In-House or in the Cloud?
Recent financial reports by the top technology companies show exactly how important cloud computing has become. Amazon is making the strongest progress with Alphabet, Microsoft and IBM trailing behind. Amazon Web Services (AWS), the cloud-computing business, grew 42 percent in the third quarter with annual revenue of $4.5 billion.
AWS remains the key profit maker for the entire Amazon business, which has always operated on thin retailer type margins. AWS makes up around 10% of the whole of Amazon revenue.
Launched in 2006, AWS was the player that sparked the great industry transformation called ‘cloud computing.’ They realised that the cloud would be valuable to companies who wanted to hold their data and applications off-site and access them through the Internet. This strategy would remove the overhead of owning hardware and software themselves.
It has not been all plain sailing for AWS. Recent reports suggest that some large corporations are placing their business with other providers. They’re doing this for commercial reasons as they see Amazon as a potential competitor in their own core business areas. (See for example https://www.cnbc.com/2017/11/08/kroger-using-google-and-microsoft-clouds-to-avoid-paying-amazon.html).
However, as the use of the cloud has expanded, it has left companies with a decision to make - whether having in-house servers or cloud based infrastructure is the right IT-strategy.
Features in favour of the cloud include:
Low set up costs and no need for expensive capital investment
Scalability – good for companies that are expanding and who might outgrow their physical in-house server capacity
Reduced maintenance and on-site IT costs
The ability for staff to connect from wherever they have an Internet connection
Regular data back-ups
Agreement of Service Level Agreements on uptime levels – with reduced fees if they’re not met.
However, some considerations are:
Security - there have been frequent debates about security issues. For example, how do companies feel when their data is held by a third party, or in the same place as their competitor’s data?
User-experience can be impacted by the speed of the Internet connection
There have been issues reported when companies want to get their data back.
Whilst companies are using cloud services, some have adopted a ‘hybrid’ approach; combining in-house servers with some applications held in the cloud. Perhaps a company wants to keep the email system on premises but use the cloud for archiving. Or they may wish to draw upon specialist services that the cloud provider can provide cheaply, while keeping core work and applications on-site.
Whichever option is taken the final decision often hinges on the financial considerations.
While on premises solutions come with capital investment and maintenance costs, cloud-based offerings can lead to long-term subscription costs.
The decision is often best taken with the advice of a professional service provider who can give guidance.