1. Use Cloud Computing to Achieve Small Enterprise Savings

2. Introduction Interest in Cloud computing is red hot. IT decision makers expect the external cloud to play a major role in hosting selected application workloads in the near future. Small enterprises are pioneers. Though it is early days for the cloud with most evaluating various options, small enterprises are ahead of the curve in evaluating and implementing various cloud-based services. These services include Software-as- a-Service (SaaS), Infrastructure-as-a-Service (IaaS), and Platform-as-a-Service (PaaS). This storyboard will tell you : – What cloud computing is and how it is being exploited by small enterprises. – How low cost barriers to entry and rapid deployment of cloud solutions allow for proving the concept without breaking the bank. – Key issues to be cautious about in evaluating cloud solutions. – A framework asking the right questions in selecting candidate workloads for cloud deployment.

3. Executive Summary Cloud services are a natural fit for small enterprises. For cloud evaluators and adopters, capital cost savings and rapid application deployment are strongly positive reasons for adopting cloud solutions. Taken together these add up to significantly lower barriers to entry than in-house developed solutions. Small enterprises are taking advantage of lower financial and technical barriers to entry to accomplish what otherwise would be prohibitive. Lowered barriers to entry is not lower overall cost. Enterprises need to be realistic about the kind of savings that can be found in the Cloud. In that other example of disruptive technology, distributed processing, lower costs of adoption were ultimately balanced by higher total cost of ownership (TCO) including costs of management complexity (server sprawl). For small enterprises, adoption is about risk management and risk tolerance. The classic cautions about the cloud are the same for enterprises of all sizes – security of data, mobility of data and workloads from one cloud to another, transparency for regulatory compliance, reliability and availability of service. Where small enterprises differ is in their tolerance of risk and ability to mitigate that risk. In evaluating cloud solutions consider risk tolerance of each candidate application and apply Info-Tech’s three rules of cloud investment. Few expect the cloud to be the home for all application workloads. Consider the enterprises tolerance for the main risk factors of the cloud. For evaluating various cloud-based solutions, Info-Tech’s three rules of cloud investment provide a framework for asking the right questions.

4. Abstracted compute resources (processor cycles, memory, storage) that are typically derived from aggregated and virtualized commodity hardware. This aggregated and virtualized infrastructure is typically owned by an external third party (outside IT). Application workloads are provisioned by these abstracted resources which are elastic (they scale up with need). Cloud service customers share access to these resources (typically via the Internet) in a multi-tenant environment. A Cloud Is... Software-as-a-Service (SaaS) The customer contracts the use of an application which is hosted and provisioned from a compute cloud. The customer typically pays ongoing rental license fees for the application. These fees vary depending on number of users and cloud resources consumed. Example: Saleforce.com Infrastructure-as-a-Service (IaaS) Compute services such as processing and storage are offered as a service accessible via Internet. Typically these services are packaged as virtual entities (virtual machines, virtual storage targets). Storage-as-a-service (cloud storage) is a subset of I aaS. Example: Amazon EC2 and S3. Platform-as-a-Service (PaaS) PaaS is like a build-your-own SaaS service – a Web application development and run time environment hosted on a compute cloud. Typically it provides access to a specific platform and tools. Examples: Windows Azure, Google AppEngine, Force.com. Key definitions: SaaS, I aaS, and PaaS are not clouds but they can be enabled by a compute cloud

5. Interest in cloud computing is hot across all enterprise sizes with most seeing clouds playing a critical role in future IT services Most see the cloud as a future home for selected key applications and processes. More than a niche technology but not the future of all IT services. n=124 n=123 Source: Info-Tech Research Group

6. Though interest is high, the cloud game is just beginning Most enterprises are in early evaluation stages… n=123 …more than half have yet to deploy a cloud solution. Source: Info-Tech Research Group

7. Small enterprises are normally early adopters of the solutions because: The disruptive technology is good enough to meet the needs of the small enterprise. They can’t afford the dominant technology. They do not have an investment to protect in the dominant technology. The risks of the disruptive technology are tolerable to the small enterprise. The technology is based on open standards that the small enterprise is already familiar with. As it matures in capability and risk mitigation, this technology will grow in usage in larger enterprises and displace a significant portion of the dominant technology. Examples: Distributed processing (x86/x64 computing). Ethernet for storage networking (iSCSI, NAS). Internet-based services (now including Cloud Computing) Cloud-based services are a natural fit for small enterprises that have a history of leveraging disruptive technologies Small businesses made this...... an enterprise technology. Insight: As a disruptive technology, Internet enabled Cloud Computing is today where distributed processing was 20 years ago.

8. The key advantage of adopting a cloud based solution is significantly lower capital cost barriers to getting started Infrastructure cost savings and rapid application deployment are the strongest reasons for evaluating cloud solutions. Another way to look at it is that cloud services have significantly lower capital cost barriers to deployment than deployment scenarios involving in-house infrastructure (It can be done cheap and it can be done fast.) Note that in many cases the rest of the business is as positive about the infrastructure cost savings potential of the cloud. As result, the business does not have to sold on the concept but, rather, may be encouraging IT to explore options. n=123 Source: Info-Tech Research Group

9. Low-cost entry make the cloud attractive for the small enterprise. IT decision makers weigh in on the hype It’s Revolutionary “Cloud computing is the next revolution in computing, as the Desktop computer was in the 80's, and the Internet in the 90's. Cloud computing levels the playing field for businesses to focus on core applications and functions, rather than the supporting infrastructure. Simply put, cloud "utilitizes" IT. ~ Team member, Small Education Institution. “Cloud Computing is the future for the next 3-5 years, as it empowers the business to deploy and integrate applications faster than with traditional models. ” ~ Director, Finance “There's a reason that data centers are going up like hotcakes all over the world. As base bandwidth pipes increase in size, computing migration to the cloud will grow in a very comparative fashion.” ~ Manager, Business Services It’s Hype “Cloud computing is just an extension of what we've been doing with networks for years: file and application access from multiple machines, expanded collaborative opportunities, and so on. While our environment will benefit from increased private cloud access from outside the work environment, there are potential access, security, and other issues we have with giving up critical controls to outside entities.” ~ Director, Education “Services available in cloud have been around a long time. It is just becoming a hot button "IT" item now and moving into the mainstream.” ~ Contractor, Agriculture “More information about the strategy and how it fits within a business model, along with better concrete and meaningful marketing is needed to advance the concept and adoption. ~ Director, Retail

10. IaaS processing and storage solutions are the next most deployed at 26% (combining Processing and Storage). Platform-as-a-Service is least deployed. Where SaaS and IaaS have been pioneered by high profile players such as Amazon and Salesforce, PaaS is a relative newcomer focused on specific platforms (Google App Engine, Force.com). Software-as-a-Service is the most deployed cloud-based solution Platform-as-a-Service deployments will grow significantly in 2010 as Microsoft Azure attracts.Net developers to a cloud platform. Info-Tech Insight: n=123 Software-as-a-service is ahead of the other cloud solutions in terms of deployment – not surprising as SaaS has been around longer than the term Cloud (they used to be called internet- based Application Service Providers). Source: Info-Tech Research Group

11. Other cloud technologies such as Infrastructure-as-a-Service have not been implemented as much. The early adopters of this technology in the survey indicated similarly positive experiences. Software-as-a-Service carries glowing recommendations n=38 Organizations surveyed were highly likely to recommend their SaaS solution to another similar organization. n=18 Source: Info-Tech Research Group

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