Reasons why companies move to the cloud and what prevents them from this step
Computers are becoming more and more complicated over the years and now it requires some technical support to set up even a small network. If you don’t set it up correctly, the network and its computers are at risk of being attacked by hackers or being infected with ransomware, viruses, and so on. Managing their IT (Information Technology) systems can be a problem for small companies. Someone has to set up new machines, install software, set up logins to network resources, and printers, and then support all this.
It’s also quite expensive to have software developed just for your company. Plus there are all the complications related to data security and making sure it is GDPR compliant, as the penalties for being caught out are quite severe. Small firms don’t have the resources to do all this. You should have at least a medium-sized company to employ staff for specific purposes; only a company of this size can afford to employ officers to ensure compliance with regulations, staff to ensure security, and all the technical staff to manage all the IT administration tasks, look after the website and so on.
If you’re a company that develops software products, then you have additional problems associated with developing and supporting your software. Someone has to provide upgrades and assist clients with their introduction.
So, it’s quite understandable why moving to the cloud can make life easier.
What is a Cloud System?
A cloud system is just a remote computer that you access through a web interface or a remote desktop like VMWare or Windows RDP.
A cloud computer is the same as a computer on your desk. It has hardware like disk drives and RAM, but as it’s remote you can access it only through the provided user interface.
The cloud provider owns the hardware that has all the files on it and provides an interface (web or remote desktop) for you to access them. It’s the cloud provider that pays for the electricity it uses and makes sure your files are backed up. You don’t know where the physical computer is located and have no physical access to it.
The cloud provider has to manage all the cloud computers, care about security, and install and keep software updated. So you don’t have to employ staff to look after any of these things. You just have to pay for the services provided by the cloud company.
With your own computer, you have to take care of all the hardware.
Cloud companies can be medium-sized or they can be giants like Google, Amazon, and Microsoft. Initially, they built up a large infrastructure of networked computers, in some cases like Google they own the network as well. Then they discovered their services could be offered to anyone and that’s how services like AWS, Google Cloud Platform, and Microsoft Azure appeared.
All data is stored not locally but on a remote database. Users often don’t have to install software and can access it just with a web browser. Applications run as websites or web applications and, as a result, it’s easier to configure and maintain them in one central location. There is no need to install special software or have to support multiple versions.
There are some obvious downsides. For example, web user interfaces tend to be simpler compared to desktop software. In a desktop application, there can be many popup forms with sophisticated User Interfaces and validation. Web interfaces use fewer and simpler popup forms. But today this problem is not as serious as it used to be because newer web technologies have emerged. It’s taken 20 years though for web developers to catch up with the sophisticated User Interface that desktop developers were building in the mid-1990s.
Case Study: How rejecting cloud technologies wiped out a business
Here’s a case study of a small taxi software firm. Their OnPrem desktop software was used by many taxi firms but required reasonably powerful computers to run it. Each customer needed a central server computer attached to a radio system and then a desktop computer for each operator plus printers and a network to connect everything. One specialist was employed by the software firm to travel from one customer firm to another across the UK installing and supporting the software, introducing fixes, upgrades, and training staff.
All taxi firms were small and had just a few operators who were using the system and there were no technical specialists to fix or manage it. Upgrading the system or even installing fixes was challenging because the company couldn’t use the system while it was being upgraded. All these actions had to happen at quiet times such as mid-morning when demand for taxis was at its lowest. That support guy was driving 50,000 miles a year between customers and was juggling them to arrange trips to minimize their downtime. Sometimes that left customers without a working system for a few hours and they weren’t happy about it.
Meanwhile, technology changes led to such a situation that taxi drivers no longer needed radios in their cars. The whole system could work via 3G and it became available just from cheap Android cell phones. That was all that was needed for drivers to work. Rival software companies also embraced this technology and set up cloud-based systems. Then the company that we are talking about started to lose its customers. Its system had just a web interface and was managed from one central location with operations and development staff located nearby.
People running a cloud system could update their software anytime they wanted even during the day without disrupting taxi operations by switching over to a second server, doing all the necessary fixes, and then switching back. To add a new customer, a firm needed just a new cloud server to be spun up and configured. And taxi drivers just needed to set up an app on their phones and started to receive orders.
Taxi firms could also start using cheap laptops for their operators to access the website so they saved money on hardware, staff, and overall running costs. There was now no need to have a server, radio system, or network and in some cases, they could close the office and run the taxi business from home with even greater savings.
The web system offered many advantages over the old desktop system and cloud-based taxi solutions rapidly replaced older OnPrem systems. All this took place just within a three-year period. As the running costs were lower, the new cloud system undercut the older OnPrem system in price.
Not all companies can move so easily to the cloud. Here are a few reasons why companies can’t or don’t want to make this move:
- Everything is done locally with the help of MS Word or Excel or proprietary software and they don’t like using or maybe even don’t have web-based versions. Over time though, more and more software that is built is intended for running on the web.
- Regulatory requirements can sometimes prevent client data from leaving the country. This has been a big issue with EU data as the EU Commission does not believe the US provides a secure data protection regime. If you don’t keep your customer’s data stored locally, it could prove expensive to pay fines for failing to keep data secure. Using cloud storage that is kept in a country can address this issue.
- It can take a lot of effort for a company to move its systems from a local network to a cloud system. This is made worse by a lack of staff trained with the cloud system or that know how to make this move. Working with third-party companies that provide training services and help to migrate to the cloud can help to overcome this problem.
- Internet Connectivity is poor. But let’s admit that this is not a very popular problem nowadays.
- Concerns about disaster recovery if the internet connection to the cloud goes down. Using online failover services where the cloud system switches to a secondary cloud held separately is a way to avoid this.
Over time though, many of those concerns will go away. Even in the software development industry, there’s a tendency to develop products in a cloud rather than on a home computer. With software getting more complex, it can be challenging to replicate a production environment locally. So why bother? Just run up a development server and use that instead.
Moving to the cloud could make a big difference to your bottom line, especially if your rivals are doing the same.