March 01, 2013
Cloud
Sally Kelly
This is the first of two articles in this series.
The Rolling Stones famously sang the anthemic, “Get Off My Cloud.” The tune has definitely changed and the refrain is now about getting on my cloud, particularly if your cloud is offering software as a service (SaaS).
Yes, this article is about the cloud, but it is not another one about the benefits and value associated with cloud computing. We have gone well beyond that. There is general agreement, and now market demand, which dictates that if you are a software provider, migration to the cloud must be part of your business and product strategy. Worldwide SaaS revenue was forecasted to reach $14.5 billion in 2012, a 17.9 percent increase from 2011 revenue of $12.3 billion, according to Gartner, Inc. SaaS-based delivery will experience healthy growth through 2015, when worldwide revenue is projected to reach $22.1 billion.
Soon, software will become a commodity, provisioned much like a dial tone or electricity; all you have to do is plug in. That said, all of us know from our relationship with the phone company, that not all providers are created equal. While the software itself will become a commodity, what will distinguish it in the marketplace are the services associated with it: its reliability, its ability to address security and compliance-related concerns, its ability to innovate, and its relationship to its clients.
This article will offer a broad look at the top five considerations for software’s migration to the cloud and how it will impact vendors; the definition of cloud will remain generic and will not focus on distinctions between the public, private or hybrid cloud environments.
No. 5: What is it exactly?
There are three components of cloud: IaaS, infrastructure as a service; PaaS, platform as a service, and SaaS, software as a service. The diagram on this page illustrates the services provided by each component.
No. 4: The Transformation
Traditionally, companies bought software and then installed and maintained these applications on their own machines. This model has given way to one where companies buy subscriptions or use transaction-based pricing to access services over the Internet from software companies that now host the applications. SalesForce.com and similar applications come to mind where one can go to a website, enter a credit card number and begin using the software in minutes.
The real significance of the SaaS movement is that it fundamentally changes the vendor-customer relationship. SaaS shifts the responsibility of successfully deploying and maintaining software applications from the customer to the vendor. This moves the burden to the vendor to ensure the success of the application deployment and the upfront financial risk of developing the application.
No. 3: The Impact
As the adoption of the cloud model transforms the relationship between vendor and customer, so too will it transform the operations of companies that embrace the move to cloud.
Provided on the following page are seven areas which will require retooling to accommodate the shift to the cloud.
Seven areas which will require retooling to accommodate the shift:
- Rearchitecting applications for the cloud
- Redesigning go to market strategies and ongoing operations
- Adopting the right pricing model
- Revising revenue recognition models
- Seeking transformation funding
- Reorienting staff to the new service delivery model
- Legal support to minimize contractual risk
The move to the cloud will touch every major area of your business and require additional funding to achieve the transformation. There is good news on this front; venture and other multistage investment firms have determined that they like the hospitality market and have been infusing the market with capital over the past several years.
No. 2: Choosing a Hosting Provider
Finding a provider that can meet the current and future needs of your company is critical to the success of your transformation initiative.
No. 1: Security and Compliance
PCI, ADA and the rest of the alphabet soup of security and compliance-related concerns that impact the hospitality industry will influence your choice of provider, as well. The chosen provider must demonstrate a proven ability to maintain a secure/compliant environment and allow for third-party verification audits.
The steps above are not exhaustive, rather they are the first directional steps needed when starting your journey to the cloud.
Sally Kelly is a principal with KConsult.
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No. 5: What is it exactly?
In simple terms the services provided by the three cloud components break down this way:
IaaS
Infrastructure
Servers • Storage • Network
PaaS
Platform
OS & Application Stack
Infrastructure
Servers • Storage • Network
SaaS
Applications
Packaged Software
Platform
OS & Application Stack
Infrastructure
Servers • Storage • Network
No. 2: Choosing a Hosting Provider
When choosing a hosting provider make the following evaluations:
Service uptime guarantees: What is the appropriate level of uptime for you and your clients?
Performance/latency: Application performance is nearly as critical as uptime, what types of servers, and bandwidth is the provider offering? What is your application’s tolerance for latency?
Failover and disaster recovery: Is the provider able to deliver a redundant system in different locations that will ensure application and data continuity? Is there a well-defined and clearly articulated disaster recovery plan that will allow them to respond effectively and quickly in the event of an outage?
Bursting: Increased periodic usage; how is the service provisioned and priced?
Cost: Check that all fees (e.g. one-time fees, monthly fees, usage fees, overage fees, etc.) are clearly spelled out in the contract.
References and accreditations: Get references from existing clients; look for industry accreditations.