Cloud computing and cloud-based services are a cornerstone of modern business IT infrastructure. At this point, it’s probably harder to find an organization that isn’t using some form of cloud technology than it is to find one that still has zero reliance on cloud computing services.
Online services such Google Docs and Microsoft Teams are just two examples of apps businesses use that store data in the cloud. Companies like Amazon provide massive cloud computing resources for businesses of all sizes and industries.
What is cloud computing? How does it work? What are the benefits and risks of cloud computing for a business?
How Cloud Computing Works
Cloud computing is the term for remote IT assets hosted in remote servers in some location not owned by the business. Cloud computing services can provide data storage, management, and processing services over an internet connection.
In most cases, a cloud service provider (CSP) will sell resources from a virtualized server to a company to host data, enterprise applications, remote platforms, or other items “as-a-service.” Other cloud services might offer private servers to customers with extremely high security requirements or processing needs.
What’s a Virtualized Cloud Server?
CSPs often use enormously powerful servers to process their customer’s needs. In many cases, a single server is far more powerful and capable than any one user or business need. So, to make more efficient use of their servers, cloud service providers use virtualization software to divide the server into separate “containers” that each have a portion of the server’s overall processing and storage power.
This allows cloud service providers to sell “space” on a single server to multiple customers—helping to reduce costs for all users on that server by splitting them up. Each container acts like a separate server. Users are prevented from seeing other user’s containers, even though all the data is stored and processed on the same device.
Virtualized servers are different from private cloud servers, where all of the server’s resources are dedicated to a single client.
Think of it like the difference between an apartment building with dozens of renters vs a mansion owned by a single family. Both buildings are big and can hold a lot of people. But, only one family is allowed in the mansion, while every renter can enter the apartment building (even though they can’t enter each other’s apartments).
Examples of cloud services include:
- Disaster Recovery as a Service (DRaaS). A specialized service that helps companies restore normal function after a major data loss event. This often involves storing data backups on a remote server and having a secondary “production environment” ready to go in case the company’s primary data center goes offline. Useful for minimizing disruptions caused by natural disasters, ransomware attacks, and other events.
- Software as a Service (SaaS). A service that provides access to a specific software hosted by the CSP. Often used to get inexpensive access to solutions that answer a specific business need. The CSP is usually responsible for upkeep of the software.
- Platform as a Service (PaaS). A service that gives users access to hardware and software tools that they can use to build their own solutions. Mainly useful for when organizations need a custom solution when there are no existing tools, but don’t want to start completely from scratch.
- Infrastructure as a Service (IaaS). A service where a company buys space on a server to act as a blank slate. IaaS typically lets companies decide what operating system to run on their cloud server, install multiple applications as needed, and manage security settings. This puts most of the work on the company to manage the production environment, just as they would with a traditional, on-premises data center.
Who Uses Cloud Computing?
These days, almost everyone uses cloud-based services in one form or another. While not every business has completed a cloud migration, enough organizations are moving to the cloud that it should be considered a standard business tool. In fact, projections from Statista expect that global annual spending on cloud IT infrastructure will exceed $109 billion by 2024.
Businesses of all industries often use cloud computing services for remote data storage, creating emergency backups in case of disastrous events. Manufacturers might use cloud services to store or access design documents and CAD files to program automated manufacturing equipment. Offices use cloud-based collaboration and communication tools to allow their teams to work remotely (which became especially important during the 2020 COVID-19 pandemic).
Why Cloud Computing Is Important
Cloud computing is important for a variety of reasons—many of which are tied to the benefits of using the cloud.
One of these reasons is how the near-universal use of the cloud has turned it into a business “must have.” Companies that aren’t able to use cloud technology effectively may find themselves being left behind by their competitors.
Additionally, certain cloud services (like DRaaS), can be essential for ensuring business continuity in the face of a disastrous event. Say a cybercriminal manages to upload ransomware to the company’s main database. All of a sudden, that data is encrypted and can’t be used. With a remote, cloud-based backup, the company could format the infected database, remove the malware, and re-download their most important data from the backup. This could restore normal business operations without having to cave into a ransom demand.
14 Benefits of Cloud Computing
The cloud has enormous potential for helping businesses achieve improved performance on a variety of metrics. These business benefits can vary depending on the specific cloud solution used and how the business operates. However, some of the most common benefits realized when working with cloud computing companies include:
1. Enhanced Security
Many cloud service providers have access to cybersecurity tools and resources that dwarf what a company not specializing in IT services can bring to bear. This can help to make cloud computing services extremely well-defended against common security risks.
For example, CSPs might have physical security at their data center such as security checkpoints to prevent unauthorized entry into server rooms, CCTV monitoring, biometric access systems, and more. Meanwhile, their cybersecurity tools, such as firewalls, antivirus/antimalware, and intrusion detection systems (IDSs) are likely to be extremely robust.
2. Reduced IT Costs
When using a virtualized public cloud service, companies can minimize their spending by only paying for what they need. Compare this to building a private data center, where the organization has to plan ahead for future growth—leading to over-provisioning that increases both initial costs (for acquiring higher-performance equipment and larger data centers) and ongoing costs (maintenance, power, cooling, etc.).
3. Portability of Enterprise IT
Portability for enterprise IT is when employees have ready access to the IT resources they need wherever and whenever they need them. One of the advantages of cloud computing for enterprises is that the applications and resources that employees need will always be available with an internet connection.
This means that employees can access resources from wherever they can get a cell phone signal or Wi-Fi network access. This greatly enhances portability compared to using a dedicated, on-premises server that is completely isolated from external networks (though there are business cases where isolation may be desirable).
4. Availability/Uptime for Services
Uptime, also known as availability, is a crucial factor for enterprise applications. If internal users (employees) and external users (customers, vendors, partners, etc.) can’t access the enterprise applications they need because they aren’t "up” at the moment, that can put a severe damper on productivity and user experience.
With an on-premises data center, the business is largely responsible for ensuring consistent availability for applications. If the unexpected happens (power outage, accidental data deletion, loss of internet connectivity, etc.), the business’ enterprise applications will suddenly be unavailable.
Using a cloud computing company’s services puts the responsibility for ensuring uptime on them. The best cloud service providers can guarantee uptimes of 99.99% (i.e., only being down for around 52 minutes a year) or better by using redundant systems and pre-planned maintenance scheduling.
5. Flexibility for IT Devices
Cloud-based services can be run on almost any modern piece of hardware since the actual computing is being handled on the server side instead of on the “client” device. This enables low-powered computers, smartphones, and IoT devices to leverage the processing power and capabilities of much costlier equipment in a cloud environment.
This adds to the flexibility of an enterprise—allowing it to use a wider variety of technology and devices in its business operations without having to worry as much about compatibility. This also helps to reduce reliance on specific hardware vendors—avoiding issues like vendor lock that can drive up costs.
6. Speed of Deployment
When adding computing resources internally, enterprises have to go through a long process of:
- Verifying physical space is available for the servers;
- If needed, acquiring or expanding data center floor space to accommodate the new resources;
- Installing servers in cabinets and verifying all connections are correct;
- Installing operating systems and apps onto the new servers;
- Testing the new server and apps to check for bugs; and
- Integrating the new equipment and resources with existing business processes.
This can take weeks or even months to complete depending on the resources being added and how much work needs to be done to rearrange and expand the data center. With cloud-based services, on the other hand, adding new resources is as simple as flipping a switch.
While cloud deployments still require some setup and integration with existing workflows, this is much less dramatic than the process for building an entirely new solution from scratch.
7. Integration with Modern Solutions
Integrations of new software and solutions with existing systems is a major challenge and time sink for businesses. This is especially true when working with legacy systems not meant for modern IT architectures.
One of the benefits of moving to the cloud is that the task of integrating software and systems can be offloaded to the cloud service provider. In fact, many cloud-based services boast a large number of preexisting integrations with popular software and services to create a near-seamless user experience.
Many of the best cloud services can even create custom integrations or software to help companies move or replace their outdated legacy software and systems.
8. Automation of IT Maintenance Tasks
One of the biggest benefits of managed cloud services is that, in many cases, the CSP is responsible for basic maintenance tasks for the cloud server and cloud apps. Things like hardware maintenance and upgrades, security patches, and functionality updates can all be handled by the cloud service company.
This frees up IT team time and resources to focus on more value-added tasks that help the business grow.
9. Better Business Collaboration
One of the side benefits of having IT resources available over the internet is that it aids collaboration between remote work teams. Cloud-based collaboration tools are a common sight amongst businesses already.
For example, Google Docs is a free online tool that allows employees to collaboratively write and edit documents online and in real time. Slack lets employees share messages and files quickly. Zoom and other videoconferencing tools let employees get "face” time remotely. The list is virtually endless as new solutions enter the market.
What makes cloud-based tools so useful for collaboration is that they are available anywhere that employees have internet access. A site manager on a business trip to Brazil can reach out to their team from his hotel, a marketer can review and approve ad copy while sipping coffee in a café, or a CEO can reach out to a business unit on another continent and request a status update on a major project affecting the company’s overseas operations.
10. Improved Continuity in the Face of Disasters
Business continuity is a crucial aspect of dealing with unplanned-for service outages, data loss events, and other disasters. As mentioned earlier, DRaaS (disaster recovery-as-a-service) is a critical tool for ensuring business continuity in the face of a disaster.
By leveraging remote IT infrastructure and resources, and keeping backups available via the cloud, organizations can harden themselves against the impacts of potentially disastrous situations. Minimizing downtime and restoring normal business operations is much faster and easier when the company has a remote data backup and spare production environment to spin up whenever there’s an outage.
11. Increased Scalability
One of the traditional challenges of managing IT effectively is anticipating the growth of IT needs and scaling resources appropriately. If a company over-provisions for IT infrastructure, it ends up wasting resources and budget. If a company under-provisions, on the other hand, it could create resource bottlenecks that negatively impact user experience, make IT resources potentially unstable, and create delays.
With cloud computing, scalability is much easier. Companies can pay for the exact amount of resources they need when they need them—controlling costs while preventing IT resource shortages. If needs increase or decrease (such as because of seasonal changes in IT demands), companies using cloud services can easily scale their resource allocation up or down.
12. Performance Stability
By making it easy to add more resources whenever demand is high, cloud services make it easier to ensure stable performance for critical enterprise and customer-facing applications. Additionally, many modern apps are designed to be "cloud native,” meaning they work better in a cloud-based environment.
The ability of CSPs to automate the software update process and manage hardware upgrades also helps to ensure that companies are exposed to fewer performance issues than they would have faced with internally-owned IT infrastructure.
13. Reduced Environmental Impact
Going "green” may not always provide a direct ROI that’s easy to measure. However, it has become increasingly important for businesses that want to earn and maintain the trust of a public that is increasingly aware of and sensitive to environmental issues.
Using cloud technology helps enterprises minimize their carbon footprint. By leveraging public cloud services that use virtual containers, companies can minimize the power and resources needed to maintain their enterprise data and apps. This helps to reduce their environmental impact, which looks good to environmentally-conscious consumers and business partners.
14. Ability to Focus on Core Business
As mentioned earlier, moving IT upkeep to a cloud service provider, companies can dedicate more internal staff time to their core business instead of basic IT maintenance. However, this can impact more than just the IT team.
With cloud-based services, companies can find and implement ready-made solutions for common business challenges that minimize the time they need to spend on developing custom solutions. Functions like payroll, inventory tracking, and benefits can be automated using existing cloud solutions. This allows members of different business units (HR, customer service, manufacturing, etc.) to streamline their workflows.
This helps to put extra time back in each business unit’s day so they can focus on more value-added tasks instead of process goals, IT management, and paperwork.
What Are the Disadvantages of Cloud Computing?
While cloud computing brings a lot of benefits to the table for controlling costs, increasing availability, and freeing up resources within a company, many business owners want to know what the potential drawbacks are.
A couple of examples of potential drawbacks of cloud computing services include:
- Compliance Issues. When using a public, virtualized cloud solution, some businesses may not be able to pass specific compliance standards. Some government agencies might mandate isolated networks be used for storing sensitive data. So, even though cloud service providers’ infrastructures are often more secure than the data centers managed by other businesses, they don’t always meet compliance requirements. However, private cloud services and other high-security clouds may still meet security standards, so it’s important to check with the regulator and the CSP.
- Reduced Control of Production Environments. Some businesses need to have a stronger level of control over their IT production environments—whether for compliance issues or to meet other goals. However, most PaaS and SaaS services don’t allow a high degree of control over the production environment—operating systems and tools tend to be fixed. IaaS services can address this by giving companies a higher degree of control over the production environment—although this can impact some of the benefits of moving to cloud since the company has to manage the environment.
Are you ready to connect with what’s next in managed cloud services? Reach out to Systems X today to get started!