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SPECIAL REPORTJULY 2010Cloud ServicesDeepDiveCreate your own cloudcomputing strategyCopyright © 2010 InfoWorld Media Group. All rights reserved.Sponsored by

iCloud Computing Deep Dive2Running your business inthe cloudsLook closely at your IT needs and limitations before you determine which cloudservices are right for youi By David S. LinthicumTHE HYPE ABOUT CLOUD COMPUTING wouldlead you to believe it supplies the “magic beans” we’veall been waiting for to fix our past and future mistakes.But the truth is, rather than introduce elaborate newtechnologies or solutions, cloud computing tends to concentrateon changing the way we consume them.Cloud computing refers to an almost infinite varietyof services, from browser-based spreadsheets deliveredby Google to the computing infrastructure for a 48-houractuarial calculation. To fall under the rubric of “thecloud,” these services must have several characteristics.First, cloud services must be self-service: If you can’tgo to a Web form, set up an account, and start provisioningthe service you want, then it’s not a cloud service.Second, cloud services must scale transparently: If youneed more horsepower, you needn’t worry about provisioningphysical servers, because a virtualized serverinfrastructure reallocates virtual machines as needed.Along the same lines, that infrastructure is shared—differentaccounts use the same pool of physical servers andstorage, with secure logical boundaries to protect data.Some large companies have the resources to buildcloud services themselves—the so-called private cloud.But if small and medium-sized businesses want cloudservices, they must rely on the public cloud: subscriptionbasedor pay-per-use services that, in real time via theInternet, extend IT’s capabilities.TO CLOUD OR NOT TO CLOUDCloud services sound attractive, particularly if yourresources are limited. You don’t need to pay up frontfor software licensing or server hardware, so you’re facedwith operational expenses rather than capital investment.Increased business agility may be the biggest payoff.Using the variety of cloud computing known as SaaS(software as a service), for example, you can decide toadopt a sales management system at 8 a.m. on Mondayand be up and running at 9 a.m. the same day. Applicationsthat would typically cost hundreds of thousands ofdollars to select, install, and deploy can be had for lessthan $100 per month, per seat.The same nimbleness applies to storage, compute,and even application development and testing. In manycases, the cloud provides an agile, cost-effective alternativeto purchasing, installing, and configuring your ownhardware and software. As your business changes, youcan change IT along with it using cloud-based systemsthat have little to no deployment latency.Such agility can directly enhance a business’s ability toenter new markets. The potential to scale capacity andprovide access to new services on demand can providea clear strategic advantage. Small businesses typicallydon’t have a great deal of cash for IT. When you avoidcapital expenditures, you lower risk and free up moneythat can be used to grow the business.But switching from internal IT to the cloud has itsown risks—not the least of which is switching itself. Thereare always hazards when changing your technology.These include not meeting the scalability requirementsof the business, opening up security issues, or adoptingnew cloud-based systems that do not meet expectations.For instance, some businesses have found that certainSaaS applications suffer from performance issues thatcan affect productivity.Then there’s the lock-in problem. When you movedata and applications to a cloud provider, it may be hardto move to other cloud providers or back to an on-premisesinfrastructure. This problem arises because manycloud computing providers, in their haste to get to market,use proprietary mechanisms to deploy applicationsI N F O W O R L D . C O M D E E P D I V E S E R I E S J U L Y 2 0 1 0

iCloud Computing Deep Dive3and store data. You may discover you don’t like yourcloud solution, but it may be too difficult or costly togo elsewhere.Another point about cost: In many instances, cloudcomputing providers are actually more expensive thanon-premises systems when you look at overall costsacross a long period of time. Amortized capital expenseslook great in the out years; on the other hand, pay-peruseor subscription fees always rise and may jump whenusers adopt tantalizing new extra-cost features.Finally, you need to consider compliance. There aremany regulations about how data, such as patient dataand financial data, is stored, protected, and managed. Forexample, in many European countries it’s illegal to sendsome financial data outside of the country’s borders, soyou need to make sure your cloud computing provideris not replicating to remote data centers. Moreover, thereare very strict laws about the management of patientinformation. If data is mismanaged and not secured inthe ways as specified by the law, you could find yourselfin a great deal of hot water.DECIDING WHICH CLOUD SERVICESTO ADOPTBy itself, the question of “moving to the cloud” makes littlesense. What exactly do you wish to move and what are thespecific risks and rewards? And if a cloud solution seemsattractive, you must always compare it against the equivalentlocally installed solution, whether ERP or email. Finally,when you choose to adopt, best practices in each functionalarea can help ensure a smooth transition.ENTERPRISE APPLICATIONSEnterprise applications are the low-hanging fruit of cloudcomputing. These SaaS applications provide an affordableway for small businesses to reap the benefits of high-endenterprise software, such as ERP and CRM applications,which would otherwise require installations costing halfa million dollars and up if the customer licensed the softwareand deployed locally.The classic example is Salesforce.com, which was apioneer in SaaS and has been one of the leading players inCRM for years. But today, you can find robust SaaS applicationsacross all enterprise software categories, from ERPto SCM to asset management. All of these apps delivertheir functionality through a browser-based UI—just asmost locally installed enterprise apps do today, so the userexperience is quite similar.The practical difference is that SaaS providers shoulderthe burden of deploying and maintaining the software,servers, and storage instead of the customer. Often, theprovider charges some minimal up-front fee for provisioningor migration, but thereafter, the customer payson a subscription basis, typically per seat. Set up the useraccounts and you’re ready to roll.Enterprise SaaS providers push out updates on a regularbasis, so all customers get the latest functionality withouthaving to go through the pain of upgrading locally. At thesame time, customers can typically configure their applicationsto adapt to their needs, and within certain restrictions,those customizations still function when updatesoccur. In addition, many enterprise SaaS providers haveopen APIs, so customers can develop extensions to thecore applications.But cloud-based SaaS applications are still applications.When selecting any software, you need to consider yourrequirements first and then evaluate the applications thatare available, whether on demand or installed locally. Considerthe costs associated with these solutions across afive-year span.BEST PRACTICE: Understand your core requirementsand the cost/benefit trade-offs of adopting enterprise SaaSapplications in the cloud. Keep in mind that, over time, youmay pay more to a SaaS provider than you would pay forlocally deployed hardware and software.EMAIL IN THE CLOUDMost of us already have at least one email account inthe cloud—through Gmail, Hotmail, or Yahoo Mail—so email may be the easiest cloud computing applicationfor businesses to understand. In fact, many smallbusinesses already shun the hassle of maintaining mailservers and have chosen either free accounts or haveestablished paid, low-cost enterprise accounts with thelikes of Google or Microsoft. Even large organizations,such as the city of Los Angeles, have moved to cloudbasedemail to save millions of dollars over time.The enterprise versions of cloud email systems typicallycome with SLAs that guarantee 99.9 percentuptime. They also have much higher storage limits—and,I N F O W O R L D . C O M D E E P D I V E S E R I E S J U L Y 2 0 1 0

iCloud Computing Deep Dive4of course, get rid of those annoying ads. Moreover, theemail clients often integrate with other cloud-basedapplications, such as calendaring, document sharing, orbrowser-based office productivity suites.The core value of cloud-based email is to allow enterprisesto escape from the licensing costs of MicrosoftExchange Server—and from paying administrators tomaintain the company email system (sometimes a surprisinglydifficult task). There will still be some administrativeactivities required with cloud-based email, justno hardware and software to maintain.Part of the reason locally maintained email has gottenso difficult is the steady increase in requirements overthe last decade. Enterprise cloud email providers offerall the modern amenities: archiving, spam blocking, malwareprotection, and a range of compliance features. Ifyou have special compliance requirements, make sureyour provider—or one of its partners—can accommodatethem. Otherwise, you may have to stick with a mailserver in the back room.BEST PRACTICE: Understand your email needs andexamine all aspects of cloud-based email systems, suchas monthly costs, SLAs, the amount of administrative timerequired, and special features such as archiving and compliancefeatures.OFFICE PRODUCTIVITY APPLICATIONSOffice productivity suites from Google, Zoho, andothers—including most recently Microsoft itself withOffice Web Apps—provide free SaaS alternatives toMicrosoft’s venerable Office software. As with SaaSemail, enterprise versions of these apps are availablefor a minimal cost per seat (or, in Microsoft’s cases, aMicrosoft Office license).The real value of SaaS productivity applications is notin the apps themselves but in the collaborative possibilitiesthey offer. It’s actually quite useful to work on thesame spreadsheet or presentation in real time via theWeb with remote users. Indeed, entire companies relyon Google Apps or similar services, with employees nearand far collaborating as if they were all sitting togetherin the same room.But can SaaS versions of office productivity suitesactually replace Microsoft Office—or even its opensource clones, IBM Symphony and OpenOffice? Not ifyou want the full range of advanced features, nor if youwant complex Microsoft Office documents to be viewableand editable in all cases. That’s why most peopleuse SaaS productivity suites as a complement to MicrosoftOffice, not a replacement.That said, there is change afoot. Many companies aretired of the high licensing fees incurred by Office—andthe retraining demanded by Office 2007 rubbed manybusinesses the wrong way. As Google, Zoho, and othersadd features and enhance Office compatibility, somesmall businesses may seriously consider making the leapto the cloud, especially for employees with both lightdutyrequirements and a persistent need to collaborate.BEST PRACTICE: Consider the core business functions,the needs of the end-user, and the distribution of the team.DEVELOPMENT AND TESTINGWhen companies large or small discuss “using the cloud,”development and testing generally appear at or near thetop of possibilities. Organizations that build and deployapplications typically have huge hardware and softwarecosts that include maintaining development platformsas well as platforms for all aspects of application testing—includingperformance, integration, and stability.PaaS (platform as a service) cloud computing providershave emerged over the last few years to provideapplication development and testing services. AlthoughGoogle App Engine is the best-known PaaS player, othermajor players include Salesforce’s Force.com and Microsoft’sAzure cloud computing platform.Beyond PaaS, there are many IaaS (infrastructure asa service) providers that provide complete developmentand testing platforms on demand—typically open sourceenvironments. Again, the idea is that the cloud providersupplies the hardware and software development toolsas a service, typically replacing dozens of on-premisessystems and licensing fees.Why such an interest in development and testing inthe cloud? Mainly because these activities have a beginningand end point. In this day and age, you don’t wantto provision infrastructure for a temporary activity onlyto have that infrastructure lie fallow until the next workloadcomes along. Here, cloud computing’s pay-per-usemodel is particularly cost-effective.Determining whether your development andI N F O W O R L D . C O M D E E P D I V E S E R I E S J U L Y 2 0 1 0

iCloud Computing Deep Dive5testing project is right for the cloud is simply a matterof understanding your own requirements and selectinga PaaS or IaaS to match. From there, it’s rather inexpensiveto do a quick prototype to see whether the use ofcloud computing is practical. If you need to developin an environment that includes licensed software, makesure you take any potential costs for that into account.BEST PRACTICE: Consider the types of applicationsbeing developed and the testing requirements. Evaluateboth PaaS and IaaS solutions and make sure to do at leastone prototype before moving to the cloud.BACKUP AND RECOVERYUsing the cloud as a DR (disaster recovery) platform hassome clear cost and technology advantages. Those whoneed to ensure that their business continues no matterwhat—and must do so on a budget—will quickly learnthat cloud computing platforms (typically IaaS providersthat supply storage as a service) are prime contenders forinexpensive places to replicate data. These cloud-basedDR sites can be used as redundant data storage locations,for the simple backing up of files, or as hot standbysites, ready to provide the core location of data processesuntil the primary data center is restored.Like development and testing, DR is often high on thelist of cloud possibilities. Shared platforms, which chargeonly for the storage and compute resources that you use,are almost always cheaper than creating a remote DR site,which typically means paying for servers and data centerspace you’ll probably never access. Larger companies maybe able to afford their own DR sites, but for many smallerbusinesses, a cloud-based solution may be the only affordableway to engage in sound DR practices.The cloud provides a good alternative to both traditionalbackup and recovery services as well as use ofa geographically different site for those services. If youlose your data center due to a hurricane in Florida, yourcloud provider with points of presence all over the worldshould be able to keep your data safe. Also, you havethe option of building systems and managing data in thecloud to create a failover site should core on-premisessystems fail or be destroyed.When considering the use of DR with cloud computing,frame your decision in the context of your overall DRor business continuity strategy. The simple act of copyingfiles and data to the cloud is not enough to ensure success.The cloud is simply an inexpensive alternative toremote wholly owned systems, but all clouds—and theirability to support DR services—are not the same.BEST PRACTICE: Create a larger DR plan—don’t justjump into the clouds as a DR strategy. Make sure to considerthe reputation of the cloud provider, as well as securityand privacy.BUSINESS INTELLIGENCESmall- to medium-sized businesses typically can’t affordbusiness intelligence software licensing and infrastructurecosts. Here, the cloud is really opening up new frontiers.The core idea behind cloud-based business intelligence isto allow those shut out of big-ticket, on-premises BI systems(such as those from IBM or Oracle) to gain more basicbut nonetheless valuable business intelligence on demand.Many cloud systems provide the ability to managehuge amounts of data, well into the petabyte range,thanks to the cloud’s ability to leverage any number ofprovisioned servers—and through new approaches to“big data” management such as MapReduce using opensource products such as Hadoop.Suddenly, smaller companies can use massiveamounts of data to make business decisions, such as theability to plan for inventory levels based on tracking withspecific market indicators, or sales-by-this and sales-bythatreporting. The cloud lends itself to using intensiveresources for short amounts of time, and business intelligenceapplications fit perfectly into that model, allowingsmall to medium-sized businesses finally to understandthe true meaning of their data.All that doesn’t change the fact, however, thatobtaining a deeper understanding of your data throughbusiness intelligence typically requires specialized expertise—andpricey consulting. You’ll also need to select acloud-based database that can handle the amount ofdata you’re looking to mine and ensure that you havethe reporting and analysis tools you need to gain meaningfulinsight.BEST PRACTICE: Look closely at the features of thecloud provider when moving to business intelligence inthe cloud. Look at the “all in” costs, including the consultingtalent that may be required to get running.I N F O W O R L D . C O M D E E P D I V E S E R I E S J U L Y 2 0 1 0

iCloud Computing Deep Dive6IS THE CLOUD RIGHT FOR YOU?Or should the question be, is the cloud a good optionfor you, considering the nature of your business andthe limited ducats you’re able to spend? The cloud isbringing applications to smaller players who were onceout of reach, and it’s quickly changing the playing fieldin terms of who can access and utilize enterprise-levelcloud applications and infrastructure.There are other factors you need to consider as well,including how to synchronize data now stored in thecloud back into your on-premises systems. Most of thosewho move to the cloud will do so in segments, so integrationis going to be a persistent problem.Also, make sure to keep security, privacy, and performanceon your radar. Despite what the naysayers arespouting, these are typically easy problems to solve, butyou need to do some advanced planning.The best way to proceed is to understand your existinglimitations first and map that to the core needsof your existing IT solution. There is always somethingdesired that has not been affordable in the past,from CRM to calendar sharing. Now is a great time toreevaluate the affordability of those systems, given thenew opportunities in the cloud.Second, make sure to do your homework about thetrue ROI of using cloud computing for some of yourIT needs. Look at costs and benefits across a three- tofive-year horizon. That’s a good indicator of value. Incertain cases, cloud computing systems could be moreexpensive than on-premises systems, despite the cloudcomputing hype crowd telling you otherwise. The truthis somewhere in the middle, and it depends upon yourorganization.Finally, stay on top of cloud computing developmentsas part of your strategy. If no cost-effective solutions existtoday in the cloud, chances are a few will show up nextyear or the year after. Cloud computing is evolving rapidly,and cloud computing providers should get betterand cheaper as time progresses.Cloud computing is an evolution in thinking, technology,and the way we consume IT resources. There areno magic beans here, but some real opportunities nowand in the future, particularly for smaller enterprises thatcan’t afford big-ticket, in-house solutions. iI N F O W O R L D . C O M D E E P D I V E S E R I E S J U L Y 2 0 1 0