What can cloud computing do for your business?

Advantages of Cloud Disadvantages of Cloud
Working software immediately. No risking of building software first and finding out that it doesn’t work for you. Data is not with you. It is out there on the internet – somewhere you cant’ see.

So, reliability of the cloud provider is important.

Pay-for-use. No need to invest huge

Money upfront.

Shared with many customers like you. You can’t suddenly get database access if you want.So,

Data export and archival is important.

No maintenance nightmare. No need of

hardware, administrators and software

upgrades.

Reliance on connectivity. You need to have good and uninterrupted internet connectivity.

Why do we need Cloud?

Building software is a painful experience for companies. If you have built a house for yourself, you can imagine how difficult it is to build software. Delays, escalating costs and building for wrong specifications are as common in software as in building a house. Buying already built software and upgrading to a new version every time are also quite expensive options. Not every company can afford to own such software. Only the big ones can. The companies that can’t afford to own software are usually the Small and Medium Enterprises – SMEs.

People who can’t afford to own a house can rent them. Why can’t companies do the same? Can’t SMEs rent software? Can’t they pay-foruse? This is the central question – the business needs – cloud computing attempts to answer.

What is Cloud?

Cloud is a term used to describe services available on the Internet. All these days, services have been available on your computer. Microsoft Word gives you document editing service on your computer. Outlook gives you mailing service, and so on. These services are now available on the Internet. For example, Google Docs is available as a service on the Internet for document editing and Gmail gives you mailing service – all on your Internet browser. You don’t have to install and upgrade to the newer version of such software, every now and then. If you are a consumer paying for such software upgrades, this is good news.

But, companies benefit much more than consumers in this regard. Software that companies use such as Customer Relationship Management is not like Microsoft Word.

They need dedicated hardware and platforms to run, and are quite expensive. Ongoing software maintenance and upgrade of such software is even more expensive. Today, this software is also available on the Internet as service. So, companies no longer need to buy, install and maintain expensive software. They can simply connect to the Internet and use this software on their Internet browser.

Such softwares that is available as service on the Internet is called Software-as-a- Service. SaaS in short! SaaS is the primary service that cloud offers to its end customers. The companies that run and maintain these software for others are called SaaS providers. Popular SaaS providers in the market include salesforce.com, success factors and zoho.

How does Cloud work?

SaaS providers follow the age-old model that hotels have been following for years. Hotels rent out rooms to customers and customers pay based on the number of days they stay. This concept is called pay-for-use. Similarly, the hotels rent out to multiple customers. When one customer checks out of a room, the same is rented out to another customer. This concept is called multi-tenancy, that is, renting out the same resource to multiple tenants. SaaS providers do the same with software:

  • They allow customers to pay on the basis of their usage of software.
  • They share the software between multiple customers. So, when one customer is not using that software, the hardware required to serve that customer is used to serve another customer.

This enables SaaS providers to offer software for rent to SMEs that can’t afford to buy their own software.

However, there is a problem! Just like hotels, software can also become unavailable during peak seasons. It is easy to pack your things and move to another hotel if a room is not available in one hotel. But it is not that easy in the case of software, since data is also stored part of the software. So, making software available at all times for customers is very important. This forced SaaS providers to predict peak seasons and predict expected increase in customers. On the basis of this prediction, they had to buy hardware upfront to run the software for more customers. But, in most cases, they over predicted and wasted lot of money in buying hardware that they never used. In some cases, they under-predicted and lost customers since they couldn’t serve them during peak seasons.

Suddenly, someone came up with this brilliant idea that if software can be rented on the Internet, the hardware can be rented too. This hardware renting model was first introduced by Amazon through its Amazon Web Services offering. Such rented hardware that runs software on the Internet is called Infrastructure-as-a-Service (IaaS). Other popular providers in this space include Rackspace and GoGrid.

Later, tech giants like Google and Microsoft jumped into the foray, making cloud computing the hottest technology on earth! When they entered cloud computing business, they also started renting out platforms (Application servers & Databases) that provide an environment to run the software. These platforms that are available on a renting model are called Platform-as-a-Service (PaaS). Other popular providers in this space include Force.com and OrangeScape.

These three layers – SaaS, PaaS and IaaS –form the cloud computing stack.

Both IaaS and PaaS are used to run SaaS. It also enables SaaS providers to rent more hardware/platforms based on the demand and release it back when they are not needed. All this expanding and shrinking happens automatically based on the number of customers using the software. This concept of expanding and shrinking based on demand is called elasticity and makes the renting model very efficient.

These three characteristics – pay-foruse, multi-tenancy and elasticity – are the fundamental characteristics of cloud. Ultimately, from the business standpoint, Cloud enables software to be available on pay-for-use model and makes it affordable to SMEs. This, in turn, enables SMEs to be competitive in the market and provide better services to their consumers!

Cloud computing – at a glance

  • Business need: Pay-for-use software
  • Target Audience: SMEs
  • Characteristics:
  • Pay-for-use
  • Multi-tenancy
  • Elasticity
  • Architecture stack:
  • Software-as-a-Service
  • Platform-as-a-Service
  • Infrastructure-as-a-Service