For companies seriously considering the cloud, but who are uncertain of the potential benefits, I've drawn up a short list of why cloud computing might make sense when compared with hosting in a data center or separately building the requisite infrastructure.
Unless you are building toward networks of hundreds (or thousands) of servers, using cloud-based facilities will be cheaper in most cases than purchasing those servers.
The economics skew even more toward cloud computing when factoring in the requisite Internet connectivity, access to co-location facilities, and also the hardware expertise and project-management know-how to put the setup together. On top of that, creating such infrastructure from scratch is fraught with the potential for hidden costs, either in professional fees, permits (e.g. to install a backup generator), or certification (e.g. fire safety).
It's inherently complex to implement the appropriate failover and redundancy systems to achieve the expected availability. The basic infrastructure alone would involve planning, acquiring and installing hardware such as a storage tier; network components like switches, routers and load balancers; appliances for data backup and security, as well as redundant servers.
Another aspect not often brought up would be the challenge of orchestrating the disparate service warranties for the various pieces of hardware. These will in all likelihood differ across different classes of components and vendors, adding yet another layer of complexity to the equation.
One of the key strengths of cloud computing would be its theoretical ability for unlimited scalability. Gone are the days where architecture upgrades have to be planned months ahead of time, and even so, might be delayed due to the unavailability of certain hardware components. Taken to the extreme, it's possible to build websites or services that start off with a negligible amount of cloud resources, but that scale dynamically to more CPU cycles and bandwidth during a spike in the number of visitors - all without any capital investments.
As awareness and acceptance for cloud computing continue to grow, vendor competition can only increase. Cloud vendors are starting to adjust their prices and service offerings to appeal more to SMBs and enterprises alike.
For example, Amazon recently introduced a lower-tiered storage service called the reduced redundancy storage option that comes with lowered service-availability guarantees. Affordability can only increase as competition heats up.
Can you think of more reasons that SMBs should consider cloud computing? Do share about them in the comments section below.