2012-10-09

Cloud – Advantages, Pitfalls and Business Opportunities

Mikael Öwall, Chief Technical Officer at Consafe Logistics, cuts through the hype surrounding cloud computing and provides an overview of the benefits and pitfalls for businesses.

Forecasts of "cloudy" weather have filled the global IT landscape in recent years. Cloud is one of the strongest trends in the IT world at the moment. Is there actually something to all the talk or is cloud a diffuse buzzword without real benefits for businesses?

In the publication "IT Predictions 2012", the Gartner Group research firm predicts that cloud will radically change the IT landscape. For many years, IT departments have invested heavily in building competence and system platforms, but many IT managers still have difficulty documenting that IT creates value and not just costs. Cloud can change this trend.

According to Gartner, cloud, social media, mobile solutions and growth in information comprise the four most important driving forces in today’s IT landscape. They call these four driving forces CSMI (cloud, social media, mobile, information), where:

• C = cloud, responsible for delivery,
• S = social media, responsible for behaviour,
• M = mobile, responsible for access, and
• I = information, responsible for the analytic platform that generates the basis for decision making.

Relinquish strict control

Daryl Plummer, Managing VP and Gartner Fellow at Gartner Group says: "CSMI is actually creating radical changes in IT. IT departments are in the process of transforming from a technology and cost centre into a value centre. IT departments will increasingly outsource all commodity activities and instead focus on the last 20% of activities that are the true value creators and strongly differentiate the company from competitors. IT departments cannot maintain strict control of the company’s ICT (information and communication technology, ed.), so they must instead focus on areas such as hosting, security, big data, BYOD (bring your own device, ed.), etc."

We met with Mikael Öwall, Chief Technical Officer at Consafe Logistics, to discuss benefits, pitfalls and business opportunities in cloud.

What is your definition of cloud?

The term "cloud" ranges from "Infrastructure as a Service" (IaaS) to complete "Software as a Service" (SaaS) in combination with a "pay as you go" price model. At one end of the spectrum, IaaS is about not owning and managing hardware. At the other end is a greater desire to ensure that "IT is just there". Many people see cloud as the SaaS end of this spectrum, with good options to choose from among solutions and suppliers in the commodity field – that is, solutions that are standardised commodities.

When we talk about business-critical IT solutions – solutions that give the company a competitive advantage – cloud is found in the middle to upper part of the spectrum: Definitely SaaS, but with long lasting partnerships with dependable solution suppliers who guarantee sustainable SLAs (Service Level Agreements).

Another feature of cloud is the transition from fixed costs to variable costs, where companies only pay for IT operations according to actual consumption.

Is cloud just hype, or a long-lasting trend – and why?

Cloud is definitely here to stay. From a technical perspective, it is yet another level of virtualisation, where instead of “buying” software from an internal IT department, you buy it from an external supplier and operate it via a broadband connection from a remote server. But there are also elements of hype when it comes to cloud. Some people seem to expect that everything will be “pay as you go”, without any need for investments and only short-term obligations. That is how things are today with commodity solutions; but this expectation is far from the current state of business-critical solutions and does not appear to be realistic in the foreseeable future. When we talk about business critical solutions, close partnerships, SLAs, collaborative development, etc. will continue to be the most important factors.

What do you see as the biggest advantages of cloud?

The advantages include a reduced need for investment in internal IT infrastructure and IT employees, shorter lead times from decision to implementation, the opportunity for flexible pricing models, and pay per use, which is especially applicable for hardware. It is also a strategic advantage that the IT department can spend more of its time and competencies on actual value-creating IT tasks without spending resources on standard commodity solutions and routine maintenance. This allows for a more proactive use of IT as a competitive parameter.

What do you see as the biggest disadvantages of cloud?

There are two major risks: 1) There is a need to build certain skills to get full value for money as an SaaS consumer and customer. 2) A full-scale SaaS strategy can make companies vulnerable to internet connection failure if the integration of the cloud solution is not implemented well enough. For companies that have already implemented a full-scale WAN (wide area network) connection with a high SLA, vulnerability to internet failure is not a problem.

What types of organisations stand to gain the greatest benefits from cloud?

Organisations with well-structured centralised IS/IT (information systems/information technology, ed.) operations will find it easier to integrate a SaaS solution – at least from a technical perspective. But you can also argue that companies without a professional IT setup will gain the most from cloud, since they do not have to invest as much in the internal centralised solutions. If cloud is well-executed, the group of medium-sized companies with decentralised IT operations will be able to achieve the greatest benefits.

How do you expect cloud to develop in the years to come?

I expect to see more development and more widespread use of cloud solutions, particularly growth in the scope and importance of long-term agreements for business-critical operating solutions.

How has cloud affected your products or services?

The technical architecture in our products has long supported the requirements for a SaaS implementation, because outsourced hosting has long been a standard implementation model for our products.

What role do you expect cloud to play in the development of your products and services in the years to come?

Outsourced hosting (IaaS) is already a standard implementation method for us. The next step is to design the total SaaS package for our customers, where one supplier delivers the infrastructure, platform, software and services in a single SLA (service level agreement). Technically speaking, we are ready to deliver it all as cloud – now it is more a matter of establishing agreements as part of long-term oriented partnerships with our customers.

Information about the company: Consafe Logistics AB

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