Steve Evans, senior vice president of information systems at PGA Tour, knew there was gold to be had in a new scoring application his developers had built. But he also knew the capacity demands to support the application would be too great for his team to handle. Before tossing his revenue-generating idea aside, Evans found the CPU strength he needed in an on-demand computing service.
"We had built this state-of-the-art scoring system where we capture every shot that's hit on the PGA Tour, and we thought it would be cool to share that with people over the Internet. We were excited about the application, but the group I lead doesn't manage many public-facing servers," says Evans, senior vice president of information systems at the company.
The company would have needed a significant personnel and capacity boost for its data center, including servers, storage, power and heating and cooling, to handle the eventual spikes in usage during each tournament -- a cost that would have negated any potential revenue.
"Our biggest spike since launching the application has been over 100,000 people accessing it simultaneously. Normally, we only have tens of thousands of users. There is no way we could have done the project if we couldn't outsource it," Evans says.
To gain the added computing cycles he required, Evans took advantage of a new trend in data center outsourcing -- capacity on demand. Aimed at small to midsize companies, providers such as IBM Global Services, Sun Microsystems and Amazon.com are offering users CPUs on an as-needed basis.
A good fit for start-ups
Andreas Antonopoulos, senior partner at Nemertes Research, says on-demand CPU services are a boon to start-ups. "This approach makes a lot of sense. Companies usually die in their first period because they can't handle scaling. Now, with this option, they can prove the viability of an idea without a lot of risk," he says.
Start-ups often get bogged down in the costs of setting up a data center infrastructure large enough to handle the needs of their applications. "Start-ups aren't good at managing infrastructure. This allows them to focus on their core competencies," he says.
Rakesh Kumar, a Gartner analyst, says that start-ups are not the only potential beneficiaries. Instead, established companies that have outgrown their own data centers could be candidates for on-demand services. "They might be on the brink of expanding but not have the budget to procure new equipment or new space," he says.
Companies in transition to new data center sites could also benefit from the short-term pricing. "They can switch their operations to the service provider for a certain period of time and not take a loss during their move," he says.
"Basically, anyone who has a substantial need for technology but doesn't want to or can't invest in the personnel, equipment and facilities could use these new services," he says.
Adam Selipsky, vice president of product management at Amazon.com, says his company hopes to alleviate the pressures on companies trying to vet and launch new services. "How they architect storage is not what start-ups talk about to their customers," he says. "This will free up a whole slice of their lives to figure out what business they want to build and how they're going to find and retain customers."
Amazon.com is in the beta stages of deploying a pay-as-you-go service it calls the Elastic Compute Cloud, or EC2. (At press time, the company had not set a date for wide release.) The goal is to offer customers a portion of Amazon's infrastructure. "We've spent 11 years to create one of the largest Web-scale applications. Think about all the infrastructure-level things we've had to do to get where we are. Now anyone can look and feel like they have the scale of Amazon with a very reliable, highly scalable and flexible architecture," he says.