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Life in the Clouds
Cloud computing, putting computer networks over
the Internet, is slowly catching on as a way for Gulf Coast companies to lower tech costs. But document security and bandwidth needs may slow its growth.
technology by Dave Szymanski | Tampa Bay Editor
Cloud computing is the latest buzzword in information technology.
Cloud refers to the Internet. It is a way for a business to put its computer network on the Web to increase capacity or add capabilities without investing in infrastructure like new hardware or software. Companies use a subscription-based service in real time.
An example of this is SaaS (Software as a Service) services such as salesforce.com.
Cloud computing, also called utility computing, is growing, and it has some big names behind it, such as Google. But among the Gulf Coast business community, there are clear differences of opinion on how fast and wide it will grow. It is just beyond infancy.
There are also different opinions on who the winners and losers of this trend might be and if it is really the next big thing in computer networks or if it is mainly hype.
"It's too soon to say that it's the next big thing," says Ieuan Mahony, technology partner for Tampa-based law firm Holland & Knight, which does not use cloud computing. But its clients do.
"I think it shows great promise," Mahony adds. "It's another way to get the job done. It shows great upside."
One common message: It is need-dependent. Be cautious. Gather information. Maybe try it with part of your company before giving all of your documents to an outside company.
In the traditional software model, a software company writes code, then puts it on CDs or allows you to download it from a Web site for use in your business. You usually need to update it every year and pay a licensing fee.
In cloud computing, software is a service. A company pays a monthly fee and that includes all licenses, updates and maintenance of the software.
It has won over a number of business customers in California and the trend is coming to Florida.
Jana Wiggins, president and chief executive officer of Document Advantage Corp. in Tampa, has jumped into the cloud computing trend and sees its influence growing. Document Advantage helps companies process electronic documents.
To Wiggins, a company is ready for this based on its corporate culture. If it is ready to let go of documents and focus on its core business, it's ready.
"A lot of it is in the eye of the beholder," Wiggins says. "We saw it coming years ago. We changed business models and built a new application."
Some compare cloud computing to the industrial revolution. Manufacturing companies needed a reliable power source so they used to locate near rivers and dams. Then Americans put generators in their basements in 1905.
Then came the consolidation of electricity with centralized electric utility companies. Buildings were built with electric outlets.
Some say the same thing is happening with computing. Companies today have off-site servers and farm-out IT service for cost savings and economies of scale. They pay for computer networking monthly, like electricity. It is provided out of their office, lowering the price.
Companies like Google are creating a 50-acre data center. It provides very heavy computing power for low dollars on the Internet. It is a timely issue because of the economy.
"Everyone is tightening their belts, so we will see a quicker adoption of it," says Arnie Bellini, chief executive officer of ConnectWise, a Tampa IT management software and IT services firm.
Potential winners, losers
Since cloud computing is a service, one potential winner could be IT service firms. But they could suffer if they are not ready.
"Since Bayshore is deeply involved with Citrix and they are leaders of application delivery - Bayshore will absolutely benefit by this new phenomena - both by hosting our own services or by doing the set up for other companies to deploy their applications and services," says Peter Anderson, chief executive officer of Bayshore Technologies, a Tampa IT services firm.
Cloud computing has some businesspeople thinking the unthinkable: The fall of Microsoft. Instead of ponying up the annual license fees to Goliath Microsoft, a business could pay less money per month in a cloud contract with a smaller, more nimble David firm.
But that prediction may not happen. Microsoft has unveiled Azure. It has figured out a way to collect fees, differently.
Another potential loser is a computer manufacturer like HP or Dell. Cloud computing only needs basic computers, so firms can use models 10 years old or older and not have to replace them as often.
IT service firms may benefit or be hurt by the trend.
"IT services companies, if they don't offer a cloud solution, they will lose business to the Googles, Amazons and Microsofts," Bellini says. "You evolve one way or another. You evolve to a provide higher level of services."
Cloud computing faces challenges, the primary ones being security, bandwidth and service. Security is especially an issue with medical businesses and law firms.
"All my data you're taking down isn't with you, it's in the cloud somewhere, on the Internet," Mahony says. "It's an issue of security vs. in my office. You need a comfort level there."
But Wiggins sees this as a non-issue. Companies are more at risk in losing information internally, to employees hacking into a server on site, than outsiders hacking in at off-site servers.
Another issue is service. Can a business count on continual backup help? Not from Google, says Terry Hedden, chief executive officer of Infinity Business Systems, a Tampa IT services firm.
"The reason you'll see problems is that support is unavailable," Hedden says. "They are physically not there."
But one way to secure this is through SLAs, or Service Level Agreements, contracts that guarantee uninterrupted service.
"If we decided to do cloud computing and you give me all your data, all your computer functionality and you have a big deadline and I leave on vacation, you're totally stuck," Mahony says. "That's where SLAs come in."
Other firms say bandwidth is preventing cloud computing from growing, so it is at best five years away. Others say bandwidth is less of an issue than security.
"I don't think bandwidth is going to be the problem," says Ralph Barber, chief technology officer for Holland & Knight. "You can get it from Time Warner and AT&T to get access to their network."
Wary first steps
While some companies are jumping fully in and others are staying traditional, some are trying part of their companies in cloud computing.
Some functions may be better in the cloud. For example, if a company has a business model that requires customer interaction, having it in the cloud in a scalable system could be helpful. Amazon is offering a service called EC2 that provides adjustable cloud computing space.
One organization that is jumping fully in, to catch up and try to pass its competitors, is Admiral Farragut Academy in St. Petersburg.
Instead of hard-wiring its classroom buildings and offices and investing in thousands of dollars in software and new hardware, the school is buying each student a basic, $400 notebook computer and using cloud computing. Students will have a gmail account and the school will use the using Google Docs document-sharing solutions.
Some technology companies see a progression for cloud computing from schools, to small businesses, then larger companies.
"This is the future," Bellini says. "There is an opportunity for anyone in the IT service space. Microsoft and Dell are not happy. And there's nothing any of them can do about it."
For many companies, it is a tough call.
"We have 20 offices, 25 million documents, it's a complex environment," Holland & Knight's Barber says. "For a company with 20 salespeople, a cloud environment, with IP (Internet protocol) phones, might work."
Tampa consultant John L. Nelson says the timing of forming a cloud computing company has accelerated as a result of the recent election.
Companies may take a look at it as an investment in a "stateless company," an effort to circumvent government controls and taxation.
"This is already happening on a massive scale," Nelson says. "Just look at foreign governments that have no knowledge or control over Internet-based companies operating within their boundaries. America regulations and taxation will drive companies to become cloud computing companies."
The scope of Nelson's thinking is not even limited to technology. In the global economy, merchandise can be drop-shipped from the manufacturer directly to the consumer anywhere in the world.
"In my judgment, cloud computing will facilitate a paradigm shift in global commerce," he says.
But that could take time. If a company's customers are concerned with the security of its documents on a shared server, so is that company, says David Gilden, co-founder and partner at Acuity Solutions in Tampa, which provides information security and networking solutions to business.
"It's certainly several years away from being relevant," Gilden says.
But one appeal is that businesses can use cloud computing to save money.
"It is very similar to buying electricity," Wiggins says. "You don't want the hardware or software. You use what you need."
REVIEW SUMMARY
Company: Document Advantage Corp.
Industry: Computer networks
Key: Linking all computers in the workplace may be the most reliable, secure and cost-effective way.
Tips for businesses
IT professionals, attorneys and chief executives offer these tips for Gulf Coast business owners and managers considering cloud computing:
• Talk with an attorney or IT consultant about it thoroughly to see how it may benefit your business. It may make sense to use only for a few functions, such as HR or invoices.
• Consider trying cloud computing on only one part of your business before turning over all of your operations to it.
• Make sure you secure ongoing service guarantees from your vendor so that vacations, the weather and other things do not affect repairs and support.
• If you have cyclical computing needs instead of a fixed need for storage space and speed, consider Amazon's adjustable EC2 cloud computing space service, which is adjustable.
• Make sure you are happy with the level of security for your documents.
• Make sure you have the bandwidth you need from your Internet service provider.
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