Why firms invest in cloud computing
“The challenge for any institution is the time to market challenge. Three years ago, it would take six months to approve the installation of a new server. Today, a virtualized server can be created in two hours with a click of a button without the need for any further manual intervention”
Barclays Capital, David King
We conducted in-depth interviews with multi-national firms in a diverse group of sectors: financial services, insurance, pharmaceuticals, technology and telecommunications. The firms interviewed had adopted cloud services to varying extents for at least two years.
Advantages of adopting a cloud model
Why do firms choose to adopt cloud computing and what benefits have they seen? Our detailed case studies revealed a range of factors encouraging adoption of the cloud. Among the findings:
• Time to market. Firms looking to develop and provide new services to their customers can do this far more effectively though a cloud computing model. Prior to adopting a cloud
based model, firms indicated it could take two to three months to get new server capacity installed, but a cloud based model enables the creation of a new server instance in minutes.
• Cost savings. Many of the interviewed firms reported cost savings as a primary motivator. Anticipated cost reductions were as high as 40%-50% when implementing an internal private cloud (as opposed to dedicated IT). These savings would come from better use of hardware as well as a reduced support team.
• Capex to opex. Firms or departments can avoid costly up-front capital investments in infrastructure and can fund the purchased service through operational expenditure.
• Flexibility. Many firms run with a large amount of excess computing capacity for much of the time to enable them to handle the spikes in activity which can occur. Firms found
Case study: Boeing Information Technology
“Boeing sees cloud computing as an opportunity to transform its business and processes while improving customer and supply chain satisfaction. Boeing is implementing a hybrid deployment model of both private and secure public cloud services in an enterprise wide strategy which optimizes the business growth from these investments.
Boeing started out on its cloud transition in 2008 and saw immediate benefits from server virtualization in helping to drive energy efficiency and today, Boeing has over 8,000 virtualized servers. However, the most significant impact of the move towards a cloud based model has been the improvement in process efficiency. Previously, it could take up to three months to provision and install a new server in the data
center. With the development of a private cloud for the firm’s infrastructure, servers will be provisioned within minutes.
Boeing sees opportunities to move some of its IT estate to the public cloud but the majority of the cloud services are private internal clouds. Boeing classifies all of its data and for the lower sensitivity data, a public cloud service may be applicable. However, a significant portion of the data which Boeing deals with is classified as highly sensitive and public cloud providers today are generally not willing to take on the levels of liability necessary to prompt Boeing to utilize their services.”
Jim Rubert, Enterprise Technical Architect, Boeing Information Technology
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