4 Cloud Computing Business Case

Most people think that Cloud Computing is a new technology model solution created to solve specific problems around applications and IT infrastructure. While this is true to some extent and cannot be debated otherwise, business willing to adopt Cloud would be short-changed if it Cloud is just considered a technology platform. Great value can be derived from Cloud Computing if it is treated as a business model.

Why should Cloud Computing be treated as a business model? Precisely because of the reasons mentioned earlier in this book. Cloud computing is a business model because it changes the way IT is delivered and consumed. Cloud is a flexible, scalable, and pay-per-use model that helps business address cost and scalability challenges. With its pay-as-you-use model, Cloud helps move IT costs from CAPEX to OPEX. It is scalable because IT capability can be ramped up or down depending on the changing business demand. For new start-ups, Cloud facilitates them to set up their IT environments quickly without creating an overhead of IT expenditure. Organizations are moving to SaaS-based solutions that help them to avoid large investments in licensing enterprise software. This aspect of cloud computing business model has come as a boon to Small & Medium Enterprises (SME) who mostly do not have the resources and funding to invest in building expensive IT ecosystem.

Over the years, this has enabled organizations to channelize their savings from Cloud adoption to invest in innovating its products and services. Cloud computing therefore speeds up entry to new markets and shortens time-to-market of new products. This is the reason Cloud computing is synonymously known for innovative IT service delivery model.

This does not mean that Cloud computing is a solution for everything or everyone. Cloud is recommended in situations where there is likelihood of rapidly growing computing resource demand, the need to reduce IT capex, rapid setup and deployment of IT environment, demand on business to be agile and respond to market dynamic quickly, and leveraging the cloud computing infrastructure to a broader set of users to reduce per-unit cost. Cloud computing is not usually recommended when the demand for computing resource is likely to be stable over a period of time, sensitive data is involved, heavy integration is involved between in-house and cloud applications, the benefits of cloud computing is marginal as opposed to the effort involved in adopting cloud, and there is not a clear business case for cloud adoption.

There is also a clear distinction between what is feasible to be hosted on private cloud vis-à-vis public cloud. Core business applications, applications built on significant internal intellectual property (IP), mission critical applications are better candidates for private cloud. Similarly enterprise-wide collaboration tools used across geographical locations can be deployed on private cloud. Data analytics platforms & storage solutions are best retained within the boundaries of private cloud as data security is still a major concern for business. At the other end of the spectrum, customer solutions such as Customer Relationship Management (CRM), Enterprise Resource Planning (ERP) can be moved to public cloud as SaaS based solutions have gained customer trust and confidence. Disaster Recovery and backup solutions can be moved to public cloud as they can lead to big cost savings.