As a veteran of the SaaS (Software as a Service) industry, I can tell you everything is rosy until the darn Internet gets in the way. For all the benefits in the world you just need the unavailability of the Internet for a short while to evaporate the lot.
Or so it would seem. Recent studies on availability of Exchange Servers or inhouse networks show that internal network or component failure is more common than major Internet outages and it's just that they are seen as 'usual events' rather than complete failure to work. Anecdotally, how many times have you been told that a business or individual within has had trouble sending or receiving mails or lost important data or files, worse still, has had major applications inaccessible for periods? It seems that internal shortcomings of applications or networks are so run of the mill as to go largely unreported - yet the self same people who experience that level of poor internal service are the first to speak out against the advance of SaaS or the new phenomenon of Cloud Computing.
The Growth And Dangers Of SaaS
Salesforce.com is one of the major successes of SaaS and it has popularised the use of high availability centrally accessed information for particularly mobile users. As a former user of Salesforce.com, I can safely say it is streets ahead of all other dedicated applications for contact and sales management I have ever used. The beauty was that whenever I logged on I had direct access to all my information, with the latest revision of software and in the form of the application itself so I could do all the things I needed to manage my own contacts and my those of my reports anywhere in the world.
And with the growth of Mobile Broadband, it means that you can do this without the need to be static. Now you can go onsite to a customer presentation or meeting and have full access to all information needed and you can catch up and work in a coffee shop or over lunch, while updating the central database for everyone else to see what is going on.
The obvious downside is the reliability of the connection or availability of the Internet or more frustratingly, if the Vendor suffers an outage or failure at their end. It has happened - as recently as January Salesforce.com suffered problems leaving 900,000 users without access to their application and information while Citrix, Webex and others have had problems. In my particular companies, Genesys and PlaceWare (now InterCall and Microsoft RTC respectively) we had many instances of failure.
Cloud Computing is an extension of SaaS - it is also the concept of having online storage and processor power highly available, as an when you need it. This is a superb solution for small businesses who find it difficult to cope with the cost of scaling their business - particularly if you have to start flexing server, storage or licence muscles in order to cope with growth. At early stage, the cost of adding an incremental, fully kitted out user is very high in proportion to over all costs, once you have grown to a certain size, the cost as a proportion to overall costs gets progressively smaller. Equally, the cost of failure of any one component is disproportionately high or the cost of insuring against such failure. Maintenance contracts are at minimum 20% of the hardware value which typically over 3 years amortisation is cheaper to replace and this does not allow for the cost of application support.
Cloud Computing takes that strain away. With the growth in things like Google Apps, you can not only have a full suite of Office applications at your finger tips, but all the associated storage and computing power needed, anywhere in the world for a single monthly fee. It takes the hassle away of worrying about scaling as it is simple and less of a proportion of your costs, while maintenance and upgrades are taken care of and the whole system gears in size in exact proportion to your own requirements at every step - there are no sudden jumps as you go from 100Gb to 1Tb storage or requiring a new server as you hit the limit of the old one - it's all taken care of for you.
I dealt with one client in the US that had 20 staff in 20 different cities in the US allowing them to 'appear' like a national organisation and they supported the whole lot through Cloud Applications even their Accounting System and Budget/Forecasting system as well as classics like Salesforce.com. No need of an internal network or costly server, everything was hosted in the cloud complete with a hosted VoIP centralised phone system from RingCentral. Meeting me at the IOD Hub in London he showed me how he could run his business in exactly the same way from London as in California, right down to answering the phone.
I also host my Exchange server at Fasthosts who also host my web site - this means that anywhere in the world, as a small business, I have full access to a full Outlook client as if I were on my own network, fully maintained and backed up for me for a single annual cost which allows me up to 10 email accounts and plenty of storage - and it is a fraction of the cost of having my own server with maintenance and storage - plus someone to run and support it for me.
I also use Spare back up which automatically runs each day no matter where I am and backs up all files which have changed and I can restore any I accidentally lose at a single touch easily - this covers all my PCs for a single charge of £29 per year for a huge storage space that I have only used 19% of so far.
Not Just For Small Businesses
In ComputerWeekly last July, Taylor Woodrow announced they would be migrating all 1,800 employees from traditional desktop applications to Google Apps. The estimated saving to the company would be £1m over 3 years according to Rob Ramsay, the IT Director, just on Office applications. He said that Google Apps will allow Taylor Woodrow to scale up and down much more easily and in a more cost efficient way.
In these tough times, Rob Ramsay's logic is sound. Not only does Cloud Computing support expansion efficiently but also contraction. This recession has hit very hard with many industries having to lay off staff. When that happens, typically the money spent on supporting the staff lost is itself wasted or at least until the company can re-use them again. In things like Microsoft Office licences, you typically pay an Enterprise licence fee so you are stuck with the cost whether the people use the licences or not. Cloud Computing allows you to simply add up the numbers and pay for what you use only, so downsizing actually produces savings, while scaling back up for the upturn becomes a less onerous task in terms of people time and cost.
New Kinds Of Business
Cloud Computing is also allowing the introduction of new types of business. Huddle is an Enterprise 2.0 start up that not only uses Cloud Computing for its own use but uses it to deliver services to its clients, some of whom are Boots, Centrica and MasterCard. Huddle is a secure, online collaboration and networking service for companies of all sizes - not dissimilar to the likes of Citrix and Webex but it started because of Cloud Computing.
If you use applications like LinkedIn or Facebook as your contact management system, then you will understand these are also gifts from Cloud Computing as is Google Apps. With packages like Huddle, Webex, Yugma or Skype plus applications like Vonage or RingCentral or Yak.com you can have a full communication and collaboration suite at your disposal for a reasonable cost without the costly outlay for capital purchase or lease of telephone equipment and use your PC or WiFi or mobile phone as your only telecom apparatus. Accounting packages like http://www.freeagentcentral.com/, budgeting packages like http://www.adaptiveplanning.com/ or CRM packages like Salesforce.com start to complete the picture - you can have your entire business run by a single laptop, anywhere in the world for monthly charges.
High Availability, Low Down Time
The Internet has come an awful long way since the heady days when I ran PlaceWare Europe Ltd. Then Internet outages were rare but frequent enough to cause angst and doubt in customers' minds. Things have changed dramatically and now the Internet is nearly ubiquitous with the advances in WiFi and mobile broadband. As a small business, I am completely reliant on access to the web and I don't have a problem with it, being able to work offline when required and online when I need to with equal effect and a fraction of the cost of if I had to fund and maintain it all myself.
Now is a good time to consider the alternatives, whether you are a large business or small. Feel free to give me a call or drop me a mail if there is anything you would like to discuss further on +44 (0)207 193 2356 or nigel.dunn@calxeurope.com.
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