Cloud computing demystified

Traditional business computing requires hardware, software and the skills needed to tie everything together. It’s a huge investment and we’re not only talking about money – you also need to set aside time and mental energy to make everything work.
This means looking after storage, managing software licences, dealing with backups, finding suitable space to house everything and trained staff to keep it all ticking over.
While none of that is rocket science, it’s a huge distraction. After all, you didn’t start that accountancy practice or open those donut outlets because you are a computer expert!

With cloud computing, you buy computing power as and when you need it. It’s the difference between running your own generating plant and buying electricity from a power company.
This means you leave the technology to the experts. It also means your software and hardware no longer need to be close to the place where people use applications and data. Your information technology infrastructure can be across town or in a huge data centre on the other side of the world. It doesn’t even all have to be in one place or supplied by a single company.
You no longer need to own servers and storage. You don’t have to buy, install and maintain software. With cloud computing you don’t even need to worry about making backups – that task is generally part of the service.
And that’s the important word: service. Cloud computing is an Internet-delivered service. You buy it from a cloud service provider. Your service provider will look after the upgrades and maintenance. Their professionals manage all the hard stuff. The day-to-day responsibility becomes their burden, not yours.
The economic case for cloud computing is overwhelming. Roly Smoldon, CEO of ICONZ, which offers cloud services throughout New Zealand, Australia and South-East Asia, explains, “Running information technology is not core to most businesses. They sink a lot of capital into technology regardless of what they use. If they need hardware to do a job, they have to buy 100 percent of it even if they only need five percent of its capacity or use it five percent of the time. With cloud you can buy a little or a lot, but you’ll know exactly how much you’ll be paying in advance.”
He says this restores some balance. “Company owners and managers can sit down and know that spending this much on technology will result in that much extra revenue. That’s not something they can do with conventional information technology.”

Cheaper, easier, and there’s more!
Businesses have already found they save money and have an easier life from the moment they switch to cloud computing. That is all the reason you need to move to the cloud. The savings can be substantial. However, once you move servers and applications out of the office to a remote service provider, something else happens – it’s almost magical.
Suddenly it no longer matters where you work from. You can still connect to the cloud from your office desktop PC. You can also connect from home using a laptop, or if you’ve got wireless technology out on the road or in the middle of a paddock. It works well with an iPad or other tablet computers. You can even access cloud applications from mobile phones.
And that changes everything.
All your important data is available all the time, wherever you want it. You can view a client’s next invoice while sitting in their office. If you’re sitting in a café and a prospect walks in, you can check out their history on your CRM system before making an approach. When you wake up in the middle of the night remembering something important about the payroll, you can hop on straight away, make changes, then roll over and go back to sleep.
Martin Gleeson who runs iPayroll, a Wellington-based cloud payroll processing service, says his customers often log in to confirm pay-runs while they are on tramping or fishing trips.
“People need to confirm before we will pay their staff; they can do it from a phone. In fact, many do.”
Smoldon says cloud is also flexible. If the business is growing, buying more is easy. If business is slowing down, reducing expenses is simple. “Scaling is directly in line with your business needs. If you use your own information technology, you’ll end up building something big then waiting for the business to come,” he says.  

The many faces of cloud computing  
Cloud computing ranges from something as trivial as reading email in a web browser with Gmail or Hotmail, to having remote access to versions of the huge powerful ERP (enterprise resource planning) tools used by the world’s largest corporations.
There are three main parts to cloud computing. They are like layers – the deeper you dig, the more sophisticated it gets.
At the top is the best-known and, from a user point of view, the simplest layer: software-as-a-service or SaaS. This is where applications run in a browser. The software runs on remote computers rather than locally on your desktop or office server.
There’s a good chance you already use SaaS applications: Gmail, Hotmail, Xero and Salesforce are among the best known examples. Some are free. If there’s a charge it’s generally a monthly or annual subscription fee – people usually pay by credit card.
SaaS is remarkably simple to use and it doesn’t require much technology at the customer end. You can run most SaaS applications on old desktop computers with limited disk and memory; it barely matters so long as the machine is capable of handling an up-to-date web browser.
Online applications can also be undemanding about Internet connections as, in many cases, only a trickle of data travels between the remote computer and the application. Gleeson says when iPayroll began operation ten years ago, most customers connected via dial-up Internet connections. This lean approach really comes into its own when you connect from a mobile phone where data is still fairly expensive.
While a fast broadband connection isn’t essential, the applications generally perform best on better links. This is one of the reasons companies are getting excited about the government funded fibre networks currently being rolled out around New Zealand.
Infrastructure-as-a-service (IaaS) is the second layer of cloud computing where service providers replace physical servers with what they call virtual machines. This means they deliver all the functionality you’d expect from a traditional server, but it’s really just a program sitting on a big system in a remote data centre. As far as users are concerned, nothing changes.

Gerhard Nagale, business manager IaaS and security at Gen-i says many companies simply rip out their existing computing infrastructure and replicate it in the cloud. So, they may replace a Microsoft Exchange server with one virtual machine, their file server with another, and so on. He says the cost savings are huge because shared resources mean service providers have huge economies of scale.
Nagale says medium-sized New Zealand companies are moving to IaaS at a steady rate. Rather than dropping everything and changing technologies, they typically evaluate cloud options when it’s time for a technology refresh.
A third layer, platform-as-a-service, or PaaS, is mainly of use to developers and larger companies with in-house development teams who can create their own applications without buying expensive systems.

Not that new
Although the name is new, cloud computing has been around much longer than you might imagine. iPayroll has been offering its software online for more than a decade. Another New Zealand service provider, ICONZ, has been in the data centre business for nearly as long and, according to Roly Smoldon, has been offering an IaaS service for more than four years.
ICONZ is best-known as an Internet service provider (ISP). It moved to a data centre role when customers began locating equipment at the company’s site and made a natural progression to offering cloud infrastructure services after customers began asking for it.
Smoldon says it’s a fast-growing business. “We’ve been seeing double digit growth, but now that’s accelerating. We matched our 2011 growth halfway through this year.” He says the growth is being fuelled by a whole mix of cloud adoption. In some cases companies are turning to ICONZ to host a specific project or to replace dying hardware. In other cases companies are moving wholesale to the cloud.
iPayroll is also seeing rapid growth, Gleeson says 2011 was the company’s best ever year but 2012 should top it. “We have seen a downturn or signs of a recession, but then people still need to be paid every week or month.”
One driver for ICONZ customers is what Smoldon calls “the need to monetise IP” – that’s selling accumulated information digitally. He gives the example of the Auckland Law Society which sells the documents lawyers need online. Smoldon said this kind of operation works best in the cloud because it needs flexibility.

Public and private clouds
As well as the different cloud services, the market can be broken down into two other distinct categories: public and private clouds. Despite the name, a public cloud isn’t insecure; others are unlikely to gain access to your data unless you let them. The term means the cloud sits on a server that is shared by other customers. The downside is that you cede a level of control to the service provider. On the other hand, private clouds more likely have your own computer infrastructure located in someone else’s premises.
Smoldon says private clouds are growing much faster than private ones for his business. Another area where he is seeing strong growth is with companies that need to operate across a region. He says an advantage of ICONZ’s centres in Auckland, Singapore, Kuala Lumpur and Sydney is it makes it easier to deal with the various legal regimes.

About those security worries
One of the biggest problems business owners have with the cloud is that it feels insecure. Smoldon says business owners feel happy when they can see the server lights blinking in the corner and that gives them a false sense of security. He says traditional servers can stop working for a variety of reasons, while the ICONZ data centre sees less than five minutes of downtime over an entire year.
Cloud providers often store data in multiple locations. Gen-i has servers in Auckland and Christchurch, so if one fails the other continues. If a conventional business burns to the ground or is struck by an earthquake it may be days or weeks before data can be recovered – if ever.
There’s a similar suspicion about unauthorised people getting access to data. Smoldon says his data centres are staffed and secure around the clock, all access is recorded. Few business owners can be certain their servers are watched as carefully or that access is as well controlled.

Before you leap
Do your research before moving to the cloud – the best time to do this is when it’s time to review your existing technology plans. Although it’s a new market, there are plenty of service providers who have been around long enough to build a good track record for reliability.
The good news is you don’t have to make a huge initial investment. So long as you chose options that make it easy to move your data from one place to another, switching providers can be relatively painless. And there is so much to gain from letting someone else look after your technology.

Bill Bennett is an Auckland-based freelance IT writer.