Resource Center

How to Turn the Promise of the Cloud into an Operational Reality

By David Talbott, Technology Analyst

The Lure of the Cloud

In recent years, there has been a great deal of discussion about cloud computing and its value to businesses of all sizes. The “cloud” is touted as a solution to every kind of business computing challenge, from running office productivity applications with unlimited scalability, to being the ultimate place for data storage and retrieval, to providing the finial building block for total business mobility. But when people talk about working in the cloud, what does that really mean?

A “cloud” is a vast, remote computing resource that is accessible to users through a web browser or a client application. Cloud computing is any computing activity based in the cloud. This can include basic information management functions like data storage and backup, file transfers, and file sharing. It can also include more powerful server-based business applications that run in the cloud, and it can include Software-as-a-Service (SaaS) applications. Cloud-based applications and services can be restricted to authorized users in an enterprise (a “private cloud”), freely available on the Internet (a “public cloud”), or a combination of local file servers and remote workspaces (a “hybrid cloud”).

Some suggest that cloud computing is just server-based computing called by a different name. So, why all the interest?

The main reason is that cloud computing is different in two fundamental ways. First of all, the cloud represents a computing resource of nearly unlimited capacity, larger even than traditional corporate data centers. Secondly, it is a computing service that is technically accessible to anyone with an Internet connection. This means even small businesses can have access to unlimited computing resources.

This capacity and accessibility is exactly why analysts are predicting a great future for cloud computing. A recent press release from Gartner (“Gartner Says the Personal Cloud Will Replace the Personal Computer as the Center of Users' Digital Lives by 2014”, March 12, 2012) suggests that the cloud is becoming the one computing resource that is unifying all client facing computing devices from PCs to smart phones and tablets. Cloud-based business applications become accessible to users regardless of what devices they are using, or where they are using them. According to Gartner, the big drivers behind cloud-based computing services are the consumerization of business technology (the trend for workers to use their own devices for work rather than company issued devices), the virtualization of the electronic work environment, and the shift toward greater business mobility.

Why are businesses so interested in these things? As it turns out, these capabilities all contribute to a more collaborative work environment. Better collaboration means more efficient business processes and more productive workers. Cloud computing offers other advantages for small and mid-sized companies, like access to computing resources that at one time would only have been available to their largest competitors. Cloud-based services also mean lower cost business computing, easy setup, and rapid scalability.

There is a lot to like about the idea of cloud computing. The real question for most organizations is this—how does one turn the promise of the cloud into an operational reality? The key is found in cloud-based computing services.

What Are Cloud-Based Computing Services?

Cloud-based computing services are applications and infrastructure based in the cloud and accessible to users over the Internet. There are three basic service models for cloud-based services:

Software-as-a-Service (SaaS) – Applications that run in the cloud and are available to users through a service provider. Users access these applications with a web browser or other client application running on their PCs or mobile devices.

Platform-as-a-Service (PaaS) – This is an entire computing environment, including operating system, and programming language, delivered as a service.

Infrastructure-as-a-Service (IaaS) – This consists of virtual or real computers, firewalls, and other basic infrastructure components delivered as a service.

Most businesses considering cloud-based computing solutions will look at service providers offering SaaS solutions. PaaS and IaaS typically only provide infrastructure for SaaS product offerings.

SaaS products are available to perform many of the same computing needs that a company would traditionally accomplish by installing its own servers and purchasing software licenses. One big difference in a SaaS solution is that companies do not buy software licenses. Rather, they pay according to how much they use the service. Other differences include the elimination of installation and maintenance. SaaS applications are already up and running in a data center, and they are maintained by the service provider.

There are a growing number of cloud-based business applications available today. Typical SaaS applications include:

Data Storage – There are many SaaS solutions for data storage, archiving, and backup and recovery that are specifically designed for business users. Some of the first commercial SaaS products ever to come to market belong to this category. They are functionally equivalent to their non-SaaS cousins, while offering the advantage scalable and flexible storage capacity.

Collaboration and Information Sharing – There has been huge growth in SaaS applications for collaboration and information sharing. These applications take data storage a step further to provide file sharing, virtual meeting systems that allow file sharing and white boarding, desktop video conferencing, virtual presentations, webinars and training, information management systems, and other collaboration tools.

Business Intelligence and Business Process Applications – Increasingly, major software providers are offering SaaS versions of core business applications like office productivity suites, database applications, customer relationship management applications, enterprise management software, and business process management applications. These SaaS solutions offer typical SaaS advantages—faster, lower cost implementations, and no IT management overhead. In some cases, business management applications that were too costly for small and mid-sized businesses to implement are now within reach.

Cloud computing services are more capable, and they are being developed with business users in mind. Yet many businesses do not like the idea of not knowing exactly where their information is located. They are familiar with applications installed on-premises. They feel more secure knowing where their data is, and if there is a problem, they like calling tech support. Does anyone really know what’s happening in the cloud?

How the Cloud Works

The cloud is made of a vast network of data centers (buildings filled with computers and enormous amounts of data storage) that are connected to each other by the Internet. SaaS applications, and the PaaS and IaaS services that support them, run on computers in these data centers. Infrastructure components like load balancers and machine virtualizers automatically adjust the computing capacity to meet the requirement of various SaaS applications and their users. Other infrastructure components, such as firewalls, protect the data center computers and the data.

There are different types of cloud service providers. For instance, Amazon Web Services, a division of, provides infrastructure web services for a wide variety of companies, including companies that need large server and memory resources for their operations. However, services from companies like Amazon Web Services are also available to companies that develop and sell branded, commercial SaaS products that customers buy on a subscription basis.

SaaS users, whether they are individuals with their own user accounts or employees who work for the software provider’s corporate customers, connect to their SaaS applications via a client app—either a web browser or a specialized application downloaded from the service provider. Versions of the client app can run on any web-enabled device, such as an iPad, laptop, smart phone, or desktop computer. The client apps may vary depending on the form factor of the device (for example, a smart phone version will not work exactly like the PC counterpart). However, once a user logs into his or her SaaS application, the experience is the same as if the application were running on the user's personal device.

What is the Security Risk?

Security is the greatest concern many businesses face when considering cloud-based computing solutions. The risk to data stored in a remote data center is just as real as the risk to data stored in servers at a company’s location. When considering a SaaS solution, companies should observe at least the same protection they would employ for their own internal network. Many data centers offer additional robust security measures to ensure protection.

When evaluating a SaaS solution, always investigate the physical security of the data center(s) where the application is hosted and where the data is stored. Understand who has access and under what circumstances.

It is also important that the service provider’s data center is well protected against online attacks. This protection includes extensive virus protection, firewalls, advanced intrusion detection, effective user authentication procedures, audit trails, and the performance of regular, certified security audits. It is also important to understand how data is stored as well as the policies around data backup and data duplication. In all cases, the SaaS application should support end-to-end data encryption

Beyond the security of the data center itself, business applications should have robust controls for managing user authentication and data access. Companies also need to develop and implement the same corporate security policies and best practices they would if all the data were stored and processed onsite.

Security should be a primary consideration when shopping for a cloud computing service provider. Most data centers are protected by world-class security measures, and most cloud-based applications designed for business have strong security features that users can manage and administer. In fact, for most small to medium businesses, a cloud-based service is better protected than any solution they would have the resources to deploy onsite.

Advantages of Cloud-Based Computing

Cloud computing services offer a wide range of advantages over the alternative of installing and managing equivalent server-based in-house applications. These include:

Lower entry cost. Cloud-based solutions do not involve up front investments in software licenses, servers, and costly deployments. Getting started with a cloud-based solution is as simple as creating a user account and installing a client application. Ramp up time is much faster.

Easy scalability. If a company adds new employees or requires more data storage, cloud-based solutions accommodate these changes with no costly or time consuming infrastructural upgrades. If a company needs to expand, they simply contact the service provider and upgrade the service.

Simplified device compatibility. Cloud resources are device and platform agnostic. This is important in an increasingly mobile work environment, and it is valuable to any company that supports a bring-your-own device (BYOD) device management strategy in the workplace.

Support for mobile workers. For workers who travel or work in the field, connecting to primary business applications using mobile devices and the Internet (or a mobile phone network) improves collaboration across the business ecosystem and accelerates business operations.

Lower hardware maintenance costs. Companies no longer need to maintain servers and data storage devices for the SaaS applications. This frees them from equipment depreciation or obsolescence.

Lower energy and operational costs. SaaS solutions lower a company’s operational costs (costs associated with deployment and maintenance), and they lower energy consumption. Many SaaS solutions also provide a dramatic reduction in a company’s carbon footprint, because a SaaS service provider is able to optimize computing resources to its user base, which in most cases lowers the amount of power consumed per application user.

Avoiding Potential Problems

Some SaaS solutions open the door to new operational challenges and risks that companies have not had to face in the past. However, research and planning will help businesses avoid possible pitfalls such as:

Service interruptions. When the Internet is down, cloud service is unavailable. Before signing a contract, check with the service provider about guaranteed service uptimes. Consider a contingency plan for times of lost Internet service. For example, SaaS applications that run on tablets or smart phones still operate over a mobile phone network.

Feature equivalence. Not all cloud-based services offer the same level of functionality as traditional server and desktop apps. Review the service provider’s feature set carefully. Make sure it matches your business needs, keeping in mind new capabilities that may be important to you in the near future (such as business mobility), and cost compare on that basis.

Data formats. Some cloud-based apps use proprietary data formats. If interoperability is important to you, make sure your vendor of choice works with all platforms and formats.

Tech support. As with any service provider, make sure they will be there when you need them. Not all cloud-based service providers offer the same level of tech support, and if something is not working, you will not be able to call internal IT staff for answers. Be sure to evaluate the level of tech support offered by a service provider. Scan user forums and ask other customers, or ask the provider for references.

The Bottom Line for Small and Medium Businesses

Cloud-based computing services offer great value at a low initial cost, and they grow and change with the business. They also offer valuable tools for supporting more efficient business operations among an increasingly mobile work force. Cloudbased services offer an opportunity for small and mid-sized companies to adopt big business applications that might otherwise be out of reach due to the high cost of on-premises deployment. Given recent trends, it is likely that cloud-based services will play an increasingly important role in mainstream business operations. There are several ways businesses new to cloud computing can get started without disrupting current operations:

- Consider applications that either improve current capabilities or provide new capabilities that are of value to the business.

- Focus on vendors that provide business-tobusiness services, rather than consumeroriented services. SaaS products designed for business users typically have stronger security and administrative controls, and they provide a better, more reliable user experience.

-Take full advantage of SaaS vendors that offer free trials of their solutions. Testing a solution before full adoption enables a business to see how valuable a particular solution is to daily business operations.