There is so much hype at the moment regarding cloud computing. Those selling the concept promise to turn IT services into a utility, enabling a company to purchase its computing requirements as required. To a finance director this sounds like manna from heaven: no more capital expenditure and fixed costs, just variable costs matching the company’s revenues. Add to that the resilience and disaster recovery afforded by outsourcing to large specialist companies, and what’s not to like?
On the flipside, there is scepticism born of experience. Sadly, the IT industry has a history of promise exceeding delivery. Is cloud computing no more than the latest buzzword for similarly hyped software-as-a-service (SaaS) or grid computing? Indeed, even that most modern of technologies – virtualisation – seems to be merely a modern implementation of the virtual machine environment concept dating back to the mainframes of the 1970s.
It can be hard to be clear-headed about the issues around cloud. At the top of my list is data security and protection. When considering data security you must distinguish between the public cloud and a private cloud-based service. The latter provides the user with greater control of the cloud infrastructure, improving security because user access is restricted. As well as commercial risks, you must ensure legal constraints over the export and protection of personal data are observed: the IT industry claims these issues are addressed, but it is an important area to pay attention to, considering the global nature of large public cloud providers. Once that is sorted, you can see the benefits: cloud architecture can eliminate the issues arising from important company data being locked up on users’ local drives. Am I the only FD who has found that the sole copy of that vital spreadsheet is on the laptop of a colleague who is off sick for the week?
There are issues around the immaturity of cloud computing that should concern FDs. Few standards exist to allow applications and data to be ported between providers. There are fundamental incompatibilities that would make the transfer between certain providers so expensive as to be impractical. The integration of SaaS products, such as sales force support tools, into a company’s other applications needs to be considered to avoid expensive rehandling and reformatting of data.
Because public cloud providers operate in many different countries, there is the possibility of confusion arising over the legal jurisdiction of where the data lies – a headache-in-waiting for global businesses.
While the reduction in server capital and support costs are the most obvious benefits of cloud computing, there are also desktop cost savings available as the technology facilitates the use of thin clients, very simple, low-cost machines. They are cheap, need less support than traditional computers, and do not have the features and capabilities that can lead to such unproductive activities as playing digital video and audio. Thin client users can log into their PC from any device and from any location, provided they have network access, which is good for flexible and remote working.
However, there is also the issue of reliance on the internet. By definition the cloud user is dependent on the internet or network access. If the connection is down, how does the business continue? To me that is a critical single-point failure risk for continuity planning.
But I see the business case if you can overlook the hype and be aware of the risks. Research published recently by Computer Weekly claimed that US IT leaders expect to save about 18 percent of their hardware operating costs by using cloud services, compared with 16 percent anticipated by Singapore cloud users. UK companies expect to save 12 percent in hardware costs; in reality, cloud computing could offer even more.
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