Choosing a cloud computing service provider

Published 21 March 2013 15:37, Updated 10 April 2013 07:32

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When online outsourcing service Freelancer.com first shifted its operations to the cloud in 2009, it chose Amazon Web Services basically because it was the biggest.

Freelancer.com’s vice-president of engineering, David Harrison, says the cloud computing industry was in its infancy back then. Since the start-up was expecting high growth, its main concern was to ensure its cloud provider could deal with it.

Four years on, Amazon remains the key supplier of cloud services to Freelancer.com.

Harrison says the success of the relationship is based on his team taking the time to truly understand the needs of the business. He advises that no company should rush to put everything into the cloud.

“You will want to start with something discrete and that you can discretely encapsulate and put that in the cloud, because there will be a lot of learning as they go through the process,” Harrison says.

Cloud computing can deliver benefits such as rapid deployment, reduced costs, and the capacity to support rapid user growth. But like any IT project, failing to ask the right questions during supplier selection can lead to trouble down the track.

The director of the specialist cloud consulting and integration firm Cloud Solutions Group, Josh Rubens, says a proper technical plan is essential. He argues that businesses that focus solely on cloud computing from a cost reduction perspective will find that the promised savings fail to materialise over the longer term.

“They get sold on it by someone and caught up in the hype, without sitting down and working through the process,” Rubens says.

He adds the most important starting point is to understand the nature of the IT workloads being shifted into the cloud, and the corresponding security and performance levels needed. This should then be used as the criteria for selecting a vendor – not the cheapest price.

So – why shift to the cloud?

The principal of IT advisory firm RLA, Rob Livingstone, says the most common mistake organisations make is not understanding why they are going into the cloud in the first place.

“Are they moving to cloud because their peers are moving to the cloud, or do they have a belief that it will reduce cost and improve agility?” asks Livingstone, who wrote the book Navigating Through the Cloud.

“This is not an IT discussion. This invariably should involve the other executives who have accountability for enterprise risk.”

But while the shift to cloud computing is a business decision, planning and execution are inevitably a function of the IT department.

These decisions can be especially difficult for smaller organisations that lack IT resources.

According to the accounting software maker MYOB’s Business Monitor Special Report for 2012, only 17 per cent of small and medium enterprises are using cloud technology today, despite that group being 53 per cent more likely to have experienced a rise in revenue in the past 12 months.

Dealing with security issues

MYOB’s general manager for its business division, James Scollay, says the main factor holding back more SMEs from adopting the cloud is lack of knowledge.

He says the most important questions relate to security. Even for a non-technical buyer, Scollay says engaging in a conversation regarding how data and services will be secured can quickly show differences in the approach taken by different providers.

Rubens adds that another important consideration is who takes responsibility for backing up data stored in the cloud, since contractually this is not always the service provider’s responsibility. Similarly, it is vital to understand what will happen if the service goes offline, and what compensation may be offered. Even more important is knowing what will happen if the service provider goes out of business.

While one of the most frequently raised concerns is that data may reside with a foreign service provider, Rubens says in most cases this is not a real problem for any but a handful of businesses and government agencies.

Bigger not always better

While larger providers usually deliver greater stability and features, Rubens points out they may not be able to offer the flexibility of smaller companies.

“Unless you are a massive customer, if you want to be able to sit there and negotiate the contract, a larger provider is not going to talk to you,” Rubens says. “And if you want to know the location of your data, they are not going to tell you. The bigger you are, the more leverage you are going to have.”

According to the vice-president at analyst Gartner, Rolf Jester, mistakes made by cloud buyers are common, but no more numerous than for any new technology development.

“People are making mistakes,” he says, “but not new mistakes. It comes back to solid [out]sourcing principles. We would advise people to look very closely at the details of the service that’s offered and really acquaint themselves with what you are going
to get and what you are not going
to get.”

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