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Cloud computing as a utility

Cloud computing has been around for a while, but the adoption has increased in the recent past than ever before. The big companies always had the advantage of purchasing power and hardware to meet the computing requirements, but the small and medium companies could not afford to try their ideas due to lack of access.

Nicholas Carr’s vision of cloud computing as described in the book Big Switch, details on the electric utilities and its evolution in the early 20th century. With the beginning of industrial revolution in the late 19th century, companies were forced to build their own generators and power plants to generate electricity for their needs. Soon every industry had their own power plants and spent a lot of time money and resources in ensuring the supplies were not affected. Though it makes sense in a conventional approach, it does not bring in any business benefits.

The capital expenditure required for a power plant, maintenance and upgrade costs involved were high and didn’t add up to the core business. That’s where the idea of “Electricity as a Service” was born and became commoditized. The capital was invested in the specialized operations and products rather than on power plants. This was significant change in strategy from production to consumption of electricity as a utility.

This model shows that the true value can be derived from centralized generation and distribution across the community. Some skeptics would call that applying the same analogy to the age of computers would be extreme, but similar analogy is only appropriate. Carr offers an interesting view on the World Wide Web and opines it should be looked at World Wide Computer that offers power to everyone.

Medium sized companies can really benefit from cloud computing as they have lot of ideas and money raised from the markets. They can ill afford to spend that money on the hardware and other software required for infrastructure. In this context, the companies can focus doing their core business and translating their ideas into sustainable business models much faster. Any new idea that required hierarchical approvals in the organization and expensive hardware now can be experimented much faster and in a cost effective way.

Though cloud computing is evolving much faster and one might be inclined to compare it with the electricity as a commoditized utility had taken many years in the course of innovation on generation and distribution. But with many stalwarts like Amazon, Google and Microsoft stepping into the new age of cloud computing, it is only bound to make the competition harder, computing cheaper and commoditization a reality.

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