SearchCIO-Midmarket.com recently spoke with Erik Dubovik, vice president of information technology at Audax Group LP, a Boston-based private equity firm, about trends that are driving midmarket companies to adopt cloud computing services. In the interview, he explains why cloud email in particular is set for mass adoption in the midmarket, why IT executives find themselves in a tricky position when trying to define the cloud, and the questions he's being asked about cloud services by senior management. Audax Group manages about $4 billion in capital across 30 companies.
Why do you think IT executives' perspectives on cloud computing services and the use of the cloud vary so widely?
Dubovik: Part of the problem is the cloud is overhyped -- you hear so often about the possibilities of the cloud, yet the applicability to our business, at least, is very limited in scope.
It's not like I can take any application and put it in the cloud, or take any storage need and put it in the cloud. Theoretically, yes, I can buy elastic compute power or storage from Amazon or CRM from Saleforce.com, down to buying free [cloud] options. You don't even have to pay for SaaS as a small business, but there are all these other details, and as we all know, the devil is in the details. If I buy storage, is it unidirectional or bidirectional? If it's unidirectional, being used for archiving, the cloud is pretty good. It's low-cost, you just send up information to the cloud and it stays at a very low cost. If you need bidirectional storage where you are putting up and pulling down [data], that's probably not an economical solution for you right now compared to non-cloud-based offerings. Particularly now, with the cost of storage continuing to plummet.
What is senior management asking you about cloud computing services?
Dubovik: They are asking questions around two areas: What are the benefits of email in the cloud and CRM in the cloud? The latter is driven largely by Salesforce.com's ability to define not just CRM, but business in the cloud through first the Saleforce.com application and then their development platform, Force.com.
The first question I hear [about cloud email] is that they are hearing from their peers about email in the cloud and they want to know if it will give us lower costs. They also want to know, in general, what makes sense to move into the cloud today and if we should have a cloud strategy.
So what is your answer to all that?
Dubovik: My answer is that we continue to monitor the "cloud." As part of any IT professional's job, we are always reading about and evaluating all technologies. We are diving into specific technologies with outside research firms and industry peers to determine where people in our industry sector are really leveraging the cloud to either drive down costs or improve efficiencies.
Why do you think cloud email is coming up so often as a potential target?
Dubovik: If you are a smaller business, there is no need today to run your own infrastructure for email. You can get email archiving, email hosting, spam and even mobile device capabilities in the cloud. In the next two to three years, you will see midmarket companies move en masse to the cloud for email and email archiving.
Why will they start moving en masse to cloud email?
Dubovik: Email in the cloud is a mature industry. But what's also happening is email is an easy target from an [IT] infrastructure perspective. With Microsoft, for example, you have an Exchange or Exchange Servers. You can define the computing power put against it, the storage allocated to it, backup policies against it and business continuity and disaster recovery processes around it. Email is a very defined, concentrated piece of the information technology infrastructure that is relatively easy to transplant to someplace else like the cloud or a managed service.
In the next two to three years, you will see midmarket companies move en masse to the cloud for email and email archiving.
Erik Dubovik, vice president of information technology, Audax Group LP
You also have a lot of midmarket companies on Exchange Server 2003, as well as older server hardware. Exchange 2010 is now released, and they are now two versions behind. You have much better I/O performance in [Exchange] 2010, even versus 2007. So there's performance and high-availability improvement in [Exchange] 2010. Then you have the choice of dedicating constrained resources to email, versus a line-of-business system, which [in the latter case] could improve revenue or reduce costs. When you add that to the cost of replacing hardware, building out high availability and archiving, putting all that [email infrastructure and management] someplace else makes sense.
What other factors are pushing midmarket companies to cloud email?
Dubovik: Gmail has really unknowingly created this expectation on the corporate side of 2 gig-plus mailboxes and the ability to search and so on. That's fantastic for end users, but it represents a challenge to small and midsize businesses that do not have the infrastructure even on the storage side to deliver on that demand.
So, right now you have this opportunity and this inflection point -- [businesses] are two versions behind on Exchange, IT is bringing a list of [Exchange] 2010 improvements and the business has a decision to make: Do we spend the next four weeks on an [email] upgrade and then monitor it, or do we get rid of [managing] it?
Why are you considering cloud email for your company?
Dubovik: [Email] is a relatively safe place for our IT professionals to test and learn about Software as a Service or cloud computing in preparation of future adoption of additional cloud services.
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