As I write these words, the processor in my computer is being intermittently highjacked by a half dozen computer processes. I witness this highjacking by running the Windows task manager. Task manager shows me not only what programs I am running, but what programs are running me. I see my processor utilization percentage leap to ninety percent. The computer won't even allow me to type. All I can do is yell, “Give me back my damn cursor.”
Why does my computer begin taking orders from some higher power than me? Every time, we start our internet connected computers, many of the programs we have installed call home across the internet the way E.T. called home. They call home to check for updates. For the most part, these updates are bug fixes. Isn't that a good thing?
In moderation, instant bug fixes are a good idea. However, when you have twenty programs all checking for updates at the same time, your computer doesn't have the processing capability to work for you. It is entirely a slave to internet updates. Goodbye productive time.
We are living through the beginning of an historic transition in the computer industry. E.T.'s phoning home destroys the productivity of hundreds of millions of computer users around the world. A lot of smart people have noticed – even at Microsoft. We are witnessing the true acceptance of cloud computing. Ten years ago, we flirted with the cloud, but ultimately returned to our Windows desktops. The cloud models of the early 2000's suffered from poor design and not enough internet bandwidth. But, like Freddy Krueger, cloud computing came back and back and back. Now cloud computing is back to stay.
What is cloud computing? Cloud computing is letting someone else host your programs and data. Think of cloud computing at the far right end of a computing continuum. On the far left, the computer processor and hard drive file storage are on the computer or a network of computers in your office. At the far right end, you have true or complete cloud computing where both your processing and data storage are on someone else's computer or computer network. In between are a whole bunch of hybrid models.
One hybrid model is called the hosted application model. In fact, there are a number of different hosted applications models. For example, we no longer maintain an e-mail server on our premises. We use a program called Microsoft Exchange along with Microsoft Outlook. In early summer, we exchanged our Exchange server for an Exchange server hosted by a company specializing in hosted solutions. The computers in our office originate our e-mail, provide the program to read our e-mail, and initiate changes to our calendars. However, all of our e-mails and calendars reside on someone else's server.
Why did we outsource the data storage for our e-mail and calendars? We didn't have the resources to manage the storage effectively. I personally save thirty minutes each morning, because their spam blocker is ten times more effective than ours. I don't spend forty minutes each morning deleting penis enlargement ads. (How do the spammers know? By the way, they don't work either.) I spend ten minutes. We don't have to worry about backing up the data or applying the at least weekly updates to Microsoft Exchange. Their spam program alone is saving me one hundred hours annually. Imagine those savings multiplied across an entire company. This increase in productivity is the promise of cloud computing.
Our hosted Exchange model is a rudimentary version of a hosted application. We still have a lot of computing resources in our office devoted to e-mail and calendar processing. Our e-mail writer and reader, Outlook, is still uses the processors in our office computers and is stored on our hard drives.
A more advanced hosted application model stores both programs and data on a remote server and only uses local computers for actual processing. This is really server leasing. You take everything, programs and data, located on your in-house server and move it to a remote server. Application hosts are now specializing by industry. For instance, there are companies now specializing in CPA firms.
There are still downsides to the various hosted application flavors. First, you are still running the same desktop applications. They are just located on someone else's server. That someone else takes care of backups and program patches, but the program patches still exist. You are also still dependent on the processing power of your individual computer and the operating system running on it. You are still cruising on battleship Microsoft.
The second big disadvantage of the hosted application model is that large amounts of internet bandwidth are required for your office computer, which is still actually running the applications, to communicate with the servers storing your data. Large amounts of data pass through your internet provider. You still pay dearly for large amounts of bandwidth even if you don't pay nearly as much as you would have ten years ago.
The submarine, with torpedoes aimed at battleship Microsoft, is true cloud computing. With true cloud computing, both your processing and storage are moved to remote servers. The computers in your office are merely the screens that display program output and keyboards that provide input. They are just devices to interact with the servers in the cloud. You probably don't even know the actual geographic locations of your programs and data.
The programs you run in the cloud are called multi-tenant programs. That means you aren't leasing a dedicated server and processor as with hybrid cloud models. You are sharing remote servers and processors with perhaps thousands or even millions of other users. Google Apps is a perfect example of true cloud computing. You neither know nor care where your programs and data reside as long as you can interact with them from anywhere with an internet connection. Another good example is QuickBooks online. If you have an internet browser, you have access to your accounting data.
There are important computer hardware and operating system consequences from true cloud computing. First, you no longer need powerful desktop computers. If the programs aren't running on your computer, you don't need a powerful computer on your desk. You just need an appliance to access the internet. Even smart phones don't have to be very smart to operate cloud applications.
Second, you no longer need a powerful operating system running in the computer on your desk. The operating system, typically Windows, provides services your programs need to operate. If your programs aren't operating on your desktop computer, you don't need a powerful operating system. This is the torpedo aimed at battleship Microsoft. Microsoft has controlled you by controlling your computer's operating system. If a program doesn't run on Windows, and you aren't an Apple user, you can't use that program.
Microsoft was slow to recognize the consequences of the cloud, but they finally caught on and offer versions of their popular desktop products like Excel and Word in the cloud. Microsoft was also slow to recognize the importance of the internet in the nineties, but they caught up, and Internet Explorer took over the browser market despite playing catchup. Does anyone remember Netscape? Netscape was clearly superior to Explorer, but Microsoft manipulated the Windows operating system to favor Explorer. They dealt a death blow to Netscape when Explorer became part of Windows. Microsoft controlled your operating system. So eventually they controlled the program to ran to access the internet.
The cloud is different, however. With true cloud computing, the operating system you use to access your programs in the cloud is irrelevant. Any operating system will do. In fact the simpler and faster the better. If you are frustrated with waiting fifteen minutes for your computer to start in the morning, the cloud promises instant on computer hardware. Imagine that – you flip the switch and your computer is on. You flip it again and your computer turns off.
Since the operating system is irrelevant accessing the cloud, Microsoft must compete on a level playing field with cloud applications from other providers like Google and Yahoo. In fact Microsoft is way behind and has expensive cloud solutions. The torpedoes haven't sunk Microsoft yet. The company is full of smart people and has survived and prospered from change before. But the cloud is a real, credible threat.
How should small business owners approach cloud computing? First, understand that the computer file server in your office may be the last one you ever own. In the near future, you will spending substantially less on computer hardware but substantially more on software hosting and services. We are quickly moving away from a business model of purchasing software to a business model where we will rent software. I can't promise you lower total costs, but I am really certain our productivity will increase as we spend less time waiting for our computers to pay attention to what we want to accomplish. We'll get our damn cursors back.
Second, inventory your mission critical computer applications. Begin determining which ones are moving to the cloud. E-mail and calendar applications are already there. Depending on the features you need in an accounting software package, the cloud might meet your needs now. More likely, your accounting is a couple years away from the cloud.
Third, contact a few hosting companies. Find out what they offer and do a cost comparison to determine if switching to a hosted solution will save you money. Don't just look at hard costs. Consider productivity increases and decreases in the time required to maintain your internal systems. I am betting you will decide to move at least some of your applications to some sort of cloud solution. We moved our e-mail and calendaring. Our project management is a true cloud solution. I foresee our income tax preparation program moving to the cloud in two or three years. I am determined to never buy another five grand computer file server.
Please check out our main S&k web site at www.skcpas.com. Thanks for reading!
Frank
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