What are cloud services uniquely good for and why? After all, CIOs aren’t going to leverage online services offered on demand just because they’re available, but for compelling business reasons. There are helpful compilations of use cases (PDF) from a technical viewpoint; here I’ve identified key […]

iStock_000001833139SmallWhat are cloud services uniquely good for and why? After all, CIOs aren’t going to leverage online services offered on demand just because they’re available, but for compelling business reasons. There are helpful compilations of use cases (PDF) from a technical viewpoint; here I’ve identified key cloud rationales from a strategic perspective.

Different people have different definitions of the term “cloud,” but I’m referring to common and flexible services, applications, platforms, content and resources delivered from a public provider. The lion’s share of the reasons I list below apply to most of those definitions, as well as other online/web services.

Whether email, IM, tweets, plain old telephone service or video over IP, utilizing a cloud service for communication provides economic benefits over private solutions because it’s cheaper to connect to a hub or network once rather than have multiple point-to-point connections. Think about how the airline industry uses a hub-and-spoke model to optimize flying routes.

Collaboration, Community, and Commerce: Web-based networks and commerce platforms offer people the chance to share, conduct business and collaborate within a trusted third-party-provided environment. The cloud, therefore, allows communities and social networks to foster ongoing relationships around shared values, goals and interests.

Commons and Collections: Sharing partially or intermittently used resources provides more for less. Be it the public library, the Magritte Museum, or an online encyclopedia, providing collections of information or apps are a natural cloud function.

Continuous Cross-Device Access: Information that’s on an unshared or occasionally offline device may be inaccessible to anyone, including the owner. But information in the cloud can be securely accessible to any authorized user — or to a user’s multiple devices — over any network.

CapEx and Cash:
Cloud services may be more cost-effective because consumers and even large enterprises may not have sufficient economies or statistics of scale compared to large service providers. But even if cloud services aren’t comparatively cheaper, they can help reduce capital expenditures. And while using cash for capital expenditures by itself isn’t bad, it’s a poor choice if the firm then doesn’t have sufficient cash on hand for daily operations, or if purchased assets are either insufficient to handle demand or underutilized — which is often the case. Like a broken watch that has the correct time only twice a day, fixed computing assets rarely have the right capacity.

Complementary Capacity: Hybrid clouds that augment owned resources with on-demand pay-per-use resources can achieve a sweet spot of minimal cost with maximal flexibility. Much in the way that retailers complement employees with temps prior to holiday shopping,  enterprises can cloudburst their applications or leverage cloud storage across a variety of data networks into service provider clouds.

Continuity and Center Migration: As a special case of capacity augmentation, consider a smoking hole disaster at an enterprise data center. Just like staying in a hotel if your house burns down, cloud capacity can provide temporary capacity until full restoration has been achieved. Or, just as you might stay in a hotel after selling your old house while waiting to move into your new one, clouds can support data center migration, temporarily housing data, applications or services.

Checkpoints and Chokepoints for Congestion Control: Filtering out invalid transactions at the perimeter is a key function of security in the cloud. Network-based firewalls and anti-DDoS are like a coast guard or border patrol. They provide scale to repel attacks and reduce transport costs by dropping invalid traffic at the earliest point possible: ingress at a perimeter. Reducing congestion is also a cloud-based edge function; traffic management of IP packets helps to ensure that the system doesn’t experience a traffic jam.

Context and Capabilities: To better focus on core, mission-critical tasks — such as program trading platforms for brokers or drug discovery for pharmaceuticals — IT shops can benefit by outsourcing non-core functions such as HR and CRM.

Cloud services can accelerate the speed of development via platform-as-a service and the speed of testing and production deployment via rapid provisioning of on-demand resources.

Consistency, Currency and Control: Information must be accurate, consistent, and timely. Applying corrections once to a master document or file in the cloud eliminates conflicting versions across multiple locations. Applying software updates once in the cloud beats distributing patches to 100,000 desktops.

Combinations: Of course, the options above are not mutually exclusive, but can be used in combination. For example, a microblogging site that provides a foundation for connection and communications also fosters a community and creates a collection of information. If that site also has access to on-demand computing capacity in the cloud, it can stay up through a popular event that would normally overwhelm its own servers.

Joe Weinman
is Strategy and Business Development VP for AT&T Business Solutions.

  1. Viable Business Models for the Cloud « Cloudonomics Sunday, November 15, 2009

    [...] cloud services, Cloudonomics, use cases, web Today GigaOm posted my latest thoughts on compelling cases for clouds. Here is a more in-depth compilation of viable business models for the cloud. I broadly define [...]

  2. Digitalisierer Sunday, November 15, 2009

    That’s a nice list of possibilities for cloud, Joe.

    To have the full picture, I would have like to see also some non-compelling cases.

    For Cloud, are there any drawbacks / risks or cases where the traditional local non-cloud service is better?

  3. Paddy Raghavan Monday, November 16, 2009

    Great summary! As mentioned in the article, a lot of non-core functions can be outsourced with the help of the cloud.
    We at 8KMiles (www.8kmiles.com) use the cloud to enable no cap-ex outsourcing for SMBs and Start-ups. The 8KMiles virtual outsourcing ecosystem provides on-demand access to talent (developers, testing professionals and project managers), infrastructure (remote desktops and servers) and tools.

  4. Digitalisierer – there are a few that immediately come to mind, e.g., caching, compression, and cryptography. Local caching–as WAN accelerators perform to minimize latency and bandwidth needs– should clearly be done on site (although there are also benefits to doing it in the network, e.g., content delivery network pinning or MRU caches). Compression (and decompression) should be done locally; same with encryption and decryption. Developing a judicious balance of enterprise data center and cloud is an individual decision, which also depends on your costs vs. cloud provider costs, enterprise application architecture and legacy considerations, industry vertical characteristics, core strategy, etc.

  5. This is a very good succinct list of good reasons the cloud is coming fast.. and it will come faster and faster not at a steady pass as competition heats up and it goes open like Open Platform as a Service http://www.openplatformasaservice.com These are exciting times for developers as well as they can spend more time developing applications and less time worrying about the infrastructure. Open and easier – the future is so bright I need my umbrella!

  6. The problem with the folks like Google & Yahoo is that they have created many tools which have been loosely coupled. The challenge with such a solution is that the the information gets locked into multiple silos. With Google Wave they are trying to integrate all the conversations (discussions) but what would be truly desirable is a platform built form ground up using social networking at the base and business apps on top of it. I have tried Injoos Teamware (www.injoos.com) and found it captures both informal and formal knowledge like documents in one single workspace on the cloud.

  7. Towerstream Blog » Blog Archive » Going Green with the Cloud Thursday, November 19, 2009

    [...] Weinman from GigaOM recently wrote a great article on cloud computing that makes some great points for businesses to consider called “Compelling [...]

  8. A piece of the cloud debate that gets overlooked is the benefit small business can gain from online services.

    Cloud applications can backfill expertise a small business may not have because of personnel constraints. For example, our cloud product Perq — http://www.perqworks.com — helps define and manage employee leave time. Some small businesses do not have human resource people, but do have employees taking vacation and sick days off. Using our product delivers all of the benefits this article describes while providing small businesses with HR expertise bundled into a tool that is easy to start using.

    Perq is just an example of how Cloud computing lowers the barrier of entry for small businesses to benefit from tools that have historically been too expensive to purchase. The cloud debate should include the non-technology aspects that are created when more people are able to access lower cost services.

  9. Time To Do The Math On Cloud Computing « JCC.COM Tuesday, March 9, 2010

    [...] practice, there are a number of reasons to leverage the cloud. One is agility: Resources and services that are immediately available for [...]

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