Many great technology breakthroughs are subject to analyst predictions about how quickly that technology will take over the world. In 2007, Gartner famously forecasted that all PCs would be virtualized by 2010. While this didn’t happen then and is not close to happening now, business leaders and analysts continue to predict that all business systems will be in the cloud in five years. This common prediction is perhaps as overhyped as the term “drinking the Kool-Aid” is overused, but if you believe that all business systems will be in the cloud in five years, you’re certainly drinking something. Here are three reasons you should sober up:
1. Too much critical information still resides on-premise.
If you think about how businesses operate and move, you realize that change takes time – and money. Physical networks, on-premise servers, and desktop software have been the core components of business systems for decades. Critical data and applications are tied into legacy networks. And chances are, IT has spent significant resources trying to get systems to run as efficiently as possible. “If it ain’t broke, don’t fix it” is another overused, though quite applicable phrase that applies to how IT and management teams think about where to apply limited resources to implement meaningful change.
I’m not against the cloud. In fact, I started a cloud solutions company at a time when few entrepreneurs were thinking about the possibilities of the cloud. I know it’s the future because of the accessibility and scalability it affords. But I’m also a realist, knowing that executives have specific priorities with limited budgets, and that ripping out and replacing an entire infrastructure does not often appear in the list of a business’ four or five top goals. Think about it – just because a chief operating officer is a believer in the benefits of cloud solutions doesn’t mean he or she is going to put aside other priorities for the company’s growth to spend an entire year’s budget on a major infrastructure change. They’re going to look at which cloud solutions will make the greatest immediate impact, then implement gradual improvements.
2. The cloud isn’t always cheaper.
One thing businesses using cloud solutions have learned: The argument that the cloud is more cost-effective doesn’t always pan out, especially when looking at an overhaul of existing systems. Depending on the size and needs of a business, cloud solutions can be far more cost-effective. Moving to Software as a Service (SaaS) accounting software or using Salesforce for customer relationship management (CRM) might be a no-brainer in terms of increased productivity and value per dollar. But those cloud solutions are not cheap. Most allow you to get up-and-running with very little or no upfront capital expense. The monthly fees can add up, and the more cloud solutions you have, the more your monthly operating expenses will increase.
There are valid reasons for choosing to stay with a particular legacy system. At Axcient, for example, we still use SharePoint. We know there are SaaS solutions that are better and easier to use, but even though it’s not ideal – and we will change eventually – for the moment, it works, and upgrading is not a priority for our IT team. For many years to come, a lot of companies will be in a similar situation: They’re not moving all the way to the cloud – not just yet – because it doesn’t pay off to do so with every application. Not all cloud solutions are created equal; some have a higher immediate return on investment than others.
3. You need a multiplier of value for cloud adoption.
Real change happens when there’s a multiplier involved. For a business to take the time and expense to rip out and replace a legacy system with a cloud solution, they need to see that they will be rewarded with a multiplied increase in productivity, not just an incremental increase. They’ve already spent the capital expense on their current system and have an IT guy to manage it. So they’re running along fine until they have an extremely good reason to change.
In the backup and recovery market, for example, many SMBs have continued using tape-based backup solutions. While tape backup is as outdated as the VHS tapes you cleaned out of your attic 10 years ago, disk and other backup methods that have appeared over the years weren’t dramatically better or cheaper, so people stuck with what they had. It is only recently that cloud-based backup and recovery technology has improved to the point that a business can see a multiplied effect on productivity and revenue over tape. With a cloud-based data and application protection solution like Axcient, businesses can not only restore data, but also recover systems instantly after a failure to ensure continuous business productivity. Compared to waiting the hours or days it takes to recover with tape or traditional disk-based backup, such anywhere/anytime uptime via the cloud delivers an exponential improvement in productivity and revenue. This is what’s convincing IT managers to finally switch from tape to cloud backup.
When Cloud Makes the Most Sense (and Dollars)
The above reasons throw a sobering cup of cold water in the faces of those who think that desktop servers and software are going away in the near future. While my aim is to set this view straight, it’s not to downplay the impact of the cloud or its rapid growth. The cloud will achieve widespread adoption gradually, as most business technologies do. When a new business starts, it will likely be on all-cloud platforms. When an established business replaces a single system, it will be cloud. Or when cloud solutions offer a multiplied increase in value, a business might do a broad rip-and-replace.
The cloud won’t magically take over the majority of businesses in the next year, or two, or even five. But we are already seeing and will continue to see a number of logical business functions and applications move to the cloud. At some point, there will be a balancing point between on-premises and cloud-based systems, and I suspect that balancing point is not too far in the distant future. In the meantime, staying grounded in the real benefits – and limitations – of the cloud will help IT professionals navigate beyond the hype to identify SaaS solutions that bring about the greatest business advantages.