Cloudonomics

The cloud has been widely hailed as the way forward for businesses to manage their information technology requirements. No more will companies need to have on-premises servers requiring dedicated teams to keep things humming and support their users; no more lost business due to infrastructure being unable to cope with demand; no more lagging behind the software upgrade cycle. What’s not to like?

The cloud does offer many benefits. Scalability is important: the ability to cope with huge but short-lived peaks in demand, along with access to software and tech gear that wouldn’t be remotely cost-effective for small businesses to provide in-house.

But just how cost-effective is the cloud?  Joe Weinman, who leads cloud services and strategy for Telx, is among industry experts looking beyond the hype. Weinman turned his research into a book called Cloudonomics: The Business Value of Cloud Computing. The conclusion: the cloud is not necessarily a panacea.

“There was a lot of simplistic thinking going on about what the cloud means to business,” says Weinman, a scheduled speaker at the Dublin Web Summit. “I found myself disagreeing with perspectives that were out there.”

It was a mix of orneriness and the math that led him to write the book, says Weinman. “Rather than just waving my arms around and saying, ‘cloud is good, cloud will take over the universe,’ I am saying ‘but why is it useful and when is it useful?’ I want to apply a bit more rigour and a little less marketing hype.”

Ed Byrne, the CEO of Cloud Vertical, a Dublin-based cloud analytics consultancy, agrees that the business benefits are overhyped. He points to a dearth of tools to help businesses work out how best to implement cloud technologies. “What is lacking with the cloud is transparency, awareness, accountability and reporting,” he says.

Further, businesses often don’t know what they want to get out of the cloud, which makes it difficult to build a business case. “No one person in the enterprise is ever always responsible for moving to the cloud. Sometimes it’s the CIO; sometimes it’s the CFO.” This means that the drivers for the decision can be different – they can be led by an IT need, or by a financial need, and the two can be mutually exclusive, says Byrne, another scheduled speaker at the Dublin Web Summit.

Rob Bamforth, an analyst with Quocirca, points to the need for all areas of the business to be involved in decisions to move operations out to the cloud – or to keep them in-house. “It needs to fit in to the broader strategy,” he says. “Where is the business going? What other technologies might that encompass? It has to be a shared discussion – it shouldn’t be about the business going off and doing its own thing and leaving the IT department to pick up the pieces.”

Gartner’s Hype Cycle for Cloud Computing 2012 report concludes that companies that focus on a very specific strategy and look to cloud-based technologies to accelerate their performance get the most out of the technology. Starting with a strategic framework of goals and objectives increases the probability of cloud-based platform success, the report says. Those enterprises that look to cloud platforms only for cost reduction miss out on their full potential. Bamforth points out that there’s “a difference between immediate and short-term cost savings and long-term cost savings.”

And businesses are rushing to the cloud without looking closely at what the benefits to their business might be. “You have to take a pragmatic view and not get caught up in the rush,” says Bamforth. “As with any technology, you have to ask what the business rationale is, and what it’s going to achieve.”

Demystifying the cloud by stripping away the jargon and explaining its benefits in more accessible analogies is the first step in encouraging people to think more clearly about the business case, says Weinman.

“According to my logic, the first cloud dates back to the Romans,” he explains. “Roman roads were the information superhighway of their time: they were used for fiscal and utility transport. Aqueducts performed content delivery.”

Weinman’s work has led him to focus on the hybrid cloud as the most cost-effective model for many businesses. Tech consultancy Gartner defines the hybrid cloud as service provisioning and use across a mixture of internal and external cloud services. Roughly translated, this means co-ordinating on-site capabilities with additional capacity or services when they’re needed, or paying for the provision of rather than access to services. In other words, don’t toss all your in-house gear. Mix and match.

“People would semi-politely tell me I was a moron when I told them the hybrid cloud would win out,” says Weinman. But Byrne concurs that this approach is cost effective for small businesses. “It doesn’t make sense to be 100% in the cloud if you’re a small business with a static workload: the cloud is not cheap for those businesses,” he says.

Bamforth of Quocirca agrees. “It’s highly unlikely that most organizations will go for a totally cloud-based model. Most will end up with a hybrid model.”

And, stresses Bamforth, it’s key for a business to understand what it is doing with a move to the cloud, and why. “You need processes for managing it, and you need to understand the rationale behind what you push out to the cloud and what you keep inside your business.”

The cloud is an exciting development in technology, but it’s becoming clear from the work done by Weinman and the analysis done by experts such as Gartner and Quocirca that it’s by no means the panacea it was first touted to be.

Says Bamforth: “Every vendor has got some marketing message about the cloud, and that’s not helpful. You have to take a pragmatic view and not get caught up with the rush.”

 

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