The Impact of Cloud Computing on SME’s

Presented By: Robert Lavery – Robert Lavery & Associates

Why You Need to Put Your Head in the Cloud

A Cloud has something in it but you can’t see it!

People in different locations see the same thing.

Everyone who shops on Amazon or searches on Google or posts on Facebook is using the cloud.

Evolution of Hosted Systems• Everything old is new again – Why?• Time share/service bureau of 60’s (Utility model)• ASP’s of early 21st century• 60’s high cost of mainframes• Early 21st century – high cost of people to

implement and manage software.• GOAL: Cost effective business systems

Evolution of Hosted Systems• Hosted systems can reduce Total Cost of

Ownership – ready made infrastructure• Solves scarce resource problem – Time & Talent• Convergence of software and communications

network – inexpensive bandwidth• Object oriented programming• Software becomes a service - scalable

Big Business Small Business

SalesOrdersInventoryExpenses CRM

Needs

Resources

Equal Needs - Unequal Resources

Trends Affecting Software• More sophisticated systems• More flexible and feature rich apps• Easy to use tools for customization• Shorter cycles between upgrades• Better communications infrastructure

Hosted Apps Infrastructure

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Has Become Cloud Infrastructure

The Perceived “Cloud” Benefits Are:1.) Economies of scale and knowledge (cheaper and better) 2.) Lower barrier to entry (software, hardware, development) 3.) Reduced costs (maintenance, upgrades, enhancements)

Influence of “GEN Y” (15 TO 25)• Sense of entitlement – “Want it now!”• Expect “FREE” access to info & products• Value shared “Experience” - “Community”• GEN Y desire freedom and decision making • Motivated by idealism and shared intelligence• Boomers and GEN X - Aspire to Acquire• Cars (AutoShare), Music (MP3BEE) – “Rent”

Some Stats To Ponder• IDC – By 2012 85% of new software delivered

as a service rather than a physical product.• McAfee and Carnegie Mellon University (May

2010 survey) – 49% of respondents claim to be “very” or “extremely” reliant on mobile devices. 1 year later – 70% (35% email addicts)

• IDC - 96% of Employees under 45 have a smart phone. 63% use business devices for personal

3 Levels of Cloud Based Delivery Methods

• SaaS: offers a contractual service to deploy, host, manage and rent access to an application from a centrally managed facility. They are responsible for … managing a software application or a set of applications. Example would be Google’s Gmail.

• PaaS: Platform as a service provides operating Systems, databases & tools running on hardware managed by a Vendor. MS Windows Azure platform is an example. “Your stuff is hosted.”

3 Levels of Cloud Based Delivery Methods

• IaaS: Infrastructure as a service allows users to manage their own applications, data and operating systems leaving servers, storage and networking to a vendor. Focuses on management of the network and servers. “Other’s stuff hosted”

• Infrastructure includes “virtualization” Which option is right for your business depends on

how much control you want over your company’s software and computing resources.

http://www.katescomment.com/iaas-paas-saas-definition/

What is Virtualization?• In computing, virtualization means to create a

virtual version of a device or resource, such as a server, storage device, network or even an operating system where the framework divides the resource into one or more execution environments. Even something as simple as partitioning a hard drive is considered virtualization because you take one drive and partition it to create two separate hard drives.

Public Versus Private Cloud• You can host your own cloud infrastructure• OR you can outsource the infrastructure.• Public Cloud places data control (Security and

uptime) outside the company’s 4 walls.• Privacy concerns slowing adoption of Saas in

HR and Finance.

Cloud Poll Dec 2011• 30% of SMBs are using paid cloud services

– 25% between two and 10 employees– 53% between 26 and 50 employees– 60% with 101 to 250 workers

• 48% plan to subscribe within 2 to 3 years.• 22% have no plans to use cloud services.• Only 51% understood that cloud computing referred

to "rented" business-computing services provided through the Internet

Cloud Poll Dec 2011• 54% expect cloud computing to save money• 47% anticipate becoming more productive.• Concerns: • 44% think cloud services are unproven & risky. • 51% say data privacy is an issue• Only 20% believe that data is less secure in the

cloud than in on-premise systems.

Lower TCO 1) Lower barrier to entry and rapid time to implement 2) Lower costs of maintaining applications, IT skills and staff (economies of scale)

Source: Aberdeen Group, June 2010

Is The Cloud Really Cheaper?

1) TCO argument falls apart when adding in software, services, hardware and on-going maintenance – Exit and switching costs.2) Showing accumulated costs over time (above) shows 3-4 year breakeven where SaaS becomes more expensive

Goal of Cloud Computing• Gartner Hype Cycle for Cloud Computing, 2

012, the best results are being attained by enterprises that focus on a very specific strategy and look to cloud-based technologies to accelerate their performance. Leading with a strategic framework of goals and objectives increases the probability of cloud-based platform success. Those enterprises that look to cloud platforms only for cost reduction miss out on their full potential.

Web Site/Store

Accounting

Warehouse

End-To-End Integration

SMART Phone

CRM

Browser

Supply Chain

Hype Cycle for Cloud Computing

Cloud Computing Priorities• By 2014 the Personal Cloud will have replaced the

personal computer as the center of user’s digital lives. (Platform as a Service)

• Private Cloud Computing is among the highest interest areas across all cloud computing according to Gartner, with 75% of respondents in Gartner polls saying they plan to pursue a strategy in this area by 2014. major goal the evaluation of virtualization-driven value and benefits.

Cloud Computing Priorities• SaaS is rapidly gaining adoption in enterprises,

leading Gartner to forecast more than 50% of enterprises will have some form of SaaS-based application strategy by 2015. Factors driving this adoption are the high priority enterprises are putting on customer relationships, gaining greater insights through analytics, overcoming IT- and capital budget-based limitations, and aligning IT more efficiently to strategic goals. (Integration & Customization barriers)

SaaS Revenue on the Rise• Gartner Study – Saas Revenue hit $12.3 Billion

in 2011 – an increase of $2 Billion from 2010. $14.5 Billion in 2012 - $22.1 Billion by 2015.

• Largest segment of the SaaS industry is CRM - $3.8 Billion.

• CCC (Content, communications and collaboration) is close behind at $3.1 B.

Importance of Software• Automates processes• Analytical tools to spot trends (knowledge)• Improves decision making/collaboration• Requires:

– Fast implementation – increase efficiency– Seamless integration – increase productivity– Scalability – reduce IT complexity

Cloud Computing Priorities• Bottom line: Gartner’s latest Hype Cycle

for Cloud Computing shows that when cloud-based platforms are aligned with well-defined strategic initiatives and line-of business objectives, they deliver valuable contributions to an enterprise. It also shows how Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) are the catalysts of long-term market growth.

• Real Time Value Network – fully networked business

Target Customer Profile• Any company struggling to keep up with the

changes in technology

Target Customer Profile• Multiple/branch office scenario• Little or no IT expertise/infrastructure• Windows users looking to upgrade to web• Interested in E-Commerce – Supply Chain• Start Up business (time to market) • Fast growing or reorganizing company• Competitive industry

Benefits of Cloud Model• More accountability• Manage cash flow• Quick implementation• Current technology• Enable B2B Marketplaces• Utilize Internet appliances

When Should You Adopt The Cloud?• Companies with no IT infrastructure• Quick time to market is important• Use common/standard applications• IT people not available• Competitive pressure• Provider understands your business

Opportunities or Risks?• Cloud services provide opportunities• New Companies – Wikipedia, eBay• New Corporate Structures

– Infrastructure without hierarchy• New Business Models - Google• EVEN New Industries - CrowdSourcing

– Collective/Social Intelligence (InnoCentive)• “Risk is the mirror image of opportunity.”

Where Can The Cloud Take You?18 Possible Destinations:

1) Collaboration – shared access to documents & schedules.

2) Content Management – update internal/external websites.

3) Customer Relationship Management (CRM).

4) Document Management – storage, release and revisions.

5) Email – malware protection, integration requirements.

6) Employee Performance Management – HR need?

7) Employee Self Service – timesheets, vacation requests.

8) Enterprise Resource Planning – integrated bus. processes.

9) Expense Management – Employee or company.

Where Can The Cloud Take You?18 Possible Destinations :

10) Financial Accounting – auto tax updates, storage, backup.

11) Marketing Automation – analytics, lead generation (CRM).

12) Project Management – access to track progress.

13) Sales Automation – qualify leads, pricing, integration mkt.

14) Supply Chain Planning & Mgmt. – production, shipping.

15) Talent Management – hiring, compensation.

16) Transportation Management – logistics, route optimizer.

17) Warehouse Management – picking, packing.

18) Web Conferencing – remote presentations/meetings.

Considerations For Moving to the Cloud• Replace or Add Functionality – Effectiveness?• Changes to User Interface & Functionality• Planning Matters – Support & Updates• License Costs – Over Time versus Up Front• ROI – Based on increased productivity• Data Migration – Integration to new service• Comparing Providers – SLA’s, redundancy.• Trouble Shooting & Training – Good Level 1.

What to Look For in a Provider• Understands your business & industry• Provides on-site services when necessary• One point of contact for issues• Low cost high bandwidth connection• Broad range of services (Co-location)• Customization• Strong financial backing

What’s Next?

Is Your Future Looking Cloudy?• Identify gaps in your business such as access &

mobility to determine if the cloud can help.• Evaluate new business opportunities where the

cloud can create efficiencies.• Assess public versus private cloud capabilities

in light of security and disaster recovery.• Understand impact on organizational processes

Do You Want To:• Delegate your IT headache to someone else

out there?• Focus on what you really want/need from

your system?• Pay only for what you use?• Scale up/down your resources dynamically on

demand?

Questions?(Got Your Head in the Cloud)