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Cloud 101: Removing the Barrier of Technology Investment

Cloud 101: Removing the Barrier of Technology Investment

Imagine that you are a small business owner and you find that you are leaving money on the table because you don’t have a mobile application for customers to make appointments or check their orders, your manual business processes are too slow for a real-time oriented society, your employee turnover allows business knowledge out the door, or you can’t do business with Walmart or Target to sell your unique product on their shelves because you can’t do B2B electronic business effectively. Competing in this next era of computing can be a daunting proposition. Cloud computing may be your answer, as it is being used worldwide to level the playing field and allow small businesses to compete in markets dominated by larger enterprises.

Technology is a pervasive force that impacts every industry. As portrayed in the 2014 movie Chef, even a lunch truck was impacted by “going viral” on social media. Big business has led the way for decades with massive databases and global networks, run on mainframes and enterprise servers, and supported by armies of IT workers and consultants. From a business forces perspective, the level of investment into information technology has been a barrier for many years to entry into markets ruled by large business with an existing technology infrastructure. Not only do large businesses have an existing investment base, but they also have the financial ability to fail with regard to technology. Small to medium businesses don’t have that luxury, as a failed technical project could result in a poor business decision from which there is no recovery.

Over the past decade, the technology provider industry has become highly competitive with offerings termed “cloud computing”. This is a major shift from the traditional model of selling technology to businesses that must be installed (deployed), maintained, and operated by the business. With cloud computing, the industry has entered into a market that can best be described as utility computing.

Cloud computing vendors are able to provide this new model due to the development and maturity of technical capabilities such as virtualization and multi tenancy. Virtualization is the concept of turning a single computer into multiples via software that can differentiate and manage many operating systems on one physical environment. Multi tenancy is the concept of hosting many customers on a single device. One way to look at this is a time-sharing environment.

At its most basic level, cloud computing can be described as a set of three key services: Software as a Service (SaaS), Infrastructure as a Service (IaaS), and Platform as a Service (PaaS).

Software as a Service

SaaS is a utilization or subscription-based license for software that is developed, maintained (supported), and operated by the utility (software company). The service is accessed via the web is and hosted (housed) at the utility location. Also, the services are not as highly customized as self-written programs and may not conform to unique business needs or processes. SaaS is best utilized for technical needs or capabilities that are common in nature such as office essentials, email, and document sharing. In many cases, it can also fit the needs for higher order capabilities such as supply chain management, enterprise resource planning, and customer relationship management.

Infrastructure as a Service

IaaS is a usage-based model for the computer, storage, and network resources. These are commonly understood to be PCs or servers, disk drives, and internet connectivity. Using IaaS enables a small business to instantly acquire needed computing resources. No need for a building, computers, networks, etc. One big advantage of cloud computing for IaaS customers is that the environment is elastic. Elasticity means that when your business grows, your environment automatically grows, and if your business slows, the environment right sizes itself. Imagine the value that this provides to a small florist chain around Mother’s Day. Rather than investing in the computing resources for peak, (leaving the systems nearly idle the remainder of the year) the computing environment elastically expands to meet holiday demand and contracts after.This is a great option for seasonal businesses such as tax preparation or a ski resort.

Platform as a Service

For those businesses that find real value in creating their own mobile and web apps, a PaaS environment hosts all of the necessary tools to use the cloud to create and deploy your programs. In a highly configurable environment, developers (programmers) can choose from a menu of available services to compose an application, manage it, and run it on an IaaS environment. In some cases the SaaS vendor that provides general purpose software may also provide a PaaS environment for any needed customization where a business has unique processes that they would like to automate and link to the SaaS.

Top 5 Reasons to Use the Cloud

  1. Limited Software Licensing Investment: Cloud applications are generally subscription or usage based and in both cases, unlike a mobile phone contract, can be terminated without penalty. The software that a small business may use for customer relationships, sales management, or financial management (as examples) may be used for a minimal up-front fee and paid for on a monthly or yearly basis. Alternatively, the software use may be initiated at no cost and the business will be billed monthly based on usage similar to a utility. This is a major win for small businesses trying to compete in a space populated with bigger players.
  2. Currency: Cloud systems are current. Currency includes systems that are updated with the latest features by default and systems that are able to transact with the most sophisticated of business partners.
  3. Managed Services: Moving to an IaaS environment eliminates the need for an organization to be in the “business of IT”. If you are not a technology company, then why do you try to maintain your own technical environment?  It’s a potentially painful move, but the simple fact is that you don’t generate your own electricity or pump water out of a well. So why, then, do you incur the high cost and high risk of trying to run your own technical utility in house?
  4. Agility: If you do need to develop a capability that would take years to create in house (CRM or ERP), but you only have weeks, or if you need to write your own mobile application and you have days then SaaS or PaaS may be the answer. If you need to add more computing power to address an anticipated spike in business, but only need it for a short time, then IaaS may be for you.
  5. Instant Maturity: In addition to basic services that cloud vendors provide, they also make many additional services available as you need them. Network management, security controls, and advanced analytics are just some examples. When your business grows and matures and you are ready for advanced capabilities, the cloud vendors are at your service.

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by Steve Bretches // Contributor to Businessing Magazine. Executive architect and digital strategist serving IBM clients and professor of Innovation and Technology at California Baptist University serving the MBA program.

Opinions expressed by contributors are their own.