Cloud-Sourced

I’ve been seeing huge movement towards cloud based services and I cannot begin to express how much this scares me as a consumer and why its even more concerning for the enterprise as a product offering. This post is my take on a discussion currently going on at the economist between a Microsoft Exec and the CEO of Salesforce.com.

First the Microsoft Definition:
•  Private Cloud: An internal service-oriented environment optimized for performance and cost that is deployed inside a customer’s datacenter. Powered by packaged server products including Windows Server and System Center family of products, private cloud provides compatibility with existing applications.
•  Public Cloud: Provided by service providers, public cloud offers customers the ability to deploy and consume services. In this category, Azure™ is a highly scalable services platform providing pay–as-you-go flexibility delivered from Microsoft’s datacenters.

Second the Salesforce Definition:
Cloud computing is a better way to run your business. Instead of running your apps yourself, they run on a shared data center. When you use any app that runs in the cloud, you just log in, customize it, and start using it. That’s the power of cloud computing.

Where I Stand on the Subject
I am diametrically opposed to what Microsoft calls the Public Cloud (which is just Salesforce’s definition of cloud computing) for the Enterprise except in the most trivial of applications. I’m more lenient of the cloud being used in consumer applications although I’m still opposed to it being main medium of storing my data, and being used to house personal information that I feel is sensitive. Additionally, anything I require substantial uptime for my personal use which I can conceivably get minus the cloud I’m in favor of.

What’s the Big Deal for Consumers?
Privacy – While there are some protections in place should your personal information be violated that doesn’t protect you from the fallout and the amount of time that needs to be spent cleaning up from a privacy violation.

Uptime – When you have everything on a computer its always available to you unless something is severely wrong with your pc (which usually would also ruin the cloud based service if you only have 1 machine anyways). The problem with the cloud is you’re on someone else’s schedule if they decide to take the site down for maintenance you’re out of luck. Also considering things like denial-of-service attacks or network outages you are almost assured to run into uptime issues at some point.

Speed – You can’t access the cloud at the speeds you can approach on your harddrive, while that may not be an issue for emails or word processing it does become an issue with things like High Definition Movies or large quantities of music and photos.

Data Integrity – If you don’t keep local copies you’re a slave to the retention policies of the service provider. Recent incidents like the SideKick fiasco create a clear concern of what can happen when you trust others to provide data backup and protection on your behalf.

What’s the Big Deal for the Enterprise?
Trade Secrets/Security – This is my favorite villain in this argument. If you’re accessing a service outside of your firewall you’re relying on someone else to implement an effective security policy. The problem with trade secrets is once they leak out you have little to no recourse on anyone who makes use of that information, sure you could sue your provider (unless your license agreement states otherwise) but that’s not going to get the genie back in the bottle.

Uptime – I’ve seen a service outage of a company that pulls in $200 million in revenues a year and it’s not fun. Doing the math their being down for 3 hours cost the company in all likelihood $300,000 in revenues. When you see numbers like that paying for your own servers and redundancy to secure uptime becomes a lot less costly.

Bandwidth Costs – Consider this if you move everything into the cloud just how much bandwidth would a company of 200 be generating? I don’t have the figures off the top of my head but this could be a sizeable cost and if you consider depreciating your in house assets you might find the variable cost of bandwidth usage exceeds the cost of the capital expenditures on equipment.

Conflict of Interest – Does the provider have the same goals as your enterprise? Having a always on service means there is a time when things need to be shutdown and cleaned up. While going to a 24 hour Wal-Mart at 3am you might notice restocking, you may see less checkers etc, and that’s ok because after all who is insane enough to go to Wal-Mart at 3am? Unfortunately, if you’re a successful cloud based service provider you have customers around the world meaning its always prime time somewhere. The worst possible scenario is a planned disruption in service that happens during your uptime as a business, and this is a likely occurrence with cloud services (see gmail and google docs going down during the West Coast prime time for 2 days in September).

Data Integrity – If you’re a business you have a disaster recovery plan/backup system (if not likely you won’t be in business very much longer). Here’s the question though, what is your cloud computing service provider’s backup system? I’m guessing most people can’t answer that question, and if you can its likely you’ve never seen it in action. This is a liability for a business that can’t be ignored and could even have legal implications depending on your business and what is cloud-sourced.

Control/Business Alignment – The great thing about having an in-house tool or hosted service is over time you can customize it to better fit your needs. Before jumping on the cloud bandwagon ask yourself if the hosted service you’re looking at is flexible enough to meet your needs.

The Private Cloud?
This is a product I can get behind it has the benefits people are looking for from cloud based services, but is controlled by the enterprise. I have always appreciated the server-side argument having dumb terminals that consume server based services but don’t store locally (provided the company has a solid IT staff and sufficient redundancy built in). The private cloud just expands upon this strategy by enable greater scalability for the private enterprise.

Not Without Benefits
I come across a little bit as one of those people up in the hills with a shotgun fighting the future I’m sure, but I don’t dispute that there are some attractive benefits to cloud computing. Things like scalability, remote access, cost reductions and simplifying your company’s IT environment. I also won’t dispute that cloud computing isn’t going to have a dramatic impact on the market-place; it has its market niche and can be a valuable service to some businesses.

Conclusion
In the end though I’m just not behind the transition to public cloud computing, put simply passing all my needs over to someone else is a bad experience. While I’m a firm believer on focusing on your strengths and bringing people in who can address your weaknesses in a corporation I do believe having people accountable within the organization is important to maintaining a solid foundation for the business.

Outsourcing is a reality and in some instances it does make sense, but whenever something ties directly into your core strategic strengths and product offering be very wary about how much you do outsource. The problem with cloud based services is they have a tendency to directly impact those strengths and offering and as such require heavy consideration before implementation.