Cloud Computing in 2012 (continued) – Shared Resources in the Cloud

A primary characteristic of cloud computing is that the platform leverages pooled or shared assets. These computing resources can be bought, controlled externally, and used for public or private usage. As we look further into the validity of these shared computing resources, one can easily see that they are an integral component to any public or private cloud platform.

Take, for example, a business website. We begin to see standard options commonly available in today’s market. Shared hosting, is one of the choices companies have had for quite some time now. The shared approach leads them to be free from managing their own data center, and in turn, leverage a third party. Most of the time, managed hosting services lease out to their customers a dedicated server which is not the shared with other users.

Based solely on this, cloud computing looks a lot like a shared hosting model of managed services. This is due to the fact that the cloud platform provider is the third-party that manages, operates and owns the physical computing hardware and software resources which are distributed and shared. At this juncture in the paradigm is where the similarities between shared or dedicated hosting and cloud computing end.

With cloud computing set aside for a moment, the move away from IT departments utilizing self hosted resources and using outsourced IT services  has been evolving for years. This change has substantial economic impacts. Two of the main areas of change are in CAPEX and OPEX. This furthers the potential opportunity for reducing OPEX in conjunction with operating the hardware and software infrastructure. The change from CAPEX toward OPEX defines a lowering of the barrier for entry when starting a new project.

When examining self hosting, companies are required to allocate funding to be spent up front for licenses and hardware purchases. Operating under fixed costs, it is an out-of-pocket expense in the beginning of that project. Furthermore, when leveraging and outsourced offering (a.k.a. managed hosting), the upfront fees can typically be equal to a one-month start-up operational cost, and possibly a set up fee. When analyzed from a financial perspective, the annual cost is close to the same, or just a little bit lower, than the CAPEX expense for an equal project. Additionally, this can be offset by the reduction of required OPEX to manage and care for the infrastructure.

In stark comparison, when analyzing the cloud model, it is standard to see no up-front fees. With closer examination, a subscriber to cloud services can register, purchase, and be leveraging the services in much less time than it takes to read this blog.

The dramatic differential comparisons in financial expenditures you might see between these hosting models, and the cloud model, exist because the cost structures when utilizing cloud infrastructures are drastically more attractive than earlier models offered to IT.  With further investigation, it’s clear the economies of scale are multi-faceted, and driven by relation to the economics of volume. The largest cloud platform providers are able to offer a better price point to the IT consumers because they are able to bulk purchase, and offer better goods and services; which in this paradigm, are capacity, power, data storage, and compute processing power.

And so continues our 2012 blog series dedicated to understanding the core layers of cloud computing. Our next blog will focus on elasticity in cloud computing. Please check back often, or subscribe to our blog to stay up-to-date on the latest posts and perspectives and news about cloud computing. For more information about Nubifer Cloud Computing visit www.NUBIFER.com

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