Cloud computing has the potential to be one of the largest revolutions in the history of the Information Technology (IT) industry. The benefits are many, but the potential to introduce risk is high unless risks are identified, assessed and mitigated before moving into the cloud. Understanding the different offerings, the technologies and the potential risks associated with them will be the key to making the move to cloud computing successful and secure.
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'Cloud Computing' is a term that is often confusing. The 'cloud' is a term borrowed by the IT community from that of telecommunications in the 1990s and is more of a broad concept than an exact science. Cloud computing is the mass centralisation of computing resources. Information, processing and software are then made available by connecting into this centralised cloud. The centralisation is often visualised or displayed as a cloud.
Ironically, centralised computing was the original computing paradigm, with mainframe computers providing the information, processing and software, and very lower power 'terminals' connected to the mainframe over a network. As end-user processing became less expensive, we gradually moved to our current computing model, with the majority of processing existing at the 'edge' or within our laptops and desktop computers either in the office, at home or while travelling.
The combination of highly available, inexpensive Internet bandwidth and connectivity, along with relatively inexpensive and powerful laptops, desktop computers and now mobile devices, has returned us once again to a centralised model, where information, processing and software are once again centralised in cloud computing environments.
There are three unique models of cloud computing services: infrastructure, platform, and software.
INFRASTRUCTURE-AS-A-SERVICE (IAAS)
1AAS allows organisations or end-users to create their own virtual data centres, including servers and firewalls, on-demand. These virtual data centres are housed in clouds such as Amazon, HP Adaptive IAAS, GoGrid and Rackspace. IAAS should not be confused with hosting as in a hosting model you typically own and procure the server hardware. In IAAS the hardware is managed by the IAAS provider.
In IAAS, the servers and the data centre are virtual components with potentially greater resilience in the event of a server failure, where replacement virtual servers can be commissioned into production on demand. This can be used to recover a failed server or to increase the number of servers if processing or information demands increase.
One noteworthy example is New York newspaper organisation needing to convert 11 million scanned and archived hard copies into PDF documents. They were faced with several months of data processing and storage headaches. Rather than facing that project, they instead deployed 100 servers to the Amazon cloud to convert data nonstop. Within 24 hours, they converted all 11 million documents, paying approximately [euro]250 for all of the computing time.
PLATFORM-AS-A-SERVICE (PAAS)
PAAS is similar in concept, except, rather than creating your own data centre, you are provided with a standard technical platform and toolset to use and can upload your applications into the cloud to run on this platform. The key difference between IAAS and PASS is that IAAS requires you to build, deploy and manage your virtual servers, while PAAS only requires that you develop your applications to run in the provided environment. With PAAS you can build and integrate all your applications
to suit your requirements and can build tight application integration. It may not be possible in all cases to integrate your existing applications with your new PAAS applications, although many platforms are coming with generic application adaptors to aid such integration.
Google's App Engine offers programmers the ability to code Web applications using a pre-defined set of technologies (currently Python or Java) and then deploy them in Google's cloud. Google will then make that application available over the Internet. Microsoft's Azure is modelled similarly to Google's App Engine, but it allows you to use the full suite of Microsoft technologies, including. Net, SQL Server, Sharepoint, and Live services.
SOFTWARE-AS-A-SERVICE (SAAS)
SAAS takes it one step further and allows organisations to use applications that have been developed and deployed on the Web. SAAS examples include Salesforce and the Google Apps package of word processing, spreadsheet and presentation software. Typically in the SAAS model you procure off-the-shelf software. It is possible that many of your deployed applications will reside in different data centres around the globe and will use internet-based services to connect with each other.
These three models of cloud computing are likely to appeal to distinct groups of users. IAAS will appeal to businesses looking for complete control over data, while PAAS appeals to independent application developers and Web designers. SAAS will generally appeal to SME business end-users or home users looking for low-cost alternatives to traditional software. Many other organisations are using SAAS for some of their non-core corporate applications, such as HR/Payroll, Time & Labour Management, Recruitment, Self Service Support, etc.
KEY DRIVERS FOR CLOUD COMPUTING
With all this flexibility it's clear that cloud computing provides many significant benefits including:
Avoidance of capital expenditure and fixed costs
Organisations can avoid the capital expenditure involved in setting up servers and data centres and the fixed costs of IT resources to keep them running. In addition they pay for computing power, storage and network bandwidth they use rather than paying for servers, storage and network capacity that are only at 20%-30% capacity.
Resilience and scalability
Cloud providers are given responsibility for managing computing usage and organisations get the ability to handle peaks and troughs on demand without an investment in additional servers and infrastructure just to meet the peaks. In other words: pay as you go and leave someone else to worry about demand planning and continuity of supply
Business agility
If we look at business agility, we recognise it is not just about speed. It involves being flexible and responsive. Often the costs and time required to test a new product or service or try a new way of engaging customers are so prohibitive they discourage companies from even trying them. But cloud computing offers an inexpensive and flexible way to deploy the infrastructure as needed to test ideas.
Green agenda
Many organisations that have moved to the cloud have seen their own electricity consumption dramatically reduce as they are no longer running data centres with their associated cooling and server power consumption. In a cloud model energy consumption and cost is dramatically reduced and is shared across multiple organisations.
KEY PITFALLS
Whilst there's a clear upside to cloud computing there are a number of pitfalls for the unwary which need to be navigated as the industry matures.
Security & Data Protection
Organisations need clarity on data protection and data security. Not all current offerings are compliant with Irish and European Data Protection laws. As with any other outsource supplier, a cloud supplier must be willing to demonstrate and prove the security of their facilities and that their security posture meets your requirements.
Tax Variations
Cloud providers face material income tax or indirect tax implications depending on the cloud infrastructure and type of revenue model employed. The nature of cloud-based global sourcing and global delivery models can raise international tax jurisdiction issues. Cloud purchasers can encounter unforeseen and significant income and sales tax variations, depending on the type of cloud services they've contracted for.
Not all technologies can be moved into the cloud
In some cases the technology available in the cloud will not help your organisation. If you are running a web-based business supported by a warehouse full of Linux servers you're probably thinking about the cloud already; if you have a room full of legacy AS400s, the current cloud environment will not help unless you rebuild your corporate applications from scratch.
Performance & Downtime
Whilst cloud providers offer and meet service levels, outages can and will happen.
Network bandwidth
While many organisations can accommodate the occasional outage in their external network service connectivity as they have their core business applications on their internal network, moving to the cloud means that external network connectivity and bandwidth become critical and need to be designed with high availability to enable your end-users to retain access to your business applications anytime. Any disruption to this service can be expensive in lost productivity. In addition, high availability network connectivity and bandwidth can come at a price.
Cloud computing has come into focus as a method to cut and contain IT costs as well as bring increased flexibility and resilience. Most organisations are already using cloud technologies in some form today. To realise the full benefits, and minimise the risks inherent in the growth of shadow IT, management need to set the strategic direction on cloud computing and rally the entire organisation to make this a success.
Kieran Mongan is a Consulting Senior Manager with PwC.
