I have seen numerous times businesses try to compare hosted services to on premise based on a price or cost standpoint. In my viewpoint, the comparison must be done not on a dollar amount in a spreadsheet, but on the value of the service to the business. Whether it is on premise or hosted or in a cloud is more a business model discussion, though with lots of considerations such as security, service levels, and recoverability.
But how do you start to get a handle on the value of the service? I have attempted here to at least outline some of the items you might consider:
- Focus IT Staff on Mission Critical Line of Business Apps
- I have heard repeatedly from customers that their IT staff is overworked and understaffed and they wish they could focus on more mission critical line of business apps instead of things like managing Exchange.
- By outsourcing commodity technology like messaging and collaboration, unified communications, and business applications like CRM, you free up your IT staff, and further, future proof yourself from having to maintain current technology and keep your staff up to speed
- Get access to technology without roadblocks
- It is increasingly common to have a discussion with potential customers about them wanting to deploy a new technology like Unified Communications utilizing Microsoft Office Communications Server, but their IT staff is blocked by too many other projects and don't have the requisite expertise to deploy it quickly and start getting value. In some cases, this is from folks that have already bought the software and cannot leverage the investment.
- Physical Security
- This one is easy, how many small businesses have their Exchange or SharePoint server sitting under a desk, or in a non secure storage closet? Physically securing your server and storage is every bit as important as the standard security from user ids and passwords.
- Datacenter Features
- "The Cage"
- Having a highly efficient and secure "cage" in a data center is the first step in physical security and reliability
- Highly Available and Redundant Power and Network
- UPS and diesel generator backup power with multiple redundant communication links - how many small businesses have that?
- Multiple levels of physical access security and video surveillance, common in a Data Center, not so much in a typical office building
- Yeah, but I can get all of that by doing co-location myself can't I?...for 100 people?
- Sure you could, and for around $2-3,000 per month you get your cage, power, and broadband, but....
- You would underutilize the cage by an incredible margin - how many servers would you put in the cage? With blade technology you can place many servers in one cage but a typical small business probably only has a dozen servers at most
- For all of that expense for your servers, you are still woefully under utilizing them - to have minimally redundant Exchange platform, even with virtualization, you will need a few physical servers - but probably no Storage Are Network and related benefits - and for how many users? Maybe a 100 or 200? You will have a platform that could easily run 2000 users or more - hey, that's not green!
- End User and Customer Experience
- Easier, Web Based Administration and it can be delegated (IT staff establishes the rules, policies, and plans - then it's automated)
- More effective tools with tasks completed in a more timely manner
- Anywhere access without having to become an expert on firewalls and security
- In this article the Whir does a nice job of analyzing the benefits for SMB's utilizing hosted services:
Finally, this is all summed up by saying it is difficult to quantify costs of on premise vs. hosted, and there are numerous tangents of value that have to be evaluated and how the outcomes of one choice impact the bottom line for the business.
A short note to telecommunications companies about "Cloud" computing services, but first some pertinent questions:
How do you define what services are delivered when you offer "Cloud" computing? Is it limited to hosted servers/OS/Database/Web Services billed by complex metering? Hosted Desktops? Virtual Servers? Cloud is a tough term to use and even define, and I eagerly await its being phased out.
This blog comes from my long and arduous experiences helping telcos deliver cheap and cheerful free PoP3 email... I have been in the ASP/Hosting/SaaS/Cloud business since 1999, and in the process worked with many telcos globally. During that time I have seen only one application service ever garner some success outside of the traditional offerings of broadband and voice services. In this context I gauge "success" as a service that actually generates revenue because customers want to buy it from the telco (i.e. the right target market), in the way the telco sells it (very cheap, or free bundled with broadband), and the way they want to buy it (online and anonymous).
Guess which application? PoP3 email! Mostly delivered to very small businesses or consumers. Transitioning to selling more advanced email and calendaring, let alone "Cloud", to real live SMB's with high expectations for support and customer service is a massive transition. This is not a technology problem.
The latest logical extension to email is Unified Communications and to me, the successful telco that wants to drive towards success in the "Cloud" will focus very narrowly on hosted Unified Communications, especially Hosted OCS (Microsoft Office Communications Server), for the smaller end of the SMB market. The accompanying diagram shows how Microsoft views the future of Unified Communications.
If you work remotely as much as I do, one of your areas of frustration is probably the situation where you are at a customer's location and need Internet access. Many companies provide guest WiFi but most do not. Wired networks may have firewall settings that stymie connection attempts. Thus, demonstrating software solutions is often reduced to PowerPoint slides rather than demonstrating the live system. In my case, a live demonstration of our hosted business applications platform is the most powerful way to show real-life performance and user experience.
Smartphones like the iPhone are great for consuming content but not really suitable for creating content or doing demonstrations. While I use my iPhone to show integration with our unified communications solution it does not work for software demos. Also, the existing 3G networks are too slow for showing any meaningful near real-time applications.
So I was delighted to find that Comcast is providing a 4G networks across the greater Seattle area, based on the WiMax standard. While Comcast sells the service, it is provided by ClearWire Communications in which Comcast has a significant capital investment. Coverage is limited in much of the country, however network rollouts are continuing. Visit http://www.comcast.com/highspeed2go/#/coverage for the current coverage map.
So how does it work? You subscribe to a plan for a minimum of 12 months. As I work principally in Seattle I chose the Metro2Go plan which costs $30/month plus $49 activation fee. National roaming is available at additional cost. The system falls back to 3G when 4G coverage is unavailable while roaming.
Comcast shipped me a USB device which is about the size of a USB thumb drive. Install the communications software, plug in the USB device and you are live. I have run connection speed tests and the typical speed recorded is 10Mb download, 1Mb upload. This is comparable to DSL speeds.
To determine coverage I placed my laptop on the passenger seat of my car and established an audio connection to one of my colleagues using Office Communicator running on our OCS platform. With a wireless headset I was able to maintain a constant phone conversation at speeds of up to 60 miles per hour. I found 2 dead spots on my 9 mile commute, similar to dead spots you find with cell phones.
So far I am absolutely delighted. I have attended several customer sales meetings on their site and so far found only one office where I could not get signal. Phone calls made over the connection are free saving me cell phone minutes. The speed of my laptop is the same or better when compared to being on a WiFi network at the office or at home.
I can imagine that 4G services will be a boon to mobile workers in sales, construction, real estate and many other professions and industries.
True location transparency is here.