What Is Cloud Computing

To paraphrase the definition of Cloud Computing from dummies.com:

Cloud computing is the next stage in the Internet’s evolution, providing the means through which everything — from computing power to computing infrastructure, applications, business processes to personal collaboration — can be delivered to you as a service wherever and whenever you need.

Cloud services include the delivery of software, infrastructure, and storage over the Internet (either as separate components or a complete platform) based on user demand. What are the benefits of cloud computing

Cloud computing is gaining widespread corporate acceptance because it overcomes many of the challenges and inadequacies of traditional on-premise software and hardware solutions. Just like outsourcing, lower cost was the initial reason organizations started to shift to cloud-based services, but the reason they stay is because it gives them greater control over their business with less hassle at a predictable cost.

There are four key benefits that companies realize by adopting cloud computing:

No upfront investment of capital — By utilizing cloud computing, companies are able to take advantage of new technology and immediately leverage software functionality without having to invest personnel resources or tie up valuable capital purchasing expensive hardware and software licenses.

Increased productivity – Services firms, particularly those with fewer than 50 employees, have limited resources available to dedicate to tasks other than obtaining and servicing customers. Cloud computing allows companies to keep their resources focused on growing business, and improves user productivity by increasing application accessibility, reliability and security. With cloud-based services, companies realize a quicker time to value with implementation of new applications taking only days or weeks instead of the months or even years required for on-premise solutions.

Favorable payment schedule to help cash flow — With pay-as-you-go or usage-based payment terms, you pay only for what you need, as long as you need it. Since you are never tied into paying for services that you no longer need, you are able to more accurately budget and manage your IT infrastructure costs based on headcount. If your headcount changes (e.g., hiring temporary or seasonal staff) your costs change accordingly. The cloud model also eliminates costly annual maintenance contracts, and enables every customer to benefit from the vendors’ latest features without the disruptions and additional costs associated with software or hardware upgrades.

Greater scalability and agility — Without expensive fixed assets at the core of its business, a services firm can grow and adapt quickly to meet new market demands. The very nature of cloud computing supports a decentralized workforce, allowing service companies to rapidly respond to growing customer demands. It enables companies to take advantage of the best available resources, regardless of location. With cloud computing you can scale up or down very rapidly to meet new requirements. You can add or remove subscriptions as staffing needs change. You can quickly implement new technology as business needs change without fear of being locked into obsolete systems.

With today’s security threats and the growing importance of information technology for productivity and competitive advantage as well as compliance, a robust IT infrastructure is moving from ‘nice to have’ to ‘must have’. Cloud vendors manage software and hardware as a core business with experienced, dedicated staff in professional data center facilities. Their business depends on delivering quality services and safeguarding their customers’ valuable data. As a result, they invest in state-of-the-industry technologies and deliver security, redundancy and resources that are equal or superior to those of the largest, most sophisticated enterprises.

Adoption of the cloud by the services industry

Enterprise adoption of the cloud has been accelerating over the past several

years, driven by the compelling case of lower cost, higher efficiency and the ability to support innovation and growth. Gartner reports that the term “cloud” is now the most searched term on their website, recently passing searches related to “cost” in Q3 of 2009. Gartner also predicts that the software-as-a-service market alone will grow at a compound annual growth rate of 22.1% through 2011, twice the rate of the overall enterprise software market.

The services industry is well positioned to continue leading the way in this transition. To date there are 6,000 professional service firms using salesforce.com, for example. Services firms are people-based businesses, without complex supply chains or large amounts of physical assets such as factories and warehouses that require specialized on-premise IT management. Services firms are increasingly deciding that managing infrastructure, application platforms, and software applications is not their core competency, and are leaving these tasks to expert providers of cloud services.

In May 2010, 244 professional service organizations representing a variety of disciplines and organization sizes responded to a survey conducted by SPI Research. The survey results showed a growing movement in the services industry toward cloud-based solutions. Both large and small organizations reported a strong preference for software-as-a-service (SaaS) solutions with 46 percent of the organizations expressing a preference for SaaS, as compared to 25 percent that preferred on-premise applications.

Further results from recent market research conducted by Spiceworks showed that 14% of SMBs are currently using cloud solutions—and another 10% plan to deploy cloud services over the next six months. It also showed that smaller companies are more aggressive in their deployments. Among the SMBs who are using or planning to use cloud solutions in the next six months, companies with fewer than 20 employees are the most aggressive at 38%.

While its not surprising that the survey showed that companies in technology fields are way ahead in adopting cloud services, with 34% using or planning to use cloud services, companies in the professional services sector comprised the next tier with 22% of them deploying cloud solutions.

Organizations that can learn and adapt faster than their competition have an advantage. One example of a professional services industry that is leveraging cloud computing to achieve an advantage over their competition is the rapidly growing sector of virtual law firms. In a time when traditional law firms are being forced to implement major cutbacks in salaries and personnel, a recent article in The American Lawyer highlights a group of virtual law firms in the Bay Area that are conversely experiencing rapid growth.

The premise of the virtual law firm is a network of highly experienced lawyers that work from home. Cloud computing allows these firms to slash costs by eliminating the expensive overhead of office space and highly paid support staff while still providing the partners anytime, anywhere access to the tools and information they need to service their customers. And by doing so, these firms are offering their customers the same services with the same level of expertise as the competition, but at one-third or one-half the price.

All these companies are already leveraging web-based services to optimize their business. As cloud computing becomes even more widely accepted in the near future, other professional services firms who wish to remain competitive will be forced to follow their lead. Those who wish to be truly successful, however, will begin their transition today.

Based on this information, Qantas should outsource to cloud computing vendor.