What is Cloud Computing?
Cloud computing is an on-demand utility service. It enables us to use a network of remote servers hosted on the Internet so as to store, manage, and process data. This allows us to only pay for the resources we use (i.e. pay-per-use) as and when required (i.e. on demand). Thus we can access these services at no up-front cost! AWS (i.e. Amazon Web Services) is the industry leader which provides a cloud based platform.
Amazon Web Services (AWS)
In 2006, Amazon stepped into the cloud computing business along with Amazon Web Services (AWS). Today it has dozens of services for computation, storage, networking, database, analytics, application services, mobile, developer tools, and IoT tools (i.e. Internet of Things). In 2015, Gartner estimated that AWS customers are using 10x more infrastructure on AWS than that of the combined adoption of the next 14 providers.
Why is AWS popular?
To explain how pay-per-use helps users, we take the help of an example wherein we compare the infrastructure cost incurred to the time taken by an organization ‘A’ in two cases.
Case I- A relies on traditional hardware
Suppose A has predicted the demand as shown by the dashed line in the graph. When using traditional hardware to meet this forecasted demand, A has to spend a lot of money from time to time to acquire new resources. This cost is depicted by the blue line in the graph. Whereas the red curve represents the actual demand.
Consider the first part of the graph i.e. where the actual demand curve is below that of the predicted demand. As one can see, a lot of money is wasted as some of the acquired resources are not being used. This refers to the opportunity cost incurred by A. (So, had it not been for these resources, the firm could have have invested the same money elsewhere and got returns.)
In the second part of the graph the actual demand curve is higher than that of the predicted demand. Here, the firm lacks infrastructure and the time to acquire the requisite resources would be very long. Thus this results in lost opportunity for A as it is unable to serve its users.
Conclusion- A is at a loss!
Case II- A uses a cloud based platform
The gap between the actual demand and the one with automated virtualization is negligible. This is because here A has the flexibility to scale their resources as per the actual demand. Additionally, by using the cloud, A is spared of buying and maintaining the resources and have to only pay for the resources it uses.
Conclusion- A has nothing to lose!
AWS is known to be very scalable i.e. it allows firms to increase the no. of instances/server machines very quickly to adapt to their requirements.
Did you know? In 2008, Animoto created an application that allowed its users to create customized videos from pictures, video clips and music. To run this application they initially started using 50 EC2 instances/machines of AWS. They launched this application on Facebook where it went viral within 3 days. (They moved onto using 5000 instances from 50 instances!)
AWS allows its users to create instances on-demand and after they are done analyzing and computing the data they can just as easily shutdown those instances.
One of the many hedge fund companies that use AWS for risk analysis uses 300 instances during the trading hours for continuous processing. At the end of the day they increase the no. of instances upto 3000 instances for end of day processing and risk evaluation. Once they are done with the calculations they go back to using 300 instances. This process is repeated every day as shown in the curve.
4. Room for innovation
As per Amazon’s survey about 70% of a company’s resources go into establishing basic infrastructure and managing it. Thus it is able to focus only 30% of its resources into evolving their business.
But with AWS the tables have turned. Amazon found that the companies using AWS are spending only 30% of their resources into managing the cloud resources. Now they are able to spend 70% of their resources in product building and innovating.
Companies using AWS
Click here to know how these companies are using AWS to further their success!
Today various organizations are adopting Cloud Computing for better productivity. So if you want to harness great technologies with minimal investment then Cloud Computing is surely the way to go. . Its dozens of services has made it a popular business solution today.