Public Cloud Computing and Managed Hosting Services

The promise of cloud computing and application hosting benefits are already delivering practical solutions to very real business problems, according to the latest market study by In-Stat. In fact, many small businesses are using managed cloud services as their primary method to solve a variety of IT requirements.

"Web hosting and data storage are the most obvious IT needs that can be addressed by public cloud services" says Greg Potter, Research Analyst at In-Stat.

"With the advent of Software as a Service (SaaS) offerings many businesses are realizing that much of their IT needs can be fulfilled without the need for expensive networking equipment and high-end computers."

Moreover, many small businesses are now re-visiting the use of thin clients for most of their employees, as the need for increased computer processing power is rendered moot by the cloud.

SMB IT Applications Transition to the Cloud

For the SOHO and small business market, there is considerable opportunity for a variety of cloud service providers. According to In-Stat’s latest market assessment, small business spending on public cloud services in 2010 was roughly $3 billion.

As a direct result of this growing demand, In-Stat forecast that public cloud computing revenues are set to increase well over 100 percent from 2010 to 2014.

This significant increase is changing the IT infrastructure paradigm in small office and home office (1-4 employees) and small business (5-99 employees) environments – it’s also transforming business technology application scenarios.

In-Stat’s research shows that SOHO and small businesses will comprise roughly 65 percent of the public cloud computing market in 2014.

Hybrid-Cloud Appeals to the Larger Employers

Mid-sized (100-999 employees) and enterprise (1000 and more employees) businesses have other issues to consider -- primarily security and the cost of transition, when evaluating their choices for cloud computing solutions.

For these companies the choice between public and private clouds will dominate their decision-making processes.

In-Stat believes that private clouds give businesses that are securing sensitive data an alternative to the public cloud, as they can realize cost advantages and improved utilization of IT equipment over a traditional physical infrastructure deployment.

A great number of enterprises are running virtualization software on their current infrastructure, and they’re already recognizing the cost savings yielded by utilizing cloud infrastructure.

For those companies not already utilizing a private cloud platform, In-Stat believes that the public cloud offers an appealing demand-based payment model and scalable infrastructure solution.

In the end, some large companies will very likely choose the hybrid cloud approach -- moving their mission-critical information and applications to a private cloud, and then partnering with a public cloud infrastructure service provider for their other remaining application needs.

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When Selecting a Qualified MSP, Assume Nothing

Hiring a managed services provider shouldn't be a leap-of-faith decision-making process. Perhaps you have staff that could fulfill their responsibilities, but instead you entrust a key component of your IT infrastructure to another company.

You believe they can do the job better and more efficiently. However, is that belief proven to be justified?

This begs another question: who licenses or certifies a managed service provider?

The topic came onto our radar thanks to a handful of companies claiming SAS 70 certification. The SAS 70 standard was developed by the American Institute of Certified Public Accountants (AICPA) to govern service organizations. (SAS stands for statement of auditing standards; see the AICPA page relating to auditing standards for more information.)

Certification's Real Meaning
You may assume that a managed service provider claiming SAS 70 certification has submitted itself to rigorous tests relating to its internal processes. However, according to Judith Sherinsky, technical manager of audit and attest standards at the AICPA: "There is no such thing as SAS 70 certification."

Sherinsky says that undergoing a SAS 70 audit only results in what she calls a "restricted use report," one intended to help auditors at the customer determine the reliability of transaction processing at the managed service provider.

For such a report to be useful to a customer, it must have meaningful context. "If the service provider organization provides several services, the report is useless if it doesn't cover the services the customer is interested in," she says.

Let's be clear: any MSP willing to undergo an audit is good for the industry, and helpful for the buyer. I'm merely highlighting the need for due diligence.

We'll return to this topic, both to keep you updated on what we learn about other standards and certifications (for instance, the ISO/IEC 20000 standard for service providers, and the MSPAlliance Accreditation program).

Attestation vs. Certification
In fact, Sherinsky suggests that customers of managed service providers check out the AICPA's attestation standards. These encompass a review of engagements that are the responsibility of "another party," that is, a service provider. An attestation report covers the processes between two parties, while an SAS 70 report covers processes internal to a service provider.

When your service provider claims certification under certain standards, don't take them at face value. Ask them exactly what it means, and how it's relevant to your relationship.

Any "seal of approval" is only of value in the procurement process when you have a sense of how stringent the benchmark requirements are, and whether they apply to your specific needs.

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