Cloud computing: special report

Cloud computing could be as important, and as game changing, as the first PCs. So how should businesses use the cloud, how should they prepare for it, and who are the vendors to watch? By Stephen Pritchard.

"If I didn't have the cloud, half of my infrastructure spending would have to come from capex, and I have to fight that much harder for funds for capital spending."

Advanced Innovations now runs all but two of its servers in the cloud, via Amazon's EC2 service, and runs a number of demanding Oracle applications, as well as service such as Microsoft Active Directory, on those servers.

But, along with other businesses using cloud computing, the switch from opex to capex is not the only advantage. According to Higgins, there is a significant further benefit of being able to add, or remove, IT resources quickly for specific projects or to meet peaks in demands. Testing an update to the company's Oracle infrastructure, for example, costs Advanced Innovations under 10 for 10 hours' server time. "Once we are happy with the upgrade, we simply shut the test server down," he says.

The move to consumption-based or on-demand computing has been trailed for several years, but cloud computing is now bringing it to businesses in a form they can use.

Whilst early efforts around on-demand were focused on large-scale contracts and compute-heavy applications, cloud computing allows companies to buy storage by the gigabyte or processing by the hour using a credit card and a web browser, or rent software from Microsoft Office or Salesforce.com to Google Apps either per person per month, or per year.

As the cost of the servers, bandwidth, software and even power are wrapped up in the service fees, companies do not have to pay up front for IT hardware or facilities they might not need.

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