IT Forecast: Cloudy

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The concept of cloud computing may seem esoteric or simply irrelevant to many midsize companies, but IT experts say the cloud is the way of the future and can be a boon to your bottom line. The cloud doesn’t change the everyday routine of running a business – tracking sales, managing people, and estimating jobs must still be done. It does, however, radically transform how and where that work gets done by shifting much of the cost of the required IT infrastructure and support to an off-site third party. 

With just an Internet connection and a Web browser, companies can access services and applications that not long ago would have required millions of dollars of investment. Think of the cloud as a utility. It’s available on demand, you use only as much as you need, and you pay as you go. Your company likely doesn’t have its own water treatment facility or power plant, so why have your own data center?  

“Midsize companies often don’t have very large IT staffs,” says Bernard Golden, cloud computing advisor and blogger for CIO magazine. “For them, the ability to create specialized applications for their business and not have to take on the staff and capital investment of a data center is a fantastic opportunity. It’s a real benefit for them to just focus on applications that help their business without having to deal with all the ‘plumbing’ that goes underneath them.” 

And that’s expensive plumbing, as companies must allocate real estate for a data center, buy and install computers and software, configure the software, install database identities and make sure they are tracked properly, perform data backups, and have a disaster recovery system in place in case the whole thing goes down. 

When these tasks are “outsourced” to the cloud, companies can direct their capital investment to areas that help strengthen their business. “Instead of hiring a network administrator they can hire a sales rep,” says Golden. “It lets executives concentrate on the business rather than staying awake at night worrying about their data center.” 

Today a company can choose from hundreds of cloud services known in IT circles by their acronyms. Amazon EC2, which offers a complete cloud-based data center, is known as an IaaS (Infrastructure as a Service). PaaS (Platform as a Service) vendors like Microsoft Azure provide computer platforms on which software developers can build, deploy, and manage their applications. 

Midsize companies can benefit from SaaS (Software as a Service) applications that help them manage everyday tasks such as social media initiatives (, human resource management (SuccessFactors Inc.), customer relationship management (, and data storage (Mezeo Software). 

“Cloud computing levels the playing field in terms of enterprise innovation, allowing medium-size companies much more power in terms of technology than they ever would have been able to build on their own,” says Steve Wylie, general manager of Cloud Connect, an annual conference held in the Bay area that will expand to Chicago later this year. “Understanding the implications of cloud computing is paramount for setting a successful strategy and avoiding potential missteps.” 

While cloud computing has much to offer, users are urged to perform due diligence before choosing a provider, just as they would before hiring an attorney or tax advisor. “A lot of people think they are eliminating risk by going on the cloud, when actually they are getting different kinds of risk,” says Brian Tankersley, a Knoxville, Tenn.-based associate with K2 Enterprises, which offers continuing education for accounting and finance professionals. Tankersley says cloud-specific risks include: 

Security and privacy – Users must ensure that strong authentication methods are used to access applications and data, as weak password protection in a SaaS environment can easily lead to a privacy breach. Review all agreements with legal counsel before storing any confidential information on remote systems. 

Availability of applications and data – Hardware failures or vendor bankruptcies that result in downtime are always a possibility when using Web-based applications. Back up your information on local systems and have multiple high-speed Internet connections in case one goes down. 

Regulatory compliance – Since data on the cloud could be stored anywhere in the world, knowing what rules apply and whose rules govern a situation can be very difficult. The ability to serve a subpoena or prosecute for a data breach can be difficult if your data is stored overseas. 

Exit strategy – Before you sign a contract, you must understand how to retrieve your data and what form it will be in if you decide to end your relationship with a provider — as well as what it will cost. The Website offers help to users who want to move data into and out of Google products. Some organizations may charge significant consulting fees for helping you extract your data in a usable format.

Tankersley recommends the SANS Institute as a helpful source of information about cloud security. 

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