Way back in 2009 cloud computing was seen as more of a staging area for new projects or businesses than a permanent business function. Those who were engaged were mostly part of startup companies. The early targeted markets for cloud computing were small to midmarket firms. Startup cloud computing development was predominantly instructive. Their offerings were cultivated between a rock and a hard place: where they provision too few servers and their company’s customers had bad online experiences and never come back; conversely where they provision too many servers, the company would run out of funding before a profit could be realized.
The Framework for Leveling Playing Fields
History shows that the those surviving startups prototyped cloud computing environments that found the appropriate amount of capacity for a given number of consumers of their website without heavy capital investment and subsequently brought the operation in-house or sold it off to better endowed operations. The value proposition that those ventures presented to small and midsized companies revolved around the flexibility of cloud computing, not cost.
Raw cloud capacity, not including labor or real estate, costs about 30% more than direct ownership. While comparing just those costs is impressive, considering the deduction of the labor and the forgoing of the real estate associated costs of information technology can drive the decision point to the top of an agenda.