Different sorts of business offer very similar solutions to digital business needs. Amazon, Google and Microsoft come from very different origins and provide different services for organisations -

Microsoft offer storage, services and office software, Amazon offer storage and business processes and Google offer storage, business software and processes. But why do people take them up rather than manage their own services?

The big issue that gets quotes more than anything else is ‘total cost of ownership (TCO)’ and the digital businesses’ needs to look at capital (one-time) expenses, operating costs and the costs associated with problems. Cloud service providers will argue that, as they provide the platforms, then the costs associated with capital expenses are not there - they divide the capital expense between their many business customers. Secondly, they will argue that they can divide the operating costs between business customers. Finally, they will argue that as owning the platform is their primary business function, they are able to take greater precautions against indirect costs such as downtime - and to spread the cost of that across all their customers.

Cloud service providers are effectively specialist facilities companies and the model is not new - many companies have outsourced aspects of their business to specialists when there is no competitive advantage to maintaining a service themselves.

However, decisions to outsource processes to cloud service providers might not just be about cost but actually about avoiding risk.