Tradeoffs in Cloud Computing are the New NormalAfter many years of working with business professionals in "enabling" their organizations to make better use of technology, I must say that it is a bit frustrating trying to get folks to understand that this new and wonderful cloud computing model (or Internet-based computing, SAAS, or whatever-you-want-to-call-it computing) is still just technology. It uses computers and disk drives, it runs software, it takes electricity, and it was developed by human beings. It can break. It's not magical and perfect and you can't get the good stuff for free. Swim at your own risk. A sales team I used to work with even recognized this reality and developed a fondness for the phrase "technology happens". So, assess the risks and measure the benefits against them. For many, the benefits outweigh the risks, and cloud computing approaches deliver advanced capabilities at cost levels not previously available to most businesses.
No industry is immune to the considerations surrounding a cloud computing model. Even lawyers involved with ediscovery (!) recognize the potential benefits - and tradeoffs - of the model, as was clearly revealed a few years ago at the ILTA (International Legal Technology Association) 2010 event in Las Vegas. While the discussions at the conference were oriented specifically towards the legal profession, the IT-related discussions were and still are totally relevant to every business. Accounting and finance professionals should pay close attention to this type of conversation, as it relates very directly to accounting's approach to information technology and the application of IT in the business or professional practice.
In a recap of the event entitled ILTA 2010 in Las Vegas: Strategic Unity, Defensibility, and the Cloud, author Chris Dale discussed the reality that professionals in both public and corporate service must work with the IT departments towards a common goal. "IT is no longer just a service department providing an infrastructure, applications, training, and troubleshooting." While these elements still remain as critical aspects of IT, the role has grown to also incorporate considerations for collaboration (collaborative information management), mobility, and social media.
Recounting one session attended, called Defensible Ediscovery Processes, the author related the variety of definitions provided to the general term" defensible", which were pretty amusing.
Definitions ranged from "protected against attack", to "less lousy practices" or "practices which suck the least", and finally, "what you can get away with without being found guilty of spoliation".
From these definitions then came qualifiers, such as "reasonableness" and "faith". Why would defensible processes be important, and how does this relate to IT or cloud computing? An example of the element of "faith" came up in this context: " how can [lawyers] have faith that the technology is delivering the right answers?" A panelist gave the sample of "an email retrieved from (or possibly not retrieved from [love those lawyers]) a system, with 26.5 pages missing. How can you be sure that the systems which you are using will not do that to you?" These are valid questions in any IT environment, and are no less important when considering a cloud-based technology model. The trade-offs are related to perfection in functionality and performance of the solution versus cost, and should be measured in proportion to one another.
The tradeoffs may come in a variety of areas, with collaboration and connectivity being the primary drivers (collaboration) and barriers (connectivity) to the model. Businesses are more than ready to adopt cloud computing strategies based on the belief in improved collaboration, access to information, and improved IT management, but tend to overlook the offsets in the areas of bandwidth availability (and consistency), application functionality (or lack thereof), and level of support available from the provider.
In support of this argument, Jerry Justice (IT Director for SS&G - Certified Public Accountants and Advisers) posted in a LinkedIn discussion on the topic that "by design the Internet is 'reasonably' connected, but not the same as a well-connected [local] network. the upside is it gives you the ability to connect from great distances, the tradeoff is that you experience variable connectivity.""The underlying issues are that there is a paradigm shift to working on the Internet (from working in the office) and then another shift when you add in cloud-based environments (versus local apps). It is possible to be very productive, but .. you have to adapt your approaches".
The idea "that perfect must be qualified by cost and proportionality" was also discussed in an ILTA session on cloud computing which included panelists from Autonomy iManage, Mayer Brown, and Ernst & Young. "Cloud computing remains a contentious area, with no obvious agreement even as to what the term means, let alone as to its implications" wrote Mr Dale in his recap of the event. While the panelists held differing views, the representative from Mayer Brown held a position similar to Mr Dale, in that it is important to "dissect the objections one at a time, accepting that there is room for more than one view, and testing arguments against the alternatives. Arguments based on pure cost are pretty compelling, and if one method of achieving an objective is very much cheaper than the others, then the burden shifts to those who argue for the more expensive route."
Discussions went on to describe differences between public cloud providers and others, who segregate customer data in "private and identifiable silos". "The key word here is identifiable", writes the author, "which connotes a geographical certainty as well as anything else. I sometimes wonder if the imagery associated with cloud computing (invariably a jagged line disappearing into some cumulus) does not leave some people with the idea that their precious data is indeed floating in some inchoate container up in the air."
"If you neglect to provide in your contract that your data remains in a specified jurisdiction, and if you fail to conduct proper due diligence checks on the provider, then you deserve all you get. Like any risk assessment, it involves weighing cost against other factors; most of these other factors are definable and quantifiable".I couldn't have said it better myself.