Cloud computing is becoming a game changer for Small-Medium Enterprises (SMEs) by offering scalable infrastructure and capabilities available as services. It is a paradigm where computing resources are available when needed, and you pay for their use in much the same way as for household utilities.
Cloud is a shift in the consumption and delivery of IT with the goal of simplifying to manage complexity more effectively. Cloud represents the industrialization of delivery for IT-supported services. Cloud models are delivering on the promise to help businesses work smarter by providing flexible, cost-effective access to technology and information.
A basic Cloud computing model is shown below. Servers, storage, applications, and services are accessed via a common network. They are shared between organizations, and accessed by users. The users may be members of the organizations working on-premise, remote workers, customers, or members of the general public.
Cloud computing resources can be rapidly provisioned and released with minimal management effort or service provider interaction. This means that an organization can use more or fewer servers, stores, applications, or services, and can configure the ones it uses to meet its requirements, as and when it wishes to do so, and without major effort.
Cloud computing has five essential characteristics. They are:
- On-demand self-service
- Broad network access
- Resource pooling
- Rapid elasticity
- Measured service
These features distinguish Cloud from other computing models.
Cloud computing provides a new business paradigm for resources. It enables organizations to create and use IT and business services on-demand from optimal sources to maximize utilization and cost-effectiveness. This can be between enterprises or within a single enterprise.
Cloud computing enables businesses to think and act beyond the “four walls” of the company through exchange of services. They can access marketplace best practice solutions, and select effective IT services from multiple sources to meet business user needs faster and at lower cost. In an enterprise that has complex and expensive IT systems to support its business processes, Cloud provides an attractive alternative by which you could pay on-demand to get IT services without being concerned with the details of how it is done.
IT planning should begin with an understanding of the overall business strategy. From experience, many businesses, irrespective of their size, lack business-IT alignment; hence IT planning becomes a matter of trying to hit a moving target. When IT planning, as the cornerstone of Plan, Build, and Run, is inadequately developed, IT organizations provision and operate IT assets that are of questionable value to the business. To make matters worse, small businesses struggle with a lack of skilled IT personnel, operational insufficiencies, and poor IT management. As a result, IT organizations often fail to demonstrate satisfactory business outcomes, such as improved financial performance.
Cloud computing won’t be the answer to all of the above. But it can help simplify IT so that SMEs stay business-focused.
Cloud has become a hot topic in IT and it seems that all vendors are branding their offering with the term “Cloud”. How should small business owners distinguish between real Cloud offerings and rebranded traditional offerings? Actually it is not the rebranding that is of concern, but the Cloud characteristics that are probably missing. The question to be asked is: can the adoption of Cloud computing help SMEs in growing revenue, reducing long-term IT cost, attracting new customers, improving cash flow, maintaining profitability, and, increasingly importantly, reacting to ever-changing market conditions? In other words, is the adoption of Cloud computing something that SMEs should consider when developing strategic IT plans?
Cloud Value Proposition/Benefits
As asked earlier, can the adoption of Cloud computing help SMEs in growing revenue, reducing long-term IT cost, attracting new customers, improving cash flow, maintaining profitability, and, increasingly importantly, reacting to ever-changing market conditions?
Let’s take a closer look at helping SMEs to grow revenue. Whether SMEs enter into new markets and therefore need related IT capabilities to support the business or SMEs acquire business lines or entire businesses and therefore need to deploy their standard application stack, IT organizations can, due to the adoption of Cloud services, support the business by instantly provisioning related IT services.
This increased agility helps the business with rapid time-to-market and, as a result, attracts new customers in a timely fashion. The reduced time-to-market not only gains new customers who otherwise would have gone to competitors, it prevents those competitors from becoming stronger and therefore enhances the SME’s competitive strength in the market. Furthermore, IT organizations help SMEs to stay nimble as IT services can be provisioned in a timely way, on-demand, and with the illusion of unlimited capacity. The adoption of Cloud computing, and with it the shift from traditional IT provisioning (in-house) to sourcing IT services from Cloud service providers, clearly demonstrates multi-dimensional benefits.
An additional dimension is represented by the fact that IT organizations shift from CapEx (Capital Expenditures) to OpEx (Operational Expenditures). IT organizations don’t have to invest in IT assets anymore, but instead “rent” them from Cloud service providers. But only as long as they are needed by the consumers. Once consumers don’t need the IT service anymore, IT organizations simply decommission the service with the Cloud service provider. Reducing and/or optimizing costs is the keyword here, and the adoption of Cloud computing can support this objective.
Last, but not least, as mobility becomes more and more important and the ecosystems of SMEs are scattered around the world, access from anywhere is crucial. Cloud computing can be an enabler here as well, as one of the Cloud characteristics is service delivery over the Internet.
The value proposition of adopting Cloud computing can be summarized as helping SMEs to stay business-focused while IT organizations provision IT services on-demand without taking money away in the form of big upfront investments for building IT capabilities but to become IT service brokers that serve SMEs adequately.
IT organizations of SMEs need to assess the security position when considering adopting Cloud computing. When selecting Cloud service providers, IT organizations of SMEs need to develop proper security policies and procedures and they need to utilize these guidelines when evaluating Cloud service providers. Following is a list of key areas that can help.
Security and Privacy
- Is the Cloud service provider operating a legitimate business that is in it for the long haul? In other words, what if the Cloud service provider goes out of business or is acquired by another company?
- Will data remain available after such an event? In this context, what if IT organizations decide to decommission the Cloud services?
- How will data be transferred from the Cloud service provider back in-house or to another service provider?
- Who has access to sensitive data?
- What are the personnel’s qualifications and how does oversight of privileged personnel work?
- Where does the SME’s data physically reside? Is the location of data something that is of importance?
- Are there specific jurisdictions that are preferred for data location or that have to be avoided?
- How about regulatory compliance? SMEs are responsible for security and data integrity, but are the Cloud providers willing to undergo external audits and certifications?
- Is data being segregated appropriately?
Besides the security-related concerns, service management is key to provider evaluation and selection. Key risk assessment areas are:
- What are the provider’s service management principles and does the strategy integrate with SME policies and principles?
- How do Cloud service providers provide back-up and recovery services?
- Are there specific Recovery Time Objectives (RTOs) and Recovery Point Objectives (RPOs)?
- Are Service-Level Agreements (SLAs) and Service-Level Objectives (SLOs) acceptable?
Other risk assessment areas include:
- Maturity of Cloud services that are offered by providers
- The ability to implement Cloud solutions with existing software stacks (in-house)
- The viability of selected Cloud providers