Let’s start with a simple explanation. Cloud computing is the delivery of on-demand computing services — from applications to storage and processing power — typically over the internet and on a pay-as-you-go basis. But that’s just a start.
Delving deeper on how cloud computing actually works. Rather than owning their own computing infrastructure or data centers, companies can rent access to anything from applications to storage from a cloud service provider.
One benefit of using cloud computing services is that firms can avoid the upfront cost and complexity of owning and maintaining their own IT infrastructure, and instead simply pay for what they use, when they use it. In turn, providers of cloud computing services can benefit from significant economies of scale by delivering the same services to a wide range of customers.
Cloud computing services cover a vast range of options now, from the basics of storage, networking, and processing power through to natural language processing and artificial intelligence as well as standard office applications. Pretty much any service that doesn’t require you to be physically close to the computer hardware that you are using can now be delivered via the cloud.
Cloud computing underpins a vast number of services. That includes consumer services like Gmail or the cloud back-up of the photos on your smartphone, though to the services which allow large enterprises to host all their data and run all of their applications in the cloud. Netflix relies on cloud computing services to run its its video streaming service and its other business systems too, and have a number of other organisations.
Cloud computing is becoming the default option for many apps: software vendors are increasingly offering their applications as services over the internet rather than standalone products as they try to switch to a subscription model. However, there is a potential downside to cloud computing, in that it can also introduce new costs and new risks for companies using it.
A fundamental concept behind cloud computing is that the location of the service, and many of the details such as the hardware or operating system on which it is running, are largely irrelevant to the user. It’s with this in mind that the metaphor of the cloud was borrowed from old telecoms network schematics, in which the public telephone network (and later the internet) was often represented as a cloud to denote that the just didn’t matter — it was just a cloud of stuff. This is an over-simplification of course; for many customers location of their services and data remains a key issue.
Cloud computing can be broken down into three cloud computing models. Infrastructure-as-a-Service (IaaS) refers to the fundamental building blocks of computing that can be rented: physical or virtual servers, storage and networking. This is attractive to companies that want to build applications from the very ground up and want to control nearly all the elements themselves, but it does require firms to have the technical skills to be able to orchestrate services at that level. Research by Oracle found that two thirds of IaaS users said using online infrastructure makes it easier to innovate, had cut their time to deploy new applications and services and had significantly cut on-going maintenance costs. However, half said IaaS isn’t secure enough for most critical data.
Platform-as-a-Service (PaaS) is the next layer up — as well as the underlying storage, networking, and virtual servers this will also include the tools and software that developers need to build applications on top of: that could include middleware, database management, operating systems, and development tools.
Software-as-a-Service (SaaS) is the delivery of applications-as-a-service, probably the version of cloud computing that most people are used to on a day-to-day basis. The underlying hardware and operating system is irrelevant to the end user, who will access the service via a web browser or app; it is often bought on a per-seat or per-user basis.
According to researchers IDC SaaS is — and will remain — the dominant cloud computing model in the medium term, accounting for two-thirds of all public cloud spending in 2017, which will only drop slightly to just under 60% in 2021. SaaS spending is made up of applications and system infrastructure software, and IDC said that spending will be dominated by applications purchases, which will make up more than half of all public cloud spending through 2019. Customer relationship management (CRM) applications and enterprise resource management (ERM) applications will account for more than 60% of all cloud applications spending through to 2021. The variety of applications delivered via SaaS is huge, from CRM such as Salesforce through to Microsoft’s Office 365.
The exact benefits will vary according to the type of cloud service being used but, fundamentally, using cloud services means companies not having to buy or maintain their own computing infrastructure.
No more buying servers, updating applications or operating systems, or decommissioning and disposing of hardware or software when it is out of date, as it is all taken care of by the supplier. For commodity applications, such as email, it can make sense to switch to a cloud provider, rather than rely on in-house skills. A company that specializes in running and securing these services is likely to have better skills and more experienced staff than a small business could afford to hire, so cloud services may be able to deliver a more secure and efficient service to end users.
Using cloud services means companies can move faster on projects and test out concepts without lengthy procurement and big upfront costs, because firms only pay for the resources they consume. This concept of business agility is often mentioned by cloud advocates as a key benefit. The ability to spin up new services without the time and effort associated with traditional IT procurement should mean that is easier to get going with new applications faster. And if a new application turns out to be a wildly popular the elastic nature of the cloud means it is easier to scale it up fast.
For a company with an application that has big peaks in usage, for example that is only used at a particular time of the week or year, it may make financial sense to have it hosted in the cloud, rather than have dedicated hardware and software laying idle for much of the time. Moving to a cloud hosted application for services like email or CRM could remove a burden on internal IT staff, and if such applications don’t generate much competitive advantage, there will be little other impact. Moving to a services model also moves spending from capex to opex, which may be useful for some companies.
Cloud computing is not necessarily cheaper than other forms of computing, just as renting is not always cheaper than buying in the long term. If an application has a regular and predictable requirement for computing services it may be more economical to provide that service in-house.
Some companies may be reluctant to host sensitive data in a service that is also used by rivals. Moving to a SaaS application may also mean you are using the same applications as a rival, which may make it hard to create any competitive advantage if that application is core to your business.
While it may be easy to start using a new cloud application, migrating existing data or apps to the cloud may be much more complicated and expensive. And it seems there is now something of a shortage in cloud skills with staff with DevOps and multi-cloud monitoring and management knowledge in particularly short supply.
In one recent report a significant proportion of experienced cloud users said that they thought upfront migration costs ultimately outweigh the long-term savings created by IaaS.
And of course, you can only access your applications if you have an internet connection.
The future of cloud computing is likely to include exponential advances in processing capability, fueled by quantum computing and artificial intelligence, as well as expansion of cloud adoption. Large and small businesses are likely to create more hybrids of public and private clouds. More enterprises will embrace multicloud strategies to combine services from different providers. Low-code and no-code platforms will continue to democratize technology and empower citizen developers to create apps that solve their own problems, without having to hire programmers.
Expect more wearable technology and internet-connected devices — from fitness trackers, thermostats, and security systems to refrigerators, pet dishes, and washing machines. There will likely be more integration into increased modes of transportation — with self-driving cars and smarter elevators, subways, and aviation. Businesses are already experimenting with using 3D printing to deliver goods on demand.
One thing is for sure: The tech industry will continue to expand its adoption of cloud computing, to the benefit of businesses and consumers alike or so we hope.
Check out my related post: What is the internet?