Monday, March 23, 2009

Understanding Cloud Computing: The Benefits and Risks - Part 3

So far, we’ve identified what Cloud computing is and broken it down into four categories: Services, Infrastructure as a Service, Platform as a Service, and Software as a Service. We've also explored some specific examples of commercial services in each category.

The key benefits of cloud computing include:
  • Improved financial control releases capital to invest in revenue-generating initiatives:
    • No capital investment
    • Lower up-front expenses
    • Ability to scale capacity and expenses up or down, based on current demand
  • Simplified operations:
    • No need to manage technology infrastructure or the staff to take care of it – zero IT footprint
    • Frequent, painless upgrades to continuously enhance functionality
    • Secure access from any computer with a Web browser and Internet connectivity
While its benefits are extremely compelling, cloud computing also presents some new risks. Perhaps the most obvious risk is the potential loss of control over IT, specifically: security, reliability, and vendor lock-in. To mitigate the security and reliability risks, look for vendors with active compliance programs, who are willing to to enter into contractual service level agreements that offer credits for unscheduled outages.

Vendor lock-in is actually no different between cloud-based services and in-house systems, since the majority of attributes that make a solution hard to replace are at the application level, which are equivalent between cloud-based and in-house systems, rather than at the infrastructure level. For example, in both cloud and in-house cases, historical data would need to be migrated, application integration would need to be examined, and end-users would need to be re-trained.

Another risk is the potential limitation to the ability to customize the application and integrate it with other applications. To mitigate these risks, look for solutions that were designed from the beginning to be delivered as a service, offering standards-based application programming interfaces (APIs), like Simple Object Access Protocol (SOAP), for integration with other applications.

APIs, however, do not always provide a way to truly customize a cloud-based solution, as is typical for an in-house solution, where clients can have direct access to develop custom functionality on the underlying database. The reality is that this form of in-house system customization might provide a little added control over API-level integration, but that control comes at the expense of exponentially increased costs and complexity and slower upgrade cycles, which delays the introduction of new functionality. On the other hand, integration using standards-based APIs provides significant control over functionality without sacrificing control over cost and complexity.

Here’s the bottom line: Cloud services allow clients to both simplify operations and improve control over finances. Risks related to vendor lock-in and limited ability to customize are more a matter of perception than practice. Any remaining risks can be easily mitigated with sound solution selection and vendor management.

Stay tuned for the next and final installment of this series, which will cover what cloud computing means to publishers.

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