Business

May 18, 2012

Cloud Computing

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Written by: Bob Green
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Cloud computing is taking the business world by storm. Here’s what you need to know about “the cloud” and your business.
 

Go to My PC” is a product that allows people to sign in to their office PCs from other locations, and is being aggressively promoted through advertising. This tool may sound like “wow” technology, but it isn’t. In fact, it really reflects the antithesis of what current technology is able to do for businesses. While many point to it as a form of “cloud computing,” cloud technology has come a long way.

Despite the outdated technology, older cloud-type products are still used in many businesses. Let’s take a look at a typical business ­scenario, one told often in today’s business world.

My company is not in the IT business but you wouldn’t know it. We actually manufacture shiny widgets for aerospace. With growing competition, globalization of our offices, and tightened governmental budgets and compliance regulations, our profits are lower on every sale. This is compounded by the growth of our IT spending, year over year. It seems that IT is the one department that is immune from cost cutting. It also seems to be an ever-growing fixture in our organization, enabled by the fact that they are not shy about telling us that they are the keepers of all our secrets. My company is spending too much time maintaining and growing an infrastructure of IT staff and everything that comes with it. For example, someone from IT is always doing server and desktop maintenance that interrupts our work. Additionally, my company spends money on software and upgrades for just about everything. From a security perspective, I find it odd that to do my work out in the field I have to be tethered by Internet to my desktop at the office. This means that my PC has to stay on all night. Where is the security in that?

Does this scenario sound familiar to you? Should businesses really be perpetuating outdated technology that assumes the comfort of having all your eggs in one desktop basket called your PC?

Now let’s contrast it with the emerging scenario, this one fictitious but based on actual experience with clients implementing new cloud technologies.

Wow! We all just received bigger bonuses this year. Our CFO told us that even though we’re competing with international companies in the aerospace widget business, our profits have grown this year as we’ve streamlined our processes and improved our governmental compliance. We accomplished this in large part due to our cross-department teams working collaboratively to improve our business. In the course of doing so, we adopted some very prudent technology practices and adopted a wider use of cloud computing. Our IT department is less than half the size of what it was last year, and our on-going cost of IT and software maintenance is one-third of what it was last year. What I particularly appreciate is that I’m no longer interrupted by our IT folks doing upgrades to the servers, software or my desktop when I am trying to get my work done. Now I can focus more on my work and worry less about when the next interruption will happen. I love using the Internet to run software that works in my browser and feels like Google, Amazon and other familiar tools that I run on my tablet when I’m away from the office. Recently I was working at home using our new cloud computing software tools, and my computer hard drive crashed. Everything was lost except the work I was doing at the time of the crash because the data wasn’t stored on my machine. Everything was there, just as I left it. When I started working from my son’s PC I was able to pick up right where I left off.

This could be your business: A business not held hostage to a growing IT department, and non-budgetable IT spending. A business with a bottom line that has improved with changes to process and technology. Migration to this kind of business model isn’t simple and it isn’t always a happy process, but it is a growing trend among businesses everywhere as improvement, control and better profitability become increasingly important. Quite frankly, unless you’re in the IT business, it’s time to get out of the IT business.

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Cloud Computing Facts

These facts help demonstrate why cloud computing has enabled businesses to become better at what they do and achieve greater profits at the same time:

1

Businesses that focus more on what they do best are usually better than their competitors. Focusing on the latest IT crash or departing IT director should not present much risk, yet today, it does. The solution is not having IT managed by internal IT departments.

2

People are constantly connected to the Internet, and as a result the lines between being connected to work and to personal matters are blurred. Employees love flexibility and want to work from anywhere, anytime. This is a permanent change, particularly with our society’s generational shifts. Cloud computing seamlessly fulfills this need.

3

IT spending comprises hardware, vendor products and services, and most importantly, IT personnel. These expenditures are becoming increasingly expensive.

4

IT is one of the most ill-managed areas of most businesses. This is because most CFOs and CEOs are not IT specialists, skilled at IT governance, and just don’t have time to focus on it. Consequently, IT is always present, but isn’t well positioned in many organizations.

5

Cloud computing—particularly in the form of Software as a Service (SaaS) which is software delivered by a publisher via an internet browser, is becoming wide-spread, and represents a way to make businesses less dependent on IT, and more focused on its core mission.

6

Using SaaS solutions allows CFOs to budget for the use of technology as they do for rent or electricity. This is because SaaS is paid for based on how much of it a business uses, similar to a utility.

7

True SaaS products include software upgrades and maintenance in the fixed monthly or annual fees they charge. This means no surprise budget-killing expenses that normally accompany running IT departments and in-house hosted software.

8

Security is always a concern. In most cases, having employees work from a SaaS environment is safer than the security provided by in-house networks and labor-heavy IT departments. It only takes one disgruntled internal IT staff to delete all of a business’ confidential data, trade secrets, and financial and personnel records.

9

CEOs and CFOs of growing businesses really don’t like to be held hostage by anyone, but frequently they feel this way by their IT leaders. SaaS products can be managed by business managers that oversee their use in a company, rather than an IT department.

10

Technology should be seen as a way to enable employees to do their work more effectively. True SaaS products are often the most advanced in terms of functionality and beneficial processes for the tasks that they are intended to handle. This is because they are newer and the publishers can write an ideal software tool from scratch. Most non-SaaS product publishers are forced to constantly deliver upgrades to their clients, and these clients typically have to manually upgrade their systems for an additional cost, and deal with business interruption.

11

It is proven that SaaS products deliver large company-level process and functionality such as financial reporting and customer marketing at a fraction of what it would cost to implement and support similar technology in-house, on in-house servers.

How Do Businesses Move Into The Cloud?

We are often asked how a business should move to the cloud. “One bite at a time,” is often the best way, kind of like the “elephant-eating” joke we’ve all heard. Start with an assessment of what business processes are most vital for managing your business and then determine if there are options available in the SaaS marketplace.

Next, determine if the SaaS options can provide greater functionality and benefit, regardless of the technology, compared to your existing computing tools. Additionally consider the cost of switching to a SaaS solution versus keeping your existing solution. After all of this, if you determine that SaaS provides the better options, you may find it is a good time to dip your toes into the cloud world, and migrate to a SaaS solution.

Your firm should also consider if you really need to be serving your employees with email, calendar, contacts, and word processing/spreadsheet software from servers that your IT department manages. Most often the answer is no. Managing email is usually not your business’ core competency. This is usually the first place businesses take advantage of the cloud. You can still have your employees use Outlook if that’s what they are used to; however, even that experience can be internet-delivered quite inexpensively, yet securely, by reputable 3rd third party providers. The return on investment from doing this can be remarkable.

Any migration of a computing process to another way of processing is challenging and comes with hiccups, regardless of whether it is cloud-based or not. Prudent and professional planning and execution of any migration is imperative. Be careful to manage these migrations well, and create clear expectations among all parties. In exchange for long-term success, buy-in and transparency among your employees is key, as well as realistic visions about the need to take extra time to make these migrations happen.

It is also critical that you pick a SaaS vendor that you can rely on. Security is a concern, since SaaS publishers hold important information about your business. Reputable SaaS publishers provide you with assurances as to their information security practices that they employ. They also guarantee your “uptime” and may even pay you for time when and if they are “down” for an extended period of time. Many SaaS publishers also allow your business to limit the specific Internet connection locations (like an IP address) that can access their programs on your behalf. If you don’t want people to connect from home or somewhere in particular, you can allow mandatory confirmation of the location from which someone is using the system, before he or she can log in. Password changes can be forced or required, and some products make users answer security questions before they use the program on a computer that has not yet been connected to that program. Tantamount to all of these practices is that a quality SaaS vendor who, by default, also gives you peace-of-mind by enabling a disaster-preparedness contingency benefit for your business, since they back up the systems and data for you, in more than one place. The security of reputable SaaS products is more often far stronger than the security of software and information that you host in your server rooms.

As you consider how you can improve the efficiencies, effectiveness and bottom line of your business, consider how cloud computing and especially SaaS, can help you get there sooner, more securely and more sustainably. Cloud is real, it’s popular with employees and it reduces your risk profile in many ways. Most importantly, it allows a business to think more about its mission, and less about IT. •

 
WHAT IS THE CLOUD?

Cloud computing is a generalized term for the concept of delivering hosted services over the Internet. Cloud services different from a traditional environment in that rather than having an significant infrastructure, platform and software housed at your company or place of business, these activities are housed on the internet, or as the metaphor says, “in the cloud.”

For the uninitiated, a first question has to be, “Why?” In general terms, moving the infrastructure and software “off-site” can provide efficiencies of scale. Just as Fed-Ex can do a better job of getting a package to Hong Kong overnight than you and I can, cloud computing (in theory) concentrates the service where it can be actively managed more efficiently. Also, the cloud can grow infinitely, and it can grow quickly, making it very advantageous for growing companies.

SaaS, or “software as a service”, is the term specifically for software applications that live in the cloud that you access from your own local terminal. SaaS has the great advantage in that you’re not tethered to an office, but rather access to your software comes through an internet connection, where ever that might be. The one cost to SaaS is that there is, well, cost. You typically pay for the use of services like this by the month or by the year.

Cloud computing does not come without potential for problems. The biggest concerned of newcomers to the cloud is that of security. “You mean my data is just going to be floating around out there?” Of course the answer to that is yes, and no. Yes, in that it is “out there” somewhere, but no, if done properly, in that it may actually be more secure than in your own internal system.

If you work in a heavily regulated field, such as accounting, law, or medicine, you need to be concerned about security whether it’s in your own system or if you are using the cloud. Developers are rapidly creating powerful new cloud products and the migration for many companies to the cloud is well underway.

One last note for business owners: asking your own internal IT department is not always the best way to explore the possibility of cloud computing. IT personnel often see the cloud as a threat to their own jobs, and many an IT manager has shot down cloud initiatives unfairly. A good idea is to engage an independent IT consultant to educate you on how the cloud be a potential solution for your computing needs.—B.G.


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About the Author

Bob Green
Bob Green
Bob Green, CPA.CITP is Partner and Practice Leader for SingerLewak’s Enterprise Risk Management Services practice. Executives of growing businesses rely on Bob and ERMS to mitigate the risks inherent in the use of information systems. In 2010, Bob oversaw the birth of SingerLewak Systems—a Cloud Computing advisory services group, a business partner of various SaaS offerings, including Intacct and Avectra software. You can reach Bob at SingerLewak Systems, or visit his blog here. Read more about Bob Green Here...




 
 

 
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