Why the Cloud is a Game Changer

Sanjay Gupta, CTO, U.S. Small Business Administration

Sanjay Gupta, CTO, U.S. Small Business Administration

A common and long-standing frustration of business leaders with respect to Information Technology (IT) has been the time it took to deliver technology-based solutions, and thereby deliver value to the business. This frustration has been consistent regardless of the industry, geographic region, or size of the organization.

While many elements contribute towards the time needed to deliver technology-based solutions, the procurement, configuration and provisioning of computing resources like servers, storage and networking devices was time-consuming. Further, as business needs changed, in response to market demand, it was nearly impossible for IT to scale the technology-based solution in a relatively short timeframe. This lag time was far more than what the business leaders expected to adequately respond to the changing market demands, thus leading to their frustration.

From an IT leader perspective, it has been a conundrum—build too much computing capacity in anticipation of increased business demands; the computing cost structure goes up. If the anticipated business demands do not increase as anticipated, you are now saddled with a flawed computing cost structure. Also, if the business demands shrink, the computing cost structure is threatened. This is because the on-premise computing environment is essentially a fixed-cost, capital expense type cost structure. The basic computing environment is required to deliver technology-based solutions, but in of itself it has increasingly become a non-differentiating, utility function.

The advent of cloud computing is a game changer for IT leaders, but more importantly, for the business. This is because for the first time, IT leaders can address some of the long-standing business frustrations with IT in delivering technology-based solutions. While cloud computing is not the magic solution which by itself will deliver technology-based solutions quickly, it addresses three key challenges with respect to the computing environment:

• Cost

• Agility

• Scale

Cloud computing provides a consumption-based, variable cost, operating expense type cost structure in comparison to the fixed cost, capital expense type cost structure. This shift is very important from a financial management perspective. Chief Information Officers (CIOs) no longer need to worry about the dreaded conversation with their Chief Financial Officer (CFO) asking for a sharp increase in capital expense needed every four to five years to replace existing hardware. Further, the consumption-based cost model enables net cost reduction. You only pay for what you consume.

Cloud computing provides a consumption-based, variable cost, operating expense type cost structure in comparison to the fixed cost, capital expense type cost structure

Once a cloud subscription is set up, procuring and provisioning additional computing resources are typically measured in minutes and hours, compared to weeks and months needed to procure and provision additional computing resources in an on-premise environment. The magnitude of this reduction in time is by far the largest game changer. Cloud computing significantly improves the agility of the organization and allows IT to quickly respond to changing business needs.

Cloud computing allows rapid scaling up, or scaling down of the computing environment in near real time. The associated cost structure also flexes similarly, allowing the costs of the cloud computing environment to be in close alignment with the changing business needs. Such rapid scalability is nearly impossible in the on-premise environment.

Security is a primary cloud computing concern. Requirements of data sovereignty, sensitivity of the information, and regulatory compliance must be evaluated to select an appropriate cloud computing environment. Public cloud (or multi-tenant cloud) may be a good fit unless these requirements are unique and specific. Private cloud and Gov Cloud are some of the other options available. It is important to select the correct cloud based on the requirements to ensure an appropriate level of security.

As organizations transition to a cloud computing environment, network connectivity to their cloud needs to be set up and sized appropriately. As the cloud use increases, it puts increasing demands on the network. Organizations can face performance issues with cloud computing, because their network connectivity and network peering may not be appropriately set up and configured. Network peering with the cloud service provider can also impact performance, and requires close coordination with them and the network provider to be optimally configured.

If you or your organization are still evaluating whether the cloud provides a sufficient value proposition, it would be safe to conclude that the cloud does provide a compelling value proposition in terms of cost, agility and scalability. It is a game changer for the business, as well as for IT. The cloud provides the needed foundation to implement technology-based solutions quickly which delivers business value and thus addresses the long-standing business frustration with IT.