Cloud Computing: What’s the payback?

For finance managers, the ever-present question around Cloud computing is when and how it will pay for itself.

The issue is a permanent fixture on our sister site BusinessCloud9.com and has also been addressed with guidance from the global IT body ISACA (Information Systems Audit and Control Association) and a recent whitepaper from FinancialForce.com.

Continued...

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Comments

Are we in the 1980's ?    2 thanks

eyeskyward | | Permalink

For an accounting piece I am disapointed.

The cloud discussion is not about how your business gets a return...It is how your business will cope in a different IT environment. The above strategy, albeit accurate, was the exact same approach used by Finance managers in the 1980's - "What is our payback for investing in the Internet?"

By the time you have sorted out your accounting model your business will have lost out.

The Cloud, tablets and social media are changing the very structure of the way the IT industry works.

Microsoft is selling cloud enabled PCs...it has never sold competitively in his way before.
After Apple, the next most successful player in the device space is...Amazon, who later this year will launch an iPad rival with free cloud email.
Facebook and Intel have both opened an App store.

Cloud is bigger than the Internet. It is the migration of application, storage and security to the web.

What finance managers need to be thinking about is how they account for shared ownership over business function and how they invest in Big Data.

By the time you calculate an ROI on your "Cloud Strategy" your employees will be downloading productivity applications from a facebook store and emailing via their Kindle Fire.

If you are not already speaking with vendors about Cloud and getting advice on the issues...update your CV as your company is in for rocky times.

Wandering slowly as a cloud    1 thanks

S-Max | | Permalink

Having recently had experience of switching to a terminal server (the cloud) the major issue I and my colleagues have had is the loss of speed. We use a program which needs to gather significant amounts of data from the server for even the simplest of tasks such as printing and this takes much longer now than before..  Each time there is a delay there is a knock on effect on the time spent trying to complete the task at hand and the morale of the workforce.

With today’s technology, programs should work without delay, when they don’t, any delay is a frustration.  There are many benefits to the cloud but be aware, very aware of the speed problem and the costs involved in making sure speed is not an issue.

garyturner's picture

Clarification on Terminal Services

garyturner | | Permalink

@S-Max

Terminal Services does not fall into a generally accepted definition* of cloud technology.

Without knowing more about your circumstances, it's likely that the speed issues you are experiencing are related to the fact that you are using older software, the architecture of which assumes a context of operating in a local network with local network speeds, when in fact you're accessing it over a considerably slower internet connection.

Well designed, contemporary cloud applications assume a low bandwidth context and should therefore not result in the same laggardly speed experience.

* This fact does not stop, sadly, vendors of older internet enabling services advertising them as belonging to the cloud generation and misleading customers.

Gary Turner
Managing Director, Xero
@garyturner

 

dahowlett's picture

Your due diligence?

dahowlett | | Permalink

If you are using a terminal server then you're not using the cloud as I understand the term. That's not uncommon as every vendor and his dog talk about a cloud strategy when they should really say: 'We've hitched our wagon to cloud - whatever that means.'

Whomever did your due diligence should be taken outside and given a good slap. If the combination of available network bandwidth, network performance and software performance problems were not identified in the pre-contract stage then they've not done their job correctly. 

As I sometimes say: 'Marry in haste, repent at leisure.'

dahowlett's picture

Big Data?

dahowlett | | Permalink

Are you kidding me or did you overdose on vendor/analyst kool-aid?

Before ANYONE starts yapping about Big Data, it wouldn't be a bad idea if we got Little Data sorted out first. 

On your ROI/TCO points, I can sum up from a convo this week: "If you're looking at TCO as a starting point for cloud then you're really looking at the wrong metrics. While important, TCO has almost nothing to do with business transformation impact."

Cloud Computing

coland | | Permalink

At first and skim read I am astounded!

Cloud Computing removes the ownership and in-house investment cost from an organisation but it is not without risks and assumptions made that Internet connection remains constant and determinate.

In-house resilience is less prone to vagaries over which an organisation has no control!

TaxTeddy's picture

Ahhhh..... control

TaxTeddy | | Permalink

I wondered when that was going to come up!

For most conservative types the worry is loss of control. It's one thing if you lose or corrupt your local data - surely you have a backup. But is it more of a worry that someone else will lose it / misuse it / sell it / leave a copy on the train (HMRC are you listening?) or generally  muck things up? I think it is.

I'm not saying this would happen (Facebook, anyone?) - just that people worry that it might happen. And that stops them embracing cloud based solutions.

An old friend of mine in marketing used to say that if something was being sold really hard it probably wasn't much good or people didn't need it. Seems to me that cloud technology is being sold quite hard these days.

 

 

Old Software and kit

S-Max | | Permalink

The software is current acounting software from a major player and microsoft's current office.

The terminal server is as far as I am aware state of the art servicing a significant number of offices within a national firm of accountants.

The problem appears to be down to the links between the offices and their server and the potential cost of a superfast dedicated connection,  

garyturner's picture

It might be state of the art...

garyturner | | Permalink

...but it's designed to enable old LAN based software applications to run across the internet and has been a commonly deployed method since the mid-nineties, initially to wring extra life out of old PC hardware but lately to encompass more sophisticated virtualisation on a large scale. 

It may well be a perfectly serviceable solution if correctly configured, but it doesn't meet the accepted definition cloud which is the basis of John's article.

There are performance considerations with any technology setup - contemporary cloud services included - but it's important to compare apples with apples.

Gary Turner
Managing Director, Xero
@garyturner

Big Data & Kool Aid

eyeskyward | | Permalink

Totally agree with the "TCO has almost nothing to do with business transformation impact" comment. Also agree that "Cloud" is slapped on just about anything to make it look Kool aid cool.

As "the Network is the Computer" was a 1980's concept, I hold back belly laughs when Cloud is rolled out as the new Babylon. 

The Big Data bit though does need referencing:

http://www.deloitte.com/view/en_US/us/Insights/Browse-by-Content-Type/de...

Understanding where data is building up is a matter for all companies. Facebook has more targeted demographical data than you can afford to store in your CRM system. You can choose to pay Facebook to use it or find ways of acquiring it...Eventually you will have to have a strategy for it.

Facebook, Twitter, eBay, YouTube are all farming data fast, because it is data that is stored in the Cloud. 

You don't have to use it. 

You can let your competitors advertise and engage in a personalised way, whilst you just spam the hell out of your existing customers in your clean enterprise CRM system.

In 1980 you didn't have to have a website either...

dahowlett's picture

Focus on the things that matter

dahowlett | | Permalink

70% of corporate data is redundant. It is difficult for many businesses to know whether they can rely on their existing data. That needs solving 1st before anyone starts thinking BIg Data. 

Even in those businesses where people are considering this topic, Facebook is NOT generally a topic of serious strategic discussion, even among the top brands, except as a peripheral activity. Look at how brands have walked away from FB the last year. re: Twitter - yes, there is a degree of sentiment analysis going on but it rarely impacts overall performance. Check what happened with BP and its stock price over time. 

Now - will those things change? Sure. But in any data analysis strategy, the 1st thing you need do is focus upon the things that matter now. 

FWIW - I have seen no reduction in the amount of spam I receive since the popularisation of FB etc. If anything, it is getting worse. When I run the analysis on companies that are said to be deep into this stuff I can find no direct correlation between performance and their use of such techniques. Not yet anyway. And that includes the likes of P&G, Kimberly-Clark and Burberry. 

Remember that Deloitte pimps these services so you should take what they say with a sack of salt.

Oh - and before I forget. Remember how Ratner single handedly nearly killed his company? He didn't need the internet, just ill thought through remarks that got mass media attention. That's STILL the way that many big shifts occur. 

daveforbes's picture

@dahowlett

daveforbes | | Permalink

dahowlett wrote:
70% of corporate data is redundant.

Not disputing, just asking for elaboration. Do you mean "redundant" as in day to day parlance meaning "surplus to requirements", or the more specialised information theory sense (i.e. essentially it can be compressed without loss) ? Where did 70% come from ?

Thanks

Definition please

RussellD | | Permalink

garyturner wrote:
Terminal Services does not fall into a generally accepted definition* of cloud technology.* This fact does not stop, sadly, vendors of older internet enabling services advertising them as belonging to the cloud generation and misleading customers.
garyturner wrote:
It may well be a perfectly serviceable solution if correctly configured, but it doesn't meet the accepted definition cloud which is the basis of John's article.

Dear Gary

Please would you be kind enough to post your 'generally accepted definition' here (along with the link/s to the industry standard setting bodies providing them).

My research skills must be rubbish - I can only find definitions that don't agree with you.

Russell

www.online50.net 

garyturner's picture

Definition of cloud

garyturner | | Permalink

@Russell - touched a nerve there, did I? ;)

This is a great resource. http://weblog.garyturner.net/cloud

Gary Turner
Managing Director, Xero
@garyturner

How silly of me

RussellD | | Permalink

Why didn't I think of reading your blog for the 'generally accepted definition'??  

Where point 1 is:

Defining cloud computing is really a drinking game thought up by traditional software vendors and consultants.

Brilliant!!

'Generally accepted' is seldom the litmus test of truth - think flat earth, slavery, apartheid

What is important is this  - if a customer wants Sage 50 (plus many others) online so they can use it from more than one location or use it on a Mac or iPad, Online50 can help.  

Some companies like S-Max try to do this in-house and discover it is difficult and can be expensive.  

Did I mention that with Online50 customers can get monthly pricing - no 12 month tie in - just straight calendar monthly prices. No adoption costs - as they have to learn new software or adjust their processes to the new software.  No leaving costs - if they decide to move on - their data belongs to them and will work instantly elsewhere.

'Generally accepted definitions' of cloud are a marketing smoke screen.  What matters is meeting customers needs.

 

garyturner's picture

How I feel about this conversation

garyturner | | Permalink

Gary Turner
Managing Director, Xero
@garyturner

Ye cannae change ....

ThornyIssues | | Permalink

S-Max wrote:

Having recently had experience of switching to a terminal server (the cloud) the major issue I and my colleagues have had is the loss of speed. We use a program which needs to gather significant amounts of data from the server for even the simplest of tasks such as printing and this takes much longer now than before..  Each time there is a delay there is a knock on effect on the time spent trying to complete the task at hand and the morale of the workforce.

With today’s technology, programs should work without delay, when they don’t, any delay is a frustration.  There are many benefits to the cloud but be aware, very aware of the speed problem and the costs involved in making sure speed is not an issue.

... the laws of physics.

Obviously trying to shuttle big-ish amounts of data up and down a wire, instead of of a local disk, is going to be a lot slower. Speed is always going to be an issue. No doubt you'll have some wide-boy IT vendor in saying you need the latest 3.5GHz PCs with 8Gbyte of memory (SSD at that!) yadda, yadda, yadda. The bottleneck will always be "the wire" and the services at the end of the wire.

 

 

Remember I was saying that ...

ThornyIssues | | Permalink

That "insider knowledge" is the Achilles Heel of security (and that includes Cloud stuff).

Things like this http://www.computerworlduk.com/news/security/3379393/hacker-group-claims-access-12m-apple-device-ids-courtesy-of-fbi/  get people to naively use this http://thenextweb.com/apple/2012/09/04/heres-check-apple-device-udid-compromised-antisec-leak/ to hand over data which allows hackers to access systems. The most recent was this http://www.wired.com/gadgetlab/2012/08/apple-amazon-mat-honan-hacking/all/