Cloud Computing for Dummies, Part 1. Cloud as retail, not technology.

I recently attended a great seminar hosted by Simon Walker and Graham Hann, Partners at Taylor Wessing in Cambridge. Great for two reasons: it was filled with excellent people which is the fundamental secret to all good events; it laid out some of the basics of a much misunderstood subject. Now, even my Dad has heard of the cloud, but that doesn’t mean that many people understand it. With TW and the speakers’ permissions, we wanted to share some of the talks.

Nigel Duke, runs Morgan Hill, “an IT consultancy dedicated to helping clients invest in and operate the most effective technology possible – for their specific objectives.”

Nigel started with some observations from customers about cloud computing. Not exactly a ringing endorsement…

“The latest technical advancement that will become the new black hole into which so much of our cash goes.”

“I think and hope it means that the IT capex budget might start to decline one day.“

He believes that most of the negativity is because people don’t understand what the cloud is and many are confused about what it is because there are some many vendors who do their level best to cause confusion by blinding people with technical bullshit.

Three main areas of the cloud

  • SaaS – Software as a Service – Salesforce
  • PaaS – Platform as a Service – Microsoft Azure
  • IaaS – Infrastructure as a Service – AWS (Amazon Web Services)

Nigel’s key point, echoed in later talks was simple, ‘The big change is not technical it is about the approach. Cloud represents a retailer’s approach to IT infrastructure.

Key attributes of cloud computing.

  • Cost transparency – the price is marked on the product
  • Cost is actionable – it can be compared and consumer can go elsewhere if they don’t like price
  • You buy what you need, not what you might need
  • Customer loyalty is earned and you are not usually locked into and single retailer.

All of these things are usually incredibly good news for businesses who do not end up locked into long term contracts if they now what they are doing. BUT, the cloud computing model is hard for big corporates to understand as whilst cloud computing tends to have transparent pricing, most corporates have ABSOLUTELY NO IDEA what their costs are.

Typical organizational IT environment

  • No cost transparency – cannot work out what the real costs are
  • Cost is not actionable – companies are typically locked into contracts with vendors and subject to depreciation and run off
  • Customer loyalty is not earned, businesses are locked into contracts with vendors.

For an organization to understand the true cost of its IT, it needs to understand the real costs of the services provided.

AWS Cloud impact of costs.

  • The big change is not about technology, it is about RETAILER mentality towards customers and costs.
  • This means cost transparency and paying for what you need.
  • Contrasts hugely with traditional approach from large IT vendors
  • Companies can only truly benefit if they have effective cost transparency which is easier to achieve now than in the past
  • If an organization can achieve internal cost transparency, they have options to reduce cost including IaaS, PaaS and SaaS cloud based solutions

Next week, part two of Cloud Computing for Dummies: Amazon Web Services, Iain Gavin from Amazon Web Services, one of the largest cloud computing providers in the world considers what the cloud is – and what the cloud isn’t – and leaves a few simple rules to help you understand the difference between real and fake cloud.

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The best entrepreneur and investor networking in London in the offices of Taylor Wessing, City of London on March 16th from 18.00.

In a discussion moderated by the excellent Rory Cellan-Jones, BBC Technology correspondent, we will debate the question, ’Should the UK worry if ARM and Autonomy were the last big UK technology businesses?’

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Drinks: 18.00

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