Is it time to let the cloud gather across this innovative island?
It's billed by technology giants as the next big net-based industry, but it is far too early to tell of the pitfalls, writes Peter Flanagan
Published 05/05/2011 | 05:00
WITH the current state of the econ-omy, it would be fair to say that the country's leaders are casting around for any port in a storm when it comes to creating jobs and pulling the economy out of the funk it has been in for the last three years.
Given the country's problems, various business leaders have called for a renewed focus on their sector. Glen Dimplex chief executive Sean O'Driscoll wants the Government to place a lot more emphasis on manufacturing.
Many leaders in the agri-foods sector are revelling in the renewed importance of a sector that was neglected over the last decade-and-a-half as the Celtic Tiger ramped up, while the Government has understandably been fighting hard to retain the 12.5pc corporation tax and all the foreign investment that brings in.
One plan the Government does seem to be following is the idea of Ireland as an "innovation island" and a "centre of excellence for technology". To that end, attention is turning in a big way to "cloud computing".
Most of the major computer companies on the planet -- IBM, Google and Microsoft are three of the highest-profile advocates -- say the cloud is the wave of the future.
A recent report from Goodbody economic consultants and Microsoft Ireland said the cloud could be worth 20,000 jobs and €9.5bn to the Irish economy -- not to be sniffed at in anyway.
But how realistic is this? For a lot of people, cloud computing is an abstract concept that is difficult to comprehend and sounds a lot like snake oil; while for businesses recent security scares have raised doubts about using the cloud to house all their data.
Is it worth Ireland going after, or is it another passing fad that will have been forgotten as soon as it arrived?
The idea of cloud computing is a relatively simple one. Most of us have computers with lots of programmes and files stored on the computer itself.
If you have a document stored on one computer and want to read it on another one, you have to physically move it to the other machine.
Cloud computing, though, sees these files all stored online, "in the cloud". If you want to access a document from the cloud, you can use any computer with an internet connection.
Practically all of us use cloud computing every day when logging on to our email on the web.
Microsoft Ireland managing director Paul Rellis has been one of the most vocal proponents of cloud computing and has repeatedly called on the Government to develop Ireland as a centre of excellence for cloud computing.
He believes investment in cloud computing will improve competitiveness while creating jobs and increasing foreign direct investment.
"The potential of this thing is big and there really is a great opportunity. If there is some speed and urgency put behind this [from the Government], Ireland can take a disproportionate share of the global cloud computing market," he claims.
"While cloud is considered by some as a technology evolution, the reality is that it is much more than that.
"The fundamental shift that it represents means that business, public sector and Government now have the opportunity to change how they run their organisations, deliver services and scale an operation, while increasing efficiencies and reducing costs.
"Globally, cloud is in its infancy, so Ireland has a wonderful opportunity to be a leader in the field and create a cluster of talent to support a wave of cloud based companies," he claims.
Mr Rellis's view is echoed by Microsoft Europe head Jan Muehlfeit, who last year compared the move to cloud computing to the transition from steam power to electricity.
"Currently, the consumer pays for capacity. With the cloud, the consumer will only pay for usage.
"It will be much more cost effective for businesses and allow business to become much more efficient," he said.
Microsoft obviously has a vested interest in pushing the move towards cloud computing -- company chief executive Steve Ballmer is "betting the company's future on the cloud" and now has more than 70pc of his staff working on cloud-based services -- but Goodbody's report on the potential of the sector was unequivocal in its belief that the Government should invest heavily in the cloud, saying it will deliver "much-needed competitiveness and jobs for the Irish economy".
The report estimates sales from Irish-based firms could reach €9.5bn per annum within three years and, in its current state, would provide jobs for 8,600 people as activity migrates to the virtual world.
"Cloud computing is a major evolving industry that will revolutionise how businesses and public sector organisations run their operations," it adds.
In the Irish context, the big selling point for cloud industries in Ireland is the cost. Goodbody says the cloud makes IT "a low operating cost rather than an expensive capital investment". That is vital, especially for small businesses which cannot afford advanced IT systems otherwise.
That transition to cheaper IT services could lead to the formation of around 2,000 SMEs not related to IT, the report says, while in the public sector it would lower cost while "improving the cost of public services in Ireland".
All very positive, but the shift towards the cloud has its problems.
Goodbody's report states the world market in cloud computing could be worth between €40bn and €110bn by 2014. Those are big numbers to be sure, but the €70bn difference between the low and high estimate tells a story in itself.
In truth, we don't know how much the cloud will be worth in a few years' time. The market is too young for analysts to make an accurate estimate of its future value.
The other big problem, especially for businesses, is security. Understandably, companies are loath to trust external service providers with commercially sensitive data.
A company's staff may access the data through the cloud, but ultimately the data has to be stored somewhere. Can a company trust the service provider to keep its data secure?
The building that houses the servers could be a well-guarded, big office but it could also be a shack in the middle of nowhere with no security.
And then there is the question of what happens if the servers fail, regardless of security.
That danger hit home for a number of companies, mostly small start-ups including high-profile new technology sites FourSquare and Reddit, after problems with online retailer Amazon's web hosting service brought down a number of websites.
While the problem was ultimately resolved, it was reported that the crash had permanently destroyed some users' data.
It was a "very small" amount of the total data affected by the crash, but for a small company, the damage could have been catastrophic.
Meanwhile, on the last weekend of February, Google accidentally deleted 150,000 of its "Gmail" email accounts, removing all mail stored by the affected users, sometimes going back a decade.
Those accounts were successfully restored but, as with the Amazon failure, the event brought the spectre of data loss into sharp focus for companies considering a switch to cloud-based services.
So how does a business decide whether to move into the cloud or not? Raj Samani is chief technology officer for Europe, Middle East and Africa for computer security firm McAfee.
Writing on his company's cloud security blog, he said for companies, the key is to manage risk.
"Although concerns are entirely valid, I would probably add that these concerns should be no different to hosting internal services, indeed such risks could even be managed easier with a third party such as a cloud service provider (CSP).
"By ensuring that all requirements are clearly defined, and included within contracts, the customer should be in a position to ensure that risks are mitigated.
"Even new threats which may have not been initially considered should be fairly straightforward to mitigate, and this will invariably require an increase in the cost of the service.
"Compare this with the challenge of recruiting specialists, and getting them to go through the 'Plan, Do, Check and Act' cycle for the mitigating controls, which could not only prove time-consuming but very costly.
"Whilst cost becomes a crucial factor, it should not remain the sole requirement for determining the CSP.
"If you are unable to find a CSP that can satisfy your risk appetite for the budget you have allocated, then either increase your budget, or host internally.
"Both options are more attractive than using your media skills to answer difficult questions about why your customer details were made public."
The cloud is undoubtedly the buzzword in computing at the moment and, given the Irish position, it probably does make sense to take the plunge and enter the cloud, but, to use a cliche, it really is a case of "time will tell" as to whether the cloud can become the saviour it is portrayed as, or if it will be forgotten in a few years' time.