Doing business in the clouds

Cloud computing has a couple of aces up its sleeve, both for large companies and SMEs. First, it has the advantage of scalability, letting companies control their computing power and pay only for what they use. Secondly, it allows infrastructure outsourcing, which can relieve users of IT administration burdens. This makes cloud computing no longer just a prophecy but a reality to which both IT providers and consumers are adjusting. However, concerns remain regarding the confidentiality of data stored in the cloud.

Otilia Haraga

“Cloud computing is one of the single biggest shifts in computing that we’ve seen in recent years. In Romania too, companies are realizing that it makes business and economic sense. The cloud is no longer the future of IT – it’s already here and has become mainstream,” Dan Bulucea, country manager of Google Romania, tells Business Review.

A global report by IDC released last month states that the services and distribution sectors, which include retail, wholesale and transportation, currently make up the largest share of public IT cloud services at USD 3 billion, and that the sector is expected to grow to USD 8.5 billion by 2014. The worldwide cloud systems management software market should reach USD 2.5 billion by 2015.

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Quoting data from IT and telecom market data firm Gartner, Bulucea says that 43 percent of CIOs want to make the transition to cloud-dominated infrastructure. “IDC predicts that, over the next four years, public IT cloud services will grow by more than 20 percent to become a USD 30 billion industry,” he says.

But there is a long way to go. “We believe that cloud computing services have not yet reached a sufficient degree of maturity to be able to talk about a market exclusively dedicated to cloud computing,” Liviu Gherman, fusion middleware sales manager at Oracle Romania, tells BR.

At the moment, efforts are being made to boost awareness and education. “We can say that the number of marketing events dedicated to this subject is relatively high, and major IT organizations are making significant efforts to educate companies,” Gherman continues.

At the moment there are no studies in this field to give a clear idea of Romania’s cloud computing status. “If we include infrastructure, platforms and software, I estimate the value of the local cloud computing market at around EUR 20 million. I am convinced there will be a two-digit growth over the coming years,” Dragos Manac, CEO of cloud computing solutions integrator Appnor MSP, tells BR.

At the moment, Romania is on a par with countries in the region regarding the adoption level of cloud computing, but somewhat behind Western Europe and the United States. Dan Gheorghe, senior manager of management consultancy at  PwC, tells BR this is due to low support from suppliers of cloud computing solutions in the region.

Over the next two years, there will be significant progress on a commercial level regarding office-type applications such as e-mail, text editor, graphic presentations and tables. But business support applications such as ERP and CRM will have to wait, predicts Gheorghe.

And of course, the investments in infrastructure and systems will need to reach maturity. Meanwhile, the suppliers and producers of cloud computing services will have to come up with proof of sufficient security measures to convince potential clients that they are able to ensure the confidentiality of the information. As long as data is stored on external servers, the question of security will remain a valid one. “Security has always been the first item on the agenda in discussions related to cloud. But we can answer with a different question: how can we trust others with our money? We might be tempted to say we don’t, but in reality our money is entrusted to banks and companies such as Visa and Mastercard. Of course, there are many levels of security when it comes to money. The same is also true when it comes to data stored in the cloud. Any cloud application comes with restrictive default settings and security is always a priority,” says Manac. At the level of the European Union, the Data Protection Directive (Directive 95/46/EC) imposes some restrictions upon the circulation of data outside the EU. Manac mentions Germany, which obliges its companies to keep data only on German territory. This is understandable, he explains, given that access could be gained to confidential data. “However, I believe that anything that exceeds the minimum restriction or red tape level is harmful in the long run,” he says.

Even if this were the case in Romania too, and the regulation framework did not allow data to be hosted outside Romanian territory, the government could host its own cloud services, says Zoli Herczeg, national technology officer at Microsoft Romania.

Under EU law, data can be transferred to countries outside the EU if the country or company provides an adequate level of protection. The directive also limits how users’ personal data can be deployed. “I actually think that the directive is quite good in this regard. Many social applications are suspected of mining users’ personal data to build profiles which they can later use for different purposes, probably the most harmless one being to provide customized advertising. (…) Some even predict that a new wave of social platforms will soon emerge that will be peer-to-peer instead of cloud based and would be totally independent of any company,” Florin Dumitrescu, software architecture consultant at Ducons Software Consulting, tells BR. Some European countries are stricter than others regarding their in-the-cloud transfer policies to other countries.

Meanwhile, small and medium enterprises seem to be the most willing to make the transfer to cloud computing, since they have more to gain from it. “Big companies are a bit reluctant to move their software and data outside their own yard. They feel that they have more control as it is and that they are independent from third parties. Also, for very big firms the cost of the infrastructure is not such an issue and, if anything, a company that has constantly significant needs in terms of computing power might get it done cheaper using its own hardware,” says Dumitrescu.

But a large company could, in some cases, derive benefits from the cloud. “They can make their internal infrastructure more efficient by adopting parts of cloud architecture and creating what is called a private cloud. Secondly, from time to time, they might want to run complicated statistical calculations with huge amounts of data and they could rent cloud servers for that,” he adds.

Gheorghe supports the view that the size of the company does not matter. What matters more is the degree of standardization that the respective firm has reached. “For fewer than 100 users, the process is very short and can be done in just several hours if it only covers office applications,” he says.

Oracle Romania’s cloud computing customers are from the public sector, banking, insurance, telecommunication, energy and commerce. “We are taking both about large firms as well as small and medium sized companies – many of these clients have adopted the cloud computing concept to some degree,” says Gherman.

Microsoft Romania also has hundreds of clients from all segments, including the public sector, Todi Pruteanu, platform strategy manager at the company, tells BR.

As usual, the bottom line is money. The adoption of cloud computing services can save 40-50 percent of costs over a period of three-four years, Marius Georgescu, cloud solution sales professional at Microsoft Romania, tells BR. “In such a scenario, we must also take into consideration another advantage of cloud services such as updates to the newest versions without any supplementary cost for clients,” says Georgescu. He adds that in the case of traditional solutions, the total cost of ownership over the same time span will involve high supplementary cost. “In three-four years, producers will launch new hardware and software versions which require both new investments and migration services.”

otilia.haraga@business-review.ro