Is it a good idea to place your data in the cloud? It is a question that is on the agenda in many companies and rightly so. Because it is a relevant question.

There just isn't a single answer to that. It largely depends on your IT priorities.

In this Pulse blog post, I will give my view on when it is best to place your IT platform in-house, as hosting or in the cloud.

THE TREND IN THE MARKET

The trend we are seeing is clearly that IT is moving out of the companies - whether it is to a central data center or in the cloud. A general perception has formed that the cloud is simpler than being responsible yourself.

THE CLOUD IN RELATION TO HOSTING AND IN-HOUSE IT

The cloud itself really gained air as a concept with the introduction of Software as a Service (SaaS), which typically refers to web-based standard solutions delivered over the Internet, at a fixed price per month with everything included. In this context, it is important to understand what the cloud is and is not. The word "the cloud" has gradually become a washed-out concept that often causes confusion. The key behind the cloud is the Pay As You Go (PAYG) price model, which, unlike hosting and IT-in-the-house, provides settlement of consumption per hour or minute.

Because the cloud is about scale and efficiency, you lose the flexibility and control you typically have with hosting and in-house IT.

Unlike hosting, the cloud has no long commitment periods and typically no initial investment. This makes it easier to adopt technology and cheaper to get started.

If you look at TCO (total cost of ownership), in-house IT is often the most profitable solution. But the downside to this approach is fundamentally the scale of the impact it has on your business if something goes wrong. If, for example, there is a fire, water damage, server crash or problems with air conditioning, this can have a major impact on the re-establishment time - if you compare it to data center operations that have just been built to handle these challenges.

EVERYONE IS TALKING ABOUT THE CLOUD, BUT WHAT ARE THE PROS AND AGAINSTS?

Since everything within IT operations in the cloud is ultimately data centers, storage systems, servers, cooling, software, labor and electricity, it goes without saying that a new pricing model just redistributes the costs. Because the cloud is usually without a commitment period and start-up costs, the monthly cost is therefore typically higher than if you own the equipment yourself.

From a practical perspective, the biggest challenges for Danish companies are still that the closest existing public cloud service from Microsoft is delivered from Amsterdam in the Netherlands. Even with the speed of light in fiber cables, there is a long way to go when trying to open a file on a network drive. The so-called "latency" often sets limits on how easy it is to migrate complex and often older systems to the cloud. At the same time, we still see that unnecessarily complicated price models make the actual costs difficult to see through.

THE TYPICAL MISUNDERSTANDING

We experience a typical misunderstanding that everything is good just because data and systems are in the cloud. There are and will be more and more examples of how human and software errors cause things to go wrong. After all, it is people, hardware and software that the cloud is built around. The risk arises if you make things simpler than they are. If you e.g. forgets to ask questions about uptime, backup and does not really relate to how one's data is stored and what the consequences are if (when) something unexpected happens.

Remember that in 10 years from now it will probably be completely different players dominating the market than today. Companies close, get acquired and make mistakes - so the best thing you can do is always have an exit plan when it comes to your business-critical data.

MY RECOMMENDATION

When choosing your IT setup, it is important to distinguish between simple, typically web-based standard systems and the more complex customized systems that require their own servers and traditional programs.

As a starting point, I would recommend companies to place simple standard systems, such as e-mail, file sharing and web applications in the cloud whenever possible. If it is a question of more complex systems that require servers, special adaptations and integration, I recommend that you consider hosting or IT-in-house before the cloud - at least until it becomes more economically attractive, comes closer to Denmark and offers greater flexibility than today. As I mentioned at the beginning, it depends on what your IT priorities are, therefore:

1. If you prioritize finances over the risk of downtime, have the facilities in place (internet, fridge and security conditions, etc.) and have a general understanding of IT, it can often make sense to have IT in-house.
2. If you prioritize uptime and flexibility over finances, have a desire to outsource the responsibility for operations and as a company with national roots, it can often be the answer to choose hosting.
3. If you prioritize scalability and standardization over economy, want to be a first-mover on innovative solutions and as a company with global roots, it can often be the answer to choose the cloud.

I hope it has given you an insight into the considerations you have to make. Feel free to write a question or comment.

With best regards

Jesper Jonsson

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