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coud computing

More than jus t buzz, the cloud rep resen ts themost fundamental computing shift in a decade

Cloud computing promises cost savings, more efficient use of

IT resources and uncomm on fle xibility, and those claims have

driven it to the top of the buzz list. But at what costs and w ithwhat risks? Are Canadian businesses ready to move portions

of their business to the cloud—a shared, virtualized, on-de-

mand IT environm ent accessed prima rily over the Internet?

Chief among the problems facing cloud adoption is sim-

ple confusion, according to many experts. A recent survey

conducted on behalf of software management company CA

Technologies found that 62 per cent ofbusiness executives

and 23 per cent of IT executives ad mit tobeing confused by

the concept of cloud computing. This broad confusion serves

as the biggest barrier to ado ption of cloud by businesses, said

Phil Shih, Web hosting and Interne t infras tructure services re-

searcher at Tien Research. Despite some significant benefits,he said, "If you don't know wha t it is, you surely can't adopt it."

H a z y d e f i n i t i o n s

Cloud compu ting is generally defined as accessing com puter

resources, usually over the Inte rnet, that are dynamically scal-

able (sometimes called "elastic") and offered like a utili ty, o n a

pay-per-use basis. Need terabytes of storage?More processing

punch for a particular project? Cloud computing allows busi-

nesses to buy anduse what they need, when they need it .

mot uuLthoutrisks

The economics and op-

portun ities are promising,

but the cloud is not perfect.

Phil Shih, Web hosting and

Internet infrastructure ser-

vices researcher a t T ie n Re-

search, pegs fear of the un-

known as the number one

barrier to adop tion. This

can even be true am ong IT

professionals, as procur-ing technology over the

cloud is simply not in line

with the way many built

their careers. That reduces

com fort levels among the

group tasked with ensuring

cloud environments work

and function as needed.

Security and account-

ab ility are also chief

concerns. Although the

electrical power grid isacommonly used metaphor

for cloud computing, the

parallels stop a t delivery,said John Sloan, lead ana-

lyst at Info-Tech Research

Group. "Generally e lectric-

ity goes only one way. If you

have a relationship with a

cloud service provider, data

usually goes both ways. So,

how secure is that data?

And also, from the perspec-

tive of accou ntability, if you

have to com ply to ce rtain

government regulationsaround the state your data

is in, or where it is and who

touched it, it becomes prob-

lematic, but not impossible,

to move it to the cloud."

Businesses lo okin g at a

move also need to consider

reliability and a vailability

of the a pplications. Sloan

said this is an area that has

improved, but he has heard

horror stories about cloudproviders going dow n and

leaving outages across

an entire ecosystem ofstartup companies.

Data mobility is a

further concern, Sloan said,

just like the telephone

industry before number

porta bility, businesses can

feel trapped w ith a cloud

provider since their d ata

and applications c ould be

tied to a proprietary archi-

tecture . "We say cloud in

the singular, but it's reallyclouds, and you have to

consider that."

Finally, the economics

are not a guaranteed fi t for

every company or every

application. Although

cloud can eliminate up-

fron t ca pital costs, over

time operation costs could

climb to a point where it is

not effective from a to tal

cost of ownership (TCO)perspective.

Michael Redding, man-

aging director of Accenture

Technology Labs, cautions

business executives to look

closely a t the costs of mov-

ing certain applications to

the cloud, as in some cases

theonline world will in-

crease costs. "A lot of times

with cloud, just because you

can do som ething doesn't

mean you should. [There

isn't necessarily] a better to-tal cost of ow nership, so for

the CIO and for the business

you've got to make a busi-

ness decision on whethe r

the cost of change is w orth

the pain and agony of mov-

ing to the new model."

The first place to look, he

said, is at functions that are

basically comm odities, like

e-mail. These offer reliable

savings wi th fewer risks.At the same time, some

very complex applications

are moving to the cloud. For

example, BPS Resolver, a

Toronto-based governance,

risk assessment and com pli-

ance company, has offered

its software in a SaaS model

for more than six years and

it recently ported it to a

cloud delivery model.

"When virtualizationbecame m ore common-

place, we looked at a model

where— instead of...basi-

cally locking in to specific

periods of time-—we wo uld

have more flexibility to

ramp up and down our

specifications, our individ-

ual servers and the ab ility

to add more servers or take

them away for peak-load

periods," said CTO James

Patterson.

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A re yoy ci DBut cloud definitions are

rare ly simple, and different e x-

perts suggest various attributes

or elements. Shih said cloud mustincorporate a number of key attributes:

elasticity, a pay-per-use consumption model, and

remote management and hosting by a third party. He said tech-

nically cloud computing re pre sen ts only computing and storage

reso urces, and not the business application running over it.

John Sloan, lead analyst at Info-Tech R ese arch Grou p, fur ther

points out that cloud is the architecture on which services run,

but not the services themselves. To make it cloud, Sloan said it

must incorporate four e leme nts: vi r tualized computer resource s

(the memory, processing or storage); ownership by a third-party

service provider; resources provisioned in a flexible or dynamic

way; and resource s that are shared be twee n mult iple businesses.

Sloan said this "classic" defini t ion of c loud is changing

t hough , a s mor e bus i ne s s e s l ook t o t h e a dva n t a ge s o f r un -

ning similar virtualized environments, either internallyor in a private hosted environment (often dubbed "pri-vate cloud"), orcombining shared multi-tenant hosting

with their own private virtualized infrastructure ("hybridcloud").Sloan said the confusion around cloud stems inpart

from the buzz of the te rm itself "It's like going to the supe r-market and, if oat bran is all the rage, all the cereal boxeswill...say "Now with Oat Bran.' It's like the boxes now say'Now with Cloud.'"

Experts also rush to point ou t that while the cloud is sim-ply the tra nspor t m echanism—like the powe r grid over whichhome or business ele ctricity travels—processes such as Soft-war e as a Se rvice (SaaS), Infrastructure as a Service (IaaS) andPlatform as a Service (PaaS) are often lumped into the bro ad-er de finition of cloud.

Some, like Robert Miggins, senior vice-president of busi-ness deve lopment with cloud facilities provider PEER i Hosting

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Computing?prefer a broader definition of cloud: it is simply IT outsourcingwith flexible terms. He notes that cloud is driving customers toseek from his company more lexible cloud-like options for tradi-tional private hosting.

"It's kind of like what the term 'green' has become, it reallymeans a lot of things now," Miggins said.

Ripe for smaller businesses

Buzz heavy or not, experts say cloud can help level the playingfield for small- or mid-sized businesses looking to leverage tech-nology to optimize their business.

According to Paul Edwards, director of SMB and channels re-search at IDC Canada, the SMB market is ripe to benefit from cloudservices, especially businesses with fewer than ioo employees.He said moving to cloud services can give small bus inesses an op-portunity to automate business processes they haven't been ableto in the past due to lack of IT staff, restricted capital and a dearthof advanced equipment.

"What cloud brings to the table is the o pportunity for smallbusinesses to improve their operational or business processes inorder to improve their business overall," Edwards said. "This is

something they haven't been able to em brace in the past becauseof on-premise technology costs."

Edwards said because of this, a higher proportion of small

businesses are looking to adop t cloud-based services in 2011. Hecalls cloud-based Software-as-a-Service and lnfrastructure-as-a-Service the building blocks that small businesses can use to riseup to operate like a larger business.

Sloan likens the small-business cloud use trend to th e shift to-ward distributed computing in the early 1990s. "Small businesseswere a growth engine for distributed computing," he said. "Mostsmall businesses co uldn't afford big-iron (mainframe) processing,so they built their businesses on PCs. 1 think that there's a similaropportunity now w ith cloud, where smaller businesses that needservices of some kind can look to the cloud and m ight have highertolerances for the risks or concerns."

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Niche sw eet spots

Cloud-based services are more suited for some businesses.

Those with computing needs that fluctuate seasonally or arehard to predict can find the economics of pay-per-use technol-

ogy procurement beneficial over purchasing software and serv-

ers themselves.

As well, technology-oriented businesses, like software devel-

opers or Software-as-a-Service companies, find the cloud com-

pensates for uncerta in computing power needs, or to ramp up anddown infrastructure for a major project or deployment.

"Primarily, cloud a doption is (most significant) among the fur-

thest along in the developer space—the Silicon Valley crow d, the

geek crowd, the very technically adept—who are better able to un -derstand and manage technology at a high level," Shih said.

These tech-savvy companies have kicked off the mom entum

for cloud, since moving to a cloud service prov ider like Amazon,

com still requires a lot of difficult manual technical work. He saiddevelopers wh o have turned to the clou d for storage of no n-c rit-

ical information and the processing power to run and test their

applications during development are the first wave of what isstill a nascent technology.

The second wave, according to Shih, includes retail busi-nesses wit h e-commerce sites, "any type of Web app lication orcontent th at gets high-degrees of variable and u npred ictable, if

not explosive , traffic." These businesses do no t itwell, Shih said,

into the traditional model of outsourcing on a per-server-per-

mo nth basis, as these approaches are less granular in terms ofcost and capacity.

Shih said the third wave buying into the cloud are mid-

sized business and enterprise companies looking to cut costsand offload certain process workloads from their own infra-

structure. Small businesses, he said, aren't technically looking

to cloud as Shih defines it but are porting some applications to

cloud-based SaaS.PaymentEvolution is one such Canadian SaaS company with

cloud-based service focused o n the small business market. Us-

ers of its payro ll applica tion ope rate in a familiar, and thereforesimple. Web browser environment. "Most small business own-

ers really just care about getting a job done and payroll is one of

those nuisances they just need to handle," said Sam Vassa, m an-

aging director at Payme ntEvolution.

Vassa said pay roll was an area begg ing for a cloud overhaul.

"The indu stry was really in need of some innovation; the last in-

nova tion in the m arket was direct deposit and that was in 1990."Moving to a cloud model allowed the software company to cost-

effectively service a growing number of customers more effec-

tively, he said. In addition, the company can offer more sophis-ticated and constantly up-to-date software, since updates and

new versions are deployed on the ir end be fore being accessed

by customers.

Vassa said traditional software deployment models wouldcost between $50 and $60 per user for each update, and users

wo uld have to install the software locally, often w ith tech assis-

tance from the vendor. Now, PaymentEvolution updates its fea-ture set weekly to deal with market changes and at an internal

cost of only pennies per user. 0

All content oiso ah backbonemog.com/magazine

unique Canadian

opportunities

where issues of privacy are

involved, location ends up

being a major concern, as

companies wish to ensure

the i r data is in- -o r not i n -

specific loc ations . Cana-dian companies concerned

th at the U.S. Pa triot Act

migh t open their data to

gove rnm ent access seek

Canadian facilities. And on

the o ther side, American

customers often feel more

comfortable with home-

soil fac ilities, said John

Sloan, lead analyst a t Info-

Tech Research Grou p.

Distance can also create latency or performance is-

sues whe n accessing IT resources over the cloud , he sa

Jim Latimer is vice-president of client services at

CentriLogic, a hosting company w ith cloud services

offered from facil i t ies in both O ntario and New

York State. He said there is a marke t for Canadian

facil i t ies tha t his company is tapp ing into , and it 's

not just for Canadians. Latimer pointe d to a New

Zealand-based health-care so ftware provider. That

company found it bene ficial to seek a cloud provide

w ith facil i t ies tha t meet Canada's "stric t bu t fair

privacy rules."Canada also enjoys grea ter access to clean

energy and even the we athe r is a ben efit, as our

climate provides natural data-centre cooling during

the winter months.

According to University of Ottaw a law profes-

sor Michael Geist, Canada may curre ntly lag behind

other co untries in the area of cloud com puting, but

it is well positioned to become a leader. "We already

have m uch of the technical and privacy infrastruc-

ture in place, we are in close p rox im ity to the U.S.

and our privacy legislat ion meets internationalstandards."

Large well-funded téleos, governmen t incentives

to install fibre, R&D tax credits, strong talen t com ing

from Canadian universities and strong integra tion

w ith Am erican netw orks are other drivers making bus

nesses seek Canadian cloud service provide rs, Latime

said. "In C anada, we're rig ht next do or; we're America

hat, giving us the best of bo th w orlds."

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