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A Layman's Guide To Cloud Computing

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Recently during our monthly meeting of our Goldman Sachs 10KSB inspired small business advisory group, one of our members asked me a few questions about cloud computing. The questions asked by a non IT-oriented business owner were very good. However, they also made me realize the current level of understanding of cloud computing by business owners and people that are not directly in information systems related industries. I had been contemplating writing this blog for a while, I now have a compelling reason to do so. Thank you to my advisors for motivating me.

This series of blogs is targeted to industry layman regarding cloud computing.

Demand for cloud is growing dramatically. Some industry analysts (Forester and others) predict the cloud computing market to exceed $190 billion by 2020. The market was $58 Billion in 2013.

This rapid growth is triggering massive investments by cloud providers, telecom Internet carriers and security protectors. Large firm chief information officers (CIOs) with management teams certainly understand the benefits and risks of cloud computing. On the other hand, executives and owners of small, midsize and emerging companies may not have as clear a view of the cloud. Hopefully this discussion will shed some light for those not directly involved in the information industry. It will also help you to answer the question, "Should I be in the cloud, and if so how do I get there?".

Throughout this series of blogs, I will define various cloud computing models, and discuss key system premises that are applicable for all systems, cloud or not. They are functionality, reliability (redundancy), speed and security. We will talk about the three links (as in a chain) of cloud computing and that they must all be well thought out and strong. And we will talk more on security, security, security in that even small businesses are targets of "bad guys" and there is no shortage of those. In one of the blogs we will tell you why large bad organizations are attempting to pierce the systems of small businesses. (Hint, we are gateways.)

Let's begin with definitions

Simply stated, cloud computing occurs when you are using a desktop computer, notebook, tablet or phone attached to an Internet carrier and you access some sort of computer application or data storage located at a central location referred to as The Cloud. This central location can be any cloud provider and it does not matter where it is physically located, as long as it is a safe computing environment. A safe computing environment is a professionally run hardened facility typically with physical security to protect you from unauthorized entry (intrusion). It usually also has multiple sources of electric power and multiple sources of Internet. Even the facility itself is generally replicated. For example, a cloud center on the East Coast is completely mirrored by a computer center in the Mid-West and the data is copied in real time. If the primary center fails, the second site takes over. A cloud center that meets certain industry criteria, some of which are described above can become certified. That certification was called SAS-70. The newest certification is SSAE 16. If you are considering cloud, you will want to know about their cloud facility. Make sure it is a certified hosting center. Ask about its guaranteed uptime levels, typically called a service level agreement (SLA). Look for a 99.9% guarantee.

The cloud metaphor is appropriate. End users really do not need to know where the data / application is coming from, only that it is safe. The metaphor may suggest an amorphous computing environment, but in reality a professionally run cloud computing facility is extremely well defined, highly secured, redundant and tightly controlled.

In many cases, the cloud computing model is more efficient than an enterprise model due to economies of scale. In the enterprise model, a firm maintains its own computer environment internally. Note, it is very expensive to replicate the environment, protections, humans and controls of a cloud computing center.

Is the cloud for everyone? -- certainly not! One of the basic premises of any software selection, cloud or not, is system functionality. I realize that is obvious, but you must analyze any cloud offering to ensure it meets your business's requirements. Early cloud offerings were horizontal, meaning the software supports some of a business's rudimentary needs, such as CRM and accounting, but it may be light on manufacturing or some other industry specific requirement. On the other hand, vertical means the software meets the needs of a specific industry such as process manufacturing, or construction. As cloud offerings mature, there will be more vertical offerings. In some cases, you may have to integrate two or more packages to get a complete cloud solution. In any case, functionality is the initial test to any type of computing, cloud or not.

In the next blog, I will define the different versions of cloud computing. If you are planning to implement "Cloud", you will want to understand these models so that you can decide upon the one(s) that best suit your business. Then I will talk about the three links of cloud computing, and security. This series of blogs is in intended to help small business owners and executives implement cloud and practice safe computing.

This blogger graduated from Goldman Sachs' 10,000 Small Businesses program. Goldman Sachs is a partner of the What Is Working: Small Businesses section.