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Why Public & Private Sector Organizations Are Considering Cloud Computing
Cloud Computing gives you access to completely different levels of scale and economics
Oct. 6, 2009 11:00 AM
Cloud Computing gives you access to completely different levels of scale and economics in terms of the ability to scale very rapidly and to operate IT systems more cost-effectively than previously possible, as we can see by the results of the following poll:
We can say that the three main categories of benefits are:
1. delivery of service (faster time-to-value and time-to-market)
2. reduction of cost (CapEx vs. OpEx tradeoff and costs that are more competitive)
3. IT department transformation (focus on innovation vs. maintenance & implementation)
During economic downturns, the ability to speed up time-to-value and time-to-market becomes more critical than ever, and represents probably the most important benefit of the Cloud. Many companies are delaying projects unless they deliver a return on investment within weeks. With Cloud Computing, companies can speed up those times, because of the following benefits:
• No upfront capital investments and less financial risk (allows companies to shift from capital to operational expenses, which also means better cash flow and a more competitive business); no more upfront huge capital investments on on-premise infrastructure (applications, servers, network, maintenance, licenses, hardware, facilities, etc.) with uncertain payoff and that may never be needed. After all, what if the benefits don't materialize? Too bad, the money's been spent! With Cloud Computing, you only pay for what you use when you need it and you can terminate the contract.
• Offers improved agility to deploy solutions (instead of taking months or weeks, now you just need days or hours) and choice between vendors (particularly when cloud interoperability becomes more of a reality than it is today)
• Reduces the headaches of integrating and maintaining servers, storage & software, and eliminates mundane IT management tasks from skilled staff, leaving those tasks as the responsibility of the Cloud dedicated specialists. This allows your staff to concentrate on what they are skilled at, and to focus on things that drive the business: service innovation, in other words, rather than the drudgery of maintaining server uptime, installing yet another software upgrade, or adding yet another user account.
• Cloud computing also offers an on-ramp for your IT staff to recent computing advances such as non-relational databases, new languages, and new computing frameworks.
• Cloud Computing can lower IT barriers to innovation and increase interoperability between disjoint technologies
CLOUD COMPUTING: PAY FOR INNOVATION, NOT INFRASTRUCTURE ...
Maybe the best way to understand all these benefits is by giving an example:
Cloud Computing Benefits Example (IaaS)
Consider a researcher at a pharmaceutical company that needs to analyze a lot of data fast. If the results turn out as expected, the company could have a world-class success (and high profits) on its hands. But 25 servers are needed to crunch the huge volume of data!
• Scenario without Cloud Computing: wait until the purchase request is approved, wait until the servers arrive, wait until the servers are configured, etc. all of which can take several weeks or even several months. Let's say it takes three months. In an industry where the cost of delaying a product is estimated at $150 per second, that three months' wait would cost more than $1 billion.
• Scenario with Cloud Computing: the researcher clicks over to Amazon Web Services, configures the 25 servers in the Cloud in one hour, and within two hours has crunched the data. Total fee for the time using Amazon’s resources? Just $89.
Just a note: this isn't an imaginary example! This really happened at pharmaceutical company EliLilly, as you can see at:
Although this is a real-world example, there were some concerns about security and SLAs(Service Level Agreements) that Eli Lilly faced, such as: "How could they prove there was no trace of their data left in the Amazon Cloud? They had to take Amazon's word for it", and that's what we will address in the following sections.
IF ALL OF YOUR IT INFRASTRUCTURE (APPLICATIONS, DATA, SERVERS, ETC.) COULD BE MOVED 100% TO PUBLIC CLOUD MODEL, YOUR BUSINESS WOULDN'T NEED TO BUY ANY MORE HARDWARE, ANY MORE SOFTWARE, OR HIRE ANY ADDITIONAL IT STAFF.
So if Cloud Computing is all that, why isn't every business using Cloud Computing?
Well, because there are some risks – some major ones – and inherent challenges such as: the security of the enterprise data that is stored in the cloud, the risk of lock-in to cloud platform vendors, loss of control over cloud resources that are run and managed by someone else, reliability, governance, performance, human capital, compliance, integration with legacy systems. Some of these risks still don't have a industry-wide solution.
And that's what we will see in the next article: "What are the Cloud Computing Challenges and Risks?"
In the next article, I will cover the followings points:
- What are the Cloud Computing Challenges and Risks?
- Real-World Cloud Computing Applications- Cloud Computing Enterprise Implementation Road-Map
Thanks, and please let me know how can I help you.
P.S. Also see:
- Cloud Computing, in Plain English, to IT Directors, VP's, CIO's and CEO's
- Why Should IT Directors, VP's, CIO's and CEO's Care About Cloud Computing?
- Cloud Equals SaaS, Grid, Utility Computing, Hosting...?
- Why Large Public and Private Sector Organizations (not just SMB's) Are Seriously Considering Cloud Computing?
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