Company Matters - Cloud Computing

The Sunday Business Post, 01 May 2011

This week's expert is Fintan Swanton, president of the Irish Computer Society and cost management consultant with Expense Reduction Ireland.

QUESTION

I set up my own small retail operation about eight months ago. We rely a lot on the internet to generate sales and publicise what we do. However, I keep hearing about ''cloud computing'' as a good way for small companies, like mine, to keep IT costs down. I have tried reading up on this myself, but find all the technical jargon frustrating. The upshot is that I can't really understand what it is, how it works –or even what products or services it is relevant to. Can you help?

ANSWER

Cloud computing basically means the provision of computing services over the internet as a utility. Like other utilities, such as electricity or water, these services are provided on a demand-driven, pay-per-use basis. They are hosted ''remotely'' - i.e. not on your premises, but on the computer hardware of the company that is providing the service. Any data or information you put into the system is also stored on the provider's hardware.

Common examples

Web-hosted e-mail services, such as Gmail or Hotmail, are one commonly used service. Web-hosted office productivity software, meanwhile, ranges from the kind of general purpose office productivity software provided by Google Apps, to more specialised applications for accounting, ecommerce, customer relationship management (CRM) and Enterprise Resource Planning (ERP).

Another Cloud Computing service is online back-up. This provides users with regular back-up and off-site storage for essential data. Computer virtualisation is more complicated. This is where one big computer system is sub-divided into a group of virtual computers - each one with its own processor, memory and data storage. Service providers rent computing power on a pay-as-you go basis, running whatever software customers require on virtual machines.

These can be configured to add resources when needed - for example, to cope with seasonal peaks in demand on e-commerce websites. A virtual, cloud-hosted PBX, or telephone exchange, can be combined with handsets for internet telephony to provide all of the features of a traditional PBX. Because these systems route calls over the internet, users can also avail of rock-bottom VoIP call rates, especially to international destinations.

Benefits

The benefits of cloud computing to start-ups and other small companies can be considerable. It can eliminate large capital outlays on hardware and software and the associated subsequent cost of depreciation. Hardware or software upgrades, carried out by the service provider, will not result in unforeseen costs or disruption to your business.

Compared with setting up similar services in-house, cloud-based services can also be deployed much faster. You pay for as much as your need, which takes a lot of the guesswork out of planning and budgeting. Hosting applications in the cloud makes them accessible anywhere there is an internet connection. This can make it easier for staff to work from locations outside the office.

The risks

Cloud computing brings its own risks too. For example, in letting data control pass out of your own hands, you must choose service providers that will secure this data adequately. Outsourcing the control of your data does not absolve you of your duties and responsibilities under data protection laws. It is also worth bearing in mind that cloud computing is inherently dependent on a good quality and reliable internet connection, so you must think about what you would do in the event that there was an interruption to your internet access.

Also, ask yourself, if you were reliant on one provider for vital services, what would you do in the event of a temporary disruption to their systems, or if they unexpectedly and permanently ceased trading? None of these issues is insurmountable, but you should plan ahead to ensure that your business is never put at undue risk.