Economics of the Cloud

Cloud Economics

For most companies, maintaining a large IT presence implies large capital expenditures and a non-trivial amount of accounting and record-keeping to track depreciation, tax considerations, and so forth. When you purchase the hardware and the software, they become yours (in every sense of the word) and your long-term responsibility.  The traditional model of enterprise computing is a capital-intensive function that requires expensive data centers (electricity, air conditioning, servers, networks, storage, etc.) and operations staff (hardware swaps, networks, backups, OS updates, upgrades, etc.) to keep it all running effectively. With an on-premises data center, you must plan and provision for maximum utilization, which is financially inefficient.

Data Center

The appeal of cloud computing includes the ability of enterprises to pay for only what they use. If demand decreases and you no longer need the assigned capacity, you can turn off systems and you are no longer charged for those systems. Since the cloud is a subscription-based model, it is an “operating expense” model. Computing becomes a service for which businesses are billed a monthly charge that is metered by actual usage. The more (compute, network, and storage resources) that you use the more expensive your monthly bill. The less you use, the less you will be charged.

Another way to save money is cloud operations frees your enterprises of the costly tasks of system backups, routine network maintenance, software patches, etc. because you cloud provider can handle these tasks.

Azure Spend

Most IT organizations find wide variations in system utilization. Some applications are seasonal and other applications run for a short period of time before being shut down. You might have other applications that are simply unpredictable and you can’t apply a cost saving model.

Building your server infrastructure in a cloud environment can save your business money and allow for greater innovations for less money.



Which Company Rules the World’s Cloud Infrastructure?

There are plenty of companies that want to rule the online cloud infrastructure market. The top four companies are all from the United States, and they have such a significant lead over the other vendors it might not be possible for them to catch up anytime soon. In a study Synergy Research Group, they show Amazon Web Services, Microsoft, IBM, and Google controlling  more than half of the worldwide cloud infrastructure market.

Amazon (AWS) holds a dominant 31% share in the second quarter of this year, with Microsoft (Azure) next with just a 11% share.

Synergy included infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and hosted private cloud services in its figures. They also found that the top four leaders are also growing more rapidly than their smaller competitors, with more than double-digit year over year (YoY) growth rates.


Zero Competition IT Careers?


Some technical jobs are easier to get than others, and it usually is driven by competition. If there are hundreds or even thousands of qualified people applying for the same job, it can be more difficult for you to get the job. The idea is that there are jobs out there that almost no one is applying for, so your odds of landing a great IT job are improved if you can find one of these hidden gems.

In this article by Paul Browning, he lists some examples of these jobs:

  • Application Support
  • Network Design
  • Cloud Computing
  • IT Governance
  • Virtualization Engineer
  • Storage Engineer
  • Juniper Network Engineer
  • Technical Project Management

Paul also lists his reasons for the low application rates, and what training or certification will help you demonstrate knowledge in these careers.

My 5 Technology New Year’s Resolutions for 2015


Keeping the new year in mind, have you created your technology New Year’s resolutions? This isn’t about losing weight or working out more often, it is instead about what technology changes you promise to make in 2015. I have a few changes I want to make, and I am resolving to make it happen this year.

  1. Learn C# – While many technology professionals have learned multiple programming languages, I haven’t learned C# since it was publicly announced in 2000. I already know and use several other languages, but this is the year to learn one more. This is the year I’m going to start learning and using C# as my primary programming language.
  2. Embrace the Cloud – With cloud based technologies becoming more popular, it is time that I investigate the cloud as possible solution to by projects. In 2015 I promise to put together an intelligent and coherent strategy for using the cloud.
  3. Windows 10 – I am currently evaluating the Windows 10 CTP released by Microsoft in 2014. I think Windows 10 is the best solution for Windows users, since I didn’t like Windows 8 or 8.1. This year I promise to organize and plan the move to Windows 10 for the over 100 corporate users at my company that I support.
  4. Consolidate Databases – I currently support more that 10 instances of SQL Server that can be consolidated into one or two instances. This has a few great benefits, like simpler administration, but also reduced licensing costs. This will be difficult because the instances range from SQL Server 2000 to 2012, and the Windows versions range from Windows Server 2003 to 2008 R2.
  5. Attend User Group Meetings – I attended about 6 user group meetings in 2014. Since I belong to 3 different groups, that is a poor attendance rate. While it can be extremely difficult to attend all 36 meeting in one year (I do have a full time job and a family that wants to spend time with me every day), I promise to support my groups more, and attend more meetings.

What are your technology promises for 2015?

Cloud Computing Requirements

For non-technical people, thinking of data being “cloud-based” might get them thinking data files floating somewhere above our heads in cyberspace, just waiting to be plucked from the air when we need them. Many people fail to realize that even though data is stored virtually off-site, all of those files are actually on a server somewhere. That server might be located across town or across the country or even overseas. While you might not think that it matters exactly where your data is stored (as long as it’s safe from unauthorized access and you can access it when you need it) the physical location of your cloud storage servers is actually very important, for several reasons.



Certain industries, notably health care and finance, are bound by strict security protocols designed to protect personal information. Companies that collect and store protected information must meet certain standards regarding administrative, physical, and technical requirements to ensure that data does not fall into the wrong hands.

The problem is that not all cloud storage and service providers are located within the U.S., and are therefore not bound by the same regulations as domestic providers. Data stored on a server overseas, for example, may not be as physically secure as that stored here in the U.S. As a result, a company that uses a service that relies on overseas data centers could find themselves out of compliance with federal regulations, and face significant fines and sanctions as a result.

For instance, many data centers are located in India, but India does not have a legal framework for cloud computing in place, nor are there any laws regarding data protection. Therefore, if your cloud storage provider stores data on a server in that country, it does not comply with U.S. laws.

For that reason, it is important to not only understand the data protection compliance standards for your industry, but to only work with cloud service providers who also understand and adhere to those rules. You must know exactly where your data is stored at all times, and ensure that it is not moved or stored in a location that doesn’t met the necessary requirements.

Incident Recovery

When a hurricane, like the one that hit the New York metro area in 2012, hits and dozens of data centers are taken offline due to power outages and flooding, many businesses will switch to backup generators, at least for a short time. Many will transfer operations to other locations outside of the storm zone, but hundreds of clients will be left without service. When choosing a cloud provider, knowing where the provider is located will help you prepare for disasters, or at least ask questions about data center emergency preparations.

For example, if your provider relies on a data center located in a tornado-prone area, is the physical structure built to withstand powerful winds? What are the emergency plans when the tondo sirens sound? If your data has to be migrated to a backup facility because the data center is damaged, where is that backup facility physically located? What about earthquakes, volcanoes, a tsunami, etc.?

Latency and Downtime

Technically speaking, the further away your cloud storage facility, the longer the has to travel to get to your desktop. The longer it takes for data to make that round trip is greater the latency. With the highly sophisticated networks used today, latency is usually measured in fractions of seconds. This means it won’t be noticeable to the average user, but in some industries (financial or even gaming industries), extended latency is a significant issue. When you need to react to shifts in the market with split second accuracy (or shoot zombies), even a short delay could result in the loss of thousands of dollars (or a virtual death).

Assuming that you are legally able and willing to store your data in a distant location, keep in mind that significant distances between your business location and your data can lead to longer recovery times should something go awry. If you have to recovery significant amounts of data to an alternate location on the other side of the planet, it can take some significant time to verify the data and resume operations at the alternate site.

Ideally, best practice dictates that you should not only know exactly where your data is stored at all times, but also that it should be stored in multiple locations. That way, should something go wrong — such as a natural disaster — you will not experience any downtime or lost data at all. You don’t want to be left with your head in the clouds, attempting to recover data or worse, engaged in damage control because you weren’t on top of your data storage requirements.


  1. World-class security
  2. Compliance, trust, and transparency
  3. Low Cost
  4. Scalability
  5. High Performance
  6. Business Continuity Options
  7. High Availability

You can read about the Cloud Computing Standards here.