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Occasional Contributor II
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Occasional Contributor

"Should we or not adopt the Cloud? Does it really reduce IT expenditures?

What are its advantages / disadvantages versus in house IT? Is it the right choice for your business?

Many individuals/organizations are still trying to figure it out. So let’s review cloud strengths and weaknesses under different scenarios."

Cloud for Startups

2 startup companies A and B, in the same business field, are getting prepared in order to launch their operations and need to setup their IT environment. Each company is initially composed of 5 employees and is expected to hire 25 new employees within one year. Both companies will be using 2 main applications: email and accounting software.

Company A decided to purchase its own hardware, and had to perform the following actions:

  1. Dedicate a room to be used as a server room.
  2. Contact IT vendor(s) in order to
    1. Discuss the setup and design of the IT infrastructure and applications: high availability, hardware needed, number of current users and expected users in 3 to 5 years …
    2. Prepare the server room in terms of cooling, electrical setup, fire suppression …
  3. Finalize negotiations and contract(s) after choosing one or many vendors.
  4. Wait for Hardware delivery and setup/configuration of the environment to be done.

Company B decided to use the Cloud applications, and performed the following steps:

  1. Using a credit card, signed up for cloud emails and accounting applications for 5 users and configured both in a few days.

Advantages of company’s B approach versus company’s A approach:

  • Reduced time to market. Instead of wasting at least 2 months (if all goes perfectly well), company B needed few days to setup its IT environment.
  • No need to invest ahead. Traditional IT expenditure has been very capital intensive: Company A paid a considerable amount of money in order to purchase Hardware, software and other equipment and services. Acquiring capital for large purchases is difficult (especially for smaller organizations).
  • Using cutting edge technology and experts support. Company B is using the Cloud Vendor’s Infrastructure which is usually equipped with latest technology, highly available, Disaster Recovery included or easily enabled by paying small extra fees. Company B will get serviced by highly skilled experts.
  • Accessing resources when needed and as needed.
    • Suppose that the 2 companies in the first year did not hire new employees.
      • Company A have paid for extra hardware capacity which was not needed
    • Suppose now that the 2 companies grew in 3 years in an unexpected way and reached 200 employees with a large customer base
      • Company A might need to change or upgrade its existing hardware: a time consuming and costly operation
      • Company B will just need to purchase licenses for new users
  • Release IT resources which can focus on core business applications. Company’s B IT department will be able to focus on the strategic aspects of its role and business applications by minimizing time spent on maintenance. Company’s A IT will spend a considerable amount of time on maintaining the status quo.

Cloud for established and/or large companies.

The story here is different, since there are many factors that need to be taken into consideration and questions which must be answered:

  1. Do we need to move fully or partially our working IT infrastructure and/or business applications to the cloud?
    1. Will it reduce IT operational cost?
    2. Is it going to give us a strategic advantage over competition?
    3. Is it the right moment to initiate the move taking into consideration:
      1. Time and efforts needed
      2. impact on all departments, IT security, working processes and business workflows which will ultimately need to be altered
      3. other crucial ongoing projects which might be disrupted.
    4. Will systems/applications performance be impacted?
  2. Is it better to use existing infrastructure in order to deploy new solutions? or use the cloud ? In case the solution needs to interact with existing in house applications, is it going to be harder to fulfill this requirement?

There is no simple or single answer to each of these questions and each company will need to study thoroughly its options before taking any action.

Other Cases where the cloud can be beneficial

  1. Unexpected or variable load: Elasticity is an important characteristic of the cloud (check article What is the Cloud?) which allows supporting variable or unexpected loads. As an example, a company is selling online products, after an interview with the CEO on TV, a considerable number of users accessed the site online. Using the cloud the site will be able to cope with this unexpected load allowing for more revenue, while if the site was using traditional hardware it might have failed to handle the load and users will find themselves unable to purchase anything online due to the site becoming very slow or unreachable. Another example is a company similar to Facebook who has to deal with variable loads on a daily basis.
  2. Need for resources/applications for a specific period of time: A company which needs to develop a test environment or an application for a specific project can provision quickly the needed environment using the cloud. The environment can be released once the project is closed. Note that the company will only be charged for the time the resources where used.
  3. Noncomplex common applications: Some companies just need to receive/send emails or use software/application as is with no or minor modifications. These kinds of applications are easier to provision using the cloud.

Cloud pain points

  1. Confidentiality: It’s hard to guarantee confidentiality in general so how can you trust third party vendors for part if not most of your data, especially after the latest NSA spying scandals? Confidentiality agreements should be properly reviewed.
  2. Upper management & employees’ mentality: Change is hard and cloud supporters might face fierce resistance.
  3. Internet cost & quality: In some countries the cost of the internet is still too high making it really expensive to access and use cloud services. Internet quality is sometimes poor (high latency, packet loss …) which also impacts the interaction with some cloud services.
  4. Legal, compliance and Regulatory issues: Many articles discuss these issues. Check this article by Vic (J.R.) Winkler

While major efforts are being conducted towards the adoption of the cloud, many barriers still need to be addressed. Businesses should carefully decide whether or not to use the cloud by weighing the advantages and disadvantages.

Read more here:

Is Cloud Computing The Right Choice For Your Business ? | XchangeTech

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