How Businesses Can Take Advantage of Cloud Computing

One article that I researched lays out the need for cloud computing beautifully, stating “Cloud computing comes into focus only when you think about what IT always needs: a way to increase capacity or add capabilities on the fly without investing in new infrastructure, training new personnel, or licensing new software”(1). Cloud computing is all the rage these days; at least it seems from scouring the Internet. Few people know what it actually is and how it works. It is much like the client-server model, but is done over the Internet. For the most part, it is changing IT infrastructure needs by making IT a service and outsourcing from an internal part of any company to specialized IT companies on the Internet. Eric Knorr and Galen Gruman say that the seven different ways of cloud computing are: SaaS (software as a service), utility computing, web services, platform as a service, managed service providers, service commerce platforms, and internet integration. The question now is: what advantages/disadvantages does cloud computing hold?

The first advantage lies in the outsourcing part of cloud computing. If businesses end up outsourcing their IT infrastructure, it saves money (hopefully they would decide to cloud compute only if it cut costs) and possibly time as well. With all their applications, databases, etc over the Internet, there’s no need to have huge servers consuming energy and space at your office. That’s all provided by the company you’re outsourcing to. Furthermore, you need less IT staff. If you have a problem, you contact the company that runs your systems. However, some businesses might find that the way they have their IT infrastructure set up is less costly than cloud computing. As a result of this knowledge and research, the company should stay in its current format. Maybe they do a little research into different divisions of the company and identify where they can cut costs by using cloud computing. On further note, John Weinman says that another advantage related to outsourcing is “agility: Resources and services that are immediately available for on-demand use clearly enhance agility over months-long engineering, procurement, and installation efforts” (2). Another product of outsourcing is specialization. As companies become specialized in their field such as, cloud computing, CRM services, ERP services, and other Internet based services, they get better at what they do and understand their field better. In this way, companies might not even need to have their own IT department at all. It will be outsourced to other companies that know how to run an IT staff with efficiency and precision. The downside of this is that companies might feel like they don’t have their own hands on their information. The personal touch is lost with their data and they might be scared as to who might have access to their data.

Another advantage of cloud computing is that if a small company wants an ERP or CRM system, it does not need as huge of a change within the business as previously conceived. In class, we discussed how it took years to install ERP and CRM systems and to take advantage of their features. With cloud computing putting this as a service, a company can do it all online. There would be no installation of servers and a database program into the whole network. The website that would run your system would be the caretakers of all the hassle. Lag-time between installation and running any system would be greatly decreased. Furthermore, interoperability may be increased exponentially if companies use the same systems over cloud computing. The only disadvantage from this point of view is actually getting the data online. The amount of data entry could be time consuming. In addition to this, Weinman points out that, “The key reason has to do with the usage-based pricing paradigm of cloud services. The important insight here is that even if cloud services do cost more when they are used, they cost nothing when they aren't used. This is a very different story than the enterprise data center, where owned resources continue to cost money whether they're used or not” (2). Instead of having the fixed cost of the entire infrastructure, it becomes a variable cost depending on how much you use it. Overall, the advantages of a business using cloud computing seem to outweigh the disadvantages. Look for this to greatly affect the information technology field, as well as how business use databases, ERP, CRM and SCM systems.

References:

1. Knorr, Eric, Gruman, Galen. “What cloud computing really means,” InfoWorld, April 7, 2008, http://www.infoworld.com/d/cloud-computing/what-cloud-computing-really-means-031, (accessed March 3, 2010).

2. Weinman, John. “Time to do the math on cloud computing,” InformationWeek, March 2, 2010, http://www.informationweek.com/news/services/saas/showArticle.jhtml?articleID=223101216 (accessed March 3, 2010).