Cloud computing is utility computing. No up front commitment required. You buy only what you need, and when you do not need it any more you do not pay for it.

There are three basic cloud computing scenarios: infrastructure scenarios, application delivery scenarios, and scaling scenarios. These scenarios are not independent, one or all of them can come into play.  Each, however, has different technological implications.

The three basic scenarios are: infrastructure, application delivery, or the need to reach internet scale.

Fundamentally, cloud computing is a software delivery platform. Are the economics of working with the cloud cheaper than doing it yourself? Doing it yourself could mean self-hosting, or traditional delivery of desktop software. Self-hosting could be in your own data center, or in a hosting facility.

Not needing to build to your peak capacity drives the infrastructure scenarios. This is not an all or nothing proposition.

Some small and medium sized companies may decide they do not want to run their own data centers. The savings in terms of not having to buy machines and pay employees is enormous. This money could be put to use in building better applications. This might be the entire compute infrastructure, or just running an email server.

Other companies may have an occasional need for massive computation. Say you have to do a stress analysis of a new airplane wing, or a geographical routing of a complicated delivery, decide among alternative new financial models, or even a human genome search. Any of the classic grid computations fall into this category. Your existing infrastructure is just fine, but for these not every day scenarios (they might actually be frequent) it makes sense to rent space in the cloud to do the computations.

A related scenario is cloud-bursting. You can handle your everyday computing demands, but occasionally you get a burst of orders that overwhelms your system. Ticket agencies are a classic example when tickets for a popular event first go on sale. So are stores around the holidays. Here you use the cloud to handle the overflow so that people wanting to order do not get unresponsive web pages, or busy signals on the telephone.

Small divisions in large companies may find the cloud appealing for prototyping, or even developing certain applications. Their central IT may be unresponsive or slow to respond to their needs. It is well within the capacity of a departmental budget to rent space in the cloud.

The next post will explore the other two scenarios, and look at how the various vendor options would meet your needs.