Cloud Computing - The Basics

Cloud computing is undoubtly the promise of having a modern and state-of-the-art IT infrastructure without the need for substantial capital investments and personnel increases.

The possibility of improving your business is something which is appealing to every decision maker across the globe. The year 2000 will always be remembered as the milenium of the more and more oustanding pace of technological progress. New and old technologies are as close together as never before. The almost uncontrollable increase in human knowledge leads to endless incremental innovations. The hunt for the next big thing seems to be never ending.

Even though cloud computing still plays that role, one might think that it is being pushed aside by the likes of artificial intelligence and blockchain. But wait… most new technologies are distinguished by a huge number of data and intelligence. In other words, “the many disparate servers which are part of cloud technology hold the data which an AI can access and use to make decisions and learn things like how to hold a conversation. But as the AI learns this, it can impart this new data back to the cloud, which can thus help other AIs learn as well” as noticed Gary Eastwood from the IDG Contributor Network. Same goes for blockchain and other data intensive technology. Cloud computing is not only the digitization tool par excellence, it is omnipresent and plays undoubtedly a key role in today’s technological progress.

Providing IT resources and on-demand applications over the Internet at usage-based prices

“Simply put, cloud computing is the delivery of computing services — servers, storage, databases, networking, software, analytics and more — over the Internet (“the cloud”). Companies offering these computing services are called cloud providers and typically charge for cloud computing services based on usage, similar to how you are billed for water or electricity at home.” (Microsoft Azure)

Whether you run apps that share photos with millions of mobile users or support critical business operations in your organization, the cloud is a technology providing quick access to flexible and cost-effective IT resources. When it comes to cloud computing, you do not have to invest in hardware in advance or spend a lot of time managing it. Instead, you can provide the exact type and size of computing resources you need to implement your latest breakthrough idea or operate your IT department. You can access as many resources as you need almost immediately by paying only for what you use. Cloud computing provides an easy way to access servers, storage, databases and a full range of application services over the Internet. Cloud providers operate and manage the network-attached hardware needed for these application services, providing and using the resources you need through a web application.

Advantages of cloud computing

The cloud has become a technology that influences everyone’s daily life. The adoption of solutions and services in the cloud present a number of advantages and benefits, among others:

• No more costs for operating and maintaining data centers
  Focus on projects that differentiate your company in the market, not the infrastructure. Cloud computing allows to focus on customers rather than setting up, populating, and operating server cabinets.
• Speed and agility
  In a cloud computing environment, new IT resources are always just a click away.The time required to deploy these resources will be reduced to minutes. This leads to a remarkable increase in the agility of the enterprise. In fact, costs and the expenditure for experiments and development decrease substantially.
• Go for variable costs rather than investment costs
  Instead of investing heavily in data centers and servers, cloud computing makes it possible to work by paying only for the computing resources that are actually used.
• Flexible capacity
  No more uncertainty in determining the infrastructure capacity requirements. Customers can access as much or as little capacity as needed and adjust their demand for short notice as desired.

Types of cloud services: IaaS, PaaS, SaaS

Cloud computing consists of three main types, commonly referred to as Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS). Choosing the right cloud computing type consists in knowing your needs to achieve an optimal level of control with worrying about unnecessary tasks. Microsoft defines these types as follows:

Infrastructure-as-a-service (IaaS): The most basic category of cloud computing services. With IaaS, you rent IT infrastructure — servers and virtual machines (VMs), storage, networks, operating systems — from a cloud provider on a pay-as-you-go basis.

Platform as a service (PaaS): Platform-as-a-service (PaaS) refers to cloud computing services that supply an on-demand environment for developing, testing, delivering and managing software applications. PaaS is designed to make it easier for developers to quickly create web or mobile apps, without worrying about setting up or managing the underlying infrastructure of servers, storage, network and databases needed for development.

Software as a service (SaaS): Software-as-a-service (SaaS) is a method for delivering software applications over the Internet, on demand and typically on a subscription basis. With SaaS, cloud providers host and manage the software application and underlying infrastructure and handle any maintenance, like software upgrades and security patching. Users connect to the application over the Internet, usually with a web browser on their phone, tablet or PC.

Cloud deployments: public, private, hybrid

There are three different ways to deploy cloud computing resources. These are public cloud, private cloud and hybrid cloud.

Public clouds are owned and operated by a third-party cloud service provider, and deliver computing resources like servers and storage over the Internet using a web browser. Today’s leading cloud providers Amazon AWS or Microsoft Azure are examples of a public cloud.

A private or on-prem cloud refers to cloud computing resources used in-house and exclusively by a single business or organisation. The particularity here is that a private cloud can be physically located on the company’s on-site datacenter.

A combination of both public and private clouds leads to what we call hybrid cloud. The advantage here is that a hybrid cloud allows data and applications to be shared between them. By allowing data and applications to move between private and public clouds, customers enjoy greater flexibility and more deployment options.

After which criteria do customers decide for a cloud provider?

Simply put, customers do not decide for one single cloud provider. Many companies pursue a multi cloud strategy to maintain the ability and flexibility to select different cloud services from different providers.

However, the cloud has always been accompanied by data privacy concerns. Customizable and real-time encryption can separate security and network functions. As a result, an extra layer of data protection is added. On the other hand, private cloud solutions can enhance the security of company specific applications by implementing cloud technology within the company’s corporate datacenter. What is important to note is that there is no one-size-fits-all solution for cloud security. Hence, customization of the most effective solutions are the best possible solutions to meet specific needs.

Summa summarum, the cloud’s success is nowadays more and more influenced on the macro level for example with GDPR and CLOUD Act. Governments, regulators, policymakers and standards setting organizations have a big influence especially on standards for cyber security at the micro-level. For the cloud, this means more regulation but also more adoption opportunities through new customers who had data privacy concerns towards cloud based solutions. In other words, there is no end to the cloud’s explosive growth.

What about a new way of innovative differentiation?

Nowadays we notice more and more a change in cloud competition. Microsoft Azure has surpassed Amazon AWS in terms of annual revenues. The cloud industry with its huge potential seems to undergo a change in competition which can be explained by a few notable trends that are emerging:

• The few giants that make up the cloud industry form the top-tier cloud providers while a number of smaller and niche players occupy 35% of the market. Interestingly, Amazon AWS, Microsoft Azure and Google Cloud are all of them American cloud providers.
• Releasing mainstream features to duplicate competitors’ features can be observed harder than before. Every provider strives to stand out! Nonetheless, compute, storage and are more or less essentially provided most of the cloud providers. However, innovation is mainly happening in areas such as big data, AI or machine learning.
• Despite the important number of smaller cloud providers, the giants still keep making the price. According to critics, a rate adjustment to pricing scheme is made once or twice a year by one of the giants.

Considering these three trends, the cloud market does not appear to be changing any time soon. An innovation-driven sector as the cloud represents is taking a risky step in falling into commodity. An increasingly strong price competition shows how difficult it has become to compete on features. The question therefore is which trends begin to emerge and express exactly what today’s customers look for?