12 min read
Jan 11, 2021
Insights

What Is Cloud Computing and Is It Right for Your Small Business?

Cloud computing is a tech that can drive business agility and help you gain a competitive advantage in your industry. But is your business ready for it?

P.T.
Pritam TamangContent Writer

If your business has a website or is performing any kind of work online, like sending emails to clients, then you’re already using some aspect of cloud computing.

For small and midsize businesses (SMBs), this technology opens up access to limitless computing power without the extraordinary infrastructure investments. And if you’re planning to start a digital business, such as an eCommerce marketplace, then cloud computing could help you stay on top of your competition.  

In this blog, we’ll uncover the different layers of cloud computing, along with the potential benefits and concerns, that can help you create a solid cloud computing strategy for your business.

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What is cloud computing and how does it work?

According to Gartner, cloud computing is a style of computing in which scalable and elastic IT-enabled capabilities are delivered as a service using internet technologies.

In other words, cloud computing is the delivery of computing resources—storage, backup, applications, and hosting—as a service via a connected network. 

The cloud computing architecture consists of three main components: 

  • The first is known as clients, which are the devices or software (mobiles, websites, etc.) you use to access cloud resources. 

  • Second is the data center, also known as cloud storage, which is a large collection of servers where all the applications and data you use are hosted or stored. 

  • Third is the cloud delivery network, which could be the internet or intranet through which the cloud services are delivered to you. 

What are the different types of cloud computing?

The types of cloud computing are classified based on how you use cloud resources. There are primarily four cloud computing categories, out of which the most popular one for SMBs is the public cloud: 

1. Public cloud computing

Public cloud refers to the shared use of cloud computing resources, viz. applications and storage, by multiple parties. Since the resources are shared by many organizations, the cost of cloud computing comes down drastically, making it affordable for SMBs.

You can pick and choose what kind of resources your business needs and accordingly find a cloud computing provider, such as Microsoft, IBM, Google, and Amazon, that fulfills that need.

2. Private cloud computing

Private clouds give you exclusive access to the computing resources you want to use. They come in three different versions. The first is the virtual private cloud (VPC), the cheapest option wherein resources from the public cloud are made accessible only to you by the service provider.

The second is the hosted public cloud (HPC), more expensive than VPC as the service provider takes you out of the public cloud and creates and manages a private cloud specifically for your business. The third is the costliest option, known as private cloud (PC), where you create an internal cloud infrastructure by building your own data center. 

3. Hybrid cloud computing

As the name suggests, hybrid cloud computing is a combination of private and public cloud computing. This version is suitable if you want to meet fluctuating workloads (with public cloud) and also ensure the security of sensitive business data (private cloud).

For instance, you can use the private cloud to run a website and when there are traffic spikes you can quickly access the public cloud resources to handle the surge. Likewise, you can store critical information (financial and client data) in the private cloud and host applications on the public cloud.

4. Community cloud

Community cloud is similar to the public cloud in the sense that one or more companies share the resources. The difference is that the access to the community cloud is limited to a few companies that have similar requirements, such as banks or trading firms. The companies can come together to create a cloud infrastructure or use the services of a cloud provider.  

What are some examples of cloud computing service models?

Since cloud computing is essentially a service, there are different types of service models that have come about. The major cloud service models are: SaaS, Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS)

  • SaaS: This is a cloud software delivery model where you pay the SaaS vendor for using their applications. In this model, the software is delivered to you via the internet and can be accessed using a web browser or client applications. Unlike on-premise software, you don’t have to install or store the software on your computer. Some common examples of SaaS are productivity tools such as email management software and video conferencing software. For more information on what is SaaS click here.

  • PaaS: This is a cloud software delivery model where you pay the PaaS vendor for using their servers, virtual machines, and software development tools. If you’re a software developer then you can use PaaS to build applications. The vendor provides you the development environment, while you only have to manage your data and the application you’re building. Some common examples of PaaS include Force.com, Google App Engine, and Heroku. 

  • IaaS: This a cloud infrastructure delivery model where you pay the IaaS vendor for using their cloud data storage, virtualization, servers, and networks. In this model, you manage your applications, data, and middleware while the vendor provides the infrastructure. Some examples of IaaS are DigitalOcean, Amazon Web Services (AWS), and Microsoft Azure.

Model Pros Cons
SaaS Easily accessible from multiple devices and locations. Performance of software depends on the internet and the vendor’s cloud computing capabilities.
PaaS Helps developers quickly build software applications. The programming language is restricted to that provided by the vendor.
IaaS Allows to quickly scale cloud servers based on needs. Security of data depends on the vendor’s infrastructure.
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What are the benefits of cloud computing?

The key reasons why you would want to move to a cloud environment or cloud-based systems are cost reduction and efficiency gains.

The cost reduction is because you don’t have to build a data center or maintain a large IT workforce. For instance, if you’re building a software application on-premise, you will need to spend on hardware such as a web server, database server, and application server. Then you will have to manage the storage of data and will need IT staff to be physically present at the data center to manage the systems. All such costs are reduced when you use a cloud service provider such as Amazon, Microsoft, or Google.   

The efficiency gains are a result of the on-demand scalability of the cloud. You don’t spend time finding hardware and developing software and configuring them to your needs. For instance, you can instantly add new users to a SaaS application or easily upgrade the development environment to develop and test new solutions. Likewise, you can purchase additional storage from an IaaS vendor at the click of a button.

Benefits of cloud computing
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What to be aware of when using the cloud?

Before moving to the cloud, know that using the cloud requires you to develop strategies for minimizing security risks. Also, there will be variances in the services provided by different vendors, which also leads to concerns about cloud security, performance, and data migration.

While most cloud service vendors have data security measures in place, this doesn’t guarantee complete safety against cyber attacks. There have been instances of cloud security breaches owing to vulnerabilities in the service provider’s systems. 

The other area of concern is performance. The service level agreements (SLAs) that guarantee cloud performance, such as system uptime, maintenance (periodic updates and fixes), and disaster recovery, can differ from vendor to vendor. 

There can also be variances in the services when you migrate data from your existing system (an on-premise tool or from another cloud-based system). The vendor needs to be capable of handling the technical aspects and addressing security concerns when migrating the data and also effectively train your employees on using the new systems and services. All of these extra services could incur additional costs.

Concerns with cloud computing
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Frequently asked questions about cloud computing

Before you invest in cloud computing technologies, you need to answer some key questions. 

Below are some of the frequently asked questions about cloud computing. 

  • What kind of cloud strategy should I follow? If you’re considering migrating to the cloud, the first thing you need to figure out is the kind of cloud computing service model you require. Understanding the tech stack you will use, the key benefits, and risks of using these services become necessary to select the right model. Also, will you be taking the services of multiple cloud vendors or using a single vendor for everything? While using a multi-cloud vendor makes sense to get the best-in-class service, this may raise your costs. All such factors need to be kept in mind when you develop your cloud strategy.  

  • Will using cloud service cut down costs? It’s a common notion that moving to the cloud reduces costs as the services come with a pay-as-you-go model. But cost-saving doesn't automatically happen when you use cloud services; it happens when you strategically invest in cloud services. For instance, cloud service providers have complex pricing that constantly change based on metrics such as data consumption, users, and features. There can also be unexpected charges when you use third-party integrations and priority support. You must be able to select the best pricing and also track granular cost details of using these services to make actual cost savings.  

  • Is the cloud secure? Cloud security is as much the responsibility of the cloud service provider as the customer. The first step to ensure security is ensuring all the SLAs and data recovery plans are in place with the vendor. It is also advisable to keep the contract term short (one to two years) to avoid being locked-in with a vendor that does not evolve its security protocols with changes in business technologies. You also need to invest in creating cloud security policies and training your employees to prevent them from falling prey to phishing and malware attacks.

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