My Head is in the Cloud

I have come to write this article after being inundated with a barrage of bandwagon jumpers who are proclaiming to have found a new religion in Cloud computing. I attended EMC World in Boston and they have spent an inordinate amount of branding dollars on “The Private Cloud”. At a resent Microsoft ISV event they primed us with their Cloud story and let us know that when we attend the World Partner Conference in Washington DC next month, we’ll get a full dose of the Kool-Aid.

So what’s all the hype about? Haven’t we been down this road before? Let me break it down for you. What they are really talking about is pure and simple “outsourcing”. I happen to be a huge fan of outsourcing because I spent about 1/3 of my career working for a payroll services company and drove tremendous value for many enterprises by offering a variety of outsourced services. Of course back then, fax machines were in vogue and intercompany email was just evolving. I know, life before the internet, hard to imagine. Back then, we were very proud of our Wide Area Network (WAN). I think we were as proud of that as EMC is of the Private Cloud today.

In the late ‘90’s the internet was starting to emerge and everyone was getting a web presence. I realized at that time that setting-up and maintaining these environments was hard and “outsourcing” to a company that hosts web sites would probably be a good idea. So we started a web hosting company (before they were called that), and perhaps we were a little too early in the adoption curve because our investors decided that the internet was just a fad and pulled the plug before we could get the rocket off the ground. Notwithstanding our failed experiment, the idea was sound and as evidenced by the evolution that ensured, many succeeded.

So what is different between the internet hosting companies of the late ‘90s and today’s foray into the cloud? Well on one hand very little has changed and on the other hand a lot has changed (Editorial comment –it is statements like this that make me think I’ve spent too long in the consulting field). The scope of applications has broadened from simple Web Content Management (WCM) systems to pretty much any application in the cloud. Bandwidth is growing exponentially and becoming cheaper in the process. This is more true for our US neighbours than North of the border in Canada. So how do you determine if the cloud is right for you?

First let’s dispel a few myths upfront. Security is my favourite topic because it’s usually the first flag that is raised. A classic consultant trick is to use the security trump card when you know you’re wrong and the idea on the table is better than yours. It goes like this: “Well, yes I can see how that would work, but of course you understand it’s less secure”. So let’s get real about this topic. The biggest risk to security is internal, not external. I have walked into offices where the administrator credentials are literally taped to the screen of that highly secure system. The last time I checked, hosting centers don’t allow access to those pesky little USB sticks to copy files off-system with little or no detection. Having been behind the firewall of literally hundreds of companies, I can tell you that I would much rather trust perimeter monitoring and security hardening to someone who does this for a living than the many IT departments trying to do this on a shoestring budget.

Control –the other false sense of security. Based on anecdotal evidence, I would say at least ½ of the back-up routines that are run so diligently every night have never been tested in a fire drill, and most of those would never recover the data they were intended to recover. Don’t tell me this isn’t true, because I’ve lived in those environments (names withheld to protect the innocent). Then of course there are the mega disasters like Katrina that literally wiped out entire data centers, but I’ll try not to be too dramatic in making the point.

Many IT shops consist of a handful of superheroes and a plethora of monkeys. Their service level agreement consists of –I’ll fix it as soon as it breaks and I’ll dawn my superhero costume and do my best to minimize downtime after someone discovers that it’s broken. Don’t get me wrong, I’ve seen some really crack IT shops that frankly I am envious of. If you think I’m wrong about the number of shops that are less than adequate, let me ask you this question –how many companies have a really well managed Active Directory? The prosecution rests on this subject.

Economics is another myth that needs to be dispelled. In the interest of full disclosure, I believed outsourcing beyond a small business market to be too expensive too. About a week ago, one of our sales reps came to me to calculate cloud pricing for a 60 person Exchange and SharePoint deployment. I did a quick calculation –60 users was about $750 per month for Microsoft’s Cloud offering. I said, there’s no way the client will go for that. So I started calculating an in-house solution. I used a 36 month amortization schedule on the software, including Exchange and SharePoint only and I was up over $900 per month. I hadn’t even started to calculate hardware, set-up and the care and feeding of the server. Not to mention, the Cloud offering also included Office Communication Server. That’s when I realized; somebody in Redmond had already done the math and ensured it was more economical.

Ok, let’s be real, not everything belongs in the Cloud and if I were to use the Microsoft example, yes there are limitations to the offering. I’ve used SharePoint in the Cloud and my frustration was that I had no access to Central Administration –meaning, I could not install any of our super cool (if I do say so myself), custom web parts. Flipside, I set-up the site and had it running between me and the client in about 10 minutes. It cost me a whopping $24/month, on a $50k contract it wasn’t even a rounding error. Not to mention that we were able to keep the project on track because we were always working with one version of the truth. In this case the trade-off was simple. I had less flexibility, but virtually no headache. As the evolution of the Cloud unfolds, I can see where the functionality will be less and less limiting.

My next example was a client that required CRM, but was quoted $100k to get it up and running. For a 25 person company, that’s an ROI that could not be justified. In this case, they opted to have CRM in the Cloud and they had us install SharePoint on-premise. The orchestration of credential management was done by a company called Statera with a product called Stratus http://stratus.statera.com/. I will do a small shout-out to this company because they have solid technology and really great support. This kind of deployment makes a ton of sense. The light transactional CRM data lives in the cloud, and the heavy document management information lives inside the firewall on local servers. It is seamless from an end user perspective.

What is interesting is that Microsoft has now put a stake in the ground saying “we’re moving to the cloud”. I’ve always said, Microsoft gets it right on the third try and by the forth try, they own 90% the market. Right now, they’re at about the second try, depending on the business application you are working with. Reading the tea leaves, they are poised to do something great in this space over the next couple of years. For now, I would consider hybrid solutions where it makes sense. For example, moving democratized applications like your Exchange server to the cloud is a no-brainer for most organizations. OCS seems like another natural candidate. Most individuals use Microsoft Messenger within enterprises that still allow it (incidentally, this is a huge Cloud app). Why not get some governance in place and use OCS instead?

Bottom line –this is an evolution, not a revolution. Pick what’s right for your enterprise and start working with the cloud.