The Great Cloud Debate
May 11th, 2010 by Ryan Meyer
In response to Alliance Technology’s recent newsletter article in cloud computing, and the brief Twitter debate between Dave Weis at Internet Solver, IP Pathways, and Theron Conrey at LightEdge, I bring you the Meyer Technology Group opinion.
First we must differentiate between the enterprise cloud and the SMB cloud.
Enterprises are moving their servers to the cloud and buying cloud computing. In whole or in part, they are still managing and maintaining the services that are hosted.
The SMB cloud discussion is based on services in the cloud. Not only are these hosted services, they are managed services, maintained by independent companies.
With that distinction made, neither of these approaches are really the revolutionary paradigm shifts they are made out to be. Enterprises have long ran mini datacenters (computer rooms) within their own building; moving to a shared building isn’t a huge leap. The micro SMBs have used hosted POP3/IMAP email for fifteen years.
Most of the current discussion is based on the latter, although it overlapped in Alliance’s newsletter in the migration paragraph. The SMB and mid-markets are increasingly interested in hosted services to ease their IT burden and cash flow. There’s also a great deal of concerns about the cloud, both business management concerns and IT concerns (another distinction often worthy of making).
The most common hosted service is Exchange email. This is probably in large part due to the history of hosted email. (of course, management often fails to realize that Exchange is more than a pass-through email service and that their emails are actually stored in the cloud and *not* on their own machines, but I digress.)
But hosted Sharepoint and document management services as well as hosted line-of-business applications and databases are the meat of the cloud computing debate.
Why should I buy, license, install, configure, maintain, and repair a CRM server when I can pay salesforce.com $500/month?
The most common criticism is indeed data security. As Alliance pointed out, aggregate security requirements may overwhelm your own. And cloud services will readily boast their security measures and compliancy. But ultimately business owners are weary of these claims. While they are usually weary of their local IT provider or IT staff – simply because they have no way of verifying the claims themselves – the impersonal nature of most cloud providers only serves to further exasperate their fears. The same can be said of data retention, disaster recovery, and so on.
While I don’t believe tangibility is a concern — most businesses would like to free up extra closet space — I suspect lack of visibility is a very real concern. Downtime seems longer and more severe without frantic technicians running around the office. (Of course, this could be partially alleviated with good customer service. But one of the efficiencies of managed services is a central helpdesk – presumably one that doesn’t keep enough techs on duty to handle a flood of “it’s down” calls. (And a ticketing system will surely be insufficient for the client at this time of disaster and crisis!))
While these concerns are mostly perceived, there are some concerns which are very real.
Data migration and data for ransom! There is a national retail franchise that is currently in court with their previous SaaS provider. They felt that their contract was not being fulfilled by the software company due to significant feature delays. The software company argued scope creep. The retail company found an alternative company and gave notice of intent to dissolve the contract. The software company, at that point dependent upon the retail company, refused to provide the client database unless the contract was paid off. Last I heard – each franchisee was *printing* their store’s database from the SaaS web app and re-entering it manually into their new software. Surely this is a complex legal issue, but a worst case scenario for most businesses considering the cloud.
Shared data security. Even with a secure and compliant hosted service, a simple programming glitch may expose your data to your competitors. While a programming flaw in an application on your server might expose your data within your organization, a programming flaw in a hosted application could expose your data to other users of the application… often your competitors!
Verdict: Cloud is a buzzword. The technology is not ground breaking but is definitely going to be increasingly utilized. Expect hybrid cloud and on premises solutions. Completely hosted IT will be the future for some, but will never be for everybody.
Starting from the top, you split out Enterprise cloud, and SMB cloud. You then equate these differences as services vs. servers.
The line can’t be servers vs. services, as enterprises of EVERY size manage application stacks on top of the physical (and virtual) layer that is both internally and externally present in their environment.
Email, sharepoint, file management, line-of-business applications, databases, VoIP, whatever, are all just applications or services running on infrastructure.
If I can add a virtual shim in between these applications (and OS) and the infrastructure it runs on, and then dynamically expand the resources when needed, when they require them, maybe even provision new resources, this is another value add of a virtualized environment. This isn’t Cloud though.
The SMB rarely has the scale to leverage all of the features, as well as the scale required to quickly deploy additional resources, to make this a financially sound venture, but large enterprises, and service providers do. This will be the first divide, the private and public clouds. We’re already seeing it. EC2, vCloud Service Providers, and others, are building environments to leverage shared resources, in a multi-tenant environment, leveraging scale of resources to overcome purchasing power of the SMB, to leverage enterprise level functionality. The enterprise, like MMC, the company I just left, is also making steps to roll out massive scalable internally oriented clouds, with their customers their internal assets.
When it’s all said and done, if there is no competitive strategic value of a function, why is the SMB doing IT? Most don’t manage their own PBX platform anymore, but leverage a managed service (hosted VoIP, quest, mediacom), and you can see that this has now become more of a commodity offering.
How is buying hardware, managing an OS, loading software, doing backups internally, recovering, managing hardware contracts any different? What strategic value does this provide?
Even backup software has moved over to the “service” catalog. Mozy is a great example of this. software and service bundled to the end user / smb to leverage a larger shared external infrastructure.
Servers, desktops, and other services aren’t any different.
A virtual server to load my custom “value add” application on, a managed exchange environment, a managed virtual desktop environment, a managed end to end VoIP solution. All easily scalable. On demand. This is the “cloud”.
Re: Data for Ransom and Data security. This argument is bigger than understanding what cloud is, a conversation I’d be glad to have. A short response though, It’s FUD. Go ahead and insert whatever conversation you have with your customers when you sell mozy here, and then add on what you do when you help a customer port a phone number.
Cloud isn’t a buzzword. It’s here.
When SMBs venture into the cloud, they are buying SaaS and managed services. Enterprises are still managing their own services — just using the cloud to replace on premises hardware solutions. This is the only distinction I was trying to make.
The rest of your comment reads in defense of the cloud, something I was not attacking. The data for ransom may be FUD*, but hosted LOB apps with shared databases is a very, very real security concern. But I digress.
Cloud is a buzzword; it encompasses everything from Mozy to EC2, Microsoft Exchange Hosted Services to co-loc servers. Which is why distinctions must be drawn when discussing the cloud.
As far as managed services and SaaS for SMB – which is what I was addressing – it isn’t the revolutionary future of business IT that we all must act on immediately!. It’s simply the direction computing is moving.
SBS businesses will integrate the cloud, but the benefits at the enterprise level aren’t necessarily worthwhile for them. And, most importantly, they won’t all be retiring all of their servers for a monthly SaaS bill any time soon, which is what they’re being told.
* it happens. and is more likely to happen with off-site storage. that’s all.