Why Is Cloud Computing Important?

Cloud computing is talked about a lot in the press. But for someone new to SaaS and the cloud, it might be hard to see what the big fuss is about, or why this is such a transformational new dynamic within the technology sector.

To illustrate the impact that the cloud is having within the IT space, we can look back to the Industrial Revolution to find some analogies.

In the early days of industrialization, only the extremely wealthy could afford to operate factories.

To power machines, manufacturers needed a source of energy. And this usually meant purchasing large engines and generators. Because of the high operating costs and barriers to entry, many manufacturers had monopolies, and competition was stagnant.

However, the introduction of public utilities, such as water and electricity, allowed smaller entrepreneurs to enter the market and compete with established giants. Instead of purchasing an expensive electric generator, a smaller company would simply need to plug a cable into a wall and pay only for the electricity that they consumed.

This was a major win for business since it stimulated competition and entrepreneurship. It was also a win for consumers since common people now had access to abundant, inexpensive electricity inside of their homes.

Once consumers had access to electricity, it also opened up new potential industries which had previously been unthinkable.

Cloud computing has had a similar impact within the technology sector.

In the past, it would’ve been very expensive for companies to implement a new data center. But today, small companies can rent IT resources on a pay-as-you-go basis, without incurring any sunk costs. These systems are also provisioned much more quickly and with less business risk.

Abundant consumer access to high-speed Internet has also created new market opportunities that would’ve been impossible 20 years ago.

• Blogging provides consumers with real-time access to news, which would’ve been impossible with newspapers that have daily publishing cycles.
• Online backup allows for inexpensive automation of time-consuming maintenance tasks in a way that’s much more secure than conventional manual backup processes.
• Email is faster than traditional mail, and it’s free. Because of utility computing, there is no need for the average person to own their email server when alternatives like Gmail are available. The postal industry simply can’t compete.
• Instead of purchasing giant supercomputers, scientists can rent time or purchase “compute cycles” on large, shared supercomputers.

Each of these cases was made possible by the “utility” computing model that comes from cloud computing. This is the idea that you don’t need to purchase or own any new equipment to access a new computer system or computing resources. Instead, you can rent someone else’s computer and pay only for what you use.</p>