Cloud Computing: The Facts

Updated: June 26, 2020 | 2 minute read

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Introduction: Cloud Computing - The Facts

Cloud Computing is the practice of utilising a network of virtual and remote servers to store, manage, and process data as opposed to an onsite (on-premise)  server. It offers the below main benefits:

  • Pay-per-use: Users of cloud computing pay only for the resources they use;

  • Scalability: Users who require more resources can acquire them almost instantly; and

  • Self-service provisioning: Users can switch on resources depending on their workload.

According to Forrester Research, the public cloud market is estimated to reach $191B by 2020, growing significantly from 2013’s market size of $58B. Cloud applications are predicted to deliver the most significant proportion of the growth, reaching approximately $133B in revenue by 2020. Forrester predicts cloud platforms will contribute $44B in revenue and cloud business services, $14B by 2020.

What is Driving this Growth?

Technological Innovation

New technologies are accelerating instant access to information. Faster servers allow more Virtual Machine instances to be created per physical server. Emerging concepts such as Software Defined Networks for automated and policy-driven network management and generic compute engines  allowing for dynamic computing resources that enable business processes to be more efficient and less costly.

Commoditisation of Cloud Services

As more people switch to Cloud storage systems, the market is becoming increasingly competitive, driving prices down and making this service a more substantial consideration.  Amazon.com, Inc.’s Amazon Web Services, Microsoft’s Azure and Google’s Google Cloud platform are some of the largest cloud players in the market, and they will continue to drive prices down and to introduce further feature enhancements to the market. Inevitably this creates tough competition for the smaller cloud providers to scale up to the higher-end requirements of the customers.

Business Agility

Adaptability, flexibility and balance are three qualities essential to long-term business agility. Cloud computing allows organisations to scale up their operations and deliver information in a timely manner. This, in turn, heightens people’s confidence and trust in the service, thus increasing the demand.

Shift to Operational Expenditure

For businesses, hardware and one-time licenses represent a sizeable investment. Subscription-based pricing enables better, if not instantaneous, accessibility to infrastructure and computing platforms that are traditionally costly and often difficult to build. One must not only consider the actual hardware and software to set up the equipment but also the relevant technical expertise to configure and maintain it.

Service Provider Licensing Agreement (SPLA) pricing

Major software vendors are increasingly adopting subscription-based pricing models that create opportunities for cloud providers to drive added consumption and revenue. For the consumer, this means access to the latest technologies without the initial capital outlay that comes with acquiring vendor software licenses.

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