By Dr Aydin Kurt-Elli, Lumison CEO

Despite the huge growth in data and the expansion in data warehousing, the global number of servers that run in a datacentre actually stands at only 15%. This suggests that most companies still have a server tucked away under a desk or in the corner of an office.

Conversely, you can’t read a newsletter, IT technology press opinion piece, or attend a conference or hosting seminar without being surrounded by a new breed of gurus promoting this year’s next big thing: Cloud Computing.

So what does this mean to Small Businesses?

Let's start at the beginning. Despite all the hype, a clear definition of cloud computing seems to be elusive. The technical definition of Cloud Computing is the application of a variety of Internet and server automation technologies to support the deployment of scalable, virtualised computing capacity in an elastic manner (usually considered “On-Demand”).

In plainer English, this means outsourcing your IT headaches remotely in the 'cloud'. This can be for your software needs (such as Salesforce.com) or your hardware, (otherwise known as infrastructure-as-a-service) — getting someone else to look after all the things that you need from your own server: your email exchange, all your files, and the security for your data (firewalls). The key benefit of outsourcing to a managed hosting company is that you can scale up or down as and when you need it. Is your sales cycle geared up for Christmas? Then scale up your IT needs in autumn. Company going through a rough patch? Then there's no need to invest in new hardware.

So, given the benefits that having a managed hosting solution brings what are the pitfalls?

Will the public cloud save me money?

The public cloud is essentially unmanaged hosting at its simplest, most atomic level. For SMEs with highly technical end users with short-term needs such as development or pilot projects, this model is highly flexible, and provides the right balance of self management, flexibility, and lack of any commercial commitment that provides a convenient and rapid deployment.

But for a less technical audience, it is necessary to buy in a support layer to help provision, configure and deploy applications on any hosted environment, whether it is on a cloud or traditional server hosting model. As such, an on-demand hosting environment still requires a substantially skilled technical support team to provision and enable the business need of the end client.

So, despite the excitement of the cost savings cloud computing has apparently made available to technology users, there has been a proliferation in the number of consultants and support specialists who will then charge a management fee for providing similar support services that have come as standard from any self-respecting managed hosting provider.

As you can imagine, this means that essentially a large part of the cost of supporting a hosted application then appears “off balance sheet” when considering the cost comparison of cloud and managed hosting.

Is the public cloud safe and reliable?
In a similar vein to the questions around credit card security when using e-commerce web sites back in the late 1990’s and early “Noughties”, there is some pretty scary commentary doing the rounds about the potential security risks associated with the public cloud.

These security concerns are real, especially when aligned with performance expectations. Most public clouds rely on software-based network virtualisation, which means you are relying on complicated operating systems to act as the switch, with the added performance and security overhead that comes with running a “network on software” platform.

The security considerations also affect the options for transparency and third party audit. It is common for both Corporate and SME businesses to engage third party audit to ensure technology and operational compliance. This can be for their own, or their customers’ legal & regulatory needs. Few public cloud operators support such audits and provide the relevant audit documentation on behalf of their clients. Until such opacity is eliminated, this means that public cloud operators will not be able to support the compliance needs of particular business users.

The reality is that cloud computing relies on two key (but fallable) platforms — technology, and worse yet, humans to run it. It is wise to take the pragmatic view that things will go wrong with technology, so the question is what service level can you expect to support you in the event of a problem, and what commercial SLA underpins that promise? In most large scale cloud offerings, the SLAs and commercial rebates are not worth the invoice they are digitally printed on.

What’s the alternative to the public cloud?

The alternative to “Public Cloud” hosting is “Private Cloud”, where virtualisation is still applied but using “traditional”, secure network security models, with the option of deploying the same virtual systems but in a dedicated hardware or datacentre environment.

With private cloud hosting, you can receive the best of breed switching in the datacentre to ensure high performance, secure VLANs on a per-customer basis, and Virtual Private Networks (VPNs) to allow secure, safe connectivity to and from existing corporate networks.

It enables businesses to feel the benefits of cloud while maintaining a greater level of control over their data. Whatever the realities of cloud security, being able to demonstrate proper data governance remains incumbent upon all responsible businesses.

In short, the private cloud provides the best balance between the need for managed, secure, transparent, auditable, high performance infrastructure with a Service Level Agreement to match, and the price/performance delivered through virtualised IT.
For organisations with in-house IT, the Private Cloud frees up the valuable resource in a business who have all the specific knowledge of how everything it put together and allow them to concentrate on value-added IT management at the application layer, which is ill-suited to an outsourced model.

That said, the private cloud model is of no value to someone wanting to quickly deploy a bit of streaming video content for a 2-week advertising campaign.

However if you are looking to virtualise your business-critical IT, outsource IT “hygiene factors”, and benefit from the security and efficiency of datacentre hosting, then it is worth engaging in the conversation with a private cloud provider.

At Lumison, we believe that the future of managed hosting will include a healthy mixture of datacentre colocation, managed dedicated hosting, and private cloud — essentially managed hosting using virtualisation as an enabler.

The public cloud excitement continues to stimulate debate, but for core IT functions, the business drivers for managed hosting remain the same as they ever were - quality, performance, and value for money.