Seven reasons cloud computing works in a tough economy

Typically, during a recession, IT departments will assume a conservative spending approach and limit adoption of new technologies, but cloud computing offers an alternative to that route, said one executive.

Bert Armijo, senior vice-president of sales, marketing and product management with Aliso Viejo, Calif.-based cloud computing provider3Tera Inc., said that in tough economic times, deploying new technologies is often sidelined as IT looks for ways to maintain their IT infrastructure and service output to the business while suffering budget cuts.

Today’s chief information officer, said Armijo, is already struggling with maintaining new applications that were deployed with a full IT staff. “All of a sudden, you get told you need to reduce staff by 15, 20 per cent. And you’re trying to figure out how you’re going to have that not impact services,” he said.

Interest in cloud computing, said Armijo, continues, and is even accelerating, as IT departments are challenged by slim budgets and limited resources. There are seven reasons, he said, the down economy is driving interest in, and adoption of, cloud computing:

1. Lower up-front costs. When introducing a new application, hardware is a significant upfront cost, said Armijo. But cloud computing means the IT department can acquire the resources by paying the provider “by-the-drink” while not spending on hardware up front, and “and this allows you to spread that cost over time, and also to really manage that cost.” So, the required 10 servers by application, once successful, can be purchased incrementally.

2. Faster time to market. It typically takes about two to four months to get an application into production, said Armijo, but in the cloud, applications can be deployed and scaled “in hours without changing code.”

3. Reduced financial risk. If the application for whatever reason doesn’t catch on, or its use within the business has a limited time frame, Armijo said the business no longer has to pay for those resources in the cloud.

4. Lower capital expense. Cloud computing leverages commodity hardware, so IT departments can avoid overprovisioning, said Armijo. And, while a server may appear only to cost around $5,000, he said “but the reality is there is a lot more capital that goes into putting that [data centre] space in there before you even get the server.” Data centre setup is a “huge expense” and enterprises are even running into power and cooling limits within their facilities, he said.

5. Lower operational expense. When application operations are streamlined, IT administrators are not so belaboured with tasks like provisioning and management of servers, he said.

6. Decreased downtime and costly delays. It’s easy to setup business continuity, redundant instances of applications with cloud computing, said Armijo. Moreover, he said, cloud service providers, given that is their business, have state-of-the art equipment for power backup and cooling.

7. Additional services. Cloud service providers, too, can offer services that an IT department otherwise wouldn’t be able to afford, said Armijo, like added security measures, redundancy, bandwidth, and staff with cloud expertise.

The adoption pattern of cloud computing has certainly changed, said Armijo, where at the end of 2007, adopters were those companies one might expect, like Web and software-as-a-service companies, as well a handful enterprises. But today, 3Tera customers are predominantly enterprises. Armijo thinks this is probably due to the unstable economic times and the challenge of having to maintain a large IT resource. “These are folks that have enormous IT budgets and staff, and as the economy starts to soften, they’re the ones that get hit the hardest,” he said.