Cloud Computing: From Fuzzy Diagrams to Business Backbone

Whether you’re streaming a movie on Netflix, collaborating with co-workers on a project, or running an artificial intelligence (AI) model, most likely you’re using cloud computing.

Cloud computing is how many businesses and individuals today store, process and manage data. But what exactly is cloud computing, how does it work and why is it important?

Cloud computing is the delivery over the internet of computing services, including servers, storage, databases, networking, software and analytics for users to access. This means users don’t need to own and maintain their IT hardware and software.

Remember the days when you used to buy Microsoft Office software in a box and then store it on your computer? When you leave the office, you can’t access your Word or Excel documents.

On a company-wide scale, businesses do the same thing. They own and manage software and hardware (such as servers, which are computers that serve data, applications and services) containing their data in their own data centers. This is what’s called “on premises” or “on prem” as a slang.

For many companies, it’s easier and sometimes cheaper to put their data in the data centers of major cloud providers, use their software and hardware, and access company information and applications through the internet.

The biggest cloud providers globally are Amazon Web Services (AWS), Microsoft Azure and Google Cloud. In Asia, Alibaba Cloud, Tencent Cloud and Huawei Cloud also dominate.

These hyperscalers operate data centers that span thousands to over 1 million square feet, housing thousands of servers that store data and run applications on behalf of their customers.

Read more: Unlocking Potential, Managing Risk: The Cloud AI Conundrum

How Cloud Computing Works

The term cloud computing came about when engineers used to diagram their corporate networks, they would loosely sketch a cloud-like shape to represent unknown networks they connect to, like the internet.

Today, cloud computing is multi-billion-dollar industry. It works through a network of data centers that process and store data. Users interact with cloud-based platforms through web browsers like Chrome or applications.

For example, when someone edits a document in Google Docs, their work is saved on Google’s cloud servers rather than their own hard drive on their computer. Similarly, when businesses use platforms like Salesforce, customer data is processed and managed in the cloud rather than on company-owned servers.

This means cloud computing serves users on demand. Users can request computing power, storage or applications as needed, without having to worry about maintaining the necessary hardware and software.

This feature lets businesses adapt to market changes quickly — such as scaling up on Black Friday when website traffic explodes for online shopping — without having to buy additional servers and maintain them.

Per Google Cloud, there are three main types of cloud computing: public cloud, private cloud and hybrid cloud.

Public cloud: This is the most common model used, where services are delivered over the internet. They are owned by third-party providers such as AWS, Microsoft Azure and Google Cloud.

Private cloud: This is a company’s own infrastructure house in their own data centers. Companies, especially those in highly regulated industries like finance and health care, prefer to be “on prem” to have control over their own data.

Hybrid cloud: This is a mix of public and private clouds. A company can put some data and applications in the public cloud and maintain control over more critical data in their own data centers.

A company doesn’t have to stick to just one cloud computing company. To avoid being stuck if a cloud provider goes offline, as many as 90% of companies opt to use multiple cloud providers. This avoids reliance on a single vendor and optimizes performance.

Cloud providers rent out three types of services: Infrastructure (servers and storage), platform (framework) and software (applications). In the industry, these services are called Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS).

AI workloads — computational tasks involved in developing, training, deploying and running AI models — use all three types.

Infrastructure — AI workloads rent thousands of GPUs and servers at data centers to power their training.

Platform — AI workloads harness pre-configured platforms to build, test and deploy, simplifying app development.

Software — AI workloads rent the software it needs to build and train AI models and develop applications in the cloud.

Read more: Amazon Debuts AWS Data Transfer Terminals For Faster Cloud Uploads

Business Benefits and Risks of Cloud Computing

An ISACA blog post details the pros and cons of cloud computing. Likewise, Google Cloud explores the benefits and risks. Here are the benefits:

Cost Savings: Cloud computing reduces IT expenses by eliminating the need for costly hardware and maintenance. Businesses only pay for the resources they use.

Scalability: Cloud platforms allow businesses to quickly scale up resources during peak demand and scale down when demand decreases.

Remote Access: With cloud computing, users can access files, applications, and systems from anywhere, enabling remote work and collaboration.

Security and reliability: Major cloud providers such as the tech giants can better provide advanced security measures, such as encryption and automated backups rather than a company’s IT department.

Automatic updates: Cloud providers handle software updates and maintenance, freeing IT departments from this burden.

And the risks:

Data security: Storing sensitive information in the cloud can make it vulnerable to cyberattacks. Organizations must ensure their cloud provider complies with security regulations like GDPR and HIPAA.

Outages: Cloud services can experience outages, disrupting business operations. Companies must have backup plans in place.

Vendor lock-in: Switching cloud providers can be complex and costly, leading to dependence on a single vendor.

Compliance and legal Issues: Organizations must ensure their cloud provider meets industry-specific compliance standards.