Cloud no longer vaporware but biz concerns remain

Asked if cloud has moved beyond the "vaporware" stage and evolved as a sustainable business model, Arun Chandrasekaran, research manager at Frost & Sullivan, cited findings from an end-user study that the research firm recently conducted in the region, where 23 percent of respondents in mid-market companies and large enterprises are using some form of cloud computing.

"Based on the current usage levels, I would say cloud has clearly emerged beyond the hype phase. However, customer concerns about security, privacy, reliability of cloud [infrastructures] and the quality of service level agreements (SLAs) still persist [in the region]," Chandrasekaran told ZDNet Asia.

He explained that key concerns revolved primarily around privacy and security. He added that it is crucial cloud service providers understand the difference and underlying business issues between the two areas when guaranteeing SLAs.

He underscored the need for market players to adopt a transparent framework and observe industry best practices such as the ISO 27001 and SAS 70 framework, in order to boost user confidence.

Network performance an issue
Chris Morris, research director of cloud technologies and services at IDC Asia-Pacific’s practice group, said consistency in service performance is a perennial issue as many cloud services are delivered from data centers on the other side of the globe. "This geographical separation can cause unwanted network latency and slow responses to users and customers," Morris said, noting that 2010 has seen big investments in regional data centers by a number of vendors looking to better achieve performance SLAs.

For online language training portal Englishtown, network performance is certainly a key consideration.

In an interview with ZDNet Asia on the sidelines of the Dreamforce conference here Wednesday, Eric Azumi, vice president of information systems at Englishtown, said infrastructure stability is a crucial factor before any decision to adopt cloud is made, especially in Shanghai, China, where he is based.

The online training service provider uses Salesforce.com in its call centers and has some 30 schools in China. Azumi explained that its schools run Salesforce.com and they have occasionally experienced connectivity problems.

"We’ve been able to control that by working with our Internet service provider, but we can’t expect that of our customers," he noted. "To have a consumer-facing app, you really need to have your server located in China [to ensure network performance]."

He added that this underscored the importance of where the cloud service provider’s data center is located. Elaborating on this, Azumi pointed to the benefit of having Salesforce.com open its first international data center–outside of the United States–in Singapore last year. Previously, any upgrades the SaaS vendor needed to deploy in its North American data center would be rolled out during Englishtown’s peak operational hours in China, he explained. With the Singapore data center now supporting the training portal’s Salesforce.com deployment, upgrades are carried out during Englishtown’s off-peak business hours.

Telcos in the cloud
According to Morris, data centers are capital-intensive. As a result, the IDC analyst noted that regional telcos–which have large investments in existing data centers–are in a good position to host cloud services for local or global SaaS vendors, he said.

Asked if he would consider telcos as an alternative cloud service provider, Azumi said Englishtown currently hosts its operations at China Telecom’s data center. "Salesforce.com is very open to this association," he said. "The cloud doesn’t mean Salesforce.com and the company may not be the best in everything. Sometimes Amazon or Google can do better in some areas of the cloud."

He added that it is then his job to decide which service provider to engage for certain cloud services, and the cloud companies will need to work out their competitive differentiator.

"If you look at Salesforce.com’s Siteforce offering, is China Telecom going to build something like that? I don’t think so," he said.

Azumi also noted that not every application can be put on the cloud, particularly if it means having to overhaul existing software.

He explained that apart from Salesforce.com, Englishtown runs mostly Microsoft applications where its speech recognition software is, for example, built on .Net.

"So at this point, it doesn’t make sense for us to rewrite everything on Ruby, for instance," he said, pointing to Salesforce.com’s announcement today to acquire Ruby cloud app platform, Heroku.

"This is where it makes sense for us to stick to a hybrid model [comprising both on-premise and cloud applications]. So we need to look at the fine level, and decide what we can and cannot do," he added.

Discussion on cross-border data flow
Investments in data centers have also been aimed at addressing cross-border issues on data sovereignty, Morris noted.

"This aspect is important for many organizations," he explained. "Their national legislation and IT governance programs dictate that certain classes of data must remain within national boundaries. Without these local data centers to support cloud delivery, many organizations would not be able to take advantage of cloud services."

However, Daniel Burton, senior vice president of global public policy at Salesforce.com, noted that most governments today, including Singapore, do not set such geographical restrictions on customer data. Only a handful, including Switzerland, actually dictate that customer data held by financial services providers must stay in the host country, Burton said at a media interview with the Asian press.

What governments are concerned about really is data security and data privacy compliance, he said, adding that most would allow organizations to decide what technology they want to deploy. So, the focus for companies keen to deploy cloud is to ensure that data is safe and trusted, he said.

"The key issue or cloud is trust in the vendor and the ability for data to flow internationally," he said.

And, as cloud emerges as a powerful enterprise platform, he added that people will increasingly have concerns about the data management.

"I think, then, that we’ll see a lot of discussions emerging over the next few years about the policies to address this," Burton said. "Governments are thinking, as they step up to cloud, about the issues they need to look at with regard to cross-border data flow."