Monday, November 28, 2011

Unclouding the Concepts of Cloud Computing

An interview with Mikael Ekstrom, eBuilder Senior Vice President, Product Marketing and Product Management

Unclouding the Concepts of Cloud Computing

Most people today have heard of "cloud computing." But how many really know what this term means?

Currently, there are many definitions and much that confuses. Lately I have heard many people ask for help in understanding what cloud computing is and how it can help them practically--"How can cloud computing be better than using our own IT department?" Often those I have talked with have been looking for companies that offer "cloud solutions," an area in which it is difficult to get help today. So I would like to explain some of the trends, concepts, and services that exist in the area of cloud computing.

Global Logistics Media (GLM): Could you start by defining some of the basic terminology?
Sure, let me define our terms.
The term "cloud" comes from the common representation of the Internet in computer network diagrams. The point of using the symbol of the cloud is that it depicts a network abstracted from its concrete infrastructure. In other words, it's a generalized symbol for a network without any details of the network's constituent parts like servers, cables, routers, firewalls, etc.
The term "cloud computing" refers to processing (and its related data) that takes place "in the cloud" and is accessed via a network, but the location of the processing is not specified or necessarily static. This, for example, contrasts with cases in which the processing and data storage are on known servers. The National Institute of Standards and Technology (NIST) in the United States defines cloud computing as "...a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g. networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction." That is a good IT definition, and I would like to emphasize that today it is not only a model, but a reality.

GLM: You mention the "reality" of what is out there, and, yes, there certainly are a lot of cloud computing and cloud-related services available today. Why?
Part of the answer is that cloud computing offers, among other things, functionality that would be prohibitively expensive to invest in but which is made affordable because it is shared among many users. The functionality is more readily available than if it were requested from, and implemented by, your own data center. Additionally, it reduces your dependence on your data center and IT staff because someone else hosts and operates the service(s) you access in the cloud. Hosting the services in the cloud enables you to take advantage of the focused operations expertise that is otherwise difficult to hire and retain. And perhaps most important, cloud computing also provides functionality whose delivery is easily accessible, scalable, and flexible.

GLM: Accessible, scalable, and flexible?
That is right. Advanced virtualization of networks, servers, storage, and applications; combined with standardization and automation, provide on-demand scalability and flexibility far beyond the capacity and capability of most IT departments. Cloud computing is a quantum step beyond what most organizations' data centers can provide. This does not mean that securing these services and ensuring that they meet your requirements is without problems. But the brute facts are that massive, highly-available, scalable (up and down) and therefore very flexible technology is readily available at very advantageous rates.

GLM: OK, there is much new technology available, and with that comes numerous acronyms. Can you disperse some of the fog?
Let's start with IaaS, PaaS, and SaaS, which I am sure most of your readers have encountered. I'll use my own condensed versions of NIST's definitions. First, is Infrastructure as a Service (IaaS). IaaS is the providing of "processing, storage, networks, and other fundamental computing resources where the consumer is able to deploy and run arbitrary software, which can include operating systems and applications." Think of how quickly you might access "fundamental computing resources" such as processing capacity or storage over the Internet in contrast to the lead time required to obtain these resources in-house via your IT department.
Second, is Platform as a Service (PaaS). PaaS refers to providing customers with the capability "to deploy onto the cloud infrastructure consumer-created or acquired applications created using programming languages and tools supported by the PaaS provider." Thus the PaaS provider is making a software development environment available to developers, and the PaaS provider hosts the applications, which are made available to customers via the cloud.
Third, and most closely related to eBuilder's Cloud Processes®, is Software as a Service (SaaS). SaaS refers to applications that run on a cloud infrastructure and are provided over the Internet to consumers in an accessible way "from various client devices through a thin client interface such as a web browser." The take home lesson here is that SaaS services are not installed on an organization's own computers, but rather in the cloud; and they can easily be accessed via a browser by individual employees who, for example, can have the usage charges debited to their credit cards for later reimbursement. The charges are "pay as you go." The IT department need not be involved and normally does not manage these applications as it does in-house applications. The IT department might not even know they are being used. But these applications can be business-critical, for example, a Customer Relationship Management (CRM) application, such as Salesforce.
These descriptions are cursory, but they highlight the advances in accessibility and flexibility that cloud-computing technology delivers at different levels to customers.

GLM: You mentioned "Cloud Processes"; what does this term mean?
Cloud Processes are most important in a business perspective, so that's where I'll start the explanation.
The term "process" refers to "a systematic series of actions directed to some end" (Random House Dictionary) or "a series of actions that produce a change or development" (Collins English Dictionary). And a "business process " is a series of activities structured to achieve a specific management, operational, or related business objective. For example, procurement, stock management, and reverse logistics are all business processes. It is important to note that business processes are richer in content than IT systems, that is, business processes include considerable amounts of business-relevant information, business rules and logic, reports, etc. And even more significant, today many critical business processes span multiple businesses to create a value network. The content is spread among, and needs to be shared among, the collaborating partners in the value network.
eBuilder uses the term "Cloud Processes" for its software to avoid confusion with the term "cloud computing." Many people, when talking about what we call Cloud Processes, call them "cloud services." For most people, cloud computing is IT operations that are run as a service over the Internet, as opposed to being run by a company's own IT department. But as we have seen above, the reality of cloud computing is more varied and complex than that. I should add that this combination of IT and business expertise is one of the most important next steps forward in the "cloud" arena. I like to say that eBuilder's combination of cloud computing with business processes is like: 1+1=3.

GLM: What does a Cloud Process do?
eBuilder Cloud Processes combine the technological advances and advantages of cloud computing with the power of their own integrations, automation, optimization, and control of business processes that are executed in a value network, that is, among multiple, collaborating businesses. This type collaborative business processes is often called "multienterprise business processes", if you have come across that term.

GLM: What marketplace needs do Cloud Processes fulfill?
While benefitting from the technological excellence of cloud computing, eBuilder Cloud Processes focus on the business activities related to the following specific process domains: travel and expense management, procurement, order fulfillment, after sales, and financial transactions. Today the business activities that make up various business processes are becoming increasingly complex as organizations' operations are driven more and more within value networks of collaborating partners. The more complex the value network, the more complex the processes. Thus the importance of a company like eBuilder that provides Cloud Processes that integrate your collaborating partners and that automate, optimize, and control the business processes throughout your value networks. eBuilder Cloud Processes will save you money by substantially reducing costs. They provide sophisticated functionality embodying years of business-process and IT experience, but they require no investment in IT staff, software, or hardware. Rather you use it and gain its benefits while charging the cost to operating expenses.

GLM: Earlier you mentioned that Cloud Processes' combination of IT and business expertise is one of the most important next steps forward in the "cloud" arena. Doesn't SaaS offer some of these same advantages?
SaaS applications were a significant step forward in IT that had positive implications for business. But it is the introduction of Cloud Processes that shifts the focus from the application-centric to the business-process centric. While they use state-of-the-art technology, they are primarily business oriented; they solve business problems. They are only secondarily technology solutions. In this sense they bridge the "business-IT gap" where it is difficult to reconcile the different dynamics of business strategy, the organization, and the underlying infrastructure. Cloud Processes embody specific business-process expertise (logic/rules, etc.). Because they integrate specific value networks of collaborating businesses, they enable cross-organizational business processes, that is, they are multienterprise. Critical in this context, they are open to change, and give you the agility to quickly make changes in a highly interconnected and rapidly changing business environment. They focus on optimizing the operations of entire end-to-end business processes. And the more efficiently your business processes are executed, the more value you derive from them.
As I hope you can see, Cloud Processes are a major step past technology fixations into the realm of achieving business excellence.

GLM: What are the differences between SaaS and Cloud Processes from an implementation and usage standpoint?
I'll start with the similarities. Both SaaS applications and Cloud Processes are easily accessible anywhere via an internet connection; neither is installed on your own server, both provide flexible and swift scalability, both feature "pay-as-you-go" pricing models, both include regular maintenance/updates, and both reap the benefits of professional hosting and security.
Now, the differences. Cross SaaS application integration is in its infancy. There are significant limits to what can be connected to what. To integrate, you will need an integration platform, and/or you may be required to begin a complex and expensive integration project (data integration, application integration, B2B data exchange, etc.) to get your SaaS applications communicating with each other. Basically, what you get with SaaS applications is specific functionality delivered over the Internet, individual pieces in the jigsaw puzzle of your organization's business process needs. More SaaS applications mean more pieces, more functionality, effectively delivered; but the issue of integrating them remains.

GLM: OK, so what parts of this "jigsaw puzzle" do Cloud Processes deliver?
If we continue with the jigsaw puzzle analogy, eBuilder Cloud Processes provide entire jigsaw puzzles that are particularly suited to be scaled in a value network. They provide software that enables end-to-end integration, automation, optimization, and control of multiple business processes. Each Cloud Process integrates all the collaborating business partners in its business process's domain. The integrations are built on eBuilder's robust integration platform, and they are expedited by the large Business Process Networks already built into the platform and by the integration expertise of eBuilder personnel. Now we have all the collaborating business partners communicating with each other.
GLM: How do Cloud Processes achieve this automation, optimization, and control? What is going on behind the curtain?
eBuilder Cloud Processes provide Business Process Management and Business Process Rules to handle the actual functioning of the business process. Because Cloud Processes contain the relevant logic and rules, they are able to automate, control, and optimize much of the business process. In addition, Cloud Processes provide Master Data Management so that relevant background information is collected, aggregated, quality assured, and managed throughout the value network. Cloud Processes provide end-to-end visibility of the business process through tools that analyze and present the relevant operational status for those responsible at the operational, tactical, and strategic levels. So there is a world of difference between SaaS applications and Cloud Processes.

GLM: How do the various Cloud Processes relate to each other in a typical business environment?
The Cloud Processes relate to each other in a logical way: imagine that you make a trip to negotiate the terms of a purchase (eBuilder Travel and Expense Management), you later buy goods and services and want to ensure that they are purchased and delivered according to valid agreements/contracts (eBuilder Procurement); your product is delivered to customers under full control and visibility to all the participating business partners in your value network (eBuilder Order Fulfillment); you provide first-class service for your products and therefore have an excellent after sales/reverse logistics process (eBuilder After Sales).

GLM: Fine, thanks for guiding us through some of the salient points of cloud computing and beyond.
Your welcome. I hope you have enjoyed our journey and that you have found it valuable. Visit our website, for more information about Cloud Processes and the various industries they serve.

Nigel Lewis
CEO - Global Logistics Media