Practical Ecommerce

8 Questions on Cloud Computing

Traditional web hosting assumes that customers pay for a fixed amount of storage space and a fixed amount of bandwidth. But the traffic to many websites varies, and storage and bandwidth needs fluctuate over time.

For those websites, cloud computing, or cloud hosting, could save them money, as they would pay only for the actual monthly storage and bandwidth usage, and not for excess, unused capacity.

But what, exactly, is cloud computing? How does it work and how does the model apply to ecommerce merchants?

We asked those questions to Brad Gyger, a cloud computing expert and area manager for Engine Yard, a cloud computing provider and a leading Ruby on Rails application deployment and management firm.

Gyger has held roles with both large technology firms and start-ups, including Sun, Oracle, Symantec and Moonlight, Lumension and now Engine Yard.

1. What is cloud computing?

Brad Gyger

Brad Gyger

“Cloud computing is a new way of delivering computing resources to run websites and web applications. Cloud computing allows customers to take advantage of a self-service, pay-as-you-go utility model that ensures they are only running (and paying for) as much computing capacity as they need. Think home utilities, such as water and electricity.

“Cloud computing allows customers to scale vertically and horizontally, and based on the demands of their users, it ensures there are enough resources at any given time. If a traffic spike occurs, it’s easy to add more capacity. After the traffic trails off, it’s just as easy to reduce capacity. And if additional components are added, you simply adjust capacity as needed.

“Ultimately, a customer’s cloud computing resources can grow, shrink, or morph based on the changing demands of their business. This significantly reduces the costs of running websites and web applications, often eliminating capital expenditures and lowering operating costs.

“One important thing to note about cloud computing is that while it offers obvious cost savings by helping companies offload the task of racking and stacking hardware, it also requires a new set of software development expertise in terms of enabling applications to run in the cloud. This is what Engine Yard and other cloud providers do: We provide a platform-as-a-service that allows applications to leverage cloud computing capacity.”

2. How is it different than “regular” hosting, where a customer pays for a fixed amount of storage and bandwidth for a fixed monthly fee?

“Cloud computing is different from traditional hosting because it doesn’t lock customers into expensive contracts that are based on calculating resources to meet their peak demands. Every month, whether all the resources are utilized or not, a customer will always have to pay for the contracted resources with regular hosting. That monthly cost translates directly into wasted operating expenses.”

3. When was the cloud hosting concept started?

“The concept of the ‘cloud’ comes from network architecture drawings of modern telephone systems and later the Internet. The early cloud service providers included Amazon Web Services, and Google, which uses it for Gmail and several other applications and services.

“Today, cloud computing typically includes three main offerings (in order):

  • SaaS (Software-as-a-Service). Delivers applications and end-user tools, such as ecommerce applications, and other brands like Google Apps and Salesforce.com.
  • PaaS (Platform-as-a-Service). Provides pre-built technology frameworks and development tools, such as Engine Yard AppCloud or xCloud, Microsoft Azure, and Google App Engine.
  • IaaS (Infrastructure-as-a-Service). Enables computing, storage and network resources to be provisioned without owning physical devices. Example IaaS providers are Amazon Web Services and Terremark.”

4. Our audience is smaller ecommerce merchants, mainly. Will cloud hosting help any of them?

“The short answer is it will help all of them.

“Ecommerce is an ideal space for cloud computing because of the cyclical nature of the business. Many online shops, web retailers and vendors have large traffic events (holiday season and new product launches) that require additional resources to meet the short-term, increased demand. Cloud computing enables business owners to add computing resources (memory or processors), storage (disk space) or network (bandwidth), but just enough to cover the additional requirements and only for as long as they’ll be needed.

“For example, an electronics e-tailer might see a traffic increase of 2 to 3 times during November and December from holiday shoppers. Cloud computing allows the company to add just enough resources for those 6 to 8 weeks to meet the increased traffic demands. Once the holidays are over, those resources can be turned off. The company’s operating costs will presumably be more in line with revenue.”

5. Amazon is a major cloud hosting provider via its Amazon Web Services division. What other companies are major cloud hosts?

“In addition to Amazon Web Services, we currently work with Terremark for IaaS services. There are a growing number of IaaS vendors as evidenced by this Wikipedia listing.

6. What distinguishes a cloud host from a “regular” host? Is it the same equipment, but a different billing and monitoring system? Something else?

“Generally, cloud computing includes three elements:

  • Self-service. Customers can access a personalized dashboard, console or command-line interface and modify resources as needed.
  • Metered/Utility model. Services are provided on a ‘pay only for what you use’ basis.
  • Fully virtualized/automated. There is little-to-no hardware or software provisioning required to get an application up and running.

“Typically, traditional hosting has none of these benefits, which significantly drives up costs.”

7. What are the downsides to moving to cloud hosting?

“For readers of Practical eCommerce, there shouldn’t be any downside to moving your application [versus a hosted solution or shopping cart] to the cloud because of the cost savings and benefits you get from not having to rack and stack hardware. In addition, using a platform-as-a-service like Engine Yard offloads additional cost by allowing your developers to forget about building the complex application stack that applications in the cloud require and focus on developing revenue-generating features for your applications.”

8. Anything else on your mind for your readers, who are smaller ecommerce merchants, mostly?

“Of course. For small ecommerce merchants that are building new applications, we’d encourage you to investigate Ruby on Rails if you’re not familiar with it. It’s open source, so it’ll help you control costs, and we’ve heard from developers that they can write code 2 to 5 times faster in Ruby than in Java.

“Additionally, if you’re already invested in Java, there’s open source software called JRuby that allows developers to use Ruby in conjunction with Java, so you can realize productivity gains while leveraging your existing apps. Engine Yard is very active in supporting these open source technologies, and we discuss it on our website.

Practical Ecommerce
Practical Ecommerce
Bio  |  RSS Feed


Get the Practical Ecommerce RSS feed

Comments ( 6 )

  1. mark_wexler July 15, 2010 Reply

    The biggest hurdle to cloud computing for eCommerce is that no current clouds will provide PCI Compliance. Even Amazon’s cloud (on which Amazon.com is hosted) and Rackspace’s cloud (whom sits on the PCI
    Security Standards Council) are not compliant.

    For my seasonal and heavy promotional clients, a cloud solution would be a great fit – but until there is a PCI Compliant cloud offering, it will have to wait.

  2. Michael Vorel July 15, 2010 Reply

    Thank you for the excellent information Brad, seems everyone is moving towards the cloud. However, Mark brings up and interesting point regarding PCI compliance within ecommerce and curious about your thoughts?

    Saw this release on Netdepot.com offering unlimited bandwidth on cloud hosting and wanted to share as it’s even more cost effective than before. http://www.netdepot.com/company/news/netdepot-announces-no-more-overages-on-dedicated-and-cloud-servers.html

  3. mathew July 15, 2010 Reply

    My company has been using cloud technology for eCommerce fro a while, in fact long before the term cloud was really used to describe it.

    A customer asked me to "explain the cloud and how it works", here is a copy of my response, I feel it covers some points that may have been missed in this article.

    Original email response:

    At this point cloud is a very generic term, at its purest definition, it means that the operating layer (which in some cases is the storage or application layer) operates independent of the hardware layer. The base theory is designed so that a virtual component can float between physical hardware, and even span across it, unaware of the underlying hardware, so if some of the hardware goes out the component can float to other hardware nodes within the cloud unaware that any hardware actually failed.

    In smaller configurations (as little as 2 pieces of hardware, as many as thousands) the cloud itself can be in one physical location (usually meaning one datacenter) and in most cases this is true.

    Our configuration is globally diverse and multi-tiered as well as redundant. We also span many clouds and systems, and implement many cloud theories within our architecture. So in our implementation yes, we are everywhere, and no where all at the same time, as well as concurrently operating across many geographic locations and facilities (at a high level view of our overall “System”).

    Of course all these terms are relative to viewpoint and implementation, and the theories are just as vast. So where cloud was originally one specific theory, with a few implementation variants, at this point it can mean just about anything, and a lot of companies are referring to their technology as cloud when it is really nothing more than virtualization with a few high availability enhancements, or even just a simple cluster.

    That’s the best I can fit into an email vs. a 3 day lecture.

  4. bgyger July 20, 2010 Reply

    What’s great about using a Platform as a Service, like Engine Yard, is that you are automatically connected to different infrastructure providers. Engine Yard xCloud runs on Terremark (which offers PCI compliance), and Engine Yard AppCloud runs on Amazon Web Services. Customers can use AppCloud in conjunction with a third party payment processing system such as products from Chargify, Braintree, or authorize.net, and they can rely on those companies to manage all credit card information in their PCI-compliant applications, making it much easier and more cost-effective to achieve compliance.

  5. Swami August 17, 2010 Reply

    I am an entrepreneur considering a eCommerce business selling specialty products. Suppose I use a cloud computing full service vendor (hosting and software app.) what will happen if that vendor goes bust? How do I take all my information and transfer to other cloud computing vendor? Either my concern is valid or I have misunderstood it completely. Can anyone help me with this one?

  6. JohnOkada July 10, 2012 Reply

    Cloud computing is the future. If you are not up-to-date on this, then you better get informed quickly. This article is good for that purpose. Pretty soon most businesses will have to utilize at least some form of cloud storage. You can find the best services at Top10CloudStorage.com. There are some great reviews on the all aspects of cloud service providers.

Email Newsletter Signup

Sign up to receive EcommerceNotes,
our acclaimed email newsletter.

And receive a free copy of our ebook
50 Great Ecommerce Ideas