Cloud Can Boost Innovation for Companies of All Sizes

Ann All
Slide Show

Make the Financial Case for Virtualization and Cloud Computing

Cloud computing has long been seen as a slam-dunk for small companies. As IT Business Edge's Paul Mah wrote in September: "Given the many inherent disadvantages faced by fledgling small businesses or mid-sized businesses, the ability to tap into virtually limitless computational resources without having to commit a single dime of capital expenditure does carry a strong appeal indeed."


In his post, Paul listed what he sees as the two key ways the cloud can help SMBs compete with larger companies: the ability to deploy without buying hardware, which frees the time of scarce IT resources, and on-the-fly scalability.


Barb Darrow struck a similar note in a GigaOm post about a recent presentation by Arista Networks co-founder (and Sun Microsystems veteran) Andy Bechtolsheim, sharing Bechtolsheim's opinion that an inexpensive and flexible computing infrastructure, combined with low-cost, open source software, allows SMBs to amp up their innovation efforts by making experimentation more affordable. She includes this quote from Bechtolsheim: "... That changes the model to allow for experimentation. Unlike ten years ago, when you had to raise tens of millions to get going, now you can do it on your credit card."


Fair enough. But what about large companies? For them cloud computing has been seen as less like a slam-dunk and more like a behind-the-back pass - an interesting move that can contribute to victory but is generally treated like a novelty rather than a standard part of the playbook. It's more popular with audiences and players (users) than with coaches (IT organizations).


Yet there are interesting case studies of large companies using the cloud not for its cost-saving potential but for its flexibility.


In a blog post for Seeking Alpha, Dana Gardner shares excerpts of his discussion with Bob Young, the CTO of Southwest Airlines, a big company that in many ways is run more like a startup. Some 18 months ago, Southwest adopted what Young calls "a Server 2.0 strategy," running VMware software on commodity-based blades. In the first half of 2010, it increased its number of virtual machines from several hundred to several thousand in production (and even more for development and testing, apparently).


Among the benefits Young cites in the interview:

  • Ability to "get the right capacity, with the right applications, at the right time" without adversely impacting user experience
  • Ability to quickly and seamlessly add capacity when needed, such as during fare sales
  • Better utilization of storage, physical and electrical capacity in data centers
  • Ability to deploy custom solutions on standard platforms, which reduces configuration times
  • Increased automation, which reduces errors and speeds deployment times


Young tells Gardner he wants to virtualize as much as possible, to prepare for an environment in which data will reside in both private clouds and public ones. (Though security will have to improve before Southwest will consider using the public cloud for some data, he says. However, the implication seems to be that he thinks it will.)


Southwest's aim, he says, is to "start learning more and start developing those solutions that don't need to be collocated in a data center or in one or two data centers, but can really be pushed wherever it makes sense. That could be from wherever the most efficient data center is from a green technology perspective, use the least electricity and cooling power, to alternate energy, to what makes sense at the time of the year."


Southwest's experience confirms what I wrote in August, in my post on Infosys Technologies introducing cloud-based platforms that address specific business processes, that the cloud's economic advantages will ultimately seem relatively insignificant when compared to its ability to transform how companies do business.

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