What is IaaS and How Can It Save You Money

By | Dec 10, 2012

Infrastructure as a Service is one of the key cloud computing developments. If you are still asking, "What is IaaS," you are probably still spending a lot of money maintaining and constantly expanding your data center. Management Information Systems, Customer Relationship Management, resource, and project management software all need increasing processing power and database space. The business environment is risky, and data centers reach limits where expansion means moving to larger facilities at great cost. The promise of IaaS is to make that increased capacity from larger facilities available for a comparatively low monthly fee. You rent the servers and data center infrastructure as a service and let the supplier worry about the expansions and maintenance.

Cost Savings

Network Computing describes IaaS and reviews 12 suppliers. Companies wishing to transition to IaaS place software and applications that they would have run in their own data centers on remote servers. Instead of renting actual machines, they lease the services provided by the owners of the servers. Suppliers charge for usage and for capacity. Many have a minimum capacity unit and then charge for processing time. They may define computing units or other parameters to determine how much you are using their facilities. Pricing often looks similar, but actual costs may be quite different depending on the use profile. As a result, it's a good idea to investigate in detail how the supplier calculates the costs for your particular needs.

Supplier and customer detail their IaaS relationship in a service level agreement. The SLA specifies what services the supplier offers and what reliability and availability he guarantees. In addition to costs, SLAs often limit supplier liability but also contain specific penalties for not meeting guarantees. The SLA is important for determining what applications are appropriate for IaaS, given the anticipated service levels.

For midsize businesses, such services are especially attractive because the savings can be substantial. That's because midsize business data centers are too small to benefit from the economies of scale available to the large IaaS suppliers. Data centers that are the infrastructure component for companies such as IBM, with their SmartCloud solutions, are many times larger than those operated by typical midsize businesses. The costs for server time and processing are correspondingly lower. Add in the advantage of service fees as current expenses rather than data center expansion costs as capital investments and the reasons why many businesses are opting for IaaS solutions become clear.


The security of the major supplier's data center infrastructure is probably superior to that of company-owned smaller centers. The key factor for IaaS is that, once you have established that the supplier's security is acceptable, your IT department can focus its resources on core competencies like software development and integration.


All the major suppliers have good reliability and availability histories, but the largest operate many data centers in geographically diverse locations. This allows them to operate with backup data and capacity at locations which will not all be compromised by single disasters. If this additional reliability is important for your company, such diversity can be a factor in choosing an IaaS supplier.

The key difference between operating your own data center and IaaS is that when problems occur, you can manage your in-house failures and have full information. For external infrastructure failures, the supplier is going to be preoccupied with fixing the problem, and you will not have reliable information about progress and expectations for restoration of service. Many companies keep critical operations on their own data centers, which now have the capacity for these functions due to the migration of noncritical applications to external infrastructure.

IaaS Acceptance

Solving data center expansion issues by leasing external infrastructure is becoming widespread. The cost advantages are compelling but the prospect of reducing the time spent on hardware is even more interesting for many IT departments. In most organizations, IT can contribute more to improved company performance through actions on the software side rather than in hardware. Resources no longer needed to deal with hardware issues can be used more productively. Very few companies will be asking, "What is IaaS" in the future.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. Like us on Facebook. Follow us on Twitter.

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