Cloud computing is becoming wildly popular. But is it right for your company?

"Cloud computing" has become the latest new "buzz" in the IT world. Old technology is being positioned as "cloud-enabled," and new solutions are popping up as the vanguards of cloud computing. A cloud has been used as a metaphor for the Internet for as long as anyone can remember. However, when the word "computing" is added to "cloud," it takes on a whole new meaning.

In a very broad sense, cloud computing refers to the complete access of resources or computing outside of the local firewall. In a more narrow interpretation, however, cloud computing is the distribution of specific applications and services from dedicated Internet-based virtual servers.

Once you parse through the hype, there is indeed substantive value in hosted/cloud solutions (terms that are used interchangeably), specifically in converting a large capital expenditure (capex) into an easy-to-digest, monthly operational expense (opex). Cloud solutions eliminate the need to buy expensive hardware and software as well as the management overhead of maintaining these. Challenges of ensuring that the latest patches are applied, that disaster recovery mechanisms are in place, and that security infrastructure is in place are eliminated with cloud-based solutions.

The implications of this technology are significant. With the processing and distribution handled remotely, cloud computing levels the playing field for those companies that do not have the funds to constantly upgrade their network infrastructure to accommodate new technologies and applications. In technical terms at least, cloud computing is the great equalizer. Companies can leverage their existing hardware and network infrastructure rather than continue a constant hardware upgrading cycle.

Three Basic Types

There are three types of clouds you may hear about:

• SaaS—Software as a Service (SaaS) is a software delivery method in which the cloud servers distribute specific applications or services to the client, typically through the client's Web browser. The applications can be distributed to hundreds or even thousands of clients simultaneously. This enables clients to access applications with limited licensing considerations, servers, and other hardware requirements. SaaS removes the need for a company to consider multiple installations, software updates, and other local administration requirements.

• PaaS—Platform as a Service (PaaS), as the name suggests, is a method of distributing operating systems or platform applications over the Internet. These platforms are often used to run the SaaS. The client systems get not only the application from the cloud, but also the platform on which the application is run.

• IaaS—Infrastructure as a Service (IaaS) refers to the infrastructure used over the Internet, including storage, hardware, servers, and networking components. The owner of the cloud computing hardware owns and is responsible for updating and maintaining that equipment to ensure the delivery of applications over the Internet. The client pays for the right to use the equipment, usually on a pay-for-use basis.

The Cloud's Pros and Cons

Spending on IT cloud services is expected to grow almost threefold, reaching $42 billion by 2012. Cloud computing solutions are being driven by vendors' search for growth and revenues, the shortcoming of traditional approaches in capturing growth, and competitive pressures. In a survey conducted by IDC in 2008, it was found that there is a strong demand for IT cloud services when organizations face budget and IT staffing pressures. Businesses are evaluating these solutions for backup and recovery, long-term data retention, business continuity, and the latest trend—data availability.

However, the comfort level with cloud solutions is somewhere between a grudging acceptance of the cost benefits and a visceral non-acceptance of living off of somebody else's server. The central issue is the perceived loss of control with the company's data. Along with security concerns about data access and data availability, there are technical limitations in living completely in the cloud.

Now compare this with the problems of carrying your own data. More and more people use laptops, tablet PCs, and smartphones for business, and it's easy to have these devices stolen or misplaced. Just consider these key stats:

• Personal information belonging to 26.5 million U.S. veterans was seized following the theft of the data from the home of a government employee, according to the U.S. Department of Veterans Affairs.
• Thousands of criminals' details were lost on USB key 22.08.2008. It has emerged that a memory stick containing personal details of 84,000 prisoners in England and Wales has been lost.

An important question needs to be posed to business professionals: why carry your sensitive data on your computer? Rather, access it securely from a virtual file server that appears as a local drive on your computer. In the unfortunate event of device loss, you don't lose data or compromise confidential information since there is nothing "stored" locally.

Similarly, perhaps you've heard that email is insecure. Many of the protocols involved with the sending and receiving of email are not considered secure protocols, in the sense that they are vulnerable to eavesdropping. For instance, Simple Mail Transport Protocol (SMTP), the protocol used to route email around the Internet, is typically implemented without any type of transport encryption.

Also, how many times have you wanted to email a large attachment—like a large photoshop file, a large CAD drawing, or a hefty video—but didn't do so because it exceeded your email provider's, or the recipient's, limits on attachment size or because it might max out the recipient's mailbox?

The foremost issue that businesses are concerned about is losing control of their data once it's outside the company's firewall. The importance of data security and privacy controls cannot be overemphasized. Encryption at the storage layer and encryption at the access layers are mandatory. Redundancy at the data storage layer that goes beyond RAID6 configuration and active mirroring should encompass secure data copies being maintained at more than one data center to protect against a network operations center (NOC) failure. Then there are compliance issues with managing and storing data, like SAS70 compliance, HIPAA compliance, etc.

Furthermore, the ability to have an "always" available local copy of the data in the cloud, essentially a "reverse backup," alleviates concerns about the data not being available if the service provider has some outage either in the software or hardware, or in the worst possible case, the service provider goes out of business. This, when coupled with Internet outage issues, either at the service provider end or at the customer end, can have a material impact to the business. In a recent survey conducted among small business owners, 99 percent of small business respondents validated that Internet outages can be detrimental to business. In fact, the survey showed that if the Internet was down for only one hour, over half (51 percent) would be moderately impacted and nearly a quarter of respondents (20 percent) severely impacted.

Latency issues are another significant challenge with cloud-based solutions . Businesses that deal with large files like CAD/CAM drawings, medical images, large design files, etc. will experience latency issues when living in the cloud because their access route is over the public Internet rather than over a dedicated connection to the service provider's data center. Switching from an on-premise application running over the LAN to the biggest WAN (the Internet) can therefore be an unsatisfactory user experience. This, therefore, calls for "hybrid" solutions that combine the cloud with an on-premise adjunct: the "local cloud." Solutions that can seamlessly merge the two worlds can truly help exploit the power of the cloud without the concerns of Internet outage, latency issues, and an always available local copy of the data. Interestingly, the same survey indicated that 66 percent of respondents said that offering hybrid solutions that connect online and offline was most important to gain small business owners' trust.

Complicating the acceptance of cloud-based solutions are technical limitations with desktop/server software designed to work on-premise. Some of these vendors either are already providing online versions of their software or are in the process of providing these to their customers. However, in most cases, there is a significant difference in features between the online and on-premise versions, with the latter being more comprehensive and, of course, being perceived as more secure. An interesting approach is to enable the traditional on-premise software to work locally but have it "cloud-enabled" for keeping the back-end data files in the cloud as a backup. This is where the "hybrid" cloud solutions are required.

Even if security for cloud solutions is made hack-proof, large companies with IT departments will never agree to live on third-party servers or data farms. However, the need to leverage the power of the cloud—secure access from anywhere—will lead to "private cloud" solutions. The distinction between a cloud solution and a private cloud solution will boil down to whose data center is running the software. Also, in case of the private cloud, there is no need for a multi-tenanted solution since there is only one tenant.

Needless to say, with teams getting more remote/distributed, IT budgets getting leaner, and bandwidth getting faster and cheaper, it makes sense to evaluate and adopt cloud solutions. For companies with no or low IT staff, these solutions reduce all hardware, software, and maintenance headaches, and even for larger businesses, they can improve the productivity of the existing IT staff. Well-designed cloud solutions should provide access to all kinds of desktop platforms (Windows, Macintosh, Linux) and mobile devices ranging from smartphones to netbooks.

Finding the Best Cloud Solution for Your Business

To help evaluate if the solution is right for you, you may ask the following questions:

• What kind of security and privacy controls does the solution have?
• Is it an integrated solution addressing the core business needs? For example, does it do just backup, or does it provides online file storage, file collaboration, and backup?
• Is the solution completely cloud-based, or does it provide a "hybrid" solution, both cloud as well as local?
• What kind of external audits/processes does the vendor undertake (SAS 70, etc.)?
• Is there an upfront fee or a simple pay-as-you-use model?
• Will the vendor whose solution you choose provide a transition plan in the unfortunate event that the vendor goes out of business?

There seems to be a pendulum swinging between a preference for local computing and centrally managed applications, services, and administration. Today's technologies with high-speed networks, low-cost disk storage, and enhanced protocols make it the perfect environment for cloud computing to really catch on and switch things well into the corner of centralized distribution and management. The ability to accommodate growth and leverage the existing network infrastructure will no doubt be too attractive for many companies to ignore. So it seems that for cloud computing, the sky is the limit.