Sunny Forecast For Clouds

Improvements in hardware, software, and networking have combined with the secular trend toward outsourcing to usher in the era of cloud computing. The economies of scale offered by remote data centers managed by third parties allow enterprises to offload or outsource some or all of their computing and storage workloads. Cloud adoption is particularly cost-effective for smaller and midsize users that lack the capital, manpower, or expertise to build and maintain their own data centers.

Startup costs for a data center include real estate, power, software licenses, servers, specialized infrastructure (racks, HVAC, raised floors, fire suppression, and so on), networking equipment, IT professionals, and recurring maintenance and upgrade costs that would start at tens of thousands of dollars for a small on-site data center to tens of millions and higher for a large facility. Users that periodically experience extremely high computing workloads also find it effective to use cloud services for those peak loads (retailers during holiday times, for example), rather than building and maintaining IT infrastructure that would lie dormant for long periods. Finally, the third parties that build and maintain cloud data centers have purchasing power, scale, and expertise that are unavailable to most users. As a result, these third parties can pass along some of the cost savings from their equipment and staffing spending to their customers. Increased competition among the third-party data center providers has resulted in price wars among the major vendors even as their services and offerings have expanded, as players jockey to gain market share.

We believe the cloud adoption cycle is still in its early stages and therefore expect spending on the cloud by both providers and customers to remain robust over the next few years. Research firm Gartner has forecast a 17% compound annual growth rate from 2013 through 2017 for worldwide spending on cloud-based business process services, software as a service (SaaS), platform as a service (PaaS), infrastructure as a service (IaaS), management and security, and advertising.

Different Clouds for Different End Users

The cloud is a generic term that typically means nonlocalized computing resources. There are several kinds of clouds for different types of end users. In our view, the distinctions between private and public clouds are blurring because public cloud providers now also offer virtual private clouds by allocating isolated resources for specific users in a public cloud environment.

Public cloud. A third party offers computing services such as database, operating system, storage, or Web servers, among others, over a network that is available for public use. Examples of public cloud providers are Amazon Web Services, Microsoft Azure, Google App Engine, and IBM SmartCloud/SoftLayer.

Private cloud. Computing resources or data center infrastructure are operated solely for a single business or user that may be managed internally or by a third party. Private clouds typically do not offer the same magnitude of cost savings that come from the scale in a public cloud, but may be preferable or necessary because of security or regulatory concerns.

Community cloud. Cloud infrastructure and costs are shared by several organizations that can be managed internally or by a third party.

Hybrid cloud. This is a combination of any of the aforementioned types of clouds, from the end-user perspective. A hybrid cloud or different parts of the hybrid cloud can be hosted internally or by a third party.

Cloud providers offer IaaS and PaaS services to customers. IaaS is the allocation of machines, either physical or virtual, with which users can install their own software or development environments. In PaaS, the cloud provider offers machines, but also provides software, such as operating systems, database software, storage, and other extras, as an easy-to-use or turnkey computing solution.

Author: Norman Young
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Brian

Managing Partner at meshIP, LLC

Brian Byrne is the founder and Managing Partner of Dallas based meshIP, a technology services firm offering cloud computing strategies and services. He is an accomplished executive with senior management experience in all facets of the technology, telecom, cloud computing, and SaaS industries. He has proven success in developing, financing and executing strategic plans as well as launching new ventures. His background includes a record of significant achievement in international business development and his credentials include a MBA in Marketing and Management Strategy from the J.L. Kellogg Graduate School of Management at Northwestern University, a MS from the School of Computer Science at DePaul University, and a BBA in Finance from the University of Notre Dame.

He is also the inventor of the patented meshDETECT, Secure Prison Cell Phone Solutions.

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