How Does the Cloud make me more agile?

How does the cloud make SMEs more agile? Perhaps this question is best answered by understanding the three charts given below –

The first figure shows the status of computing capability of a typical company before it has moved to the cloud. The blue line indicates the changing nature of demand on IT resources.  Sometimes, the demand goes up, sometimes it comes down. There can be diurnal variations as well as seasonal ones. But the overall general trend is an increase as the scale of operations of the company grows.  Now, when the company was set up, let us say that they invested in X amounts of servers and bandwidth, software and personnel. Together this amounts to an IT  capability that is shown by the dotted red line labeled server capacity. Now this capability is critical since it represents (say) web pages or online order processing capability.

As is clearly evident, initially the IT capability was more than what the company needed. But soon as the work expanded, there begin to be situations where the demand exceeds capability and the company begins to lose business and money. This is the situation depicted so starkly in figure 2. Obviously, such a situation cannot be allowed to go on indefinitely. You need a solution that keeps IT resources closely in tune with company requirements without costing an arm and a leg.

What if we add more servers, more software and more people? The red dotted line will shift up but the same situation will eventually recur.  Besides this, on days or nights when the demand is low, you will have a large amount of unused capacity. Once again the company will bleed money. Such situations are a CIO’s nightmare.

How is one to cope up with such a situation and ensure that neither do you lose business due to under capacity nor do you waste money due to un-utilized over capacity.

The cloud provides a solution.

When you hire resources from a cloud based service provider, you can increase server instances when your server loading is increasing beyond a threshold value. This will ensure that you are never turning away customers due to under provisioning. Similarly, when the traffic surge is over, you can release those additional instances back and get back to a reduced load. Obviously you do not end up paying extra.

How does it work in real life?

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