What is Infrastructure-as-a-Service?

Cloud computing can be broken down into three cloud computing models. Infrastructure-as-a-Service (IaaS) refers to the fundamental building blocks of computing that can be rented: physical or virtual servers, storage and networking. This is attractive to companies that want to build applications from the very ground up and want to control nearly all the elements themselves, but it does require firms to have the technical skills to be able to orchestrate services at that level. Research by Oracle found that two thirds of IaaS users said using online infrastructure makes it easier to innovate, had cut their time to deploy new applications and services and had significantly cut on-going maintenance costs. However, half said IaaS isn’t secure enough for most critical data.

What is Platform-as-a-Service?

Platform-as-a-Service (PaaS) is the next layer up — as well as the underlying storage, networking, and virtual servers this will also include the tools and software that developers need to build applications on top of: that could include middleware, database management, operating systems, and development tools.

What is Software-as-a-Service?

Software-as-a-Service (SaaS) is the delivery of applications-as-a-service, probably the version of cloud computing that most people are used to. The underlying hardware and operating system is irrelevant to the end user, who will access the service via a web browser or app; it is often bought on a per-seat or per-user basis.

According to researchers IDC SaaS is — and will remain — the dominant cloud computing model in the medium term, accounting for two-thirds of all public cloud spending in 2017, which will only drop slightly to just under 60 percent in 2021. SaaS spending is made up of applications and system infrastructure software, and IDC said that spending will be dominated by applications purchases, which will make up more than half of all public cloud spending through 2019. Customer relationship management (CRM) applications and enterprise resource management (ERM) applications will account for more than 60 percent of all cloud applications spending through to 2021. The variety of applications delivered via SaaS is huge, from CRM such as Salesforce through to Microsoft’s Office 365.

Cloud computing benefits

The exact benefits will vary according to the type of cloud service being used but, fundamentally, using cloud services means companies not having to buy or maintain their own computing infrastructure.

No more buying servers, updating applications or operating systems, or decommissioning and disposing of hardware or software when it is out of date, as it is all taken care of by the supplier. For commodity applications, such as email, it can make sense to switch to a cloud provider, rather than rely on in-house skills. A company that specializes in running and securing these services is likely to have better skills and more experienced staff than a small business could afford to hire, so cloud services may be able to deliver a more secure and efficient service to end users.

Using cloud services means companies can move faster on projects and test out concepts without lengthy procurement and big upfront costs, because firms only pay for the resources they consume. This concept of business agility is often mentioned by cloud advocates as a key benefit. The ability to spin up new services without the time and effort associated with traditional IT procurement should mean that is easier to get going with new applications faster. And if a new application turns out to be a wildly popular the elastic nature of the cloud means it is easier to scale it up fast.

For a company with an application that has big peaks in usage, for example that is only used at a particular time of the week or year, it may make financial sense to have it hosted in the cloud, rather than have dedicated hardware and software laying idle for much of the time. Moving to a cloud hosted application for services like email or CRM could remove a burden on internal IT staff, and if such applications don’t generate much competitive advantage, there will be little other impact. Moving to a services model also moves spending from capex to opex, which may be useful for some companies.

Cloud computing advantages and disadvantages

Cloud computing is not necessarily cheaper than other forms of computing, just as renting is not always cheaper than buying in the long term. If an application has a regular and predictable requirement for computing services it may be more economical to provide that service in-house.

Some companies may be reluctant to host sensitive data in a service that is also used by rivals. Moving to a SaaS application may also mean you are using the same applications as a rival, which may make it hard to create any competitive advantage if that application is core to your business.

While it may be easy to start using a new cloud application, migrating existing data or apps to the cloud may be much more complicated and expensive.

In one recent report a significant proportion of experienced cloud users said that they thought upfront migration costs ultimately outweigh the long-term savings created by IaaS.

And of course, you can only access your applications if you have an internet connection.

What is cloud computing adoption doing to IT budgets?

Cloud computing tends to shift spending from capital expenditure (CapEx) to operating expenditure (OpEx) as companies buy computing as a service rather than in the form of physical servers. This may allow companies to avoid large increases in IT spending which would traditionally be seen with new projects; using the cloud to make room in the budget may be easier than going to the CFO and looking for more money.

“CIOs are increasingly turning to cloud infrastructure and services in order to increase flexibility and relieve pressure on capital budgets,” notes ZDNet’s survey of IT budget predictions. Of course, this doesn’t mean that cloud computing is always or necessarily cheaper that keeping applications in house; for applications with a predictable and stable demand for computing power may be cheaper (from a processing power point of view at least) to keep in-house.

How do you build a business case for cloud computing?

To build a business case for moving systems to the cloud you first need to understand what your existing infrastructure actually costs. There’s a lot to factor in: obvious things like the cost of running a data centers, and extras such as leased lines. The cost of physical hardware — servers and details of specifications like CPUs, cores and RAM, plus the cost of storage. You’ll also need to calculate the cost of applications – whether you plan to dump them, re-hosting them in the cloud unchanged, completely rebuilding them for the cloud or buying an entirely new SaaS package each option will have different cost implications. The cloud business case also needs to include people costs (often second only to the infrastructure costs) and more nebulous concepts like the benefit of being able to provide new services faster. Any cloud business case should also factor in the potential downsides, including the risk of being locked into one vendor for your tech infrastructure.

Cloud computing adoption

It’s hard to get figures on how companies are adopting cloud services although the market is clearly growing rapidly. One set of research suggests that around 12 per cent of businesses consider themselves to be ‘cloud-first’ organisations, and about a third run some kind of workloads in the cloud – while a quarter of firms insist they will never move on-demand.

However, it may be that figures on adoption of cloud depend on who you talk to inside an organisation. Not all cloud spending will be driven centrally by the CIO: cloud services are relatively easy to sign up for, so business managers can start using them, and pay out of their own budget, without needing to inform the IT department. This can enable businesses to move faster but also can create security risks if the use of apps is not managed.

Adoption will also vary by application: cloud-based email – is much easier to adopt than a new finance system for example. Research by Spiceworks suggests that companies are planning to invest in cloud-based communications and collaboration tools and back-up and disaster recovery, but are less likely to be investing in supply chain management.