To Cloud or Not to Cloud, That is the Question

By Joe Caserta, president Caserta Concepts

One of the biggest decisions any business will need to make this year is where to store the company’s data. Is renting space in the Cloud the answer, or is it best to keep data in-house by investing in the appropriate infrastructure?  So much has been written about the benefits of the Cloud, but going to the Cloud may or may not be right for every organization.

Choosing between on-premise, private Cloud or public Cloud is not a quick and easy decision. We must think about more than the basic physical and computing considerations. There are financials to consider, including the impact on your tax strategy as well as to your balance sheet.

The Cost Factor

Businesses that own their data computing and storage systems can account for them as a capital expense (CapEx), which makes it an asset on the books to be depreciated over time. This can be advantageous for some, but the cost involved to buy on-premise infrastructure can be prohibitive for startups or smaller companies.   Furthermore, once the investment is made to bring computing services in-house, a staff of employees or consultants must be retained to administer and support the hardware and software in place.

Cost consideration is one of the primary reasons many small to midsized businesses and startups turn to the cloud for their data computing and storage solutions.  Businesses can “spin up” new servers on the Cloud quickly without having to make a long-term financial commitment up front.  Storing data on the Cloud also creates an agile environment with a solution that can change as the business evolves. This also means that a business won’t be locked into a specific set of technologies nor require dedicated network and system administrators to run the systems.

When Time Matters

The incredible speed at which we can get servers up and running in the cloud is unprecedented.  Customers can be developing on provisioned servers with Cloud providers such as Amazon Web Services (AWS) in less than 30 minutes.  The cloud, in general, means abbreviated infrastructure implementation build-out times.  On the other hand, companies that opt for an internal compute and data storage solution could end up spending months going through bureaucratic due diligence, procurement, vendor selection, negotiation, legal review, hardware and software acquisition and licenses, data center space, and resources, internal administrator planning, installation and system configuration – all just to get a project started.

Flexibility

Unlike on-premise infrastructure, the Cloud offers flexibility in that there is no commitment or long-term vendor lock.  Companies can shop around for the best deals and switch quickly between data storage providers if it means getting a better rate.  Vendors such as Right Scale help companies manage their Cloud infrastructure and application portfolio to optimize governance, scalability, availability and cost.

The Cloud allows businesses to scale seamlessly, increasing (or decreasing) data storage and Cloud presence as needed. Plus, Cloud technology allows companies to benefit from changes in the technology impacting the latest storage solutions. Companies with internal data storage systems find themselves having to stay committed to what they currently have – and trying to work it out the best they can.

Counting Beans

Moving to the Cloud is not solely a technical decision; a cloud-based computing solution is typically shown on the corporate profit and loss (PnL) report as an operating expense (OpEx), which reduces your operating bottom line and can be a problem for larger, especially publicly traded, companies.  When looking at the PnL, the organization may be seen as less profitable due to carrying the recurring Cloud expense on their books.  Businesses with massive data storage usage may find that it makes sense to own their systems, weighing the financials of a large initial investment and depreciating it as an asset (CapEx), versus the ongoing expense involved in subscribing to a service plan on the Cloud.

Elastic Needs

Some companies choose the Cloud due to their Elastic computing needs. For example, an eCommerce operation may increase production capacity during a featured sale, and then decrease capacity once the sale is over.  Another use case for Elasticity is the need to spin-up a cluster of servers for a Big Data proof-of-concept (POC) or a special development project with a known lifespan.  Even though elastic computing for production systems require new technologies such as NoSQL databases to gracefully scale-down once computing power is no longer needed, it still may make more sense than having a large internal system that would be under-utilized much of the time.

The Hybrid Approach

When it comes to the OpEx vs. CapEx debate, some companies find themselves with a foot in both camps. Many businesses can benefit from a hybrid solution, using both the Cloud and internal/on-premise options for their computing and data storage needs. Not only does the hybrid solution optimize benefits of capital and operating expenses, it also addresses some of the major concerns of putting internal data outside the corporate firewall: security, privacy and compliance.  A practice becoming more common is to keep production systems on-premise or in a Private Cloud, and to keep all non-sensitive data in Development, Test & Quality Assurance (QA) on a Public Cloud to achieve elasticity, speed, and flexibility, and to ensure security where it counts.

How to Decide

If you simply listen to the hype you may think that going to the cloud is the only answer.  You may even be considering a mix of public, private and hybrid cloud options and focused on the pluses and minuses of that. But a closer look at your existing infrastructure investments  – your datacenter, your network, your applications – may change your thinking. There are business benefits and risks in going to the cloud, and it does not have to be an all or nothing solution.

About Caserta Concepts:

Caserta Concepts is a New York-based technology innovation consulting services firm that specializes in big data analytics, data interaction and visualization, data warehousing and business intelligence. With a worldwide network of professionals, Caserta Concepts collaborates with CIOs and their IT organizations to help them gain new business insights through a better understanding of their data. The company was founded by internationally recognized data warehouse authority and author, Joe Caserta, in 2001. For more information, please visit http://www.casertaconcepts.com Connect with Caserta Concepts on Twitter (@casertaconcepts) and LinkedIn at http://www.linkedin.com/company/caserta-concepts. You can also follow Joe Caserta on Twitter at @joe_caserta

About Joe Caserta, president Caserta Concepts:

Joe Caserta is a recognized data strategy consultant, writer and educator.  He is President of Caserta Concepts, a New York-based technology innovation consulting firm, founded in 2001. Joe is the co-author, with Ralph Kimball, of the industry best seller ‘The Data Warehouse ETL Toolkit’ (Wiley, 2004).

Joe has built world-class big data, data warehouse and business intelligence solutions for businesses and organizations in Finance, Education, Insurance, Healthcare, and eCommerce. He partners with CIOs to help their organizations reinvent their data strategy and implement practical, accessible solutions using proven and emerging technologies for data analytics and data visualization.

He is a recognized industry thought leader and serves on the advisory board of financial and technical institutions.  Joe’s work frequently appears in industry publications and he is a regular speaker at industry conferences and events.

Contact Joe at joe@casertaconcepts.com