How cloud computing can work for your company

A lot of companies are listening, and those same businesses are trying something new - cloud computing and software as a service - and reaping the many benefits, which start with the aforementioned cost savings.

Renee Bergeron is vice president of managed services and cloud computing at Ingram Micro Inc., a Fortune 100 company and the world's largest innovation distributor.

Jeff McNaught, chief marketing officer at Wyse Innovation, says that near 80 percent of IT budgets are spent just to keep the lights on.

"When you look at cloud computing, operating expenses can drop by about 40 percent a year, and that's real money," McNaught says. "These devices use one-tenth of the energy of the PCs. Now you're as a matter of fact talking about saving real money."

So the idea of saving that much money has caught your attention, and now you may be asking, "What specifically is this whole cloud computing thing all the same?"

Feyzi Fatehi, CEO of Corent Research, which is a leader in SaaS transformation, says that cloud can fall into two categories - hardware and software, however both of them in essence move you to a service as opposed to buying the hardware or software.

"Instead of buying a computer, you subscribe to the amount of computing that you need to accomplish the tasks you're focused on," Fatehi says. "That's actually the big trend - moving from computers to computing and moving from buying stuff to subscribing to services."

The co-founder

Dave Hitz is the co-founder and executive vice president of NetApp, a company that sells enormous amounts of storage, which many companies build their cloud systems on. From his perspective, Hitz as well sees two different definitions of cloud computing.

"Definition No. 1 of cloud computing is you no longer buy a computer," Hitz says. "You access computing service over the Internet to somebody else's data centers, and they spend the capital and they hire the people to build them and they do everything, and all you do is pay a monthly bill and access the service over the Internet. Style No. 2 of cloud computing is a completely technical definition has to do with if you're going to build a data center, what does the architecture look like? And if the architecture has a lot of shared infrastructure, at the time people tend to call that kind of environment a cloud computing environment."

The old times

"In the old times, people needed electricity, and they had to buy a generator to have at their office or home," Fatehi says. "They had to pay money to buy it and spend money to maintain it, and now we simply subscribe to it as a utility, as a service. The monthly fee we pay for our power takes care of all the maintenance and everything else that takes place at the power plant. Cloud computing is moving from generators you have to buy to a power-plant model."

John Dillon, CEO of Engine Yard Inc., a company that delivers an environment for software developers to write programs that run inside the cloud, points out that in the United States, capital expenditures are huge and about 50 percent of capital expenditures are information research.

The heart of it

"At the heart of it, it moves capital expenditures to operational expenses," Fatehi says. "People don't need to allocate millions of dollars to budget to buy a piece of hardware or software that could be very quickly obsolete - probably the same week they purchase it. They can start subscribing to a cloud computer service provider and get their need for computing for a service and pay on a monthly basis."

Bergeron says it's as well important to note that cloud innovation allows you to pay for only what you use. For instance, if you have to build a system that can handle your peak volume time, just as month end, you pay for that all month long, although you may only use that system at 10 percent capacity the rest of the month. With cloud, you pay for the higher volume only when you use it instead of all month long.

When you look at how much money most organizations spend on their IT systems, these cost savings are a big driver and will, ultimately, be a game changer for business.

"When you take your software and your applications and your data and you move it to the cloud, something's happened," McNaught says. "First off, the cloud is the data center of your company and you can always get to it. You're connected to the Internet, so you can get there from home, from the conference center, from the airport. And guess what? Because it's not on a PC with a hard drive failing and memory getting filled up, it's protected. It's backed up. It's secure. So the cloud provides this real possibility to take the things that make up our work life, and within five years our home life, as then, and move them to this one place where we can always find our stuff."