Utility computing – Pay-as-you-go IT

Cloud computing is a prime candidate for over-hyped IT buzzword of the year. But what does it mean and how do you try it?

Amazon Web Services (AWS) is the poster-child of cloud computing, or more specifically, ‘utility’ computing. Unlike Salesforce, which offers a particular application over the internet (so called software-as-a-service), utility computing is just that: computing as an on-demand utility in much the same way as the water system or electricity grid.

Cheaper option

Storage, database and web processing services can be bought as required, giving small businesses the potential computing power of a major multinational without the lavish capital expenditure. It is particularly useful for sectors that experience peaks and troughs in their computing requirements, such as retail, and do not want to maintain idle systems during slower periods.

‘Your ability to quickly adjust provision greatly reduces your time to market,’ says Peter De Santis, general manager of Amazon’s EC2 services. ‘But we are all very bad at predicting demand. You either overprovision, which creates waste, or you underprovision, which leads to disappointing your customers.’

Powering up

AWS was a logical spin-off for the online retail giant. With thousands of idle servers and endless processing time going to waste in its own data centres, AWS allows the company to make an income from its downtime while offering a compelling price point to customers due to the economy of scale of its infrastructure. For instance, a powerful server with extra large storage capacity can be rented for 55p an hour. Buying something similar would involve an outlay of tens of thousands of pounds, not to mention power and other running costs.

The possible uses are endless: the Telegraph Media Group, for instance, runs all its business intelligence on AWS. Although it is still in its infancy, industry analysts predict this model for business computing will become standard practice in the same way that companies no longer create their own power from a generator in the basement.

See also: Third party outsourcing trends among UK businesses – Anand Srinivasan, founder of business app suite company Hubbion, helps explain how third party outsourcing in the UK can help firms’ scale

Nick Britton

Nick Britton

Nick was the Managing Editor for growthbusiness.co.uk when it was owned by Vitesse Media, before moving on to become Head of Investment Group and Editor at What Investment and thence to Head of Intermediary...

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