“Not a day goes by where I don’t read a headline talking about ‘the cloud,’” says Zack Schuler, founder and CEO of Cal Net Technology Group. “The current, overused definition of the cloud is ‘anything that happens on the Web,’ but in the business world, the more accurate definition of cloud computing is leveraging someone else’s hardware/software and services in order to complete a business task.”
Smart Business spoke to Schuler about the role that cloud computing has played for businesses over the last two decades, and in what ways it can benefit their operations today and in the future.
How does Cal Net Technology use cloud computing?
When I started Cal Net Technology Group 15 years ago, we didn’t host our own e-mail server. We used an outside company (Earthlink) to host our e-mail, which, in essence, meant that Earthlink was providing ‘cloud services’ for us.
We also have been using an online payroll service for eight years now, whereby we enter our payroll data into a website, and they process our paychecks for our employees. Many other businesses might be doing the same. This is truly a ‘cloud service’ that has been around for close to a decade.
Some companies use an Internet-based product called Postini, which has been around since 1999, to scrub their e-mail for spam. I bring this up to point out that all of us have been leveraging the cloud for quite some time now, and we probably didn’t even think about it; in actuality, it really isn’t a very new phenomenon.
What are some examples of how businesses can move functions to the cloud?
There is a definite shift in moving some computing resources into another company’s data center in order to save you some headaches and, in some cases, time and money, as well. I use the word some with emphasis here, because if you think that your entire business is moving to the cloud anytime soon, you are probably mistaken.
The most prominent shift to cloud computing is the migration of e-mail back into the hands of hosted providers, similar to how it was 15 years ago. Microsoft is now in the hosting business with its Exchange Online product and will soon release Office 365. Don’t be fooled by the name though; this isn’t ‘Office in the Cloud.’ It’s really Exchange, SharePoint (an intranet product), and instant messaging (dubbed Lync Online) in the cloud, with the ability to ‘rent’ Microsoft Office on a per-user, per-month basis, with Office still being installed locally on your desktop.
In moving from an on-premise e-mail solution, such as Microsoft’s Exchange Server, over to Exchange Online, the migration has been very time-consuming, and thus very costly. These migrations have proven to be more costly than moving from one on-premise solution to another. That being said, there can be some significant savings in hardware and software costs, reducing CapEx spending for many companies. Additionally, after the solution is running, the ongoing maintenance of on-premise solutions will be gone, which should equate to a cost savings in the long run.
Google has made a significant impact in cloud computing with their Google Apps software. From what I’ve seen of the software, it is a good solution for individual use, and for the use of ‘micro-businesses,’ but it reminds me of Office 95 from a functionality standpoint. So, I couldn’t recommend this to any business that relies heavily on word processing within their organization.
Perhaps the most successful case study, and a company who I feel has truly made its mark by delivering software over the Internet, is Salesforce.com. They have a very robust feature set within their application, and I think it was remarkable what they were able to do early on in the cloud-based CRM space.
There are some other line-of-business applications that are cloud-based, as well, and truly deliver a rich user experience, but these are few and far between.
What are some challenges that businesses face with using the cloud?
In our experience with cloud computing thus far, the biggest challenge is integration among systems. With as smart as technology has gotten these days, many systems are now talking to each other. For example, your accounting system might automatically e-mail invoices to your clients utilizing your e-mail system. Well, if you are on a cloud-based accounting system, and a cloud-based e-mail system, and these are at two separate cloud providers, you could lose that functionality. When both of these systems are located on your office network, then the two systems have an open enough architecture that they can have their ‘hooks’ into each other and can truly integrate. This lack of integration is what stopped us from putting our e-mail into the cloud. We simply have too many integrated systems that make it necessary to keep our e-mail on premise.
Another show-stopper for many of our clients is the fact that you completely lose control of your data and uptime when you are in the cloud. If your business is 100 percent cloud-based, a simple Internet outage at your company, or at your cloud provider, means that you are sending people home for the day, and your customers are going elsewhere. No one asks about how your cloud provider is backing up your data either. Many assume that this is happening, but I can point to many examples of lost data in the cloud as well. This is not good if you are trying to run a business.
How can businesses determine what to take to the cloud?
Is the cloud here to stay? The answer is yes. Is it truly ready for prime time? My opinion is no. The wise approach to the cloud is to hire an IT firm with expertise in this area to evaluate your systems, determine the few that may be ready for the cloud, and take a hard look at the overall ROI in moving them.
Zack Schuler is the founder and CEO of Cal Net Technology Group. Reach him at [email protected]