What Is Cloud Computing and How Can It Help Your Business?

Cloud computing is often regarded as the future of business technology. While traditional IT systems that reside on-premises at a company’s location require considerable up-front investments, continual management and troubleshooting, and regular upgrades to keep up with changing company needs, cloud-based IT places these burdens on cloud-technology vendors. That leaves your business to focus less on in-house technology and more on bigger goals – among them, sales, growth, and innovation.

The business case for cloud computing has influenced IT spending priorities in every industry, to the point that 66% of enterprise spending on application software is expected to go to cloud technology by 2025, according to a report issued by Gartner in February 2022. Small and midsize businesses (SMBs) are also focused on the cloud, increasing their spend 38% over last year to $1.2 million, according to Flexera’s annual “State of the Cloud Report,” which polled 753 global cloud decision makers and users.  

Cloud-based IT promises businesses many benefits, including lower IT costs, improved productivity, and greater scalability. But to derive the greatest returns from the cloud, it’s helpful to start with a clear understanding of how the technology works.

Unlike on-premises IT systems, which are limited in space and performance, cloud-based systems can scale quickly to accommodate changing requirements.

Cloud Computing Defined

Cloud computing is the delivery of computing services over the internet. These services include data storage, IT infrastructure, and cloud-based software applications, among others. Unlike other business technologies, a cloud-based solution is not a single piece of hardware like a database server. Instead, companies pay for on-demand access to the hardware, computing power, and software they need from an external cloud vendor.

Though new service models emerge each day, most cloud computing solutions fall into three “as-a-service” categories:

1. Software-as-a-Service

Software-as-a-service (SaaS) cloud solutions allow companies to use powerful business applications that are developed and hosted by cloud vendors. Companies pay for monthly or annual renewable licenses to access these applications, though some vendors deliver SaaS cloud services on a pay-as-you-go basis. Collaboration platforms like Microsoft Teams, Cisco's WebEx, and Zoom are popular examples of SaaS cloud applications, with businesses purchasing a license for each employee who requires access to these services.

2. Infrastructure-as-a-Service

Rather than buying IT systems, servers, and storage outright, businesses can pay for access to cloud-based versions of core infrastructure. This form of cloud computing is known as infrastructure-as-a-service (IaaS). In addition to reducing up-front IT costs, this approach enables businesses to scale easily because they can simply buy more IaaS licenses to accommodate the need for more storage and computing power. Amazon Web Services (AWS) and Microsoft Azure are the two biggest players in this space, though vendors including IBM, Alibaba, and Rackspace also offer popular IaaS solutions.

3. Platform-as-a-Service

Companies that want to innovate at speed need a powerful environment in which to develop their digital services and software applications. A growing number of businesses choose to do so in a platform-as-a-service (PaaS) cloud environment. There, they can access the hardware and software resources they need to create new applications without purchasing or managing these technologies themselves.  

Cloud Computing Delivery Models

Cloud computing services can be implemented via one of three delivery models: public, private, or hybrid cloud. Public cloud services are shared, which means they are available to every business with an internet connection. Private cloud services are also transported via the internet, but they are delivered directly to one company over a private connection that is inaccessible to others. Private cloud solutions are particularly attractive to businesses with data security and governance concerns.

Hybrid cloud implementations combine public and private cloud services. Some businesses may not want to host their entire IT operation in the public cloud, especially if they manage sensitive data like financials or customer payment details. With a hybrid approach, companies can host some services, like email or a collaboration tool, in the public cloud while keeping more sensitive data, like financials, close to the chest in a private cloud environment.

Cloud Computing Benefits

The benefits of cloud computing range from better IT performance and improved reliability to enhanced business agility. According to Foundry’s “2022 Cloud Computing Study,” for which the martech provider surveyed 850 global IT decision makers in February to measure cloud computing trends, disaster recovery and business continuity is the top objective for investing in the cloud. Indeed, both are major concerns when just a few seconds of downtime can mean millions of dollars lost for companies. It can also leave a sour taste in customers’ mouths, impacting future business.

Every business has different goals for its cloud implementation, so benefits will vary accordingly. That said, here are three more common drivers behind today’s cloud investments.

1. Reduced Cost of Ownership

Cloud licenses are paid monthly or yearly, so they don’t count as capital costs on your company’s balance sheet. Moreover, businesses don’t have to buy or maintain their own IT systems and databases or the facilities to house them, which means significant cost savings both up front and in the long term.

2. Improved Data Access

Access to data is essential for modern businesses, especially as more employees work remotely or use their personal devices. With cloud-based IT, staff can access crucial software and IT services from any location, providing they have an internet connection and approved logins. Not only does this enhance productivity but it also removes the need for employees to carry around external hard drives or USB sticks to access their files – which, in turn, reduces or eliminates the likelihood of exposing their companies to a data breach.

3. Greater Agility and Scalability

Market conditions change constantly in response to shifting customer behavior, economic levers, and socio-political events. Unlike on-premises IT systems, which are limited in space and performance, cloud-based systems can scale quickly to accommodate changing requirements. Companies simply need to increase or decrease their number of cloud licenses in line with their needs. As a result, they can continue operating at scale with minimal downtime.

Cloud Computing Examples

Some cloud computing tools are universal, such as cloud-based email services like Google's Gmail, Microsoft Outlook, and Yahoo Mail; document-sharing services like Dropbox, Google Drive, and Microsoft OneDrive; and instant messaging applications like WhatsApp, Slack, and Viber. Others are designed to help specific lines of business – for instance, an enterprise resource planning (ERP) system for a finance department or a customer relationship management (CRM) system for a marketing team.

New examples of the cloud at work come to light every day, with every business and team finding its own unique way to benefit from the technology. Here are three examples of how entire industries are using the cloud to improve the way they operate and serve customers.

1. Financial Services

Long seen as a legacy industry that tends to hold back from new ways of working, the financial services sector has embraced the cloud as a better way to engage with customers. The rise of mobile-banking applications and anywhere/anytime access to financial data is a direct result of these investments. In parallel, banks and insurance companies have turned to cloud vendors for online data backup and recovery services to ensure governance and add a layer of protection to the sensitive information they manage.

2. Retail

It is often said that customer data is the new battleground for retail brands. Data analytics – the collection and analysis of large volumes of data to identify patterns, trends, and correlations – is the cornerstone of success in this environment. Cloud-based marketing tools allow retailers to collect, analyze, and draw insight from their vast data sets in record time so they can serve customers in increasingly personalized ways.

3. Health Care

E-health, which leverages computing technology to improve health care services, is transforming health care institutions around the world. From telemedicine to online health care services to doctors sharing patient data for more accurate diagnoses, cloud-based data hosting sits at the center of this revolution.

How to Get Started with the Cloud

Cloud computing is the first choice for most new business technology investments. The cloud’s flexibility, performance, and cost benefits make it compelling to every industry. 

Success in the cloud often starts with a clear vision of what your business wants to achieve. Simply migrating your systems to the cloud may bring cost and efficiency benefits, but cloud computing’s real power can be unlocked with faster, more powerful, more agile, and more innovative ways of working.

It can be good advice to choose a cloud vendor that understands this nuance. The best vendors aren’t just technology providers. They're eager to get under the skin of your organization, understand your needs, and work with your key stakeholders to lay out the best path forward.

Of course, an all-cloud approach may not be the best option for your business. Considerations around data security, governance, and the capabilities of your IT teams should factor into your decision making. For instance, a business with a skilled IT team might decide to maintain control over its infrastructure operations to ensure proper provisioning while shifting some of its less sensitive processes to a cloud provider.

The Takeaway

There is no single solution to implementing the cloud. There is only the best solution for your business at the moment. Cloud computing – and the pressure to implement it – is on the rise, but it’s critical to cut through the noise and be realistic about your needs. The most sustainable approach is to invest in line with your business’s goals and to revisit that investment as your goals evolve.

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