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1 Midsize Organization Busts 5 Cloud Computing Myths

Anthony Hill, CIO of Golden Gate University, debunks the conventional wisdom on cloud computing security, capital expenses, risk management, switching vendors, and service level agreements.

Fredric Paul

At the recent Cloud Summit in Silicon Valley, I got the chance to hear Anthony Hill, chief information officer of San Francisco's Golden Gate University, talk about the advantages of cloud computing for midsize companies.

Hill has moved the school into a largely cloud-based infrastructure, and his real-world experiences debunked some of the conventional wisdom about the issues facing companies considering a move to cloud computing. So I've taken his points and used them to bust five common myths about cloud computing.

Myth 1: Security Is A Big Cloud Concern
Many people are concerned about security in cloud computing, but not Hill. "I'm a lot more comfortable with my data in an Oracle data center than I am with my data in my little data center," he said. "There's no way a midmarket organization could produce that level of security and that level of redundancy" on its own. With local data centers, Hill added, "It's a perception of control. If can walk over and touch the box, does that make it more secure? Our answer is 'no.' "

Hill added that most of the significant data security problems he's heard about have been due to laptop losses and other such issues, not data center breaches. And in those cases, it really doesn't matter whether your data is primarily stored in the cloud or locally.

Myth 2: Avoiding Capital Expenses Is Always A Good Thing
But Hill also challenged one oft-cited advantage of cloud computing, the lack of capital expenditures. In the real world, he pointed out, it's "often an advantage to bury IT costs in the capital budget and keep it off the P & L for a couple years." He said the desirability of doing that varied case by case, but if the overall costs are similar, it's not automatically positive to avoid any of it going into the company's capital budget instead of its operating budget.

Myth 3: Technical Risks Are All You Have To Worry About
Though Hill says that all of "ilities" -- reliability, availability, etc. -- have increased since Golden Gate University moved into the cloud, the transition has led to a new kind of risk. You "offload the technology management risk," he said, but because you are entirely dependent on the cloud companies to run your business, you take on a new liability: Vendor risk.

If the companies you rely on experience problems or go out of business, you could be vulnerable to business disruptions for completely nontechnical reasons. That's a new kind of concern for most IT organizations, and it requires a new kind of risk management. The question, Hill said, is how much more insurance do we need beyond working with large-scale data centers? His answer? "We can't afford another level of insurance."

Myth 4: Switching Cloud Vendors Is A Snap
Despite the service model and avoiding the capital costs of large upfront purchases, the switching costs for cloud computing are still "extremely high," Hill said. Moving from one cloud vendor to another involves "costly, expensive, disruptive change. The reality is I can't just switch vendors."

Myth 5: Tight SLAs Are The Key To Good Cloud Vendor Relations
The key to a successful cloud computing business relationship, Hill said, is to negotiate Service Level Agreements (SLAs) that allow for termination based on something vague like customer satisfaction, not just breach of contract for not meeting specific metrics. According to Hill, locking in customers with restrictive contracts doesn't do anyone any favors. His advice for how vendors should treat customers: "Keep them happy, and you'll keep them."

Myth 6: Integration Is Difficult
OK, so this myth appears to be true. "That is the last frontier," Hill said. "We're our own integration broker," but buying integration services from a vendor would be the next logical step.

See more columns by Fredric Paul

Fredric Paul is publisher/editor-in-chief of bMighty.com and SmallBizResource.com.

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