Why Investing in Clouds is a Profitable Move?

Cloud Computing, which has become a buzz phrase over the last few years, essentially denotes, broadly, three categories of hosted delivery services over the internet.  This includes, Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS). It’s interesting to note how the phrase Cloud Computing came about; it was basically inspired from the cloud symbol that were all so familiar with, the one used to typically represent internet flowcharts and diagrams. As Cloud services have began to grow in recent times, Cloud Computing has come to encompass any computing service that offers users extra computing capacity. The potential of Cloud Computing seems immense and it is being seen as the next big thing, as far as IT services for distribution and shared computing are concerned. The potential synergies that come to be, as the result of the shared grid between providers and users, are the major drivers of the growth of Cloud Computing.

Cloud Computing also offers its users major advantages, in terms of return of capital and conservation of internal IT resources. Cost-effectiveness is definitely one of the great benefits of Cloud Computing for businesses. The common IT grid, which include servers, routers and switches, and are owned by the provider and used by the business or group availing the service, makes it a convenient and viable model.  Also, the minimal additional investment in storage space often leads to a higher-rate of returns, especially when compared to the investment itself – and this has been noted by many experts and IT theorists. The availability of space at any point, also frees up firms from the need to keep spare space on stand-by, thus employing optimally whatever networking bandwidth and space is available. Given that IT firms need to constantly invest in network, storage and IT capabilities, means that Cloud Computing is going to be a viable alternative, and in the long run, possibly the better option for many businesses. The flexibility of Cloud Computing services, with various pricing options and levels of services, means businesses of varying dimensions, and more number of them, can benefit from the technology itself and required technology upgrade available through service providers.

With the growth of the internet, cloud computing has also grown. Companies like Amazon have huge computing capacities that are on offer for businesses or organisation in the need. And the great thing for the users is they could choose to increase or decrease computing capabilities as per their requirement, without making any additional IT investments! There is no need to hire new personnel or buy software, all they have to do is choose a service provider and the plan that fits their budget and requirement. Providers like Amazon, of course, stand to benefit from it by making the most of their IT investment. On the whole, the economy benefits too, due to the convergence of the provider and user and the way in which the IT ecosystem operates. Traditionally, convergence across industries has only benefitted all those involved, leading to better profit margins for the providers and higher returns for the user.
As mentioned earlier, the costs of cloud computing services depend on the type of service being availed, since cloud computing spans software, infrastructure,  application, testing and integration, all offered as service. Cloud computing has also evolved from traditional hosting services of previous times, in that, Cloud computing is sold on demand and it offers users a great deal of flexibility. Also, since the onus of maintenance of the IT network is on the providers, users need only to pay for the service and access it through the internet. The flexible nature of Cloud Computing makes it the go-to hosting service and it is most certainly favourably viewed, compared to traditional hosting services. No wonder then, that many major Venture Capitalists and Investors are looking to invest in Cloud providers.

Obviously, given the potential, it is not just new companies looking for funds that are offering Cloud Computing services. Big players of course, are Amazon and Google, and there’s also AppNexus and GoGrid. These businesses offer users many options and given the reach of their audience, can reach out to many more internet users.  Take Amazon, for instance, which offers users a dynamic package, letting them choose from data, through their Simple Storage Service (S3) to CPU cycles that are aided by virtual machines called Elastic Compute Cloud (EC2), which goes to show that Amazon is able to offer users a range of Cloud Computing services. Similarly, Google offers users a range of services in Cloud too. However, the crucial difference between the two, and this is something that users need to be aware of, is that Google makes users go through many layers of security protocol, however, Amazon offers users root file privileges.  Depending on their need for security and root privileges, users could choose either service provider, or one of the many that are currently being offered in the Cloud Computing market.

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.