Cloudy (Computing) Days are Coming

By Mike Scheuerman

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There are a few coalescing trends that will make the next few years very interesting. One trend is demographic: there is a new generation of folks coming into management that is very comfortable with technology since they have never known a world without it. The members of this group view technology as a given. Like electricity, they don’t notice it’s there until it’s not and even then they expect it will be back on quickly.

A prime example was the most recent outage that Blackberry suffered in 2009. There were a lot of people who were shocked because they didn’t really know where their email came from―it just showed up. The howls of the addicts who couldn't get their constantly connected fix for a few hours was heard far and wide. These nascent business managers use and trust the utility that the Internet provides. They also assume that it will always be there when they need it.

A second trend is the rise of the massive data center with thousands of CPUs and petabytes of storage. These data centers are driving the cost of computing to new lows. This commoditization of basic information processing capability is driving the purveyors of software application systems to forgo building and maintaining data centers. It is easier and cheaper to let someone else deal with the vagaries of demand and capacity. The massive data center is becoming the computing utility company.

Building on the second trend is a third trend that is giving rise to services that provide business process functions through the Internet. This is generally known as Cloud computing or software-as-a-service (SaaS). Today, the services are still a bit sparse and don’t provide all the pieces that you need to run a business. However, the breadth of services available is growing daily. It won’t be too long before you’ll be able to get and/or assemble a complete set of business processes via the Internet. The cost of these services is typically lower than the traditional method of buying, installing and maintaining a set of servers, networks and applications software. Even today with less functionality than traditional applications, these service providers are garnering customers who don’t need, want or can’t afford a full system. This makes Cloud computing look like a classic disruptive technology.

So, where are these trends leading? The subtle yet more radical change will be in the way businesses develop and deploy business processes. The new business owner/manager wants to conserve cash but still needs robust and scalable business processes to grow. These managers recognize that generic business processes add no significant business value. Given that, they will cast about for a solution that provides them with the necessary functionality at the least cost. They will likely, in time, find that solution in the Cloud.

Cloud computing is going to become the default way for businesses to implement and maintain common business processes. Business managers are beginning to take a critical look at what they are spending on "standard" business processes. They are looking at what it costs to acquire and maintain the software packages that automate the day-to-day busy work of the business. They are looking at not only the out of pocket costs but also the opportunity costs associated with lost focus on business strategy and goals. This rethinking of how to value the generic business process is leading to a different paradigm of business operations. In this new world, the basic business processes will be purchased on an as-needed basis.

Since there are very few software applications, if any, that provide competitive advantage, the application of the technology in unique ways that support the business strategy will be the path to competitive advantage. Just as electricity is used to drive tools that manufacture unique and desired products, the information utility will provide the power for businesses to produce the unique services and products that their founders envision."But wait," you say, "what about data integrity? Control? Ownership? eDiscovery? Availability? Depending on the public Internet to run your business?"

All of these supposed roadblocks don’t change the fundamental business case for moving toward a business model that doesn’t include an in-house IT infrastructure.

If you look closely at these objections you'll realize the vast majority of businesses don’t have a decent backup plan nor do they have business continuity plan in case of disaster. This makes the data integrity issue is a red herring. The integrity of the data is actually better when it sits in a professionally managed data center. If the business owner thinks he has control of his systems, he is sadly mistaken. The IT people control the systems, and the software manufacturers control how systems work.

As to the availability of systems that are Internet based, most businesses have access to broadband communication services. Those services are generally as reliable as the electric utility company. So, if you lose power you will probably lose your communications service. However, if you are using the Internet, you may still be able to use a wireless link on a laptop to access your data because the data center where your data is stored has power backup systems. Depending on the public Internet is no more dangerous than relying on the phone company or the gas company to provide needed utility services and your business relies on those entities every day.

Are these objections based on reality or the perception that using the Cloud services is so new that no one really understands the risks? The latter is more likely the case. New, disruptive technology has always had detractors that can’t see the value until it’s too late and their competitors have passed them by.

Mike Scheuerman is an independent consultant with more than 26 years experience in strategic business planning and implementation. His experience from the computer room to the boardroom provides a broad-spectrum view of how technology can be integrated with and contributes significantly to business strategy. Mike can be reached at mike@scheuerman.org.