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By Info-Tech Research Group
Small enterprises have traditionally been first to take advantage of disruptive technologies that provide good enough service at significantly lower upfront cost than the traditional dominant technologies. Cloud services offer this kind of opportunity.
For those evaluating and deploying cloud services, the opportunity to save on infrastructure costs and to deploy applications rapidly were the two highest ranked issues in terms of positively influencing the decision to deploy.
Figure 1: Enterprises Rank Positive Issues in Cloud Evaluation
Lower upfront costs are attractive particularly if the small enterprises simply cannot afford the costs of the dominant solution. With distributed processing, for example, small enterprises could afford industry standard PCs and network servers but not mainframes. Lower cost barriers and rapid and flexible deployment mean: It can be done, and it can be done faster.
"Good enough" service means that for issues like resiliency, availability, and security, the solution is within the bounds of tolerable risk for the enterprise. Typically with disruptive technologies, the capabilities in these areas improve with maturity and the technology migrates upwards to larger enterprises that have more stringent requirements.
With cloud services, for example, a 99.9% uptime guarantee may not be adequate for an enterprise that requires "five nines" availability, but for smaller enterprises three nines may well be good enough and better than what the best effort of their on premise infrastructure could provide.
Feeling Positive about Security
Info-Tech has found that small enterprises are proportionally ahead of large enterprises in using cloud-based storage services. Here the cloud options have proven good enough for a common risk factor -- security. Not only is security viewed positively by enterprises that use cloud storage, the proportion of those who see it as a positive (rather than negative) factor in deciding to deploy increases as enterprises go from evaluating, through planning, to deployment.
Figure 2: Enterprises Rank Security as Positive Issue in Deployment
Flexibility and Low Cost Not the Same as Lower Total Cost
Cloud services will bring lower upfront capital spending however it will not necessarily mean lower overall total costs. Operational costs might simply be displaced or shifted from one infrastructure area to another.
For example, shifting infrastructure to an off premises cloud may bring the need to provision stable and sufficient bandwidth to connect the enterprise with the off-site infrastructure. This would be a new operational item that didn't exist before the cloud strategy was implemented. So, while you may have removed some OPEX and CAPEX items related to the servers themselves, the addition of a data line or lines to tether the enterprise to the services could be an offsetting cost that does not necessarily result in lower cost.
Moving to a SaaS model might also bring with it the need to provision and support data integration with servers/applications that remain inside the business. There could be, again, some OPEX costs required that offset to some degree the lowered cloud operating expenses. The Cloud does not translate into a zero OPEX win, but it is potentially lowered. On the other hand, CAPEX sees a big reduction.
Capacity and Agility Benefits
The customer does not need to acquire hardware to boost resources, and consequently does not need to have expertise in the underlying hardware in order to use the services. The focus can be on enabling core business processes with applications while decreasing the unit costs of compute capacity. So, for example, a cloud-provisioned retail Web site can scale to meet Christmas shopping demands. The retailer only pays for the additional capacity used during the rush period.
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