There’s a lot of hype around cloud computing, but there should be no mystery to the business rationale you should use to justify it. The decision process to use the cloud is the same one that executives used almost 50 years ago when they ditched their company-owned trucks in favor of leased fleets from companies like Penske.
It was a similar story with organizations that couldn’t afford their own mainframe computer, and so opted to run their apps on remote time-sharing computers from IBM’s Service Bureau Corporation and others. They just didn’t call it cloud computing in the 1960s.
The Business Decision
The decision to go to the cloud comes down to dollars and cents. Certainly, people talk about business agility, risk avoidance, time-to-market, business continuity, customer service, competitive advantage, etc. as reasons to make any investment decision. But in the final analysis, they all reduce financial impact. Certainly, that’s how your chief financial officer views it.
So what are some of the financial drivers for a cloud decision? If you’re already running — or planning to implement — an IT system or application, can you do it in-house as efficiently, as effectively, and as quickly as you could using a public cloud service? Does it make sense to keep or create your own — VMware or Hyper-V based — private cloud?
You need to consider issues such as the scale and availability of the infrastructure, geographic coverage, technical expertise you may need to acquire, cost of hardware and necessary software license fees, and cost of physical space for data center equipment. Your business case should include the costs and savings of migrating to and operating in the cloud and a comparison to the costs of keeping systems in-house[i].
Business Applications in the Cloud
Let’s take a look at some of the ways businesses are using the cloud. We’ll look at the three “flavors” of public cloud computing: Software as a Service (SaaS), Infrastructure as a Service (IaaS), and Platform as a Service (PaaS)[ii].
Software as a Service (SaaS)
Our first business application example — customer relationship management (CRM) — arguably popularized the use of cloud terminology. The ease-of-use, simple implementation, and affordability of Salesforce.com enabled it to capture a lion-sized share of the CRM market over its premises-bound competitors. Salesforce.com was probably the first major instance of what came to be known as SaaS. Following Salesforce’s lead, many software firms began to introduce SaaS versions of their applications, including Microsoft (Office 365, Dynamics CRM), Oracle (CRM, Human Resource Management, and ERP), Adobe (Adobe Creative Cloud), and SAP (ERP). SaaS is now well-accepted, with popular examples such as Box and Google G Suite, as well as social media apps like Facebook, LinkedIn, and Twitter.
SaaS is typically the go-to delivery model for new application products. Billing and invoicing, collaboration, help desk and ticketing, human resources, learning management, project management, travel and expense management, and vehicle fleet management are just a few of the business application areas that are now serviced by SaaS offerings.
Examples include collaboration offerings like GoToMeeting, Slack, Webex, and Skype. In IT operations and service management, premises-based support apps are disappearing, replaced by SaaS solutions such as Jira Atlassian, Zendesk, and ServiceNow.
Infrastructure as a Service (IaaS)
Even though most companies license and run packaged software, many of them also have custom and highly modified software packages to run their businesses. Even if they wanted to switch to SaaS offerings, it’s probably not feasible to do it across the board. In some cases, considerations such as security regulations[iii], or fear of vendor lock-in[iv] might prohibit the move.
But what if these companies moved their applications to a cloud service — either with a dedicated infrastructure or a shared public one? In these situations, there is often a straightforward financial case to displace the operating and capital costs of their own physical data centers with the rental costs of the shared cloud data center.
In this Infrastructure as a Service model, users access applications over the Internet, just as they would with a SaaS offering, but the customer still has the responsibility to run and manage the workload. AOL, for example, was able to shut down 14,000 in-house servers and redeploy their workload to the cloud, saving the costs associated with operating their large data centers[v]. And similarly, companies like Lockheed Martin have moved their ERP applications to run on IaaS cloud environments[vi].
Customers also use IaaS capabilities to extend the scale and reach of their own infrastructure. For example, many use cloud storage capabilities in conjunction with their own physical centers for data backup, file sharing, and Big Data applications.
See, for example, how the Financial Industry Regulatory Authority (FINRA) uses AWS to capture, analyze, and store 37 billion records daily[vii]. Companies like McDonald’s also leverage the scale and universal presence of a cloud provider to connect to thousands of devices. In McDonald’s case, they use AWS to support their global point of sale (POS) system of 200,000 registers and 300,000 POS devices[viii].
Platform as a Service (PaaS)
Up to this point, we’ve discussed the cloud in terms of off-the-shelf solutions and legacy applications. The next significant impact of cloud technology is in the development and deployment of brand new applications. In the PaaS model, development teams are provided with a complete stack — infrastructure (servers, storage, and networking) as well as middleware, development tools, business intelligence (BI) services, database management systems, etc. — with which to build their applications.
Examples of PaaS offerings include Microsoft’s Azure and Google’s App Engine, which allow for the development, deployment, and management of sophisticated enterprise applications[ix]. Not surprisingly, Azure is focused on Microsoft-centric apps like Swiss Re’s delayed flight insurance service[x], while App Engine favors the open source world and is used to build scalable web and mobile back-end apps.
The Final Say
There’s no question that “the cloud” — in its various shapes and sizes — is a significant part of most enterprise IT strategies. Few organizations are completely either 100 percent cloud-based or cloud-free. The majority have a hybrid mix of in-house and cloud, public and private. There are plenty of excellent technologies available for both cloud and non-cloud alternatives. The choice as to when or whether to move an application to the cloud must be driven by the needs of the business and the financial case.
As you make decisions and move to execute your cloud strategy, be sure to check CBT Nuggets for online courses that are relevant to your cloud development and deployment needs. You’ll find training for the AWS, Microsoft Azure, and Google Cloud platforms. If private cloud figures in your future, then look for VMware and/or Hyper-V training.
[i] Ranger, S. (2017, November 06). Cloud computing: How to build a business case. Retrieved February 10, 2018, from http://www.zdnet.com/article/cloud-computing-how-to-build-a-business-case/
[ii] Bernheim, L. (2017, May 30). “IaaS vs. PaaS vs. SaaS” Cloud Models (Differences & Examples). Retrieved February 09, 2018, from http://www.hostingadvice.com/how-to/iaas-vs-paas-vs-saas/
[iii] Gould, J. (2013, October 28). Los Angeles Gives Cloud Email Another Chance. Retrieved February 09, 2018, from https://www.informationweek.com/cloud/los-angeles-gives-cloud-email-another-chance/d/d-id/1112089
[iv] Danieli, Y. (2017, July 25). Stratoscale Hybrid Cloud Survey Reveals 8 out of 10 Enterprises Fear Vendor Lock-in and Avoid Running Sensitive Data in the Public Cloud. Retrieved February 09, 2018, from https://www.stratoscale.com/press/stratoscale-hybrid-cloud-survey-reveals-8-10-enterprises-fear-vendor-lock-avoid-running-sensitive-data-public-cloud/
[v] AOL Case Study – Amazon Web Services (AWS). (n.d.). Retrieved February 10, 2018, from https://aws.amazon.com/solutions/case-studies/AOL/
[vi] Lockheed Martin Case Study – Amazon Web Services. (n.d.). Retrieved February 10, 2018, from https://aws.amazon.com/solutions/case-studies/Lockheed-martin/
[vii] FINRA Case Study – Amazon Web Services (AWS). (n.d.). Retrieved February 09, 2018, from https://aws.amazon.com/solutions/case-studies/finra/
[viii] McDonald’s Case Study – Amazon Web Services (AWS). (n.d.). Retrieved February 10, 2018, from https://aws.amazon.com/solutions/case-studies/mcdonalds
[ix] Weins, K. (2015, February 25). IaaS vs. PaaS: 2015 Cloud Trends from the State of the Cloud Survey. Retrieved February 9, 2018, from https://www.rightscale.com/blog/cloud-industry-insights/iaas-vs-paas-2015-cloud-trends-state-cloud-survey
[x] Pioneering insurance model automatically pays travelers for delayed flights. (2017, May 9). Retrieved February 10, 2018, from https://customers.microsoft.com/en-us/story/swissre