What is Cloud Computing? - The Complete Guide

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Cloud computing is a better way to run your business. Instead of running your apps yourself, they run on a shared multi-tenant. When you use any app that runs in the cloud, you just log in, customize it, and start using it. That’s the power of cloud computing.

Businesses are running all kinds of apps in the cloud these days, like CRM, HR, accounting, and custom-built apps. Cloud-based apps can be up and running in a few days, which is unheard of with traditional business software. They cost less, because you don’t need to pay for all the hardware and software, extensive configuration and maintenance of a full technology stack, or facilities to run them. And, it turns out they’re more scalable, more secure, and more reliable than most apps. Plus, upgrades are taken care of for you, so your apps get security and performance enhancements and new features—automatically.

The way you pay for cloud-based apps is also different. Forget about buying servers and software. When your apps run in the cloud, you don’t buy anything. It’s all rolled up into a predictable monthly subscription, so you only pay for what you actually use.

Finally, cloud apps don’t eat up your valuable IT resources, so your CFO will love it. This lets you focus on deploying more apps, new projects, and innovation. The bottom line: Cloud computing is a simple idea, but it can have a huge impact on your business.


The Benefits of Cloud Computing

Costs Less

Cloud computing providers share their complex infrastructure and servers, and consumers only pay for the storage they use, which saves them money.

  • A report by Osterman Research revealed that in 2010, companies spent an average of $6335 on cloud computing, or $23.31 per employee. That figure is expected to rise to $26.63, or $6920.

Users can access their content from anywhere with an internet connection.

  • At the end of 2010, there were an estimated 940 million 3G subscriptions worldwide - meaning almost a billion people could do work on their phones from pretty much anywhere on the planet.
  • Add as a second point: Gartner forecasts that by 2013, there will be 1.6 billion mobile devices, with smartphones leading tablets and laptops as the fastest growing segment. [Source: Gartner Research; Smartphone, Tablet, and PC Forecast, December 2010.]


The scalable systems of the cloud mean services and usage can expand or contract on demand.

  • Amazon.com began offering and selling cloud computing because on the average day, they were only using 10% of their server resources. The other 90% just sat around until there was a spike in service demands.

Software Updates

With cloud computing, you're putting server maintenance in the hands of people who do it professionally, day in, day out, and build their company's reputation off the back of good server maintenance.

  • Though a loss of control is a major concern to some businesses (an InformationWeek survey found 'control' was one of the top three concerns respondents had with cloud computing), most businesses recognise the benefits of having an agile system (65% of respondents said "the ability to quickly meet business demands" was the most important reason for moving to cloud computing).

Who Uses the Cloud and How


SaaS - Software as a service.
This means pretty much any program that you use on the internet.
- Producers - Any online provider, Salesforce.com Google Docs, Facebook
- Consumers - Pretty much everyone who uses the internet

PaaS - Platform as a service.
This describes services that developers use to build custom cloud applications.
- Producers - Force.com, Google App Engine
- Consumers - App and web developers

IaaS - Infrastructure as a service
In this service, companies access either physical or virtual servers on a pay-as-you-go basis. This allows them to pay for only the server space they use. It often overlaps with PaaS, and the distinction between the two is often very difficult to make.
- Producers - Amazons Elastic Compute Cloud (EC2)
- Consumers - Development and IT providers

Jargon Busters


Jargon buster 1 – Virtual Server – Despite popular misconception, this is not an animated restaurant waiter. A virtual server is a physical server running multiple virtual machines or isolated operating systems simultaneously.

Jargon buster 2 – Utility computing – Paying for applications and hardware on a pay-as-you-go basis from a service provider, rather than installing and maintaining them personally. This is just like paying for any other utility, like water or gas.

Jargon buster 3 – Private cloud and public cloud – A private cloud is a service that is built for only one company to use. A public cloud is a more standardised service that hundreds of thousands of companies could use at once – though they can’t access each other’s information. There are also hybrid cloud services that use a bit of both of these.

Jargon buster 4 – Multi-tenancy – Cloud service providers have massive technology stacks with servers that run the same operating system, and with the same database and application server layers. The application metadata and data is broken up into many distinct parts, and individual companies can access their own distinct part, but not anyone else’s. It is much like a hotel or office building, with thousands of rooms. The rooms share the same utilities, electricity, plumbing, lifts, cleaners, staff etc., which makes them cheaper than building your own house, but each room is only accessible by the person or company who rents the space.

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