Cloud computing strategy guide (Part 2)

Recognising the power of Cloud-delivered services, especially in quickly getting new capabilities online, many enterprise software vendors have made a wholesale commitment to the Cloud. That’s offering tantalising promise for companies that have struggled to implement business analytics systems, for example, across their in-house systems; accessing analytics as a platform, rather than implementing it as a bespoke project, promises unprecedented visibility of enterprise data.

This article is part one of a two-part series on Cloud computing. Read Cloud computing strategy guide (Part 1)

“The private Cloud trend has really consolidated thinking,” says James Foster, chief technology strategist with business-intelligence vendor SAS. “We’re seeing business customers understanding the benefits of an analytics platform from the people, process, and insight perspectives.

Rather than cutting costs, it’s now about driving value and getting away from the individual or departmental silos of the past.” SAS has already chalked up early wins with long-time customers like Telstra, which has leveraged Cloud-based analytics in a project to speed analytics-based marketing. A process that took 11 hours on an internal platform, where the poorly optimised process was previously running, now completes in less than a minute thanks to having the full attention of a scalable, optimised Cloud-based data environment.

Many organisations will find procedural fit with companies like Kaggle, a Cloud-based analytics provider that has already chalked up a big win after helping the NSW Roads and Traffic Authority (RTA) to construct and execute a massively data-intensive competition based on modelling traffic congestion on Sydney’s roads.

Rather than hosting the data and analytics itself, Kaggle commissions servers via the Amazon Elastic Compute Cloud (EC2) and storage space via Amazon Simple Storage Service (S3) to handle the load.

This allows its online analytics model to scale as large as needed without requiring additional infrastructure in its own business — and at a total cost just a fraction of that necessary to achieve such analysis through conventional means.

“This kind of data analytics would have previously required the support of an external consultant,” says CEO Anthony Goldbloom. “A six-figure bill for this work would not be uncommon. But we can leave data in the Cloud and take the code to the data.”

While increasingly mature Cloud providers may be ready to go, IT leaders considering public Cloud solutions face a raft of governance obstacles, privacy law concerns, and other business restrictions that will force enterprises to tread carefully and in full consultation with data-management authorities. The last thing you want to do is outsource a major analytics initiative to a Cloud provider then find that provider goes out of business or, even, is brought offline for several hours due to an external attack or catastrophic systems failure.

Over time, such complexities will no doubt be resolved through the sheer persistence of dedicated advocates within both business and IT organisations.

Research firm IDC, for one, has directly linked Cloud adoption with business profitability, arguing that the exodus of technology complexity — first through its assimilation into private Clouds, then by being jettisoned, piecemeal, to external providers — will become necessary to keep internal IT organisations from tripping on their own shoelaces.

Thankfully for IT strategists, executive perception of Cloud computing has improved dramatically over the past year: “It was viewed as a technology before, and for most organisations it’s seen as an extension of their outsourcing strategy,” says Chris Morris, Asia-Pacific director of Cloud services and technology research with IDC. “It was new and took a while to be understood, but now it’s being considered in almost every deal as one of the options to acquire resources or deliver services.”

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Cloud as you need it — and if

In the short term, many organisations will be pursuing hybrid private-public Cloud deployments that let them straddle the two spheres. Indeed, given the extensive customisation most companies have already gone through, it’s unrealistic to anticipate a wholesale move to the public Cloud by any decent-sized organisation in the near future; however, cherry-picking will continue to lead to major processes moving into the Cloud as needs and opportunities arise.

In many cases, the appeal of the Cloud will come as specialised providers offer not only to take over business processes, but to add best-practice knowledge and value that will help customers optimise specific parts of the business.

“About 80 per cent of our customer base have an existing HR system they bought from one of the top three ERP companies, and probably spent millions in implementing them,” says Murray Sargent, Asia Pacific and Japan general manager with Success Factors, whose local clientele includes Australia Post, Jetstar and BlueScope Steel.

“However, their managers and employees are still not given any capability to manage it; it’s all back office and focused on making sure they capture leave and pay people every month. That’s why they have made a very conscious decision to invest in people-focused solutions for talent and performance management.”

In other words, many emerging Cloud providers are in fact positioning themselves as knowledge outsourcers, offering additional value over and above the long-running practice of business process outsourcing. Ease of access to these systems and skills could drive continued major growth in Cloud services, with infrastructure providers falling over themselves to bolster investments in Cloud-suitable infrastructure.

Productivity applications may provide a quick win — Optus and AAPT, for example, recently announced Google Apps resale plans while the latter also announced storage-as-a-service, ‘Solaris-as-a-service’ and hosted call centre capabilities. Growing partnerships between telcos and systems integrators such as Fujitsu — which recently made a major Cloud investment in Australia and is already hosting Cloud-based applications for the likes of Frucor and Toyota — are likely to push more and more functionality into the Cloud.

There’s also likely to be significant latitude for enterprise buyers keen to push a particular part of their IT infrastructure into the Cloud. “There’s no question people want to put their toes in the water,” says Aidan Tudehope, managing director for hosting with Macquarie Telecom, which has boosted its Cloud portfolio with rapidly scalable server and storage infrastructure along the lines of Amazon’s EC2 and S3 — but with the governance advantage of being hosted within Australia.

“We’re now seeing real deployments, websites with real transactions and businesses living and dying by the success of their deployments,” Tudehope explains. “It is a very significant change, and a fundamental change in the way businesses procure services. You can start by moving your Web layer onto the Cloud, then pick the other bits that make sense and do it at your own pace.”

Yet despite its promise, many organisations are still holding back on their Cloud investments. Gartner’s survey found that 45 per cent of respondents had no plans to invest in Cloud computing this year, with many offering sentiment to the effect that the paradigm is not ready for their businesses.

This isn’t only a question of the business-related issues, like data sovereignty and availability, mentioned earlier; technological issues still abound. Specifically, vendor lock-in and portability of Cloud investments has come onto the radar screen of late, with Telstra and the Commonwealth Bank among big businesses actively engaging with Cloud standards body the Enterprise Cloud Buyers Council (ECBC), an initiative of global service delivery body TM Forum.

High on the ECBC’s radar screen are issues like standard product definitions, interoperability between Cloud versions, data portability, and Cloud security issues. Such standards are in their early days and will by necessity need to adapt to reflect future developments in Cloud infrastructures, requiring constant vigilance on the part of standards bodies.

They will also offer opportunities for open-source efforts, whose focus on openness and sharing will appeal to many that want the Cloud to be an enabler for unfettered growth — rather than just the latest tool for vendor lock-in.

“Moving providers today is definitely a pretty invasive operation,” says Frank Feldmann, Asia Pacific director of business and technology solutions with Red Hat, which is angling to maintain its operating systems’ primacy as a development and hosting platform amongst Cloud providers.

“Not only does it mean you may have to re-architect your application stack, but there are going to be networking and other challenges you have to manage. We envision that same movement could become a much more frequent move, as some companies choose to internally reprovision their resources on a regular basis.”

While many vendors may be quite happy to lock in enterprise customers to their Cloud vision, broad standards support and the efforts of a global community of open-source advocates should at least provide a foil for those efforts.