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Where's the cloud now?

Know the problems you are trying to solve before choosing your strategy.

October 28, 2013
By Randy Johnston/Microsoft Corp.

Cloud has fact and hype everywhere. Businesses will continue leveraging cloud resources throughout the rest of this decade and beyond. Vendors of products are still experimenting with definitions and marketing messages. Your strategies have to fit your organization. What are the business problems you are trying to solve and the solutions available? For most solutions, a blend of local resources and cloud resources will be needed for the foreseeable future. For example, Microsoft Office 365 is a blend of storage in Microsoft public cloud data centers, applications that can be run through a browser, and traditional Microsoft Office that can work locally or connect to the cloud storage. You can extend local resources over the internet, using Microsoft’s cloud resources. You can privately and publicly share computing capability with others using the cloud connections provided by Microsoft Office 365.

So what cloud capabilities are working well and should be considered? Why should you consider these strategies? What are the risks and costs? When should you choose Software as a Service (SaaS), private and public cloud offerings? Who implements these solutions? Although there is no single answer, this article will provide a summary of your choices.

Private coud, public cloud?

Software applications that can run in a browser are called Software as a Service, or SaaS applications. Examples in the accounting profession include: AccountantsWorld, CCH Axcess, GoFileRoom, GoSystem Tax RS, Intuit Online Tax, XCM, ADP Run, Avalara, Concur, QuickBooks Online, Xero, Wave, SageOne, FreshBooks, Kashoo, Intacct, SAP Business ByDesign, ShareFile, and SmartVault. Productivity applications that are SaaS include the Microsoft Web Apps, Google Docs, and Zoho Docs. Vendors are concerned about keeping your local speed and user experience fast and rich, and frequently have used more robust local clients as a solution to this issue today. Examples of this approach include Microsoft Office 365, as noted above and the CCH Axcess Suite. All of these product examples are public cloud offerings.

A second approach is to host traditional applications in a data center. Thomson Virtual Office, Cloud9 Real Time, InSynQ, Cloudvara, Right Networks, Qutera, and IVDesk would be examples of hosting services for traditional accounting applications. Vendors of accounting software frequently provide or recommend a hosting company for their product. Accounting software vendors also have added pricing models that provide for a monthly lease that includes ongoing maintenance instead of requiring all of the licensing fees up front plus annual maintenance. All of these vendors’ approach of hosting applications should be considered public cloud. Your files can be private or shared, but you are still using resources that are publicly available with supporting hardware infrastructure components shared by more than one company. When security is set up correctly, your private data will be secure. Some vendors would argue that even though you are sharing common data center and applications, your firm’s data is kept private, and they’ll refer to their offering as a private cloud.

We prefer to think of private cloud offerings where you build and maintain a private cloud in-house or in hosting centers that provide a completely separate infrastructure using offerings like Microsoft Remote Desktop Services (formerly Terminal Services), Citrix XenApp, Citrix XenDesktop, or VMware View. You may find the long-term costs to be less to build a private cloud in-house and you will typically see greater speed and flexibility. When a virtualized network is extended with these technologies, whether the network is in your firm or in a data center, you provide users the ability to run from anywhere, anytime with similar performance to the office. This approach is a private cloud. A few vendors will build a separate private cloud for you at a premium charge. The key benefits to a private cloud are more flexibility, integration and customization, and, in most cases, greater security but at a premium price.

Based on the current state of cloud services, it is very difficult to run everything in the cloud. Because of this, you will wind up with a mix of hosted applications, SaaS products and a blend of public and private cloud technologies to solve most problems. This strategy is a hybrid strategy. Hybrid simply says we will mix solutions together, and integrate them as needed to solve our business problems.

What should be your cloud strategy?

In our last article, “Where's the Cloud Now?,” we discussed public cloud, private cloud, SaaS applications, and blending these into a hybrid solution. You should always look at what you are trying to accomplish as a firm. If you are an accountant in public practice, think about the interfaces to your clients first. If you are in industry, think about how you interface with your customers and suppliers. The technical tools today allow you to work anywhere, anytime, and anyplace.

For any business problem, first you should look at the software that fits your needs the best. This process of establishing your requirements definition and needs analysis tells you what you believe is needed to solve the business problem at hand. If the solution you need is only available as an in-house or network based application, then don’t feel badly about choosing that approach. If your needs can be met by a SaaS application, then choose that. Make sure you understand that you’ll have to spend money on interfacing systems unless the vendor provides the interfaces. Generally vendors will provide many interfaces to make it easier for you to adopt their system.

If you conclude you need an in-house application, as noted above, you have two primary choices: implement a traditional in-house LAN/WAN extended with technologies from Microsoft, Citrix, and others OR turn to a hosting company that supports all of the applications that you need and want to run. If you have a mix of in-house and SaaS applications, or a hybrid solution, then you have to make sure your hosting provider can support all of the applications you desire. Model all of the costs for a 10-year period. This will help you see the cost/benefit of being in the cloud or remaining in-house. The reason for using 10 years in the model is that traditional network hardware such as servers and Storage Area Networks (SANs) need to be scheduled for replacement every five years. One of your largest unexpected costs will likely be on software licensing and upgrades if you have an in-house implementation. Cloud vendors factor in hardware infrastructure and upgrades in their monthly costs and charge this as part of their monthly charges. Remember that most hosting and SaaS contracts are the equivalent of permanent leases.

You will continue to have local technology resources that have to be maintained whether you are in the cloud or have an in-house “private cloud” implementation. These technologies include: a next-generation firewall, good cabling (CAT 6af), 1GBps switches, phone service (VoIP), copiers/multifunction printers, end user computers including Ultrabooks or desktops, multiple monitors, scanners, printers, smartphones, and encryption everywhere. Optionally, you may want to have: redundant internet lines, wireless (public/private), tablets, cellular data, portable monitors (MMT, HP U160), conference room displays or projectors connected with an Apple TV or McTiVia appliance, a well-thought-out website, and digital signage. This technology will need either local or remote technical support. Most of these items can be supported from a distance today, but you may be more comfortable by working with a local partner.

The advantages to being in a hosted data center include: redundant communication lines, generators for backup power, SLA (Service Level Agreements) of 99.999(9)%, physical security and control, command centers, SOC/SSAE 16 certifications (often inherited), and probable BC/DR preparedness. The issues for private cloud implementations include: sufficient local expertise, Microsoft licensing, ongoing maintenance and managed services costs, software updates, the capital expense of replacing server, SANs, and backup appliances every five years, power outages, physical risk in the office, and internet costs for greater speed.

As you do your evaluation of how to use the cloud, think about your goals. Look to maximize reliability and speed, minimize downtime and costs, and provide flexible client/customer solutions. With either a public or private cloud, you can work anywhere, anytime, anyplace … or not.