Can the Cloud Ease Your IT Headaches and Make You Money?

By Dave MacLaren, an EO Vancouver member and president and CEO of VRX Worldwide, Inc. and MediaValet.

One of the many things that we have in common as entrepreneurs is a shortage of time. As a result, we’re constantly looking for new ways to run our businesses more cost-effectively. One commonly cited area of our businesses that tends to take up a lot of our time is IT – whether it’s our own legacy systems or those of outsourced service vendors – they always seem to create one headache or another, draining precious time, money and resources.

Clearly most of us need technology to run our businesses. Luckily, there’s a shift happening in the technology industry that can eliminate many of the IT headaches that we experience every day, transform what is traditionally an operational area of our businesses into a competitive advantage, and potentially generate entirely new revenue streams for each of us. Over the past two years, I’m happy to say, I’ve experienced all of the above.

In 2009, a decade into our photography business, the legacy system that we’d built in early 2000 to manage the content that we create for clients started to break down. At the time, we were handling the content production, distribution and licensing needs for 8,000 hotel clients and were managing 20 TBs of media assets. We initially considered purchasing a new “digital asset management” system but after an exhaustive search that lasted the better part of 2009, we decided the licensing, setup and customization costs, along with the ongoing infrastructure, maintenance and personnel costs, were prohibitive. If we had gone down this route, we would have severely crippled our business financially for the foreseeable future.

The Cloud
With the recognition that we needed to find a creative solution to our dilemma, we turned to technology, and ultimately to cloud-computing, to see if it could solve our challenges.  To avoid any confusion, I’m using the term cloud-computing to mean IT infrastructure (specifically storage, bandwidth and compute power) that you pay for on a pay-as-you-go basis, similar as you do for electricity. The main Cloud service providers are Amazon, Google and Microsoft. However, there are many smaller providers today, as well.

Cloud-computing can include everything from simple storage services, provided by infrastructure-as-a-service (IaaS) providers, to full blown development environments that enable companies to focus entirely on application development and leaves the IT infrastructure  (hardware and software) entirely up to the provider, provided by platform-as-a-service (PaaS) providers. We took advantage of the latter by leveraging Microsoft’s Windows Azure cloud-platform to create an entirely new, 100% cloud-based, digital asset management system to replace our crumbling legacy system. Today, our new system handles all the digital asset management needs of VRX Studios and it’s become an entirely separate brand, MediaValet, that’s now being used by companies outside of the travel industry to handle their own digital asset management needs.

In this article I thought I’d share the benefits we experienced in “moving to the Cloud” and how best to approach this move. The Cloud can mean many things to many people but I thought our Cloud story might be enlightening for some and may spark a few new ideas for others – who knows, it can even help you create an entirely new business.

Saving Money and Time on the Cloud
The Cloud makes employing technology faster, cheaper and easier.  There’s no longer any need to worry about IT infrastructure – the hardware, software, upgrades and maintenance – or the people to manage and support it. Cloud providers take care of all of this for you. And we have to be honest with ourselves, Amazon, Google and Microsoft are way better at it than we’ll ever be.

When it comes to saving money in the Cloud, the numbers say it all. In our case, a cloud-based digital asset management system for a company our size would cost $5,000 – $10,000 per month (all in) vs. a traditional server-based or on-premises digital asset management system whose costs break down as follows:

  • $75,000 – $100,000 upfront for the initial software purchase
  • $25,000 – $50,000 for customization
  • $50,000+ for hardware
  • $15,000 – $25,000 per year for software updates
  • $10,000 – $15,000 per month to cover maintenance and support costs

In my experience, you’ll find similar cost savings when comparing other Cloud-based solutions to traditional on-premises software solutions, be it in storage, backup, email or other technology solutions our businesses need to operate in today’s business environment.

Cost savings are only the beginning. The Cloud delivers benefits to a business that go well beyond simple cost reductions:

  • Scalability.  The Cloud automatically scales to meet your business needs ensuring you’ll never again pay for capacity that you’re not using or hit a ceiling and have your application(s) or system(s) suddenly go dark. If you want more computing power, storage or bandwidth, whether for a short-term development project or to increase the performance of a critical system for the long run, it only takes minutes vs. days, weeks or months to configure.
  • Accessibility. By their nature, cloud-based systems and applications are accessible from anywhere in the world. However, if speed is an issue, Cloud service providers such as Microsoft have massive data centers located around the world for you to utilize on demand and it only take a few hours to set up each new location. Taking advantage of this infrastructure, without having to invest tens, if not, hundreds of thousands of dollars and months of setup time, can be a major competitive advantage.
  • Security. Although there has been a lot of talk in the press about security issues relating to the Cloud, with companies such as Pixar, AP, 3M, Apple, Toyota, Coca Cola and many other large household names already taking advantage of Cloud-computing, companies our size have much bigger day-to-day issues to be concerned about. Let the big boys worry about security. Again, they’re much better at it than we ever will be.
  • Time to Market. If you’re developing new applications, the Cloud reduces development time by thirty to fifty percent and makes setting up development and testing environments as easy and fast as setting up a Facebook account – no matter how much storage, bandwidth and computing power you need.
  • Capital Expenditures Reduced to Zero. You no longer have to invest large amounts of capital upfront to acquire expensive IT infrastructure that rapidly depreciates and your monthly technology spend (previously covering things such as hardware and software maintenance, updates and support) will be significantly reduced.

Putting the Cloud into Practice

Cloud computing looks good on paper but how do you go from where you are now to being in the Cloud? Here are the steps I recommend:

  • Take inventory: First, take inventory of the systems you use to run your business and decide which would benefit from moving to the Cloud. Storage, backup, email and business process systems are often the first systems to be considered for moving to the Cloud.
  • Stick with the Big Guns: Next, review the Cloud solutions available that fit your specific needs.  I strongly recommend  using the Infrastructure as a Service (IaaS), Platform as a Service (PaaS) or Software as a Service (SaaS) offerings from Amazon, Google or Microsoft. As I’ve said a few times in this article, these guys know what they’re doing and are much better at it than we can ever hope to be.
  • Take little steps: If Cloud-computing is compelling to you, look at migrating specific systems first, such as e-mail or storage.  As you get more comfortable with the Cloud provider you’ve chosen, move more systems over.  I don’t recommend moving too many systems at once as there’s a steep learning curve that you need to take into consideration.
  • Pay attention to your IT skills (those you need – and those you don’t): Like our technology department did, your tech staff will probably find that they’ve lifted a giant elephant off their back by moving systems to the Cloud.  The time and effort that goes into maintaining in-house servers is significantly more than most think.  In that same breath, though, I’ll say that your tech team will need to adapt and, in some cases, learn new tech skills to work with (in) the Cloud.  You’ll need to take the skill level of your technology team into account when you take inventory of your systems and reassess the skills you need once you’ve migrated your systems to the Cloud.
  • Consider outsourcing: We did.  As our system is completely Cloud-based, our tech staff works with a team of experienced Azure developers in India. This saves us time and money. It allows us to focus on product design, marketing and sales while leaving the coding and quality assurance to our outsourced team.

New Business Opportunities Born by the Cloud
I mentioned in the beginning that the Cloud can open up entirely new business opportunities for you and your businesses. Those opportunities might be right in front of you, but without a Cloud perspective, you might be overlooking them. We did.

In a span of six months, from the time we started architecting our new digital asset management system to the time it entered beta, MediaValet went from being a tool to solve VRX Studios content management headaches, to a product that some of our hotel clients could use to manage their own assets, to a completely separate brand that now offers digital asset management services via the Cloud to companies of all sizes, industries and locations. A tool that became a separate company, that’s a story that I can tell over and over again.

It’s true what analysts and industry experts are saying:  the Cloud will be a great equalizer for all businesses; it will eliminate the constraints placed on them by existing IT infrastructure and enable the creation of entirely new systems, applications and businesses. It will improve data management practices and business processes, untether workforces, increase collaboration and maximize the return on businesses’ digital assets.  

I highly recommend taking the time to explore how the Cloud can save you time and money, and open your mind to how it can create entirely new opportunities for you and your businesses.

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