Someone once remarked that corporations are jumping on to the Cloud Computing bandwagon because they perceive it to be “low cost”. A recent survey of 502 respondents (C-level executives and IT decision-makers across 17 regions in the world) by Avanade shows that nearly two-third of them (worldwide) believes that cloud computing reduces up-front costs.
What we should always keep in mind is that there are always two perspectives to the statement. For every cloud services, be it IaaS (Infrastructure as a Service), PaaS (Platform as a Service) or SaaS (Software as a Service), there are two perspectives, namely: (a) The Producer of the service; or (b) The Consumer(s) of the service.
Yes, Cloud services can be low cost to consumers. Rather than investing on huge CAPEX and integration services to build up their own infrastructure and application services to support their business, consumers can just subscribe to these “services” and be charged for what they use. It converts what is supposed to be CAPEX into an OPEX (Operating Expense).
However, when we view it from the perspectives of the Producer of a Cloud service, then the same will not hold. Costs can never be a motivation for organizations to become a Cloud service producer. Simply because the definition of Producer of a Cloud service means investing and constructing infrastructure, networks, and technology to build up excess capacity in order to sell these as a Cloud service. Such investment is never going to be “low costs” but instead is going to be a huge business decision. Hence, the motivation for Producers will have to be driven by their business and operational constraints. For instance, an organization might have myriads of storage disk arrays, of all types and classes, be it SAN, NAS, DAS, etc. spread across their data centers, and each time a business unit require additional capacity, they go out to procure new harddisks for expanding the array used by that business unit. Over time, it turned out to be a messy spread of of storage silos, fragmented, unable to share capacities across business units, across different storage technologies, across different arrays. This organization could benefit from turning their storage mess into a private storage cloud service by consolidating and virtualizing their existing silos of arrays and charging the business units by capacity & usage, i.e. turning IT into a shared service organization with charge-back model.
The beginning of a conversation with Producers should always be “how to develop a business strategy and business plan”, not about costs. In reality, transforming IT into a shared service organization (SSO) is basically venturing into a new business startup.
Tags: Cloud Computing, Consumers, Cost, Producers