4little1s.com and the Cloud

IT STRATEGY - IT RISK REWARD IN THE CLOUD

Disruptive Technology for consideration 101

The speed at which information technology has changed in the last twenty years is unbelievable. I can speak with experience of this, as I have worked in the IT industry for over twenty years now and have seen it unfold over the years. Right from the basic Personal Computer as an essential piece of business equipment, electronic mail and of course the Internet, the business community has always struggled to keep up. In some cases, has not kept up and made a last minute rush at the end.

Yet again, as during various periods over the last twenty years, we have another concept known as Cloud computing that is poised to have a significant impact on business. This impact we have the effect on business regardless of whether they are IT enabled or not.

Cloud computing is a general term for anything that involves delivering hosted services over the Internet. These services are broadly divided into three categories: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS). The name cloud computing was inspired by the cloud symbol that's often used to represent the Internet in flowcharts and diagrams.

The Cloud

Basically in Layman’s terms, the concept of the cloud is that any of businesses resources can be accessed over a communal network that spans the world (i.e. The Internet). The concept is that regardless of location or device being used to connect to this cloud, you are able to connect to your resources with little or no hardware or systems locally.

The main business benefit behind cloud computing are as follows:

1. Scale resources
2. Dynamically match computing requirements
3. Utility based pricing model
4. Economies of scale

Scale resources

Depending on operational requirements, M&A activity or new market activity, cloud computing offers maximum capacity and flexibility due to the fact that services are not located locally as you are buying a Service.

Dynamically match computing requirements

If the business experiences peaks and trough cycles throughout the year, cloud computing offers the flexibility to dynamically increase or decrease processing capacity dynamically. A really good example of this being maybe the market you operate in is the leisure industry such as a cinema or a bowling centre. Clearly the school holidays will have a huge impact in terms of footfall at the location and also an increased level of online booking. Cloud computing offers the flexibility to do just that…..’flex’. Everyone knows that trending is not always 100% accurate and sometime there is a sudden boost in capacity, footfall, website visits etc. With the use of cloud computing, these sudden peaks can be accommodated on the fly.

Utility based computing model

In the same way paying for electricity, gas or telephone services is a pay as you go service, so it is with the cloud computing model. At home in the winter for example, you generally expect a larger bill given the fact that it is on more often. So it is with the cloud, the more processing capacity, storage used the more you pay. The good thing about this of course, is the fact that your costs are more predictable and easier to forecast. You end up being able to say to your Finance Director (FD) IT costs are x per month for the next twelve months !

Tell me more about software piece

At the most basic of levels, the result of cloud computing means no more having to invest in your own servers and data centre at your place of business. Instead you adopt a ‘pay as you go’ service model from a 3rd party. Another potential benefit is that you no longer need to buy software licenses for all your workstations but instead to ‘use’ software that still does the same job but you are accessing it via a web browser such as Internet Explorer, Google Chrome, Safari, Mozilla Firefox, Opera etc etc

Sounds interesting…tell me more

Moving to the cloud means that you have an alternative to high capital investments in IT and ultimately move all IT spend into Capital Expenditure (CAPEX). It means an end to the endless upgrade cycle for hardware and software that needs to be bought (or leased) every few years. With this commoditization of IT, the burden of paying for upgrades suddenly becomes the responsibility of the service provider and not the person who uses it (You). Technically your IT department would only need to roll out ‘access devices’ such as PC’s. However, instead of all the software that is normally installed on these devices, they would only technically require an operating system such as Windows, the rest would be provided to the end customer via the cloud. Clearly if you are a large organization or an international organization with PCs in different countries, the savings would be significant. That’s not to say smaller UK companies that maybe only have 200 or 300 PC’s there are not savings to be had.

IT roll out programmes are known to be expensive, time consuming and disruptive. Adopting this approach not only makes an organization more flexible it could potentially provide an edge in speed to market for example.

Is this just a phase and a passing FAD ?

Well the technology is still maturing and whiles the public cloud infrastructure is already well established there are still some systems organizations would feel ‘uncomfortable’ opening up into a public cloud. This is why a number of Hosting companies are investing time, money and effort in developing their own private cloud. Whichever way you look at cloud computing, it does offer huge economies of scale that would be a benefit to business. A consideration that will become more focused as the technology matures is the fact that as these locations grow with servers, it will become inevitable that competitors within the same sector and competitors could potentially share the same box or be neighbors. The term being used here is ‘multi tenanted. While the IT cloud companies will be able segment and encrypt these areas and ensure customers their competitors will not be able to see their data…….there is still the physiological element that will need to be overcome.

Below are some of the main players in the cloud arena:

Google
Amazon.com
IBM
SUN
Salesforce.com
Rackspace
Informatica

This is by no means a full list, just a number of names you will recognize and given they are investing in the technology should indicate we should pay attention.

So what about security then ?

Security of data is always a hot potato and regardless of how much security you put in place with passwords, encryption, physical security such as hosting in data centers that have ram raid posts, unmarked warehouses as not to draw attention to themselves, security guards, pass-cards, CCTV and so on and so on…….if you leave your laptop on the train or in the back of a black cab coming home, what’s the point.

The good news is that cloud computing moves the data away from us, away from the individual business location and into a more robust and secure environment that we simply couldn’t afford as a single organization.

Hybrid clouds – A combination of a private and public cloud.

Is this the end of the IT department as we know it ?

I think the dynamics will change but not to the extend that no IT resource is needed.
Savings to businesses maybe achieved by the ‘re allocation’ of skill level required onsite. Rather than having expensive skilled technical resource onsite for each customer, I believe the level of expensive technical resource required will decrease.

Companies will want to hang on to their bespoke and industry specific systems and probably host in the private cloud on onsite still. Business systems that cry out for going into the cloud are:

- Customer Relationship Management – CRM (See Saleforce.com model)
- Electronic Mail – Email
- Office Tools – MS Office, OpenOffice.org

These systems can quite easily become utility based in terms of usage.


What Happens to the Role of IT Directors in companies ?

The role will change from that of a deliverer of IT Systems into more of a utility broker of IT Services. A closer relationship to business direction and Board plans to ensure that moving IT systems into the cloud, complements the strategic direction.
There are risks associated with moving towards the cloud but I believe the potential returns a business can receive from doing so far out weigh them.


MOBILE DEVICES AND THE EXECUTIVE COMMUNITY – iPhone, Blackberry etc


As the executive becomes more mobile as the business requires, the more technically astute they become. This provides more of a security concern with respect to company data. Individuals are able to access data and take it with them more and more. The ease to leave a mobile device on a train or in a cab is no much easier and possible. This actually strengthens the case for cloud computing as in the data is not located or stored on the access unit itself, instead the data is safe in a data centre, and the access unit is expendable.

It is worthy of note that the current thinking from a recent Morgan Stanley report predicts that by 2013 there will be more mobile devices accessing the Internet than there would be laptops and desktop devices.

Trending

It is predicted that there will be a large business shift over the next five years to this model. The requirement to rate devices by how much memory, disk capacity, speed of disks, processor etc etc will become somewhat obsolete. The main requirement will be the speed at which one can access the cloud and your data located within it. This relates more to the networking requirement and infrastructure more than the access device connecting to it.

Clearly Wi-Fi areas in towns and cities that will provide access to the cloud will increase. The new 4G (currently 3G) wireless service as ‘always on – always available’ will be key to the growth in this area.

Note: As of today writing this article, 18th November 2010, I note the BBC have released news that the new 4G networks will be auctioned off in the first half of 2012 according to Ed Richards the current Chief Executive of Ofcom. This means the spectrum will be available in 2013. The auction will be for the 800 MHz and the 2.6GHz spectrum bands. Interestingly the 800MHz slice has been freed up by the switch over to digital TV, this will allow mobile signals to travel further and provide greater access to Broadband services to the more rural areas of the UK. This will be a great relief to businesses in these areas I’m sure. The 2.6 MHz band will be more useful in towns and cities where there is a greater demand for services.


Lets hope the treasury will enjoy the windfall, as the last auction for 3G which was auctioned off in 2000 raised a cool £22bn !

In summary, a web browser and a cloud could be all you need ?


4little1s.com is an online nursery furniture, baby bedding and baby gifts retailer located at www.4little1s.com .You may wonder what on earth is an online baby retailer writing such a long article all about Cloud computing ? Well we run our business on the cloud computing model and it is a core part of our business strategy for us. Secondly, I enjoy writing about cloud computing ! You are welcome to copy this item if you wish, but I would ask that you provide a link back to our website (www.4little1s.com) as a token of your appreciation.

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