In the Cloud

Oct. 1, 2010
Internet-based cloud computing offers improved functionality, faster implementation, timely updates, anytime accessibility and seamless software integration to the rental business.

When Microsoft CEO Steve Ballmer, or Apple chairman and CEO Steve Jobs introduce their companies' latest technologies to the world, software developers everywhere pay attention. Heck, even everyday tech geeks take notice. So when Ballmer stated at a recent seminar that Microsoft was “all in” under the cloud, the term and the concept of “cloud computing” really grew legs. It wasn't an unknown concept before Ballmer made it hip with his presentation, but his acknowledgement of Microsoft's use of the cloud instantly made it the most important paradigm shift in technology infrastructure of the moment.

Cloud computing refers to a computing environment where computer software and data are stored on high-end servers located within an offsite secure data center. Because users access their business information via a secure Internet browser, and most Internet connections come through wireless devices, the environment is one that functions “in the clouds,” hence the term cloud computing. Put simply, cloud computing utilizes the Internet as a channel to deliver software functionality to users, as opposed to housing the programs on servers on premises at the business location.

Cloud computing is essentially synonymous with the term Software as a Service. SaaS is the application software that is provided via the cloud computing model. “SaaS usually combines the elimination of your ‘on-premises’ server hardware with a subscription-based purchase model,” says Rob Ross, president of Alert Management Systems. “Effectively, you ‘rent’ your software for a monthly fee that combines software support, new revisions and a cafeteria-style list of programs, just like cable TV.”

With the cloud computing model there are cost benefits to a business because most of the technical demands of the system are outsourced to the provider. “If the cloud ‘package’ incorporates rental transaction functions, dispatching, maintenance tracking, data archiving, reporting and other key functions of the operation, it can make it easier to share information and access these capabilities from any Internet connection,” says J.J. Shea, chief operating officer of Solutions by Computer. “In small- to mid-sized rental businesses, where the employees charged with system management typically have customer-facing roles as well, cloud computing can be a way to let the staff focus more intently on rental.”

“The cloud lends itself naturally to what was before a difficult process of software integration and sharing,” says Paul Chapdelaine, president, RMI Corp. “This natural integration now brings the best-of-breed software and devices to rental businesses as if it were all coming from a single source.”

Simply stated, under the SaaS model, there are no servers, no operating system upgrades, no application upgrades, no IT department and no data backups needed on site. “While these are specifics of computing, the [cloud] concept of providing fully managed tools is the basis of our rental industry,” says Mike Stilwagner, vice president of sales and marketing for Wynne Systems “It is a sensible alternative to investments in computing assets that materially depreciate faster than automobiles. Wynne Systems' growth year to year for SaaS has been in line with the worldwide average of 20 percent. We expect this trend to continue as the software publishers continue to deliver specialized applications in all areas including rental management, telemetrics, logistics, routing, credit bureaus and business intelligence.”

The cloud rains benefits

The benefits of operating with the cloud model are many — more functionality and lower cost, faster implementation, timely system and software updates, accessibility, integration and “right sizing,” to name a few.

The functionality of a rental business' computer technology can be improved under the cloud model because “all-up” software licenses are often more affordable when budgeted as a monthly fee. An all-up license gives the user access to all available functionality of the system for one licensing fee. Traditional, on-premise software is typically licensed by module, which determines the software's ultimate functionality. The trend in “all-up” licenses makes it easier for software suppliers to manage their products, and benefit the end user by eliminating the nickel and diming often associated with software licensing.

With a SaaS business management model, the cost of entry is lower and it gives the rental company access to better or more inclusive software than might otherwise be affordable, which can be an attractive benefit to a start-up or seasonal rental business. In addition, because the system management shifts away from the rental staff to the software provider with support usually included, the costs associated with full-time IT personnel can often be lowered or eliminated.

“There are far fewer hardware costs, and the consistent subscription charge is easier to budget,” Shea explains. “Depending on the supplier, there may be additional advantages: for example, with our SaaS models, off-site data backups are automatically included, as are new software releases, so our SaaS customers are always running on the latest versions. Another thing worth mentioning is that the rental environment is famous for being harsh on computer systems — that's a non-issue for the most part with SaaS.”

Barrett Thompson, director of pricing excellence for Zilliant also sees cost advantages with a SaaS model versus traditional perpetual-license procurement. “The modest setup costs and recurring subscription fees for SaaS are very advantageous for most firms, especially when funds for large capital expenses are scarce,” Thompson says. “Often the entire project can be funded out of budgets as an operating expense. By removing the barrier of large capital investments, the SaaS approach has made high-end software solutions accessible to many more rental companies who otherwise couldn't afford the investment.”

Utilizing a cloud computing model can save time at the implementation stage as well as during software updates. Eliminating the need for on-site file servers and desktop configurations wipes out the cost and time related to computer hardware. Plus, cloud computing offerings tend to be industry specific, so when combined with an all-up license the user ends up with an out-of-the-box system that can meet virtually all of a rental business' needs.

Unlike the old on-premise model of computing, where updates with new features and functions were a challenge to get implemented to existing customers' systems, under the cloud updates can be done much more quickly without costly business interruption.

“With cloud computing software, publishers can update their existing customer systems without interrupting their day-to-day usage of the system,” says Chapdelaine. “As a result, existing customers become the first to use new features and functions rather than the last ones to use it.”

An undeniable benefit to using a cloud model is its reliance on the Internet, enabling remote access from anywhere in the world at any time day or night. In the rental business, emergencies happen, and when equipment is needed in the middle of the night, the cloud model allows a rental operator to access company data from his or her home computer, Smartphone or other device to check equipment availability in the company's fleet — all without having to make a trip to the store to access the same information.

Unlike on-premise software that must be configured to specific workstations, cloud systems simply rely on Internet browsers for their user interface. “Removing restrictions that are associated with ‘device dependency’ means that business owners will not have to reinvest in hardware just to gain access to their systems,” Chapdelaine says.

In addition, the cloud computing model seamlessly integrates multiple software offerings within a single computing solution. It is developed to run all of a business' software on any and all of the Internet-equipped devices that business and its employees use.

The cloud model also allows a rental business to right-size the software it uses specifically to meet its needs. Software industry studies show that more than 35 percent of the software that is licensed is not being used. Cloud computing, however, is synonymous with on-demand computing where licensing, data storage and processing speed can be increased or decreased instantly to correspond with current needs. So if a rental company has downsized, under the SaaS model, it no longer has to pay for a former employee's subscription to the software.

Is the cloud model for you?

A rental business should closely evaluate the potential cost benefits of switching to a cloud computing model. Depending on its size, and number of locations and employees, it may not offer the most benefit over the on-premise model it is already using.

“Small rental companies should not embrace a cloud implementation just because it's fashionable,” says Bob Shaffer, CEO, Point-of-Rental Systems. “Very small, single-user stores don't need a cloud because a PC probably doesn't cost more than the terminal you'd require for a SaaS implementation. Smaller, multi-user stores might look into SaaS, but they must be careful to read the fine print of the terms. For example, who owns your store's database (inventory, customers and transactions) if your server is a cloud?”

Alert Management's Ross notes that many rental business clients are wary of one-size-fits-all technology solutions. “We can all agree that the cost/benefit equation needs to be evaluated carefully. For example, the price of new server hardware has plummeted, and most businesses find they need to have one for other purposes anyway. So, when you take out the hardware cost differential, you have to look hard at the ROI and your overall comfort level with a long-term software rental vs. an up-front purchase.”

Ross also urges rental companies to beware of generic Internet back-up services that are targeted to home users, noting that it can take several days to restore your system in the event that backup data must be called upon to restore service and get the user back up and running immediately. Plus, there are generally no guarantees that the service will be able to restore all of a rental business' rental-specific software.

A reliable data center should provide the ideal environment for the efficient operation of computer hardware at a remote site off-premise from the user's business. “A strict definition of a data center is a remote site designed with redundant means of communication and power,” explains Wynne's Stilwagner. “Heating, ventilation and air conditioning controls, including redundancy for each system is required. Minimally there will also be a server, a human and an ozone-safe fire suppression system.”

For a rental business currently using a non cloud-dependent legacy rental management system, a good time to consider a conversion to a SaaS model under the cloud is threefold: when it's time to reevaluate the need for IT personnel, when they get the invoice for enhancements or upgrade fees on their current software, or when they start looking to make changes to their hand-held devices.

Security, security, security

The most common concern for rental businesses considering the cloud model is the security of their online data. Many people ask, “Doesn't storing our data along with other companies' data in a shared data center pose security concerns?” The answer, according to most software providers however, is “Not at all.” Consider this analogy from RMI's Chapdelaine: “Think of the differences between maintaining your key financial documents in a strong box hidden in your home versus storing them in a safe deposit box maintained in a bank vault. The safe deposit box within the bank is stored with all of your neighbors' documents, but you still rightfully feel secure because of the bank's security procedures, alarms and links to the police station should something occur. The same is true for sharing computing power in the cloud. The technical term for this is ‘multi-tenancy.’ The end result is that you get to drive the Ferrari while paying for a Ford.”

Julian Archer, marketing director, equipment service management and rental, for Lawson Software, acknowledges that there is still some hesitancy among rental companies to store business data off premises, and an issue with giving too much control away, but notes that data centers do offer tangible advantages.

“If you store your data offsite, you have reduced the overhead of the software,” says Archer. “You've got trained technical skills at the source and you haven't got to invest in it yourself. For us, the cloud as an application provider is exciting. It offers another channel to get our product to the end market.”

With the cloud computing model, data centers are part of the equation, taking advantage of economies of scale and highly trained IT personnel at an off-site location that an independent rental business is not responsible for. The backup process is done automatically overnight — no rental business personnel need to be involved. Business data is encrypted for security purposes and stored securely offsite in one or more locations. With data centers, rental businesses no longer have to invest in backup tapes, other storage media, or the IT personnel to implement the process.

“Cloud computing can be a tremendous advantage for a small rental company because it probably doesn't have an inside IT person that it can depend on,” explains Michael Saint, president, Corporate Services. “By putting all your eggs in this data center basket, you're making sure that's taken care of — you have redundant backup of your data. Data centers can guarantee you 98- to 99-percent uptime.”

Point-of-Rental's Shaffer recommends Internet-based disk backup services such as Mozy, which are cloud-based applications that can backup all the files on a business' hard drive automatically at night over the Internet. These services simultaneously store that information in secure data centers in multiple geographic locations, providing instant redundant backup.

“If your store is leveled by a natural disaster, firebombed by an irate customer, or suffers some other calamity, your store's database will be waiting for your new terminals and printers to be put in place,” Shaffer says.

Saint, whose business is based in hurricane-prone Baton Rouge, La., agrees with the disaster recovery advantages that are inherent with off-site data storage. In case of fire, flooding, tornados, hurricanes or other catastrophes, a business operating under the cloud model will have its data safely waiting offsite at the ready.

“Everybody is potentially subject to a disaster recovery situation,” says Saint. “Data centers are the cheapest way available to get this multi-million dollar redundancy and infrastructure. Some people drive cars without insurance because they think they're such a good driver that they'll never crash; some businesses think the same way.”

In addition, businesses operating under the cloud model realize savings on insurance costs associated with the infrastructure, potential data recovery and loss of data costs that come with a disaster. Under a SaaS computing model, rental companies are assured first-rate data security, and in a disaster recovery situation the hosting service is subject to the insurance premiums of protecting the data, which often means significant savings on insurance premiums for the rental business.

The toy shop

The benefits to the cloud computing model for rental business management are many, but perhaps the most tangible satisfaction for many users are the wide variety of mobile devices available in the marketplace to access business information in the cloud — the toys!

Smartphones, iPads, mobile apps and other Internet-enabled devices are all pieces of the puzzle that can provide remote access to a rental business' functionalities that at one time required direct connection to the rental management system. But recent developments in mobile technologies in the business world at large, including the ability to transact or accept payments using a mobile device, and the ability to use GPS data in real time, both have practical applications in the rental environment, according to Shea.

The latest portable devices can have a positive impact on customer interaction when used by dispatchers, drivers and sales representatives to access information remotely from the branch's rental management system. Mobile devices under the cloud can access client information such as credit limit and history. It can also access critical equipment information such as service notifications, location, items on rent by jobsite with maps and directions to the site, as well as items called off rent and ready for pickup.

“For example, a useful application for store delivery drivers would allow them to access planned arrival and departure times, and update them to actual times,” says Shaffer. “In similar fashion, applications could be created to update the status of service calls and even create purchase orders for parts not typically inventoried. Other applications could allow sales people to log sales calls, write quotes and place rental requests — all in real time.”

Mobile devices are playing a larger role than ever in streamlining both a rental company's business processes as well as its customers' processes. “Rental stores are no longer simply brick and mortar warehouses, they are also virtual stores (via their websites) as well as mobile sales and service counters,” says Steve Milcik, sales executive for Texada Software.

“Mobile tech development is not without its challenges, such as the current lack of universal standards and the security concerns raised by exposing critical business data to mobile devices, but I think it's fair to say that the trend is here to stay,” Shea says.

The cloud at work

There are many examples of the cloud computing model at work in industries outside of rental. For instance, Amazon, iTunes, and all utilize the cloud.

Alert Management Systems users already take advantage of a growing list of cloud-based modules that the company has integrated into its software, such as mapping, automated back-up, e-mail and customer contact management, GPS-based equipment tracking, and more. “Our web services program includes a customer portal, where your customers can manage their equipment and credit account, and shopping cart features that can turn your website into a 24/7 rental store,” says Ross. “Cloud-based computing has finally come of age — it is cheap and easy to use, and our use of it dramatically expands with each new Alert revision.”

Solutions by Computer offers rental management software that is compatible with mobile devices through its Enfinity Portal technology, allowing a rental business' customers to check rental rates, submit rental e-requests, call equipment off rent and view their account reports from any web browser.

“The Portal also accommodated development of Smartphone functionality for the field, such as the ability to check item availability and quote prices while with a customer, reserve equipment on the fly, check dispatch status, and receive automatic warnings of high-risk transactions back at the store,” explains Shea, who notes that there can be some very substantial benefits to a rental business depending on its needs and resources. “We've seen a slow but steady gain in the popularity of SaaS, and we would expect a strong future for this model.”

The Point-of-Rental Systems implementation makes the entire rental management system available via Smartphones, laptops, net books or tablets. The company recently introduced GPS integration with its Dispatch Center module, and select customers can view invoices, statements, open contracts, reservations and quotes. In addition, they can call equipment off rent using a customer web portal hosted by Point-of-Rental.

“We continue to believe that SaaS will ultimately benefit the rental industry and become just as important as systems that are sold with a permanent license, with all data and software under the physical control of its owner,” Ross says. “There can be potential benefits for both rental operators and software developers.”