Cloud Computing Shifts the Risk - InformationWeek

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Commentary
3/4/2009
11:42 AM
David Linthicum
David Linthicum
Commentary
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Cloud Computing Shifts the Risk

A core value of cloud computing is the ability to shift the risk from your enterprise to the cloud computing provider. Since it's up to the cloud provider to handle the computing processing load and you'll pay by use, it's possible to reduce the risk that you'll run out of capacity. The burden of scaling shifts to the cloud provider.

A core value of cloud computing is the ability to shift the risk from your enterprise to the cloud computing provider. Since it's up to the cloud provider to handle the computing processing load and you'll pay by use, it's possible to reduce the risk that you'll run out of capacity to support your customers and core business processes. The burden of scaling shifts to the cloud provider, which is in business to accept such risks.

So, while you reduce your risk as computing needs go up, you also reduce the risk that you've purchased excess capacity that you don't need. In short, you've outsourced your data center to those who will manage it, keep it healthy, and only charge you for what you use over time. Thus, an organization (such as yours) that is not in business to provide computing resources can sidestep that challenge and transfer the risk to cloud providers that are in the computing resources business.Perhaps it's better to use an example. Let's say you're supporting an inventory management system and you use cloud computing resources for database-as-a-service and platform-as-a-service. In this example you avoid the cost of datacenter-bound resources, but more importantly, the cost of the risk. By using cloud computing resources you avoid the investment in a set of on-premise computing resources that have two major attributes: First, they require a specific amount of capital investment for hardware and software. Second, they have an upper limit in scalability.

An investment of $500,000 in hardware gets you to a specific number of transactions per day, and then you have to invest again to support the increasing load as transaction volumes increase. Once you upgrade, you have excess capacity you're paying for and more risk. Indeed, you always have to keep additional capacity on hand in order to handle the peak transaction processing loads. This does not consider the disruptive nature of purchasing, configuring, installing, and testing new hardware and software.

In this scenario there is the risk that, for the amount of capital committed, you will provide either more capacity or not enough capacity than is required for a particular period of time. Either way, you're running a risk.

When using cloud computing resources, the risk is reduced or eliminated since you only leverage the capacity you need, and the cost adjusts based on the capacity you use (assuming the contract specifies these terms). Thus, at a lower capacity, you're not wasting money by having idle computing resources around, nor are you risking that you won't be able to scale, since the cloud computing resources are on-demand.

While shifting risk is a huge benefit of cloud computing, you still need to consider the core aspects of your systems and architecture and the technical fit for cloud computing. I've found the best approach is to look at the rudimentary benefits first, such as operational cost reduction, then move to the more strategic benefits. All benefits need to be considered, and you should understand all of the risks and rewards before making the move into cloud computing.A core value of cloud computing is the ability to shift the risk from your enterprise to the cloud computing provider. Since it's up to the cloud provider to handle the computing processing load and you'll pay by use, it's possible to reduce the risk that you'll run out of capacity. The burden of scaling shifts to the cloud provider.

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