Dr Werner Vogels: You can walk away at anytime and have the vendor on its toes to give you the best terms.

Cloud computing puts user organisations in control as the platform frees customers from being locked in to IT vendors, said Dr Werner Vogels, Vice President and Chief Technology Officer of Amazon.

Explaining this at the Infocomm Industry Forum 2010 during his presentation on the Economics of the Cloud, Dr Vogels said Chief Information Officers or CIOs had been “held hostage in pricing games in the old world of IT”. For CIOs to enjoy good pricing for business applications such as enterprise resource planning, they would have to lock their organisations to a vendor for a long period of time, such as 10 years.

But the cloud shifts the enterprise landscape, said Dr Vogels. This Internet-based computing platform allows a vendor’s IT infrastructure, software and applications to be shared on demand in a manner akin to plugging into the electricity grid. Providers deliver their IT services to businesses in the form of web-based applications that they access and use through a web browser. As users pay for only what they use, they are not exposed to the high capital costs and burden of maintaining large amounts of infrastructure that go underutilised.

“With this new world of IT, you make no commitment to the vendor. You can walk away at anytime and have the vendor on its toes to give you the best terms,” said Dr Vogels. Therefore, with cloud computing, there is no lock-in on licences, commitments, complexity, hardware and capital, he emphasised.

As business users want to go to market fast, they can look up to the cloud to make their organisations more agile, said Dr Vogels, citing cloud-computing user Netflix, a subscription service that streams movies and TV episodes over the Internet and sends DVDs by mail. Changing demands in the entertainment industry required Netflix to reinvent itself.

While the entertainment company concentrates on its core business, Netflix leverages Amazon Web Services (AWS) to run the infrastructure that enables it to continue improving its members' overall experience. Enabling Netflix to deliver content to members faster and on more devices, AWS stores and transcodes Netflix’s growing movie library for delivery on new platforms, including the Nintendo Wii and the Apple iPad. The scalability of AWS lets Netflix utilise vast numbers of servers to store and transcode shows into new formats quickly, which accelerate time to market in rolling out new services to their customers, and they pay only for the resources used.