Cloud computing is here to stay. Few IT organisations would disagree with that. The shift to the cloud is being driven by ubiquitous web access and speedy networks as well as attractive service tariffs that appeal to both large and small organisations.
This is just the starting point, however. Cloud opens up new opportunities, new ways of working and new business models.
There are some constraints. Industries and organisations vary in their IT requirements and, by extension, the sort of cloud models that are appropriate for them.
The cloud model itself still has challenges ahead. Among these are the need for cloud service providers, and the wider IT industry, to standardise security and interoperability. The for cloud service providers also need to help adopters and potential users to calculate and mitigate their risks in moving operations into the cloud.
However, organisations of all sizes are already reaping the rewards of moving their IT from on-premise into the cloud.
The first of these is the reduced cost of adoption that the technology offers. One of the original and still most compelling arguments in favour of opting for software as a service (SaaS), or cloud-based computing, is that it shifts capital expenditure (capex) to operational expenditure (opex).
What’s more, cloud holds the potential to significantly cut overall IT costs as businesses no longer have to buy, manage and maintain their own hardware, software and licences. Instead, they rely on a service provider, which has gained economies of scale from operating the equipment for multiple users.
Consequently, internal maintenance and helpdesk costs are reduced or eliminated as organisations relinquish the day-to-day responsibility of running their own IT.
Another, increasingly compelling argument for investing in cloud is that it enables organisations to be more agile. Services can be set up quickly, and scaled up or down rapidly, as the cloud uses virtualisation to spread application usage across the required number of servers and storage.
In addition, SaaS offers the ability to provide applications to employees working remotely and even globally, as users access services via the web. The model also supports flexible working, making applications, communications, storage and processing power available to workers whether they are in an office, at home, on a laptop or using a web kiosk.
David Bradshaw, research manager, European SaaS and cloud services at analyst group IDC, says the cloud has two basic attractions for businesses. “IT buyers are looking for ways for cloud to increase agility while reducing cost,” he says.
Tom Koulopoulos, founder of IT consultancy Delphi Group, adds that another big attraction of the cloud is that the majority of consumers and workers already use it. The concept is familiar and people are already convinced of its usability, he says.
“We are currently living in the cloud. Most of us use Gmail. Many of us back-up our laptops to the cloud, and many of us use Facebook. But cloud isn’t just about technology, it’s about changing the nature of business.”
Koulopoulos adds that for business users, the cloud provides a way for them to expand their organisations. “The cloud allows me to gauge the risk, to scale and accept more risk. It helps us to think, ‘I need to scale’,” he says.
This is both about ‘speed to value’, where a change provides competitive advantage, but also about cutting costs whilst mitigating corporate risk. The cloud does this by transferring business processes and applications over to a managed service provider that has the means to easily add more computing power to process more data or transactions, or perhaps serve a larger constituency of users, as required.
On the back of this, cloud users also benefit from constant innovation as their application service provider, for example Google for desktop applications, ensures they are always using the very latest version the software.
Finally, the pay-as-you-go SaaS model frees organisations from the long-term licensing agreements of the past, giving them a new level of flexibility.