What’s a Cloud?
Well, here in Ohio, we are all too familiar with them. Look in the sky, and you can see a cloud. They obscure the sun and sky, they rain or snow on us, they blow past us with the winds, when they come to the ground, they become fog. When you are in fog, you can’t see beyond a few yards all around you. If you are driving through fog, you do not see the danger that may be lurking around the next corner. You don’t want to know. It’s all too disconcerting. To me, clouds are bad.
So why do they call this new technology that has become such a buzz word in the IT business “The Cloud”? That’s easy, because, it works exactly the same way. The cloud is the technology that exists where you can put your IT services so that you don’t need to see or worry about how they function. But why would you want to stop worrying about where your data lives and who is touching it? You shouldn’t.
With the right arguments, clouds can be made to sound good in many ways to a business, and a few of those arguments are even valid. However, once again, the industry has managed to sell the world on the benefits of a cloud based computing environment where the goal is not intended to help the business save costs, but instead to help cloud provider gain steady revenue. Always remember, this IS the provider’s primary goal, the secondary goals are to actually maintain the data for the business client. Oh, the provider as a whole may care about you and your stuff, but only as long as you pay them to do so. However, not all of the individuals who work within the provider have strong ties to your business, this is just a job to them.
So how are business convinced the cloud is best for them. Well, for one, the Internet is a “False Prophet”. I am amazed at how things become fact by simply repeating it again and again in marketing and on the Internet. Any more, if you put enough into the marketing and advertisement, you can talk a mother into selling her kids to further your business. Just as I mentioned in my blog on managed service, I do not understand how people can make this pitch successfully to businesses. To me, it borders on being unethical. If I had a cloud service to sell, I would have a hard time truthfully justifying such business models. If, however, I just wanted you to pay me non-stop for services you could provide to your own business at lessor cost, and you were able to be talked into it through whatever trickery of hand I can muster, then by all means, I’d be there reaping the benefits.
I don’t roll like that.
The biggest argument businesses hear from the provider is about saving costs. Somehow, these providers “show” the client that the business is going to save so much money over time if they move to a cloud. But how can that possibly be?
One way, according to the provider, is that a company can let go personnel and have their duties replaced by the provider and this saves costs not having to pay them … this is BULL for two reasons.
First, as long as companies need to support a network infrastructure — and they will — then they will need an IT staff, or even just one IT person. So who’s salary are you giving up to go to a cloud provider? No ones. Being in a cloud solution is NOT the same as replacing your IT staff. You still have to pay a guy to support some part of your network, so as long as they are there, they can still keep a watchful eye on your data storage mechanisms alleviating the need for a cloud solution in the first place. And that employee is typically invested in the needs of the business as they are a part of it. They are not some outsider that just has a job to maintain something for a company for which they are not employed nor care much about.
Second, in addition to paying that IT person on your staff, you still have to pay the fees to the cloud provider. The fees you pay to the provider not only cover their hardware and licensing costs, but they have to pay their staff. You are still going to pay through the nose to have someone watching something.
Another cost argument is capital expenditures. It is said you won’t have to purchase your own server hardware any more. If you go to a cloud, that may partially be true, but you are still going to pay more to the provider for the very same reason I just gave. Your fees are going to cover their hardware and licensing costs to support your business. Sure, they may spread this expense out over several of their clients, purchasing one additional server to support you and some additional number of clients/businesses/users. But it’ll cost you.
So, regardless what the cloud provider sells you, moving to a cloud is going to drive up costs for your business over time. It is only because the fees for cloud based services are spread out over time in weekly, monthly, or even yearly costs, where the perception is that the company is saving money.
The next argument is that business users can work from the cloud allowing them to work from anywhere. It is true that business users can work autonomously from anywhere. I take advantage of providing service for my clients from remote locations all the time. Web based and thin client based networking does a fair job of allowing business users to conduct business in the same business applications even though they are not located in the same area. However, you don’t need a cloud to do that. Every business can provide a cloud to their users without utilizing a cloud provider.
So as an example, taking all these arguments into account, let’s look at one of the most popular cloud based services of this day, Hosted Exchange. Without a cloud, a business with 100 users can install their own Microsoft Exchange 2013 server with all licensing for about $14,000.00. Add $2600.00 for my time to roll it out, so we’ll say $16,600.00. I’ll even round up to an even $17,000.00. This server will continue to run pretty much as is over the next 3, 5, or even 7 years until it is time to realistically retire that hardware and email technology for the next current version. That cost may seem large up front. But, not counting your IT guy’s pay (don’t worry I’ll get back to this point), the maintenance costs can become very small for the remainder of the life of that technology until the next upgrade needs to happen.
If that same business chose to use any of the available Hosted Exchange providers at an average cost of $6.95 per month per user for 100 users for — say — 5 years (the average amount of time a business maintains their own Exchange server), that business will be billed a grand total of $41,700.00! That’s not even including extra services for support BlackBerry phones, since they do not always natively support connections to Exchange servers. So that number can go higher. Does this include Spam and Virus filtering? Maybe, but if not, you will be spending more for that service as well. This could put you well in to the $50,000.00 to $60,000.00 range for those 5 years alone… for 100 users!
Now, in regard to the $17,000.00 server solution, the Cloud guy will tell you that you need to take into account the IT person salary you have saved by not having the IT person. But, whether you have in-house, or Hosted Exchange, you have 100 users! Someone is going to train them, deploy them, support them. You are GOING to have an IT guy anyway, so you really are not saving his salary at all.
“Oh, but MikeyJ, what about the 10 user networks? I don’t need to have an IT guy on staff for our 10 users, correct? The cloud has to be the answer there, correct?” For those 10 user networks that truly don’t need and IT guy on staff, they do have ME! And I will not cost that company an entire yearly salary. I can install an entire Windows Small Business 2011 Server for $14,000.00, and that includes the server hardware, File and Print and licensing, Exchange and licensing, and all bells and whistles and perks and fixings, and even includes my labor to do so, and they have an entire cohesive network infrastructure with a server will last them that same 5 years. Even if that 10 user business used Hosted Exchange that may only cost them $4170.00 in the same 5 years, they still need the rest of their network. They may not have an onsite Exchange server, but they will still either have some kind of server on site to support their infrastructure, or they have to purchase additional “cloud” based services to support those remaining needs. So in the long run, they will still spend more on cloud computing even with the network of only 10 users.
So, don’t be fooled, it is far CHEAPER for the business in the long run to support their own systems. It always is and always has been and probably will continue to be as long as the business has to support some networking infrastructure.
Beyond the argument of cost, I also have security issues about the placement of business intellectual property in the cloud. Would you take your file server, database server, or Exchange email server to a stranger’s place of business and leave it there, stating “Here is our important production server. It has lots of company secrets on it. Here’s the Administrator password for it. We’ll just access this server remotely. Please keep it clean for us. Please back it up regularly. Please make sure you replace failing or failed components. And for God’s sake, PLEASE don’t look at any files on it.”?
I would not. You have NO idea who is holding those Administrator keys, who is using them to gain whatever information they may use in whatever way in the future. Now many cloud based systems use forms of encryption to prevent this type of tampering even though the data is on their systems, and only those remote business users accessing the system have the right credentials to read it, but very few providers carry out this level of protection. Even then, that doesn’t protect you against cloud provider failures in other ways. They can still lose data even if they can’t read it.
At NMJ Technology LLC, it is my job to point out the realities of the impact of the IT providers on your business. My views may disagree with the industry as a whole because the true drivers of the IT industry are indeed these providers whose intent is to siphon revenue from the business who are told they must do it this way. In your business, there are always alternatives that will work for you, and not your providers.
Call for a free evaluation today at 330-283-6902 or email us at firstname.lastname@example.org.