Cloud Computing 101

Cloud Computing 101

In today’s times, information technology (IT) is ubiquitous, irrespective of the core competency of one’s business. But, questions as to the purchase and management of IT systems still baffle many business owners. Cloud computing is the newest methodology that has made their lives easier as it enables the user to access IT solutions remotely, as and when needed. And what makes things better is that payment systems are based on usage.

Clearing the cloud

Cloud, an Internet-based computing solution, denotes a set of shared resources, software and information provided to computers and other devices on demand. “In layman’s terms, it operates much like the electricity grid, which is no more than an interconnected network for delivering electricity from suppliers to consumers,” explains Amit Chatterjee, managing director, CA Technologies (India) – a global IT management software company. In the cloud, information tasks are assigned through a combination of connections, service and software, over a network.

This on-demand access to IT resources can be put to use for infrastructure, applications or platforms. “Users can either go for fixed plans, whereby there is a flat fee and we manage their datacentre. Or, they can opt for the variable plan where they access the solutions online on virtual machines and pay per use,” says Nitin Mishra, vice-president, product management, NetMagic Solutions, a managed IT solutions provider.

An incidental benefit is that there is a reduction in the need for hardware components in individual companies, thus, reducing energy costs for running and cooling hardware. Further more, this process is environment friendly as it reduces carbon dioxide emissions.

Universal acceptance

International Data Corporation expects global spending on IT cloud services to grow almost threefold over the next five years, reaching U.S. $42 billion by 2012. And the pace of spending on cloud computing will accelerate, capturing 25 per cent of the growth in IT spending in 2012 and nearly one-third the following year’s growth. In India, the cloud market is estimated at U.S. $1 billion.

The cloud concept is especially beneficial for the small and medium enterprises (SME) since this enables tremendous cost cutting in IT. According to Mishra, they have particularly seen demand from the SME segment, especially from media and online companies, online trading companies and manufacturing companies. He estimates the software-as-a-service market to grow by 35 per cent from the current U.S. $ 28 million before 2012-13. The Infrastructure-as-a-service (IaaS) market is at U.S. $3-4 million currently and is expected to grow after the second half of next year, touching a 50-60 per cent growth rate. “Different studies give different estimates, but we believe this will be the market trend,” adds Mishra.

But, Chatterjee believes that this concept will spread across segments. In his opinion, while SMEs and startups will be aggressive about it, this form of shared computing resources will percolate to banking, finance, healthcare industries and even BPO segments.

Accruing benefits

There are several advantages that cloud computing provides its users. For one, it is environmentally friendly as it helps conserve energy. It reduces the investment on IT infrastructure and benefits economies of costs and resources. “Pooling of resources additionally leads to superior performance, load balancing (as the load capacity is centrally managed) and complete use of server capacity,” says Chatterjee.

International Data Corporation expects global spending on IT cloud services to grow almost threefold over the next five years, reaching U.S. $42 billion by 2012

Remote accessing of solutions implies that the user can be located anywhere, not necessarily only in his office. Because of remote access, security and monitoring systems are also strengthened. Also, because service providers stack multiple virtual machines, breakdown does not affect operations since other virtual memory systems are running simultaneously. What it also enables the chief information officer or the IT head to do is focus on strategies aligning IT usage to company requirements.

Way forward

Cloud computing is a paradigm shift from the way IT has been used over the years. It is in its nascent stages, but, the service providers are optimistic based on their own experience.

NetMagic, for instance, acquired 100 customers within eight to nine months of launching Cloud 1.0 in May 2008. By September 2009, the company had launched its Cloud 2.0 virtual machine model and is experiencing 400 per cent growth. According to Mishra, cloud computing contributes 10 per cent of their revenues to the tune of about four to five million dollars.

CA, in addition to building its own products has also acquired companies such as 3Tera, NetQoS and Oblicore to enter new, adjacent markets or substantially upgrade existing offerings to its customers. These are not the only examples of IT companies wanting to come on board the cloud wagon. This segment is generating substantial interest amongst users and service providers alike as it presents each with a viable solution to their business needs. Indeed, cloud computing promises to be the next big thing in IT.