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Cloud Computing: Will it thunder or rain?

Higher productivity, better resource utilization and innovative solutions are some of the critical factors for sustainability of any organization. In today's highly competitive environment, organizations need to be more agile, flexible and able to respond to changing customer preferences quickly. IT, as an enabler of doing business efficiently, has always provided a bucket of solutions to organizations to achieve their business goals. Customized applications, SAP, Oracle, Siebel packages etc. are some of the preferred solutions for the organizations. Although these IT solutions provide desired results to organizations but their implementation and maintenance are huge upfront costs for any organization. In global economic uncertainty and tightening market, organizations need to evaluate other options which are secure, reliable and cheaper. It makes a case for cloud computing based IT solutions. Cloud computing has become buzzword in today's business world globally and organizations are certainly cannot ignore it without evaluation.
I am going to discuss various benefits and concerns associated with cloud computing solutions. I have taken example of Salesforce.com (SFDC) in next few paragraphs for better illustration. SFDC is pioneer in cloud computing based CRM packages.
Some of the important features of cloud based solutions are multi-tenancy, rapid deployment, pay-as-you-go model, high flexibility, On-demand solution, automatic upgrade and Lower total cost of ownership.  Salesforce.com as compared to traditional systems (SAP or Oracle) has very small implementation cost and deployment time. Pay-as-you-go model works like our electricity bill. Organizations are charged for what they are actually using. Hence, Organizations are not needed to buy heavy infrastructure and licenses keeping future expansion plans in mind. They can scale up their CRM application as per their requirement. It puts lesser burden on company's cash flow.
Salesforce.com offers automatic upgrade to any new feature to running applications. It also has a repository of hundreds of applications where organization can browse, test and implement as per their need.  Force.com is delivery platform for Salesforce.com which is secure, reliable and scalable. Salesforce.com also offers Chatter, a collaboration cloud product for providing private organizational networking tool.
Cloud computing solutions are fast, user-friendly and cost-effective compared to traditional IT solutions. So, should we assume that traditional system has outlived its utility and cloud based solutions are going to replace them? In my view, there is little possibility for it.
There are certain downsides also with cloud computing solutions. The biggest threat is that as organization's crucial data is lying in cloud and if unauthorized access is obtained to these data, it would pose a big question mark to Cloud based CRM reliability.  As these cloud service provider has tie-up with various third-party vendors, it makes the system more susceptible.
As most of the organizations have already invested huge sum in implementation, training and maintenance of legacy system, they would be reluctant to move to cloud based system. Any CTO would not be willing to experiment their business data with new cloud solutions.
Any interruption in third-party data hosting facility would impact the all organizations under multi-tenancy arrangement. In August this year, Amazon's Elastic computing cloud (EC2) suffered outage for few hours impacting its clients' (Foursquare, Netflix) business.
Keeping above concerns in view, organizations can adopt private cloud or hybrid cloud options. I would discuss about these options in my next blog.
Reference:
http://www.pcmag.com/article2/0,2817,2390702,00.asp

Comments

Anit,Very interesting article. Thanks.

Definitely, Cloud Computing is an IT phenomenon which is going to affect every company, however the extend may vary.

Just adding to your points in concern, I believe one major barrier is to integrate existing legacy system with cloud applications. Companies will want to store some data with them, and probably store some in cloud, but they should be able to move data between the two systems with ease. I see Integration-as-a-Service having a great scope in coming days.

Dear Amit,
It is a good insight into the cloud. And Saria too has a very valid point. Let me add some more perspective to the whole debate on the cloud.

On security, as you have already pointed out, the stakes are very high. The necessity of third party infrastructure and security management leads to accountability and risk mitigation issues. The prominent question is that who will be liable for any kind of security breach. Consequently legal issues will come into picture.

Again, when it comes to data storage and maintenance, being on cloud, it is not known at which location client’s data reside. It may be overseas and then the regulatory compliance with local body may bring some more concerns with privacy and confidentiality of the data.

Moreover, people are also talking about investigation processes post some unwanted events. Since the client’s data may co-located and may even spread across a set of host servers across the geography with several other clients of cloud service provider, it posses tremendous challenge to investigate the root cause of any mishap.

There are other concerns too. Our assumptions of business model and continuity plan is that the service provider is there till we are there. But, what if it gets broke. Or may be it gets acquired by some other giant. Under these circumstances, there must be a plan B for the users.

When looking at the customer segment for cloud, I believe, as suggested by you too, the well established organizations may not come forward so early to run critical processes on cloud for all the above reasons. The early adopters may be the organizations who are yet to have their own systems in place or may be smaller companies who see cost advantage with the cloud. Even the giants may go ahead for their non critical processes which do not involve sensitivity of data exposure – the very recent example is that of BBVA bank going for Google cloud for their mail services.

Surely waiting for your next blog... :)

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