Cloud Computing level playing field for SMBs

A great deal is being written about Cloud Computing, with most attention, focusing on how large corporations and government can benefit from Cloud Computing. But what of Small to Medium Size Businesses (SMBs)? And what of ASEAN SMBs?

  • 1) Cloud computing levels play field for ASEAN SMBs (Source)

Damian Crotty says, quote: “According to Springboard Research, cloud adoption has accelerated sharply across all countries in the Asia Pacific excluding Japan (APEJ). The same report also revealed that small and medium-sized businesses (SMBs) are the most aggressive adopters, with 54% currently using or actively planning to adopt cloud-based solutions.

There are many reasons why the cloud is most attractive to SMBs. In addition to reduced costs of ownership, taking enterprise services to the cloud allows SMBs to eliminate the need to maintain in-house expertise to manage these applications. The flexibility that public cloud offers is also an appealing proposition for SMBs. By engaging a cloud service provider, SMBs have access to resources only when they need it, eliminating the need to maintain expensive equipment on-premise.

More importantly, the cloud significantly reduces geographical barriers related to application provision. A company in Indonesia can easily leverage cloud services made available from a server in Singapore. This, in reality, extends the reach of cloud services across the region, leveling the field for companies, regardless of where they are physically located.”

  • 2) Varying adoption levels

Across Southeast Asia, a majority of SMBs are comfortable using cloud services in conjunction with their existing applications and services. Software-as-a-Service is the most common form of cloud adoption. Additionally, a small but growing number of SMBs are also using the cloud to replace their on-premise infrastructure.

“Across Southeast Asia, a majority of SMBs are comfortable using cloud services in conjunction with their existing applications and services.”

Key applications running in the cloud today include email, customer relationship management (CRM) systems, enterprise resource planning (ERP) systems, database applications and business intelligence systems. This is expected to gain speed over the next four to eight quarters, as more companies begin to warm up to the cloud concept.

Smaller SMBs, with less complex infrastructure tend to be more open to cloud services. Their relatively lower operational risk makes it easier for management to take a step into the cloud. Security also remains a key concern for ASEAN SMBs. The larger the number of users, the more critical it is to keep data secure and resilient.

  • 3) Asia Pacific Region continues to progress and accelerate business transformation

VMware, Inc., the global leader in virtualization and cloud infrastructure, recently announced the results of the VMware Cloud Index which shows that cloud adoption in the Asia Pacific Region continues to progress and accelerate business transformation. Survey data shows that emerging markets, including China, India, Indonesia, Malaysia, Thailand, Vietnam and the Philippines, are increasing their adoption of cloud computing (Source).

  • 4) What is Cloud Computing?

Cloud computing is a phrase used to describe a variety of computing concepts that involve a large number of computers connected through a real-time communication network such as the Internet.[1] In science, cloud computing is a synonym for distributed computing over a network, and means the ability to run a program or application on many connected computers at the same time.

The phrase is often used in reference to network-based services, which appear to be provided by real server hardware, and are in fact served up by virtual hardware, simulated by software running on one or more real machines. Such virtual servers do not physically exist and can therefore be moved around and scaled up or down on the fly without affecting the end user, somewhat like a cloud.

In common usage, the term “the cloud” is essentially a metaphor for the Internet.[2] Marketers have further popularized the phrase “in the cloud” to refer to software, platforms and infrastructure that are sold “as a service”, i.e. remotely through the Internet. Typically, the seller has actual energy-consuming servers which host products and services from a remote location, so end-users don’t have to; they can simply log on to the network without installing anything. The major models of cloud computing service are known as software as a service, platform as a service, and infrastructure as a service. These cloud services may be offered in a public, private or hybrid network.[3] Google, Amazon, Salesforce, and Microsoft Azure are some well-known cloud vendors.

The development of the Internet from being document centric via semantic data towards more and more services was described as “dynamic web”.[22] This contribution focused in particular in the need for better meta-data able to describe not only implementation details but also conceptual details of model-based applications.

The present availability of high-capacity networks, low-cost computers and storage devices as well as the widespread adoption of hardware virtualization, service-oriented architecture, autonomic, and utility computing have led to a growth in cloud computing.[23][24][25]

  • 5) Cloud as a Service

VMware, Inc also said a majority of the respondents surveyed from emerging markets believe that cloud or ‘as-a-service’ offerings are a top priority for their organization, and can significantly impact business transformation – with respondents putting cloud or “as-a-service” offerings ahead of revenue growth and market expansion, cost-cutting, or improving margins.

The Manila Times on February 2 2014 reported (Source): “In the Philippines and Thailand, 92 percent of the respondents surveyed believe their IT organization must act quickly and cost effectively provide cloud services to the business or risk getting marginalized. This is reflected in the areas of storage and networking, where fast provisioning and zero downtime is a top priority.

“Business demands are driving the need for the evolution of IT. Many businesses are now embracing cloud computing, and are realizing the benefits it offers to business operations,” said Emmanuel Portugal, Country Manager for VMware Philippines.

“As businesses deal with rising customer expectations, while improving customer satisfaction levels as important growth drivers, IT efficiency and responsiveness is critical, or organizations may risk falling behind competitors,” added Portugal.

Additionally, the study showed that flexibility and disaster recovery are important for hybrid cloud in APAC

Another need for companies today is to quickly respond to the requirements of the business. A shift to Infrastructure-as-a-Service (IaaS) enables IT operators and distributed application developers to quickly provide new infrastructure without waiting to purchase, ship and install physical servers within their own data center.

However, it may take time and resources for organizations to gain the expertise, resources and investment to deploy and manage cloud infrastructure.

“Particularly in the Philippines, where business operations are often interrupted by unpredictable weather conditions, the need for flexibility and disaster recovery has led to companies exploring hybrid cloud options,” explained Portugal.

Around 35 percent of senior IT and business decision-makers surveyed in the Philippines, South Korea, Australia, and India said their companies will invest more time, money and skills around hybrid clouds in 2013 and 2014.

  • 6) Mature vs. emerging markets

The survey noted that mature and emerging APAC markets are aligned when it comes to a software-defined approach to IT, yet the markets differ in their perception of cloud’s relevance to their organizations.

Respondents in mature APAC markets (27 percent) say that cloud is highly relevant to their organization, while the majority view in emerging markets (31 percent) sees cloud or ‘as-a-service’ approaches as a top priority.

Roughly 65 percent of the surveyed respondents agreed that if they do not improve their knowledge of cloud computing and the software-defined data center, IT operators may risk falling behind their peers professionally and this view is true with 55 percent in the mature markets.

“In this new era of cloud computing, organizations need to take a holistic approach to planning, building and operating their IT infrastructure,” said Portugal. “VMware believes the software-defined data center will enable organizations to build infrastructure that is radically simpler and more efficient, while delivering agility and flexibility to support business growth,” said Portugal.

  • 7) Challenge for Cloud Computing

Cloud computing presents a number of management challenges. Companies using public clouds do not have ownership of the equipment hosting the cloud environment, and because the environment is not contained within their own networks, public cloud customers don’t have full visibility or control.[68] Users of public cloud services must also integrate with an architecture defined by the cloud provider, using its specific parameters for working with cloud components. Integration includes tying into the cloud APIs for configuring IP addresses, subnets, firewalls and data service functions for storage. Because control of these functions is based on the cloud provider’s infrastructure and services, public cloud users must integrate with the cloud infrastructure management.[69]

Capacity management is a challenge for both public and private cloud environments because end users have the ability to deploy applications using self-service portals. Applications of all sizes may appear in the environment, consume an unpredictable amount of resources, then disappear at any time.[70]

Chargeback—or, pricing resource use on a granular basis—is a challenge for both public and private cloud environments.[71] Chargeback is a challenge for public cloud service providers because they must price their services competitively while still creating profit.[70] Users of public cloud services may find chargeback challenging because it is difficult for IT groups to assess actual resource costs on a granular basis due to overlapping resources within an organization that may be paid for by an individual business unit, such as electrical power.[71] For private cloud operators, chargeback is fairly straightforward, but the challenge lies in guessing how to allocate resources as closely as possible to actual resource usage to achieve the greatest operational efficiency. Exceeding budgets can be a risk.[70]

Hybrid cloud environments, which combine public and private cloud services, sometimes with traditional infrastructure elements, present their own set of management challenges. These include security concerns if sensitive data lands on public cloud servers, budget concerns around overuse of storage or bandwidth and proliferation of mismanaged images.[72] Managing the information flow in a hybrid cloud environment is also a significant challenge. On-premises clouds must share information with applications hosted off-premises by public cloud providers, and this information may change constantly.[73] Hybrid cloud environments also typically include a complex mix of policies, permissions and limits that must be managed consistently across both public and private clouds.[73]

Key applications running in the cloud today include email, customer relationship management (CRM) systems, enterprise resource planning (ERP) systems, database applications and business intelligence systems. This is expected to gain speed over the next four to eight quarters, as more companies begin to warm up to the cloud concept.

However, the level of adoption within each country may differ greatly, reflecting varying levels of comfort and among SMBs with the new paradigm. Several factors contribute to this.

1. Connectivity and reliability

The reliability and availability of services are important issues with most SMBs. Because they rely on service providers for key business functions such as CRM and ERP, the availability of reliable Internet connection and bandwidth do affect cloud adoption across ASEAN countries.

Another factor is the level of technology used in the businesses. In some Southeast Asian countries, SMBs either do not have a clear understanding of how cloud technology can benefit them or do not use the computer and Internet much in their business activities. There is thus less impetus for these companies to consider the cloud.

2. Availability of trusted services

One of the most fundamental factors affecting cloud adoption is the quality of service providers. Cloud services for SMB from local providers in Asia today remains largely limited, with many of the service providers not possessing a definitive strategy for their cloud offerings — let alone an SMB-focused services portfolio’s aimed at addressing the unique needs of this market segment.

Examples of this are cloud product offerings that are too generic, such as compute or storage services which do not address any specific pain point for SMB customers other than infrastructure acquisition and management. SMBs require specific, point solutions that enable them to do more with less, shift capex to opex and be truly liberated by IT.

“Singapore has offered pay-per-use cloud computing services to SMBs since 2008, covering on-demand applications.”

Additionally, the presence of trusted service providers, who understands where companies are in the adoption curve, plays an important role in cloud adoption within a country. In more advanced markets,

SMBs are becoming more aware of the need for comprehensive SLAs with cloud service providers. This includes the ability to help SMB’s address issues such as work force mobility, on-demand access to data and tools as well as regulatory compliance. In contrast, SMBs in emerging markets may simply require education on this new paradigm to increase its market acceptance and, in turn, adoption.

3. Government support and infrastructure

Finally, government support and initiatives do play a part in influencing cloud adoption among Asian SMBs. For instance, Singapore has offered pay-per-use cloud computing services to SMBs since 2008, covering on-demand applications, such as CRM, e-commerce, ERP and business management.

Malaysia is also working with industry players to develop a national cloud computing platform. These initiatives set the tone for cloud adoption among businesses and ensure the right infrastructure to support the provision and adoption of cloud services are in place.

4. Organizational culture

Cloud computing do require a new way of working and will require an organizational change. For most companies, building familiarity and getting the buy-in from users represent the first step in their cloud journey. This is simpler for an organization with 20 users compared to one with 150.

Smaller SMBs, with less complex infrastructure tend to be more open to cloud services. Their relatively lower operational risk makes it easier for management to take a step into the cloud. Security also remains a key concern for ASEAN SMBs. The larger the number of users, the more critical it is to keep data secure and resilient.

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