When it comes to their IT capabilities and services – for employees and customers – more companies than ever are looking to the cloud. Cloud computing, that is, which allows companies to replace their legacy software and data centers in favor of subscription-based platforms, software-as-a-service and storage solutions that are offered by outside providers.
Cloud computing has become mainstream, with large companies working to transition to cloud-based services, and new companies building with a “cloud first” platform philosophy. Worldwide, public cloud services are projected to grow 21.4 percent in 2018 to a total of $186.4 billion, up from $153.5 billion in 2015, according to a recent forecast from Gartner Inc. By 2020, Forrester estimates the market for public cloud computing services will reach $260.3 billion.
While thousands of cloud-based IT services are available to companies, they generally fall into three primary types:
• Infrastructure as a Service (IaaS), where companies contract with cloud providers for the server space, storage and networking they traditionally would have in their data center.
• Software as a Service (SaaS), where cloud providers offer continuously updated subscription-based software.
• Platform as a Service (PaaS), where a third-party provider offers hardware and software tools that make it possible for companies to build and test their own applications in a cloud-based environment.
“Every company we work with has a high interest in cloud computing, and the trend points toward broad adoption,” said Greg Rhoades, chief technology officer for SIS, a Lexington-based company that provides consulting services for companies looking to transition to the cloud. “It’s easy to be overwhelmed by all the available options. We see clients taking on everything from Microsoft Office 365 to Google G-Suite, to Amazon Web Services, to more complex platform services that give them a virtualization platform for development. There are so many benefits to using cloud services that most companies can’t afford not to at least consider it.”
Less cost, more security
Companies taking the plunge with cloud services often experience big savings from investing in the cloud, sources say. Instead of having to purchase software annually, or develop and maintain software themselves, companies can purchase what they need on a subscription basis, moving costs from capital expenses to the operating cost side of the ledger. With cloud-based IT, there’s no more down time that comes from switching out upgrades of software, according to sources. Updates happen in the cloud, continuously.
“What could have been a $10 million software installation can now be something you buy on demand, on a monthly basis. You’re paying per user and per touch point, for just what you need,” said Erik Dunnigan, managing director of Coastal Cloud, which operates its Midwest Solutions Center in Louisville. “We had a client recently, a manufacturing company, that had more than 30 legacy systems running, many of them that were duplicating data and effort. We were able to eliminate a lot of inefficiencies and expense by getting rid of those, and getting them just the streamlined cloud services that they needed.”
Marshall Butler, president of Volta, an IT consulting firm based in Louisville, concurs.
“Use cases vary widely for the cloud,” Butler said. “But in general, if you’re properly implementing a cloud strategy, you can expect to save between 20 to 25 percent.”
And the benefits go far beyond just cost. Companies get scalability from cloud-based services – services that can take over key functions like email, intranets and even accounting. Jason Miller, director of consulting services for Dean Dorton Allen Ford PLLC in Lexington, said the consulting business is growing faster than ever, thanks to his company’s migration to cloud-based accounting software.
“We do a great deal of financial software systems integration and accounting consulting for our clients,” Miller said. “In 2015, we switched to cloud-based tools for our consulting team, and it has revolutionized our business. Now, all our clients’ accounting work can be done on a shared cloud platform like Bill.com or Expensify. Our clients have total two-way access to their financial data, so they don’t have to wait for weekly or monthly reports. And we don’t have to wade through 10 versions of Quicken to look at historical data. It has kept our clients truly engaged and involved, and seeing results as they happen,” he said.
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Sources interviewed for this article also cite security as being one of the key advantages of working with cloud-based services, citing the security protocols at major providers like Google, Salesforce or Amazon as being more rigorous and consistently updated than most corporate-level security systems. And the ability to have corporate IT functions spread out over several cloud providers actually enhances security in the event of outages or company-level tech failures, as data is stored in more than one place and platform, they said.
Implementation considerations
Miller warned that while cloud computing has wide use cases, no cloud computing system or service can be one-size-fits-all. Companies that operate in very narrow, niche markets may find that they need the kind of custom design that can only come from developing programs in-house. And Miller said it’s never a good idea to leap into cloud computing before doing the proper due diligence.
“Companies considering migrating to the cloud should take the time to evaluate their IT processes, and ask the hard questions. Does this vendor have the proper security protocols to work with our systems? Is it stable? If I want to change cloud service providers, can my data be easily migrated back out? Do they provide the proper reports and systems compliance? Do they offer the ability for third parties to assess their service? You really shouldn’t consider proceeding until you’ve got the answers to those questions,” Miller said.
Craig Meadows, sales operations manager at Volta, agreed, saying that instead of automatically choosing a public cloud product some companies might be better served developing a private cloud.
“With a private cloud, companies can use cloud services without having to share a public platform to do it. They can simply use the cloud to provision just the service or platform space they need, making it scalable and affordable to handle peaks and valleys of usage,” Meadows said.
Companies wanting to get into cloud computing should approach adding new cloud services like they would adding any other kind of software – with extensive vetting, processes and procedures, according to Rhoades.
“IT departments need to understand their objectives going in when they are considering cloud computing. They need to have a conversation around the complexities of adding cloud services alongside their legacy systems,” Rhoades said. “And they need to have a lot in place to make it work, including security guidelines, best-practices architecture guidelines, a formal process for implementation, and a model for compliance with their systems.
“Just because a program or platform or storage solution is offered in the cloud, it doesn’t make it bulletproof. But with the right development and governance, it can truly help you streamline your company, and marry your legacy systems with the promise of the cloud,” he said
Susan Gosselin is a correspondent for The Lane Report. She can be reached at [email protected].
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