In the last ten years, global markets have been strongly influenced by the likes of YouTube, Google, Amazon, Facebook et al. This happened in an incredibly short space of time and their influence resulted in phenomenal market growth. In the meantime, a new trend has emerged under the “slightly hazy” moniker of cloud computing.
Since the term “cloud computing” is used to describe a variety of things, and, strictly speaking, is something the marketing world came up with, it would be best to start by identifying the three primary aspects of cloud computing: technology, processes and business models. Actually, there isn’t much new on the technology level. The core idea behind cloud computing is the central provision of resources for processes and data processing. The driver of this paradigm shift is the prospect of drastically reducing costs (once again turning our backs on decentralized data processing in favor of a centralized concept). The potential savings span the gap from locked up capital (there’s no need to commit to largescale investments) to better workload distribution in the IT department (more balanced use of available IT resources, especially on short notice). This type of central provision of IT resources was the primary technical approach used back in the 1980s and at the start of the 1990s, before the advent of the personal computer. IT was either handled in companyowned data processing centers or through outsourcing.
On a second level, cloud computing stands for the introduction of industrial processes in the provision and use of IT. Since IT is still in its infancy (e.g., compared to mechanical engineering), in abstract terms this trend is like the evolution of thinking from the craftsman’s perspective to thinking in terms of industrial mass production. However, for such a transition to take place, customers have to focus on standardized options, which will ultimately force customized solutions off the market. This is where large companies have really done their homework by introducing concepts such as ITIL (IT Infrastructure Library) into their operational areas. ITIL is a prime example of a “best practice” model for IT operations, and it’s an area where smaller companies have a lot of catching up to do. In some cases, not being sufficiently prepared for a transition to cloud computing could have a negative cost impact for these companies, since the time and effort required for making the move can have follow-on costs. For example, a company that employs internal IT technicians, who regularly go to their colleagues’ workstations to carry out work tasks, probably isn’t yet ready to quickly transfer pro- cesses to the cloud. It would be worth recommending that such companies carefully consider their own identity management, create a documented infrastructure and formulate a clear description of internal business and operational processes before outsourcing processes in a cloud. On the business process level, a lot of companies are faced with the question of how willing they are to subject their own internal business processes to external pressures, just in order to standardize. Using standard, off-the-shelf software to support internal business processes provides opportunities in cost terms, but these can only really be seized if systems need no customization. This phenomenon isn’t unique to cloud computing. It also affects companies that similarly implement a standard ERP software (e.g., SAP), but the effects are particularly noticeable with cloud solutions.
The third and most important dimension of cloud computing makes it possible to implement completely new business models. Gaining access to customers via the Internet can establish a foundation for new business models that will need to be implemented, and help roll these out to different target markets. In this respect, cloud computing can be both a blessing and a curse, in particular for smaller companies focused on local markets. A move to cloud computing could provide the basis for quickly tapping into new global markets, but on the other side, the company might come to feel intense competitive pressures in home markets as a result.
In addition to these three aspects of cloud computing, it’s important to mention two general challenges for which society hasn’t been given satisfactory solutions yet: With the increasing significance of travel and transportation mobility, and our collective desire to tap into our familiar IT environment from anywhere, we have to look for ways to make our communications networks available. Not enough has been done in this respect in Germany to date. Although the telephone network does the job, the Internet – and above all, the data networks – most likely won’t achieve expected requirements anytime soon. That said, our dependence on these networks is growing rapidly as cloud computing begins to permeate existing systems. Availability of the (mobile) network infrastructure is the primary impediment, since there is no fallback option for switching data traffic to other network operators if the network fails. But even the data networks for landlines aren’t designed redundantly closer to the end-user’s side, and that means they aren’t fit for growing bandwidth demand. States like Baden-Württemberg, which have dense industrial areas nestled in their more rural regions, will definitely feel the pinch here. The second challenge for cloud computing is the issue of security, which has been defined by terms like authenticity, availability, integrity, confidentiality and data protection. When it comes to integrity, authenticity and confidentiality, it is important to note that data stored in a cloud is not fundamentally less secure than data stored in an on-site data processing center. In both cases, it is important to carefully select a service provider or technology specialist who is clearly monitored within the scope of clearly defined contracts. The issue of data protection isn’t quite as simple for cloud computing. According to the German Federal Data Protection Act (BDSG), data liability can either be transferred to another party or the company retains the right to process specific data. A transferal always involves overcoming strict legal hurdles, so this option is rarely an option for German companies. When it comes to the other option of processing specific data, the actual processing itself may be outsourced, but the liability for handling the data in accordance with the law remains with the company. Since this liability cannot be transferred, it is dangerous for companies to outsource unstructured processes as this can entail unknown risk.
Another thing that should be mentioned in closing, which hasn’t received much air time in public debate: Aside from the network connection, cloud computing has taken sufficient precautionary measures to ensure that data isn’t lost. This is done through mirrored drives, duplication and storing data in separate physical locations, if necessary, even on various media. That said, cloud users cannot yet be sure that all copies of specific data are removed when one instance of the data is deleted. This is an area where technological efforts should be made to ensure this is possible in the future.
In conclusion, it should be noted that it’s not advisable for SMEs to ignore cloud computing, but an unconsidered jump on the bandwagon is equally imprudent. A carefully considered approach involves analyzing the IT infrastructure and checking whether internal processes are neatly and clearly documented – then it certainly provides a basis for reaping all the benefits that cloud computing has to offer a company.
Dr.-Ing. Jürgen Jähnert is the director of bwcon GmbH, an enterprise founded in October 2014. The company aims to support businesses, organizations and individuals in the strategic use of technology by providing appropriate services. The enterprise helps foster transfer between public sources of knowledge and networks, but it also focuses on entrepreneurial transfer between knowledge sources in the private economy.