Software firm SparkWeave argues that keeping corporate data inside the company is better than trusting it to the public cloud.
Brent Bowlby, center, CEO, SparkWeave created the cloud computing software used by Array Services Group systems administrator Roger Lund, left and I.T. director Keith Swingle, right. Array Services Group is a call center handling debt collection and medical billing. Thursday, March 29, 2012.
Cloud computing appears to offer everything today's modern company needs: reliable, remote data storage that's faster, less expensive and just as safe as a company's own data center.
Not so, says SparkWeave, a Minneapolis tech company that portrays itself as a sort of anti-cloud computing company. Oh, and SparkWeave markets a competing service.
"It's a matter of whether I can trust the cloud," said SparkWeave CEO Brent Bowlby. "Who do you trust more with your data, someone outside your company or yourself?" He claims the computer industry's promotion of "public cloud" computing over the Internet has oversold the benefits while minimizing the pitfalls.
He's not the only one. National business surveys have shown that large U.S. corporations are not rushing to use public clouds, citing both concerns about the safety of data and cost. "The slower adoption of cloud [computing] within the U.S. and Europe reflects a greater hesitancy ... about putting mission-critical and customer data on the cloud," Forbes magazine reported last week.
Greg Potter, an analyst at market research firm In-Stat in Scottsdale, Ariz., said that companies with more than 1,000 employees, as well as most companies storing medical records, have been reluctant to risk putting their confidential corporate data in the public cloud. As a result, the rapid growth of public cloud computing has been driven mostly by smaller companies that can't afford their own data centers, he said.
Cloud computing is a form of corporate outsourcing, and is a modern term for what in the 1970s was called "computer time-sharing." Because cloud computing uses modern technology, it's more powerful, efficient and easy to use than computer time-sharing ever was.
That's because cloud computing data centers, typically run by big companies such as Amazon, Microsoft, Google and IBM, use computer equipment that is simultaneously shared by many clients, using a technique called "virtualization."
This makes it possible to scale computing power up or down rapidly, so theoretically customers pay only for the computing horsepower they need. But Bowlby argues that heavy computer users could save money by using their own data centers instead.
SparkWeave was launched more than a year ago by Bowlby, software experts Jay Groven and Macie Korte, and a financial backer who doesn't wish to be identified, Bowlby said. The firm opened its doors this spring, and hopes to have revenue of $3.5 million in 2012.
The company, based in northeast Minneapolis, applied this year for a patent on the way its software more efficiently stores data by reducing duplication of information. Bowlby, 42, has been involved in other Twin Cities start-ups, including Intradyn of Eagan, a privately owned e-mail archiving company.
SparkWeave designs private clouds for companies with 500 or more employees and figures it competes in a market with about 20,000 potential corporate customers. The cost of its software varies widely with the tasks to be performed and the number of employees at the client company. But typically the costs run about $100 per user per software application per year, Bowlby said.
That means the costs of SparkWeave's "private cloud" can be much lower than in a "public cloud" for firms that are heavy computer users, he said. Data will be more secure because it will never leave the client company's data center and there will be electronic audit trails for everyone who viewed the information.
That makes private cloud computing attractive for companies handling health care records or credit card information, which are subject to strict government or financial industry rules about maintaining control over data, he said.
The case for private clouds
Bil MacLeslie, president of ipHouse, a Minneapolis data center company, agrees that there are strong arguments to be made for private clouds. While his firm offers a public cloud data service, it keeps all the data within its local facilities, which means a client at least knows where the data is physically housed.
"With some of the big public clouds, you don't know whether your data is stored in Virginia or New Jersey," MacLeslie said. "All you know is that it's in the east half of the country. So being local is a selling point for us."
MacLeslie also believes that the savings of cloud computing have been oversold. Cloud computing is economical for companies that only need computing during 20 to 25 percent of their working hours, he said. If a company needs computing more often than that, it's cheaper to buy and run its own computers, he said.
One of SparkWeave's first clients is Array Services Group of Sartell, Minn., a suburb of St. Cloud. Array, which employs about 500 workers, handles credit card and patient health record information as part of its billing and collection operations for hospitals and businesses. It needed a more secure way to manage the data and exchange information with its clients, said Keith Swingle, Array's information technology director. Using a public cloud service wasn't considered sufficiently safe.
"The question is, 'Where is that data and who gets to see it?'" said Roger Lund, a senior systems administrator at Array Services Group. "If the data's stored in the Amazon public cloud, you don't know where it is. I'm not saying that Amazon isn't secure, I'm just saying you can't prove it one way or the other."
That's why SparkWeave can prosper in competition with big cloud computing firms, Bowlby said.
"At the end of day, you want to know where that data is."
Steve Alexander • 612-673-4553