Anatomy of the Cloud

Your company is working on its IT budget and the CIO meets with the CFO to discuss additional costs for cloud computing.  The CIO is explaining the costs he’s added to the budget to take advantage of cloud computing. The CFO is puzzled, everything he has read suggests leveraging cloud computing to reduce IT costs.  Why an increase in IT expenses to move to cloud computing.

Reality is, there is no single answer to explain what you get when you go to cloud computing.  There are at least three levels of cloud computing to consider:  Infrastructure as a Service, IaaS;  Platform as a Service, PaaS; and Software as a Service, SaaS.   Each has its own advantages and disadvantages.    Using these three levels will help you understand the anatomy of the cloud.

Organizing your IT along the same three levels of cloud computing will help you measure the benefits of utilizing cloud computing and if cloud computing is right for your company.   A simple way to look at it is by services.  IaaS is comprised of your servers and storage.   Amazon, Google and Apple all offer variations of server and storage solutions.   Having a centralized server and storage cost structure in your company provides the best basis for evaluating your opportunity to leverage cloud computing for IaaS.

PaaS is what is needed to develop software solutions for your business.  It is more difficult to separate the cost of your IT computing platform.  Azure by Microsoft is an example of PaaS.  PaaS is a great cloud computing offering for anyone interested in developing software and may work well for a company with a small programming team.  It is probably more difficult for a large company to leverage services at this level.

SaaS is the highest level of service you can get through cloud computing. is an example of SaaS.  In this case, the business gets a complete business application and just has to add their business content.   These types of solutions work best for Business Applications that automate well understood business processes.   Typically, understanding the cost of using an SaaS solution can be done as part of a build versus buy analysis.

Employing a SaaS solution avoids the investment in infrastructure and potentially avoids an investment in a programming platform.   Servers and storage are often purchased to support new Business Application development.    An investment in a programming platform, PaaS, is not necessarily a cost savings.  It is likely the tools used to develop the solution are already owned.

It’s quite possible the reason the CIO is looking for more in money is because they’ve selected a SaaS business application.  The application provides additional automation for the company and increases IT capabilities which justifies additional IT expenditures.  The company is buying this additional capability comes from a cloud based solution.

IT is a very a complex, tightly coupled set of services, individual competencies and costs.  Cloud computing offerings are just as complex to understand.  It is important to accept that Cloud computing is going to continue to grow and learn how to leverage Cloud services.  Over time, the Cloud will dramatically change the way companies acquire IT services.  To properly leverage the Cloud, companies should align their IT services with how cloud computing services are offered.   A proper alignment of IT by services, roles (i.e. competencies) and responsibilities provide the clarity needed to leverage the Cloud.   This will provide the CIO and CFO with a common basis for evaluating the opportunities and risks of Cloud Computing.





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