This is the third part of the presentation given as part of the City of Sydney’s Let’s Talk Business series of workshops on new business technologies.
Not always free
There are some misconceptions about cloud services though.
Just last year, the Australian Financial Review ran a front page article headlined “massive savings to be made in the cloud” stating that cloud services can save a business up to 80% on its IT spend.
Many industries have made the mistake of relying on cheap prices to get customers through the door. Think of Myer’s problems with their perpetual sales, a mistake being repeated today by dozens of smaller businesses offering 80% off meals or haircuts through the group buying services.
In the Internet based industries we’ve made the mistake of training our customers to believe we can do everything online for free.
Free is an illusion, there is almost always a cost and on the net you’ll either pay by spending time or giving away your own, or your clients’, privacy.
The better services cost. The most successful cloud service, Salesforce.com, is quite expensive although still substantially cheaper than the server based alternatives.
Many services though are based on the freemium model, when you need additional features or grow beyond a certain size charges kick in or increase with your needs.
Mail Chimp, an online email management system is an example. Late last year I resurrected a mailing list which hadn’t been used for 18 months. I chose to pay the fee for MailChimp as their management service would deal with the hundreds of invalid addresses and unsubscribes a neglected mailing list always attracts when you restart it.
Not only did MailChimp deal adequately with these problems but it also took the size of the mailing list below the 2,000 name threash hold for their free service. So spending a bit of money actually saved a lot more money and a massive amount of time. It also illustrated the flexibility of cloud systems and their pricing models.
The risks
Nothing though is risk free. Any technological change comes with risks; electricity changed humanity but thousand of people die every year from misusing it. We can say the same for the motor car, steam engines and penicillian.
For all the benefits of Internet technologies they too have their own risks. In cloud computing we can divide them into three major groups; Reliability, Terms of service and Security.
Security
Probably the most misunderstood, and so riskiest, aspect of IT is security. Most business people over estimate the security of their own systems and are shocked when their data is compromised by viruses, hackers or, most commonly, their own staff walking out the door with vital information.
Cloud services generally have better security than most business networks as they have the resources to deal with the massive task of keeping computing systems secure, but there are still risks in using online providers.
Strong passwords begin to matter and guarding them is important as well.
Granular access, not giving everyone access to everything also becomes very important. This is also a common problem on small business networks.
Accessing cloud services from shared computers or through unsecured wireless networks is probably the biggest danger, particularly with mobile workers. It’s important any provider you use offers encrypted services, which you can tell from the login page showing https:// at the beginning, and making sure you log off when you finish using computers in Internet cafes or in other people’s offices.
Terms of service
When using cloud services you have to understand these are someone else’s computers you are occupying so you have to play by their rules regardless how arbitrary they seem.
Wikileaks is a good example of how large cloud and Internet providers use ToS to shut down customers they don’t like.
You don’t have to upset the CIA or Julia Gillard to get into trouble. Victoria Buckley Jewellers in Sydney’s Strand Arcade uses beautiful porcelain dolls to model their products. One of the female dolls has nipples and Facebook shut down Victoria’s account after a series of photos showed the doll topless, nudity being a breach of Facebook’s conditions.
A more common problem is eBay shutting down traders’ accounts on spurious piracy claims. This is very common and genuine risk to anyone running an online store relying on PayPal or eBay.
Probably the best example of silly piracy claims is when the University of Florida hit the Flickr photo sharing service with claims that every photo with a description containing the words “Florida” and “football” was a breach of their college grid iron team’s copyright.
The howls of outrage from angry Flickr users when their pictures of kids playing football while on holiday in Florida or local team photos were taken down soon convinced both organisations that their actions were hasty and ill-advised.
The problem remains though that online services are still too quick to shut down other people’s services so you need to plan for these type of disruptions.
Reliability
Tied closely into the terms of service is reliability.
Reliability is at the heart of all technologies. If something breaks down most of the time you use it, then it’s of little use to your business.
If you are using a cloud service you need to have both reliable internet connections and a provider you can trust. This is why free services often don’t cut it for business use.
One aspect cloud services and technology companies often sell is the Service Level Agreement or SLA, these offer a refund if the service doesn’t perform to set standards. While SLAs are useful, they don’t make up for the disruption a service interruption causes your business. As Virgin Blue found during their service problems late last year.
As we’ve seen with the recent natural disasters in Japan, New Zealand and Queensland, the Internet routes itself around problems. So if you are in a problem area the challenges of keeping your business operating may be increased while communications are still being repaired
Redundancy is the key, just as the Internet and cloud computers have redundant features, so too should your systems. You have to choose providers that let you easily download usuable data from their services in case you find yourself offline or unhappy with their product.
This is the third of a series of four posts taken from The Networked Business presentation. Parts One, Two and Four are also online
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