The recent economic downturn and pressures on IT budgets have evolved a creative new business model in the form of Cloud Computing. This paper by Dr. Pradeep K.Mukherji, President & Managing Partner, Avasant Asia discusses Cloud Computing and its implications on todays businesses and outsourcing.
Necessity is the mother of invention and innovation. The current economic downturn and pressures on IT budgets has thrown up a completely new business model in the form of Cloud Computing. However, Cloud computing means more than cost saving and scalability. Cloud computing allows firms to minimize use of internal IT systems and access IT services over from remote hosted locations via the internet. This provides a way for firms to increase capacity or add a mix of capabilities on demand, without investing in new infrastructure, training, or licenses.
The need to remain agile and competitive in the difficult economy, has forced firms to evaluate cloud as a solution. It is expected that cloud computing will expand to serving local needs via mobile devices even as smaller enterprises adopt the current internet-connectivity, shared resources model. Amazon, Google and Microsoft already offer central-processing-unit cycles, data and document storage, and customer relationship management services with the benefit of cost-savings and scalability. The general consensus emerging is that concerns over security and reduced hardware demand are overdone. Cloud computing with its pay-per-use service is allowing organization convert capital expenditures (CAPEX) to operating expenses (OPEX). The new business model opens the possibility of fixed costs are being converted to variable costs, driving efficiencies in the organization. However, it is yet to be ascertained if such value drivers are a reality or still a myth.