Cloud Computing in 5 minutes

When it comes to the cloud sometimes navigating the many terms, jargon and advertisements can be confusing. This cheat-sheet summarizes some of the key concerns when it comes to cloud.

Cloud is commonly used to refer to the outsourcing of software and IT as a service or utility.

Within the context of infrastructure this can mean outsourcing the management network, storage, physical servers or to even applications to a 3rd party.

Most business decisions are informed and take an economic view. Any given solution to an IT problem can be seen in the context of “required initial investment” (CAPEX — capital expenditure) and “operational costs” (OPEX operational expenditure).

The first approach of an on-premise solution is initially high CAPEX followed by low OPEX. Cloud based solutions, relative to on-premise solutions offer zero CAPEX with a low initial OPEX. However as demand scales so do the costs in a linear fashion.

Given static goals such as fixed demand over time, in most cases, the high CAPEX approach always yields a better investments.

Given variable demand, in most cases, a high OPEX approach allows for Just-In-Time infrastructure costs to be tightly aligned with usage demand.

SLAs such as availability and mean-time to recovery also influence decision making. The costs of DDoS protection for example range wildly between CAPEX and OPEX based solutions.

Finally economies of scale mean that cloud providers can always offer lower initial OPEX based solutions. However once scale reaches a certain point CAPEX based solutions begin to reduce costs for a company.

Given static demand over time, in most cases, not using the cloud always yields a better investment. Given a large amount of storage or compute resources the OPEX costs of the cloud may out grow in comparison an initial CAPEX approach. Some companies are simply too big for the cloud.

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