May 18 2010 
Posted by: admin 
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Wikipedia describes Cloud Computing as “Internet-based computing, whereby shared resources, software and information are provided to computers and other internet enabled devices.” It is an internet based delivery model, through the “cloud”, that allows home and business users to easily access hardware and software capabilities remotely over the internet.
Companies, wherever feasible, have always tried to offload non-core operations to outside providers who could run them with better cost base and efficiency. Big companies, long time ago, got away from generating their own electricity and started consuming it from the electric grids. Further advancements in technology have kept pushing the envelope of what companies can outsource to outside providers. Today every major industry relies on a chain and tiers of outside providers and suppliers that help to optimize the operational efficiency and lower the cost.
Benefits
Cloud Computing is continuation of the above trend. It represents a significant refinement of the delivery model which takes advantage of better technology and faster internet to provide computing services for companies that are charged based on consumption and hence provides better economics for these companies. Today these companies can procure computing power in a scalable manner and without significant upfront cost.
Potential Issues
It is inevitable that going forward more and more companies would be looking to Cloud Computing for their hardware capacity and software services needs. Therefore it is critical that companies are aware of potential issues of this delivery model and have risk mitigation strategies in place to address them.
- The data security issue – all of the data will be hosted on the servers of the service providers. This change, by itself, is enough for companies to think twice before moving their operations to cloud.
- Trust level – how much a company trusts its provider is the key to how fast the cloud adoption would proceed.
- Service Level Agreement (SLA ) – whether Service Level Agreements would support the business objectives of the companies.
- Internet Connectivity – whether internet connectivity is stable and fast enough to support securing cloud services over the internet.
Things to consider
Like every technology and business transformation endeavor, the shift to Cloud Computing has to be planned carefully. Below are some points to consider when planning a switch to Cloud Computing.
- Review your business strategy and make sure that it is compatible with Cloud Computing model. For example, a company that processes financial transactions may not want to give up control of their data and server operations since a breach could be fatal to their business model.
- Review the license agreements and user manuals before subscribing to any service. While bigger companies would always perform this due diligence, the smaller companies some times get locked into the contracts without reading the fine-print.
- Make sure the provider has proper backup plans of your data.
- Verify where the servers are physically hosted, where the data is stored, and what level of certifications and storage policies are being implemented on the provider side. The physical location of the servers could impact the regulatory requirements and in some cases the speed at which you receive the computing services.
- Understand the pricing structure before subscribing with any cloud provider. Different kinds of pricing models are currently being used by providers like per user cost model, total usage cost model, and fixed weekly/monthly cost model. Make sure you do your home-work and select the model that will cost you the least while meeting your requirements. Also find out how feasible it would be to switch from one pricing plan to another.
- Make sure that the provider allows data export out of their systems. It is critical for you to maintain back-ups of your data on your side and also be able to switch to another provider if needed.
Switching to Cloud Computing model represents a significant change of direction for any company but is not the best option for all of them. Knowing what issues to consider and how to address them would help you decide whether this is the best move for your business.