The idea of cloud computing might seem like a no-brainer for many. However, there are some issues that we need to consider carefully before deciding whether we should be moving our organization and some of the services to the Cloud. In this video, we're going to look at some of these issues. So, the first question we must ask is what is driving the adoption of Cloud computing. On the technology front, the advances in virtualization technologies, the rise of large data center providers, reliable internet connectivity, have all helped in the adoption of Cloud computing. Markets have also responded quite positively to Cloud computing with major companies like Amazon, Google, IBM, Microsoft all competing to win a customer base and provide Cloud-based solutions. Businesses that have moved to the Cloud have experienced very large economies of scale and scope in rolling out heterogeneous services without significant infrastructure investments. In terms of the financial benefits of using Cloud services, using such Cloud-based services allow a customer to avoid incurring large capital expenses in creating their own computing infrastructure. The cost of investment in computing infrastructure anyway, depreciates over time. So, instead now by using Cloud infrastructures provided by vendors such as Amazon or Google, a customer only incurs an operational expense and pays according to their usage and needs. This helps from a cash outflow perspective for businesses with a tight budget. Another important economic benefit that Cloud provides to its client businesses is that the clients do not have to worry about employing a large IT maintenance staff, which can cause significant savings for a company. Additionally, when a new product version becomes available. For example, a software update, the Cloud provider does these updates on their Cloud infrastructure seamlessly and often for free. This helps the client to avoid the cost of updating software on each of their host machines individually, thus saving them on the man hours involved in the maintenance. Now let's look at what are some of the perceived barriers to using Cloud for your organization. The first issue that businesses often struggle with is whether they should opt for public or a private Cloud. This decision may depend on several factors including the sensitivity of the data in question and regulations. The security concerns with using a public Cloud can also be a barrier in moving an organization to Cloud computing. We will explore these more in later videos. The lack of a clear organizational strategy on Cloud migration and governance of the Cloud can also hinder the adoption of Cloud-based solutions. In terms of the long-term trade-offs between the benefits of Cloud computing and the risks, a common consideration is data privacy and ownership of the data. The data ownership issues are clearer in legacy systems that are housed on-premise and in private clouds but the ownership issues can become murky in the context of a public Cloud. Another consideration is the reliability of Cloud-based services. It is important for Cloud providers to ensure that their infrastructure remains available to all clients 24 across seven. Finally, although Cloud solutions provide a way to avoid CapEx in favor of Opex, there is an issue with the migration costs that a business incurs when they want to change their cloud provider vendor. Furthermore, use of proprietary data formats can also introduce incompatibilities across Cloud vendors that help them to lock in their customers. So, an organization should be careful about the migration cost and the potential for lock-in. Similarly, the Cloud provider that a business chooses should be able to grow at the same rate as the business. Else, if the Cloud provider faces bankruptcy, then it might be very difficult for a business if all its data is locked into that particular provider. So, what are the implications for revenue? So, why does the business model of Cloud computing also make sense for the providers of Cloud computing platforms like Google and Amazon? That's because providing an Opex model to their clients, give providers a steady revenue over time as clients pay on a recurring basis for using their infrastructure. It also allows the Cloud provider to attract new customers to try out their products with very little commitment initially, but to have them locked into the product if they grow to depend on it over time. This is a kind of freemium model that many Cloud providers offer. For example, if you are using a Cloud-based storage provider such as Dropbox, initially you would have some data available to you for use, some amount of storage, but if you want to store more data then you would have to upgrade to a paid version. So, these are some of the considerations that an organization needs to have, before thinking about moving to the Cloud and in defining their Cloud strategy. So, in the next video, we're going to look at the various realizations of Cloud computing.
