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Get Grounded Before You Reach for the Clouds
By Paula Klein, Editor
used with permission from the Microsoft Small Business website

Like most IT deployments, deciding whether to use cloud computing is not as simple as it first looks.

While it is straightforward to have a third-party vendor host certain business applications — such as sales or HR — for your employees to access over the Internet, "the reality is, the cloud is very specialized; one size does not fit all," says Judith Hurwitz, president of Hurwitz & Associates consultancy and co-author of the recent book, Cloud Computing for Dummies.

CIOs can't dismiss the trend toward cloud computing nor obstruct its progress because business-side executives like the idea of "IT as a utility where they can use services as needed," she says. However, "If you randomly pick applications in a piecemeal fashion," she says, "you're not going to get the value you seek. Good planning really is important."

That's why many CIOs are trying to figure out what part of the business is ready to adopt cloud services, and what apps should stay in-house. Most begin with a single application, accessed by few users, to host off-site. For instance, Tom Gill, VP and CIO of Plantronics, has used cloud services for about 20 applications over the past few years. Among his customer-facing app providers are RightNow and Salesforce.com; Taleo and Salary.com are used for HR services. Gill also uses a niche portal application solely accessed by corporate board members.

Quick Wins
"Applications with quick deployment can be a big win for us," Gill says. With limited IT staff and resources, Plantronics relies on these app services for secure, reliable access with minimal intervention from his IT department, he says. This approach also frees IT to do more mission-critical work.

"We won't add IT headcount this year but demand keeps increasing, so this is a solution" for augmenting resources without capital expenditures, Gill says. As for ROI, Gill has lowered costs, especially when it comes to daily maintenance of applications and new hardware. "We wouldn't do it without a cost advantage," he says.

Headquartered in Santa Cruz, Calif., Plantronics reported $765 million in 2009 revenue and has offices in 20 countries, including Mexico, the U.S., U.K. and The Netherlands. Its headset products are sold through a worldwide network of authorized partners as well as retail and consumer electronics stores. Gill says that every IT investment goes through a rigorous portfolio-management process in which the business case is presented and ROI is reviewed. "Cloud is no different," he says. "We manage the technology investment, but we enable the business to interact with vendors, too."

Gill's best practices address some of the basic requirements that Hurwitz advises CIOs to consider. She says CIOs should ask, "What is your core business and is IT infrastructure where the business wants to put major investments?" If IT is critical to the business strategy and its competitive advantage, "you may not want to put those services in a public cloud at all," she says. If IT is not a core competency, however, you can get started consolidating servers and looking for reliable partners as Plantronics has done. (See sidebar for Hurwitz's top 10 tips.)

Security Worries
While niche applications are relatively easy to farm out, CIOs are still grappling with the trade-offs required by large-scale cloud computing. Chuck Musciano, CIO of Martin Marietta Materials, and author of the blog, The Effective CIO, says that he is becoming known as "the contrarian" when it comes to cloud computing. "There are gaping holes in some cloud models," he says. "My overarching concern is about the security of data when it is out of my control." He has written about his concerns about cloud computing, especially in the arena of security.

Martin Marietta, a supplier of construction materials with 2008 revenue of $1.9 billion, runs its own data center where it can store data and have access to it at all times, Musciano says. Cloud providers "will swear data is encrypted, but security is only as good as the weakest administrator managing it. My job is to secure data, and I don't trust others to do it as well." Particularly in highly regulated industries, cloud computing poses too many risks, he says. "For enterprise-level computing, I'm generally distrustful," of the cloud, Musciano says. "I'm astounded at how many CIOs are ready to push applications over the [fire]wall."

Nevertheless, Musciano — who has been an IT exec for more than 20 years — understands the need to deploy various computing models, including cloud computing, for some applications. Martin Marietta "uses cloud services effectively" for noncritical processes such as property management and HR performance appraisals, as long as they are cost effective and don't involve sensitive data.

Gill of Plantronics agrees that core systems like ERP are best kept in-house for security as well as practical reasons. ERP is "not suited for the cloud, and we're not ready to move that yet," he says. "There's no advantage to that." At some point, Gill thinks that hosting e-mail in the cloud will be the norm, "but we're not there yet." In the short term, he will use a hybrid approach to MS Office services.

An Evolving Market
Consultant Hurwitz's view is that if you have a large, heterogeneous data center running multiple transaction-processing apps and operating systems, you "can't put all of IT in the cloud." However, the enterprise can "offload some apps, even large ones, such as e-mail where you can pay by the seat. This market is evolving" and security is improving, she says. Currently, many large enterprises require providers to put their data on a private service so no one else can access it. Other providers offer VPNs as added security.

But Musciano isn't convinced. Maybe it's a "generational difference," he says. Younger CIOs "don't have the same sensitivity" and haven't lived through a large security disaster. "Who will they call [if there's a security breach in the cloud]?" he asks. He also sees users driving more processing power to the edge of the network with personal mobile devices while the cloud is "going in the exact opposite direction. I think the benefits really are very limited."

Top Ten Tips for Cloud Computing
What steps should business and IT take now to deploy cloud services in the future? Judith Hurwitz, president of Hurwitz & Associates, says if you're considering cloud services for a major enterprise wide rollout, it's best to do the following first:

Reassess your workload, business processes and data center infrastructure before you get started. Analyze patterns and data center requests. What are your goals for cloud computing?
Virtualization is usually a prerequisite for software as a service (SaaS), and server utilization rates should be analyzed and documented. Take an inventory of assets.
Answer some basic questions: What is your core business, and does the business want to put major investments into IT infrastructure at this time?
Test one app before buying a lot of capacity. Once you go live and build maturity, you may decide to bring the app in-house. Hosting a small app is a good way to deliver services quickly or to build up app development platforms.
Find an older app that's used by fewer than 25 people or in one geographic region, and farm that one out first. It's probably not economical to host it in-house.
Consider the cloud when you need extra CPU cycles for a short burst of activity, such as a product launch or an annual event.
Cost equations are not black and white. Average cost may look cheap until you scale over time and add more workloads. Keep reassessing.

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