The Cloud from Both Sides
You might remember Best Buy’s commercial during this year’s Super Bowl, the one in which comic actress Amy Poehler inundates the helpful, hapless Blue Shirt with inquiries and innuendo about cameras and computers. At one point, she asks, in rapid-fire succession: “What’s the cloud?” “Where is the cloud?” “Are we in the cloud now?!”
In the simplest terms, cloud computing allows companies to share software and other applications and capabilities across a digital network. Industry statistics and anecdotal evidence both show a fast-growing use of cloud IT services, though they remain a small part of total U.S. business IT spend. What makes cloud computing a bit cloudy for many is the fact that there’s more than one cloud. There’s the public cloud, which is familiar to anyone who has ever used Google Apps (which most notably include e-mail, documents, and spreadsheet capabilities) or Rackspace (server space) or Salesforce.com (CRM). The public cloud lets companies “rent” server space, software, and other services on an as-needed basis, with the promise of greatly lowering a company’s IT costs.
There are also private clouds, which function as in-house clouds, central repositories of data and applications that can be accessed across departments and locations, and even by different devices. A hybrid of public and private clouds is the most popular configuration.
The cloud can’t be taken lightly. “People can’t necessarily jump in with both feet and say, ‘Well, I’m going into the cloud,’” says Brian Arneson, president and COO of Sovran, Inc., an Eagan-based IT consulting firm with a large cloud computer practice. Companies need to look carefully at numerous considerations besides costs, including legal issues and their existing IT infrastructure.
What Is the Cloud?
The software-as-a-service (SaaS) model was one of the first instances of cloud computing—companies could access the SaaS provider’s product via the Internet rather than having to buy licenses and updates.
SaaS turned out to be just the start. “You can go to Amazon Web Services and literally spin up a server on a public shared infrastructure on Amazon’s environment,” says Arneson, noting that Amazon is just one of many infrastructure-as-a-service providers. “It’s truly a utility model—just like you pay for access to your electric company or your gas company. You’re paying strictly on usage—both memory and CPU and storage.” What’s more, you’re getting scalability, and you’re getting it cheap—much cheaper than if you had to add more of your own servers. That’s also true of vendors offering data storage as a service. Microsoft’s Office 365 cloud environment, for instance, allows for up to 25 gigabytes of storage per user.
For seasonal businesses such as retailers, the cloud can provide additional server capacity as needed. “You scale up as you need it, scale back down when you don’t,” Arneson notes. All told, he believes that the cloud is particularly advantageous when it comes to “commodity-type services” such as e-mail. Office 365, Google Apps, and other providers can deliver services “consistently and reliably on a public cloud environment at mass scale,” Arneson says. “It’s a commodity-type solution, and can be managed across hundreds and thousands of customers. Therefore you drive the cost to the floor.”
Most people consider the cloud to comprise IT services that sit on the servers of providers such as Amazon, Google, and Microsoft, or the smaller data centers owned by IT consultants and service providers. In fact, “most businesses have a private cloud,” says Jim Griffith, CEO of Corporate Technologies, an Eden Prairie–based consulting firm whose data center hosts clients’ servers, applications, and offsite backup. If your company has five to 500 computers or one to 50 servers, “you have a private cloud, an IT infrastructure where your programs, resources, applications, data files are accessed by your employees,” Griffith says. A true cloud allows a company’s employees to access information from just about anywhere—workstation, mobile phone, or other device.
A private cloud typically offers less scalability and fewer cost savings than a public cloud. But a private cloud also offers something else—control. You can’t make changes to software that resides in the public cloud and can’t do much customization. Businesses also might have security concerns about storing their data outside of their own firewall, about how well sensitive information is protected. Arneson and other consultants note that highly regulated industries including health care, legal, and financial services prefer—and may be required—to keep the IT on their own servers.
And while some recent studies suggest that public cloud has 99.5 percent reliability versus 98.5 percent for the typical private data center, many companies remain skeptical. High-profile outages, notably those that Amazon data centers have experienced (most recently last June), also gives some businesses pause.
Griffith says that very few of his customers have migrated to public cloud computing. The majority still has at least some of their own IT infrastructure in place. After all, those customers reason, if we moved to the public cloud, we’d be left with unneeded servers and other assets that have very little resale value. Second, Griffith says, the migration of data and other IT to the cloud has significant costs of its own. “What we’re finding is with most of our customers, what they are interested in doing is keeping their existing IT infrastructure in place,” he adds.
Who’s in the Cloud
But private and public aren’t the only clouds in the sky. Arneson says that most of his clients are on a hybrid model, in which some IT services remain on premises, while the rest are “off-prem.” They keep some information and applications under their control, while cloud-sourcing less sensitive material.
“Probably the best success we’re seeing with moving things to the cloud is corporate e-mail,” says Tom Kieffer, CEO of Virteva, an IT consulting firm based in St. Louis Park. “We have many clients now that have looked at their aging Microsoft Exchange e-mail platform and just assumed it was time to buy new servers, new licenses, a new set of software from Microsoft, and hire someone like us to build the whole thing out for them.” For these clients, Virteva suggests using a cloud service such as Office 365. “Nine times out of 10, that’s what they end up doing,” Kieffer says.
Other clients ask Virteva to manage their existing Microsoft Exchange e-mail server environment: “It’s probably the number one thing that we outsource.” In most cases, Virteva moves the client to Office 365. “What people find is that they have a more robust, better performing, more highly featured e-mail platform than they probably had before,” Kieffer says, and an e-mail system that has backup and anti-spam protection built in. “The bad news for us is that it reduces our management fees dramatically,” he adds with a chuckle. Kieffer also sees another aspect of migrating e-mail out of a client’s premises: “It gets people comfortable that this cloud thing can really work.”
Karl Populorum, vice president of sales and marketing for RBA, an IT consulting firm with headquarters in Wayzata, tells the story of one of its large enterprise customers, a traditional manufacturing company with an aging IT infrastructure and 3,000 users worldwide. Instead of going through a major upgrade, the company migrated to the Microsoft Office 365 platform, which includes messaging collaboration and a variety of other applications. The company saved money by abandoning its out-of-date legacy platform and not having to maintain an e-mail server. Where the client had been “allocating all of these internal resources to be able to manage the servers, apply patches, do updates,” Populorum says, “now [it] can just buy that server in the cloud and have feature parity.”
Populorum also notes that while larger enterprises tend to be cautious about cloud computing and how much of its data and IT services to put there, “certain smaller customers, they’re just going to it,” he says. “They’re running their business in the cloud.”
Kieffer’s firm has worked with a number of startups that provide software as a service, and many of them have moved their operations to the cloud, “where they don’t have to worry about every time they sell a few more customers they have to buy another server.
“It’s very rare to find a new software company or a new web services company that isn’t starting in the cloud,” Kieffer says, since operating in the cloud means less capital to get going.
Are We in the Cloud Yet?
The one-size-fits-all nature of the public cloud, however, is another reason established firms remain cautious about it. “There’s not a lot of customization within the public cloud infrastructure because it has to be the same for everyone,” Arneson says.
For instance, many companies’ e-mail systems are integrated with billing, business, and communications systems—“literally right into their phone system,” Arneson notes. The more features and integration a company’s e-mail system has, “the harder it’s going to be to move that capability to the cloud.” Another example is an accounting program such as Intuit’s QuickBooks. Customized versions typically have more features than cloud versions. “You have to decide what you can live with to determine if it’s worth it,” Arneson says.
Populorum sees “a gradual adoption” of cloud computing, particularly the hybrid model. “But overall, there’s a macro trend where it’s accelerating, both because of cost and general acceptance,” he adds. He also believes that “the next big push” in cloud computing is collaboration and sharing information with internal and external partners, such as Microsoft’s SharePoint allows.
A bit like an actual cloud, cloud computing is still changing its shape. Arneson notes that “we’re still in this early-adopter phase”; vendors and products could change. With more players, prices will continue to come down. “Features and capabilities are going to be more robust in the future,” Arneson believes. “It’s changing for the better.”