Summary: Cloud computing offers considerable advantages to businesses, but also comes with it’s fair share of risks. While the pros and cons vary by company, it’s important that you understand both sides before moving towards the cloud. Here are 5 of the biggest advantages, and 5 potential problems associated with cloud computing.

Despite its growth in the business, cloud computing is still surrounded by debate.

Some believe it saves money. Others believe it’s more expensive.

Some believe it adds agility. Others believe it locks you down.

Some believe it’s more secure. Others believe it puts you at risk.

I could go on.

So, which side is right? Actually…both sides.

Yes, the cloud offers some great business advantages. But it also comes with its own set of potential problems. While advantages and problems vary by company, it’s important that any business considering the cloud understand both sides.

What does the cloud offer, and what potential problems should you watch for?

Today, let’s address that topic. Here are 5 advantages, and 5 potential problems of the cloud.

Advantages

1. Reduces spending on infrastructure

“With typical IT organizations spending over 30% of their budget on infrastructure (primarily data centers and data networks), shifting some or all of this work to the cloud can save organizations anywhere from 10-20% of their annual IT budget, savings that can either be returned to the firm or reinvested in growth and innovation,” explains KPMG LLP in its recent report, “Cloud Economics: Making the Business Case for Cloud.”

“This cloud run-rate economic advantage comes from two primary cost drivers: higher utilization rates as a result of a significant drop in “capacity hoarding” and lower unit costs from the increased scale, newer technologies, best practices, and improved operational efficiency of the cloud providers. The cost of ownership gap of 30 to 40% between traditional IT and public cloud services is predicted to continue, if not widen, over the next few years, driving growth in the market for high-quality and secure externally-hosted cloud capacity at over 40% per year.”

Besides the reduced spending on infrastructure, time savings also comes into play. Does your staff spend time maintaining/updating/installing new hardware? With the cloud, they can focus on other mission-critical tasks.

2. Provides flexibility

In the past, your software selections depended largely on your database and enterprise systems. Your choice of database, OS, and enterprise application software limited your software selection.

The cloud removes many of these limitations. Most cloud services provide ways to integrate with other services–letting you focus on the software that best fits your needs.

“We took a hybrid approach to migration and selected different vendors and solutions for each business function,” says Bob Shirilla, Owner of Simply Custom Bags. “This allowed us to evaluate each solution based on the specific value it provides to our business. For example, we selected an order management system that was already PCI compliant.”

3. Scales up (or down) as necessary

Before the cloud, what happened when you needed extra servers? What happened if you needed more storage capacity? You bought and installed new hardware–a process that might take hours or days. With the cloud, you can scale up in minutes.

“Businesses can start with modest storage and computing resources, and easily scale as their needs evolve,” says Jim Garrity, Interim CEO at Xtium. “That way, you decide how much infrastructure you invest in the beginning, and at the same time, have a sustainable long-term solution in place.”

4. Makes your applications more accessible

In the past, the applications you used in the office weren’t accessible from anywhere else…unless you carried a laptop around with you. That’s all changing. We’re coming to expect that applications work on any device and be accessible from any location. Cloud computing is the driving force behind this change.

“One of the major advantages of the cloud is the ready availability of resources – even outside of an organization’s walls,” says Garrity. “This can help your business run remotely or empower employees who need to travel to off-site locations.”

5. Offers immediate time-to-value

Speed is one of the biggest advantages to the cloud. In the past, deploying a new application software system might take months. Now, you can get up and running in minutes. This advantage can revolutionize business–offering agility to both large and small businesses.

“The biggest benefit of cloud computing for a business is the agility gained through an immediate time-to-value,” says Mike Matchett, Sr. Analyst and Consultant at Taneja Group. “With a few minutes and credit card, anyone can provision a truly impressive and fully capable IT infrastructure, a full stack development platform, or even a complete software service.”

Potential problems

Sure, those advantages to the cloud sound great. Who doesn’t want time savings, scalability, and flexibility? But, be careful. Here are a few potential problems to monitor before moving towards the cloud.

1. Is your architecture “cloud ready?”

The sad truth that many businesses face: The cloud requires modern architecture, but they’re tied to outdated systems. They’re stuck with applications built for a different era. If they want to move those applications to the cloud, they must overhaul their architecture.

“Not all architectures are ‘cloud ready,’” says Ivo Vachkov, a DevOps Engineer at Xi Group, Ltd. “In fact, many “Enterprise Architecture” are not. Decades worth of production code will not benefit strongly from the cloud. New paradigms emerge and new technologies, but the reality is that many businesses will still run software written in the 90s that may not be ready for the cloud. Attempted migrations of legacy systems are always costly and disruptive … and in some cases impossible.”

2. Will your cloud vendor lock you down?

Here are a few questions to ask before moving to a cloud host or SaaS vendor: What happens if you need to move away from the cloud vendor? What happens if they go out of business? Can you move your data and applications? Some vendors make it purposely difficult for you to move away from them–a problem you don’t want to learn about after you sign up.

“Beware of the costs of and capabilities for migration,” says Matchett. “It’s all too easy to enthusiastically opt for cloud computing, but then get locked-in by a single cloud vendor.”

3. How do you keep costs in check?

While the cloud can save money, costs can just as easily spiral out of control. The long-term operating expenses (OPEX) of the cloud may surpass the initial capital expense (CAPEX) savings you saw from moving to the cloud.

Additionally, you must keep a close watch on what you’re paying for. It’s easy to sign up for a cloud service. It’s hard to keep track of which cloud services are still in use, and which aren’t.

“In many environments cloud usage goes out of control at some point,” says Vachkov. “Nobody tracks what *NEEDS* to be running and the bill grows (we’ve seen clusters of 250 instances doing nothing for months, just because the people that setup those left and nobody will take the responsibility to pull the plug on them). Lack of operational preparedness in developers leads to this. Test systems slowly become production systems, different deployment paths emerge resulting in an untangleable web of dependencies and operational nightmare.”

4. Will performance suffer?

Many companies focus so much on cost, availability, uptime, etc…, they forget about application performance. They don’t factor in the physical server location, or data transfer speed into their decision.

Why is that important? The farther away a server is from the users, the slower the application will perform. For small applications, this performance decrease is hardly noticeable.

But, the effect on data intensive applications will be dramatic. For instance, suppose you have an in-house business application that pulls hundreds of thousands of database records. That application’s performance will suffer dramatically if moved to a server halfway across the country.

“What is frequently forgotten is performance, especially important when moving business critical applications to new networks,” says Debra Wilkins, PR Manager at iTrinegy. “Even though they will be well secured and available through redundancy, if response times for the end-users is poor, it’s as good as useless. The execution of performance may be part of the cloud providers package but never forget that the responsibility remains firmly with the business, not the cloud provider.”

“So I would stress that before a company embarks upon a cloud move that they understand the performance experienced from their end-users, they need to gain useful metrics prior to moving so that when the SLA is written up its not an arbitrary figure set, its meaningful and the customer has greater control. After all, there are no independent metrics from the cloud’s perspective and performance problems are very expensive to investigate and fix. My recommendation – do due diligence before apps are deployed to the cloud.”

5. Legal Considerations

According to Scott Giordano, Esq., corporate technology counsel at Exterro, “There are many favorable reasons why corporations are moving to a “cloud-first” strategy – cost, efficiency, scalability. In fact, Exterro, offers its complete e-discovery software suite in a fully hosted, SaaS model. When considering cloud computing options, however, IT must understand the legal implications that accompany any storage or records management strategy. To do so, it’s important to ask the following questions during the evaluation process:

1. How accessible is the data should it be called upon during the course of litigation or government investigations?
2. In what country will the data stored?
3. If stored in a foreign country, what types of security and data privacy compliance protocols does the cloud service provider offer?
4. Does the provider offer the ability to dictate the location of where data is stored?

The answers to these questions are extremely important for multi-national organizations who are subject to frequent litigation or government investigations. The United States has very liberal laws around e-discovery and access to employee data, while foreign countries, like the United Kingdom, have very strict data privacy laws. In the midst of litigation, companies can easily be sanctioned for non-compliance with e-discovery requests made in the U.S. simply because foreign laws prevent any collection or access to an employee’s private data. To mitigate this risk, it’s imperative to include members of the legal and compliance departments in the evaluation process.”

While these are all great questions, here’s another question to ask: What happens if a government agency requests confidential user data? Will your cloud host turn it over? The legal side of cloud computing is tricky, and varies from company to company.

So, what do you think? Is there anything you would add to this list? If so, please share your thoughts in the comments.