Friday, February 13, 2009

Can Computing Get a Boost from the Poor Economy

Written by Tsvetanka Stoyanova

The poor economy is a topic one can't escape from because many of the headlines of any major media are dominated by recession-related topics and most of the reports are gloomy. The recession has hit all branches of the industry and for some of them the damages are devastating.
When one has such a picture as a background, it sounds strange to think that there might be sectors which will prosper thanks to the poor state of the economy but the case with cloud computing looks exactly like that.

Cloud Computing – the Bright Side of Life? Cloud computing might not reach the rocket heights just because of the poor state of the economy but still the forecasts for its development are pretty bright. Cloud computing has been on the rise for some time and its rise is expected to continue, though the reasons for that are very different from, for example, the exponential growth of real estate a couple of years ago. Certainly cloud computing is not a hype and its success has a solid economic base.

It is not precise to say that cloud computing is recession-proof, but the expectations are high, no matter if the recession gets even uglier. According to IDC experts: “Over the next five years, IDC expects spending on IT cloud services to grow almost threefold, reaching $42 billion by 2012 and accounting for some 9% of total software sales. More importantly, spending on cloud computing will accelerate throughout the forecast period, capturing 25% of IT spending growth in 2012 and nearly a third of growth the following year. ” If you don't call this forecast bright, I don't know what else could sound better in these tough economic times.

In addition to industry analysts, people from the data center sector are also reporting that cloud computing is on the rise. The growth in the example below is pretty steep and chances are that the positive developments will persist in the future.

Why Cloud Computing will have success If you are familiar with what cloud computing is (according to the definition of webopedia, cloud computing is: “A type of computing, comparable to grid computing that relies on sharing computing resources rather than having local servers or personal devices to handle applications. ”), then it is hardly a surprise that it can benefit from the poor economy.

There is only one reason why cloud computing will benefit from the poor economy: savings. In comparison to getting a dedicated in-house deployment, cloud computing is much cheaper, could be more reliable (unless you choose the most amateurish provider), and gives you the chance to see if the software you are using is what you need without the need to pay for its full license. Cloud computing allows you to start new projects without substantial expenses (i.e. you don't have to buy the equipment, you will rent it – but you will still be using it) and this is a really tangible benefit especially at times when IT budgets are shrinking.

On the other hand, when the economy was healthier, this also boosted cloud computing but the reason was not lack of money – rather it was ease of use and maybe even curiosity. Companies wanted to give a try to new applications and cloud computing were the easier option to try an application before you buy it and deploy it in-house. Even companies which have been using cloud computing as a temporary option only, will most likely stay with their provider because now is not the moment to invest in new in-house solutions.

Web 2.0 is going full throttle which provides another reason why companies will need cloud computing services. With all the traffic and storage requirements a Web 2.0 application has, it is a safe bet that many companies, which want to host Web 2.0 applications for internal or external use, will need a place to do it. Hosting Web 2.0 applications in-house is not that easy and that's why many companies will opt to use the services of cloud service providers, who are pros in dealing with the intricacies of deployment and administration of Web 2.0 applications.

Is Cloud computing a safe bet? All the above sounds wonderful and the forecasts about the growth of cloud computing is positive, but if you plan to expand your capacity in order to accommodate for more cloud computing clients, think twice before doing it. Develop an in-depth analysis before jumping on the “cloud” because you may be making an investment that does not meet your requirements.


Recent Posts