Practical Ecommerce

Ecommerce Know-How: Cloud Computing in the Ecommerce Forecast

If meteorologists predicted ecommerce and computing trends, the forecast would be at least partly cloudy as more computational and transactional applications join the cloud computing front. But are the wispy clouds on the near horizon the harbinger of a gentle, growth-encouraging rain or a destructive storm?

Cloud computing is a somewhat ambiguous concept that describes a blend of software-as-a-service (SaaS), infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), grid computing (multiple computers working on a single application), and utility computing (pay for consumption) all bunched up in a package that some say should be more scalable, faster to implement, and less costly than traditional application and computing models. But the cloud is not without potential problems, such as considerable security and usability (in terms of choice) hurdles.

In this edition of “eCommerce Know-How,” I will (1) describe basic cloud computing concepts and theoretical benefits, (2) prognosticate regarding the cloud and ecommerce, and (3) enumerate at least some of cloud computing’s rarely mentioned potential problems.

What is Cloud Computing?

The term cloud computing comes networking diagrams wherein presenters used cartoon clouds to represent undefined or unknown portions of the network.

Even with the phrase’s origin in mind, defining cloud computing can be like digging the foundation for a house with a tablespoon. You can scratch at the job and move some small bits of the material around, but in the end it’s hard to really get it done. Why? Because even so-called experts describe cloud computing in very different ways and seemingly confuse it with SaaS or grid (clustered) computing or even with mainframes circa 1980.

As an example, self-proclaimed “cloud nut” Michael Coté of Red Monk described cloud computing “a sort of silly-putty… that you can jam into any hole or problem that you can sell to somebody.”

In spite of the difficulty (and the knowledge that many will find my definition too broad, too narrow, not technical enough, or too technical), I must pour some meaning into the term, so for purposes of this column, cloud computing is a model wherein information and applications are stored in unknown, unidentified servers and temporarily accessed from terminals (i.e. laptops, desktops, and other Internet-capable devices). Users access that infrastructure as a service, develop on middleware as a service, and use web applications (SaaS) as a service.

In cloud computing, your PC, Mac, mobile Internet device, or mobile phone are all just dumb terminals accessing the network of networks to do everything from check email to compose a document to manage an ecommerce business.

Your “terminal” accesses applications and data via the Internet. When you want to make a change to a product description page on your ecommerce site, just send the request to the cloud. If you want to get customer data, you just ask the cloud.

Cloud Computing’s Perceived Benefits

Cloud computing offers three potential benefits:

  • Cost
  • Flexibility/speed of implementation
  • Scalability (sometimes called elasticity)

Cloud Computing’s Cost Benefit

Because cloud computing costs are based on consumption—many clouds bill like your electric company—and because there is no hardware, software, or infrastructure to purchase, individual cloud users are supposed to save money.

The argument that cloud computing can save money is built around so-called peak usage. Imagine that your ecommerce website is busiest from November 1 to December 23 each year. During these peak periods, you require greater bandwidth, more computational power, and more data storage. But for the rest of the year your traffic requires just a third as much bandwidth etc.

In the traditional information technology model, you would purchase servers, frames, a PAN manager, applications, etc. sufficient to handle your peak activity, leaving much of that capital hardware and software idle most of the year. But in a cloud you would theoretically only pay for the bandwidth, processing, or data storage you used. Nothing should be costing you money when it is idle.

Cloud Computing’s Flexibility Benefit

Next, cloud computing may be more flexible in terms of developing new applications or implementing custom applications because the cloud includes middleware (PaaS) to do your building on and loads of raw computing power to get things running in parallel. See Force.com for an example.

Cloud Computing’s Scalability Benefit

Finally, because users are not limited to one server or even one data center, cloud computing promises to be very scalable. As an example, social media site Twitter recently went down, leaving hordes of microblogging addicts waiting to share their up-to-the-second status. And popular sites like Digg and Slashdot have both gone down for lack of bandwidth. But in cloud computing, an application should just be able to add more and more resources so that service is never interrupted. And when traffic wanes, so does the consumption of resources. The cloud-based application is perfectly scalable in theory.

Predicting Cloud Computing’s Effect on Ecommerce

So now let’s get to where the rubber meets the proverbial road for ecommerce. How will cloud computing effect ecommerce in the near term? My opinion? At least 90 percent of ecommerce businesses will be using some form of cloud computing in the next five years.

Is that a bold statement? Am I overreaching to say that nine in ten online retailers will be participating in a cloud by 2014. No, not really. You see ecommerce has been migrating toward clouds for years.

Many (if not most) online merchants are already using some form of IaaS, PaaS, or SaaS. Consider that anyone with a hosted shopping cart has already moved beyond “traditional” computing to a web application that by our definition is a form of cloud computing. What’s more, I believe that most ecommerce business owners that use licensed carts are paying for hosting services (i.e. IaaS), which is part of what cloud computing is.

So the move to cloud computing will simply mean that more and more ecommerce businesses will offload infrastructure, development, and software to the cloud—a trend that has been going on since before I opened my first store using Yahoo! Merchant Services.

In some ways, cloud computing is just a new way to describe what ecommerce businesses have already been doing.

Concerns About Cloud Computing

But cloud computing and even IaaS, PaaS, and SaaS do not come without significant concerns, and even cloud advocates can produce long lists of hurdles that the trend has yet address. For our purposes, I am going to focus on three: choice, custody, and cost.

The Choice Problem for Cloud Computing

In spite of its promise, cloud computing will almost certainly limit customer choice, eliminate some potentially better solutions in favor of available solutions, and lock users into a particular providers.

Consider the example of hosted shopping carts or content management systems. While many of these are functional and easy to implement, they often lack the ability to integrate third-party solutions, and if they do allow such a thing, they require users to ask permission, and or so limit that external solution that it becomes useless.

For a specific example, try putting a content slider (like the free jFlow slider) on your hosted shopping cart? Can you? Some services won’t allow it at all. If fact, can you even change the code on your hosted cart? Or are you required to use the templates provided?

Repeat this experiment with product image pan, tilt, zoom tools; third-party customer review solutions; and third-party analytics. Cloud computing, in this example, will limit your choices.

Also, don’t be surprised if you cannot choose when your peak hours are. One of the promised benefits of cloud computing is that it is scalable, but some are already talking about “fairness” in the cloud. This means that if your business scales up too often—allegedly taking more than your fair share of the cloud—you could be throttled back. Sorry no scalability for you.

The Custody Problem for Cloud Computing

Next, there is a problem of who has custody of the data in cloud computing? Where will custom data, credit card data, your ecommerce business records, and personal data be stored? And if I am using multi-tenant software how easy will it be for other users to get my data?

To some extent, cloud computing will be protected by the same SSLs and protocols that have always protected ecommerce, but there is more room for trouble. As the cloud masks infrastructure and platforms, a sort of fog settles in and we can lose track of where data is being stored. For example, would you really want your customer data, including credit card data stored on a server in Turkmenistan?

In a cloud the users has no idea where the infrastructure is or how secure it is.

The Cost Problem for Cloud Computing

Finally, in spite of its promise, cloud computing will actually cost some users more money. This is like IaaS, PaaS, and SaaS that can, in some circumstances, be more expensive than just owning or licensing your infrastructure, platform or software.

In fact, I would argue that more often than not using a licensed cart is less expensive than using a hosted one. Certainly there are other considerations, but I know of excellent licensed ecommerce solutions that cost less than $20 per month including basic payment processing fees and server space. Likewise having your own server is cheaper in the long term than using a hosting service.

Summing Up on Cloud Computing

Cloud computing is a term that in many ways describes what ecommerce businesses specifically and most businesses generally have already been doing, and as such it will permeate business and industry. But it is not without major drawbacks that require careful consideration. IaaS, PaaS, and SaaS each have significant drawbacks that make me take pause and none has proven to be better than more traditional information technology models.

And consider that almost all cloud advocates want to be cloud providers not cloud users. Google and Amazon, for example, would never operate their businesses in a cloud, but they are happy to make huge profits offering cloud services to others.

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Armando Roggio

Armando Roggio

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Comments ( 2 )

  1. Laura Beken June 4, 2009 Reply

    This is the best explanation of the cloud I have seen. I tried to do my own research, but I could never quite find the clear outline of pros vs cons. And thank you for clarifying that Google and Amazon simply provide the cloud to others, and they don’t use it themselves. That answered my questions right there. It doesn’t mean I will not use the cloud, but I will choose and pick what parts I want the cloud to handle.

  2. techguide November 1, 2009 Reply

    absolutely right..