Cloud economics

Owning a datacenter is not a core business of typical companies. While it might be tempting for the IT department to own physical servers that they can set up and physically interact with themselves, it probably is not something your Chief Financial Officer (CFO) wants to do. Owning servers not only shows up in the balance sheets as capital expenses, but the costs of the facilities, electricity, insurance, and so on also add up in terms of total operational costs. If you ask any IT manager how much it costs to buy, set up, operate, and dispose of the infrastructure needed to host one application for a year on their own datacenter, they most probably won't know or even dare to guess.

Outsourcing your infrastructure to a hosting provider sounds like a good idea after you realize how expensive it is to operate a datacenter yourself. A multi-customer datacenter is certainly more cost-effective compared to a single-customer datacenter. Adding scale makes it easier...