We are starting to see more and more IT related services being sold under the banner of “cloud computing.”  And it is not just coming from the large service providers like Google, Amazon, Yahoo, although they are certainly a big part of it.  Traditional hosting service providers are also starting to evolve their infrastructure to support this model.  A good part of the motivation to move to Cloud services is its potential to bring significant economic benefits to consumers.  We all know that servers are expensive to purchase and operate, and building and managing even a small size data center is no walk in the park.  For consumers of cloud services the pay-as-you-go model rather than having to own and manage their own infrastructure is attractive.  And the smaller consumer you are the more attractive this probably is.  So it is not surprising that we see individuals and small business as the leading adopters of this model.  Actually, it turns out that the business considerations look different if you are a large enterprise, but perhaps more on that at a later time.

But if you are a service provider what drives the economic model for you and how do you benefit?  Clearly, you need to deliver a differentiated and competitive portfolio of services; but a good part of this is also about how you drive down the cost of owning and operating your data center.  I see a difference between the “true cloud” service providers and the traditional hosting service providers in their approach to data center design and operations.  Efficiencies in data center are the key to driving down data center operating expenses.  And optimization is the path to achieving efficiencies.  There’s a lot of buzz in the press and the blogging world about how large Internet Portal Data Centers are optimizing and driving efficiencies.  Smaller cloud service operators and traditional hosting providers should be watching this to ensure not only their competitiveness, but also to ensure their ability to I’ll be sharing my perspectives on how the traditional hosting providers are evolving in upcoming blogs; in the mean time, I’d love to hear from you on what your data center challenges are and if/how you are going about driving efficiency in your operations.