Tectonic Shifts is a series of articles on the mega trends that will shape our digital future for years (if not decades) to come.
tl;dr (Executive Summary)
Cloud Computing can make your company’s life easier by allowing you to focus on building your service/product rather than mucking around with IT infrastructure – at least that’s the main motivator for embracing the Cloud. By renting on-demand computing power rather than owning server hardware, you can now access and pay processing power on demand at every level of the technology stack. On the most basic level it means virtualized server power (of course all of this still runs very much on physical infrastructure). The key term to remember is “as a Service”, as in Infrastructure as a Service (IaaS), Plaform (PaaS) and Application/Software (SaaS). That moment when you check your Gmail account from your phone, or share a photo on Dropbox? You’re using Cloud services right there.
- IDC estimates businesses spending around USD 100b on Cloud computing in 2014.
- Amazon Web Services accounted for 37% of the $9 billion infrastructure as a service (IaaS) market in 2013, according to Evercore.
- According to the Guardian, the Apple data center for the Cloud in Maiden, NC, requires as much power as roughly 14,000 households.
What does this mean for society & industries?
As more and more web-services are moved to (and powered through) the Cloud, the costs and barrier to entry for new services are lowered. Also, peak demand, like a spike in traffic, is handled more easily as more computing power and bandwidth can be redirected to handle the incoming traffic – in ways that more traditional, dedicated servers wouldn’t allow.
Hand in hand with this new infrastructure comes the potential to much more easily collect, process and handle data-intense calculations (Big Data, anyone?).
In short, a company can focus more easily on their core offerings, and develop more cost-effectively. This comes at the price of new dependencies (to Cloud service providers).
Which industries are expected to be most strongly affected?
Software companies of all kinds are most strongly affected, but there are implications for any company that has an offer that includes an element of server-side operations. Cloud-based services mean, among other things, that vast amounts of data can be processed on the server-side that might otherwise have to be calculated on the client-side. This becomes particularly relevant in the mobile space.
Companies who do not primarily offer software services are affected mostly in that the software they use – accounting, email, etc. – might be Cloud-based rather than run on their computers (software clients) or dedicated servers.
Risks & opportunities
- less infrastructure needed
- lower costs
- easier scaling
- allows more focus on the service/product rather than IT infrastructure
- dependencies on third party services
- IT security not managed in-house
- key data might be handled across jurisdictions depending on where data and servers are hosted/stored/located
Resources, key players, links
Most of the global software corporations offers Cloud solutions of one sort or another, as do many highly-specialized startups and smaller service providers. The biggest played in the field is Amazon and their Amazon Web Services (AWS) service with their EC2 and S3 offerings. According to a Gartner report, AWS has more than five times the capacity of its next 14 rivals combined.