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Today I am sharing my thoughts and observations about the Cloud, and clarifying some of the components of the cloud. I hope this provides some new insights. Personally, I love the cloud when it adds value to our organization. ~Dan Forsyth, Owner

What is Cloud?

Like many technical services, the term “cloud” represents a group of outsourcing service/hardware options in the IT space. However, there are a few details that I would like to cover.
1. A cloud platform.
2. A cloud application.
3. A cloud application hosted on a cloud platform.

A Cloud Platform

The first way to enter the cloud is to take your existing infrastructure and upload it to a cloud platform such as Amazon AWS or Azure.
– You still pay licensing fees on the software.
– You still need to maintain the software (server software and application software).
– Costs of local hardware are converted to a monthly fee. (there are many ways to pay for this – contracts etc.)
– Your current software now runs in a datacenter at the cloud platform provider. Your old server equipment can be retired.
– In many cases you may still need to take care of your own backup, depending what your needs are.
– Because your servers are now remote, it is important to look at your internet connection capacities and backup.
– In general, there are not a lot of savings here. In many cases – this solution is much more expensive than on-premise equipment. However, they are scalable and reliable.

In this solution – not a lot has changed. You now have the ability to add server capacity instantly – which is great. However, your internet connection now becomes a bottleneck as the servers are all remote. Depending on your fees you may be happy or not. Make sure you factor in any internet / conductivity upgrades in the new monthly costs as well.

A Cloud Application

This is a newer approach to how your software is delivered. Cloud applications are normally web based, for example, and normally built to be very resilient.
– Typically web based, so no more client installations.
– Software is normally designed as a scalable system. Performance can be ramped up quickly to deal with load. However, this will depend on the provider.
– Upgrades are gone. This is a big one. There are no more migrations from one version to the other.
– Change. Once they have a large user base, the applications will not change a lot – this could really be a plus, as we are all tired of our software changing.
– Cloud applications can run on a cloud platform like AWS or Azure, on premise or both (hybrid).
– If it is running on premise, all the factors of on premise servers apply.

Cloud Application on a Cloud Platform

So now we have the combination of both services. We have a cloud platform like AWS or Azure with a huge datacenter, and in addition we have a vendor who has developed cloud software.
– Hardware and the application are managed by the same group of people.
– Hardware is managed by the software vendor, however hardware is maintained by the platform provider.
– There is a large level of accountability here, as the application vendor has control over almost everything.
– Cloud applications are only that – a single application. As the various applications will be running on different cloud platforms, performance and quality will largely depend on the applications management and technical ability.
– Two words – Single vendor (for the application).
– Zero Control – If there are problems, it will be the vendors fault, the issue will be – do they respond? Make sure you are well aware of the Service-Level Agreement in writing.

Cloud Sprawl

Cloud services and applications are all based on monthly fees and they are usually in USD. Contracts should be used whenever possible. Infrastructure is largely new and so are the programs themselves. As these services, software and hardware ages, they may re-assess their pricing model. In some cases, some cloud providers are not able to generate enough volume. This can lead to price increases. For example, in order to deal with growing demand, Microsoft is trying to place datacenters in the ocean. That’s great, but what will the cost be over the long haul?

Support Levels

Support levels will change by application vendor. Many cloud providers are good at support and some are not. We have dealt with large application providers in the past where a fix took months on a non-system down issue. There are many factors here, including profitability and labour market conditions.

Security (Cloud or On-Premise)

No matter how you structure IT systems, they can be made secure. I’m not sure Cloud systems are immune from being hacked, as sometimes touted. They are big targets and with a lot of employees and turnover, it can leave them potentially open to social engineering. In the end, because the cloud doesn’t eliminate your local need for PC’s, laptops etc., you still need security but now you have to factor in your cloud provider(s) as well. There are many third party security applications that are deployed on top of the cloud as many providers only offer a basic level of security.

Cloud Costs

Cloud services are almost always a monthly fee. Whenever you can lock in contracts – use them. However, even with contracts, many providers price only in USD. As a Canadian company, you have currency exposure.

One notable point on cloud pricing is that applications and platforms seem to be going up even as volume is going up. Normally, one would think volume would help to reduce pricing. However, this may be demand related, coupled with labour shortages for high value personnel. Many cloud services are likely entering into their maintenance periods – the equipment is aging and this will drive costs up.

Another interesting factor is the logistics behind these massive datacenters. They need two inputs in excess: 1) Power and 2) Cold water. This typically means they need to be located near hydroelectric dams. They use enormous amounts of power and require lots of cooling capacity due to the density required to generate a profit.

Cost Reductions

Storage is the big cost in the cloud. However, using tiers of storage — and perhaps incorporating local storage, you can keep your current and most important data on the cloud high performance systems and older data or static data on a lower cost platform.

We need to make sure that we don’t over-spec our cloud capacity too much. Capacity can usually be expanded on-demand. You don’t want to waste money on storage capacity you don’t need.

Lastly, use on-demand pricing for testing (avoid contracts for short term projects/capacity) and lock in prices with long term contracts on your production services, preferably in your home currency.


My personal observations:
I like a lot of these services and use them myself. They simplify deployment of capacity. At Dataforge, we use the cloud sparingly though. We have a few issues:
1) Cost – in order to convert Dataforge right now to the cloud it would raise our costs considerably. A $50,000 asset would cost that same amount, but on an annual basis. There is a risk that the USD will continue to rise against the Canadian dollar going forward.
2) Uncertain support – Even with a decent sized contract, we would still be very small.
3) Right now it feels that these datacenters are big targets and that a smaller distributed model is more secure.

On top of that you get weird scenarios such as this, where Facebook was locked out of its own datacenter, causing a major outage. Look, what these guys are running is HUGE. The scale of these operations are impressive to say the least. However, they are complicated with many people involved.

That being said, if you have the money or you find certain cloud services that work well in your company, they can be a great asset. Facebook up time is excellent. Especially since their system has billions of users. Services like Office 365 can simplify many functions for both large and small organizations. For very small offices it can be a godsend. For a few hundred dollars a month they have access to services they could never have had before at the price (backup, email, mobile billing, and more.)

At the end of the day, it’s a matter of looking closely at the requirements of the business, the budget and risk profile. As it is also an ever evolving landscape, checking the latest reviews is recommended. Through this lens you can determine how and where cloud services can bring value to your business. Remember, Dataforge IT Managed Services can help take the guesswork out of evaluating what works for you.