Cloud Computing Still Has Many C-Suite Executives Lost in a Fog

By Angus Gillespie

The advancement of cloud computing over the past several years has expanded at such a rapid pace it would be hard to believe that even those companies who spearhead its initial foundation could have predicted such explosive growth.  Yet despite its meteoric rise, there are still a vast majority of businesses that have yet to embrace the notion of having their sensitive data held off-site by a third-party source.

For those who may be unfamiliar with the cloud concept, described in its simplest form, it essentially amounts to a large groups of remote high-powered networking computer servers that permit centralized data storage for thousands – make that millions – of companies to use for a monthly and/or annual fee. These fees are based on necessary storage size and the types of application software required.  Think of it as having a personal storage unit that you can access from your own office computer, or home computer. But it’s not just accessing data – it’s the ability to tap into an infinite number of programs that can help your business. Cloud computing networks are routinely classified as public, private or hybrid.

One of the primary attractions to cloud computing is that it allows businesses to focus on their core business products and services rather than having to devote time and money sorting out their own sophisticated computer networking system.  When outsourced in such an enormous environment, it makes doing so quite affordable, and practical.

There is a reliance on the sharing of resources to achieve coherence and economies of scale, similar to a utility, thus avoiding upfront infrastructure costs.  Many companies also love the idea of not having to dedicate a large office for a server room, when a much smaller sized room will suffice when dealing with the cloud.

Evolution to the Cloud

Cloud computing really began to surface about seven years ago, but it was in 2010 when Rackspace Hosting and NASA launched an open-source cloud-software joint venture called OpenStack that drew a tremendous amount of attention. The project was designed to provide cloud-computing services running on standard hardware, which thousands of businesses immediately gravitated towards. From that point onwards, it’s been full steam ahead – or so it seems.

Big data and analytics have dominated the technology movement to a much greater extent over the past couple of years and each continues to accelerate their importance for the business world. Big data is essentially the collection of data sets so massive and complex that it becomes difficult to process using on-hand database management tools or traditional data processing applications – thus the need for the cloud.
Several well-known technology companies are now at the leading edge of cloud computing, including the likes of IBM, which brought forth the SmartCloud framework to support Smarter Planet in early 2011. The following year Oracle got into the mix with Oracle Cloud.  Dell and Microsoft are also big players in this arena.  For the latter, it’s a conscious effort to move beyond the recognized lines as the world’s largest software developer. Microsoft began its first consumer cloud two decades ago with the launch of Hotmail. Today, Microsoft has invested $15 billion creating cloud infrastructures in 90 markets around the world accounting for about 20 million business partners who have transitioned to the cloud.

Microsoft currently has the largest footprint in the world with 19 massive cloud data centres worldwide since opening its first one in 2007. Each one has the equivalent of 16 football fields of servers or about 600,000 servers in each data centre. There is state of the art physical protection and data is fully encrypted both in transmission and at rest meaning that the customer holds the key. The company generates about $850 million of its $2.2-billion in annual Canadian revenue from small and medium-sized businesses, where the most growth has been witnessed, but a huge portion remains untapped, largely due to skepticism by the decision makers at those companies.  Some of Microsoft’s larger clients in Canada include: Rogers Communications, Tim Horton’s and Air Canada. Competitors such as Google and Amazon are also moving aggressively into this space, resulting in a noticeable lowering of costs for a number of cloud-based services, which is great news for businesses and individuals alike.

Microsoft Canada President Janet Kennedy is a huge proponent of advancing the cloud concept for the Redmond, Washington-based company that has been made famous for building software operating systems that are found in most personal computers to this day around the world.
“In the 1990s it was about the Internet, in the 2000s it was about social media, and the cloud is our future,” Kennedy begins. “It’s very important to Canadian businesses and yet many small and medium sized businesses don’t fully understand what cloud offers.”

“The cloud is not just for the IT department,” Kennedy continues. “It’s for sales, marketing, finance and other areas of business.”

Canadian Apprehension

Canadians have definitely been slower to jump on the cloud than our neighbours to the south, which definitely was a barrier Kennedy has had to work hard at getting past – and the battle continues. The good news is that the potential is strong with so many businesses using the Internet as an integral part of their daily operations.

“In Canada, this year alone, 21 million Internet-connected devices will be sold,” Kennedy says. “The cloud is growing, both the public and private. When you look at the marketplace, those cloud-based services are going five times faster to the market. Of the Fortune 500 companies, 70% are using at least one of the five services we have.”

Perhaps the largest barrier of all is that there remains a gargantuan knowledge gap with many business professionals when it comes to understanding what the cloud is really all about. A recent survey of 476 C-suite executives from various industries was conducted by Northstar on behalf of Microsoft, revealed some startling figures.

Only one in 10 C-level executives surveyed said they were familiar with the cloud – beyond simply having heard of the name. Of those who claim they know about cloud computing, 45% could not properly describe what it actually entails when asked to elaborate. One-third don’t know about the various cloud services that are used, while six out of every 10 didn’t know what traditional computer applications could be easily moved to the cloud. Two thirds of executives are just now beginning to familiarize themselves with the cloud in late 2014, realizing that it’s more than just a passing fancy.  There are 44% of C-suite executives who are unaware there are different cloud-based systems and 43% overall feel the cloud is only useful for large corporations. From a communications perspective, 59% of C-suite executives are not involved in, or discussing, cloud computing within their organization.

“The survey provides an insight to both the challenges and opportunities facing Canadian businesses with respect to the cloud,” Kennedy states. “It does identify some opportunities and for small businesses in particular.”

“We need to make sure that Canadian businesses take advantage of the opportunities available in the cloud,” Kennedy emphasizes.  “Whatever doubts exists with some executives, the cloud is real. It is happening and it’s going to keep on happening.”

It seems that the education process has been slow, with a sizeable percentage of decision makers who still have not embraced the idea and concept of moving to a cloud setup. Six in 10 small businesses are not involved and still not planning on moving to the cloud compared with 75% of medium and large sized businesses that already embrace the idea of cloud-based solutions.

“Canadian business leaders have heard of the cloud, but it’s still not a clear view,” Kennedy continues. “It’s limited both in terms of general knowledge and also concerns about data security. It tells those of us who are leaders in the technology industry that we have a long way to go in helping the Canadian C-suite fully understand what the cloud is; what it does and the difference it can make for efficiency, profitability and success of their organizations. This is especially true for small and medium-sized business.”

The survey also found 65% of senior executives do not feel secure in sharing their business data and information with a cloud services provider.  Almost three-quarters (72%) would be uncomfortable sharing confidential strategic plans in the cloud; and 45% believe their company’s information would be unsafe in the cloud.

“This lack of awareness about cloud-based benefits in general, coupled with persistent concerns about data security should be cause for concern because they are holding Canadian businesses back,” Kennedy says. “Security, data, privacy – they should be top concerns for the C-suite here in Canada. I will commit that we will do our part to let them know of the tremendous robust capabilities of security practices and how seriously we take the responsibility of protecting privacy and their data that we are entrusted with. Scalability is always based on the individual’s comfort level in moving forward.”

Security & Affordability

Storing data in the cloud keeps it safe from fires, floods or malicious damage that could strike on-premise servers, and data is constantly backed up to multiple data centres. The cloud’s on-demand scalability means companies can save considerable amounts of money by not having to buy new physical hardware as storage needs increase – and IT staff can spend their time working on innovations rather than tending server rooms. Microsoft also has the largest footprint on the Earth.

“The fact is that the cloud enables companies to be more efficient, more responsive and able to innovate more quickly,” Kennedy remarks.

“Cloud-based software, data analytics and IT infrastructure help businesses be more responsive to changes in customer demand and preferences, while the security of data and multiple backup/disaster recovery provisions cloud solutions offer is unparalleled by anything an on-site server array could provide.”

In October, Microsoft announced the new G-series virtual machines, which, along with Premium Storage, will enable customers to run the most demanding workloads in the largest virtual machines available in the public cloud today. The Microsoft Cloud Platform System, powered by Dell, is the next step in hybrid cloud and brings Azure to the datacenter.

One quarter of small to medium-sized businesses said they didn’t have a clue about what cloud computing meant to them. It’s a figure that astounds people like Kennedy, but she says the goal now is to educate people on its inherent benefits.

“The numbers really didn’t surprise me, because just one year ago I took the role as president of Microsoft Canada and I had been told when I took this job that, unlike other geographies around the world, that Canada was not moving to the cloud due to concerns about data, privacy, data sovereignty and other concerns,” she says. “That was my perception at the time and I think that survey reflects a similar perception of the C-suite executives here in Canada.”

Perception vs. Reality

According to Kennedy, perception is the key word in all of this, because the reality is quite different. A number of Canadian businesses are in fact utilizing cloud-based services, whether it is for an email system, collaboration system or data-based storage. What gives Kennedy and others optimism for the future is the number of impressive, well-educated young people who are coming out of universities and who will lead future generations of the Canadian business world.

“I am so impressed with the talent I’ve seen graduating from universities across Canada,” Kennedy smiles.

In the past, this top tech talent would come up with a great idea and then look for venture funding to help them start their idea. It took money to buy servers, storage, the network and someone to run the systems and frankly what was happening in Canada in the past is that the top tech talent was leaving, often to go southwest to Silicon Valley where the perception and reality is that the funding pool is much larger.

“The cloud has changed that dynamic,” Kennedy confirms.  “Today, if you have a great idea the agility of the cloud allows you to bypass the huge capital investments that you need to start your business.”

The concern is that if Canadian businesses don’t jump on board now, competitiveness will quickly be lost and as Kennedy puts it the bottom line will become the shrinking line. The cloud is touted as being able to seamlessly promote the ability to reach new markets.

According to data from Gartner says that half of American CIOs will have all of their critical applications based within the cloud in five years or less. A similar number say they expect their company will be running fully on public cloud in that same time period. The momentum and direction is clear and for the reasons one would expect, including greatly lowering capital cost expenditures as well as agility and the chance to share in innovation.

This is mostly about a challenge of awareness, rather than understanding. The reason many people don’t understand, is because they really haven’t taken the time and effort to bother to learn what it is that’s available right at their front door.  As Kennedy says, it’s an opportunity that the business community as a whole needs to seize. As time goes by more and more businesses seem willing to open that door and explore the vast opportunities that await them.