Cloud Computing - it is all up there

Traditionally the IT assets of most organizations are hosted in their own premises like a Data Center. The same is managed by the in house IT team with or without external service providers. The IT infrastructure involves the active involvement of the Organization's IT team in the selection, procurement, installation and running of the operations. The IT team of the organization has to maintain the availability of the system resources, manage the daily operations and keep the system secure. The diversity in the infrastructure, applications and software skill sets coupled with 24/7 availability is always a challenge for all organizations, particularly for the smaller ones.

Cloud computing is a new buzz word in the IT world with more and more customers evaluating and embracing this concept.  Cloud Computing, as a concept, is the on-demand availability of computer system resources like Applications, Compute, Memory, I/O and data storage, without direct active management by the customer organization. Being an on-demand service, Cloud Computing alleviates the challenges associated with nonlinear growth brought in by digital channels. The concept of Cloud computing is similar to the Web hosting services in the past, where the web hosting companies would host the HTTP server, manage the DNS, IP, Load Balancing etc. Cloud computing also shifts the financial construct of computing from a Capital Expenditure model (CAPEX) to an Operating Expenditure (OPEX) model.

Cloud computing has three main categories based on the ownership of the computer system resources, as explained below: -

• Private Cloud: - Where the Cloud infrastructure caters to only one customer. A Bank or any service provider can host a cloud only for the Bank’s computing needs. The IT team can procure a large compute capacity and cater to the individual departments through virtualization. The usage of the cloud resources can be monitored and the individual departments cross charged based on the usage. The shared usage leads to more optimal usage of the resources, lowers the overall cost and can cater to spikes in demand during month or quarter ends.
• Public Cloud: - Where the Cloud infrastructure caters to more than one customer. Typically, a large-scale cloud service provider like AWS, Google, Microsoft, Oracle manages the Data Center and provides the Cloud services to a large number of customers. The usage of the cloud services is available on a subscription model and customers can choose the plan that suits their requirements.
• Hybrid Cloud: - Where the Cloud infrastructure is an hybrid of a Private and Public cloud. Some of the data where security could be a consideration, will reside on the Private Cloud while other data may be hosted on a Public Cloud. Please note that in no way is a Public Cloud less secure that a Private Cloud. It is just a matter of control and perception. In fact Public Cloud infrastructure may offer a higher level of security checks and compliance due the larger scale of operations and brand image.

Cloud computing can be categorized into three main categories based on the services offered as:-

• Infrastructure as a Service (IaaS): - IaaS is a base category service where a cloud service provider provides the customers that basic compute infrastructure like a server or Virtual Machine that is provisioned or managed on the Internet. The customer gets compute, memory, networking and storage. The customer can avoid the hassle of buying, managing and retiring the infrastructure in their Data Center.
• Platform as a Service (PaaS): - PaaS includes all the features of IaaS and additionally provides the Operating system and Development tools like the Database, Middleware, Business Intelligence tools etc. While the IaaS will offer you the flexibility of choices in the Infrastructure layer (compute, memory and Storage), PaaS will not. PaaS will offer pre-configured packages of Compute, Memory and Storage that you need to select from.
• Software as a Service (SaaS): - SaaS allows the end users to connect and use Cloud based applications over the Internet. SaaS is a complete software solution with out of box functionalities that leverage the global best practices of the application. The access to the SaaS applications can be authenticated and authorized through the integration with the Enterprise Active directory. The objective of SaaS is to provide standardized application that can be used with minimal personalization. Eg of a SaaS solution is Microsoft Office 365, Oracle HCM Cloud etc.

The above three categories are in most cases based on a monthly subscription model for a predetermined configuration with a capability to scale on demand. There is a variant in Cloud Computing called Serverless Computing that allows the user to pay only for the duration and the resources that they consume.

In conclusion, Cloud Computing offers a complete bouquet of services that is needed by any enterprise. Cloud Computing is a reality and will in the near future replace all siloed customer Data Centers. The shift from the CAPEX to the OPEX model makes a lot of sense to the CFO. Serverless computing will slowly shift the financial model further from a fixed monthly fee model to the pay per use model.