I am always amazed at how many people are under the mistaken impression that something like Office365 (or Google Apps) can replace an on site network system (like Microsoft Small Business Server). In short the answer is no. Yet.
Office365 is designed to remove some of the ‘heavy lifting’ from on site networks by moving complex and hard to maintain applications like Exchange and SharePoint into a place where they can be managed by the people who designed and developed that software. However, even with those applications removed, local systems are still performing a lot of functions that the cloud cannot do well presently.
A good example is Windows Update Services (WSUS) which provide patch management for local machines. Microsoft does have a cloud product (Windows InTune) that does something similar but it is still in the early stages of development so it currently doesn’t have all the features the onsite equivalent has.
An very important phrase here is ‘currently’. The plan seems to be that Windows InTune will one day rival any onsite solutions (especially for small business), however it still has a way to go to reach parity. What many also overlook is the fact that cloud solutions like Windows InTune will improve far more rapidly than traditional on site software.
So even with Office365 and Windows InTune many small business have third party applications that depend on onsite solutions and infra structure. Those that use things like SQL will also eventually move to the cloud under something like Windows Azure but they won’t until developers rewrite their software to take advantage of the cloud offerings. Until they do, businesses will have to retain on site infrastructure.
Rather than believing that the cloud replaces everything currently on site you need to look at cloud technologies as reducing the requirements for on site equipment. With Office365 many business probably only need something like SBS 2011 Essentials, rather than the full blown SBS 2011 Standard. Think downsizing, not elimination. Yet.
As any business moves to the cloud they also need to carefully consider their connection to the Internet. Generally, most businesses have been able to get away with ‘consumer grade’ broadband. As they move to the cloud they must step this up to faster and more reliable pipes with redundancy. Most modern internal networks run at a speed of 1,000 Mb, while broadband typically only delivers 3 Mb consistently. Currently, you’ll never get the same performance but broadband speeds are always improving but they are not yet equivalent to on site speeds. Yet.
Finally, in all this talk of moving to the cloud, traditional things such as backup and security don’t magically disappear, they simply need to be re-thought and re-engineered. Just because your email moves to the cloud and Office365 does that mean you shouldn’t back it up? Certainly for me it doesn’t. I know that it is backed up at the data centre but since it is ‘my’ data I still backup regularly. Admittedly, this is still cumbersome and not totally automated as it is with on site situations. However, the key term again here is ‘yet’. It will come as demand increases.
So, in summary, can the cloud totally replace what you have with the your on site network? Almost certainly no. Will it? Almost certainly yes. The only question is when. In the meantime rather than thinking of eliminating think down-sizing locally when it comes to the cloud.