A lot has been said about the merits of
cloud computing and how it is going to be the technological choice of most
enterprises in the not so distant future. But the key question that is bound to
keep cropping up in the higher echelons of the enterprise is whether the cloud
makes good business sense. While most know that cloud computing adopts a
pay-per-use model similar to regular utilities like electricity and water and
does away with upfront infrastructure costs to the organization the nagging
question to most senior management people is whether cloud computing is prudent
choice in the long term.

 

This is not an easy question to answer and
depends on a multitude of factors. The alternative to cloud computing is to
have an in-house infrastructure of servers, hardware and software, software
licenses, broadband links, firewalls etc. All these will form the Capital
Expenditure (CAPEX) for the organization. In addition to these expenses will be
the Operational Expenditures (OPEX) of real estate to house the equipment,
power supply systems, cooling systems, maintenance personnel, annual
maintenance contracts (AMC) etc which will be recurring expenses for the
organization. 

 

Cloud Computing does away completely with
procurement of hardware, software, databases, licenses etc and an enterprise
should be able to host their application in a couple of hours provided they
know ahead of time the resources their application will need. 

 

While the upfront costs and the running
costs of maintaining a data center will be high in comparison to the zero
upfront costs of the deploying on the cloud the steeper operational costs of
the cloud will eventually catch up with the in-house infrastructure. 

 

The point at which the cumulative running
costs of the cloud will break even with the in-house data center will depend on
how well the application is designed. This may happen in a couple of years down
the line after the application is deployed. Assuming that the break even
happens in 3 years does it make sense to go with cloud computing? To a large
extent the answer depends on the type of application that is to be deployed on
the cloud.

Some clear benefits of a cloud deployment
is that the enterprise does not have to worry about equipment obsolescence,
upgrading of software etc not to mention the depreciation of the equipment
costs. Moreover cloud technology is extremely useful to enterprises which are
planning to deploy application in which there is difficulty in forecasting the
type of traffic that will be hit their application. Where the traffic may be
intermittent, bursty or seasonal then a cloud makes perfect business sense
since can it scale up or scale down depending on the traffic. In these
situations the benefits accruing from a cloud deployment cannot be easily
quantified and makes perfect sense for the enterprise.

 

Some typical applications which are prime
candidates for the cloud are CRM software, office tools, testing tools, online
retail stores, webmail etc.

 

One possible worry of the enterprise will
be the security concerns while deploying to the public cloud. In such
situations the organization can take a hybrid strategy where their sensitive
data are hosted in in-house data centers and their main application is hosted
on a public cloud. 

 

Hence in most situation cloud deployments
do have a definite edge for certain key application of the enterprise.

By Tinniam V Ganesh

[email protected]