Cloud Love: Why Cloud Computing is Today’s Most Disruptive Force
by Tobin Smith
From time to time industries go through disruptive paradigm shifts. The rise of automobiles changed transportation and significantly impacted the railroad industry. Aviation changed human and time-sensitive product and material transportation. Mobile phones accelerated the reduction of fixed landline communications. And most recently, the Internet has changed communications (Webex, IM, Skype), search and access to information (Google, Wikipedia), online retail and commerce (Amazon, eBay) and social interaction (Facebook, LinkedIn and Twitter). Another shift is occurring that will forever change how consumers and businesses use networks, services, software and applications – Cloud Computing.
Spending on “cloud computing” ie datacenter based/usage priced IT is about 5% of the $1.5 trillion annual spend on cororate IT. All research and analysts firms agree a CAGR of at LEAST 30-90% a year for the next decade is at hand depending on which segment of the “cloud” we are talking about.
AMI Partners predicts that the worldwide cloud computing market for SMBs will reach $94 billion by 2014. Suppliers are already experiencing rapid growth in cloud computing offerings driven by its ease, speed and economic benefits for the users. It is interesting to note that the worldwide recession has actually placed a spotlight on cloud computing due to the low cost nature of these service offerings.
Clearly there has NOT been this type of “Cambrian explosion” in corporate technology since the dawn of the World Wide Web.
Our mission at CloudInvestor.com is to help investors make enough sense of the transformational opportunities to place their bets on the winners in the immense Darwinian battle of survival that has taken the IT world by storm.
What’s Different About Cloud Computing?
The Cloud is changing the way that applications and infrastructure are distributed, delivered and consumed. Enterprises around the world suddenly have access to applications and functions that promise to transform the way they do business. Application vendors can now reach markets around the globe that previously were too expensive or too dispersed to capture.
A cloud service has four primary characteristics that differentiate it from traditional hosting:
- Usage-based charging – Payment is variable based on user consumption. Formerly high fixed cost capital expenditures become variable operating expenses.
- Immediately scalable – Usage and cost can be scaled up or down immediately to accommodate from 1 to tens of 1000’s of users for a single enterprise.
- Multi-tenant – Numerous enterprises can subscribe to a service while retaining privacy and security. There is no longer a need to worry about expensive software upgrades.
- Managed infrastructure - The service is fully managed by the supplier so there is no need to manage hardware or storage components.
This explosion in cloud computing investment is also driving tremendous growth in the types of applications and services that are available. This broad range of applications and services is now commonly referred to as X-as-a-Service (XaaS).
Today, the most common forms of XaaS offerings include:
- Software-as-a-Service (SaaS) - Provides software applications for consumers and businesses on-demand. The software is accessed via the Internet and directly to a computing device. This enables consumers to use the software only as needed and at a reduced cost, versus the traditional model of licensing equipment with software rights. Examples include Salesforce.com, NetSuite and Workday.
- Infrastructure-as-a-Service (IaaS) - Provides consumers and businesses with virtual servers and storage capabilities, which saves money because they only pay for the capacity they need. Examples include Rackspace, Savvis and Terremark.
- Platform-as-a-Service (PaaS) - Provides the ability to create applications over the Internet using the PaaS supplier’s platform. Because there is no hosting or maintenance, this is a cost effective way for SMBs to create their own company websites. Examples include Microsoft Windows Azure and Amazon EC2.
- Business-Processes-as-a-Service (BPaaS) – Ties together different offerings used by SMBs into one cohesive technology process. An example is Appirio.
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