What is cloud computing? Everything you need to know from public and private cloud to software as a service

An introduction to cloud computing from IaaS and PaaS to hybrid, public and private cloud.

What is cloud computing?

Cloud computing is the delivery of on-demand computing services -- from applications to storage and processing power -- typically over the internet on a pay-as-you-go basis.

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Rather than owning their own computing infrastructure, companies can rent access to anything from applications or servers from a cloud service provider. Providers can benefit from significant economies of scale by providing the same services to a wide range of customers.

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.

Cloud computing underpins a vast number of services, from consumer offerings like Gmail and Netflix to enterprise workloads, providing the arrays of processors needed for artificial intelligence.

Cloud computing is becoming the default option for many services: 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.

Why is it called cloud computing?

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 it is running on, are often largely irrelevant to the user (although this is not always the case in practice). It's with this in mind that the metaphor of the cloud was borrowed from old network schematics, in which the public telephone network (and later the internet) was often represented as a cloud to denote that the underlying technologies were irrelevant.

What is the history of cloud computing?

Cloud computing as a term has been around since the early 2000s, but the concept of computing-as-a-service has been around for much, much longer -- as far back as the 1960s, when computer bureaus would allow companies to rent time on a mainframe, rather than have to buy one themselves.

These 'time-sharing' services were largely overtaken by the rise of the PC, and then the rise of corporate data centers where companies would store vast amounts of data.

But the concept of renting access to computing power has resurfaced a number of times since then -- in the application service providers, utility computing, and grid computing of the late 1990s and early 2000s. This was followed by cloud computing, which really took hold with the emergence of software as a service and hyperscale cloud computing providers such as Amazon Web Services.

How big a deal is the cloud?

Building the infrastructure to support cloud computing now accounts for more than a third of all IT spending worldwide, according to research from IDC. Meanwhile spending on traditional, in-house IT continues to slide as computing workloads continue to move to the cloud, whether that is public cloud services offered by vendors or private clouds built by enterprises themselves.

451 Research predicts that around one-third of enterprise IT spending will be on hosting and cloud services this year "indicating a growing reliance on external sources of infrastructure, application, management and security services". Analyst Gartner predicts that half of global enterprises using the cloud now will have gone all-in on it by 2021.

What is Infrastructure-as-a-Service?

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.

What is Platform-as-a-Service?

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.

What is Software-as-a-Service?

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. 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 percent 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 percent 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.

Cloud computing advantages and benefits

The exact benefits will very 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.

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 disadvantages

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. Also, moving to a SaaS application may 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. And of course, you can only access your applications if you have an internet connection.

Is cloud computing more secure?

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Certainly many companies remain concerned about the security of cloud services, although breaches of security are rare. How secure you consider cloud computing to be will largely depend on how secure your existing systems are. In-house systems managed by a team with many other things to worry about are likely to be more leaky than systems monitored by a cloud provider's engineers dedicated to protecting that infrastructure.

However, concerns do remain about security, especially for companies moving their data between many cloud services, which has leading to growth in cloud security tools, which monitor data moving to and from the cloud and between cloud platforms. These tools can identify fraudulent use of data in the cloud, unauthorised downloads, and malware. There is a financial and performance impact however: these tools can reduce the return on investment of the cloud by five to 10 percent, and impact performance by five to 15 percent.

What is public cloud?

Public cloud is the classic cloud computing model, where users can access a large pool of computing power over the internet (whether that is IaaS, PaaS, or SaaS). One of the significant benefits here is the ability to rapidly scale a service. The cloud computing suppliers have vast amounts of computing power, which they share out between a large number of customers -- the 'multi-tenant' architecture. Their huge scale means they have enough spare capacity that they can easily cope if any particular customer needs more resources, which is why it is often used for less-sensitive applications that demand a varying amount of resources.

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Image: Gartner

What is private cloud?

Private cloud allows organizations to benefit from the some of the advantages of public cloud -- but without the concerns about relinquishing control over data and services, because it is tucked away behind the corporate firewall. Companies can control exactly where their data is being held and can build the infrastructure in a way they want - largely for IaaS or PaaS projects - to give developers access to a pool of computing power that scales on-demand without putting security at risk. However, that additional security comes at a cost, as few companies will have the scale of AWS, Microsoft or Google, which means they will not be able to create the same economies of scale. Still, for companies that require additional security, private cloud may be a useful stepping stone, helping them to understand cloud services or rebuild internal applications for the cloud, before shifting them into the public cloud

What is hybrid cloud?

Hybrid cloud is perhaps where everyone is in reality: a bit of this, a bit of that. Some data in the public cloud, some projects in private cloud, multiple vendors and different levels of cloud usage. According to research by TechRepublic, the main reasons for choosing hybrid cloud include disaster recovery planning and the desire to avoid hardware costs when expanding their existing data center.

Is geography irrelevant when it comes to cloud computing?

Actually it turns out that is where the cloud really does matter. Firstly, there is the issue of latency: if the application is coming from a data center on the other side of the planet, or on the other side of a congested network, then you may find it sluggish compared to a local connection.

Secondly, there is the issue of data sovereignty. Many companies -- particularly in Europe -- have to worry about where their data is being processed and stored. European companies are worried that, for example, if their customer data is being stored in data centers in the US or (owned by US companies) it could be accessed by US law enforcement. As a result the big cloud vendors have been building out a regional data center network so that organizations can keep their data in their own region.

In Germany, Microsoft has gone one step further, offering its Azure cloud services from two data centers, which have been set up to make it much harder for US authorities -- and others -- to demand access to the customer data stored there. The customer data in the data centers is under the control of an independent German company which acts as a "data trustee", and Microsoft cannot access data at the sites without the permission of customers or the data trustee.

Who are the big cloud vendors?

When it comes to IaaS and PaaS there are really only a few giant cloud providers. Leading the way is Amazon Web Services, and then the following pack of Microsoft's Azure, Google, IBM, and Alibaba. While the following pack might be growing fast, their combined revenues are still less than those of AWS, according to data from the Synergy Research Group.

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Synergy Research Group

Analysts 451 Research said that for many companies the strategy will be to use AWS and one other cloud provider, a policy they describe as AWS + 1.

Cloud computing price wars

The cost of some cloud computing services -- particularly virtual machines -- has been falling steadily thanks to continued competition between these big players. There is some evidence that the price cuts may spread to other services like storage and databases, as cloud vendors want to win the big workloads that are moving out of enterprise datacenters and into the cloud. That's likely to be good news for customers and prices could still fall further, as there remains a hefty margin in even the most commodity areas of cloud infrastructure services, like provision of virtual machines.

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