This is the fifth in a series of six blogs, which attempt to provide airport accounting managers with information on how they can improve their financial management processes. The previous blogs covered the following topics:
- Blog number 1: the benefits of using a multi-dimensional accounting system like Microsoft Dynamics NAV 2017
- Blog number 2: the key to improving productivity and accuracy of data by integrating your accounting system with other airport systems
- Blog number 3: how to improve your reports by capturing key statistical data and combining this data with your financial data.
- Blog number 4: implement a new data visualization product like Microsoft Power BI
This blog post and the next post, coming next week, will describe cloud technology and how airports can take advantage of this new technology.
In addition, readers are encouraged to read my white paper (Modern Airport, Modern Tools) that covers the same topics in a summarized form.
Introduction: What is the Cloud?
There has been much discussion in the media about cloud technology, but it can be confusing since each vendor has their own terminology and description of what their cloud service offers. I will attempt to clarify what it all means in this post, and show you how you can take advantage of the new technology at your airport. Before we start discussing the cloud, let’s first take a quick look at how computer systems have evolved over the last 40 or 50 years to the current cloud technology that we have today.
How did the Cloud evolve?
Some of us may remember the old “mainframe” computers, which were large multi-million dollar centralized computers that were accessed by “dumb” terminals. They were called dumb terminals because they had no processing capability – all the processing was done at the mainframe.
Then came the “mini computers” which were an attempt to offload some of the processing load onto smaller distributed computers which may have been located in local offices of the company, or even in departments.
Next, we had the rise of the “personal computer” which provided processing capabilities at the client level. PC’s were connected to local area networks and servers were connected to these networks to handle various tasks like file serving or application hosting or acting as email servers. This is essentially what we have today in many companies and is called a client-server model.
In the last few years, cloud technology has developed, which essentially puts the processing capability back into a centralized location which is called a “data center”. Data centers can be huge facilities the size of 10 football fields, with thousands of computers connected together and controlled by software to provide you, the user, with a host of services. Microsoft is a global leader in the data center market, and has invested over $15 billion building dozens of these large data centers around the world. The old mainframe architecture was the best design in terms of providing centralized services, but communications technology did not support this architecture 40 or 50 years ago and remote users experienced slow response times. We have now gone full circle, in my opinion, since the technology has now evolved to the point where communications are fast enough to allow processing to be centralized again with access from any device that can connect to the internet.
The concept of cloud services is similar to the idea of outsourcing any service that can be done more efficiently and at a lower cost than you can do yourself. If providing a data center is not your core competency, then the idea is that you will be better served by outsourcing your IT needs to a company that specializes in this service.
2015 was the tipping point in the adoption of cloud services. According to Microsoft, more than 50% of new systems were implemented on the cloud instead of on-premises in 2015. Some of Microsoft’s business application systems are now offered only on the cloud, for example Dynamics 365 (covered in the next blog).
Cloud vs. Hosting
What’s the difference between a cloud service and a hosting service? A hosting service is a basic form of cloud service – a company provides service remotely by allowing you to install software on their server for a monthly fee. Cloud computing takes this simple approach and extends it by offering all sorts of different levels of service (IaaS, PaaS and SaaS) as well as providing the capability to scale the service that you need. A hosting service can be thought of as the first generation or forerunner of cloud computing in its most basic form.
Cloud Services Explained
Simply put, cloud computing is the delivery of computing services—servers, storage, databases, networking, software, analytics, and more—over the Internet (“the cloud”). Companies offering these computing services are called cloud providers and typically charge for cloud computing services based on usage, similar to how you’re billed for water or electricity at home. You are probably using cloud computing right now, even if you don’t realize it. If you use an online service to send email, edit documents, watch movies or TV, listen to music, play games, or store pictures and other files, it’s likely that cloud computing is making it all possible behind the scenes.
The following diagram shows the three different types of cloud computing paradigms according to Microsoft. The blue-shaded boxes indicate on-premise computing and the green boxes indicate cloud computing. On-premise computing is the traditional model where each company has their own server or servers installed locally on-premise.
In the right-hand bar, labeled “Software as a Service (SaaS)”, all the services are on the Cloud. For an airport using SaaS solutions, you would not need any local servers — just workstations or laptops on a local network with a connection to the internet. In this case, you would typically not need substantial, full-time IT staff to manage the software, and could outsource any IT support that might be needed to support your local network and computers.
Cloud computing is a confusing topic since different companies talk about their cloud services in different ways. However, one thing is certain: cloud computing is the way of the future. Microsoft’s vision for the future is highly focused on cloud computing and they have invested approximately $15 billion dollars in their cloud data centers. Some of their new business software only works on the cloud. Other companies like Amazon, Google and IBM are following the same path.
The following diagram shows the three different types of cloud computing according to Microsoft:
- IaaS: Infrastructure as a Service
- PaaS: Platform as a Service
- SaaS: Software as a Service
IaaS: You manage the blue-shaded boxes (applications, data, runtime, middleware and O/S) and you rent the infrastructure (virtualization, servers, storage and networking) from the cloud provider. This is the most basic category of cloud computing services. With IaaS, you rent IT infrastructure—servers and virtual machines (VMs), storage, networks, operating systems—from a cloud provider on a pay-as-you-go basis.
PaaS: You get more services from the cloud provider compared to IaaS, to the point where you only manage your applications and data. PaaS refers to cloud computing services that supply an on-demand environment for developing, testing, delivering, and managing software applications. PaaS is designed to make it easier for developers to quickly create web or mobile apps, without worrying about setting up or managing the underlying infrastructure of servers, storage, network, and databases needed for development.
SaaS: This is a method for delivering software applications over the Internet, on demand and typically on a subscription basis. With SaaS, cloud providers host and manage the software application and underlying infrastructure, and handle any maintenance, like software upgrades and security patching. Users connect to the application over the Internet, usually with a web browser on their phone, tablet, or PC.
For an airport using SAAS, the airport would not need any local servers other than a server to provide the local network but instead would just have workstations or laptops with a connection to the internet. In this case, you would typically not need any IT staff and could outsource any IT support that might be needed to support your local network and computers. In a true SaaS environment, all you need is access to the internet and a device with a browser like a laptop, tablet or smartphone.
Don’t be confused by the terminology since the acronyms can mean different things to different people depending on who you are talking to. Notice that I said the above diagram shows the three different types of cloud computing according to Microsoft. If you spoke to a different vendor, they might have different definitions for IaaS, PaaS and SaaS services, but at the end of the day you are paying for services and you can decide which services you want.
What is Azure?
It would be difficult to talk about the cloud without mentioning Azure. What is Azure? Microsoft Azure, formerly known as Windows Azure, is Microsoft’s cloud computing platform. Azure provides a range of cloud services including those for databases, business intelligence, storage and networking. Users can pick and choose from these services to develop and scale new applications, or run existing applications, in the cloud.
Azure is available in 34 regions around the world, with plans announced for 4 additional regions. Microsoft places a high priority on geographic expansion to enable higher performance and to support your requirements and preferences regarding data location. For example, if it is important for a Canadian airport to keep its data within Canada, there is an Azure region in Central Canada.
Azure has the most comprehensive compliance coverage of any cloud provider with 50 compliance offerings. Azure has been recognized as the most trusted cloud for U.S. government institutions.
There are many advantages to implementing a cloud solution, and you could reduce the cost of your system while improving the performance, services offered and security of the system. Contact me if you need help with understanding the benefits of cloud computing, or help with any of the other topics covered in this series of blogs.
Paul Fernandez B.Sc., ACMA, CMA
SBS Group Pacific Canada
Paul Fernandez is the general manager of SBS Pacific Canada, which is part of the SBS Group. He has worked as a professional accountant in industry for 25 years in various senior financial positions. He founded his consulting practise 15 years ago and has worked as a consultant implementing accounting systems at many companies, drawing on his own experience to advise clients on the design of their chart of accounts and multi-dimensional reporting structures. Contact Paul at email@example.com.