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July 22, 2019

The Advantages of Cloud Computing for Business Today

"Low-end use makes the cloud attractive due to its initial low cost to get moving. However, high-end use demands most organisations to outsource their cloud solutions, as the scale increases beyond the organisation's ability to handle processes internally."

By CBR Staff Writer

One of the key advantages of cloud computing is that it can dramatically lower the cost of entry for smaller enterprises that want to undertake compute-intensive business analytics, writes Computer Business Review’s Conor Reynolds. 

With the rise of data analytics, AI systems and machine learning, data processing is quickly becoming not just a business advantage, but is proving crucial for companies just trying to keep pace with competitors.

The potential cost benefits that cloud computing could represent for the industry as a whole have been recognised for years: as one 2013 academic report puts it: “By sharing resources to smooth out peaks, paying only for what is used, and cutting upfront capital investment in deploying IT solutions, the economic value will be there.”

CloudKnoxThe simplest way to define cloud computing is that it is the outsourcing of data storage and compute. Rather than store or process information on your own premises, you essentially subcontract this to specialist providers that typically have almost unlimited capacity, along with umpteen extra services; if you are willing to pay, of course.

Todd Matters, Chief Architect and Co-Founder of Hybrid Cloud Management Platform RackWare says: “With cloud computing, businesses don’t need to worry about managing as many data centers, which are a big burden. This is because data centers are complex and have security concerns while also demanding major real estate as well as power and cooling requirements. Relegating some of your workloads to a cloud environment removes this burden and is economically advantageous.”

Natural Innovation of Cloud Computing

The destruction of infrastructure barriers unveils another one of the advantages of cloud computing: that of natural innovation. Take the UK challenger bank Monzo which is currently growing by 200,000 customers every month.

Monzo built its own back-end and uses AWS hosting for most of its infrastructure needs, it has also stretched out across the cloud eco-system to use Google’s BigQuery allowing it to run searchers on its data providing the bank with business intelligence. It’s a fair question to ask if Monzo could exist at all without cloud computing.

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To build the computer infrastructure to facilitate all of these features and more importantly be able to deal with spikes not just of new users, but the dreaded event of everyone logging into the service at once. If Monzo had built the bank on a traditional on-premises infrastructure, it would have taken a significant cost to build resilience into the system so it was able to deal with user spikes, but with cloud computing your service provider just spins up another rack in a data centre.

In fact it is this scalability that is one of the most inviting advantages of cloud computing for organisations. Start-ups want to be able to rapidly expand their business as demand grows, but it would be detrimental to them if the cost of rapid expansion was a reduced service for existing customers. Cloud computing effectively eliminates this concern.

Sash Sunkara, CEO and Co-Founder at RackWare comments: “For a smaller company, it doesn’t make sense to invest in servers that they house in their closets and pour huge amounts of money in employing IT personnel, especially when it has nothing to do with their core business. Instead, cloud computing allows them to leverage the best-in-breed (the best in technology, compute, storage and networking) without having to make a huge investment.”

Security Advantages of Cloud Computing

The cloud of course contains legitimate concerns, especially in Europe where General Data Protection Regulation (GDPR) is starting to throw its weight around in the form of costly fines, as recently experienced by British Airways (£183 million) and Marriott International (£99.2 Million).

Both of these fines were for internal data breaches, but the message is clear from the EU data regulators; the data you hold has value and you better be sure at all times where it is! (While most cloud providers let you keep your data in a chosen geographical region, and make GDPR compliance easy, many organisations are opting for a hybrid cloud model that involves them sending the bulk of its data to a public cloud for processing, while securely keeping sensitive data on hardware situated in-house.)

On the flip side GDPR compliance could actually be a one of the advantages of cloud computing for small to medium enterprises. Both the Marriott and British Airways breaches were the result of a hack of their systems. A small firm that decides to host and operate its infrastructure via a cloud service provider would benefit from its top tier data security protocols.

The current big draw for companies to the cloud is the provision of cloud services, which are quickly moving from being the cherry on top, to the entire meal itself. All the big providers offer security and monitoring services, business process services, communication services and data collating services.

Sid Nag, research VP at Gartner comments recently: “At Gartner, we know of no vendor or service provider today whose business model offerings and revenue growth are not influenced by the increasing adoption of cloud-first strategies in organizations. What we see now is only the beginning, though. Through 2022, Gartner projects the market size and growth of the cloud services industry at nearly three time the growth of overall IT services.”

At the end of the day the advantages of cloud computing really dwell in how an organisation wants to store and process its data. For a company whose core business has noting to do with IT, it makes sense to outsource storage and analytics, allowing them to focus on what they do best without worrying about maintaining infrastructure.

For larger organisations who collected petabytes of information, but are not gleaming insights from its stored data, the advantages of cloud computing may lie in the incredible compute power and scalability of the public cloud.

Either way the advantages of cloud computing can’t be ignored and it may just be a case of picking the right provider to suit your desired outcomes.

As Red Hat’s Martin Percival, notes, however: “Low-end use makes the cloud attractive due to its initial low cost to get moving. However, high-end use demands most organisations to outsource their cloud solutions, as the scale increases beyond the organisation’s ability to handle processes internally. The problem is that the cost equation at the top-end is no longer as cheap as the initial cost.

“The business curve of hyper-growth startups often targets growth of audience, which requires cloud resource usage, before a profit model is established that can handle the rising cloud costs. Even companies with well-defined revenue streams have found the i/o costs of moving data in and out of the cloud suddenly become a significant factor where storage and compute power were the only factors considered.

At first glance, outsourcing IT management might appeal beneficial for an organisation. It’s an effective way to delegate work that’s not core of a business. However, next level considerations arise when organisations require more specific configurations and usage outside the pre-defined limits applied by the cloud provider.”



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