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What's All the Buzz About Cloud Computing?

September 17 2010

cloudcomputing200pxOne of today’s technology buzz phrases is “cloud computing.” In 2010 Google found over 1.4 million blog posts referencing “cloud computing.” Currently there are 23,300,000 Google search results for cloud computing today. While at the WITI Women in Technology Summit, cloud computing made several seminar and keynote topics.

One of the best seminars at WITI on cloud computing was Leah Sweet’s “Cloud Computing - The New Normal and the Impact for IT Departments.” Leah is the VP Flagship Advisor for CA Technologies, a cloud computing IT company. Formerly heading American Express’ IT department and the state of Arizona, Leah Sweet’s experience in IT is impressive. She provided a lot of information about what cloud is, and how it fits in modern businesses strategies.

What is the “cloud”?

Wikipedia defines cloud computing as “Internet-based computing whereby shared resources, software and information are provided to devices on demand.”

What does it really mean? Cloud computing is able to provide bandwidth and data capabilities at anytime from anywhere. Rather than hosting your server farm and paying for servers, you can purchase extra space on Google, Amazon, or other network servers to store data at a fraction of the cost. Because your application is stored over many servers across multiple networks, it is believed to be more secure, more stable, and faster.

Nikon saved $14 million in five years by switching to cloud computing on Amazon S3 Cloud, and Amazon only takes 90 seconds to sign up for an account. Right Scale is another cloud hosting network that has launched 1 million cloud-based servers. Many enterprise level applications are moving to the cloud, currently hosts their application for 50,000 unique companies using cloud computing.

How does this fit into modern business development strategy?

We’re now able to share resources with others who specialize in something. Sound familiar in the business world?

Leah used Ford Motors as a classic example. Originally they built each component part of a car, and could create 11 cars per month. Today, the Ford assembly line can push out a car in about 93 minutes. By getting specialists to create steering wheels, etc., and they would mass ship these parts to Ford they expedited their fulfillment and increased productivity, and reduced costs by cloud sourcing.

Many companies are now taking out pieces of their IT department and outsourcing those pieces to become more efficient. In the real estate industry we have hosting companies, database, data backup, security, SEO specialists, coaches and consultants. Cloud computing is another form of reallocating resources to become partners with those who can do a service better than you can. Take components off your plate and do better when the areas only you can focus on.

If every MLS needs to provide CRM services, listing syndication, virtual tours, agent websites, SEO and back office accounting and management software, why should one organization create their own technology solutions, and go through the development, testing and rolling out phases? It would be a waste of resources. This is one reason why we have sites like that pool all the technology products already meeting these business needs into one place.

As the world becomes more and more global, resource sharing is easier. We all do it because it makes sense for our businesses. Focus your people and your IT department in a way to be most effective and innovative in your core services.

Cloud computing is simply one way to do something better.

Cloud computing is projected to be a $112 billion industry by 2015. Research by IT analyst GartnerGartner showed a forecast that companies are expected to invest up to $112 billion in cloud-based services, such as SaaS, during the next five years.

Today, less than 50% of people know that cloud computing is available. Certainly, anyone with Nephophobia (the fear of clouds) may not be keen to learn of the pros of this budding technology.

Grail ResearchGrail Research provided their research findings to WITI attendees. Their report, titled “What is Cloud Computing” highlighted some interesting pros and cons of this new innovation.

Benefits of the “Cloud” include:

  1. Flexibility – ability to scale computing resources on demand
  2. Lower costs – opportunity for businesses to lower upfront IT costs
  3. Concentrate on core activities – ability to focus more on core business activities, instead of IT infrastructure
  4. Accelerated deployment – less time to deploy applications and servers in production mode
  5. Collaboration – growth in connectivity and bandwidth capacities through the Internet
  6. “Greener” IT – lower cost of power, space and data center maintenance.

What are the down sides?

I would be remiss to not mention some major barriers to adoption:

  1. Security and data privacy (but this is getting better, and many believe that a piece of data without all of the pieces is useless, and therefore, more secure. For example, if you have a credit card number stored in one location, a name stored in another, the expiration date stored in another, etc. No single piece of information has any value. By using encryption keys to scramble the data and the location of all of the data parts, you enhance security. The only one that can put the puzzle together is the company that holds the key to the data.
  2. Integration with Cloud-based systems – it is a new server storage model, so applications need to be modified to work with the cloud. The only MLS system we are aware of that lives on the cloud is the California MLS.
  3. Regulatory and compliance issues – laws that govern privacy data have not been modified to allow for cloud computing in regulated industries like Banking, Finance, Insurance, etc.

Data protection and security is a concern right now. Certain key players in the cloud computing industry have undertaken initiatives to deal with security concerns. These companies include:

  • MSFT Research – CloudProof
  • NTT – Mitsubishi – Advanced Encryption scheme
  • IBM – Homomorphic Encryption Scheme
  • Trend Micro – SecureCloud

Who are the adopters?

The middle to small businesses around the US are quickly adopting the cloud, largely because they have not invested as much in their IT infrastructure as larger companies. The fast adopters are looking at email applications and are not as embedded in their environment (i.e., Gmail). Smaller companies are exploring synergies to compete with larger market forces.

Over the next 2 years, more large corporations should adopt cloud computing as the data security and other concerns are met with solutions.

What do you think about cloud computing?

Is there a future in the cloud for MLSs and Associations?