Cloud computing, including Software-as-a-Service (SaaS), Infrastructure-as-a-Service (IaaS), and Platform-as-a-Service (PaaS), is widely seen as the next big thing. Gartner, for instance, says “Cloud Computing Will be as Influential as E-business”. Its attractiveness to business executives include: 1) the opportunity to replace capital expenses (CapEx) with operational expense (OpEx); 2) increased flexibility to control costs and respond to sudden changes in the business environment; 3) utility-model billing that shows the CFO exactly what the enterprise is paying for and 4) and the opportunity to cut corporate payroll.
Cloud computing also provides a strategy for rationalizing the enterprise application portfolio. Obsolescent applications are often retained long after they have been replaced by much newer, more flexible systems to maintain access to inactive but still business-critical data needed, for instance, to support compliance requirements. These become early targets for a migration to the Cloud, which can free data center resources while maintaining data access at a much lower cost. Such a strategy also allows the enterprise to gain experience with Cloud computing without the pressure of maintaining quality-of-service for production systems.
While not appropriate for applications handling very high security data (e.g., the formula for Coca Cola or the nation's nuclear secrets) or applications that are providing competitive advantage, cloud computing can replace many expensive applications and their associated infrastructure. Advocates have argued persuasively that many small-to-medium businesses (SMBs), for which IT is basically a cost center providing no competitive advantage, have no reason to have any IT above the LAN in house. Everything they need can be provided by the Cloud at much lower expense and often higher service levels than their present in-house solutions and staff, as anyone working for a company that uses Salesforce.com knows.
Given these advantages and the present economy, the surprise is that cloud services are not being embraced more rapidly.
Everything has tradeoffs, of course, and cloud computing has its own set of issues. The first of these to surface in most conversations is data security and loss of control over your data. The second is quality-of-service (QoS), including network latency issues.
Security and control of sensitive data is a multi-level concern. However, a key part of insuring security of data moving to a third-party service provider's infrastructure is a strong data masking tool. This can mask sensitive data fields as the data leaves the organization and unmask it only when it returns for internal use, effectively maintaining internal control over this data.
QoS is in large part a product of real business needs. The reality is that while Cloud Computing does have latency and sometimes other quality issues, often internal services also suffer from problems. And the large numbers of organizations engaged in e-business today already have a fairly positive experience running applications requiring high QoS, such as e-commerce, over the Internet. Certainly currency trading applications are not going to move to the Cloud. But few internal applications really require sub-second response times.
Further, infrastructure development is a major focus of research in the area of Cloud-based applications; with time we may resolve the latency issues but speed of light remains an issue. In the meantime improving application performance via archiving can potentially offset some of the lost performance because of the latency. A strong archiving tool can move the data off the production database to appropriate media, supporting a tiered storage approach by archiving data that is still in use to Tier 2 or 3 online systems such as SATA or MAID disk arrays, and moving data that is no longer used regularly to off-line media. A good archiving tool also maintains a directory of the archived media, making retrieval easy when that is required, for instance to support compliance audits or satisfy legal discovery requirements in civil torts.
On the other hand, the opportunity to retire obsolescent applications presents a strong argument in favor of Cloud platform. Over time, enterprises collect large numbers of data assets in M&A, application upgrades and migrations. Old applications tend to hang on far beyond their obsolescence because they have influential supporters among users who, having learned how to make them work, are unwilling to ever let them go. Duplicate applications accumulate to the point that many organizations may have two or three applications that do the same job, and often cannot even communicate with each other, running in their data centers. The result is that some CIOs cannot even answer the question, “How many applications do you have running, and how many do you need?”
The main reason businesses develop these bloated application portfolios is not because they're trying to manage too many business processes, but rather because they're trying to manage a small number of business processes in several different ways. In this economic environment, they cannot afford to maintain this redundancy, which costs money in the data center and damages productivity in the larger enterprise. The answer is to review the application portfolio to identify under-performing or redundant systems where maintenance outweighs business value with an eye to consolidate applications, and a Cloud computing strategy provides the perfect opportunity to do that.
Such reviews often identify inactive or orphan applications that are maintained for compliance reasons. These applications provide a perfect opportunity for businesses to “get their feet wet” in Cloud computing at minimal risk. By retiring those applications with the least amount of active data to the Cloud, they can optimize their portfolio, reduce cost and risk, decrease CapEx expenditures, while gaining experience in Cloud computing and maintaining access to business-critical data. This approach allows them to gain a comfort level with Cloud computing before moving on to look at major production systems.
Action Item: Cloud computing offers an opportunity to rationalize the enterprise application portfolio, replacing obsolescent applications with SaaS equivalents that provide access to business-critical data at a much lower expense while freeing storage and processing equipment in the data center for reuse, reducing pressure on CapEx budgets. CIO's should assess their application portfolios from a cost and value basis to identify which applications are best candidates for the cloud. Those with high cost/low risk profiles should be considered primary targets.
Footnotes: Solix Technologies is a leading provider of data management, masking, and archiving and application sunsetting tools. Its EDMS solution set includes rules libraries allowing it to archive the data from popular enterprise solutions, including CRM and ERP, while preserving the full context of each transaction. That data then can be accessed using either the native application or Solix EDMS or popular third-party data readers.