The Emperor’s New Cloud Data Warehouse

Is it just me or is the world going crazy? We all know the story of the Emperor’s New Clothes as originally written by Hans Christian Andersen where the good people of the town are forced into believing that their Emperor is wearing new clothes because anyone who doesn’t go along with that premise is said to be either blind or stupid despite the fact that everyone can see that the emperor is naked. No-one (including the Emperor) wants to be thought of as blind or stupid and so they will follow any foolish notion like a flock of obedient sheep. The foolish notion in this instance is placing the most precious asset of a company – the data – in the hands of a third-party vendor by moving data assets onto a cloud platform.

Now I’m not saying that it’s completely foolish to create the odd data mart in the cloud here or there or to use software as a service (SaaS). The foolishness is in moving all the company data to the cloud. Granted, there are numerous cost benefits that make directors and accountants go weak at the knees and salivate at the prospect of the obvious savings. The concept is sold to them on the basis that the cost of hardware and software is greatly reduced in the cloud along with the cost of hiring the expertise required to maintain the hardware and databases. Outsourcing the company’s reliance on IT to a cloud vendor such as Amazon or Microsoft gives companies the opportunity to ‘trim the fat’ in terms of IT personnel so that only a skeleton IT staff will be required for solution design and development.

There is also the advantage of scalability. Obtaining extra computing power is a simple matter of ticking a box on a cloud vendor control panel while at the same time opening the company wallet to shell out more money to the vendor. The cloud vendor costs may increase on a month-by-month basis, but the company will ultimately be paying less than if the equipment was bought from hardware vendors for on-site servers.

‘So where’s the harm?’ you may ask. ‘How can there be any cloud to this silver lining?’ Well you remember how, ‘in the old days’, companies would buy hardware and software from third-party vendors such as IBM, Microsoft, Hewlett Packard amongst many others? Apart from the initial capital outlay for the purchase, there were the annual license fees and the costs of any additional support and maintenance. Then the company would fall out with the third party vendor over excessive license cost increases, poor service or any number of other reasons. The pain of changing vendors, while not always easy, could be mitigated by using consulting companies to fill the gap while moving to another vendor.

Now let’s apply that same scenario to a company that moves all its data warehousing requirements into the cloud. The life blood of the company…..the data….is handed over to the third-party vendor. Doesn’t that seem like a crazy thing to do?! You may say: ‘Well it’s just a data warehouse that would be in the cloud while the operational systems and original data source would still be kept on-site’. Again, on the surface, no problem here until we consider how much reliance the company places on its data warehouse for reporting and planning company strategy. The company may also be tempted to move its transactional systems to the cloud too. All the eggs in one basket. We all know what happens in that case. What happens if the basket breaks or the company decides that it needs a new basket?

Now you will say ‘but these cloud vendors are very reliable and have massive resources to maintain the platforms’ and you would be correct. However, just as company management can fall out with a hardware or software vendor, when the company management has a difference of opinion with the cloud vendor, they are trapped in a hell of their own making. The cloud vendor effectively has control of the company’s IT operations and the company has no choice but to continue paying whatever charges the cloud vendor chooses to implement. Moving from one cloud vendor to another or moving all the data and software back to an on-site model will be daunting in the extreme and, depending on the level of dependence on the cloud vendor, even impossible without crippling the company.

In past decades we saw the rise of companies outsourcing their IT development to offshore vendors. More and more companies followed the flock and outsourced their development. Then, years later and after millions wasted, one by one they began to realise that all that glitters is not gold and that they should have stayed with their own in-house development. The same thing is happening now with cloud computing. Companies are clamouring to get all their IT operations into the cloud with little thought to the long-term consequences of such a major decision.

The most simple and obvious threat is completely ignored: What if the company’s internet connection is lost for whatever reason? The company’s IT capability is effectively lost in an instant. Perhaps such an event is unlikely given the current level of technology surrounding the internet, but isn’t it worth considering? Balance is all-important in life and never more so than in this mad dash into the cloud.

If you take a step back and look closely at the Emperor, you will see that he is in fact naked and, although no-one wants to acknowledge (or see) that, it is the wise person who does!