Call it the Logistics Cloud.

It’s cloud-computing technology for logistics service providers, or LSPs, and it’s a huge universe that encompasses every industry. It’s computing that involves delivering hosted services over the Internet and employs a network of remote servers to store, manage and process data rather than a local server.

It’s flexible: A user can obtain as much service as needed at any given time. It’s sold on demand, usually by the hour or minute. It’s fully managed by the cloud provider. It can be a public cloud, which sells services to anyone on the Internet such as Amazon Web Services. Or a private cloud, a proprietary network or a data center that supplies hosted services to a limited number of customers.

There is some hesitation among LSPs to move to the cloud because they worry they will lose control of what they deliver to customers and that the cloud is less safe and secure than their own operations. The truth is, the cloud can be more secure because, especially with a private cloud provider such as SunGard Availability Services, more security officials including a chief security officer are monitoring operations constantly using state of the art tools.

Are You Ready to Enter the Cloud?

So how does an LSP determine its readiness to migrate to the cloud? Here are some essential elements to gauge if this is the right time.

An LSP should approach it from three fundamental domains – technical, security and regulatory compliance/data governance. It should consider each area in turn, deciding if it can run an application on the cloud based on their unique requirements. If you can’t move it to a cloud-hosting provider such as SunGard Availability Services or Amazon, you need to start somewhere else.

Assuming the LSP already has done a strategic analysis and a business plan, it must explore the tactical challenges that surround software, applications and platform. It must determine what it needs to survive, and if these elements are a good fit.

It should consider the security and risk implications of taking data out of the datacenter and, assuming it can’t handle this internally, moving it to a cloud provider. It’s not a simple decision. Not every element will fit into a hosted environment, such as legacy applications that can’t be integrated into new systems. Can you justify the risk of moving some elements?

Can Your Cloud Service Provider Weather a Storm?

In addition, an LSP must determine a cloud service provider’s resiliency and recovery should some crisis occur, such as a datacenter hampered by a disaster like Hurricane Sandy. It should make sure the provider has done its homework in terms of disaster-preparedness. That’s a key element when you’re a 24/7 logistics operation that needs a 24/7 platform. It also should ask to see printed reports of successful disaster-recovery testing and, of course, ask for references.

The cloud provider’s fee and costing model also are important. Some providers might advertise that their service costs 20 cents an hour, but there may be four other considerations to that. It may be 20 cents to run the server and another 5 cents to monitor network traffic and 10 cents for certain storage duties, for instance. So it’s important to understand the cloud provider’s fee schedule as well as its service level agreement, or SLA, to ensure its needs will be met vs. what the provider offers.  

Other issues to explore: the vendor’s patching and backup regimen; reporting for performance management; whether it has scheduled for downtime and whether it will coordinate any of those with you; and how it maintains its servers and knows they’re secure.

Plan for the Actual Moving Day

A major dissatisfaction often comes with simply migrating data and information to the cloud. A cloud service provider should have an in-house staff to help you move; we joke about changing tires on a running car but that’s what migrating your data entails so the quicker and easier it can be done, the better.

Also, the LSP should attempt to determine how well all things will perform. Likely, it will possess a hybrid situation – it’s actually the new “normal” – where the LSP manages some elements and the cloud provider manages others. For instance, you usually don’t move out the accounting or HR systems as well as intellectual property and those other areas that required a very specific environment.

But a lot can be moved to the cloud that will benefit an LSP’s costs. Ask the cloud provider for a service catalog that lists all the services it provides.   

Avoid a Cloud of Uncertainty

For LSPs, it’s important to think of data resources as a platform for their business. So if you’re considering the cloud and have done all the research and the due diligence but still have concerns, here’s a suggestion. Instead of thinking of a cloud service provider as the home of complexity – fostered by, say, 98 servers and the like – consider it as an invaluable resource that enables you to develop new logistics initiatives that you and your team wouldn’t have time to do otherwise.

Let’s put it this way. While you almost certainly should be in the cloud, you don’t want to be in a cloud of uncertainty. 

Joe Pampel is consulting director, Enterprise Architecture and Cloud Computing at SunGard Availability Services