Why the adoption of Resources as a Service (RaaS) is accelerating among startups

Startups are new business enterprises trying to find their wings. At the outset, they may not be well funded enough to have proper IT infrastructure. Since they start operations on a small scale, setting up a separate IT function with dedicated hardware/software and human resources can be prohibitively expensive. This is where the pay-as-you-go model of cloud computing becomes relevant.

This model sells individual resources like CPU, memory and Input/Output Resources for a few seconds at a time so that providers and clients can optimize their resources- the provider by selling idle resources and the clients by making full utilization of these resources at best rates .

The cloud computing market which topped $241 billion in 2020 is expected to hit $480.04 billion in 2022 and a whopping $1712.44 billion by 2029. So, you can imagine the scale of growth that is expected in the near future.

Given the pace at which demand for these resources is rising among startups, providers will reinvent how they design, operate and sell cloud computing resources while clients will also figure out how to use these resources optimally instead of blocking capital by buying them outright. Resource providers are packaging bundles of resources and selling them as virtual machines billing them for a few seconds at a time.

Essentially the period of lease has reduced drastically – from hours and minutes, the billing has reduced to a few seconds at a time. Moreover, resources are now available on lease at a granular level and you can lease them based on your exact requirement. Well-defined service level agreements ensure that clients get the best value for their money

Let us look at how the duration of rent has crashed drastically over the last couple of years after the advent of cloud computing. Before cloud computing became the rage it has become, a server had a life of around 3 years. When web-hosting services were launched, servers became available on monthly rentals. On-Demand Amazon Elastic Compute Cloud allows you to pay by the hour or second to ensure minimal wastage. The prices are dynamic and change every 5 minutes depending on the availability. The price is entirely a function of demand and supply and if clients are smart, they can get themselves good bargains. Just as cell phones are charged by the second, cloud computing resources can also be billed by the second. Some companies allow clients the flexibility to customize their own bundles by combining CPUs, Memory and I/O devices.

Customers will have the flexibility to mix and match resources so that the bundle is dynamic depending on their needs. Similarly, providers will also need to adjust their prices depending on the demand-supply situation and the competitors. In times of rising demand, the sellers will have the flexibility to choose clients who pay higher prices over those paying lower prices.

Customers will seek to optimize costs by paying for resources based on their actual usage. They will use more efficient methods to negotiate resources and prices to get the best deals. They will have to buy a basic combination of resources at the outset to get a set of dedicated resources after which all additions will need to be rented or sublet based on prices driven by demand and supply.

Providers will try to ensure that they sell their resources at the best possible prices they can negotiate while customers will aim to get the best value for their money. They may even pick more resources when the prices are low and sublet them to others. This is a highly dynamic model that works in real time.

Resources as a Service will be a game changer as it will change the way startups approach IT resources. This will provide them with the flexibility they need to manage their system requirements at optimal costs without the need to create an independent IT function. This could help them to use their funds more effectively and accelerate their growth.

Companies that are in the business of providing RaaS are focused on providing an accelerated growth platform to small and growing business enterprises that prefer the pay-as-you-go model for cloud computing resources. This trend is set to revolutionize the way businesses imagine resources and could dynamically change the business landscape in the future. As they stand, we are set up for exciting times ahead as the optimum utilization of resources at market-driven real-time prices will democratize the entire sector.



Views expressed above are the author’s own.