Ahead in the Clouds | SKYY
The Importance of Cloud Computing
The concept of cloud
computing is a technological change brought about by the convergence of a
number of new and existing technologies.
It is essentially the delivery of computing services such as storage,
networking, databases, software applications and analytics over the internet –
combined this is known as the cloud. The cloud concept proposes the following
benefits to corporates who have either existing, or looking to grow IT
- Speed: The performance for one should be the
same for thousands of users
- Cost: No infrastructure setup
liabilities for the end-client, and generally a pay-as-you-go service
- Access: Applications and end-clients are
not locked into specific locations
- Scalability: On-demand, with the ability
to scale-up or down with instant availability
- Reliability: Cloud data is mirrored
across multiple sites
- Productivity: The lack of onsite
hardware reduces the need for software patching and hardware setups
The following table shows some of the characteristics of traditional IT
compared to Cloud-Computing.
| Hardware on-premises
||Hardware hosted off-premises
|Hardware provisioned for peak demand
||Services provisioned based on actual demand
|Under or over-positioning can lead to financial loss
||Elasticity in capacity mitigates provisioning risks
|Business invests in ownership of IT assets
||Ownership risks are transferred from buyer to cloud service provider
|Changes to hardware/software can be costly
||Cloud service provider administers hardware
The model capacity utilisation curve below illustrates the concept of
cloud-based services where on-demand provisioning can meet usage, save costs
and mitigate risks from underinvestment in a traditional hardware setup.
Hardware vs Cloud Expenditure
Cloud computing helps avoid the cost impact of over- and
under-provisioning in addition to the opportunity cost, revenue and margin
advantages of business services deployed in the cloud. Furthermore, it helps
businesses exploit new markets due to the low entry costs of cloud services
relative to traditional hardware investment.
Analysis from Bloomberg Intelligence highlights that an organisation may
incur 30% in cost savings If it were to switch from an on-premises hardware
system to a cloud based one. This is most likely the primary driver in
business’s decision to move to the cloud. As a consequence, cloud computing is
growing at rates that are surprising even the most bullish IT analysts,
changing the fortunes of traditional hardware and software vendors.
Public Cloud Adoption
Many enterprises are moving away from traditional hardware and are
attracted to cloud solutions due to their zero-upfront infrastructure
investments and rapid time-to-market. A survey by Skyhigh of 460 senior executives
regarding cloud strategy revealed that in adopting a cloud framework, there was
an average of 20% improvement in the time to market for these businesses, which
resulted in an average of 19% increase in company growth and an average of 18%
increase in process efficiency. This shows that utilising a cloud strategy
enables companies to get the products out to market quicker than their
competitors which results in faster growth and higher return on investment.
A recent RightScale survey of key IT spenders in global corporates
highlights how many respondents are now using the cloud (see chart below).
This rapid take-up of cloud services will continue
to fuel the demise of legacy hardware vendors that are clinging to the shrinking business of developing and implementing on-premises hardware systems.
Cloud service providers are benefitting substantially from the recent rise in
||2017 Market Share (%)
||2016-2017 Growth (%)
|Amazon Web Services
Source: Gartner, August 1st, 2018 
Enterprise cloud spend is significant and growing quickly. As use of
public cloud has grown, so has the spend. Public cloud spend is quickly
becoming a significant new line item in IT budgets, especially among larger
companies. Among all respondents of the RightScale survey, 13% spend at least
US$6 million annually on public cloud while 30% are spending at least US$1.2
million per year.
Monthly Public Cloud Spend
Companies now run 79% of workloads in cloud, with 40% of workloads in
public cloud and 39% in private cloud.
It is clear that the cloud computing industry is likely to continue to
expand rapidly as it has done so in the past few years, as more businesses
continue to shift their physical, on-premise infrastructure over to the cloud
to reap the aforementioned benefits.
The Components of Cloud Computing
Cloud services have evolved into three main components which businesses can cherry-pick
from; Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and
Software as a Service (SaaS)
The Cloud Pyramid
- SaaS is a process for delivering
software applications over the internet, on-demand, and typically on a
subscription basis. Cloud providers host and manage the software application
and underlying infrastructure and handle any maintenance, such as software
upgrades and security patching. SaaS has been a growing method of delivering
technology, such as in financial management, customer relationship management
and healthcare management.
- Because of the web delivery model, SaaS
eliminates the need to install and run applications on individual computers.
With SaaS, it’s easy for enterprises to streamline their maintenance and
support, because everything can be managed by the vendor.
- SaaS is most commonly used to replace
traditional on-device software such Google Apps, Salesforce and Cisco WebEx.
PaaS allows for the creation of web
applications quickly and easily without the complexity of buying and
maintaining the underlying software and infrastructure. In other words, it is a
platform for the creation of software, delivered over the internet.
- This type of service makes sense when
there are multiple developers working on a development project or other
external parties need to interact with the development process. In other words,
PaaS makes it easier for developers to create web or mobile applications
without worrying about setting up the underlying infrastructure.
- Force.com is a PaaS platform, being
commonly used to improve developer productivity, helping decrease an
applications time to market.
- IaaS is a way of delivering cloud
computing infrastructure – servers, storage, network, and operating systems –
as an on-demand service, rather than purchasing that infrastructure. In IaaS,
resources are distributed as a service, which allows for dynamic scaling. This
type of service makes sense when an organization has very volatile demand, and
as a result, there is fluctuating demand for the infrastructure as well.
- IaaS is most beneficial for small
companies that do not have the capital to invest in new hardware or if a
company is growing rapidly and needs to scale its resources.
- Amazon Web Services is one of the
largest IaaS providers, helping replace traditional hardware whilst providing
flexible infrastructure capacity.
There are 3 ways to deploy
cloud services, public, private or a hybrid of the two. Public clouds are
operated by third parties such as Amazon Web Services, private clouds are
operated by a single organisation for the benefit of their geographically
Hybrid clouds are becoming increasingly popular due to the sensitivity
and security of data stored while allowing greater sharing between data and
applications. In the 12 months since the last RightScale State of the Cloud Survey,
both public and private cloud adoption has increased. The overall portion of
respondents using at least one public or private cloud is now 96%.
A recent McAfee survey highlighted that 21% organisations have
experienced data theft from the public cloud with a large portion of clients
(36%) feel they have a lack of security controls in the cloud and broader IT.
The most recent Cloud Next conference mirrored these concerns with
companies such as Google making it a key theme in all of their presentations,
highlighting the physical security of its data centres, custom security chips (Titan)
and large army of security engineers and two-factor authentication. Industry
standards have now been created to help mitigate risks in the Cloud industry
and alleviate end-user concerns after some high profile security events.
VMWare have now adopted the ISO/IEC 27001 standards for its vCloud
products, which involves independent audits from Schellman and the ANSI-ASQ
National Accreditation Board. All major contenders in the Cloud services
business are now investing heavily into cloud security, and is becoming an
important revenue source.
In addition to the
practical challenges that enterprises face in keeping track of data and
securing it throughout its lifespan, several regulations and standards impact
data in difficult ways.
The General Data Protection Regulation (GDPR) pertains to data that
intersect with operations or activities that enterprises might perform in the
European Union (EU) or that impact information that enterprises might hold
about persons in the EU on the Cloud. Even for businesses for whom GDPR is not
directly applicable, other geographically bounded regulatory considerations are
useful to consider. For example, breach disclosure requirements in specific
jurisdictions, such as US state laws, specify requirements for notification if
data about customers are breached.
The McAfee survey highlighted that 10% of organisations anticipate
decreasing public cloud investment as a result of the European Union’s General
Data Protection Regulation (GDPR), but the majority are either increasing or
increasing investments as a consequence.
Cloud computing has ample benefits including but not limited to cost
savings, efficiency, and speed, and can be deployed in numerous ways via
public, private, or hybrid cloud. In
addition, cloud computing services can be offered in different ways such as Infrastructure-as-a-Service,
Platform-as-a-Service, and Software-as-a-Service, each with its own advantages.
There have been many drivers to the growth of cloud computing, including
the significant cost savings that organisations have achieved along with smaller
businesses now being able to compete with larger organisations by scaling their
infrastructure (storage, servers, etc.) in the cloud rather than implementing
the IT resources on premise. This has led to an increase in cloud computing
spending, and this spending is projected to continue to increase as
organisations continue to divest from physical infrastructures.
The risks for corporates transferring to the cloud are primarily around
technical expertise and cyber security which is encouraging is not discouraging
cloud adoption and creating a sub-industry focussed on the physical, hardware
and software security to ensure clients data is kept safe.
The fears over regulations and data privacy appear over-done, with it
leading to only 10% of organisations decreasing their cloud spend.
Cloud Computing is an important stage in the development of IT systems,
comparable with the emergence of the mainframe, the minicomputer, the
microprocessor, and the Internet.
Cloud Computing can provide many advantages over conventional approaches
to IT provisioning, which can translate into significant improvements in ROI.
But what makes it particularly exciting is that its potential effect on
business is not just incremental improvement, but disruptive transformation through
new operating models.
Download the full whitepaper "Ahead in the Clouds" here.