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Heading Towards the Cloud

The Cloud. If you haven't heard about this yet, you've probably been walking around in a fog.

The ubiquitous buzzword is even taking on new lives and branching out to other areas. To date, we have cloud computing, cloud storage, cloud engineering, and Intercloud, the interconnected global cloud of clouds. In the last week, we've added Apple's iCloud (an announcement that pulled CEO Steve Jobs out of medical leave) and HP's CloudSystem, and talk of cloud-connected gaming will likely come up at the video game industry's E3 conference.

I bet pretty soon the supply chain cloud will be on the tips of all our tongues, so let's get the conversation started.

On many levels, a supply chain cloud makes sense. For starters, supply chain visibility, agility, and flexibility have been the elusive trio taunting supply chain professionals for decades. Lean practices, traditional ERP systems, and easier-to-implement software as a service (SaaS), among other things, have achieved a good number of improvements. But what if they've taken companies as far as they can go? Maybe the reason companies can't glean more from existing systems is that something is still missing. Perhaps what's missing is a hyper-robust interconnectivity layer that sits on top of systems and better routes internal and external supply and demand exchanges.

I'm not sure if the cloud can do all that, but the questions are worth considering. As Gartner VP Jim Shepherd noted after a recent NetSuite user conference, more and more clients are asking about cloud-based ERP. “They aren't necessarily ready to adopt it — some aren't even looking for a new ERP system — but everyone wants to know if it's ready for prime time,” he said.

He continued, “Nearly everyone was convinced that ERP in the cloud is much less expensive than on-premises ERP, but they tended to be much more focused on the speed and agility advantages. Everyone seemed to have stories about how quickly they had gone live with parts of the suite, or how they responded to some business change in days instead of months.”

That brings me to the second advantage of a supply chain cloud: It's cheaper than classic supply chain tools that require large capital investments and extensive implementation planning and execution. As the Financial Times points out, cost-saving is one of the most cited benefits of moving to a cloud environment.

Lastly, if one good thing has come in the aftermath of Japan's tragic earthquake and tsunami, it could be that companies are reassessing supply chain practices and looking for alternative ways of protecting themselves from these kinds of risks. Perhaps, in certain supply chain activities, the cloud would provide the element of speed that's often required to effectively collaborate within the ecosystem. Of course, I realize that without electricity or Internet service, any communication will be challenging. But, the cloud does seem at least to provide the framework through which multiple communication platforms could be linked to a variety of devices the world over.

Unfortunately, there is a potentially big hole in the cloud's otherwise sound argument: Is the cloud safe? If a big OEM like Sony is still reeling from a major online data-hacking incident in April that exposed personal information of more than 100 million of its video game users, the issue of security is an absolutely legitimate one.

The sad truth, though, is that I have come across very little convincing data for that piece of the puzzle. There's acknowledgement that companies must protect their IP, data, products, customers, and that good planning may mitigate some of the security risks. But, without a plausible solution, the other benefits may come to naught.

So, when and how will the cloud affect the way the electronics industry does business? What pros and cons are on your list?

17 comments on “Heading Towards the Cloud

  1. Ariella
    June 13, 2011

    I believe that in situations of natural disasters, clouds can be helpful in getting back on track more quickly and keeping key data safely stored away from physical sites that may be damaged. It is true, though, that many regard what is the cloud to be less secure than what they store on their own hard drives, but I'm not certain that the perception is absolutely true. Though we think that we control what we see in physical form, anything that allows access via the interne presents some risk.

  2. SunitaT
    June 13, 2011

    “there is a potentially big hole in the cloud's otherwise sound argument: Is the cloud safe?”

    Jennifer,

     I totally agree with you that security is one of the biggest challenge in the implementation of the cloud. One more biggest concerns is reliability. For example  Amazon Web Services outage in April created uncertainty about the reliability of the cloud and these outages may have cast doubt about clouds ability to handle mission-critical applicatios.

  3. AnalyzeThis
    June 13, 2011

    Is the cloud perfect? No. Are the security concerns valid? Yes.

    But is the future of ERP cloud-based? Absolutely. It's going to happen.

    That being said, I do believe that the transition to cloud-based ERP systems will be much slower than it is in other sectors. Salesforce is already leading the way in CRM and is wildly adopted, for example, but as we all know an ERP system is much more complicated.

    You mention many of the flaws in the cloud but in the end the numerous advantages will far, far outweigh the disadvantages. And of course the cheaper cost is a gigantic plus as well.

    All that being said, I don't think it's ready for prime-time at this moment. 5-10 years from now I think it'll be a different story.

  4. Parser
    June 14, 2011

    And cloudy days are coming.

    Let’s imagine our cloud services falling into dictatorships like in Arabs countries where internet services were cut off? Or other political take takeovers by rogue terrorist groups and the like.  Internet already got to the point of national security. Hopefully our cloud services will not be based in China or India, but nobody can assure that. There are also natural disasters and most people think that cloud services would restore businesses faster, but that may not be the case. Clouds might be destroyed as well.

    Cloud services like ERP will have a lot of to plan for. Maybe the price of well designed clouds would be to high. 

  5. prabhakar_deosthali
    June 14, 2011

    I firmly believe that the cloud will be much more secure than any in house server or the desktop. It will have, inherent redundancy built in for continuity of service, mirror sites to take care of  data loss in any of the servers, backup and archieve storage, and 24 x 7 connectivity. Electronics businesses can be the early adopters of this new computing paradigm and can immensely benefit by the lower total cost of ownership of the IT infrastructure to run one's business and a lot of associated headaches wil go away so that the companies can concentrate more on their core business.

  6. jbond
    June 14, 2011

    My biggest concern is security. With all the hackers out there, some to steal information and others just to disable the systems for fun, security will always be an issue. In the past few weeks Citi Group was hit with a hacker, and they still haven't revealed what all was accessed. Citi along with Sony are big targets with valuable information, that doesn't mean that smaller companies with proprietary info are off the hook. I feel that until the cloud can prove to be safe for all info, many companies and individuals will be skeptical. 

  7. mfbertozzi
    June 14, 2011

    Parser, I've experienced ERP implentation for manufacturing is usually very customized. Do you think cloud will be in condition to provide similar services? Currently it seems a service most focused on ” general needs ” instead of ” customized needs just only for the time requested”.

  8. Ariella
    June 14, 2011

    pabhakar deosthali describes it very well. Perception and misperception aside, what is stored in the cloud can be kept more secure than what is stored on a business's own systems. There is also a huge advantage in being able to access data and applications from anywhere in the world with any device that can connect to the internet.


     

  9. FLYINGSCOT
    June 14, 2011

    I believe whether we like it or not everything will eventually merge into the cloud.  The technical hiccups of security will be overcome, as will the problems of ubiquitous cloud access.  In a generation or two everything will be up there and we will access it from down here.

  10. Parser
    June 14, 2011

    @mfbertozzl

    As many comments are pointing out cloud services are expanding and getting more sophisticated and the drift at present is to have all in the clouds. We have to see developing pros and cons in next months or years to see.

  11. Wale Bakare
    June 14, 2011

    Cloud computing concept seems well matured and have been readily available for deployment by the major leading service providers. IBM, Amazon, Google, Salesforce as well as others giant IT firms.

    Security indubitadly major issue – how reliable is public cloud security over private cloud? Or should the adopters go for private instead of public.

  12. Hardcore
    June 14, 2011

    Me old gran used to say “be careful what you wish for, you may get it”.

     

    There are major security issues related to cloud computing, and not just from the hacker perspective.

    A good example of this is Google and “Gmail”, wow all that space and an email account for 'free'. Then you start noticing things, about how items in your trash don't actually disappear but move about and how all of a sudden the 'on page' advertising starts to track the internal content of your emails, or even documents attached to an email.

    Gradually you start to realize that your documents and all content attached to emails sent to your Gmail account, is actually being used to build a profile on you and you then start to notice that your time on the web and adverts also starts to reflect the content of your documents, but Hay it's 'secure'.

    So you decide that you are going to become more secure in the way you store documents in the cloud, and you subscribe to that very capable company RSA and use their SecurID, only RSA drops a 'bollock' and has their servers hacked, then they refuse to tell anyone what exactly was compromised.

     

    http://www.lok-it.net/blog/offline-encrypted-data/

     

    Possibly because if they did disclose what was hacked, it would very well be the end of the company, certainly if the root keys for RSA have been hacked, then these hackers have access to massive amounts of financial and technical data, or anything that relies on the root RSA keys.(The whole internet!!)

     

    No problem? We can use a different service that does not directly rely on the SecurID system, in fact such a system is already very popular, they even promise that the data is securely encrypted from your desktop. (wow must be good)

    But then this company discloses that they use a form of data compression that looks at each of the files contents and maps sections that are the same to a single copy.

     

    Hang on a minute…. if the files are encrypted HOW can they compare documents between different users or the same users to find similarities so that this compression system can work? (identically encrypted documents should not match ever )

    It seems that whilst they encrypt the traffic, YOUR encryption key/data is salted with THEIR MASTER key, which means they can decrypt every piece of data on their systems even if it is protected by your master key. This enables them to compare documents for compression and no doubt they can search and index your content at the same time.

    So here we have two very good reasons WHY offerings of Cloud computing/storage is no safer that current methods, and this is before we even consider the 'hacker' aspect (or even rampant staff)

    Interesting hacking techniques.

    Now there is something called a 'side channel' attack, this is when we use a method to attack a computer system that is not directly related to the target, this same attack vector has ALREADY been used to decode 'secret' RSA keys.

     

    So here goes.

     

    'Someone' uploads some documents to this cloud system, the cloud system tags and indexes the document so that it can perform data compression, by not duplicating data stored on the system that is the same.

     

    An attacker then tries to upload a document or data, but there is almost zero traffic between his computer and the 'cloud' system, this simple act tells the hacker, that a copy of HIS unencrypted document or sections of unencrypted data must already occur on this system under someone else's account. (why would a computer system upload content it already has?)

    Never going to happen? what if the attacker is a 'government' looking for copies of documents or data in peoples account without a search warrant?

    Potentially such a system could be used to 'search' for words or sentences, without having access to the individual accounts on the target system.

    (load a massive file with 'keywords'/keys and then see what parts of the file are transferred to the cloud system)

    There are an incredible amount of issues related to security of data once that data enters a system you do not have total control over, many people forget that computer systems all have an “admin” operator who usually has total control over the system, not to mention that there are people all over the world working to break these systems.

    HC

     

     

     

     

     

     

     

  13. prabhakar_deosthali
    June 15, 2011

    While discussing about the Cloud , we should remember that the security of your data and Privacy of your data are two different things.  The security aspect is regarding how your data is protected from loss by hardware or software malfunction, server crash or such thing . It also covers the issues related to how the unauthorised access to your data is prevented by the Firewalls, password authentication and such access control methods. The issue of privacy comes in when you have a doubt about the Cloud service privider's integrity and fear that he may willingly but without your knowledge , pass on your sensitive data to your competitors. For Security we need technical measures whereas for Privacy protection we need strong service level agreements and legal support.

  14. Jennifer Baljko
    June 15, 2011

    Thanks for the lively conversation. I'm defintely getting an education on cloud computing and the potential security issues we soon will all have to face either personally or professional as our data and workflow habits migrate out of back-end servers.

    Besides the security issues, a few of you mentioned that cloud ERP isn't quite ready for prime time but that it will become a reality a few years out. Others pointed out that electronics companies could benefit from being early adopters and cloud-based CRM platforms are already gaining considerable popularity. How are your companies having this conversation? Have they started to research the pros and cons? What supply chain/ERP practices may be the first transition? Is cloud computing technology coming up in budget discussions regarding planned IT deployments for the next few years?

  15. stochastic excursion
    June 15, 2011

    My company uses cloud services for distributed project management and billing.  I think Google has an edge in this arena as they have applied their technical resources to key areas that make this part of their business viable.  The areas are speed, definition, security, low-cost and monetization. 

    The idea that cloud computing is a mature technology is disputable.  Much of cloud services generally available is sluggish, with a fuzzy process sequence that contains bugs.

    Security and privacy are an issue in the clouds.  Google has a good record for security, but as the e-mail below recounts, data-mines its users communications to make money off of its service.  There are assurances that they scrupulously omit personally identifiable information in this process.  Still, the advertisements that come up are an indicator of what the outside world might see if it were to sift through your e-mails. 

    In these kinds of arrangements, “trust but verify” is a good watchword.  This is one reason it would be hard to certify the security of a cloud service.  Security firms can gauge the security of your on-site data, but a third-party provider would be understandably reluctant to put their environment to the test, especially as other companies data is involved.  In light of this I think the position that cloud is more secure is mistaken.

  16. Jennifer Baljko
    June 15, 2011

    stochastic excursion : speed, definition, security, low-cost and monetization – this makes sense as key motivators. So does moving relatively routine practices (sending project updates to a geographically-dispersed community) and tasks that already have a track record for being fairly well automated, like billing. The real test will come when people need to manage inventory, get an accurate pipeline picture, make design changes, protect IP, and do more complicated supply chain function s. Will be interesting to see how the traditional ERP providers refine their offerings and tackle (and overcome) the big hurdles of security, privacy, reliability, and the lag time you mentioned.

    And,  “trust but verify” should be the supply chain professional's mantra. It's sound advice regardless of whether things operate on the ground or in the cloud.


  17. t.alex
    June 18, 2011

    Cloud seems to be very beneficial to the service providers. They have access to all the data customers put up.

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