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Cloud Computing: An Interview with Rackspace

October 12, 2016  - Technology & Software
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In today’s high-tech world, small to medium size businesses (SMBs) are often facing the same challenges and opportunities as large enterprise-level companies, but without the same budget. So how do SMBs stay competitive in this environment? One of the major advancements that levels the playing field has been the rise of cloud computing and how it has facilitated the adoption of new technologies.

Although cloud computing has been steadily increasing in both adoption and use, many business owners are still trying to figure out what exactly a transition to the cloud can do for their company. We recently sat down with Tom Grezek, Strategic Account Executive for Rackspace, to help shed some light on Cloud computing and its benefits for your business.

Can you describe what cloud computing is?
Cloud computing can be defined simply as accessing systems remotely. The scope at which a company chooses to put tools and resources in the cloud is one of the key components, but there are three critical functions that can transition to the cloud: storage, processing, and networking (connectivity). In today’s world it’s about delivering universal access to remote storage and network resources that are highly scalable. This scalability is one of the key benefits: scale to demand. This enables a pay-per-use model that may be scaled down or up based on the unique business needs that may change over time. This is in heavy contrast to the traditional approach that required a large up-front capital investment. 

How does cloud computer differ from traditional computing?
Ubiquitous access defines what cloud is today. If you look back at remote computing in the 1950’s, it typically meant computers were used as a timeshare resource. You could access computers and applications at a library or university and you paid for time to use a server. Today is an elaborate variation. We can access information, tools and resources from nearly any device, nearly anywhere in the world. It’s infinitely scalable. Additionally, cloud computing, and more specifically cloud storage, can save companies an enormous amount of money on real estate. In the past, larger companies needed substantial physical space for a physical server. Being remote, cloud storage removes that obstacle and diminishes costs associated with real estate. 

Is cloud computing something that sounds good but the real-world application doesn’t manifest real value?
Some tech solutions have a hype cycle: short-term excitement without long-term adoption. This occurs when significant value doesn’t exist. Conversely, cloud computing fundamentally changes how a company does business. Almost all industry sectors are technology based in the sense that the majority of the business processes, client interactions, and data access is all tech-based. Cloud solutions really change the way business adopt technologies to drive efficiencies. It’s also an extremely cost effective platform for small businesses due to the pay per use model.

Can you provide any background information to quantify the trend towards cloud computing?
There’s no doubt that implementation of cloud services is on the rise. A 2015 report by Synergy Research Group shows the $100 billion Cloud market growing at 28% annually. The levels of adoption currently vary by the component being adopted: storage, processing or networking. There is a high adoption for cloud storage, especially off-site back up (such as MS One Drive or Apple’s iCloud). For cloud processing/computing there is roughly 50% adoption that includes workload (application of service that produces a result or a function for the company). If we look at traditional computing, adoption is about 20%.

Immense efficiencies can be seen in the retail sector and finance industry. In the past companies in these niches would run batch processing (overnight running of information on tapes to reconcile information). Since the 1990’s we have seen a substantial shift to real-time processing due to the benefits of technology and the cloud. Businesses can have real-time feedback loops. An example is a business processing a client’s credit card. Within seconds the card is validated for the business and the consumer gets an immediate notice that the card was used. Data now comes in all the time versus in a batch-process.

Does cloud computer benefit only certain business sectors?
The benefits of cloud computing cross all sectors. The key is for a business owner to think creatively about their company. Consider the share-ride service Uber versus the traditional taxi service. The taxi industry started out as hailing a cab – you had to physically be in a specific location and wait – or calling a dispatcher and waiting 30-45 minutes for your cab to arrive. Then Uber comes onto the scene: born out of an online app with back-end processing; a tech-based service created with cloud-based solutions. Uber leverages local drivers with local customers, dramatically shortening the cycle to deliver a service. It’s faster and cheaper for the customer and it’s a more profitable model for the company. Uber had a low cost of entry: it didn’t need to build a fleet of vehicles, it utilizes local drivers that already have their own cars. The start-up risk for Uber and the drivers was minimal. The cost of acquiring a customer was also minimal. The online Uber app made adoption easy, marketing went viral via word of mouth. This made it very easy to get in front of an interested market as well as improve the consumer experience - it drove popularity at a low cost. The economics of Uber has a greater advantage over the traditional taxi model, and most taxis still haven’t adopted technology to compete effectively. This is just one example of the benefit of thinking creatively for your business.

Is there an ideal application or workload/process that works well in the cloud?
The answer to this really depends on the vision of an organization. Business owners, especially small businesses that are labor or service intense, may benefit substantially from cloud computing – they could have a complete game changer in their hands simply by tweaking their business model. Certain industries that have high regulation or governance will need to look at each business process to see where cloud implementation makes sense while balancing risk with process improvement and cost savings. A company, whether a Fortune 500 business or in start-up mode, should look creatively at its business model, adopt what makes sense and add additional cloud features over time. A company should investigate a cloud-solutions partner that offers not only tech-solutions, but strong consulting services to analyze the business process and architecture to assist in implementing cloud solutions.

How does a business start transitioning to the cloud?
This is usually easier for small businesses. Typically companies start by creating an inventory of business functions and documenting how technology is used to run each business process. Then, look at current applications (accounting systems, e-commerce solutions, etc.) and assess how going to the cloud can be scaled - the pay as you grow approach. A company also needs to evaluate costs, regulation and risk.

One of the easiest transition areas is SaaS – software delivered to the client as a service. In the past, software was locally delivered (via disc and update every 3 years). Now, with MS Office 365 (cloud-based software), companies always have the latest version. Businesses can look at productivity tools including email, Adobe, etc. and see if the SaaS model makes sense. It’s very easy to adopt – payment is typically a monthly fee which is generally much cheaper to pay as you go versus a full license and amortizing it over 3 years.

How are companies paying for cloud-based solutions?
This varies by business and their cash flow needs. However, many non-traditional finance companies will offer cost effective payment solutions, including 100% software financing and leasing with the ability to include maintenance, installation and other start-up expenses. Companies will need to evaluate what makes sense for their business.

How quickly can companies adopt cloud-computing solutions?
This varies dramatically based on the complexity of the business and the solutions a business wants to implement. The average steady state for small business and a simple project can be very fast – even the same day. For example, moving to cloud apps like MS Word, Excel and PowerPoint, and other SaaS solutions, can be almost immediate and centrally served out to PCs on the fly. For more sophisticated projects where there would be a structured engagement, it could take 6 months or more and that would include solution architects that vet out business processes in order to develop an architect solution. This would be followed by a needs analysis, program and code development, build out, and then testing to ensure the cloud solutions were in a steady state. This is a perfect example of how scalable projects can be to meet budgetary needs and rollout expectations. 

Do you have more questions about Cloud computing and how it can benefit your business long-term? Comment your questions below.

 

About our Guest Contributor:
Tom Grezek II, Strategic Account Executive at Rackspace
Rackspace (NYSE: RAX) helps companies step into the cloud without the complexity and cost of managing it on their own. Rackspace engineers deliver specialized expertise, easy-to-use tools, for leading technologies developed by AWS, Google, Microsoft, OpenStack, VMware and others. The company serves customers in 120 countries, including more than half of the FORTUNE 100. Rackspace was named a leader in the Gartner Magic Quadrant for Cloud-Enabled Managed Hosting. Learn more at www.rackspace.com or contact Tom Grezek at: 612.227.5557 or by email at tom.grezek@rackspace.com

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At Ascentium Capital we work with many businesses nationwide that have adopted cloud technologies to improve their business. Contact us today to learn about our financing programs that cover everything from SaaS software, to the equipment and technology you need to acquire to roll-out cloud services for your business.

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