Shanthi Kannan

User need not own the technology platform, infrastructure or the required software

“Pay-per-use” model allows maximum IT efficiency with minimum cost

Benefits are probably biggest for small and medium-sized companies

CHENNAI: When Netscape launched its Internet browser, nobody anticipated the kind of changes Internet would bring about in human behaviour and the interface with the external world. The much talked about “cloud computing” promises to change the way Information Technology people look at delivering IT and the way business people look at IT.

Consumers using the Internet are not aware of the location of the server or the delivery of information/service to them or the route taken by the data to travel. As technologies developed, vendors have started offering the entire range of services required by an organisation over the Internet safely and securely. This in a way refers to cloud computing.

In cloud computing, the user need not own the technology platform, technology infrastructure or required software. They become available like power at the press of a switch. In a way, much of capital expenses (hardware, infrastructure cost, etc) is converted into revenue expenses with cloud computing.

Today, IT vendors such as Sun, IBM, HP, Microsoft and Google swear by the cloud computing architecture. They say it will bring a new level of efficiency and economy to deliver IT resources on demand. In the process, it opens up new business models and market opportunities.

“If you want to slash your IT spending, maximise the flexibility of your systems, and be able to run your business from almost anywhere, then it’s time to jump on the hot new IT trends: cloud computing, and software-as-a-service (SaaS). You are probably already using some SaaS tools such as Gmail, Hotmail and YouTube, which are all free examples of SaaS delivered via the cloud,” says an IT analyst.

“The pay-per-use” model of cloud computing allows maximum IT efficiency with minimum cost. However, the real benefit comes from business agility to exploit opportunities leading to maximum returns. The recent emergence of massive network bandwidth and virtualisation technologies has enabled this transformation.

Cloud computing does not imply that one discards the entire existing infrastructure and embraces the cloud. One can complement the existing infrastructure with required parts from the cloud. “Actually, an IT organisation can increase hardware utilisation rates dramatically and to scale up to massive capacities in an instant — without constantly having to invest in new infrastructure, train new personnel or license new software. It also creates new opportunities to build a better breed of network services, in less time, at a lower cost,” says S. Madhavan, founder of GQuotient.

Services for all

The common perception of state-of-the-art IT infrastructure is the cost and that only big players can afford it. But cloud computing makes services available to all irrespective of size. “While big businesses are leading the way in the use of cloud and SaaS tools, experts argue, the benefits are probably the biggest for small and medium-sized companies which often cannot afford to hire IT staff to build, manage and maintain their systems. Under the cloud computing model, these functions are effectively outsourced.”

The pay-as-you-go model behind cloud computing and SaaS allows smaller companies to increase (or decrease) their IT investment in systems as their firms grow. In the current economic development, SMEs will be attracted towards cloud computing, SaaS and virtualisation. These models can help smaller businesses deliver new products and services quicker and at a lower cost, says a recent report by consulting group BroadGroup.

The SaaS model is gaining a lot of traction in the business world, with most large software vendors and application service providers, including HP, IBM, Microsoft and Salesforce.com, now offering business applications such as customer relationship management (CRM), databases, knowledge management and web development software as web-based utilities.

Analyst Gartner estimates that typically organisations have a project savings of 25-40 per cent by deploying SaaS-based CRM applications. SaaS is particularly attractive to the SME sector because it removes the high entry costs associated with some business applications.

But who owns the “cloud”? What is the security? What is the percentage of external and internal cloud one should own? These are the some of the commonly asked questions. In the current trend, SUN, IBM, HP, SAS and others have started outsourcing cloud computing. They have started setting up cloud computing facilities to provide on-demand services.

With IT budgets under pressure, the corporates could use cloud computing selectively, and some of the challenges like security will be resolved as this industry matures.