First, what is The Cloud?
The Cloud simply refers to information technologies that are externally hosted or otherwise “virtualized”. For example, your Web site is probably hosted through an Internet service provider. It’s in The Cloud. If you’re using Gmail for email, your email is in The Cloud. If you have “hosted VoIP” or “hosted Microsoft Exchange”, then that means your most business critical tools are in The Cloud. If you use SalesForce.com, Autotask or other software as a service (SaaS) offerings, you’re using The Cloud.

For IT pros, The Cloud is just a new way to refer to a general trend in computing (usually referred to as cloud computing) over the last 20 years to move computing resources and applications off-premise. For businesses, using The Cloud means that they don’t have to worry as directly about administering, managing and provisioning the hardware and underlying software for those applications (along with some up-front savings). There’s nothing especially new about The Cloud (except for the recent round of hype).

Is The Cloud really gaining momentum? Reality bites.
I don’t want to rain on anyone’s parade, but The Cloud is still a fair amount of unrealized potential and, analysts and vendors aside, a source of confusion for us earthlings. That doesn’t mean The Cloud isn’t useful for some applications. It is. It’s just that small and medium business owners need to be careful to set their expectations accordingly and that IT professionals need to do a better job of educating customers about what the benefits and pitfalls of The Cloud are.

It’s always difficult to predict when a way of managing information technology is going to gain critical mass. Sun declared that the network was the computer in the 1990s. If you read the press at the time, we were all going to have thin-clients on our desks. Corel was converting Word Perfect to JAVA in anticipation of a swing in the market. Things didn’t turn out exactly as expected, did they?

That’s not unusual. Lots of good technologies and good ideas never transform the market. But that doesn’t mean The Cloud isn’t gathering momentum this time around. There are good reasons to believe that there is some truth to the hype about The Cloud. Security, bandwidth, decreasing costs for computing resources and other factors are looking very good for The Cloud, but there are rarely any guarantees with information technology. For now, The Cloud is still on the horizon, and FAR is advising clients to take a wait and see approach unless they have very compelling business reasons to switch to The Cloud.

What should small and medium businesses put in The Cloud and what should they keep on premise?
This is always the most difficult question to answer. It depends on the business. It depends on their costs and business model. It may even depend on the types of customers they service (their verticals). At FAR, we work with customers to put the right solutions in place for their needs. More and more, small and medium businesses, even if they have IT teams in place, need that kind of help from a company like FAR. What is important is using the right tool to meet the right challenge, and using the tools at your disposal (whether they’re in The Cloud or in your server room) in ways that work for your business.

But really, what should and shouldn’t small and medium businesses put in The Cloud?
Most companies can divide their information technology into two key groups: user productivity and related business systems (e.g,. their customer relationship management applications, their project management applications, and so on), and their core infrastructure applications (e.g., Microsoft Exchange, their VoIP phone system, their network and so on). These are general categories and some products straddle both.

The Cloud is sometimes a good way to address the needs of the first group. For example, FAR uses Autotask to manage its professional services automation. We love it. I love it. FAR also hosts a lot of our clients’ Web sites through a virtual Web server provided by an ISP. So, these are both in The Cloud.

The Cloud is often a bad (bad as in costly and potentially dicey) way to manage the second group (core infrastructure products). E-mail, phone services and unified communications, for example, are typically so critical to many businesses and so expensive to host over even a 2 year period that putting them in The Cloud doesn’t make much sense for many small and medium businesses. FAR hosts its Exchange and VoIP phone system on-premise for this reason, as do the majority of our clients.

What key factors should businesses consider?
The Cloud and on-premise solutions are not mutually exclusive ways to solve business problems. They are two different but increasingly related tools to solve the challenges many businesses face. There may be overlap between the two in the same business process.

For example, when I wrote this blog, I wrote it using Microsoft Word on my desktop computer. Then I uploaded it as an attachment to an Autotask project for the proofreader (into The Cloud). So, even though I didn’t write the document in The Cloud, we used The Cloud during the process; now that I am publishing it to this blog, the content is officially in The Cloud again.

Even though we could have used Google Docs to write the blog (and so, used The Cloud from beginning to end), we won’t be switching to Google Docs any time soon. Why not? Microsoft Office provides us with the right cost/benefit ratio and the features that we need. That’s really the best way to make a decision about what to put in The Cloud and what not to put in The Cloud: does it make financial and business process sense?

Beyond that, there are a number of factors to account, but the big questions are usually: What are the costs? How important is this information technology to our business? What level of service does this application require? In some cases, cost-wise, it may make sense to rent an application (in The Cloud), and in some cases, it makes sense to own (on-premise). In some cases, the business system is simply too critical or too complicated to put in The Cloud and an on-premise solution makes the most sense. In other cases, the level of service provided by an external service provider can’t match your business expectations or requirements. The answers to the questions will vary from business to business and from application to application.

The FAR Cloud
As a managed service provider, FAR provides its own “cloud” to our customers (The FAR Cloud, so to speak). We take the business challenges our customers face and put in place a seamless solution that combines on-premise and virtualized products and services with our boutique level of planning, execution, support and monitoring to meet their business requirements and to provide continuous improvement. We make sure that everything just works together.

That’s really the value that good information technology planning and execution provides (whether it’s in The Cloud, on-premise or a combination): reasonable peace of mind at reasonable cost. What FAR provides customers is that peace of mind extended to the whole of their information technology requirements. Over the next several blog entries, I will be giving you some of FARs most common answers to these questions and how The Cloud can be an effective part of your business.