Introduction
Traditional business applications and platforms are expensive and difficult to maintain.
Companies need a whole set of experts to buy the infrastructure, run, maintain and deliver
the IT services. To install an application, a company needs hardware (Networks, Routers,
and Cables) and Software (Windows, Linux etc.,) and needs resources to maintain the
application. All these costs time, money and effort just to have the infrastructure in place in
order to access the information services. Large companies like Amazon, Google and IBM
have built-in capabilities to handle the enormous data centre and application based
computing capacity. But medium and small enterprises are still struggling to find ways to
build economies of scale to optimize on the infrastructure costs. They don’t stand a chance
to win in this competition without “Cloud”. The common questions buzzing around these
days are “Where is the cloud?” “Are we in cloud now”? This report primarily focusses on a
brief discussion about what cloud computing is, what are the growth and investment trends
in this area as well as potential opportunities and risks for venture capitalists in this
industry.
What is cloud Computing and the Current trends
Cloud computing is the future of business today. It is an internet-based computing where
different services such as hardware, storage, servers and applications are delivered to an
organization’s computers through the internet to be paid on “as-needed, pay-per-use”
business model. This service reduces the burden on enterprises to buy and maintain
infrastructure and offers elasticity by letting firms outsource their computing needs and
focus on their customers’ solutions. There are three common cloud services models offered
by service provides – IaaS, PaaS, SaaS. The details of these services are defined in Exhibit
– A. In addition to the cloud services mentioned above there are four types of cloud
deployment offerings – Public Cloud, Private Cloud, community cloud and Hybrid Cloud.
Public Clouds are owned and operated by third party service providers on a low cost
“Pay-as-you-go” model. Customers take advantage of the economies of scale as numerous
customers share the same cloud thereby sharing the costs. Also, as public clouds are
typically larger than private or in-house clouds, customers have an option of on-demand
scalability. Private clouds are built exclusively for an enterprise to address concerns
regarding data privacy, security and control. There can be on-premise private cloud or an
externally hosted private cloud. On-Premise private cloud allows organizations to set up
their own cloud but it costs the company on infrastructure. These are best used for cases
