Cloud Computing Trends: Where is the Cloud Headed Next?

Cloud adoption has been quick and painless at the consumer level. For instance, everyone’s on Gmail, YouTube, Facebook and Twitter on a daily basis yet most think nothing of the fact that they’re already using cloud-based services. Small businesses have also discovered how cloud solutions have raised efficiency in the workplace up a notch or two, while also bringing about significant cost savings. Cloud applications, particularly those for communication, file sharing, office software, backup and storage, and customer management, have rapidly grown in usage among SMBs.

In the same manner, large corporations are starting to see the potential of moving some of their IT department, whether its infrastructure or network management, to the cloud. By all indications it would seem that whether we are ready for it or not, cloud computing technology is here for the long haul.

So where is the cloud headed to next? In this post we examine the trends in the world of cloud computing and what likely lies in store in the near future for cloud users.

Focus on Security

Security has always been a key concern in the cloud computing industry and this will not go away anytime soon. If anything, data security in the cloud will only get to be in the limelight even more as cloud adopters grow in number. That’s why we expect professional cloud services providers to start implementing measures that will help slowly build up confidence in cloud security.

We should soon see more advanced security techniques and protocols that would increase the overall level of privacy and protection for cloud-stored information. Tighter security for login encryptions and prevention of unauthorized access are priority although there are a lot more issues that may need to be addressed. Now it remains to be seen whether these moves are enough for corporate clients to put their full trust in the cloud. But then again, they can always find ways to stay secure while making use of cloud computing where they can, which brings us to the next cloud trend.

Hybrid Approach

Large businesses are taking a longer time to get used to and actually use cloud services, and understandably so. After all, these companies have more at stake when it comes to dealing with such valid issues as security, compliance, outages, legacy systems, and more. However, they also cannot ignore the very appealing characteristics of the cloud. For big companies that have substantial IT needs, scalability, business agility, and faster deployment are listed as the biggest draws of the cloud.

This is why analysts predict that as as these businesses look toward leveraging the benefits of the cloud while at the same time maintaining control over mission critical data and systems, the use of a hybrid approach, i.e. putting some services in a public and at the same time opting to utilize a private cloud for other applications, will see enormous growth.

Mobile Cloud Computing

The BYOD or Bring Your Own Device business policy is another emerging trend that would not have been possible if not for cloud technology. This practice involves having employees bring their mobile devices to work, allowing them to access company files, data, and applications from their personally-owned gadgets in and out of the workplace.

As with any new business practice, the concept of BYOD can be both advantageous and disadvantageous. On the one hand, some believe it helps increase employee productivity and lifts their morale, while reducing overall IT costs. On the other hand, BYOD also opens up a whole new set of problems that are quite consistent with what many businesses take issue with with cloud technology: security. Do the pros outweigh the cons or vice versa? This much isn’t clear yet but what is evident is that more cloud apps are going mobile.

Efficiency, Innovation

While cost savings has always been one benefit that cloud proponents are quick to point out, its capability to improve and streamline business processes, thereby increasing efficiency and agility within the organization, is another key opportunity that the cloud offers. This is evident when you take a look at the most commonly used cloud services: backup and archiving, business continuity, collaboration tools, and big data processing.

Moreover, the cloud is making it easier for individuals to create new products and produce new lines of business. With access to higher IT capacity at lesser cost and at faster deployment rates, businesses can scale into more innovation without having to worry about the availability of computing resources.

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Can you do away with the Project Initiation Meeting?

Project initiation meetings are often skipped to fast-track projects. Once a sponsor is found, organisations go straight to project planning and execution. But based on our own experience, holding a project initiation meeting can actually eliminate many issues that may crop up in the future and hence may speed things up instead in the long run.

It is in the project initiation meeting where your project objectives and scope are clarified and all stakeholders are brought to the same page. Project sponsors and stakeholders will have to know in a nutshell what is needed from them, what the possible risks are, what different resources are required, and so on. So that, when it’s time to proceed to the next phase, everyone is already in-sync.

So what are taken up in such a meeting? Perhaps an actual example can help. Sometime in the past, we set out to work on an eCommerce website project. After conducting the project initiation meeting, these were some of the things we were able to accomplish:

  • Identified deliverables e.g. site design, interface to payment system, etc.
  • Come up with the project phases
  • Agreed what should be in and out of scope
  • Defined the acceptance test criteria
  • Identified possible risks
  • Identified the possible training and documentation work needed
  • Established whether any analysis was required, e.g. as with regards to payment interfaces
  • Formulated disaster recovery plans
  • Defined roles and responsibilities
  • Drafted timelines and due dates

Aren’t these covered in project planning? If the project is a big one, the answer is no. In a large project, project planning is a much more exhaustive activity. In a project initiation meeting, only the basic framework is defined.

Some questions may still remain unanswered after a project initiation meeting, but at least you already know what answers you need to look for. In the example we gave earlier, we left the meeting knowing that we needed:

  • a list of all necessary hardware to estimate the costs
  • to identify possible dependencies we might have with third parties
  • to identify what software had to be bought and what skills we needed to hire

When it was time to proceed to project planning, everyone involved already knew what direction we were taking. In effect, by not skipping the project initiation meeting, we were able to avoid many potential obstacles.

How to Reduce Costs when Complying with SOX 404

Section 404 contains the most onerous and most costly requirements you’ll ever encounter in the Sarbanes-Oxley Act (SOX). In this article, we?ll take a closer look at the salient points of this contentious piece of legislation as it relates to IT. We?ll also explain why companies are encountering difficulties in complying with it.

Then as soon as we’ve tackled the main issues of this section and identify the pitfalls of compliance, we can then proceed with a discussion of what successful CIOs have done to eliminate those difficulties and consequently bring down their organisation’s IT compliance costs. From this post, you can glean insights that can help you plan a cost-effective way of achieving IT compliance with SOX.

SOX 404 in a nutshell

Section 404 of the Sarbanes-Oxley Act, entitled Management Assessment of Internal Controls, requires public companies covered by the Act to submit an annual report featuring an assessment of their company?s internal controls.

This ?internal control report? should state management’s responsibility in establishing/maintaining an adequate structure and a set of procedures for internal control over your company?s financial reporting processes. It should also contain an assessment of the effectiveness of those controls as of the end of your most recent fiscal year.

Because SOX also requires the public accounting firm that conducts your audit reports to attest to and report on your assessments, you can’t just make baseless claims regarding the effectiveness of your internal controls. As a matter of fact, you are mandated by both SEC and PCAOB to follow widely accepted control frameworks like COSO and COBIT. This framework will serve as a uniform guide for the internal controls you set up, the assessments you arrive at, and the attestation your external auditor reports on.

Why compliance of Section 404 is costly

Regardless which of the widely acceptable control frameworks you end up using, you will always be asked to document and test your controls. These activities can consume a considerable amount of man-hours and bring about additional expenses. Even the mere act of studying the control framework and figuring out how to align your current practices with it can be very tricky and can consume precious time; time that can be used for more productive endeavours.

Of course, there are exceptions. An organisation with highly centralised operations can experience relative ease and low costs while implementing SOX 404. But if your organisation follows a largely decentralised operation model, e.g. if you still make extensive use of spreadsheets in all your offices, then you’ll surely encounter many obstacles.

According to one survey conducted by FEI (Financial Executives International), an organisation that carried out a series of SOX-compliance-related surveys since the first year of SOX adoption, respondents with centralised operations enjoyed lower costs of compliance compared to those with decentralised operations. For example, in 2007, those with decentralised operations spent 30.1 % more for compliance than those with centralised operations.

The main reason for this disparity lies in the disorganised and complicated nature of spreadsheet systems.

Read why spreadsheets post a burden when complying with SOX and other regulations.

Unfortunately, a large number of companies still rely heavily on spreadsheets. Even those with expensive BI (Business Intelligence) systems still use spreadsheets as an ad-hoc tool for data processing and reporting.

Because compliance with Section 404 involves a significant amount of fixed costs, smaller companies tend to feel the impact more. This has been highlighted in the ?Final Report of the Advisory Committee on Smaller Public Companies? published on April 23, 2006. In that report, which can be downloaded from the official website of the US Securities and Exchange Commission, it was shown that:

  • Companies with over $5 Billion revenues spent only about 0.06% of revenues on Section 404 implementation
  • Companies with revenues between $1B – $4.9B spent about 0.16%
  • Companies with revenues between $500M – $999M spent about 0.27%
  • Companies with revenues between $100M – $499M spent about 0.53%
  • Companies with revenues less than $100M spent a whopping 2.55% on Section 404

Therefore, not only can you discern a relationship between the size of a company and the amount that the company ends up spending for SOX 404 relative to its revenues, but you can also clearly see that the unfavourable impact of Section 404 spending is considerably more pronounced in the smallest companies. Hence, the smaller the company is, the more crucial it is for that company to find ways that can bring down the costs of Section 404 implementation.

How to alleviate costs of section 404

If you recall the FEI survey mentioned earlier, it was shown that organisations with decentralised operations usually ended up spending more for SOX 404 implementation than those that had a more centralized model. Then in the ?Final Report of the Advisory Committee on Smaller Public Companies?, it was also shown that public companies with the smallest revenues suffered a similar fate.

Can we draw a line connecting those two? Does it simply mean that large spending on SOX affects two sets of companies, i.e., those that have decentralised operations and those that are small? Or can there be an even deeper implication? Might it not be possible that these two sets are actually one and the same?

From our experience, small companies are less inclined to spend on server based solutions compared to the big ones. As a result, it is within this group of small companies where you can find a proliferation of spreadsheet systems. In other words, small companies are more likely to follow a decentralised model. Spreadsheets were not designed to implement strict control features, so if you want to apply a control framework on a spreadsheet-based system, it won’t be easy.

For example, how are you going to conduct testing on every single spreadsheet cell that plays a role in financial reporting when the spreadsheets involved in the financial reporting process are distributed across different workstations in different offices in an organisation with a countrywide operation?

It’s really not a trivial problem.

Based on the FEI survey however, the big companies have already found a solution – employing a server-based system.

Typical server based systems, which of course espouse a centralised model, already come with built-in controls. If you need to modify or add more controls, then you can do so with relative ease because practically everything you need to do can be carried out in just one place.

For instance, if you need to implement high availability or perform backups, you can easily apply redundancy in a cost-effective way – e.g. through virtualisation – if you already have a server-based system. Aside from cost-savings in SOX 404 implementation, server-based systems also offer a host of other benefits. Click that link to learn more.

Not sure how to get started on a cost-effective IT compliance initiative for SOX? You might want to read our post How To Get Started With Your IT Compliance Efforts for SOX.?

Measure it to manage it with smart meters

Measure it to manage it. This saying applies perfectly to energy management. Effectively managing energy use is virtually impossible with unreliable measurement devices in place or worse still, no measurements at all. Smart meters are a smart way to measure energy and water usage giving you more control over the amount of energy or water usage.

Smart energy meters:
Smart meters are indeed a smart way to get insight into your energy use which brings more security and a better environment. They can also enable you to get Smart Energy Reports that are a personalised guide to energy efficiency.

Other benefits of smart meters:

? You are able to generate simple graphs and charts showing you where you use your energy and money

? Consumption of gas and electricity is broken down. This implies that one can be able to view their spending at a glance

? Smart meters track consumption on a monthly basis enabling you to compare your own consumption against other similar households

? By tracking energy consumption and spending over time, one can be able to view the history and assess the impact of their energy efficiency measures over a particular period

Smart water meters:
Smart meters are not only used for measuring energy use, they are also used to measure water usage efficiency. Water efficiency is essential for management of sustainable water resources.

Water resources have been diminishing over time posing a challenge for water users and water suppliers to seriously look for ways to manage water efficiency. The need for accurate, adequate and reliable measurement and monitoring practices of water consumption in organisations can therefore not be overlooked.

Timely collection and analysis of water use data, and relaying this data in a timely manner to the water user, can result in significant changes in water use behaviour. Other benefits include instant detection of areas where water wastage is occurring e.g. leakages hence action is taken to save water. Similar to energy data, water data collected by smart metering systems is also vital in designing water efficiency and recycling systems as well as the improvement of demand management policies and programs.

The use of smart meters to monitor water consumption enables users to analyse, and interpret the data collected. This feedback enables users to change their behaviours.

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