Cloud Computing

Cloud computing is, in a sense, “the perfect solution for the economic times,” Thickins says. Access to credit and capital is tight, and many companies’ technology budgets are frozen or in reverse. Cloud computing gives companies a path to expand and experiment without breaking the budget. Amazon, for example, charges 10 cents an hour for use of a virtual server on its Elastic Compute Cloud, or EC2. Buying and installing the same equipment in house would cost thousands of dollars and could take several hours, days, or even weeks to set up.

For a start-up like Flyspy that hadn’t already invested in its own data center equipment, putting an application in Amazon’s cloud instead was a “no-brainer,” Metcalf says. The company was prepared to spend $200,000 on hardware before Metcalf researched Amazon as an alternative. “We went back to the spreadsheets and plugged in all the numbers, and it was a dramatic cost savings,” he says. The company’s monthly bill from Amazon is about what it originally budgeted for maintaining an in-house data center. So the move left the site’s operating costs unchanged and all but eliminated its capital expenditures.

What really opened Metcalf’s eyes to the possibilities of the cloud, though, was the way in which the services allow users to infinitely scale up their resources and immediately scale them down when they are no longer needed. True cloud computing services sell computing power like a metered utility. Customers use what they need and only pay for what they use. Say, for example, a cold snap caused a spike in Flyspy searches for Minneapolis to Florida airfares. Amazon would detect the traffic increase and assign more servers to keep the site from slowing or crashing.

“All of a sudden, we’re not constrained,” Metcalf says. The paradigm shift was so great that the company actually went back to the drawing board with its business plan, which worked on the assumption that the company would be restricted by the hardware in its in-house data center. “We re-engineered [the plan] to be in this very liquid environment that scales up and down on demand,” Metcalf says.

That scalability is part of what keeps Internet Broadcasting’s network of Web sites running smoothly. The St. Paul company operates sites for about 70 television stations around the country. Much of the content is stored in its own data center, but the company uses a cloud provider called Akamai to help offset some of the demand on its equipment, particularly during big, breaking news events, says Andy Morgan, vice president for platform technologies.

When Anna Nicole Smith was found dead in a hotel room in 2007, for example, traffic to the company’s Web sites quadrupled within minutes. Same goes for when Sasha Cohen skated in the 2006 Winter Olympics. A local news Web site that typically got 1 million page views a month received 1 million in a single day when flooding hit the region. For Internet Broadcasting, the cloud means not having to build infrastructure to meet those demand peaks.