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Cloud computing is a concept that continues to evolve and demand an ever increasing level of attention both from the B2B and consumer world. IT Reseller looks at a number of current Cloud computing discussion points and findings within the system vendor, hosted services, consultancy, legal and channel worlds.

Cloud computing continues to dominate the more technical or IT-oriented pages of the press and the world of social media. So what's all the fuss about. A good place to start is the ongoing debate in IT circles about the benefits or otherwise of Cloud computing versus the traditional standard local server approach. According to WMS developer MACS Software, software vendors will naturally tend to extol the virtues of their own products, and this can lead to an unbalanced comparison being made resulting in an inappropriate choice. Therefore, MACS Software believes it is important for users not to lose sight of what they actually want their new system to achieve. MACS Software's managing director, Tony Liddar, considers that rather than getting bogged down with the science and technicalities of a prospective new system it is better for users to look at the practicalities of how the system would work in the business on a day-to-day basis and ask the following simple questions:

  • Am I in control of my own destiny (data/system)? If my vendor goes bust, can I demand the return of my data?
  • Servers can always fail, but what is my backup operating procedure and am I comfortable with that?
  • What happens if the Internet fails? How would I have coped with the UK-wide BT broadband problem at the end of 2011?
  • What happens if there is a fire at the software hosting company?
  • What are the costs involved? Not just the software payments (because paying monthly is no different to spreading costs using finance) but the infrastructure costs associated with my chosen method of working.
  • Can I easily change the number of licences I need, short or longer term?
  • Do I need remote access to the IT system?

Liddar added that what suits one company might be inappropriate or unnecessary for another. "The answer to these questions will be different for every individual business," he said, "so it's important to look at every case carefully before making a decision."


Uncertainty around the current economic climate is one factor that is spurring an increasing number of companies to look at alternatives to on-site IT infrastructures and resources. According to a recent survey conducted by hosted services provider Rise, one-in-three organisations citing managed services as a more affordable option. In excess of 100 IT industry representatives were surveyed regarding their willingness to embrace Cloud computing. Over one-third of the respondents stated that 'affordability' was a key driver when looking to move from on-premise to managed services.

Cost was also referenced when it came to the demands of end users considering a migration to the Cloud. The potentially substantial cost savings that can be realised by such a move was ranked second highest in a list of various demands. The results also suggest that while firms are starting to gain a better understanding of Cloud computing, there still exists a level of uncertainty when it comes to the actual adoption. Over 50 per cent of respondents highlighted issues such as a lack of understanding, as well as security and complexity concerns as reasons for not migrating. Other results from the survey include:

  • Almost two-thirds of participants are looking to migrate to the Cloud within the next two years.
  • Some 63 per cent of participants identified cost and maintenance as the biggest challenge when it comes to managing existing IT systems.
  • Over 50 per cent of interviewees stated loss of control and security and storage as barriers to Cloud entry.

According to Steve Holford, director at Rise, the results suggest that while uncertainty still exists around Cloud uptake, the cost benefits are forcing organisations to take a more serious look at managed services. "The uncertainty hovering over the financial markets has acted as a bit of a wake-up call, forcing people to actively go out and see where savings can be made, and Cloud is most certainly one of those areas," he said. "The financial commitment that goes with maintaining an in-house IT infrastructure is huge, and Cloud computing represents an opportunity to do away with expensive upgrades and maintenance costs."

Holford added that the low cost adoption of Cloud can potentially lead to enormous cost savings for a business, and in the current climate he believes these cannot be ignored. "Instead of buying additional servers and storage devices that are used only a fraction of the time, employees can have access to Cloud applications and only pay for the amount of time actually used," he pointed out. "Also, by outsourcing your IT needs you'll be able to realign and focus on core business activities. We appreciate that a lot uncertainty still exists, and that us why a hybrid Cloud model offering the benefits of a hosted service while keeping sensitive data on site might also be an attractive option."

Fitting innovations together

Current trends such as Cloud, mobility, analytics, Big Data and Social may all be separate innovations, however Sven Denecken, SAP's vice president strategy Cloud/On-Demand Solutions, sees all these trends as fitting together and being highly complementary. "And the Cloud for us is the perfect time to bring these innovations and technologies together," he said. Why? According to Denecken, this is primarily because all this innovation in the Cloud sits on the shoulders of the vendors. "When SAP provides services to customers these innovations are already baked in," he remarked. "So within the Cloud, we're designing the Socials mobile first, and are bringing in Analytics in context. People who run business processes want Analytics not as a tool or an after-thought; they want it within the context of their own business or own job role. And for their business processes they also want to leverage In-Memory computing tools such as SAP's HANA either in the Cloud or on premise. Either way, users want to leverage that technology to also build and use the solutions differently."

As an example, Denecken said that sales personnel today want a system of engagement that increases their flexibility and profitability. "Therefore sales people need to connect quickly with the best people in their company and to the best partners," he said. "And they need to get the information from every system pushed to them on their mobile device. They also need that information within the context of their accounts, their region and their industry. And users want this data in real time and within their own business context. So, knowing how business processes run and how end users work, SAP is designing Cloud solutions that are very people-centric." Denecken added that Cloud solutions should also be designed with the flexibility to embrace the hybrid (Cloud/on-premise) model. "This is so Cloud solutions can be connected with users' existing on-premise investments," he said. "Users should also be able to adopt these solutions at their own pace, taking into consideration where pure Cloud or hybrid fits best within their organisation."

Eco-system flexibility

In terms of specific channel partner opportunities going forward, Denecken points out that SAP is heavily investing in Java-based Platform as a Service (PaaS) offerings, which enable SAP's eco-system partners to configure existing solutions (concerning mobility, analytics, Big Data and Social, in-memory etc.), leverage the openness of the integration and also develop their own solutions for their end customers on top of this platform.

Microsoft is another vendor company that fully embraces the Cloud model, while recognising the importance of flexibility in Cloud/on-premise integration, and the rich system integration opportunities available to its channel partners. Dr Michael Newberry, HPC product manager at Microsoft, commented that since the company made the statement that it was making the transition into the Cloud a few years ago the Cloud has become the design goal for all its products while also facilitating easy integration with other types of system. If you look at Microsoft Office, for example, which remains a very successful on-premise product, it now has its Cloud analogue Office 365," he said. "For end users, it's sometimes a question of either Cloud or not, but in most cases the focus is on integration. If a company has an existing on-premise infrastructure it can easily integrate this with the Cloud solutions built on our Azure platform to provide a fully linked, seamless experience."

Strong SME uptake

While many larger global organisations are feeling more and more confident as to the business benefits of Cloud deployment, the SME space is also becoming increasingly convinced. Figures published recently by the UK Cloud Magnet point towards a 68 per cent growth in the UK SME market, amid the greatest economic downturn of the decade. The analysis of over 100 established SMEs that have all virtualised with VMware looked at growth over the last financial year 2011-2012 following the adaption of Cloud based virtualisation technology. Alex Parker, Cloud computing blogger and CTO of Cloud computing and Infrastructure as a Service provider, Commensus, commented: "In our increasingly globalised world, small businesses need an effective communications network to span the geographically dispersed parts of the business. But the business applications required to achieve this are an expensive proposition in our current economic climate."

Parker continued: "With Cloud computing, instead of running desktops, applications, Microsoft Exchange or a PBX voice system on physical in-house servers, they are hosted on centralised virtual servers in a data centre. This whole process is instantaneous to setup and effortless to use; you just login, customise and begin. Applications are more scalable, more secure and more reliable as you don't need a copy of an app for every department using it, just one app which is flexible enough for everyone to customise for their own specific needs."

The results from the UK Cloud Magnet study indicate that by utilising Cloud computing, businesses can instantly provision applications whenever they need them as the end user directly controls the resources they require, making the firm more agile and flexible. This allows companies striving to adapt to the pace and dynamism of business today to deploy highly resilient virtual machines for their staff, dawning a new era of flexibility. This agility and flexibility also points towards increased profits with 68 per cent of firms seeing a positive uplift.


The study also looks at security and highlights that many IT executives still raised concerns about the security of their data in the Cloud. However, comments UK Cloud Magnet, the reality is that this is a transitional phase "where laggards are yet to grasp the technology". UK Cloud Magnet adds that since all data and applications are centralised in a data centre, it is vastly easier to enable and enforce processes and procedures to ensure security, privacy and other best practices. No data is stored on a device, so you never have to worry about proprietary data falling into the wrong hands if the device itself is lost, stolen or breaks. This is especially significant with potentially gigabytes of sensitive corporate data sitting on the desk of every member of staff.

"Many executives are still hesitant to take the step," said Parker. "Their view is that they would no longer be able to 'touch and feel' the systems which drive their business. Data centres have been on the scene for three decades or more: Cloud computing is simply a logical progression of that service. There has been little evidence of companies experiencing problems with access to data and with comprehensive service level agreements that specify virtually continuous availability, any remaining concerns should be set aside."

Duncan Binnie, marketing manager for Cloud storage provider Livedrive, reflects that when Cloud storage was brand new a lot of people were concerned about the level of security. "But I think security isn't such a big issue any more because of things such as the current levels of encryption and the multiple redundancies," he said. "It's now much more of a tried and tested way of storing data securely and efficiently."

From a voice services perspective, Paul Aabryn, strategy director of next-generation voice services provider, Hipcom, comments that security has to be a paramount focus. "Security is the beating heart of what we do," he said. "We spend a lot of time talking to our customers about the Public Cloud, the Private Cloud and the hybrid Cloud so they fully understand the impact of using these types of services. We run multiple levels of security; application, network, service type etc. But really it's about making sure that the applications you deploy from the Cloud over your device whether it's a Bring You Own Device or a typical business device have security parameters that really hold up." Aabryn  recognises that there is still an element of the 'Wild West' with regard to some players in the market, which can impact on the level of security available to users. "True Cloud infrastructure needs to be built from the ground up to support the environment it's being deployed across," he said. "And security is an intrinsic part of this process."

SaaS adoption

In terms of Software as a Service (SaaS) adoption, new research from Pierre Audoin Consultants (PAC) has found that UK SMEs are rapidly adopting SaaS, although the supplier community is struggling to keep pace. SMEs spent almost 1.6 billion on business application software and SaaS in 2011, according to the report. Despite an unclear business outlook, SMEs (companies with less than 2000 employees) will continue to invest in business applications and SaaS, with key areas of investment including CRM, analytics, mobility, and industry-specific software. PAC expects the SME market for business application and SaaS to grow to over 2.1 billion by 2015, which is a faster rate than in the large enterprise segment.

Fast-growing start-ups, enterprises expanding overseas, and subsidiaries of international companies expanding into the UK, will present the strongest opportunities for business applications and SaaS suppliers. However, there are big differences in terms of customer needs and level of IT complexities within the SME marketplace. PAC has divided the market into five different categories to assess their specific IT requirements and position the suppliers that address them. George Mironescu, senior consultant at PAC commented: "There are significant differences in the positioning of vendors by company size. Although Sage is the undisputed giant of the UK SME market, it is not as strong in the Upper Mid-Market and faces tough competition from the likes of IRIS Software in the SOHO segment."

The SME market is entering into a major phase of transformation as buyers are increasingly attracted to Cloud-based services which enable them to access enterprise-class functionality on affordable and flexible commercial terms. PAC expects the SaaS market in the UK will more than double its size by 2015 to well over 500 million. However, SaaS is a work in progress for many ISVs, with established players wary of cannibalising existing revenue streams. Of the top 20 application vendors servicing the UK SME sector, PAC rates only Salesforce.com and Fidessa as currently having a mature SaaS proposition.

PAC's report 'Business Applications & SaaS in the UK SME Sector Identifying Hot-Spots and Mapping the Vendor Landscape', is the latest in a new UK local research programme. The report analyses the positioning of key application vendors in the SME space in the UK, and provides an overview of how various application vendors are directing their strategies to tackle the move towards SaaS. The report also includes data on the current and future scale of application software and SaaS spending in the SME market, as well as a detailed breakdown of the supplier landscape by company size.

Infrastructure as a Service

Since Cloud started stealing headlines some five years ago, its role within SMEs has changed dramatically, according to Cloud hosting provider Pulsant. No longer seen as purely a capacity/cost balancing tool, Pulsant believes that 'Infrastructure as a Service' (IaaS) is fast emerging as the most flexible storage option for handling the complex data applications that are essential to driving competitive advantage. Involved in Cloud hosting since its inception over ten years ago, Pulsant comments that it is increasingly SMEs not large corporates that represent the vanguard behind Software as a Service (SaaS), Virtual Desktop Infrastructure (VDI)-style technologies, Bring Your Own Device (BYOD) and mobile cloud apps.

Pulsant believes that these new web and mobile applications, richer digital presence and growing online sales will further accelerate demand for Cloud storage this year. It also predicts that many SMEs will re-examine Cloud storage to help them cope with increased data footprints as information management, analytics and remote and mobile working become vital to their performance. Mark Howling, CEO of Pulsant, said that private and public Cloud is now a major strategy for any CIO aiming to help his or her organisation to deliver high-quality services to internal audiences and customers, over a variety of channels, while operating efficient data flows. "Both types of Cloud use virtualisation software to create 'virtual server' environments - on infrastructure either owned and shared across a single organisation (private Cloud) or rented and shared across many different businesses (public cloud)," he pointed out. "Offering elastic provisioning and optimised data performance, Cloud reduces the volume, power and costs associated with traditional server solutions."

Pulsant maintains that in the past many SMEs have been reluctant to embrace Cloud as virtualisation carries a three per cent increase in overhead compared to traditional hosting. However, the company states, time and experience has revealed that for many organisations overall operational savings are returned tenfold. Indeed, adds Pulsant, many of its own customers report a 40 per cent reduction in storage running costs.  "As many SMEs turn to Cloud, we are helping them get the best out of their investment by making it easier to choose a system that's right for them," said Howling. "It's all about building reassurance and establishing trust vital if we are to see mass adoption of Cloud hosting across SMEs. This means supporting Cloud with better firewalling, more rigorous IP management and fail over processes. Taking all this into consideration using Cloud from a proven supplier with certified processes and offering 24/7 support, will undoubtedly become the preferred route to Cloud success."

Attractive price point

In terms of the main drivers behind the growth of the Cloud storage market, Duncan Binnie of Livedrive, comments that originally companies tended only to store their most important data in the Cloud. "However, now with the price of data storage becoming more competitive there is now a more compelling reason for companies to store most or all of their data in this way," he said. "Being able to move a greater volume of traffic to and from the Cloud speedily and more economically is one of the key reasons for Cloud storage's increasing popularity."

Another reason for Cloud storage's growing uptake, according to Binnie, relates to the high number of smartphone users that enable the user to access their data from their phone; data they might previously only have accessed from their office or home computer. He adds that by using modern smartphone apps users can easily stream videos, photos and music without the need to store anything on the phone's hard drive itself. "Now everything is immediately accessible from the Cloud," he said. "So there's currently a big focus within industry on smartphone integration."

Retail deployment

A growing number of companies within an increasingly wide spectrum of vertical end user sectors are deploying Cloud-related systems and services. One strong case in point is retail. According to a recent survey and report by RIS News titled 'Cloud Evolution: Moving into the Mainstream of Retail IT Cloud computing' and sponsored by Dell Boomi, Cloud computing is becoming an increasingly popular solution in retail enterprises, with Cloud-based deployments within this vertical segment expected to rise 25 per cent by 2013. The adoption of Cloud computing as a whole would appear to have fuelled the retail industry's comfort level, as has the hunger for Cloud as an enabler for Big Data analytics.

As trends such as mobile commerce and real-time analytics make their way into the industry, retailers seem to be slowly abandoning their hesitations about the Cloud and are beginning to question which areas of their business it can benefit the most. The RIS survey suggests that the three most common kinds of Cloud-based applications are core retail such as point-of-sale, general business (i.e. payroll) and omni-channel and marketing, fast-growing digital commerce initiatives for example.

'Pop-up' channel

Continuing the retail theme, according to Deloitte per cent of retail sales from traditional brick-and-mortar stores is currently 91 per cent and expected to fall to 76 per cent in the next 5 years. The need for the big box retailer would appear to have been losing appeal, replaced by the Internet retailer. Only recently, it appears there may be an emerging third retail sales-channel, according to Matt Mikell, senior advisor global Cloud messaging at Dell. This, he states, is called the 'pop-up,' enabled largely by Cloud computing. "Using POS, CRM, and other services via a secure Cloud connection, they have all the same IT services," he points out. "While the pop-up retailer acts like a physical store, with inventory and systems, it outmaneuvers most other retailers with its agility and flexibility to pack-up and follow customers, seasons, or events. Imagine a store 'untethered' by burdens of permanent locations, staff, machines, or fixtures."

Matt Mikell adds that if shoppers have visited the local shopping mall during Halloween and Christmas seasons, they would likely have seen this third retail sales channel. He cites companies such as Spirit Halloween and The Latest Scoop that maintain no long-term physical presence, but spring up overnight in empty retail spaces and depart after only a few weeks or months. "In an industry widely known for 'brick and click' retailers, we're seeing the emergence of the 'quick' retailer," he said. "They are agile, mobile, and capable of being strategically placed in large part to the capabilities of the internet and Cloud computing." Adapting to market trends, testing a market, or moving to where the customers are, the retailers are free of shackles of IT and many back-office systems. Nick D'Alessio, Dell's retail marketing lead, comments that vendors such as RICS are making Cloud applications so simple that any merchant with an Internet connection potentially becomes a store overnight.

Automation and economies of scale

Stepping back for a moment and considering how the term Cloud should be accurately defined, Dan Scarfe, CEO at Not Net Solutions, observes that many companies are attaching the term Cloud to their offerings although, in his view, the true definition of Cloud is all about economies of scale and high levels of automation. "We believe that there are probably only five to ten companies in the world that can truly be called Cloud vendors in terms of being able to operate on a very large scale," he said. "These companies include Microsoft, Google, Amazon and Salesforce.com." Secondly, Scarfe believes it is all about the high level of automation and the subsequent cost savings available to end customers due to the minimal number of people required to run the data centres.

Fine print

And what of the legal side of Cloud computing? A study conducted by the Centre for Commercial Law Studies (CCLS) at Queen Mary University of London, predicts the evolution of a multiplicity of contracting models to be used by suppliers/service providers for Cloud computing services. The report raises concerns that end-users often overlook unfair terms as they are not afforded the opportunity to negotiate (e.g. through the use of click thru licences) and they fail to assess risk properly (if at all) when adopting low-cost Cloud services.

Conor Ward, partner at Hogan Lovells International LLP and chair of the Cloud Industry Legal Forum (CILF), has warmly welcomed the research and reminds end-users to carefully consider the legal implications of the Cloud proposition. "This is the first in-depth study in to Cloud computing contracts, shedding some valuable light on this still maturing branch of IT," he said. "The legal issues relating to the use of the Cloud are well established and indeed have been so for some time, but currently this wealth of understanding and experience is overlooked.

Ward continued: "To date, the relative immaturity of the market has resulted in contracts being used which were not particularly well-suited to the services being provided, but the study anticipates that contracting models will mature as a combined result of pressure from regulatory bodies and experience from negotiations on the larger deals. Cloud computing is not going to be suitable for every circumstance and potential customers would, as this study demonstrates, be well advised to undertake a detailed risk analysis before committing new applications to the Cloud. A properly thought through contract will help mitigate the majority of risks associated with Cloud computing services.  However, there are few things that it is important to note. CSPs, like all external suppliers, will not act as insurers of a customer's business. Remedies under a contract may form part of, but should not be considered to be an entire, risk mitigation strategy."

The university's study identified common clauses in a wide range of both off-the-shelf, and negotiated Cloud contracts that raise cause for concern, these include attempts by suppliers not to take liability for failures, service level agreements that do not match the needs of the business, incompatibility with EU data protection rules, and the right of suppliers to change service features without notice. "Legal concerns can generally be addressed by technical and legal means," said Ward, "and whilst this may mean that the supplier may not have total flexibility on where it can process and store data, in the majority of cases the supplier is subject to restrictions imposed by its technical infrastructure in any event and with full transparency and suitable contractual terms, data protection as an issue will disappear."

Ward added that ensuring an adequate level of service will of course be important, but data losses or the temporary loss of Internet connectivity could have dramatic consequences to a business. "Agreed service levels with limited service credits will generally not provide an adequate remedy," he said, "and where the loss of service is due to a force majeure event, the supplier may have no liability at all. A careful review of the contract and SLAs should highlight the extent to which the customer has any meaningful remedy if the service levels are not met and should enable the customer to take measures to minimise losses or disruption in the event that a disaster does occur."

And with particular regard to the legal side of data security, Andrew Lockwood, head of data solutions at unified business communications provider Daisy Group, considers that the concern still remaining is where the data is stored, and if it is stored in the UK. "If data is moved to a different country, a whole different set of legal rules could be in force," he said. "If you process data in the UK, store it on servers in the US, send it via France, managed by support staff in India; whose laws would you obey? Things can get messy very quickly and UK companies could easily end up in breach of UK data protection laws."

The future

So what other developments will we see from the world of Cloud computing over the next couple of years or so? As with any technology vertical, crystal ball gazing can often prove a less than accurate practice, with new innovations and trends coming from often highly obtuse angles. There are a few likely developments, however, that will largely revolve around what we already have in place; just on a grander scale. For example, user deployment will continue to increase, both in the consumer and B2B environment. And, largely as a consequence, data centres particularly those owned by the existing large players will likely get even larger. Of course, along with this growth come increased sales and integration opportunities for the channel. Also, keep an eye out for even more powerful mobile devices and it will be interesting to see just how thin they can become


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