The advent of cloud has all but eliminated the limitations provided by each of the preceding points. Cloud providers now completely manage the undifferentiated heavy lifting for their customers. They've bought the physical space to house the data centers; deployed network, electric, and cooling systems to support millions of machines; managed security of the physical infrastructure, performed background checks, and segregated duties to ensure that no staff has both physical and logical access to systems; designed and deployed state-of-the-art cooling systems; and have a staff of focused operations engineers to maintain their massive fleets of data centers. For a further discussion on the cloud providers' scale, please refer to Chapter 5, Scalable and Available.
In every one of these points, the CSPs aggregate and reduce costs through economies of scale. A company such as AWS or Azure can spend more time designing more secure systems than other enterprises because they have more resources, money, and commitment for ensuring security. In the case of cooling, CSPs can apply greater engineering know-how to developing greener, more efficient cooling systems than any other enterprise on the market. For example, Google is using seawater to cool its data centers in Finland, which reduces stress on local freshwater sources and local electric generation, and increases efficiency. You can refer to https://www.wired.com/2012/01/google-finland/ to read more about this.
Apart from the tangible benefits of adopting cloud, there are several intangible cost benefits (opportunity costs), which are enumerated as follows:
- Reduced complexity: Adopting the cloud eliminates the undifferentiated heavy lifting to manage your business's IT infrastructure. Lengthy license pricing negotiations are eliminated because the cloud provider has pre-negotiated bulk licensing agreements with vendors. In other cases, the CSP provides a marketplace of third-party software that's available on the platform with rates baked into the cost of the compute resource. Finally, the cloud gives your business the ability to devote the human capital previously concerned with managing that complexity to more business critical tasks. This reduction in complexity saves the business dollars, directly and indirectly.
- Elastic capacity: Adopting the cloud gives the enterprise the unprecedented ability to expand or contract their IT infrastructure on the fly. This elasticity allows businesses to expand on successes and contract quickly after a failed experiment, or to follow seasonal business needs or daily user fluctuations. Enterprises no longer need to forecast demand years in advance and plan accordingly—they can manage and expand their business today, with cloud consumption mirroring their own business trends.
- Increased speed to the market: Enterprises competing for market dominance need agility to be successful. The ability to design, develop, test, and launch products supported by IT projects more quickly is a dominant factor in whether a company succeeds or fails. Adopting cloud native architectures is a key factor in increasing the speed with which a company can iterate product development.
- Global reach: The hyperscale cloud providers have a global network of data centers that are available to all customers. Any size of customer can leverage the global network to expand its products or services globally within minutes. This greatly reduces time to the market and allows companies to reach new markets with ease.
- Increased operational efficiency: Each of the major CSPs provides tools to decrease time spent on basic operational controls and checks, which helps automate many of these functions. Resources (people, capital, and time) are freed up so that they can be spent on building the company's differentiating product. In a similar vein, people within the organization can now spend time solving valuable and difficult problems, leading to higher job satisfaction.
- Enhanced security: The CSPs manage their portion of the shared security model (covered in Chapter 6, Secure and Reliable), which frees up customer resources to focus on their portion of the security model. By providing native security tools on the platform, CSPs amplify and automate security functions on the customer side of the shared responsibility model. These have large effects on how an organization is modeled and operated, enhancing security and freeing up resources to focus on greater application security.
These tangible and intangible cost benefits are enormously beneficial to every single organization with an IT department. This is explained well by the upswing in cloud adoption that started in 2013 by large enterprises. The collective realization dawned on these entities that the cloud has many upsides and almost no downsides to adoption—the sole valid exception being the unrealized return on capital investments made recently in the IT infrastructure (for example, Company X just invested $50 million in a new data center that came online last month). Unless Company X can find a way to relinquish their new data center without recuperating commensurate sunk costs, the math is likely not in favor of cloud adoption until the next refresh cycle (this term is used to describe the time in-between the replacement of computers and associated computer hardware).