My own private cloud

   “Hey you, get off of my cloud,” Mick Jagger admonishes in the Rolling Stones’ 1967 hit song.
   The tone of the song was clear: Mick and the boys were tired of people’s expectations of them. How apropos that most supply chain managers these days are sick of hearing about the cloud itself.
   But the lyrics are also poignant in terms of worries about cloud-based solutions that still persist. An American Shipper study from September, produced with Oracle, found data security is the biggest concern among current and potential users of cloud-based global trade management solutions.
   Around 70 percent of retailers, manufacturers and 3PLs, collectively, cited data security as a concern, according to the study, Hype or Reality: How Supply Chain Convergence and Cloud Impact Global Trade Management Usage.
   I’m sure we’d see a similar response to concerns about cloud-based transportation management systems. That’s not to say that these concerns keep people from using cloud-based solutions—almost 30 percent of respondents in the study said they use a cloud-based GTM solution, whether licensed or subscription-based. But it is a concern—hence the relevance of shouting “Get off of my cloud.”
   Perception or reality, people have a clear association with cloud and data vulnerability. There’s a key nuance to understand about cloud-deployed solutions, however. There are public clouds and there are private clouds.
   Realistically, the security of data in either is only as safe as the developer and user make it. Remember that most data breaches are caused by internal forces, not some hacker worming his or her way into a vulnerable, cloud-based platform.
   But for those companies for whom data security is absolutely paramount, they might be more inclined to gravitate toward a private cloud. This is essentially a situation where a software provider takes the hosting and maintenance burden off the user. Think of Oracle’s recent deployment of a cloud-based version of its Oracle Transportation Management and Global Trade Management solutions.
   In this case, Oracle is not moving its customers to a multi-tenant, public cloud, rather it is relieving them from the responsibility of hosting and maintaining that solution internally.
   Public cloud solutions, on the other hand, seek to create a network of users, where new customers and their connected entities all come together and share the benefits of critical mass. They forgo the idea that operating on this shared platform endangers their data.
   The proof, to me, is in the pudding. None of the major cloud-based, multi-tenant supply chain solutions providers have experienced a serious breach of information on their networks. It’s architected in such a way as to put an emphasis on sharing data that should be shared, and keeping hidden the data that shouldn’t.
   That said, this decision largely comes down to company philosophy. The companies that are attracted to on-premise, licensed software (or at least have been in the past) have been drawn by the idea that their systems and data reside under their control. Their decisions to move to private cloud deployments are not only governed by a desire to keep that relative control, but to minimize the capital investment required to host and maintain it.
   There are other factors, like the idea that a private cloud is more highly customizable, as it is only being used for one client rather than 100 or 1,000. Lack of customization was cited as the second biggest cloud concern in the American Shipper study.
   There are also technical issues that might compel a company to choose a private cloud— the ability to choose its own hardware or data storage equipment. But those decisions would likely be driven by IT decision-makers and not logistics or compliance decision-makers.
   What advocates of public cloud solutions argue is that supply chain is the perfect place for the advantages that public clouds bring to bear. Supply chains inherently encompass multiple organizations, and those organizations generally need to share data among themselves. Public cloud solutions more easily enable that sharing of information (the right information) from the word go. It’s the very definition of plug-and-play.
   They also allow an organization connected to that public cloud to benefit from the entities brought by other users. There’s a multiplier effect.
   Our research shows there’s a steady migration to cloud-based solutions, but we haven’t yet dived into whether those are public or private clouds. Certainly that will be an area we try to understand better in 2015. 
   Meanwhile, Gartner analyst Chad Eschinger recently said he sees more growth potential for private cloud solutions for midsized and expanding small businesses eyeing scalable multimodal transportation management software.
   “The market for SCM solutions is influenced by a climate that continues to make large capital expenditure difficult for many organizations,” he wrote in a recent report. “This environment will drive many organizations to adopt solutions that are deemed ‘best of breed’ and often delivered as a subscription, which provides more focused capabilities and typically enables less expensive and quicker deployments. We expect that, through 2018, twice as many organizations will purchase private cloud and hosted offerings each year as those that purchase multitenant (software-as-a-service) offerings.”
   In many cases, the decision comes down to this tradeoff: data security versus connectivity. Both public and private clouds allow companies to vastly reduce their upfront software acquisition costs (assuming they are priced on a subscription basis) and take the burden of hosting and maintenance off the user. But private clouds are perceived to offer a safer harbor for critical supply chain data, while public clouds offer a quicker avenue to partner connectivity (not to mention higher data accuracy since all partners work from the same data).
   It’s really up to you and your company as to which perception is more important, or harder to overcome.

This article was published in the December 2014 issue of American Shipper.