Silver linings

For advice on moving business applications to the cloud, I doubt if there’s anyone more qualified to talk on the subject than the CEO of OneNet, Dr Michael Snowden.

OneNet has provided cloud-based solutions to New Zealand businesses since 2001 – well before it was commonly referred to as ‘The Cloud’. Today Snowden’s firm delivers cloud-based services via 150 authorised resellers around the country, and he believes cloud acceptance is entering an exciting new phase. “In terms of technology cycles we’re moving beyond the early adopter phase and into the early majority growth phase where there’s a much wider spread of acceptance.”

Until recently there have been cultural barriers in companies hindering change, says Snowden. Many business owners preferred their data server to be on the premises where they can see it. In larger organisations there has been resistance from IT personnel who’ve seen their livelihoods under threat. Business managers, while not understanding the technical jargon, do understand the constant IT capital expenditure requests (often cropping up when least expected) and challenges associated with having IT staff on the payroll; but they struggle to see how they can get out of it, he says.

“Along comes cloud computing, which for all practical purposes is a different version of outsourcing, and managers suddenly realise that owning IT equipment and having your own people running it, doesn’t bring any value whatsoever to their business. What makes a business competitive is the software they’re utilising.”

It comes down to your business model and the series of processes you employ, which are supported by software – “get that mix right and you can derive some competitive advantage,” explains Snowden. Driving that software is all that internally managed IT hardware – and that brings zero value he says. Snowden argues that pouring in IT time and resources actually brings negative value to a business in terms of serving customers. He is, of course, talking about software delivery – “the software itself and, more importantly, how you use it, is what creates value.”

Snowden believes the reluctance by businesses to adopt ‘the Cloud’ has been overcome by a number of factors – namely the introduction of Google Apps, Microsoft’s subsequent response, and Amazon Web Services coming along in 2005 – all helping create awareness and legitimisation of cloud-delivered services.

The adoption of cloud technology is following a typical ‘diffusion of innovation’ pattern. As business owners learn from trusted friends, peers or even competitors about the benefits of using cloud services – adoption quickly moves from a trickle to a torrent. Trigger points, such as the need for server upgrades, also help drive demand for cloud solutions – as does the trend towards mobile Internet access. If you can access the web, you have a window to your cloud-delivered solutions and tools; you don’t need to carry all that computing power with you.

Snowden believes switching to the cloud is nowhere near as scary as people imagine. He describes the process his company uses to transition a client over – which generally involves identifying the applications driving the business; running them in parallel on OneNet’s servers through a dedicated data line (while the client’s business carries on as normal); having those parallel applications tested thoroughly by users; and then at an agreed point, perhaps a weekend, all client data gets transferred over, and come Monday it’s a fresh start in OneNet’s Cloud.

Start-up businesses are a dead cert for the cloud – “because why would you want to invest all that money in software and hardware?” asks OneNet’s Snowden. However, a well established business might prefer to dip their toe in first – for example, an online server backup with automated data backups every 15 minutes to replace that dodgy tape system, or perhaps a ‘low risk’ email server.

Once that business has, say, its backup in the cloud and other applications such as Exchange and CRM, then it can look to migrate the main, critical software application that drives the business. It could be the ERP program, for example, which may or may not have been specially customised for the business.

Snowden says in this instance, his company rolls out its ‘Desktop-as-a-Service’ offering. They’ll run the application for the client and deliver it back to the users; the client only pays for what gets used. “The client still owns the application and accesses support from the same support provider as before. The difference is that everything below that application – the operating system, storage, processing, distribution, and so on, we deliver back at a per-user or per-usage rate. So if employee numbers increase, you know exactly what the incremental costs will be and you never have to worry about buying servers. It takes away the uncertainty.”

Data integrity can be an issue whenever cloud options are being considered – and the argument for local versus overseas hosting is inevitably raised. Snowden tells me of a local pharmaceutical firm that came to him after its US-based host lost its entire database. “The real issue is that there is almost zero legal redress there for the average Kiwi business; you’re dealing with different laws and can’t meet your host face to face.

“You may get a cheaper service overseas, but who will listen to you when there’s a problem? Is the service and support quality there?”

His advice is to thoroughly check out any potential cloud services provider before entrusting your precious business data to them. “Entrusting your data to someone else is understandably a giant leap of faith, because it is a vital part of your business.”

In the not too distant future, cloud will simply be the way computing is done, he says, and it’ll be a case of how you can harness it. “Businesses will ask ‘how can I innovate with unlimited computing power?’ ‘How can we better understand our products, services and customers; how can we serve them better and create more business value by using analytics and the cloud’s unlimited capacity?’ There will be no need to have this cloud conversation at all, suggests Snowden, because everyone will have embraced it.

It’s a bold prediction, yet probably a safe one.

NZ Business September 2013 Silver Linings