What are the real benefits of cloud computing?
Most cloud vendors and cloud enthusiasts will tell you that putting applications in the cloud is cheaper and delivers greater scalability. While it's true that many people do indeed reduce their overall costs by moving to the cloud, the larger advantage is really with the scalability. Cloud services provide you with the ability to scale with the click of a button, or via API calls, or even automatically based on certain thresholds.
A startup video-encoding service launching in the traditional world would start out by getting a lot of venture funding, spending a lot on hardware and network and even more on space and cooling that hardware. Next, it would release a product on the world. The startup would have tested the software and been ready to handle the 10,000 customers they expect to have per day.
Then, unfortunately, as the business is just starting out, its load goes completely to waste and it's got a lot of extra servers that simply aren't being used. This company would not be hitting its margins, but it would be burning through VC money. Eventually one of two things happens: It becomes successful and it's suddenly overwhelmed with requests, bringing services to a screeching halt as the IT team rushes to buy new services; or, it never gets the influx of customers it needs to survive and the service fails because all of that extra hardware was a waste of money.
Using the same example, but substituting a cloud-based startup, there's a very different outcome. The company builds a service, measures its scalability and reliability on cloud-based systems, and then sets up some automatic scaling solutions to make sure the company only provisions the number of servers it needs. There is no need to waste a lot of money on hardware, space or cooling because that's all taken care of at the start. In a cloud-based startup doesn't even need an office.
It can move as slowly or quickly as it wants and is able to bring in users, scale up its usage as the load demands increase. If the service fails, the business doesn't have any extra hardware lying around to try to sell to get more money, and with cloud technology, it's able to live on a lot longer, giving the company the chance to succeed.
The analogy works for groups working on a project in an already established company. Many projects fail or at the very least don't take off immediately. In cases like this, it can be useful to build an application using cloud technologies so that it can scale when it has more users. Operating this way saves money as well, but the bigger advantage is the ability to scale.
This was first published in January 2013