Cloud Computing Economics
The demand for cloud computing has grown due to the economics of the cloud computing value proposition. Cloud computing users can avoid capital expenditures on hardware, software, and services when they pay a provider only for what they use. When one considers the savings associated with the capital expenditure cost and then factors in the cost savings of technical personnel and opportunity cost the return on investment concerns can typically be avoided. In many small and medium businesses (SMB) the real value is found in the application deployment as the company can quickly deploy enterprise applications and then scale them up or down as needed. This rapid deployment allows the company to quickly test markets or opportunity in a highly controlled manner.
Cloud Computing is normally billed on a consumption model and is usually billed like a utility (e.g. resources consumed, like electricity) or subscription (e.g. time based, like a newspaper) basis with little or no upfront cost. While a few cloud providers are now beginning to offer the service for a flat monthly fee as opposed to a utility billing basis, the most common billing process is that of consumption depending on the requirement of the company. The billing model for access to a server and operating system might be billed on a utility basis while access to an enterprise application is typically a simple per user charge that incorporates the underlying infrastructure.
The benefits of this time sharing style approach are low barriers to entry, shared infrastructure and costs, low management overhead, and immediate access to a broad range of applications. Users can generally terminate the cloud computing contract at any time (thereby avoiding return on investment risk and uncertainty) and the services are often covered by service level agreements (SLAs) with financial penalties which provide another level of assurance.
CDMworld offers Cloud Computing Services from servers to enterprise applications and point solutions. Contact CDMworld at 866-447-6953 extension 701 for more information.
