Finding the cloud’s silver lining

6th June 2011

The cloud has become so hyped that it can be tempting to dismiss it on this basis alone. But when you look below the surface, some manifestations of cloud computing are proving more effective than others, and some types of organisation are benefiting more than others, as FSN writer Lesley Meall discovers when Hackett Group consultant Tony Chauhan shares his research findings, and a selection of cloud users, share their experiences.

As you might expect, small companies and start-ups have a lot to gain, because the cloud’s utility model gives them access to technology resources that would otherwise be outside their reach. ‘When I started my own consultancy business I didn’t even have any clients, so setting up my own IT infrastructure would have been overkill,’ laughs accountant Geoff Matthews, but this was never an issue, because he decided to go for his own private cloud. 

‘Matthews Business Associates was the first company to use the platform of a telco that had just started offering this service, back in 2008, so the pricing was very competitive,’ he explains. Since then, the virtualised infrastructure has been providing him with the software and systems he needs to expand his business, the scalability to support his growth strategy, and a level of technology expertise that he would not otherwise be able to afford. 

‘All my staff and associates work from home, but they all have online access to the software they need, such as Microsoft Office and KashFlow accounting,’ he says. The hosting company handles infrastructure maintenance, support, and other essentials such as data backup, so as Matthews observes: ‘It doesn’t matter that we don’t have anybody who is particularly IT literate in our organisation, because we have somebody else to take the strain.’ 

The business structure and the level of IT literacy are different at White Springs, but as its CEO and CFO Gary White explains, it still chose the cloud route to support its ambitious growth plans – and in more than one respect. White Springs is a Software as a Service (SaaS) company that helps sales teams to reinforce training methodologies through Customer Relationship Management, so it’s dependent on the cloud for its back office and its customer-facing systems. 

‘We have plenty of technology expertise, but I wanted the staff to be focussed on growing the business not supporting its IT infrastructure,’ says White. ‘We are growing rapidly, and we are handling a lot of sensitive customer data, and putting an appropriate infrastructure in place would have required huge resources,’ he explains, ‘so we chose to partner with somebody who has the deep pockets and expertise to provide us with all of the necessary resources.’ 

Great expectations

Although White Springs was an early user of the SalesForce.com customer relationship management (CRM) system and other cloud-based services, for some years it stuck with a traditional finance system – but not out of preference. ‘I used to work for Coda, so I knew that FinancialForce.com was being created by people who really knew what they were doing,’ he asserts. ‘I knew that it would offer better functionality than other cloud-based finance systems, and integrate seamlessly with our CRM, so we waited for it,’ – and he’s not been disappointed. 

According to Tony Chauhan, UK lead with the Hackett Group, a global consulting and finance strategy firm, White Springs and Matthews Business Associates aren’t the only ones whose experiences of cloud computing are not a disappointment. ‘This type of organisation sits in a sweet spot for the cloud,’ he says, ‘because they can get affordable access to a protected integrated IT infrastructure without having to own the hardware and all that goes with it,’ and they represent one of the areas where both uptake and satisfaction levels have been high. But there are others. 

‘Some parts of an organisation’s technology architecture are naturally ring-fenced,’ observes Chauhan, giving payroll, email and other collaborative tools as examples, and these can offer businesses the opportunity to exploit the strengths of cloud-based services, whilst minimising the negative impact they can potentially have. ‘Hackett Group research indicates that collaborative applications are leading the way, because they can easily be separated from the core data spine of the company,’ he says, ‘and still grow rapidly as the company does’. 

The advantages of this is ‘ring fencing’ became clear to the recruitment consultancy Head Resourcing at the end of 2010, when one of its hard drives failed, and it started its journey into the cloud by moving its back-up and disaster recovery. ‘We required a resilient and secure IT solution that’s accessible 24/7,’ says Gordon Adam, managing director of Head Resourcing, but he was wary of moving his IT assets into a public cloud, so the business chose a private cloud, hosted by Lumison, the ‘trusted’ internet service provider it has been using for the past decade. 

‘Our database and our data are our Crown Jewels and I didn’t like the idea of putting them somewhere in the world in the big cloud,’ says Adam. ‘The private cloud is a half way house,’ he explains. ‘The data is still down the road in the UK, and Lumison’s private cloud meets our security and service needs,’ and as the business subsequently put its email and then its (all important) recruitment database into its private cloud, Adam expects the IT infrastructure to assist Head Resourcing with its future international expansion plans.

 Public-private partnership

But as organisations get comfortable with cloud computing, the move into a private cloud may increasingly be a waypoint on the road towards a public cloud or a hybrid cloud. Witness the Intercontinental Hotels Group (IHG): it uses Salesforce.com for CRM, does a lot of its software development and testing using the Amazon Web Services Elastic Cloud Compute (EC2) infrastructure, has built its own private cloud (called Camelot), and it is moving some of its customer-facing apps into a hybrid public-private cloud provided by Verizon and VMware.

 

So, whilst IHG currently chooses to keep some of its more sensitive applications and data in its private cloud, many of them are being developed or redeveloped in a way that makes them very easy to transfer into a public environment, as Bates Turpen, senior vice president of technical operations at IHG explains. ‘We are using VMware in our own private cloud implementation,’ he says, and the fact that Verizon uses VMware was a factor in its selection as a cloud provider: ‘It was critical that we had the seamless integration that it would allow us to obtain.’

 

The IHG loyalty system that manages its priority club rewards has already made the transition from the private to the public cloud. ‘We pushed that to the vCloud with Verizon as a way to benchmark the capabilities of and ease of use of the vCloud, and also the integration points to our back-end private cloud,’ says Turpen, and it went so well that IHG has similar plans for its reservation system. ‘We are going to use the cloud to push the compute as close as we can to our end users,’ he adds, ‘and we think that’s going to drive a lot of value and benefit for response times to our customers.’

 

Research from Hackett suggests that there is another type of organisation that also has much to gain from moving into the cloud with their own private cloud: the architecturally challenged. ‘As an organisation grows organically or via acquisition over time, it can end up with a real mish-mash of architectures and systems,’ says Chauhan, and the cloud can provide an effective way of standardising and consolidating. ‘Rather than buy themselves out of the mess, they can just hand it over to somebody else,’ he adds.

 

This is just what Silverdell, an asbestos removal and management contractor recently decided to do. ‘We are a relatively small company, but over the past three or four years we’ve gone through a series of acquisitions, and we ended up with 3 operating divisions that all had very different infrastructures,’ explains Paul Robinson, the Silverdell CFO. As one of the acquired businesses already had a relationship with a third party provider, Lancashire-based IT Managed Services (ITMS), Robinson decided use it to unify the infrastructure and applications the of three companies.

 

‘We are not big enough to support our own internal IT team,’ says the CFO, who quickly realised that ‘for what one competent IT head would have cost us, we could get ITMS to host our own private cloud,’ and the various associated benefits. Robinson reports: ‘We have a much faster more robust infrastructure, and although we are geographically dispersed, we have access to centralised apps,’ and virtualised desktops that can be accessed online from Microsoft Windows systems, Macintosh systems, iPads and various other user owned devices.

 

One size fits all

When the world’s largest sugar refiner Domino Sugar recently bought Tate & Lyle, and wanted to integrate the European refineries it had acquired in Lisbon and London, it also used a private cloud to solve its architectural challenge. Like Silverdell, Domino already had an agreement with a third party service provider (Virtustream), but the consolidation of the Domino and Tate & Lyle systems remains impressive, as during a sixteen-week period, it migrated its infrastructure, SAP applications, and 170 non-SAP applications, into the Virtustream multi-tenant private cloud xStream.

 

‘By doing this we were able to leverage the flexibility and interoperability of the cloud, and consolidate these systems into our own environment more efficiently,’ says Don Whittington, the chief information officer at Domino Sugar, who is also the chairperson of America’s SAP Users Group CIO Council. ‘The solution accommodated our need to commission temporary resources,’ he reports, which is a common requirement during IT migration and integration processes, and Domino was able to do this without committing itself to long-term costs.

 

So although a cloud solution may not best meet the needs of every single organisation at every single stage in its evolution (even if cloud advocates claim otherwise), businesses of all shapes and sizes can reap some significant benefits from cloud computing, when it is judiciously applied. But with private clouds and public-private clouds looming increasingly large on the horizon, it’s hard not to dismiss a lot of cloud computing as the next step on the evolutionary ladders of good old fashioned managed services, mixed with good old fashioned hype.

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