This article covers some technology trends that could impact your business. Some of the major trends in IT for Small to Medium Businesses include Cloud Computing, Software as a Service (SaaS) and Virtualisation. What do these terms mean and how could they improve your bottom line?
The CEO of Microsoft, Steve Balmer, reportedly told a reporter in New York in March 2009, “Anything that has been a server needs to be a service.” His statement is a good summary of Microsoft’s strategy, and gives you an indication of where things are going. In short, both Virtualisation and Software as a Service (SaaS) are component parts in the overall Cloud Computing trend.
Believe it or not, Cloud Computing was started from a non-traditional IT player. Amazon.com, the famous web based bookseller, has changed the traditional computer hosting model by offering hosted computers (e.g. CPU/Memory) to use by the hour. Additionally, the ease of setting up a new computer with Amazon takes literally seconds, therefore, changing the process of ordering and maintaining computers forever. They have turned traditional computing on its’ head by turning the service into something similar to a utility (i.e. pay-per-use). Amazon even helped coin the phrase “Cloud Computing” by naming their initial product Elastic Compute Cloud. This service is sometimes called Infrastructure as a Service (IaaS) and is the foundation for turning your capital expense (CapEx) into an Operating Expense (OpEx), thereby impacting your bottom line dramatically.
Many other vendors have jumped into the fold and offered similar services, among them, Rackspace, Mosso, Nirvanix, IBM, etc. Locally, the only major hosting company offering a similar service is Melbourne IT. (Update: Macquarie Telecom is not far behind with some movement in late 2011.)
Think about on-line accounting packages, collaboration, messaging, document management, CRM systems, etc. They are all available “in the cloud” instead of being hosted on your small business server. At last count, there are over 150 vendors with announcements in the Cloud Computing infrastructure or software areas, most of them big players.
You should ask: how does Cloud Computing help my organization? Can this new commoditized infrastructure give me a competitive advantage in delivering services or does it provide new flexibility? Many of the advantages of Cloud Computing are a culmination of advantages derived from the multiple technologies that drive it – such as Grids, Clusters, Virtualization, Utility (e.g. pay-per-use), Service Oriented Architecture and Quality of Service needs. Some software is now offered in a Software as a Service (SaaS) model, where you pay based on number of users, and the software is delivered/accessed through the internet. Both Software-as-a-Service and Virtualisation are therefore smaller waves in the larger Tsunami called Cloud Computing.
Salesforce.com helped pave the popularity of Software as a Service (SaaS) by offering a CRM solution where their clients pay for only what is used without having to host or maintain the software. Even MYOB is reported to have a Software as a Service product in the pipeline. Microsoft and a company called Zoho have similar CRM solutions “in the cloud”.
To help you understand further, Google is offers Software as a Service. You can get your e-mail, store documents, and create spreadsheets and a number of other things without installing any software on your local machine. However, you cannot buy any infrastructure (i.e. hardware) from Google.
Traditional hosting often locks companies into long term monthly contracts, but have the benefit of built-in back-up and redundancies. Cloud Computing goes further by allowing you an hourly rate, instead of monthly. Cloud Computing is possible at a much lower cost due to the popularity of something called “Virtualisation”. Many companies are moving to virtualization as a way of saving money. Basically, you can use virtualization to create multiple computers images on one computer. This means less hardware, less power, less space and often also means it is easier to back up your data.
The key elements of “pay-per-use” and “ease of setting up/down” are critical elements of Cloud Computing that are made possible by virtualization technologies. Some of the benefits of Cloud Computing are also benefits of virtualization:
- reduced administration and support costs;
- reduced electricity cost and lower CO2 emissions;
- better efficiency of CPU resources;
- easier to back-up and restore in event of failure.
Virtualization is one of the key drivers that make Cloud Computing elastic and most CIOs are already aware of the big names involved: EMC (VMWare) and Citrix Systems (XenServer). The growth and popularity of Cloud Computing, especially driven by companies such as Amazon and other companies, is mainly in the USA. Australia tends to have more SMBs and more expensive broadband and hosting costs, but there is an overall trend to follow America in the longer term. Most, if not all of the technologies mentioned in this article are already in use by SMBs in Australia.
Cloud computing is a way of getting enterprise grade software and features at a much lower cost without having to maintain a computer system yourself. One of the problems with Google is they often do not have the same level of functionality that Microsoft has, therefore not considered as enterprise grade software. Both Microsoft and IBM have both recently made announcements specifically targeting SMB market with software options available in the cloud. Microsoft’s plan is to offer a version of their Business Productivity Online Suite (BPOS) for SMBs, which includes Microsoft-hosted Exchange Online, SharePoint Online, Live Meeting conferencing and Communications Online. With over 150 Million businesses with fewer than 500 employees, no wonder the SMB market is being targeted.
So what should you do as a small-to-medium business?
Start looking at options in the hosting, software-as-service or virtualization area that can save you money. A good place to start is in your most commonly used software like Microsoft. Microsoft Exchange and Sharepoint hosting has become a normal option for many small businesses. This reduces the number of servers needed on your premise and is a step in the direction of cloud computing.
To find out more about Cloud Computing, Software as a Service (SaaS) and virtualization, contact your local technology partner.
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About the author: Dexter Duncan provides consulting services to small business and is a divisional manager at Empower IT Solutions. Dexter’s career spans Texas, Silicon Valley, Singapore and Sydney working at large and small companies. Dexter was born in Texas, wears his Texas boots and has Bachelor of Science degree. You can contact Dexter at firstname.lastname@example.org
References and readings –
Rackspace whitepaper comparing Cloud Computing and Managed Hosting – http://www.rackspace.co.uk/rackspace-home/media-centre/resource-centre/white-papers/
Cloud Nerve Network Blog. More information on Cloud Computing – http://texdexter.wordpress.com
IBM and Microsoft targeting SMB Market. Article in PC World in March 2010 – http://www.pcworld.idg.com.au/article/340607/ibm_microsoft_court_smbs_cloud_appliances/)
ZDnet article by Mary Foley in February 2010. Microsoft reported to be working on BPOS Lite (Business Productivity Online Suite) – http://blogs.zdnet.com/microsoft/?p=5090