Simply stated, cloud computing is renting IT capabilities from an outside vendor over the internet (Brown et al, 2012). These capabilities could be hardware, software, or services. For example, the cloud services include accounting software, office suites like word processors, communication software, games, storage, processing capacity, and so forth (Fox & Hao, 2018).
Even if a large corporation has an Information System organization, it can benefit from the use of the “cloud” because it can only use what they really need and scale when required. Also, the services rented could be used as “pay as you use” operational costs (Fox & Hao, 2018) which is cheaper than planning and investing on IT platforms. In addition, for building an IT infrastructure, there are no up-front costs for maintenance or security (Fox & Hao, 2018).
Infrastructure as a Service (IaaS) is the hardware provided by a cloud organization that can be rented to run user’s applications (Bai, 2019). These virtual servers can be rented by a large corporation in order to save money because they don’t have to make large investments in hardware. By using cloud providers, large companies can benefit from three cost-saving: infrastructure costs, management costs, and energy costs (Fox & Hao, 2018).
Example: Walmart
Walmart has the resources to implement any IT platform in-house. However, engineers at Walmart and Microsoft are working together to migrate their entire ecosystem to Azure, a Microsoft Cloud Computing service (Humphries, 2018). In their announcement, Walmart provides some important benefits that they expect to gain after the transition. The benefits are innovation, changing the way they work, and the digital transformation of Walmart brands (Walmart, 2018).
The digital transformation expected by Walmart is described with the following points:
- Compute Capacity. They will take advantage of Microsoft’s experience and infrastructure to get competitive advantages.
- Elastic Environment. This indicates that resources will be available when needed by changes in the workload. For example, during peak seasons like Christmas, they can rent more resources so there is no downtime for some of the users due to maxing out the capacity of the server. Then, scale back down when the season is over.
- Manage costs. They only use what they need and when it is needed. In addition, they don’t have to spend money on maintaining those servers and keeping them secure. That is part of Microsoft’s job.
- Innovate faster. They concentrating more on creating value and competitive advantage than maintaining the IT infrastructure.
Cloud Computing for a Start-up Company
In most cases, cloud computing makes sense for a start-up company because it saves money. For example, a small team of developers or small companies could have access to a top-of-the-line platform by just using PaaS or IaaS that competes with the leaders in the field. They don’t need to invest in infrastructure, maintenance, or development of those platforms to use them because they just rent them in a pay-as-you-go format.
I am right now working with a small team of developers in a start-up company, we decided to go with a cloud service for virtual servers because we can concentrate on the application that we are building instead of maintaining the servers. We use several servers for development and testing and each one of them costs around 10 dollars a month. That is cheaper than buying or configuring a server locally. The server for production is more expensive, but we can scale up and down depending on our needs.
A start-up can use cloud computing as Dropbox did in the past. Then, when they believe that they have the resources to build the entire platform in-house or the cloud does not offer more benefits for their growth, they can transition to their servers. Dropbox left Amazon Web Services (AWS) stating that they wanted to increase performance (Gupta, 2016).
References
Brown, C. V., DeHayes, D. W., Hoffer, J. A., Martin, E. W., & Perkins, W. C. (2012). Managing Information Technology. Upper Saddle River, NJ: Prentice Hall/Pearson.
Bai, H. (2019). Zen of cloud: learning cloud computing by examples on Microsoft Azure. Boca Raton, FL: CRC Press/Taylor & Francis Group.
Fox, R., & Hao, W. (2018). Internet Infrastructure: Networking, Web Services, and Cloud Computing. Boca Raton, FL: CRC Press.
Humphries, M. (2018, July 17). Walmart Moves to Microsoft’s Cloud. Retrieved August 20, 2021, from https://www.pcmag.com/news/362513/walmart-moves-to-microsofts-cloud.
Walmart establishes strategic partnership with Microsoft to further accelerate digital innovation in retail. (2018, July 17). Retrieved August 20, 2021, from https://corporate.walmart.com/newsroom/2018/07/17/walmart-establishes-strategic-partnership-with-microsoft-to-further-accelerate-digital-innovation-in-retail.
Gupta, A. (2016, March 14). Scaling to exabytes and beyond. Retrieved August 20, 2021, from https://blogs.dropbox.com/tech/2016/03/magic-pocket-infrastructure/.
