The Continuing Cloud CAD Controversy

Have you jumped in feet first into cloud computing? Why or why not? In this week’s column we explore cloud-based CAD tools and why you might want to tread carefully with adopting fully cloud-based products.

How many years have we been hearing about cloud-based CAD now? Long enough that the conversation has progressed beyond pure marketing hype. Of course, we've been told that cloud-based CAD would make workstation-based CAD obsolete, but has it? Hardly.

In this edition of the CAD Manager's Newsletter I'll explore the state of cloud-based CAD tools from a practical point of view and offer some reasons as to why your company should be wary of cloud-based tools. Here goes.

Image source TeamOktopus/istockphoto.com

Trends Worth Noting

Let's brainstorm a bit here and think of some of the trends software vendors have pushed:

Cloud-hosted applications. Where software is NOT on your own machine, but at the software vendor's web server.

Cloud-hosted data. Where the data produced by the application is NOT on your own server, but on the vendor's servers.

Named-user licensing. Where each user must have a unique (named user) account at the vendor's web site to validate their license.

Per-use pricing. Where software licenses are irrelevant because each use is chargeable — typically using a credit or token billing system.

Subscription rental only. Where software licenses lapse after a fixed rental term rather than running perpetually.

Notice a trend within the trends? More of the central control of your applications, licenses, and data is held by the software company and more of the risk falls to you, the user.

What risk you may ask? Let's explore that concept in more detail.

Lack of Control = Risk

Let's use the trends listed to ask some diagnostic questions. Answer the questions honestly, based on what you experience at your own company and you may start to draw some conclusions yourself.

Cloud-hosted applications. If your software isn't on your own server, what happens if the hosted server is down? What happens if the software company goes out of business? What happens if the software vendor decides to triple the cost of its software? What is your escape plan should things go wrong?

Cloud-hosted data. Does the software vendor encrypt or encode your stored files? Can you backup your own data? What happens if the software company is hacked or their server goes down? Again, what is your escape plan should things go wrong?

Named-user licensing. Beyond the same concerns about server/internet outages, named-user licensing deals a death blow to the traditional practice of shared (concurrent) licensing administered from a local server. If every user must have their own unique account, then licensing costs will clearly increase.

Per-use pricing. How can you control which users are using an application with pay per use licensing? What happens if casual use of an application goes up and the cost goes way up as well?

Subscription rental only. What happens if your company is hit by a business downturn and you can't afford to renew a subscription?

As I answer the questions above I can't help but draw the following conclusions:

1. When applications or data are hosted on vendor servers, my company is more at risk for service interruptions.
2. When application software is hosted on vendor servers, we're at the vendor's mercy and trusting that the company will maintain the software and not go out of business.
3. Everything is geared to increase the cost of the software.
4. Everything is geared to make us captive to the software company's infrastructures and web architecture.
5. Security for your data becomes questionable as nobody really knows who might hack your application or user data.
6. The ability to easily control user accounts — in case of employee termination or hacking — becomes much more complex than administering a local network account.

You may want to show this list of questions and conclusions to your senior management teams so they understand the inherent workflow, cost, and security risks that cloud-based CAD software can present.

Who Benefits?

The short answer? Not the customer.

This centralized model of CAD use obviously benefits the software and cloud vendors because it allows them to charge for their software and servers on a monthly basis. They also gain ultimate control of your CAD system since they can disconnect you from your applications and data unless you keep paying them.

The question I keep asking, yet never get an answer to, is this: If having all our CAD software and data on the cloud is really the best way to do things (like all the marketing literature says) why aren't design companies stampeding to adopt that methodology? After all, software companies wouldn't have to push us towards cloud-based centralization if it were truly the best business option, right?

If that were the case, we'd all go there voluntarily.

Resistance Mounts

In the real world, the CAD managers, users, and company leaders I talk to have become much more aware of the situation and have remained with more traditional CAD tools. Consequently, adoption rates for purely cloud-based CAD tools have remained low. However, many large software companies (Microsoft, Intuit, and Autodesk amongst them) have either eliminated or are phasing out perpetual licenses (those that continue to run on the installed machine indefinitely) in favor of monthly or annual rental agreements.

As more companies realize this trend, I find more of them are becoming "anti-cloud," particularly within the last two years. Why the resistance? The reasons I hear from my clients always focus on the following:

Cost containment. If a company runs perpetually licensed software on its own servers it doesn't have to face steep monthly or per use costs. If the software and the data storage are cloud-based, costs stack up quickly.

Perpetual is cheaper. If a company already "owns" its software it can maintain that software at cheaper annual support rates than renting. And, if the company ever stops paying the annual support it can keep running the software without fear of being shut down by a cloud vendor. Note: I see a lot of old software in the field that is no longer actively supported by the software vendor, but... it still runs.

Network security. No matter what anyone predicts, there's no arguing that cloud-based tools present security risks. Think cloud-based software platforms are hack proof or 100% online? Recent data breaches and outages at big companies such as Under Armour and Wells Fargo illustrate the fallacy of that thinking.

Security risks are better understood now. You don't have to be an IT expert to see that as more of your company design processes are moved to cloud-based tools, the more vulnerable your company becomes to Internet or vendor outages.

Risk avoidance always wins. In years past, many discussions I had with senior management teams started with the question, "How can we move our processes to the cloud to cut IT and hardware costs?" Today those discussions often begin with someone asking, "How can we keep our software and data resources internal so we don't get hacked?"

Intellectual property is ruthlessly guarded. Even the thought of losing design data to a foreign company not subject to patent and intellectual property laws is a huge incentive to keep data off a public domain cloud. This is especially true when the cloud servers may be located in other countries.

While IT technology may overcome some of these issues in the long run, the trend towards companies being more guarded in how they manage their applications and data is clearly happening. Given all the valid objections presented above it is hard to see a stampede towards a centralized cloud-based CAD environment happening.

Summing Up

Does your company have a strategy for cloud-based CAD tools? How can you mitigate the risks we've talked about? Are there cases where cloud-based CAD tools make sense? Those are the questions we'll delve into in the next edition of The CAD Manager's Newsletter. Until then.