What Is The Cloud?
Cloud Computing is essentially a new name for essentially existing technology that is becoming mainstreams and widely utilized. Cloud providers offer software that is hosted on a remote server and accessed over an Internet connection. This is what we call hosted services. Add scalability and on-demand availability and you get “Cloud”. As such, a more accurate definition of the ‘Cloud’ would be a hosted service available over the Internet with the ability to scale these remote resources instantly and on demand. Several business models reign in the “Cloud” marketplace, such as infrastructure-as-a-service and platform-asa-service but the most widely adopted model and the one that has the most demonstrated benefits for business is the Software-as-a-Service or SaaS model. The question that must be asked is, ‘Should I migrate my IT systems to the cloud?’
Organizations already have IT systems in place for just about every major function of their business: an email server, a website server, file and document sharing systems, telephone systems, and others. Traditionally these systems are built in-house, by purchasing and deploying the servers, devices, cables, etcetera, on-premise within the building the businesses is housed. This way of buying and deploying IT systems adds to the company balance sheet, yet adding little value compared to cloud solutions available without exorbitant equipment, licensing, and personnel fees. Virtually every in-house server can be replaced by a cloud-based solution. Cloud technologies offer increased flexibility, scalability, higher standards of care and quality, and higher standards for support, service, and functionality. Hence, your business receives better technology at a fraction of the cost.
Why use the Cloud for your Business?
As many businesses encounter today, the ability of in-house IT teams to efficiently and effectively operate much of the newer technology solutions is diminished as the complexity of the software they must administer increases almost exponentially with each new revision. It is unreasonable to expect a Server Administrator whose duties include administrating a phone system, an email system, and document sharing system to be an expert in all of these areas. As such, organizations have to choose between going to the cloud and introduce a business advantage over their competitors in terms of cost, quality of service, efficiency or staying in-house and face a competitive disadvantage, sometimes a fatal one.
Another fundamental shift going on is that SaaS providers are currently snapping up the best talent available – from in-house IT teams, and from the broader market. The talent that you need to run your inhouse systems is increasingly difficult to find, as the talented individuals, who ten years ago would have creatively engineered an in-house solution to a business need – are now working with Cloud providers, creatively implementing cloud-based solutions for the broader corporate and consumer marketplace.
All in-house systems come at a cost. Upfront hardware and software costs, equipment depreciation, equipment service and replacement costs, lost productivity in end-user training to utilize your specialized systems,
infrastructure costs such as electricity, air conditioning, internet access – to keep all the systems up and running, and others – it goes on and on. In sum, owning your own equipment is a huge expense for your business. By making a move toward the Cloud, your business benefits from the investment; the creative implementations of solutions, and cost savings derived from the economies of scale that cloud providers enjoy and are able to pass on to your business.
Cloud Vs On-premise
Cloud Computing service offerings are usually based upon a simple flat rate – a monthly per-user fee is typical for most billing arrangements. To draw a comparison, we will use a hypothetical company with 1000 employees requiring advanced email service such as Microsoft Exchange. The company has a choice – they can utilize an in-house solution, or find a Cloud-Based provider that can do it cheaper, better, and deploy the entire service instantly. If our hypothetical company chose to build the infrastructure inhouse, our company would require a physical server – roughly $3000 to purchase the bare minimum of hardware necessary to make the system work. On top of this server, software costs would come into play – you would require a server operating system. Currently, Microsoft charges $1029 for a version of Windows Server 2008 R2, which includes only 5 Client Access Licenses. To get the thousand client access licenses necessary, the cost shoots to $39,950. Our running total so far is $43,979. We still need to cover the personnel costs involved and we still need to configure the software with the Exchange Server software, a separate cost of $629. A separate set of Client Access Licenses is also required for Exchange Server at a cost of $67 per user – totaling $67,000. Our running tally so far? $111,608. Microsoft’s antivirus solution for Microsoft Exchange server, Forefront Online Protection for Exchange, is priced at $15 per user for a total outlay of $15,000 additional. Total outlay: $126,608. Utilizing the industry standard Symantec Backup Exec for your backup solution yields an additional cost of $1,162 for a single license for the server environment. Total tally? $127,770. This scenario does not even address the personnel costs and ongoing maintenance for the system – just the immediate upfront costs for building a Microsoft Exchange system in-house at current licensing fees. By means of contrast, an outsourced solution with per user costs of $9.99 per month will result in a monthly fee of $9,990.00 for the users, for a yearly fee of $119,880. Just the upfront costs of a server alone cost more than a year of service with a leading Hosted Exchange Cloud provider.
Cloud: On-Demand Software
Imagine trying to build a power-plant for generating electricity for your business. It makes no sense to generate your own electricity if you can just buy electricity from the grid cheaper and more reliable. This is, in effect, what the Cloud value proposition: enterprise class infrastructure – available on demand. Cloud service providers are able to field systems managed by experts in their field, and focus on providing the very product you are utilizing, plus offer the highest level of support. Cloud Providers are experts in their respective service offering. A provider that focuses on specific service will invariably gain expertise in the underlying platform that would be impossible for companies with other business models to obtain. Regardless of how well financed your inhouse IT team is, they will be unable to obtain the same breadth of experience that a Cloud provider can offer unless you are part of a multinational company, upwards of 10,000 users – the only sorts of organizations large enough to retain and maintain a competent in-house IT staff with requisite experts in their fields. Despite many of the benefits, Cloud Computing solutions are not for every company. Using the Microsoft Exchange hosting model and scenario discussed above, the cost benefits for going with a Cloud Email provider that offers Exchange Server powered service disappears if more than roughly 10,000 users are needed on the same system. A large enterprise may also obtain other cost savings realized through creative implementation of large systems – but the costs of these systems – both upfront, and on an ongoing basis greatly exceed those that would be paid to a Cloud service provider unless the operation is sufficiently large to offset the ‘economies of scale’.
Most Cloud providers offer Software-as-a-Service will obtain necessary quality certifications for their internal systems. It is a good practice to ensure that the company has met a minimum quality standard. A current SAS-70 Audit will ensure the company’s processes and access control systems are appropriate for a business of the type that you intend to entrust your data to. Certifications as it pertains to operating standards for SaaS companies are critical to assessing the quality of a prospective provider. Without the necessary internal processes in place to ensure that you data is secure, and that the system is up and operational at all times. Another important area to inspect when signing on to Cloud based SaaS companies is the SLA, or Service Level Agreement. The SLA defines in legal terms what sorts of uptime guarantees are made by the provider, and by agreeing to service, your legal rights are defined within the SLA. It would be good practice to review the SLA of any prospective SaaS provider you plan to do business with. Cloud Computing has matured to a point that it can replace almost every in-house system. Essentially, business telecommunications can now be outsourced, and the exorbitant costs to house the in-house telecommunications equipment can be done away with.
A significant advantage that businesses obtain with Cloud-based solutions is the ability to predict the cost in advance. Existing in-house systems are unwieldy by design, and an unexpected systems failure can result in shooting over budget with additional equipment, software, and licensing fees. With Cloud-Based systems, the only cost you need to know is the monthly fee.
To recap, when utilizing a Cloud based system, you enjoy significant cost savings, and an internal pool of talent that is able to address any issue that may occur with the system quickly and efficiently. In larger organizations with in-house systems, members of the IT team float around between different systems, often times never turning into an expert on the system, and not utilizing it to its full potential. When working with Cloud providers, the provider you are working with is an expert – it is their business to be an expert in the product they offer, and the expertise that works on the systems ensures that best practices will be adhered to. Companies operating in the Cloud space are also aware that their business depends on perception, and service offered. Service outages are unacceptable, problems and issues need to be rectified immediately. Perception is key to their continued success – which is why Cloud-based offerings carry certifications along the lines of SAS-70. In the event of a service interruption, major damage can result to the company’s brand and image. In sum, cloud computing offers a number of significant advances in functionality, and allows companies to streamline and better predict their costs. Deployment of systems is instantaneous, service is top-tier, and you are working with experts who live and breathe the product that your business utilizes.