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There are clouds in your forecast


Published:

By Basil Willis

There has been a great deal of hype around “the cloud” the last few years. Marketers, in an attempt to sell new services, have managed to confuse people around a concept that is meant to simplify. When we talk about the cloud, it’s really just a way to describe the mass of interconnected networks we call the Internet. The cloud is the Internet. There are specialized applications and storage services, and there are private clouds and public clouds and things packaged as the cloud, but we’re talking about the Internet.

The term “cloud” came from telecommunications and network diagrams, where an image of a fluffy cloud signified an external network, or the Internet. These schematic icons have worked their way into the broader consciousness as a way to think of and describe a set of services and tools rather than the physical architecture, and to take some of the confusion out of how all this stuff works. Even more fundamentally, don’t even worry or think about how it works. Just think of it as a cloud.

The cloud is changing the way organizations consume technology. IT infrastructure has become so cheap and reliable when produced on a massive scale that it has become commoditized. A common analogy is the electric grid; with very few exceptions, it is much cheaper for a company to “rent” electricity from the energy company than to build a plant to generate its own. Having assets in the cloud allows companies to focus on their core competencies and plug into platforms instead of building their own.

The irony here is that the big cloud providers are building their own hydropower plants and huge solar arrays because their server farms consume so much electricity. So maybe that’s not a great example any more.

TurboTax, the online tax software, is the perfect example of a business that can leverage cloud computing. For nine months out of the year, their website gets very little traffic. For three months of the year the traffic increases by a hundred fold, and for the first two weeks of April it doubles. On April 15 it doubles again.

For TurboTax to build out the infrastructure to support the huge spike on tax day, just to have it lie idle for nine months, does not make financial sense. TurboTax’s value to consumers is their knowledge of tax laws and their proprietary software that helps you get your taxes done, not how good they are at building servers and network capacity.

Companies such as Amazon take the opposite approach; they have become successful in no small part because they excelled at logistics and were nimbly able to expand their systems to keep up with rapid growth. They were so good at it they realized they could duplicate their infrastructure and rent it out to companies like TurboTax when the latter needed extra capacity. This is known in business terms as “elasticity,” the notion that the cloud can expand or contract when you need it to.

From a consumer perspective, the cloud is pervasive. If you’ve ever used Google, Facebook, Netflix or Hotmail, you’ve used the cloud. Apple, Google and Microsoft each offer a suite of cloud-based storage and software, and there are a host of smaller companies offering specific services.

The beauty of having your stuff in the cloud is accessibility from multiple devices, independent of location. If you lose your phone or your laptop gets run over, your data is safe in the cloud. It separates our stuff (pictures, music, video, financial records, school work, social networks, etc.) from the devices we use to work with our stuff.

There is also the added benefit of disaster recovery, because most people don’t think about backing their stuff up until it’s too late. And even if you’re backing it up, you’re probably not keeping a copy of the backup at another location in the event of fire, tornado or theft.

Another big driver of cloud technology is offering software as a service, formally known by the acronym SaaS. Apple iCloud, Microsoft Office 365 and the Google app ecosystem are all examples of SaaS. In addition to storage, these services offer productivity tools (word processing, spreadsheets and presentation software) that are regularly updated.

Microsoft Office used to be on a three- to four-year release cadence, where you would have to buy a disc and load it to your computer. For businesses, this is expensive and disruptive. For individuals, most people don’t bother upgrading and don’t get to take advantage of newly released features. The cloud providers now release new features every quarter, and users don’t have to do anything. The new features are just there.

This cloud stuff sounds great, but what’s the catch? There are valid privacy concerns, and some smaller cloud providers have gone out of business, leaving their customers scrambling to move data and applications. But the big catch, as always, is money.

The cloud is subscription-based, and we (businesses and individuals) are not used to this model. We are used to buying an expensive computer, loading expensive software onto it and repeating one or both of these activities every few years (unless you’re my mom, who will not let go of her 2004-era PC running Windows XP). There are big spikes in spending followed by years of “free” use.

Right now the PC-based version of Microsoft Office 2013 costs around $250, which allows you to use it on one computer. The same software offered through the cloud via Office 365, costs $100 per year, allows use on up to five devices (it works on tablets too) and comes with a boatload of storage for your important stuff.

The new model has us paying nothing up front for the software, but essentially paying for the service, well, forever. Like electricity, it is becoming a commodity. There are people who don’t like the new model, but there will come a day when software companies, including Microsoft, will not sell one-time fee software that isn’t somehow tied to the cloud.

It’s going to be interesting. This is a new world and there is enough competition in this space to keep everyone honest on prices. Being an old infrastructure guy, it took me some time to get my head around what this all meant. I didn’t want to like the cloud, but it is a rich environment that opens up a number of new possibilities, and we’re just beginning to scratch the surface.

Basil Willis

is an information technology consultant in the Chicago-Milwaukee region. He lives in Kenosha.