Business Value of Cloud Computing

Cloud Computing is both a business delivery model and an infrastructure management methodology. The business delivery model provides a user experience by which hardware, software, and network resources are centralized and optimally leveraged to provide innovative services over the Web. Server, storage, networking, and application resources are virtualized and provisioned in accordance with the logical needs of the service using advanced, automated tools. The cloud then enables the end users to use these services via a Web-based interface that removes the complexity of the underlying dynamic infrastructure.

The infrastructure management methodology enables IT organizations to manage large numbers of highly virtualized resources as a single large resource. It also allows IT organizations to massively increase their data center resources without significantly increasing the number of people traditionally required to maintain that increase. Importantly, enterprises are able to adapt much faster to changes, and adapt their information systems in a fraction of time (compared to traditional infrastructures).

The Cloud Computing solution from a business perspective can be summarized:

• Reduction of total cost of ownership (TCO)
• Transition of fixed to variable cost using metered service
• Improvement of business agility and ability to build first class systems in much less time and upfront investment. “Time to money” for revenue generating IT projects is improved which increases return on investment (ROI) and profits
• The cost model allows the business to free up budgets on infrastructure and use existing data center resources more efficiently
• Fast adaptation to market needs enables competitive advantage

For organizations currently using traditional infrastructures, a cloud enables users to consume IT resources in the data center in ways that were never available before. Companies that employ traditional data center management practices know that making IT resources available to an end user can be time-intensive. It involves many steps, such as:

• Procuring hardware; finding raised floor space and sufficient power and cooling
• Allocating administrators to install operating systems, middleware and software
• Provisioning the network; and securing the environment. Most companies find that this process can take upwards of two to three months. Those IT organizations that are re-provisioning existing hardware resources find that it still takes several weeks to accomplish.
• Labor reduction in the provisioning, support and management of complex end user devices

A cloud dramatically alleviates this problem by implementing automation, business workflows and resource abstraction that allows a user to browse a catalog of IT services, add them to a shopping cart and submit the order. After an administrator approves the order, the cloud does the rest. This process reduces the time required to make those resources available to the customer from months to minutes.

Grid computing provided a virtual pool of computation resources but it’s different than cloud computing. Grid computing specifically refers to leveraging several computers in parallel to solve a particular, individual problem, or to run a specific application. Cloud computing, on the other hand, refers to leveraging multiple resources, including computing resources, to deliver a unified “service” to the end user.

The cloud also provides a user interface that allows both the user and the IT administrator to easily manage the provisioned resources through the life cycle of the service request. After a user’s resources have been delivered by a cloud, the user can track the order, which typically consists of some number of servers and software, and view the health of those resources; add servers; change the installed software; remove servers; increase or decrease the allocated processing power, memory or storage; and even start, stop and restart servers. These are self-service functions that can be performed 24 hours a day and take only minutes to perform. By contrast, in a non-cloud environment, it could take hours or days for someone to have a server restarted or hardware or software configurations changed.

For small and medium sized enterprises, the cloud levels the playing field for procuring and managing complex applications. Large enterprise software solutions, such as ERP (Enterprise Resource Planning) have traditionally only been affordable to very big enterprises with big IT budgets. However, companies that sell these solutions are finding they can reach small to medium businesses by making their very expensive, very complex applications available as Internet-based software services. This ability of SaaS to deliver expensive applications at affordable prices will continue to drive up Cloud Computing’s business value.