What Decisions Your Business Really Needs To Make About The Cloud

Despite all the hype, the cloud is not the answer to everything. That said, the cloud is definitely the answer to a lot of things. Here’s a primer on telling the difference.

What Decisions Your Business Really Needs To Make About The Cloud

From where I sit, there’s no more over-used, over-hyped expression than “the cloud.” It has become so ubiquitous as to almost be meaningless. I want to correct that.


The term “cloud” is the current darling of the tech industry. Anyone who can lay claim to it can be seen as hip and leading edge. I was at an event in June 2012 where a cloud evangelist proclaimed, “The cloud is going to transform business!” Transform? Really? Excuse me, but, “transform” seems to me to be a really big promise–just exactly how is a business going to be transformed by “the cloud?” Is “the cloud” so powerful that it–all by itself–can change the competitive nature of a company? I think not.

I’ve grown weary of the hype and I suspect, if you’re reading this, you may have, too. So, let me try to break this down from a non-IT perspective for business executives so you are (a) more knowledgeable about “the cloud,” and, (b) have enough understanding to avoid being bamboozled by IT folks, their teams and the endless number of vendors in the marketplace all of whom claim to have the answer to your cloud needs.

The questions executives should ask are: Do you really want the cloud to transform your business? Or, do you just want it to deliver outcomes that help drive your business forward? IDC offers, “The cloud movement is about much more than the cloud. Cloud cannot be sufficiently understood as a standalone phenomenon in the IT market, but rather as a core ingredient of a larger transformation of the IT industry–and many other industries–using IT to transform themselves.”

The first thing you need to be aware of is the notion of cloud washing: the purposeful and sometimes deceptive attempt by a vendor to re-brand an old product or service by associating the buzzword “cloud” with it. Gartner says the cloud is a “style of computing where scalable and elastic IT-related capabilities are provided as a service to customers using Internet technologies.” Even Gartner acknowledges intense hype surrounds cloud computing making it difficult to understand vendor options and strategies.

At the most basic level, with respect to the cloud, you must know what you need, and only pay for what you use.

The cloud can liberate you from having to deal with some or possibly all of your IT infrastructure on your physical premises, enabling you to reduce or eliminate IT infrastructure capital expenditures (CAPEX). You pay a third party in the form of operating expense (OPEX) to create and manage that infrastructure for you. And, here is where the transformation piece comes in.


If you dislike CAPEX and want more OPEX, the cloud can change that for you. Yes, you can do that with fancy finance vehicles today but most of those won’t let you add the second variable of only paying for what you consume. So, in some ways, the cloud is a game changer. It just depends on what you think is more important to you in terms of either CAPEX or OPEX.

The cloud enables customers to easily procure ready-to-use application development environments or on-demand infrastructure within minutes. Flexible, pay-as-you-go models enable more experimentation and risk-taking, fueling innovation for businesses small or large. Production environments can either be cloud-based on brought in house if the application provider allows for this.

While IT costs are often apportioned like peanut butter as part of an IT overhead allocation (leaving business leaders disappointed with their IT counterparts), cloud computing empowers IT leaders to directly apportion IT costs to those who consume it. Usage meters in the cloud make it very easy to ascertain who is using what assets and for what purpose and to directly charge those assets back to each business unit. This concept resonates well with leaders at all levels in a business, particularly those executives who consume a little and pay a lot.

There are tools that enable your existing on-premise, legacy applications to integrate with cloud-based applications by either pushing data from one application to another or by having bi-directional integration. These tools can now be deployed in days or weeks, not months or years, as we have classically seen. So, if you need to push information from a cloud-based application like customer relationship management (CRM) into an on-premise enterprise resource planning (ERP) system like SAP or Oracle, this isn’t difficult anymore.

How do you plan to consume the cloud? There are 3 different delivery models: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS), with three different deployment options (Private, Hybrid, Public).

  • The most common path to “the cloud” is what is known as a “private cloud.” The path to a private cloud can either be to move from an on-premise application, data and storage to a private cloud or you can, of course, enable a new application in a private cloud. A private cloud means hardware, software and storage which is dedicated to single customer yet has pooled resources across business units thus making it multi-tenant. It is, of course, is metered and highly automated as well.
  • A public cloud–which can offer a step-function change in agility, flexibility, speed to value, and cost–can also introduce increased risk over a private cloud. I liken this to staying in a youth hostel compared with a normal hotel room. For business use cases with highly-sensitive data, a private cloud is likely a better fit.
  • A hybrid cloud configuration connects an organization’s private and public clouds to alleviate cost, time or cyclical constraints without sacrifice to security, vendor support and control. Hybrid balances choice and the needs of the business against cost, flexibility, and risk. Workloads and data can be moved from private to public cloud environments as needed during peak capacity, seasonal/cyclical spikes in demand, or when compute/storage capacity is quickly needed for business growth.

Alas, there are yet more issues to consider.


Some companies want to know where in the physical world their data will exist in “the cloud.” Perhaps they don’t want their data outside the U.S. or they want to exclude certain countries from having their data. Does your cloud provider help you manage and control this? Are you able to specify this and make sure that your specific requests aren’t changed without your permission?

System availability, or uptime, is another big concern. If you are deploying mission-critical applications in “the cloud,” what is the vendor commitment for uptime or availability? What does each application you have require? For example, when Gmail is down even for small part of the user population, work comes to a grinding halt and people start screaming. 99% availability means an application can be down for any reason with no notice for 1 hour out of 100. That’s not very good. System availability can also exclude scheduled downtime for maintenance or system upgrades. It is not uncommon to see cloud service level agreements (SLAs) be out to 2 to 4 decimal places, e.g., 99.95%. There are often penalties associated with a vendor’s failure to meet their SLA commitments.

Security is a top consideration for any cloud-based solution. You need to understand your exposures and your tolerance for risk. You want to be able to control who can access the applications and ensure that users are properly authenticated.

Cloud vendors need to be carefully selected and managed. That’s right–you have to manage this relationship. This isn’t a “set it and forget it” world. You want a trusted partner and adviser. This isn’t just about finding a vendor and going with the lowest cost provider. There is a big difference between buying cheap commodity compute with no real support model vs. buying enterprise-class cloud with a support and service management model that marries well with your existing business practices. You are outsourcing critical applications and infrastructure. This isn’t simply about making arrangements for and executing payments. Someone needs to manage and monitor the relationship, understand how the cloud vendor’s business and infrastructure is evolving, understand what new opportunities come into play over time and what the risk is associated with these new opportunities.

What have we learned? The cloud offers a company the ability to transfer IT infrastructure and support to a third party reducing CAPEX. Through the cloud, a company has the ability to continuously decouple the workload and infrastructure creating portability, flexibility and agility. The cloud can be a key part of a company’s mobile strategy allowing applications and data to be accessed from anywhere at any time (providing you have been granted access!). Lastly, with tools to bridge the gap between cloud-based applications and in-house legacy applications, companies no longer need to be at the mercy of a data architecture in terms of being to have what is needed to support the business.

Despite all the hype, the cloud is not the answer to everything. That said, the cloud is definitely the answer to a lot of things. If you take the time to educate yourself , you can outpace and out innovate your competition. You will harness the cloud to deliver more innovation, more flexibility, realize shorter time to value, and support a more agile workforce. In the end, you’ll spend more time managing your business and less time managing your IT.


And, finally, perhaps one of the very first questions you should ask is how do you get out of the cloud should you want to?
Dave Gardner can be reached on Twitter and via his website at Gardner & Associates Consulting.

[Image: Flickr user Max Braun]


About the author

Dave Gardner is a management consultant, speaker, blogger and author based in Silicon Valley. He's been in the front row for the birth and evolution of Silicon Valley, the innovation capital of the world