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Cloud Pricing Models Article

Cloud signifies a fundamental shift from a traditional model to a more dynamic model

Traditional vs Dynamic

Cloud computing is not just a trend. It is changing the way IT organizations drive business value.

In a short span of time, cloud computing has changed the way in which businesses and individuals consume computing resources. Cloud signifies a fundamental shift from a traditional model to a more dynamic model of consuming IT in which resources are more flexibly deployed than was the historical models.

In short, cloud computing refers to a convergence of technologies and trends that are making IT infrastructures and resource intensive applications more modular, and more consumable. The cloud offers business enterprises the opportunity to consolidate their IT operations and adopt virtualization technologies that lead to eliminate capital expenditure, better utilization of resources, instant access to the latest technology at all times, greater innovation, speedy deployment cycles and lower administrative costs.

What is the true meaning of the Cloud?

As with any major technology transformation, there are many definitions of cloud computing each with their own nuances and subtleties. In very simple terms, cloud computing is a new consumption and delivery model for information technology (IT) and business services that is characterized by:

  • On-demand self-service
  • Ubiquitous IT Infrastructure access
  • Location independent resource pooling
  • Rapid horizontal and vertical scaling
  • Pay-per-use

Cloud has evolved from on-demand and grid computing, while building on significant advances in virtualization, networking, provisioning and multi-tenant architectures. As with any new technology, the exciting impact comes from enabling new service consumption and delivery models that support business model innovation.

Traditional vs Dynamic

(Image Source: KPMG)

The evolution of the Cloud

The traditional IT ecosystem vs. the Cloud

Business environments are becoming increasingly complex and competitive. At the same time, the expectations of customers are also increasing. With companies now looking for new ways to enhance the quality of their products and services through IT, the traditional model seems to be inadequate. Sourcing and deploying IT systems and solutions, using the traditional model, requires large investments in IT infrastructure but may not result in the optimal utilization of resources. Furthermore, businesses not only have to setup an in-house (On-Premise / Hosted) computing environment but they also have to build / source IT teams to manage the same – thus adding on to costs.

The Cloud on the other hand signifies a complete transformation from the traditional IT setup. It refers to the process of sharing resources (such as hardware, development platforms and/or software) over the Internet or other WAN technologies. The Cloud enables On-Demand network access to a shared pool of dynamically configurable computing resources. These resources are accessed mostly on a pay-per-use or subscription basis.

Virtualization is the first step to adopting the cloud. Services of the Cloud are made available through virtualization and provided on a usage-based pricing model. These resources can be quickly provisioned and easily managed, by the user, without any major inputs from cloud service provider. Customers sign standard Service Level Agreements (SLAs) with service providers of the Cloud to ensure availability of services based on certain guiding principles.

The Cloud advantage for business enterprises

Cloud computing liberates organizations to deliver IT services as never before. Cloud enables the dynamic availability of IT applications and infrastructure, regardless of location. More rapid service delivery results from the ability to orchestrate the tasks to create, configure, provision and add computing power in support of IT and business services much more quickly than would be possible with today’s computing infrastructure. Enhanced service delivery reinforces efforts for customer retention, faster time to market and horizontal market expansion. Cloud computing can enhance SOA, information management and service management initiatives, which also support service delivery initiatives.

Cloud computing also promotes IT optimization so that IT resources are configured for maximum cost-benefit. This is possible because cloud computing supports massive scalability to meet periods of demand while avoiding extended periods of under- utilized IT capacity. With the click of a mouse, services can be quickly expanded or contracted without requiring overhauls to the core datacenter. The benefits include lower cost of ownership, which drives higher profitability, enabling you to more easily reinvest in your infrastructure and answer the question, “How can I get more value out of my IT infrastructure investments?

Cloud computing fosters business innovation by enabling organizations to explore quickly and cost effectively the potential of new, IT-enabled business enhancements that can grow with unprecedented scale.

Not only does cloud computing deliver a greater return on IT investments, but it also promotes more efficient and effective use of technical staff. IT managers can devote more time to business critical activities with the cloud service provider managing the IT infrastructure to support these activities. With its highly autonomic character, cloud computing eliminates much of the time traditionally required to requisition and provision IT resources.

Cloud computing also yields significant cost savings in the real estate required for the data center as well as power and cooling costs. Thanks to virtualization and the cloud’s capability of tapping resources (either through a private cloud or tapping publicly available cloud resources), datacenters can rein in the relentless pressure to expand their physical footprint resulting in reduced energy consumption.

At the enterprise level, delegating commodity infrastructure and services allows organizations to focus on their core competencies and further develop capabilities that can differentiate them in their respective business markets.

Who is using the Cloud today?

  • Large enterprises

More likely to have hybrid models where some things are kept in house: On premises data for legal and risk management reasons.

  • Midsize companies

Can use clouds for numerous activities: compute cycles for R&D projects, online collaboration, partner integration, social networking, new business tools

  • Startups and small business

Can use clouds for nearly everything: SaaS, IaaS, collaboration services, online presence

By Gopan Joshi

  • Articles
Gopan Joshi Contributor
Product Manager – Netmagic Solutions Pvt
Gopan is Product Manager: Cloud Computing Services, Netmagic Solutions Pvt. Ltd. and has expertise in managing products and services in various market scenarios and life cycle stages. His experiences ranges from introducing cutting edge innovations in existing products, existing markets to new technology, new markets.

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