Enterprise Cloud Computing Economics Becoming Clear

It’s just over 3 years now since Cloud Computing became the most popular topic of conversation in the IT, and to a certain extent the business world.  The promise that Cloud Computing offered in the early days of freedom from the traditional IT room is now recognised by the market as being correct and accurate with the last obstacle, that of real cost savings, finally being overcome.  The benefits of Cloud from resilience, scalability and manageability were clear to see and not disputed. The two major questions are Cloud revolved around Security and Cost reduction.

Security factors were a real concern for most commentators in the early years with most attention being drawn to the security and protection of data. The market has since educated itself in this area of Data Protection legislation, the Patriot Act and the transfer of certain personal data across diverse jurisdictions where Data Privacy and Protection Laws are not as strict as they are in Ireland. With this knowledge to hand, and with the lack of many major reports of data leakage from the Cloud, the concern over data security is becoming less and less of a hot topic.

The Sunday Business Post, June 2013

The major focus now is on the internal cost of delivering computing power to an organisation and the real savings to be made in pursuing a Cloud model as part of an organisations IT strategy. Companies are engaging their Finance departments to develop more detailed TCO models that project the true cost of running and delivering computing resources from the traditional in house model. The fully absorbed costing model that not only includes hardware, but also resources, power, services, up-time and space is presenting a powerful argument to look at monthly rental of the computing solution via a Cloud model. The pure economics of building an extensive computing ecosystem and, through the medium of virtualisation, delivering partitions of these larger systems to multiple clients is proving to be far more economical than the building and management of dedicated in-house systems. The conversation has moved from servers to that of CPU and RAM and from Capital investments on depreciating assets to that of monthly rental costs.

Once this final costing obstacle is over-come, the early adopters will be quickly followed by the mainstream corporates in launching some if not all of their IT platform to the Cloud model.  From an industry and employment perspective, the potential of Cloud computing has been rightly lauded as a real opportunity for the Irish economy to develop employment opportunities in the tech sector. However, it is important to remember that Cloud technologies, while presenting great opportunities also carry risk to job security in operations exposed to the advancements in Cloud technologies. The first visible casualty of this came with the recent regrettable demise of XtraVision. It is rarely one factor that signals the end of any operation, but surely the advent of media streaming in the guise of Netflix and others have contributed substantially to the end of a business model that relied on physical media rather than virtual.  While all jobs created by Cloud technology will be highly publicised by the media, the loss of employment due to the Cloud will not be so publicly recognised. In an underfunded economy where opportunities for R&D and start-up investment are not as prevalent as times past, one wonders if we have the capacity to take advantage of the opportunities that the larger Cloud Computing ecosystem presents.