What are the possible benefits of cloud computing?

Organizations should approach the cloud prudently, like the adoption of any new technology: investigate the pros and cons and then proceed only if/when it makes financial sense. That said, there is a lot of confusion about cloud computing. A good rule of thumb is that the best cloud-based applications are those with dramatic usage spikes.

Why? The cloud is perfect when you don’t want to waste a lot of space on your own server with data your organization only occasionally uses. Think of tax-related operations, from private tax preparation companies to government-related services such as business registrations. Most of the year, the applications needed to power these operations lie dormant – until the annual activity blizzard begins!

In these situations, servers go from no or very little use for about nine months of the year to very heavy use for three months of the year. Using the cloud to run seasonal applications and data storage takes the annual burden off a company’s or governmental agency’s in-house data centers. It also allows IT staff to continue focusing on bigger, strategic goals instead of trouble-shooting during the annual data stampede.   The obvious exception to this rule is for small organizations, such as Intertech, which use off-the-shelf software like email (Exchange), CRM (Microsoft CRM), or online collaboration (e.g. Microsoft SharePoint) on an everyday basis. For these organizations, a year-round hosted solution makes a lot of sense versus buying and maintaining a server.

Big, international organizations can benefit from using cloud-based solutions that are hosted in or near the countries where they have operations. For example, if a global firm wants people in Russia to use its application (either employees or customers), the cloud-based solution could be hosted in or near Russia because proximity to the cloud-based server makes the application faster to access and use.  In a similar way, if you have data intensive applications like video, they can be served using a Content Delivery Network (CDN) to improve performance.

One expert believes the cloud represents an ideal solution for organizations whose IT departments are “stretched thin with maintenance activities, leaving precious little bandwidth for development and new initiatives.” MIT’s Andrew McAfee argues that “the cloud offers a way for companies to pursue opportunities nimbly, and, in many cases, cost effectively.” He goes on to suggest that, “many unanticipated cloud benefits arise after a project is launched and employees discover novel ways to use the technology.”

Among these unanticipated benefits catalogued by McAfee: making individuals more productive, facilitating collaboration, mining insights from data, and developing and hosting new applications. His article, “What Every CEO Needs to Know about the Cloud,” in the November issue of Harvard Business Review gives an excellent overview of these benefits, replete with real-world examples of how companies are realizing them today including Netflix, Zynga, eBay and Minnesota’s own 3M.

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