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6/20/2011
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4 Reasons Cloud Computing Isn't Overhyped

CIO of Schumacher Group, a midmarket physician management firm, says that as much as 85% of the company's processes are now cloud-based. Here’s why, and his advice on how to make the shift to cloud-based infrastructure.

Analytics Slideshow Calculating Cloud ROI
Analytics Slideshow Calculating Cloud ROI
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One of the biggest benefits in Schumacher Group's heavy cloud investment has been how Menefee is able to prioritize IT resources as result: Most of his department is focused on areas such as business analysis, project management, development, and innovation rather than infrastructure and services support.

"I can spend 60% to 80% of the budget dollars on bringing net-new for the organization as opposed to just supporting infrastructure," Menefee said.

Cost savings is another benefit, though it's not as straightforward as some vendors might like you believe. Menefee said that in his experience, making a total cost of ownership (TCO) case for SaaS versus an on-site deployment depends on the timeframe.

"A three-year TCO on software as a service, the on-premises solution would win nine times out of 10," Menefee said. "If I pushed that to a five-year TCO, the software as a service would win." Menefee attributes that to the hardware and software upgrades--and the possibility of needing to bring in professional services support--necessary in a typical release cycle for on-premises deployments.

Menefee has some lessons learned for fellow IT executives and managers pursuing a similar shift to cloud-based infrastructure, applications, and services. Here's his advice:

-- Focus on application integration from the start, and make single sign-on a priority. It's unlikely that you'll find a one-size-fits-all vendor that meets each of your needs, and Menefee said IT managers and administors will have security issues and other headaches if their end users have to manage multiple logins and accounts. Consider middleware applications; Schumacher Group uses Boomi and Cast Iron for integration, and Symplified for single sign-on. Plan for future needs rather than just the current landscape. "Not waiting until you get four or five applications into it is always a best practice," Menefee said.

-- Assign in-house project management, and don't buy the hype that cloud means you don't need IT involved. "We found that when we didn't have internal project management resources and left it up to [the vendor] to work with our end users, the project didn't move as effectively and efficiently as it could have," Menefee said.

-- Take service-level agreements seriously, and be realistic with them on matters such as security. "Be honest with yourself when you look in the mirror," Menefee said. "What security practices do you have in place versus what they have in place?"

As Schumacher Group approaches the 1,000-employee mark and beyond, Menefee said it's unlikely the company will ever be 100% cloud-based. But he thinks that smaller businesses and new startups should seriously consider the idea.

"If I were a small business today in a startup mode, I would have very few--if any--on-premises solutions because of how mature the marketplace is today versus what it looked like five or six years ago," Menefee said.

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