The Business Benefits and Risks of Cloud Computing
What is Cloud Computing? Why is it important? Why should businesses care about this new
technology? These are some of the many
questions that all organizations and their
leaders are asking. The answer is clear.
First, moving applications to the cloud
helps reduce cost. This leads to smarter IT
spending. Second, it enables faster delivery
of new capabilities, thereby supporting
business innovation. However, as is always
the case, with benefits comes risk—
business risks as well as technology risks.
What is Cloud Computing?
Cloud Computing is simply an approach
to computing that enables applications to
be delivered at scale for a variety of workloads and client devices. It is the foundation for running applications and storing
data in data centers that is owned by an
external service provider and accessed via
Internet. Cloud Computing can help businesses deliver IT services to its subscribers
as “pay as you go” service.
CURRENTLY, CLOUD COMPUTING IS
OFFERED IN THREE MAJOR FLAVORS:
• ProIaaS (Infrastructure as a Service)—A set
of infrastructure level capabilities such as an
operating system, network connectivity, etc.
that are delivered as pay for use services and
can be used to host applications. An example
of this is Amazon’s AWS.
• PaaS (Platform as a Service)—Higher level
sets of functionality that are delivered as consumable services for developers who are building applications. PaaS is about abstracting
developers from the underlying infrastructure
to enable applications to quickly be composed.
An example of this is Microsoft’s Azure.
• SaaS (Software as a Service)—Applications
Mohit Nigam is a Manager with Hitachi
Consulting. His client list includes
multiple Fortune 500 companies across
many verticals, including healthcare,
transportation, financial, high technology and the communication industry.
that are delivered using a service delivery model
where organizations can simply consume and
use the application. Typically an organization
would pay for the use of the application or the
application could be monetized through ad revenue. An example of this is SalesForce.
Benefits of Cloud Computing
Why should businesses move to the Cloud?
What benefits does this technology provide? Let’s take a closer look.
REDUCTION IN CAPITAL COST
AND SMARTER IT SPENDING
Cloud Computing can help business leaders spend capital money more intelligently. Organization’s IT budgets are
usually bucketed into two main areas. The
first area is towards support of basic applications and its infrastructure like e-mail, etc. The second area is building new
applications towards support of new business capabilities.
Every organization’s goal is to minimize
the first and maximize the second. Cloud
Computing can help towards achieving this
objective. It does not require any upfront
investment cost towards building of servers
and its associated software. Cloud Com-
puting becomes an operating expense
rather than a capital expense because you
are charged only for resources utilized.
Organizations can then spend those dollars
FASTER TIME TO DELIVERY
In most organizations, deploying new IT
capabilities takes time. This delay often
occurs as it takes time to request and deploy IT resources, such as servers and operating systems. If not planned properly,
this can result in lost revenues and profits in
this competitive landscape.
Building applications using Cloud Computing helps in minimizing this delay. Unlike in-house data centers, cloud service
providers provide capability to deploy the
application quickly and begin running it
immediately. There is no need to wait for
hardware and software resource allocation
for your application.
LOWER BUSINESS RISK INNOVATION
New product development and innovation
is always a risky proposition for a business.
The more a business spends on a new idea,
the greater the risk. Cloud Computing can
help in reducing this cost.
Most innovations begin with a proof of
concepts and experiments. This requires a
low-cost and commitment to validate a
business proposition. Cloud Computing’s
model of “pay as you go” service is a good
candidate for such a scenario as you will be