By Tim WeberBusiness editor, BBC News website
Cloud computing is taking off on a massive scale, so what should companies look out for as they move their information technology into the cloud?
Cloud computing is not just a buzzword anymore. If 2010 was the year that cloud computing went mainstream, then 2011 will be the year that companies have to get their cloud strategy sorted.
At its most basic, cloud computing is "just another word for something that’s been going on for a long time – the internet," jokes Rowan Trollope, in charge of cloud services at web security firm Symantec.
In reality, though, cloud computing is a fundamental change of how we – companies and consumers – use computer technology.
Cloud computing is the delivery of computing power over the internet. It turns software into a service where customers don’t pay for a licence but for how much they use; it makes computing power and storage space a commodity, bought when needed and scaled up when necessary.
The cloud is such a "major technology disruption" that the new chief executive of computer giant Hewlett Packard, Leo Apotheker, has decided to refocus his whole company around a cloud strategy.
The early adopters are both the very big and the very small beasts in the corporate world.
"This year, especially for service providers like big telecoms companies, there is an extraordinary rush underway to deploy and go live with their cloud offerings," says Bob Beauchamp, CEO of BMC Software, a firm that helps large companies to build their own cloud solutions.
"The people who are most keen are those who see new revenue streams," says Mr Beauchamp.
One telecoms boss told him that "time is of the essence, we must hurry and get our cloud offering out because the market is very competitive, and we don’t want to be late to the market."
Not everybody is quite ready yet. Many manufacturers, says Mr Beauchamp, haven’t even started to think about their cloud strategy.
Many established small and medium-sized firms don’t even know what the cloud is, reports Martin Leuw, until recently chief executive of Iris Software Group.
From zero to server in 30 seconds
Ironically, small firms would be best placed to take advantage of the cloud. Indeed, it is usually start-ups that are seizing the moment.
After all, information technology is costly. It requires capital expenditure – for servers, software licences – and a team to maintain it all.
Cloud will ultimately become the prime architecture to deliver IT services”
Bob BeauchampBMC Software
And it is slow. "Twelve years ago, it took a company six to eight weeks to commission a server," says Lanham Napier, chief executive of Rackspace, a webhosting and cloud services company.
Putting your IT into the cloud allows "you to have a new server in 30 seconds, and to innovate and grow faster," he promises.
But going into the cloud is not without pitfalls. Companies have to think strategically how to "enable the cloud, get the road map, embrace the implementation and work out the security dimensions," says Nick Coleman, in charge of cloud security at IBM.
The price of cheap
The global economic crisis is helping with cloud adoption. Big IT providers report that customers’ budgets are so squeezed that there’s a huge reluctance to invest. So finance directors hope that moving to the cloud allows them to replace capital expenditure with operational expenditure.
Getting your IT from the cloud may be cheap, but it comes at a price: standardisation. Using the cloud means opting for off-the-shelf solutions.
There will be no, or hardly any, customisation. On the upside, instead of having the same big, pricey software package for everyone, your staff should be able to select smaller and cheaper applications with the functionality that is just right for them.
The cloud is also the perfect answer to the surge of corporate mobility. Workforces are becoming ever more mobile, while staff – from the chief executive down – carry smartphones and tablet computers, and expect that they can use them to access their work files everywhere.
Old school IT systems don’t cope with that, but attempts to force users to comply with old IT rules are doomed to fail, says Rami Habal of Proofpoint, a web security firm. "Users will revolt instead of going through the normal IT channels," he says.
Using cloud services saves companies from building the expensive infrastructure to support mobile solutions.
Most companies pay good IT money for little return. Their servers usually run at 15% to 25% of capacity at most.
Shifting the computing workload to a cloud provider is more efficient. Companies like Rackspace or Amazon run their cloud servers at 75% or even 90% of capacity. That’s both greener and cheaper.
More importantly, extra storage or computing power can be switched on in an instant, and it is this agility and scalability that persuades most companies to venture into the cloud – even more important than cost, according to a survey by Gartner, a technology consultancy.
Not all clouds have been created equal, though. Asking for a cloud solution is like asking for a "vehicle" instead of specific type of car.
Moving into the cloud is a cultural shift as well as a technology shift”
For starters, there are public cloud solutions that deliver a service, but you won’t know in detail how it is delivered. "The public cloud is a really cheap place to do business," says Dave Coplin, until recently the chief technology officer of Microsoft UK.
Big companies, however, often feel queasy about sharing their IT service with other companies. They want the "commercials of the cloud", paying only for what they use, but stay in full control as well, says Nick Wilson, the man in charge of Hewlett Packard in the UK and Ireland.
The solution is private clouds, where companies know exactly where their own software and data are, maybe even down to the server racks dedicated to their computing.
Realistically, though, most established companies won’t even go that far and opt for a hybrid cloud instead, where a private cloud solution is closely integrated with a company’s legacy system, says BMC’s Bob Beauchamp.
As companies phase out these old systems, "cloud will ultimately become the prime architecture to deliver IT services," he predicts.
Cloud enthusiasts like JP Rangaswami, chief science officer at Salesforce.com, one of the earliest firms to bet on the cloud, wants companies to ditch their legacy systems much faster. "It’s the sunken cost fallacy," he argues, where IT departments feel more comfortable supporting old mainframes and enterprise software instead of supporting their company’s business strategy.
The cloud check list
Still, even the biggest cloud cheerleaders counsel companies to compile a thorough checklist.
The starting point for any such list will be a self-examination, because one size won’t fit all.
Nick Coleman at IBM reels off a long list of vital questions: How much management do your data or applications need? What’s the right measure of security for your company? Where is the workload? Which data are sensitive, which are not? Do you have specific regulatory issues like audits, compliance and privacy?
"Map your company’s IT needs early for the right cloud strategy. In a start-up, the source code might be really sensitive; for others it is not a core issue. Ask yourself what you should put in the cloud," says Mr Coleman.
"Think of the cloud as a tool, an enabler, you have to think about what you want to have as an outcome," says Microsoft’s Dave Coplin. For one company, security may equal reliability; for another it may be the safety of the data.
Rowan Trollope at Symantec has six tips for companies moving into the cloud:
- Check out the reputation of the service provider: How long have they been offering cloud services, bearing in mind that size isn’t everything; many big companies are piling into the market but don’t know what they are doing
- Security is key. Really understand how secure your data have to be, and ask the vendor how they would solve your security problems
- Investigate how the cloud provider makes back-up copies of your data, how you can move the data to another provider, and what happens if the provider goes out of business
- Work hard to get a good service level agreement with clear financial penalties to ensure a good service.
- Be wary of industry certifications, because they capture just a moment in time. Do your own research on how the vendor is performing
- Finally, try the service. The beauty of cloud computing is that it’s easy to switch on and off. Obviously don’t start your cloud adventure with confidential data or mission-critical systems, but if the service works for you, you can expand.
The experts at Gartner counsel their customers to "put a small [cloud service] in place first and see what unexpected behaviours happen."
"The risk is in allowing that small private cloud to grow faster than your organisation, people, and processes and business model changes can handle it."
Companies have to understand that cloud computing is more than an IT deployment. "Moving into the cloud is a cultural shift as well as a technology shift," says Microsoft’s Mr Coplin. "People lose some flexibility, but they get scalability and power in return."
For IT departments, and especially the chief technology and chief information officers, it requires a rethinking of their roles, away from operations and towards business strategy.
Moving to the cloud also results in new challenges. To "onboard" a new employee – putting them on the HR system, sorting their payroll, giving them access to the company’s customer relationship management software, providing mobile access to the corporate IT etc – may involve half a dozen cloud services.
All this needs to be tied together, so that one click can enable all cloud services, says Bob Beauchamp.
IT service providers like Infosys of India have identified this as a big business opportunity. Chief executive Kris Gopalakrishnan believes that companies moving into the cloud will soon require a "cloud aggregation service" that integrates the patchwork of cloud services with a company’s core IT systems.
Clearly, these are still early days.
There are no fully established policies that rule the behaviour of data and applications in the cloud.
Cloud-to-cloud communication is still a big issue, says Mr Beauchamp, although he predicts that soon they "will be able to interoperate".
At Rackspace, chief executive Lanham Napier even describes cloud technology as "still a little bit immature, but progressing".
JP Rangaswami at Salesforce.com, meanwhile, calls for the adoption of10 simple principles for cloud service providers – ranging from data portability and transparency to security breach notifications.
Then there is talk of IT becoming just another commodity, with spot prices for storage and computing power.
John Manley, in charge of cloud computing at HP Labs in the UK, says that "we are in the foothills of cloud computing and going towards Mount Everest".