Demystifying the Cloud

Posted on 3 Feb 2010 by The Manufacturer

What is Cloud Computing? provides the following definition: “Cloud computing is a general term for anything that involves delivering hosted services over the Internet. These services are broadly divided into three categories: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS).”

The term ‘cloud’ is used as a metaphor for the Internet, based on the cloud drawing used to depict the Internet in computer network diagrams as an abstraction of the underlying infrastructure it represents.

However, Martin Banks, associate analyst at Bloor Research for Data Centres, says, “I prefer the term Exostructure — an externally sourced, and theoretically limitless, seamless extension of an internal IT systems infrastructure that delivers information services on a fee-paying basis. This is looking at the issue from the users’ point of view.”

A cloud service has three distinct characteristics that differentiatest it from traditional hosting:

• It is sold on demand, typically by the minute or the hour;

• A user can have as much or as little of a service as they want at any given time; and

• The service is fully managed by the provider — the consumer needs nothing but a personal computer and Internet access.

Rather than operating applications on an in-house computer, therefore, you run them on an external machine — which could be anywhere in the world, accessing the application programs via the internet.

Data associated with the application is held externally to your organisation and hosted on a server, with the data being stored in a database all on a server run by a third party.

Digging deeper…
A cloud service can be either public or private. A public cloud sells services to anyone on the Internet; Amazon Web Services, for example, is currently the largest public cloud provider. A private cloud is a proprietary network or a data centre that supplies hosted services to a limited number of people. The final concept to understand is that of the virtual private cloud — i.e. when a service provider uses public cloud resources to create their private cloud.

Once understood, our attention turns to what it is that makes cloud computing so appealing? In a recent article Nigel Stanley, Bloor Research’s security practice leader, said, “In an economic downturn, cloud computing oozes sexiness. The thoughts of off-loading your data to a third party gets financial types excited, given that they start to see how much money can be saved.” Cloud computing means that rather than purchasing software, which would go on your CapEx, you pay for it when you use it — coming from your OpEx budget instead.

Manufacturing the Cloud
So far, so good. Crucially, however, can cloud computing be used in manufacturing? CRM has been one of the first areas covered, piloted by with its launch in 2000.’s CRM solution is broken down into several modules: Sales, Service & Support, Partner Relationship Management, Marketing, Content, Ideas and Analytics. Its Platform-as-a-Service product ( Platform) allows external developers to create add-on applications that integrate into the main Salesforce application and are hosted on’s infrastructure. currently has 55,400 customers and over 1,500,000 subscribers. Why CRM? Quite simply, it is due to the need to support a mobile sales force that records information easily and quickly without necessarily having to contact the centre.

Couple this with the need for the centre to have control over this distributed workforce and you create an ideal environment for cloud computing solution.

“ made much of its early running selling its service to sales managers direct who prefer to buy a simple web solution they could use immediately and pay for from their expenses budget, rather than getting a CapEx approved and have their IT department build a solution for them,” says Sam Lowe, Sector CTO at Capgemini. “More and more of the sales force deployment I see now have been done in partnership with IT and are better integrated and leveraged for it, but a sizeable proportion are still like that.”

A number of the large ERP vendors provide cloud capabilities; SAP, for example, launched its Business ByDesign in September 2007. Having been plagued by negative press, however, in September 2009 SAP gave a briefing to the industry on how it was tackling a number of its solution’s issues. These included:

Scalability — all customers run on their own blade servers

Overly “feature-rich” — the suite was originally designed to meet all of the needs of its customer base instead of focusing on specific functionality

Lack of corporate commitment — SAP is cutting R&D funding and shifting resources to other products

Runs on NetWeaver — a full instance is too heavy for a SaaS application and finding “cloud developers” who have full Java EE stack experience may be tough

Infor entered the market in October 2008 with the launch of a SaaS version of ERP SyteLine. It is a typical entry from an existing vendor, in that it allows a user to move seamlessly between SaaS and on-premises deployment, or vice-versa. Microsoft Dynamics entered the SaaS market in 2007 with the introduction CRM Live. This is run at Microsoft data centres around the world, along with all the other “Live” products such as Live Small Business Office.

Software-plus-Services for Microsoft Dynamics ERP is the new capability being offered, which allows a user to choose to implement their Microsoft Dynamics software as a wholly-owned on-site solution, via online services, all or partly-hosted, or in any combination.

Similarly, Oracle entered the market last year with the introduction of an offering comprising its Oracle Sourcing and Oracle Sourcing Optimisation products. The tools can be used to aggregate demand; determine whether an RFP, RFQ, or other sourcing process is needed; compile contract terms; notify and qualify suppliers; establish prices and discounts and conduct multi-round negotiations; and aggregate and award bids. In addition, Oracle is offering CRM as a SaaS, call CRM On Demand.

Christian Verstraete, HP’s chief technologist for manufacturing and distribution services, believes a number of areas will quickly become the favourites of manufacturing companies. These include:

1. Cross enterprise collaboration — Verstraete sees cross-enterprise collaboration as being a current weak point in Supply Chain management. The required integrated environment would require the exchange of structured and unstructured data, and synchronous and asynchronous communication. By integrating multiple concepts of social networking and providing them in an integrated, cloud based environment, companies could use a variety of collaboration mechanisms to perform key business processes without having to manage the environment.

2 High Performance Computing — Verstraete foresees the needs for additional computing power as companies increase the use of digital models to virtually test their products and/or to understand their business environment better through business intelligence and decision making. The models used are typically highly parallelisable, and fit well for a cloud environment as long as the amount of data they need to be provided with is not large, when the network could become a bottleneck.

Approach with caution
Its benefits aside, cloud computing can get a business into hot water if they have not thought through the many consequences, particularly regarding data security. “Without assurances that organisational data will be totally secure in a remote site, the whole concept of cloud computing is dead in the water,” says Bloor’s Stanley. Securing the cloud, therefore, is vital for its success. With companies trusting their corporate data — their most important asset — to third party organisations, the holy trinity of confidentiality, integrity and accessibility has to be assured. The infrastructure underpinning this is Identity Access Management (IAM); without it, system access security is non-existent.

A final worry relates to the ability of the service provider to continue operating. Raimund Genes, CTO at Trend Micro, says, “You need a provider that will be in business three years from now. When you give up your IT infrastructure, you need a reliable service provider.” Indeed, with Cloud Computing you must realise that your business process in no longer in your complete control. It is wrapped into the cloud service and in the control of the provider” It is imperative that when selecting a cloud service provider you choose one that is likely to be there for the long-haul, or a supplier that has a strategy to manage the situation if they are not there.

Indeed, says Rob Price, head of IT leadership at Atos Consulting, “Argubaly the most interesting aspect of this technology going forward is when one considers the solutions specific to sub-market sectors.

Where companies have struggled to make a case for developing or replacing their legacy systems, they now have the opportunity to determine whether as a market they wish to further develop and share the cost of a different model or have the supplier compile groups of organisations — thus provisioning more complex offerings through a software/systems model.”

The ‘Cloud’ and its impact on Manufacturers is one of the topics at the next ERP Connect.