Archive for the ‘cloud’ Category

Concern # 2 – Operations

Reliability of the Cloud. Cloud Companies may not provide service level required or may go out of business. No one knows that the general reliability of the Cloud will be, or even how it can be measured adequately. If history is any guide to the future, then experimentation with a new model of delivering computing services in a matter of course will involve problems. No one wishes to be the first to experience these problems. Amelioration Strategy: Favor the large End-to-End providers (i.e., EDS/SAP).

Loss of control: data, software, and operational management. How can day-to-day operations and management control be set

Disadvantages of Cloud Computing

Disadvantages of Cloud Computing

up under the Cloud model? What are the organizational implications when data, software, and operations are under someone else’s purview? Clearly, each organization will be forced to answer this question in a different way, but for some, uncertainty in this domain under the Cloud model may prove to be a significant barrier to adoption. For others, perhaps, it will prove to be a great opportunity. Amelioration Strategy: Difficult. Try to maintain in-house expertise to use in case of a problem.

Technical decisions made by third party. What are the implications for IT autonomy when technical decisions are being made elsewhere, out of direct control? Amelioration Strategy: No real solution, unless Cloud and customers are partners.

Lack of in-house experts. Presumably, use of an Cloud will reduce the need to employ in-house experts in various areas of information technology and applications. This will reduce costs, but at the same time strip away skilled personnel from internal IT operations. IT organizations need to understand the implications of the lack of in-house experts. Note this is generally a long-term systemic issue with outsourcing. Like outsourcing, the Cloud model will create a certain level of dependence of the enterprise on its Cloud. Amelioration Strategy: Give in-house experts control over research responsibilities, and give them management decision status.

Staff migration from company. Few have considered the staffing implications of the Cloud model. What will happen to your own IT staff (assuming you have one) after the Cloud starts to take over major segments of your applications portfolio? If the staff leaves, then will your organization permanently lose the ability to ever build up an in-house operation? If so, then what are the long term implications for that? Clearly, migration of staff away can have serious implications, but it is difficult fully to anticipate what they are. Amelioration Strategy: Give in-house experts control over research responsibilities, and give them management decision status.

Boardroom representation. If the Cloud is a key partner in providing your service, it must be aware of all of your competitive plans, yet it also services your customers. The logical board member representing IT would be the Cloud itself, yet since it services competitors, this is not workable. Amelioration Strategy: Give in-house experts control over research responsibilities, and give them management decision status.

Unclear responsibility for failures. With the Cloud sharing your processing, problem determination can be difficult. If something fails, it may be unclear who is responsible for the failure. Amelioration Strategy: Pick Cloud providers carefully. Contract for single point of responsibility.

Technical decisions made by third party. Once the Cloud is doing the processing, it makes the technical decisions. This removes them from your control. The risk is that you are at the hands of the Cloud for IT-based innovation. Amelioration Strategy: No real solution, unless Cloud and customers are partners.

Mass market versus customization. It is impossible to get competitive advantage from IT applications that everyone else has access to. At the same time, customization can be expensive, possibly reversing the Cloud economic advantage.

Concern # 3 – Peak Workload Concerns

Monthly financial cycles, operational peaks, end-of-year, holiday crunches, and annual meetings – what will happen to a fully-developed Cloud model implementation when it is the end of the billing cycle and hundreds of company uses are doing their monthly billing? Will the system be able to handle it? If so, then how much extra capacity will the Cloud be required to build so that no one receives a “busy signal” during peak hours? And if a significant amount of extra investment is required, then how can the Cloud be profitable? The fact is that no one at this time understands the full implications of peak loading. Amelioration Strategy: Proper Cloud selection and use of contract guarantees.

Concern # 4 – Software Issues

There are a variety of software-related issues that must be considered in the evolving Cloud model:

Version update problems. What will happen when new versions of the software program are released? Has anyone  had experience migrating hundreds of different customers, and their data, to new versions? Although this is not impossible, not many Cloud vendors have done it yet,  and as a result it is a legitimate concern. However In my experience salesforce.com does manage this well, you need to make sure you choose carefully.  Amelioration Strategy: Exercise control by having ownership of the server or partition if possible.

Inability to customize. If the user organization has contracted for vanilla services from the Cloud, then it will be either impossible or very costly to make any type of modification or customization in the software outside of strictly pre-defined ranges of change. Each of these ranges for change needs to be negotiated in advance, because each will involve pricing; yet, it is impossible for any user fully to anticipate all of the changes that are going to be required. As a result, for some users the inability to customize the software being used might present a series of unanticipated business problems. Amelioration Strategy: Make this an advantage by minimizing customization.

Concern # 5 – Selection of Best Cloud Vendors

There are 1000’s  of Cloud vendors, but most persons have heard of only a few. Under these circumstances, how is it possible to make the best choice? Clearly advertising and word of mouth is going to play an important part in selection and screening, but this can not substitute for a clear and more transparent process. Until the markets ‘‘shakes out’’ some with the emergence of dominant players who have a good market reputation, selection of Cloud vendors will remain extraordinarily difficult to the user. Amelioration Strategy: Use a consultant with a track record in doing this.

Other Limiting Factors

Contract limitations. It is impossible to place too much emphasis on the importance of careful contract negotiation. Since there is a poor track record – actually no historical record at all – for Cloud vendors, it will be more difficult to write ‘good’ contracts that can handle the vast amount of new contingencies that may appear. As a result, the contract itself may end up being a liability for either the vendor or the user, neither situation of which is good for the relationship. Amelioration Strategy: Sign shorter contracts, adjust as necessary during renewal. Advance study pays off.

Pricing and economic assumptions may be faulty. There is such a high amount of change in the market, that pricing models can not possibly remain stable. They have not stabilized yet, and may not do so until the third quarter of 2012. As a result, any long-term contract (of perhaps more than 1 year) is subject to a significant amount of arbitrage risk in pricing. Amelioration Strategy: Sign shorter contracts, adjust as necessary during renewal. Do more than listen to the Cloud.

User resistance to change. In some organizations, user re-training, acceptance, and possible resistance to change may inhibit model adoption. Any type of change such as this demands significant sensitivity on the part of IT regarding users. Note that user resistance may not come only from desktop workers, but might as well come from line managers worried about confidentiality and security of their proprietary data. “If one of our competitors is using the same Cloud, how can we guarantee we will be protected?” might be one expressed concern. Amelioration Strategy: Improve training.

Reduced ability to develop competitive systems. Being forced to renegotiate new contracts or add ARUs (additional resource units) each time the enterprise wishes to adopt a major change in technology may not be the preferable route for companies wishing to develop competitive systems. Amelioration Strategy: In-house expertise still needed. Don’t let it slip away.

No standards for certification of applications or service levels. There are no standards for either of these. Amelioration Strategy: In absence of standards, develop your own – either on your own, or with unbiased experienced consultants.

Checklist for Ongoing Management of Your Cloud

Stick to clearly defined responsibilities
  • The company
  • The vendor
Follow pricing formulas and ground rules for change
  • Triggers (tariff increases or decreases, cost of living, etc.)
Formalize change management
  • Formal process and authorization
  • Updates/new releases/new services
  • Changes in requirements
  • Triggers
Monitor performance and service level guarantees
  • Define governance process and responsibilities
  • Specify vital signs, tolerance ranges, and metrics. What is measured – response time, storage capacity, up-time, time-to- repair/recovery, other? How frequently? For what time period? How do you calculate? What period to redress?
  • Reporting periods and formats
  • Face-to-face review meetings
  • Issues management
Put in place an escalation policy and process
  • Define conditions as to when to escalate to next higher level
  • Disputes, recourse and remedies
  • Internal responsibilities
  • External responsibilities – arbitration, the courts
Prepare for untoward contingencies, disaster recovery, back-up and insurance claims
  • Testing
  • Insurance (for multiple reasons – privacy, theft, going out of business, liability, intellectual property
  • Planning
Know how to terminate the agreement
  • Define conditions and responsibilities
  • Define transition plan and costs
  • Define who owns what resources
For more information please contact Shaun

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Discussions with CIOs

My discussions with users and potential users of the Cloud model indicated a number of key concerns among IT professionals (primarily CIOs) I interviewed. There is in the marketplace much concern about the “vanilla” standardized approach being offered by many Cloud vendors vs. the need for proprietary data access that may be demanded by an enterprise. How can these two be reconciled without recourse to expensive customization, leading down the road to dis-economic transactions? Another factor is the fear of “versioning” disruptions caused when the Cloud is forced to upgrade to new versions of software. The Cloud will face the same types of problems that any user organization would, yet in multiples of its number of customers. How can it do this effectively, considering the problems with data transfer, help desk support, and other associated factors? So it remains a large question mark over the entire viability of the Cloud model in the medium term.

Disadvantages of Cloud Computing

There also are concerns about pricing. There is a general promise that the Cloud model offers a revolutionary pricing model for getting services, but the “show me” attitude of most IT professionals means that speculation and marketing messages are not enough to sway them towards a new model. Only negotiated prices are real, and most would rather wait for others to achieve success before attempting the Cloud model on their own. Concerns are also expressed regarding cyclical capacity. How will the Cloud, for example, operate on the 15th of the month, or during tax payment time, or at the end of the month when companies must prepare monthly statements? Indeed it is hard to believe that with multiple enterprises (i.e., not multiple users) on a system, it will not experience service degradation. How the Cloud vendors solve these problems will be key to their model’s viability.

Some CIOs simply do not like the lack of control that the Cloud model assumes. If a lot of change generally is required in the system, then a successful CIO does not wish to renegotiate a new contract every time it is necessary to make changes in order to meet business requirements. Some CIOs openly question what will happen if the Cloud fails as a business? It is difficult to estimate the consequences. Certainly any Cloud adoption plan needs to include a disaster contingency plan that will provide a realistic alternative in case of failure. The fact that no one has any experience with this type of event does not help rapid model adoption in the marketplace.

Prioritization is another key issue. What if your enterprise is one of the smaller customers subscribing to the Cloud service? There is a fear that one’s enterprise will not get top priority service by the Cloud, particularly in cases of problem resolution disputes. In this connection, discriminatory pricing also could be an issue. Being one of many is not an entirely appealing option for many enterprises and their IT leadership. Finally, there is a lingering concern that corporate non-IT leadership may latch on to the Cloud model, thinking that it is a “silver bullet,” thus restricting maneuverability in considering alternative solutions for long-term IT strategy. Everyone has heard of “airline magazine” ideas that come to top business executives, and how they can be adopted without adequate consideration of the unique requirements and conditions of the concerned enterprise.

Concern # 1 – Communications

Complete dependence on connection. The enterprise’s connection to its applications and data will be completely dependent on the type of (Internet) connection that is available. Is this a single point of failure? If so, then what can be done?

Internet inadequacy/capacity concerns. Capacity issues on the public Internet infrastructure are serious, particularly with reference to peak load times during the day or month. Any person who has edited text over the Internet knows the problems that can ensue.

Security issues. Security is always a concern when corporate date is involved. When all of the corporate data is involved, the concern is even more severe.

To be continued…

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