What are the benefits of using a cloud service provider? The main benefits are lower operating costs and quicker time-to-market, meaning you can get up and running in days instead of months.
If you don’t use a cloud-service provider, think of what you have to do to install a new application. First you have to buy your own hardware. Then you have to hire system administrators, programmers, subject matter experts, and project managers or bring in an outside consulting company. You also have to spend money to buy packaged software or write your own.
Getting a custom software package installed and working—especially an enterprise one, meaning one that will operate across the whole business—can take months or a year. Sometimes these projects never work at all; they can be monumental failures or underperform, meaning they do not meet your business goals. If you buy something really complicated, like SAP or Siebel, then you need to engage consultants that know how to customize and install the product. These business processes and IT consultants know how to configure the product work for different businesses. Programmers know how to write code to extend the functions of the software. Some companies, like General Motors, have spent up to a billion dollars to get such systems working (In their case, that was SAP.).
What if you could just rent time on a system which is already up-and-running? You could get online with the application in days, (if what you do is fairly standard) or maybe a couple of months, instead of a year. This is what the cloud service provider offers when they provide Software as a Service (SaaS). The first and most popular of these SaaS providers is Salesforce.com, who, as a competitor to Siebel, has knocked Siebel right off its track towards market dominance in Customer Relations Management (CRM) software, as more than 100,000 companies have signed up for Salesforce.com.
The cloud service provider also provides Infrastructure as a Service (IaaS). This means you don’t have to buy and maintain your own computers; you rent space on theirs. There you can install packaged software or write your own application.
Why is this more efficient? A large cloud service provider can buy computers more cheaply than the average company, because they buy so many. Plus they have lower electricity bills and labor costs per machine. Finally, they have automated tools that can upgrade and maintain the software on thousands of these machines quickly, thus relieving their customers from doing the same. They also backup the machines and monitor them against hacking. They also offer better performance, because as traffic surges during peak usage, they can spin up other instances of web servers, voice systems, video optimization servers, and more. So you do not need to build out your own data center with this increased capacity, which will sit idle most of the time.
Another benefit is redundancy and failover. A data center needs to have two locations in case one burns down, gets flooded, or is overrun by revolution, employee strike, or other political events. The benefit of having more than one data center is that the data can be located closer to your customer thus giving improved performance, meaning decreasing latency. Having two data centers drives up costs.
There should be less downtime if you use software in the cloud. Downtime is when a company takes their system offline for backup or scheduled maintenance. These are called “planned outages.” Downtime can also mean the system crashes. Software as a service should be more reliable, as there would be great repercussions for a cloud-service provider if their systems went offline, so more effort is spent keeping them up.
Standardization is important too. If each machine requires different commands to do the same thing, then you need different people and skill sets to do that.
Another benefit could be called “following the crowd.” IT managers are more likely to get approval for their projects, and avoid being blamed for bad decisions, if they do what the majority of other businesses are doing. This is called “best practices.” Cloud computing has become a best-practice strategy for avoiding risks and lowering costs.
Those are some of the benefits of cloud computing. Now that the idea has spread, it is easier to sell it to those who are your internal and external customers and set expectations accordingly.