West Michigan firms have successfully moved to the Cloud for much of their software needs. So, is there even more value to be found in the Cloud? Yes, there is. That’s because the part of the Cloud most people use is just one-third of the Cloud’s possibilities.
When firms think of the Cloud, they think of using sites such as Salesforce.com. These are “software as a service” (SaaS) sites. In SaaS, a firm subscribes to use a vendor’s software over the Internet with the vendor handling the information technology issues. The success of this IT model can be seen in its adoption by West Michigan firms. Such success has caused firms to look for additional possibilities in the Cloud. So let’s broaden the definition of the Cloud and find additional value.
The other two-thirds of the Cloud are “platform as a service” (PaaS) and “infrastructure as a service” (IaaS). The Cloud can be viewed as a spectrum with SaaS at one end, IaaS at the other and PaaS filling in the middle. While SaaS offers the software for hire, IaaS offers the hardware for hire. The infrastructure within a normal IaaS includes the servers, operating systems, storage and network access, but not software or an application environment. Firms choosing the IaaS path then design and configure applications and introduce data into this rented system.
West Michigan firms with well-developed IT departments and significant investments in prewritten software may benefit from the IaaS path. While there is much value to be found for firms within IaaS, it is not the true value here. That will be found in PaaS.
PaaS is touted as the “next big thing.” Several IT future forecasters suggest PaaS has the potential for high growth over the next five years, with some touting 2012 as the year of PaaS. PaaS is somewhere in the middle of the Cloud spectrum with the vendor operating similar to an IaaS but also providing an application environment. It is this application environment that differentiates PaaS from the SaaS environment. Applications are at the heart of why PaaS is the key to cloud development.
With vendors offering a PaaS environment that has application development environments designed to make the whole process quick and efficient, firms benefit from the vendors’ experience. Best practices from other users can be built into a system. For example, a drop box of tools can be made available in the interface. This speeds up the construction of applications and allows for efficient and cost effective creation of applications.
Additionally, since the application environment provides pre-tested technologies and multiple tools, it lowers the risks and costs of application development. Within the PaaS environment, tasks can be performed by less experienced and less costly personnel. The personnel also have the advantage of working in an actual application environment. This avoids the problem of applications testing well in the lab and then having problems in the real environment. The PaaS environment also moves the costs and time involved with security updates, backup and disaster recovery plans to the vendor.
While a PaaS environment has these advantages, West Michigan firms should be aware of its risks. A prime concern is the reliance on the Internet. Events such as operating error, natural disasters or terrorist attack may close down a major part of the Internet. Working in a PaaS environment will increase risk for firms since their applications are now on the Internet, which the firm may not have access to in the future.
PaaS vendors present their own risk. Most require lock-in contracts that create risk, such as choosing a vendor that cannot provide the services expected. Significant costs can occur when either breaking the contract or trying to operate efficiently until the contract runs out. Most PaaS vendors have design considerations that limit what a company can do. Bankruptcy is a real possibility for many of the start-ups. PaaS is definitely a decision that should be made with eyes wide open while questioning every aspect of the decision.
With PaaS, West Michigan firms can focus on innovation instead of complex infrastructure. By leveraging PaaS, organizations can redirect a significant portion of their budgets from maintaining the infrastructure to creating applications that provide real business value. PaaS provides the value that will allow firms to take advantage of Cloud technologies to contain costs while growing their sales.
Associate Professor Kurt Fanning is director of the School of Accounting at Grand Valley State University.