Posted on Thursday 23 September 2010 byUlster Business
Cloud computing has become one of the buzzwords of the technology world. But has it moved from being a concept to something local companies are embracing in their everyday operations?
Cloud computing isn’t a new technology, but as organisations look for more efficient ways to work, it is one around which interest is growing.
The term essentially refers to the process of accessing and using computer services on a pay-as-you-use basis without the need to own the software or infrastructure involved.
For some local companies that means their network and the data used every day is stored in a data centre off site and all that is in the physical office is the company’s own pcs, laptops and printers. That removes the complexity and cost of physically setting up and maintaining a network and server in house.
Advocates liken the rise of the Cloud to the early days of the electricity network, when large users who were initially generating their own power realised it was better to have a single source that generated and distributed the power, which was then paid for on how much was used.
A variety of businesses have grown up around the Cloud, split into the provision of infrastructure and software services.
Patrick McAliskey of Novosco in Belfast – which works to integrate virtual network technology on behalf of Citrix – says cloud computing is still at the early adopter stage and estimates only 4%-5% of its customers are using cloud for their entire infrastructure. However, Novosco expects this to increase to 25% within only two years.
“The people who are investing in cloud computing are probably the most technically savvy – those who can understand the principles and values of it, and therefore can sell it internally to their own businesses and get approval for it,” he says.
“Initially people will invest in bits of it, but then when they get confident and agree the security is there, they will then move their entire infrastructure there. The big change will come in the next two years when it becomes more economically viable to have cloud computing available.”
Martin Cullen from Microsoft in Dublin believes the fundamental benefit of cloud computing is that it helps small to medium sized businesses optimise their technology use, because they only pay for what they use.
“In the world we are in today, cashflow is king and the cloud facilitates people doing things without a massive cashflow hit,” he says. “It lets businesses get back to what is core without a large capital expenditure on infrastructure and the management of it.”
Microsoft plainly sees opportunity in the Cloud. The company has launched its new CRM software as a cloud product first.
“It is a bit of a departure but I think it represents a view of where the business is going and the opportunity we see in different segments of the market. We think more SMEs will use it because they can now access it,” says Cullen.
“What’s going to drive cloud computing in the longer term is the fact that it can be pervasive. It’s not limited to one sector, or restricted by the capacity it could bring to one individual marketplace or geography. It can be everywhere and everyone can avail of it in the form that they want.”
Both Cullen and McAliskey believe the technology is there to service a much wider audience through the cloud.
“Today you could have every single private sector and public sector customer in Northern Ireland run their IT in the rack space that would fit inside my garage, because computing power and storage has grown so much that you could run tens of thousands of servers from within a number of single racks,” says Novosco’s McAliskey.
“To have done that five or ten years ago in the physical world you couldn’t have fitted it inside several acres.”
But as with any new technology there are still some hurdles to get over, primarily security concerns.
“There’s a feeling that once you pass your data to someone else, you lose control of who sees it, how it’s being safeguarded, how it being secured, how are you making sure it is never lost,” says McAliskey.
“The other thing is that IT people sometimes feel it is like turkeys voting for Christmas, that it will reduce their importance in the business.”
And yet there is huge interest in cloud computing across the economy – from the public sector to pharmaceuticals, financial services, manufacturing and IT development companies.
“Customers have to make the conscious decision to invest. They have to make that decision to move to the cloud. It isn’t going to happen without their understanding,” says Microsoft’s Cullen.
“Once they understand how cloud computing could best add value to their business in the short term you can move your world towards the cloud. It doesn’t all have to happen tomorrow, you can pick the areas that are most critical to your business and accelerate that focus.”
Marty Neill, a local entrepreneur who owns web design company No More Art, this year launched Airpos, a cloud-based point-of-sale software business that offers real-time access to current and accurate inventory and financial data.
Airpos came out of the realisation that retailers typically have a number of sales platforms - in-store, online, mobile - that are not joined up. The software enables them to bring together inventory, stock, financial data and sales figures from both an online and offline environment, which in turns helps lower operating costs and increase sales.
“We can do a lot of the heavy lifting and powerful processing in the cloud that wasn’t possible three years ago. The cloud aspect allows us to do this stuff on a very large scale,” says Neill.
“We’re moving towards a new business model because the costs of running an application and the infrastructure costs are probably one thousandth what they would have been 10 years ago and those types of costs are moving towards zero. That enables the new business model that means you don’t actually have to go and buy software, you just use it as and when you need. It’s very exciting.”
Airpos has cost £30,000 to set up but pre-cloud Neill says building the infrastructure would probably have cost half a million pounds before the product had even been developed.
Airpos has been picked up by franchises rather than the small retailers Neill expected would be its early adopters, which he says demonstrates the difficulty in predicting the market for a cloud-based product or business. Customers from as far afield as Portugal and Australia are signing up to the system and he hopes to shortly raise another £200,000 that will allow him to bring in a sales and marketing team to promote it further.
Neill believes the cloud offers start-ups a massive opportunity because they are able to be more agile than even the largest players.
“In Northern Ireland we have start-up Eden, because we don’t have any rules and we don’t have any infrastructure and we don’t know what we’re doing. That’s the perfect environment for tech start-up companies and certainly a lot of the US guys recognise it and have their eyes on Northern Ireland at the moment because they can recognise the potential, that there’s a lot of young people who have good ideas and the drive and the wit to try them, which is rare,” he says.
“I think there’s a very healthy tech scene just starting to blossom. I see a lot of young people dropping out of university and starting companies, which was the precursor for Silicon Valley.”
Shane Meehan runs Newry-based Media Lightbox, a file storage and sharing business.
It works with everyone from local ad agency AV Browne to gold mining companies in Australia and international brands like Nokia, Vodafone and Comic Relief.
For him, the cloud means the business can win clients from around the world with the same ease as on the island of Ireland.
“If we were to build a self-hosted version of Media Lightbox which we had to install via our own support maintenance guys, they would have to fly to Canada, or fly to Africa to install servers and chain networks together. There would be huge cost to the client and to us as well. That’s just one of the beauties of a cloud-based system. It is like a plug-and-play of the software industry. You purchase it online and can be using it within seconds.”
He adds: “We are an agile company and we are fast in responding to customer needs. If a customer said they thought a particular service would add to our offering, we could potentially have that built in a couple of weeks.”
He acknowledges there are still security concerns about cloud computing but believes they can be overcome.
“If you look at larger organisations, particularly government, they are pretty risk averse. There are security implications. For example if we were to do a deal with a US government department it is a legal requirement that the files are hosted on US soil,” he says.
“But what we’ve found is that many SMEs are quick to embrace the technology if they find it works for them and they see real benefits. That’s how companies like Salesforce and Basecamp have been able to build up a user base.”
Meehan believes the trend is already moving towards use of the cloud because of the speed of setting up and rolling out applications.
“Five years or ten years ago people were accessing email through Outlook and programmes like that which were hosted on your own PC. Today people are happy to be using gmail, accessing it on a coffee shop or mobile device,” he notes.
“It’s a huge change in culture,” adds Meehan. “Even five years ago we would have all had our own pcs with its own software needed to do our daily jobs functions and we would all store our own files and folders on our own pcs. Then servers came in and organisations maybe started to have a shared server and files. If you look at what’s happening now we’re moving into hotdesk territory where you have pcs that are blank. All they have is an operating system and access to the web.”