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Cloud computing – a business introduction

Selecting Cloud Computing as an option for your business is less straight-forward than you might think.  The overwhelming bulk of writing on Cloud Computing to date has been marketing spin of little practical help to end-users.  DMW Group is bucking the trend with two articles: one that helps dispel the myths for business readers, and a second which gives technical readers some specific criteria to evaluate when considering using “the cloud”.

The IT industry is more like the fashion industry than it would like to admit.  New “inventions” come and go but in fact, they are mostly old ideas recycled and presented with a fresh twist.  Cloud Computing is one of the most recent recycled ideas. In this paper we’re exploring the basic business rationale for moving to the cloud, to help determine if and when it’s a trend that is worth adopting.

I wandered lonely as a cloud

Cloud Computing is this season’s “must-have” label. Because of this there’s no widely-agreed definition of Cloud computing; vendors stretch the meaning to ensure they are “on-trend” and continue to get exposure. Thus hosting companies, software-as-a-service (SAAS) organisations and infrastructure vendors all become Cloud Computing providers.

At its most basic, Cloud Computing is the supply of computing power over the Internet. Usually there is also the notion of ‘elasticity’ – that is the ability to flex the amount of power required (up and down) on demand, and only pay for what is used. This was previously known as utility computing, as there are parallels with the way electricity, gas & water are supplier to the consumer and billed, and is now sometimes referred to as Platform-as-a-Service (PAAS), Amazon’s EC2 being a prime example. Some definitions (and providers) then add software onto the compute platform and offer hosted services. These services can vary from office tools (e.g. Zoho or Google Docs) to hosted exchange email services, through to specific business applications such as Salesforce.com or MySAP.com, offering CRM and ERP solutions.

Every sliver lining as a cloud

Assuming you don’t just blindly follow trends, you will need to assess whether Cloud Computing would be useful for your business. It is worth asking a couple of simple questions to ensure it’s not another technology solution looking for a problem:

  • Why should I consider using the cloud?
  • What could I use the cloud for?

Why should I consider using the cloud? 

Many businesses or IT departments are facing at least one of the following pressures:

  • Cost-reduction challenges (especially challenges on capital expenditure)
  • Focus on operational efficiency
  • Headcount pressures
  • Initiatives to decrease time to market
  • Space, power or cooling constraints in existing computing facilities
  • Environmental policies (such as the impact of maintaining datacentres)

Cloud Computing should be used to complement existing in-house IT resources, to solve genuine business need and most importantly of all, when it makes financial and business sense to do so.  Hence your goal in moving to Cloud Computing for one or more services should be to achieve the reduction of at least one of the following:

  • Capex spend (or at least, the transformation of much of it to Opex instead)
  • Operational costs of supporting your current systems
  • Ongoing support & maintenance overheads

Some shrewd and forward-thinking IT departments may wish to use the introduction of Cloud Computing as a mechanism for creating a more robust recharge model for many of its existing services in the form of a fixed service catalogue for computing resources.

What could I use cloud for?

Although Cloud Computing is slowly being adopted throughout the IT industry, unusually the greatest take-up is by consumers.  Many consumers use some form of web-based email, without realising that their inboxes, and the associated infrastructure, reside in the cloud.  Cloud Computing services targeting consumers also include “to-do” lists, photographic galleries, back-up solutions, web-based office productivity suites, and complete cloud-hosted virtual desktops.

For a first foray into the cloud, you should assess any services currently provided and supported in-house which are:

  • common-place
  • non-strategic, ie. do not offer any competitive advantage
  • expensive to maintain in-house

Services which meet the criteria above may be offered by cloud providers who can pass on some benefits of scale. Likely conclusions include start your cloud adoption at the platform or infrastructure level. For application candidates, email can be a good place to start as there are already a lot of providers in the market, so service and pricing is competitive.

Other application candidates may need to be further assessed by your technical team using a number of dimensions. These are discussed further in our technology paper.

Read our technology paper: “implications of moving to the cloud” for a more in depth discussion of what to consider when migrating services to the cloud.