Clouds and linings

Okay, it’s been over-hyped, but it is a remarkable platform-for-platforms – of all sorts. The cloud itself is no hype. It’s the genuine thing. It really can deliver on most of the claims made for it and companies are increasingly lining up to use it. Big ICT companies like Google, Oracle, Microsoft, Cisco and others like them as well as all reasonably sane telecom service providers are hustling to get their share of the action. No well established ICT enterprise can ignore it; those that aren’t already selling their own cloud services or platforms are working hard to get into the game. Investors are lining up to back the hoards of inventive, and hungry, cloud start-ups springing up everywhere. The cloud has not generated a ‘dot.com’ era type boom to date, but it might get there yet.

There are good reasons for the hopes raised by the cloud and few doubt that the cloud will justify these hopes – one day.

The mobile cloud is similar in many respects, but the main user will be the consumer. Sure, companies will take advantage of the vast computing resources available in the cloud to support their personnel in the field, but there are many more consumers in the world whose only link to the Internet is a smartphone, a tablet or other mobile device.

The cloud can give a mobile device the computing and search power of the world’s biggest and fastest computers. I can’t imagine what cloud killer app will conquer the consumer – if I could, I’d be working on it now instead of writing this, but there will be one; it will be massively important and it might well channel through social media platforms.  I’ll get back to the mobile cloud in a future eLetter.

According to a Microsoft 16 country study of 3,258 SMEs, about 40 per cent of SMEs expect to be using cloud services within the next three years. Microsoft’s study points to a future where today’s shrink-wrapped applications for SMEs will become increasingly outmoded and where cloud-based service models will predominate. Contrary to the usual sequence, small companies are adopting the cloud faster than large ones.

Large companies certainly have more to worry about and plan. Any change in the way business is done requires serious planning, retraining and reorganizing. Most large companies already make limited use the cloud for non-critical applications. Inevitably, large companies will migrate critical applications to the cloud, but only after their needs for unfailing availability, perfect privacy and rock-solid security have been fully met.

Any business, but especially a large one, needs to feel confident that the computing power they need and the service levels they have contracted will be there when they need them – without fail – that their cloud applications and systems will function and their data will be available without a hitch. Given the current state of the art, this is a reasonable concern. There is also the fear, especially with smaller, less stable, cloud providers that one day the provider for financial reasons, internal problems or legal motives might shut down – it does happen.

Privacy laws and the seriousness with which privacy is handled in many parts of the world – including the USA – leave many companies uneasy. The cloud is an increasingly international operation. One never knows where in the world ones data might be found.  Governments around the globe are known to monitor what they will when they will and cloud hosting companies can easily monitor the traffic into and out of their systems. International privacy groups warn frequently of the dangers.

Security is a major concern. The Cloud Security Alliance lists fifteen areas of risk: security and privacy; data protection; identity management; physical and personnel security; availability;  application security; privacy; legal compliance; business continuity and data recovery; logs and audit trails; data centre compliance requirements; legal and contractual issues; and public records. I won’t go into this weighty issue now – perhaps some other time. I cite the list because of the notion it gives of the problem’s dimensions and of the sort of concerns large companies must carefully consider before committing themselves to the cloud.

Smaller companies are generally less concerned about the risks, are more flexible and can deal with limited changes more easily. SMEs are also more cost sensitive; the cloud can cut investment and supply expertise and systems far beyond what a small company could otherwise afford or manage. Nevertheless, changing systems and services in even the simplest of firms is rarely a plug-it-in-and-go affair. Murphy has a law and a special interest in systems changeovers, even the simplest – if they can go wrong, if they can explode spectacularly – they will. The upside is almost all get through it, battered and bruised, but alive.

Working for or with a wide range of companies and institutions – from the biggest to quite small – I’ve dealt with a great many service providers and suppliers. Invariably, the bigger the company, the better the contract; small companies get the standard – take it or leave it – contract. They have little if any bargaining power regarding support, quality of service – indeed over terms of any sort. Standard contracts are often worth the paper they are written on – and little else, so it is doubly important for small companies to read the fine print when choosing a supplier. That said, I would worry more about computer utility type services than platforms for specific services such as Salesforce.com.

I’ve never seen a cloud provider’s standard contract, but I’m fairly sure it is very specific about the limits, the maximum  a customer will get – if lucky, what the customer’s obligations are, the prices, the penalties the customer will pay, say, to terminate the contract. On the other hand the suppliers’ obligations are often ‘best effort’, loosely framed, seemingly reasonable and largely unenforceable.

To be fair, small companies that do their homework and understand what to expect will probably get a much better deal and much better and more sophisticated services than they can otherwise obtain either internally or from other sources – and cloud service suppliers that take the SME market seriously and guarantee their customers the support and service they need will be the big winners in this huge new market.

The cloud business is still growing and finding its way. It has a way to go and much to consolidate before it becomes the mainstream option for either large or small firms; but there is no doubt at all that it is on the road to becoming a major mover in both the world of business and our daily lives.

Fredric Morris
Editor-in-Chief