What is cloud computing? A beginner’s guide

To provide quicker innovation, adaptable resources, and scale economies, cloud computing delivers computing services over the Internet “the cloud”, such as servers, storage, databases, networking, software, analytics, and intelligence. Spending on the cloud is expanding in scope. According to technology analyst IDC, cloud infrastructure spending will have increased by 8.3% from 2020 to $71.8 billion in 2021, while non-cloud infrastructure is predicted to have grown just 1.9% to $58.4 billion. Over the 2020–2025 period, the analyst anticipates that computing and storage cloud infrastructure spending will grow at a compound annual growth rate of 12.4%, reaching $118.8 billion in 2025 and making up 67.0% of all expenditures on computing and storage infrastructure. Contrastingly, spending on non-cloud infrastructure will remain broadly stable and reach $58.6 billion in 2025.

Why is it called cloud computing?

The location of the service and many other details, like the hardware or operating system on which it is running, are fundamental ideas in it. Still, they are largely irrelevant to the user. The public telephone network (and later the Internet) were frequently depicted as clouds in old telecoms network schematics to indicate that the location didn’t matter – it was just a cloud of things. With this in mind, the cloud metaphor was borrowed from these schematics. Of course, this oversimplifies the situation; for many customers, the location of their services and data is a significant concern.

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History of cloud computing?

Still, “computing as a service” dates back to the 1960s when computer bureaus allowed businesses to rent time on mainframes rather than purchasing one themselves. These “time-sharing” services were primarily replaced by the personal computer (PC) development, which made owning a computer much more accessible. It was followed by the emergence of corporate data centers, which allowed businesses to store enormous amounts of data. However, renting access to computing power has repeatedly come up in the applications service providers, utility computing, and computation of the late 1990s and early 2000s. It was followed by the emergence of a software-as-a-service model and hyper-scale cloud-computing providers like Amazon Web Services, after which cloud computing took off.

How does cloud computing work?

Companies can access anything from applications to storage from such a cloud service provider, renting access to them instead of owning their computing infrastructure or data centers. Utilizing its services allows businesses to avoid the upfront costs and complexity of purchasing and maintaining their own IT infrastructure to pay only for the services they use. Cloud computing service providers can gain significant economies of scale by offering the same benefits to many customers.

What are the examples of cloud computing?

Cloud computing is the foundation of a wide variety of services. It ranges from services that let big businesses host their data and run all their applications in the cloud to consumer services like Gmail or the cloud backup of the photos on your smartphone. For instance, Netflix uses cloud computing technology to power its video streaming platform and other internal business systems.

As software vendors transition to a subscription model, they increasingly offer their applications as services over the Internet rather than standalone products, making cloud computing the default choice for many apps. However, there may be drawbacks to cloud computing, as it can also result in new expenses and dangers for businesses that use it.

How important is the cloud?

Indeed, it’s becoming increasingly apparent that like it or not, the cloud has prevailed in enterprise computing platforms. According to tech analyst Gartner, by 2025, up from 41% in 2022, up to 50% of spending in the application software, infrastructure software, business process services, and system infrastructure markets will have moved to the cloud. It predicts that by 2022, cloud computing will account for nearly two-thirds of application software spending, up from 57.7% in the previous year.

This transition picked up steam in 2020 and 2021 as companies sped up their plans for digital transformation in response to the pandemic. The lockdown throughout the pandemic taught businesses how crucial it was to allow staff access to computing infrastructure, applications, and data from any location, not just an office. According to Gartner, the continued transition to the cloud will be driven by demand for integration capabilities, agile work processes, and composable architecture. Even though the specifics vary slightly, all cloud computing spending estimates point in the same direction. 

What is multi-cloud computing?

While the major cloud vendors would be more than happy to meet all of the computing requirements of their enterprise clients, more and more companies are seeking to distribute the workload among several suppliers. The rise of multi-cloud is the result of everything. This strategy includes both avoiding vendor lock-in (which can result in the high costs and rigidity that the cloud is frequently claimed to avoid) and finding the best combination of technologies available in the market.

Therefore, connecting and integrating cloud services from various vendors will become a new and more difficult challenge for businesses. Customers will also want to manage all their cloud infrastructure from a single location, make it simple to develop and move applications and services, and ensure that security tools can function across multiple clouds, none of which are straight forward.

What are the benefits of cloud computing?

The clear advantages will depend on the type of cloud computing service utilized, but using cloud computing services essentially frees businesses from having to purchase or maintain their computing infrastructure. There is no need to buy servers, maintain operating systems or applications, decommission outdated hardware or software, or dispose of it because the supplier will handle all of these tasks for you. It may make more sense to use a cloud provider for typical applications like email than to rely on internal resources. 

Cloud services may provide end users with a more secure and effective service because a company specializing in managing and trying to secure such services is likely to have more skills and experienced staff than a small business could afford to hire. Because businesses only pay for their resources, cloud computing services enable them to move projects along faster and test ideas without time-consuming procurement processes and high up-front costs. Cloud advocates frequently point to this idea of business agility as a significant benefit. 

Launching new services quickly and easily without the time and effort required for traditional IT procurement should make it simpler to launch new applications. Additionally, the elastic nature of the cloud makes it simpler to scale up a new application quickly if it is trendy. It might be more cost-effective to host an application in the cloud rather than having dedicated hardware and software that is inactive for a large portion of the year for a business with an application that experiences prominent peaks in usage, such as one that is only used during a specific time of the week or year.

Advantages and Disadvantages of cloud computing 

Just as renting is not always more cost-effective than buying over the long run, cloud computing is less expensive than other types of computing. It might be more cost-effective to provide computing services internally if an application has a consistent and predictable need for them.

Some businesses might be hesitant to host private information in a service used by competitors. If you switch to a SaaS application, you might use the same programs as a competitor, making it difficult to gain a competitive edge if the programme is essential to your company’s operations. While using a new cloud application may be simple, moving existing data or apps to the cloud may be much more complex and expensive. Additionally, there is currently a skills gap in the cloud, with a particular shortage of personnel with DevOps and multi-cloud monitoring and management expertise.

According to one study, some seasoned cloud users believed that IaaS’s long-term cost savings outweighed up-front migration costs. Of course, having an internet connection is a requirement if you want to access your applications.

What is cloud-computing technology adoption doing to IT budgets?

As businesses purchase computing as a service rather than physical servers, cloud computing tends to shift spending from CAPEX to OPEX. Companies can avoid the significant IT spending increases typically associated with new projects by using the cloud to free up funds rather than approaching the CFO for additional funding.

Keeping applications in-house may be less expensive (from a processing power perspective) for applications with a predictable and stable computing power demand than in the cloud. Of course, this does not imply that it is always or necessarily less expensive than doing so. Spending on cloud computing is expanding even more quickly than anticipated.

Conclusion 

Regarding enterprise technology spending, cloud computing is likely to surpass more established methods of delivering applications and services internally that have been used for decades. However, as businesses become more at ease with the concept of having their data somewhere other than a server in the basement, the use of the cloud is only likely to increase. And now, rather than just concentrating on price, cloud computing vendors are increasingly promoting cloud computing as an agent of digital transformation. By assisting in dismantling organizational silos surrounding data, the argument goes that moving to the cloud can aid businesses in rethinking business processes and accelerating business change.