Cloud Computing 101

Excerpt taken from the Compuware whitepaper “Performance in the cloud”

Cloud computing provides on-demand, real-time network access to shared resources that can be physically located anywhere across the globe. From an enterprise point of view, it represents a fundamental shift in the way to acquire and implement new services (computing power, storage, software, etc.) to support the business. Instead of internally developed, monolithic systems, or lengthy and costly implementations of customized third-party business solutions, cloud computing provides an agile and flexible environment with shorter solution implementation cycles and much lower initial cost.

The business benefits of cloud computing include lower IT costs—new hardware and software functionality is acquired on a metered-service basis rather than through capital expenditure—and increased business agility—application enhancements to support changing business needs no longer rely on internally developed or customized third-party software. Also, since cloud applications are inherently web- and Internet-based, enterprises can quickly and easily extend new functionality to customers via their web sites.

As an example, consider a common financial application such as mortgage loan preapproval. As a legacy application, the client-based software contains all the business logic necessary to guide the customer service representative (CSR) through the pre-approval process. Several steps may require manual intervention—accessing property tax records, insurance data and credit history—because the information does not exist inside the enterprise and can change very quickly. The net result is either a delay in pre-approval or an inaccurate estimate of closing and servicing costs to the customer, both of which can result in lost business. Provided that the legacy application uses a modern architecture (.NET for instance), it is relatively straightforward to add various web (cloud) services to the application to access the missing information, resulting in faster (and more accurate) decision making.

Existing enterprise applications that have been upgraded with cloud-based services are commonly known as “composite applications.” They offer a “best of both worlds” approach to the business: They protect the significant investment in existing software, but they also provide a rapid, relatively inexpensive way to add functionality to meet changing business needs. Additionally, with a browser-based user interface, the application can be offered to customers as a self-service option through the enterprise’s web site—this can have a significant positive impact on the bottom line, since the site is open for business 24x7. In the case of mortgage pre-approvals, for instance, a number of financial institutions now offer web-based applications which can provide on-the-spot decisions, with a complete, accurate listing of closing and servicing costs. The application saves money because no CSR is involved in the pre-approval process, and boosts business because consumers are less likely to shop around if they receive a fast, accurate pre-approval.

Cloud computing actually provides even greater flexibility—and potential cost savings—by allowing enterprises not only to leverage existing applications in the cloud (Software-as-a-Service); it also allows the enterprise to deploy applications on a service provider’s servers (Platform-as-a-Service), and to leverage the availability of processing, storage, networks and other fundamental computing resources owned by service providers (Infrastructure-as-a-Service).