Cloud spending is reaching new heights by the month, and this trend is expected to last for at least the next few years. Why? Because the cloud can be a very good investment, and cost efficient as well – especially for the enterprise.
Many research firms have set a very high bar for the cloud industry, which includes a recent report by research group In-Stat. The firm forecasts corporate US cloud spending will surpass $13BN by 2014, compared to less than $3BN last year, and also suggests SaaS spending will increase by 112 percent between 2010 and 2014. These predictions, as well as similar ones by IDC, Gartner and others are all indicators of the reasons behind the cloud’s practical appeal to the enterprise.
Scalable, end-user-friendly, simplified infrastructure, platforms and service(s) can theoretically be more cost-effective for a company than traditional alternatives. It’s this cost efficiency, or the outsourcing of hardware maintenance and a portion of instance running-associated labor, that functions as the main gimmick for AWS.
AWS aims to facilitate cost-savings in the cloud – a goal which was proven time and time again to be very much achievable by numerous entities. Enterprise Management Associates (EMA) surveyed 159 enterprises with active or immediately planned cloud deployments, and 61 percent of companies running cloud services cited IT capital savings. Indeed, the cloud can result in massive IT savings, such as mobile operator Orange’s closure of 2 datacenters thanks to “efficiencies achieved by consolidating some applications on cloud servers”. However, an enterprise must fully assess its strategy and options before carrying out such a move, since one case study cannot qualify as a single, universal internal or external cloud solution.
In his analysis of a cloud computing report by business strategy firm McKinsey (which also featured a case study of a major corporation utilizing primarily Windows AWS instances), HyperStratus CEO Bernard Golden made some important observations. These included that Windows is not the preferable OS for AWS instances – it is among others more expensive to run on every available AWS instance configuration than Linux, as the Amazon EC2 Pricing page clearly displays.
Another conclusion from McKinsey is that an enterprise’s internal cloud infrastructure is capable to come close to cloud service provider-level server utilization rates by promoting server consolidation (as Orange did above) as a main strategy for cutting costs. Virtualization however doesn’t equal efficiency, and an internal cloud can be much, much more expensive than an outsourced one depending on the given enterprise’s setup and specific needs – the very same thing which can be said about a Windows AWS setup.
On the bottom line, internal and external cloud do offer enterprises major operational cost-savings, but each option needs to be fully assessed and evaluated before it’s even considered as a viable course of action.