Certain new realities of cloud computing are becoming clear as underscored by FTF’s briefing last week in New York. For starters, the cloud is setting the agenda for data centers; private clouds often come with trade-offs; and, as more systems move to the clouds, firms must have a better grip on contingencies in case their cloud providers go out of business.
Cloud computing, with its various methods of implementation, will dominate the discussion of the future of data centers, according to the panelists at the FTF event. Last week’s participants included: Brian McCallion, global performance architect at AIG; Uche Abalogu, CTO at Harbinger Capital; Daniel Rhee, CTO at OrbiMed Advisors; Peter Mager, CTO at DK Partners; and Michael Kurzer, a lawyer from Milbank, Tweed, Hadley & McCloy.
For firms with incumbent data centers, it’s likely to mean the shifting of non-mission critical operations to a cloud provider. The cloud will also force a conversation about what is and isn’t mission critical, panelists say. E-mail systems, for instance, used to be sacrosanct but firms are moving them to the cloud or are thinking about it. Order management systems, on the other hand, are not likely to be part of this first migration to the cloud.
Those firms just starting out may decide not to build data centers, especially if they have a limited number of applications and systems, according to one speaker. Venture capitalists have been urging hedge fund start-ups, for instance, to use a cloud provider rather than spend time and effort on a data center. It’s the ideas of the firm and not an IT infrastructure that a VC wants to fund.
The hierarchical and fiefdom-oriented culture of many firms is likely to be challenged by cloud computing, says a panelist. The managing director may not automatically get priority if another part of the firm needs the attention of the cloud first. However, the MD is not likely to be happy if his or her cloud-based email system is down because of poor back-up planning. IT managers must gauge the impacts cloud performance will have on their careers. They should know exactly what their providers can do if an implementation runs into problems. “With email, I start with my own accounts,” suggests one panelist.
The same is true of for disaster recovery and business continuity operations—yet the consequences could be far more severe if cloud providers, especially the new ones, go out of business.
“You can write the best legal agreement but what happens if the entity shuts down? If the entity is handling your disaster recovery, what are you going to do?” asks one panelist. Once systems are with a vendor, it controls the servers, storage and networking—all of which is lost if the vendor goes under. Firms will need to quickly shift applications and systems if the vendor fails.
IT managers will also have to know the trade-offs of private clouds.
Public cloud offerings such Amazon Web Services include cost-effective provisioning, metering, scaling, and the capability to move applications to “the most advantageous sites” for processing, says one of the FTF speakers. Private clouds may lack the resources and scope of public cloud offerings, but most firms will not be letting their crown jewels of data and applications reside on servers that support others. To compensate, firms are investigating hybrids of public and private clouds, only using public systems when appropriate, panelists say.
With so many important considerations, cloud computing will be a boon for the major accountancy firms, other consultants, and lawyers, panelists say.
Service level agreements (SLAs) alone will require a huge effort. Among other details, firms will have to assign penalties for missed expectations, define response times for incidents and outages, and set metrics to gauge performance.
Clouds are definitely not “set it and forget it” solutions. IT staffs have to take into consideration privacy and security, latency issues, CPU and server power levels, scalability, reliability, storage concerns and internal funding for cloud projects. Luckily, security concerns can form the basis for a strong funding argument, urges a panelist.
So, it’s not news that most firms are adopting a go-slow approach to the cloud and are exploring new, tighter relationships with their providers. The one thing that firms cannot expect from their vendors is an outsourcing of regulatory responsibilities.
“Vendors do not want to be on the hook for that,” says one panelist.
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