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The term “Cloud Computing” was developed to describe the hosting of Information Technology resources in a data center other than the one used by individual end-user companies (on-premise).
Information Technology resources impacted are as follows:
Network Components
Infrastructure components include technologies that provide the “plumbing” for system operation, data movement and access to other IT related resources internally or externally to
an organization.
- Infrastructure equipment including modems, routers, switches and firewalls.
- Server equipment
- Other infrastructure support equipment including spam devices, bandwidth analyzers and backup devices.
Network Software
- Security Systems including virus, malware and intrusion protection.
- Data protection systems supporting the backup and protection of organizational data.
- Network management utilities supporting the administration and management of an organization’s network. Some samples are monitoring systems, process control, workflow and communication technologies.
Productivity Software Tools
End-user tools to support operational needs to increase efficiency, productivity and quality. Example systems are:
- Email systems
- Word processors
- Spreadsheets
- Project management systems
- Graphic design, publishing and other content management systems
Business Software Tools
Software designed to address specific business issues and generally aligned with typical
organizational business units. Example systems are:
- Accounting
- Sales and Marketing Systems (CRM, Website)
- Operational systems specific to industry
- Integration Systems
- Connecting data between systems
- Provide transport of transactions between systems
Overview
At the heart of the “Cloud Computing” model is to leverage the economies of scale related to the capital investment, configuration and maintenance of the above technologies by sharing (among other organizations) the associated costs. In addition, having access to a greater level of quality and service related to these “shared” technologies that would otherwise not be possible within one organization without prohibitive costs.
Below are some of the key topics supporting the “Cloud” model and the instance where its use both makes sense, and does not make sense, to an individual organization. In general, there are two primary “models” for providing “Cloud” capabilities: Shared and Co-located.
Network Components and Network Software
Hosted Data Center
In both models, a hosted data center is included providing redundancy in critical areas insuring a high level of availability. For example:
- Power supply (consistent, battery, generated)
- Telecommunications redundant through multiple channels
- Physically secure environments
- Physically protected environments free from electromagnetic and fire hazards and include electronic friendly fire suppression.
- Redundant networking components (routers, switches,etc..) ensuring connectivity from servers to internal and external resources
Shared
In a “shared” model, the “Network Components” and “Network Software” systems are shared between multiple organizations.
- Server capacity is shared by multiple organizations.
- Servers have access to centralized management software and systems.
- End-user organizations have limitations on the resources available, configuration options and customization.
- Hosting charges include a pro-rata share of the costs of individual network systems.
Co-Located
In a “Co-located” model, an organization invests in “server resources” and elements of “Network Software” to meet operational needs while leveraging data center capabilities.
- Server resources are dedicated to the organizations needs.
- Network software components are either invested in or (based on hosting environment) paid for through the hosting organization.
- Very few limitations imposed on environment configuration and administration providing flexible management and customization.
Productivity and Business Software
Shared
In the shared mode, business software systems are licensed, distributed and resources shared between multiple organizations.
- As with Network Components, shared business software is essentially rented on a per month basis.
- Organization users are provided access to software functionality that would normally be provided if installed on a local machine.
- Software tools used would be specific to organization and end-user needs.
- Organizations would be take advantage of the most current functional capabilities while being insulated from the costs (and possible downtime) associated with upgrades.
Co-Located
In co-located installations, software licensing, upgrade costs and capabilities are essentially the same as in a traditional model.
Software as a Service (SaaS)
The most common applications that benefit from a SaaS model are those that are business unit centric.
- SaaS systems are distributed via the Internet and provide functionality typical of operational or line-of-business applications.
- System licensing is based, usually, on a monthly rental cost that includes the costs related to maintenance, upgrade and distribution of the application.
- As with the shared models described above, the end-user organization takes advantage of sharing the costs related to the design, development, enhancement and maintenance of a business application with other “end-users”.
- SaaS based systems are limited in their customization, integration and configuration as standardization is imperative to the underlying business model. Meaning, that if system customization/extension is not built into the architecture then each customization impacts the economic viability of future enhancements.
- SaaS systems follow the 80-20 rule of providing 80 of the functionality each individual organization requires while 20 percent is left to alternative solutions, or unresolved.
Business Case
Network Components and Network Software
- High availability environments require appropriate levels of redundancy that is not affordable in a typical SMB organization.
- Some high availability services are affordable, and often used, by SMB organizations such as web hosting.
- Web sites that are “read-only” and have little operational functionality are well-suited for a hosted environment.
- Technical infrastructure necessary for websites is usually very common and therefore very affordable.
- Basic integration to websites is common and therefore affordable to provide as a service.
- Some organizations utilize hosted environments for high availability infrastructure that is very niche in nature (i.e. phone systems).
- Organizations may require high availability environments where access to system resources is spread between multiple physical locations. In this case, the organizational impact increases with each business unit impacted by interruption.
- Organizations may not be able to reduce the business impact related to system interruption if the primary risk is not addressed. Power or telecommunication risks will still impact an organization even if the data center is hosted elsewhere.
- Cost savings will not necessarily be realized in a hosted environment especially if co-location is necessary to meet organizational IT requirements.
- Organizations need to weigh the cost savings of a “shared” plan with the reduction in associated performance, functional or customization capabilities.
- Depending on the resources allocated to “hosting” environments, performance risk increases as telecommunication speeds (externally) are slower than internal network speeds. This risk is further increased depending on the nature of data accessibility across those resources in the form of files, database calls and simultaneous users.
Productivity and Business Software
Productivity Software
- Hosted solutions for productivity tools is a valid alternative for those organizations that require expedited access to tools (startup, new offices, single users, etc..)
- Hosted tools provide an acceptable level of functionality for the business issue being addressed.
- Accessing productivity tools regardless of location.
- Tools that are “cloud-based” require an internet connection which may not always be available. This risk is being continually reduced as wifi and broadband connectivity is becoming more widespread.
- More advanced features of cloud-based tools may not be available including integration and workflow.
- Cloud-based tools may require another level of end-user training not necessary today.
- Traditional productivity tools are licensed one time while cloud-based toolsets are usually subscriptions where costs reoccur or the service is lost.
Software as a Service (SaaS)
- Business unit specific (operational) systems usually represent a high capital investment, configuration and maintenance costs.
- Saas systems functionality may address operational needs at a much lower cost than purchasing.
- Business applications incur costs related to maintenance of underlying infrastructure which the Business Application resides.
- Saas system maintenance of underlying infrastructure is built into the on-going charge therefore removing the associated risk.
- Saas systems may have limited integration capabilities limiting solutions that require moving data between systems.
- Access to data found in a SaaS system (if the service is no longer desired) may be an risk including data loss.
- Fundamental control of organizational data will be one layer removed generally increasing organizational risk.
- Access to application dependent on telecommunications architecture and interruptions will prevent operational abilities.