One of the key promises of cloud computing is its limitless capacity. It levels the playing field for small and medium-sized enterprises (SMEs) to tap into the cloud’s pooled resources and networked applications and deliver whatever is needed to meet their business needs.
The cloud’s ability to truly deliver on the promise of limitless scale — both up and down — and do so rapidly is one of the defining characteristics and sets this technology apart from anything in the past. With the cloud, companies can scale up very quickly when their business demands it and also rapidly scale down when the need is no longer present.
The cloud thus presents a perfect opportunity for many businesses that experience cyclical and/or unpredictable demand patterns. A good example is the retail industry where there are seasonable shopping spikes around holidays that can sometimes be unpredictable. The cloud enables companies to dynamically obtain the IT resources needed to service the peak demand and then release those resources when the season is over. Best of all, companies pay only for what they consume during this period. As an example, consider the following case study of a company participating in the Sand Hill survey
Case study
Every year, the company conducted a month-long charitable-giving campaign. Two years ago, the company created an auction tool to donate physical goods it wants to auction off and donate the proceeds to charity. This was a typical three-tier Web application with a Web server, app server, and a database. The resources required by the application begin to increase towards the end of the month as the auction deadline nears, and then loads spike dramatically at the end of the month as donors scramble to meet the deadline.
For several years, the company dealt with significant slowdown of the system towards the end of the month when usage was highest. They always underestimated how much resource this application would consume and found it difficult to predict accurately how popular the auction would be. IT had to provision all the hardware, storage, and networking in advance of the peak load (which was often incorrectly forecasted) that would be needed at the end of the month. The result was an expensive project, which pushed the company to look for alternative solutions.
In just two weeks, the company rewrote the application to run on cloud infrastructure. They let it run during the month-long campaign and monitored resource usage. During the last several days, the team ramped up capacity and continued to monitor usage. They determined how popular the auction would be and ramped up capacity even further. They continued to fine-tune resources based on consumption and demand.
The benefits of using the cloud-based solution were tangible and compelling:
- There was no system slowdown at the end of the month.
- The company raised double the contributions compared to previous years because the infrastructure was not constrained by the amount of computing resources.
- They achieved almost 50 percent in resource savings. Even in the development phase, dev/test resources were only consumed on demand rather than having them sit idle for most of the time. Cost savings were realized across the entire project life cycle.
The cloud solution gave this company not only the scale it needed to service peak demand but also the ability to scale almost instantaneously. Thus, the company enjoyed great flexibility, agility, and speed while saving costs at the same time.
Leadership and competitive advantage
Analysts often compare the advent of the cloud today to that of the Internet in the late 1990s. The companies that were early in embracing the Internet’s cost-effective and interactive capabilities in marketing, commerce, and communication continue to be leaders in their field. Similarly, cloud leaders report their early initiatives are producing bottom-line results that will keep their companies one step ahead of their competitors.
As the cloud technology wave hits, companies have a unique opportunity to lead their companies into the cloud era and realize the business benefits as well as the competitive advantage of being leading-edge users. Sand Hill’s Leaders in the Cloud survey found that many executives are seizing the opportunity: nearly half (40 percent) of the companies reported that their business and technology teams already are working together to drive their company’s move to the cloud.
Kamesh Pemmaraju heads cloud computing research for Sand Hill Group. Follow him on Twitter @kpemmaraju.