - check need for integration, availability of capability in and out, and reliability

Configuration (using end-user functions) - Establish what you can change and what requires help from the provider e.g. VAT rate change

Customisation (additional custom-programming) – Not usually available within the app, but extras may be bolted on. If you require customisation now or possibly later, understand the options.

Upgrades - Is there any control over timing of upgrade? e.g. do you have a separate database, and/or are you given say 2 months to upgrade after new release becomes availabl

Upgrade Testing & Update of User Procedures - Does provider allow you to view/test a new release before it goes live? If so, can you use a copy of your data, to test transactions that are part-processed? How good are the release notes in detailing every change, not just new headline features?

Training Environment - Does provider allow additional space into which your live setup (and possibly data) can be copied for training purposes?
 
Purchase Cost – Typically monthly OpEx rather than up-front CapEx. But there may be a lump-sum payment up front, especially for the more sophisticated systems that require pre-sales consultancy

Adding Users – Usually easy but understand any minimum timescale commitment

Administration Time/Cost – Typically lower, but not zero. Still have admin of set-up such as leavers and joiners, plus fault resolution and management of provider


End Of Use (termination of contract) - Ensure you legally "own" data and there are tools to extract a copy in usable form whenever you require.


Supplier Financial Stability – Lower payments put additional financial strain on providers. Establish all parties in provider supply chain, back to hosting provider. Demise of any one of them could mean service withdrawn sooner rather than later. Check financial status of each party in supply chain.

If Provider Goes Out Of Business What safeguards does the provider offer, given the various members of the supply chain? Is it worth using two different systems in two parts of the business, with a tested transfer routine, so you can quickly switch systems if provider goes out of business? Or should you have a second system on stand-by on minimum subscription?

Control of Systems – It can be a relief to put your systems in the hands of an “expert” provider. But unless you are an important customer you will have little if any influence on commercial terms or day-to-day running. Understand sophistication or provider, and consider control issues.

IN CONCLUSION

As you assess each of these aspects, by comparison to equivalent aspects of any new or existing on-premise options, you can better assess whether each SaaS offering will be acceptable. Even an imperfect SaaS offering may be a lot better than the on-premise alternatives!

If in any doubt, do contact us.

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SaaS Cloud Computing - Why oh Why?

SaaS Cloud computing (Software as a Service) offers many benefits. But like many things in life, it isn't perfect.


The key benefits of SaaS compared to on-premise packages include:

1. Faster implementation, due to differences in selection process and physical procurement. (Note: Implementation itself is little different for a system of equivalent complexity)
2. Improved backup and disaster recovery (typically, by comparison to many organisations large and small)
3. Remote access from anywhere in the world that offers internet access
4. Reduced costs up-front, as OpEx rather than CapEx
5. Potentially power admin costs and hassle through no need to have the staff to administer the system and database (although you'll still need basic app administration such as adding and removing users)

However  the key drawbacks of SaaS are:

1. Loss of management control, as with any outsourcing arrangement, unless you are a major customer of the app supplier and can exert superior influence
2. Reliance on an internet connection, for which at least two types of connection at each location is recommended so one acts as a contingency
3. Access security, especially for any apps that rely just on username and password (Why don't more SaaS systems offer at least an optional third level, such as an easily-memorable security question or numeric grid?)

Many SaaS systems are on a "multi-tenant" basis, where  various user organisations share one database with other organisations. Some providers offer an option to have your own database, either at their data centre or on your own premises (when it effectively becomes an on-premise web-enabled software package). In either case, you can have better control over if and when a software upgrade takes place, and avoids risks of sharing a database (however small they suggest those risks are).

Further details are in previous articles.

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Cloud Computing - Business Models and How They Affect You

Whether you are an end-user, reseller or software provider, the rise of cloud computing will affect you. Probably significantly. But how? What can be done?

Once upon a time the internet promised “disintermediation” - the demise of the middleman. Now this is happening increasingly in the IT software industry as a result of SaaS cloud solutions (Software as a Service).

Disintermediation has happened in many industries such as air travel, where you can now book directly with the airline. The ultra-cheap flights are a product of that change. Travel agents have had to change to survive. Many haven't.

With car insurance the high street brokers have tended to disappear, and the comparison sites are just middleman brokers online (albeit in some cases a front for the group insurers). Despite this, I was interested to see a new insurance broker opening in our high street - I must ask them what's going on!

With software applications (apps) it's happened to a certain extent in being able to buy software direct from the author. In general this is low value software that would not have been commercially viable via resellers.

However traditional IT resellers are now under threat from cloud SaaS services. Software vendors are offering software apps to users directly for uses such as accounting and ERP – in the mid-market applications traditionally the preserve of resellers.

The more complicated cloud services still need implementation help, such as configuration and training. But in many cases support is provided direct by the software vendor, rather than from a local reseller as before.

But does this mean the end of resellers, with their transformation into implementation consultancies? This has long been the model for SAP and other corporate systems. Will this become the norm in the mid and small business markets?

Probably not. The simpler software systems can be sold “off the page” using demo videos and other pre-recorded techniques, without a salesman involved, helped by recommendations. The more sophisticated the system is, the more likely a discussion and/or demonstration will be needed – be this face-to-face or via a webinar. The vendor can employ sales people themselves, or continue to use “the channel” of resellers – or both. Even the simpler systems benefit from more people promoting the system, who will all expect commission.

But wait a minute! Many SaaS cloud services are paid for on a monthly subscription, with the benefit to users of a lower cost and delayed payment. The other side of this coin of course is a later cash inflow for vendors and resellers than before. Something has to give.

This situation is a major headache for the SaaS cloud industry! The life insurance industry has long coped with this problem by paying their brokers a lump sum when a policy is taken out. But this means the vendor has a significant negative cash flow for sometimes a year or more. When this model is applied to SaaS, a reseller may still not get as much for a sale as for an equivalent on-premise solution. Which will they prefer to sell? SaaS vendors have to pay their resellers adequately if the resellers are going to sell their services rather than other SaaS or on-premise options.

The industry is applying at least three approaches:

1. With monthly instalments, the reseller/broker gets a share of each instalment. Fine perhaps for extra services being sold, but not for a reseller’s bread and butter business. Reseller takes the pain
2. Or the life insurance model, which leaves the vendor substantially out of pocket. Vendor takes the pain, and the reseller to a certain extent if initial sales value lower
3. Customer pays a lump sum for a 1, 2 or 3 year contract, and commission is paid out of that. The customer doesn’t get the benefit of monthly instalments, and to that extent takes the pain. The vendor and reseller also take some pain with less money up-front than for on-premise software

Approach 1 means the end of resellers as we know them, as they cut back to become implementation specialists. Approach 2 means SaaS vendors have to be much better capitalised than previously to cope with growth. Either approach means less money available for vendors and resellers to help a customer in their buying decision, and indeed to help them buy their services. For the customer, it also means a higher risk of their IT partners failing, on whom they rely.

Approach 3 provides lower initial cost to customers whilst giving vendors and resellers more money to share upfront when the sale is made.

In Conclusion

Most of the SaaS cloud industry is adopting approaches 1 or 2, depending on whether the vendor can afford to pay lump sums up front, with a few using option 3. Those adopting approach 2 are offering resellers and brokers a larger amount up front, so their services will tend to be sold in preference to those using option 1.

It will be interesting to see if a larger proportion of the industry goes down the approach 2 route, and even use approach 3.

As an end-user customer, approach 3 still lets you benefit from a lower initial cost than equivalent on-premise solutions. The vendors and resellers then at least get a lump sum to share to pay for pre-sales assistance and to keep them in business. For many users, approach 3’s improvement in service and reduction in risk may be worth it. For others lowest cost will always win.

For a reseller, which approach do you prefer? Which vendors offer it? And as a vendor, will approach 1 get you the volume of sales you are looking for, or do you need to look at the other two approaches?
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