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Cloud Computing: Benefits - Economic Growth

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Cloud computing provides a strong engine for growth across businesses and regions.

Research indicates that the cloud computing industry segment is substantial and growing. According to recent research by Gartner, cloud services revenue was projected at approximately $68.3 billion in 2010, and the industry is poised for strong growth through 2014, when world-wide cloud services revenue is projected to reach $148.8 billion.

While the growth of the cloud computing industry is strong, even more important is the effect cloud computing will have as an engine for driving growth across other sectors— growth made possible by greater access to advanced computing resources, often at lower prices.

Cloud computing creates efficiencies for individuals and enterprises that no longer have to purchase and maintain their own computing resources, and the great potential for cost savings that go along with this on-demand approach. This efficiency derives from the fundamental nature of cloud computing that builds on the framework of the internet and further breaks down borders. This ability to foster a seamless flow of information and IT resources where technology can be located in accordance with infrastructure and labor efficiencies, rather than being localized and provisioned independently, capitalizes on the economies of scale of network computing like never before.

Cloud computing provides elasticity, enabling customers to leverage the shared underlying capacity of IT resources via a network. Customers can quickly request, receive, and release resources as needed. As a result of this elasticity, customers can avoid the risk of over- provisioning resources to build for capacity demand. Therefore, they can pay for only what they need, when they need it, and resources needed to support mission critical capabilities can be provisioned more rapidly and with minimal overhead and routine provider interaction. Accordingly, “unused” resources can be redeployed to other business imperatives.

In many cases, cloud computing is provided via a convenient rental of computing resources: users pay service charges while using a service but need not pay large up-front acquisition costs to build a computing infrastructure. The reduction of up-front costs reduces the risks for pilot projects and experimental efforts, which supports organizational flexibility.

As a result, cloud computing presents a major innovative opportunity to businesses of all sizes, and across all sectors of the economy. This opportunity is especially critical for the opportunities provided to small and medium-sized entities (SMEs) and underserved regions that lack substantial investment in local IT resources. SMEs can innovate more effectively and grow more quickly. Therefore, cloud computing levels the playing field by enabling start- ups and smaller businesses to compete more effectively with larger companies.

Recent research has indicated that these fundamental characteristics of cloud computing can promote economic growth and competition, and it can help encourage broader economic recovery from a severe downturn like the current one. Today, one of the greatest barriers to growth for SMEs is the massive up-front investment required for IT infrastructure.

Cloud platforms and new data centers are creating a new level of infrastructures that can be exploited by businesses, to the greatest benefit of SMEs, and help to free-up new investment and business opportunities at a time when growth is critical.

Beyond the reduction of the fixed costs of entry and production, other key cloud attributes such as the ability to more rapidly modify and customize software applications to meet the needs of niche business models and the ability to share computing resources by a large pool of users, are combining to create an environment where growth of businesses, particularly SMEs, is enabled to an extent not seen since the introduction of the Internet in the 1990s, and perhaps even greater. Accordingly, it can be expected that the macroeconomic impact is similarly large.

Not only is this benefit significant to businesses, it will also have a transformative effect on governments around the world, especially in regions where access to necessary technological infrastructure is that much harder. Countries that face shortages of IT professionals trained on the latest computing technologies stand to benefit tremendously from cloud computing, provided they have adequate connectivity. With cloud computing and an internet connection, researchers, government employees, and entrepreneurs in any country can access the same quality of software applications.


This is an excerpt from SIIA's Cloud Computing Guide for Policymakers' White PaperDownload the full report for a list of references. For more information on Cloud Computing, check out SIIA's Cloud Computing Resource Page.