General Consultant Discussion

HELL HAS FINALLY FROZEN OVER... Finally a technology publication has published and article saying the cloud is usually NOT a better deal than on premise. Something most of us feel, but are afraid to admit in public as we might get laughed out of the room and be deemed heretic's thanks to the tech media and their love affair with cloud vendors (and their advertising dollars) http://www.accountingtoday.com/ato_issues/27_10/Whats-worse-leasing-a-car-or-going-to-the-cloud-68143-1.html#read

From my perspective just looking at customers that I come into contact with I've seen that almost all of them do the math prior to making any type of move. The cloud vs on-premises really has to show a clear benefit before they're investing. Funny that in the middle of ripping cloud computing a new a*hole he brings up two cloud services that he wholeheartedly recommends (Mozy and Carbonite - both 100% cloud backup storage). A better title for the story would have been ""Leasing a car or moving EVERYTHING to the cloud"". Most cloud providers seem as if they're pretty focussed on the ROI and one of the first things they know they have to do is convince a customer that once all costs are considered that the cloud is actually cheaper. The problem is that the question of which is cheaper is really an ""it depends"" type situation. Depending upon the circumstances you may find the cloud is cheaper - or not.

And there is the attention span issue. We are today dealing with a small customer who refused to take care of their server (we've warned them for two years), and it turns out has an inappropriate backup service (Carbonite). It blew up late yesterday. This sort of low-tech customer would benefit from the forced discipline of keeping MAS 90 in the cloud (say, I-BN). All the boring maintenance stuff is done automatically for one price that they can't cut corners on. I have a lot of empathy with Mark's position because they are true -- if the customer can actually do what he's supposed to do with the infrastructure.

This post is long so bear with me. First I think the analogy is a little off. The comparison is not apples to apples. Hosting is less like leasing a car and more like a fleet management agreement. A service costing 100 dollars per month per user should include more then just the server. It should included windows licensing, both the CALs and the Server software. It should also include the maintenance and server support so the Tech Guy is unnecessary. The setup and migration should also be included in the price. Second his price is overly conservative. He is assuming quite a bit. He is leaving out the cost of OS licensing, Installation and redundancy. He only has the price of the hardware. No Windows licensing, no CALS, no backup service or software or media, no service to install, no back power supply, no electricity or cooling or heating costs. He mentions the cost of having a tech guy coming out for the server twice a month, but fails to include the cost of emergency services. We could easily double the price he quotes for the cost of the server if all of this is taken into account. We could also double the price of tech guys service to if we take into account emergency service calls, broken updates, etc. Third he is also missing the three biggest advantages of moving to the cloud, up time, cross platform compatibility and mobility. When talking about uptime all the costs associated with it need to be taken into account. Aside from the cost of emergency services, and parts or replacement you also have to account possible lost customers, sales and reputation. Cross platform is more then just a buzzword; it means two things for clients. The first is apparent from the name it allows software work on an operating system it would not otherwise. The second is something fairly new, the company then can implement a BYOD policy. A company as part of the employee benefits package reimburses the employee up to a predetermined price the cost of purchasing a computer (with a clause for length of service should the employee quit or is fired early and that they purchase the extended warranty). Because the computer is then the employees and no software is installed locally no more desktop support is needed outside the hosting agreement. And because nothing gets installed locally there is no need to worry about them stealing company software or data. So for the price a moderate laptop every 2-3 years you can increase morale and lower costs. Mobility is inherent with the service. The Cloud is by definition available from anywhere. No more having to work from the office or use GoToMyPC or VNC or maintain a VPN, Citrix server or remote desktop server at the office. Combine all of this and you have moved from a on-premises software package accessible only from your office (or having to maintain some sort of outside connection) to an on-demand software package available, wherever you are, with whatever you happen to be using, whenever you need it. All of that, after adding in all the costs he has left out and subtracting the costs he left in, cheaper then you can purchase, install and maintain a server on your own.

There are places for 'cloud services', like mozy, gotomypc etc. Mozy reason for existing is physically storing your data in a redundant place, which the cloud does better hands down. Certain apps really make sense to be very mobile. For traveling salesforces, CRM does, for email etc. But lets just talk ERP. How many of us are doing production entry, or purchase orders while standing on line at Costco?? I would guess that 95% of all ERP functions are done perfectly well sitting at a 24"" monitor on a desk at a fixed location/plant. And the few places where mobility makes sense such as WMS, is perfectly handled via local networks, not trying to integrate a cloud service, back through a firewall to local device and bang out hundreds of orders an hour without waiting for internet and browser latency. The only way to start talking about doing away with on-premise IT costs is if you move EVERYTHING to the cloud, which means its not likely a pure saas solution will work because good luck integrating netsuite with your scores of other applications, including Office, CAD, email, file sharing, search etc. Sure they claim to do some of this but in most cases their UI is way to slow compared to using outlook or autocad on the desktop. The other option is you essentially (in a virtual sense) ""ship"" all your servers to an I-BN or rackspace and they run ALL of your applications there and you use VDI (Virtual Desktop Interface) or terminal servers. However, take a look at the cost for a 100% full service solution where they offer everything, including phone support, network support, application support, full image based backups with real time disaster recovery (shameless plug: http://www.eversafe-backup.com ), helping end users when they can't print a document, email server (with exchange like flexibility) etc. Based on what I've seen quoted by the likes of Rackspace, you'll fall off your chair. And that still doesn't handle the issue when your local firewall has problem, your internet goes down, your cable modem has a problem, a local printer has an issue etc. And that also assumes you throw away all PC's and go with Winterm's or something similar (which are no longer any cheaper than laptops & desktops). And when you go this route, except for laptops, mobile devices suck because a citrix/terminal server interface is only viable for emergency use on a tablet. And yes, there is windows licensing, cal's, etc, it's just all embedded in the service price and trust me, they are marking it up way more than the average 10% most IT var's do. If you decide to do away with all things windows and go completely saas, good luck connecting 5-8 saas providers into a unified solution that works for your business, doesn't have you flipping between multiple 'apps' on your tablet, or browsers etc. And then you probably need devices like desktops for local storage to exchange files. IMHO, other than certain niche applications, its a solution created by an industry looking to come up with an excuse as to why people can't remain comfortable with their current IT and spend money again like they did with the windows wave in the 90's. And a solution that doesn't require selling customers every year on why they need to pay annual maintenance. A solution that gets them to rebuy your product every 3 years. And the only way saas makes sense is multi-tenent which means far less customizability and flexibility which will inevitably lead to alot of local Excel workarounds and thus local servers and desktop computing. All the reasons we moved away from Timeshare computing in the 70's to Desktop computing in the 80's. Man peoples memories are short

@JerryNorman Have your customer take a look at www.eversafe-backup.com We have some great small business solutions that start as low as $250/month and you would get a nice recurring cut. Unlike Carbonite, its image based and backs up all in use files, including SQL & MAS and while their server blew up, they can failover to a local device and continue working with no downtime and no 911 type day like you probably had to deal with.

The IT part of this customer will be handled by a former partner. I passed the eversafe info to him. If I get feedback, I'll pass it to you. How does eversafe compare to Zenith Infotech's BDR: http://www.zenithinfotech.com/en/Solutions/BDR-G14.aspx Thanks for the suggestion.

I agree with @WayneSchulz comment that ""it depends"". It's not always just a dollars comparison. Even when dollars are involved, have we really placed the correct value on the subjective advantages that are the basis for the decision? I have a customer with a 50-user Sage 100 license on subscription that is hosted by I-BN. They are a relatively small subsidiary of a $12 billion parent, and they simply cannot add to the balance sheet through a capital expenditure. This subsidiary has also been bought and sold many times through the last 20 years, so they also have the flexibility of not having a long-term commitment, plus they can expand or contract their system as required. This flexibility has a value, so that should be factored in when comparing investments. As for leasing a car, I will always do this. I have little time or tolerance for having to repair cars. And every three years, I get the latest in technology. And then there's feeding the ego which is . . . priceless.

@JerryNorman Zenith was the pioneer in these solutions. However, their approach of being a 90% India based company backfired on them due to gaining a reputation for horrendous support. They are now on their last legs, including numerous legal and financial proceedings against them. We offer 50% off (through our vendor) on EverSafe! units for people 'trading in' Zenith BDR's. A few others in our industry, like Axcient, are doing the same. We have a number of technical advantages over Zenith including automatic bootup & testing of the backups, use of ShadowProtect, which is hands down the best image based backup engine, better cloud pricing and the use of 2 data centers instead of one for redundancy, granular control of both local and cloud based retention, simplified, pay one price regardless of # of servers pricing, and 24x7x365 live American phone support, vs. Chat with India support for Zenith

Interesting, Mark. Thanks. Makes a lot of sense.

Recently I have found AT to be uneducated talking head speak, although I generally like Gene Marks. Different strokes for different folks. When we sell cloud we include upgrades and unlimited break fix through Sage or Support One for SAP. Therefore our price is all inclusive (oil changes included). Now if you want to add chrome rims... you pay for that enhancement. I stopped trying to play the ROI game a long time ago. I find the breakeven to have stretched from 2-3 years to 4-5 years for purchase vs. subscribe. I offer both and let the customer choose. It is not my decision to make for anyone but my company.

What Gary said. It won't be a black or white world in 10 yrs. I suspect that it will become very, very virtualized. But the method of paying for access to those apps will vary. Some will be public cloud, some will be private. Some purchased, some leased, some rented. We're having good success with offering choices to customers/prospects and letting them choose with our advice. The concept of ""cloud"" is about 10 yrs old now. I suspect we'll be seeing some other ""new and exciting"" product offering defined soon. This sizzle is starting to age.