How “IaaS” is paving the way for increasing digital economy?

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What is IaaS?

Infrastructure as a Service (or IaaS) in cloud computing is the entry level or the base case of the cloud service model. IaaS provides computing infrastructure, including servers, storage, network, and operating systems as an on-demand service. In IaaS, off-site server, hardware and network are provided. The client has to take care of installation or development of its own operating systems, software, and applications. IaaS is meant to cater to the hardware requirements of the clients. In 2006, Amazon (AMZN) rented its vast data centers to companies so they weren’t required to build their own infrastructure. Amazon pioneered IaaS with its Amazon EC2. In March, 2014, Google (GOOG) announced price cuts on its rent storage and computing power solutions that was followed by Microsoft. Amazon web services have also slashed its prices multiple times since its inception. According to Synergy Research Group, in 2013, the computing segment’s share in IaaS total revenues was the largest at ~50% followed by networking and storage, each contributing ~20% to the total IaaS revenues. The remaining revenue came from cloud management and security. IaaS 1

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The previous chart shows the IaaS market share held by various players. Amazon (AMZN) leads the IaaS market followed by Microsoft (MSFT), Google (GOOG), and IBM (IBM). Xerox Corp. (XRX) and Oracle also have presence in this market. According to IDC, IaaS alone comprised the cloud infrastructure product group that formed 14% of the overall cloud services in 2013.

When is IaaS preferred?

For startups, small and medium enterprises, funds to invest in hardware are limited. That makes IaaS particularly suited to their needs. Also, organizations sometimes have temporary infrastructural needs or try to limit its capital expenditure and make the shift to operating expenditure. In those cases, IaaS seems to provide a swift and cost efficient solution. Organizations using Iaas are looking more to applications for value, rather than infrastructure.

Reduced capex and opex

Under IaaS, the service provider owns the equipment and is responsible for housing, running, and maintaining it, with the client typically paying on a per-use basis. As a result, capital expenditures as well as operating costs are significantly reduced.

Optimized workflow

Cloud infrastructure provides a strong computing platform for the organizations that is capable of supporting workflow on a day-to-day basis. Consequently, enhanced workflow improves the delivery speed and general productivity.

Network efficiency

An organization’s adoption of IaaS will lead to bandwidth expansion and improved data transfer. Networks will experience less stress during peak demand leading to increased network efficiency. Iaas adoption is growing as it provides on demand infrastructure where clients and organizations can build and deploy applications. The goal of IaaS is to provide a flexible, standard, and virtual operating environment that becomes a foundation for Paas and SaaS.

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