The Dummies Guide to Cloud Computing

What is cloud computing?

So, let me tell you in simple words, what cloud computing means. Cloud computing is the delivery of computing services—including servers, storage, databases, networking, software, analytics, and intelligence—over the Internet (“the cloud”) to offer faster innovation, flexible resources, and economies of scale.

You typically pay only for the cloud services you use, helping lower your operating costs, run your infrastructure more efficiently and scale up as well as down as your business needs change.

How does cloud computing work?

Cloud computing is possible because of a technology called virtualization. Virtualization allows for the creation of a simulated, digital-only "virtual" computer that behaves as if it were a physical computer with its own hardware. The technical term for such a computer is virtual machine. When properly implemented, virtual machines on the same host machine are sandboxed from one another, so they don't interact with each other at all, and the files and applications from one virtual machine aren't visible to the other virtual machines even though they're on the same physical machine.

Virtual machines also make more efficient use of the hardware hosting them. By running many virtual machines at once, one server becomes many servers, and a data center becomes a whole host of data centers, able to serve many organizations. Thus, cloud providers can offer the use of their servers to far more customers at once than they would be able to otherwise, and they can do so at a low cost.

Even if individual servers go down, cloud servers in general should be always online and always available. Cloud vendors generally back up their services on multiple machines and across multiple regions.

Users access cloud services either through a browser or through an app, connecting to the cloud over the Internet – that is, through many interconnected networks – regardless of what device they're using.

What are the main service models of cloud?

Software-as-a-Service (SaaS)

Instead of users installing an application on their device, SaaS applications are hosted on cloud servers, and users access them over the Internet. SaaS is like renting a house: the landlord maintains the house, but the tenant mostly gets to use it as if they owned it. Examples of SaaS applications include Salesforce, MailChimp, and Slack.

Platform-as-a-Service (PaaS)

In this model, companies don't pay for hosted applications; instead they pay for the things they need to build their own applications. PaaS vendors offer everything necessary for building an application, including development tools, infrastructure, and operating systems, over the Internet. PaaS can be compared to renting all the tools and equipment necessary for building a house, instead of renting the house itself. PaaS examples include Google App engine, AWS Elastic Beanstalk and Microsoft Azure PaaS.

Infrastructure-as-a-Service (IaaS)

In this model, a company rents the servers and storage they need from a cloud provider. They then use that cloud infrastructure to build their applications. IaaS is like a company leasing a plot of land on which they can build whatever they want – but they need to provide their own building equipment and materials. IaaS providers include DigitalOcean, Google Compute Engine, and OpenStack.

Formerly, SaaS, PaaS, and IaaS were the three main models of cloud computing, and essentially all cloud services fit into one of these categories. However, in recent years a fourth model has emerged:

Function-as-a-Service (FaaS)

FaaS, also known as serverless computing, breaks cloud applications down into even smaller components that only run when they're needed. Imagine if it were possible to rent a house one little bit at a time: for instance, the tenant only pays for the dining room at dinner time, the bedroom while they're sleeping, the living room while they're watching TV, and when they aren't using those rooms, they don't have to pay rent on them.

FaaS or serverless applications still run on servers, as do all these models of cloud computing. But they're called "serverless" because they don't run on dedicated machines, and because the companies building the applications don't have to manage any servers.

To understand these models better, refer to the picture below in which Legacy Services, IaaS, PaaS and SaaS is explained by taking an example of Pizza as a Service.

What are the different types of deployment models?

In contrast to the models discussed above, which define how services are offered via the cloud, these different cloud deployment types have to do with where the cloud servers are and who manages them.

The most common cloud deployments are:

Private cloud

A private cloud is a server, data center, or distributed network wholly dedicated to one organization.

Public cloud

A public cloud is a service run by an external vendor that may include servers in one or multiple data centers. Unlike a private cloud, public clouds are shared by multiple organizations. Using virtual machines, individual servers may be shared by different companies, a situation that is called "multitenancy" because multiple tenants are renting server space within the same server.

Hybrid cloud

Hybrid cloud deployments combine public and private clouds, and may even include on-premises legacy servers. An organization may use their private cloud for some services and their public cloud for others, or they may use the public cloud as backup for their private cloud. Most of the companies these days have a hybrid cloud model as they are too afraid to move completely on cloud.

Multicloud

Multicloud is a type of cloud deployment that involves using multiple public clouds such as AWS, Azure and GCP in the same environment. In other words, an organization with a multicloud deployment rents virtual servers and services from several external vendors – to continue the analogy used above, this is like leasing several adjacent plots of land from different landlords. Multicloud deployments can also be hybrid cloud, and vice versa. Companies generally prefer this model, when they don't wanna lock in themselves with a single vendor. Also, managing the multicloud environment is more complex than a single cloud environment.

Benefits of cloud computing

Cost

Cloud computing eliminates the capital expense of buying hardware and software and setting up and running on-site datacenters—the racks of servers, the round-the-clock electricity for power and cooling, the IT experts for managing the infrastructure. It adds up fast. Cloud Computing basically help convert your Capex (Capital Expenditure) to an Opex (Operational Expenditure). Also, you only pay for what you use.

Speed

Most cloud computing services are provided self service and on demand, so even vast amounts of computing resources can be provisioned in minutes, typically with just a few mouse clicks, giving businesses a lot of flexibility and taking the pressure off capacity planning.

Global Scale

The benefits of cloud computing services include the ability to scale elastically. In cloud speak, that means delivering the right amount of IT resources—for example, more or less computing power, storage, bandwidth—right when it is needed and from the right geographic location.

Productivity

On-site datacenters typically require a lot of “racking and stacking”—hardware setup, software patching, and other time-consuming IT management chores. Cloud computing removes the need for many of these tasks, so IT teams can spend time on achieving more important business goals.

Performance

The biggest cloud computing services run on a worldwide network of secure datacenters, which are regularly upgraded to the latest generation of fast and efficient computing hardware. This offers several benefits over a single corporate datacenter, including reduced network latency for applications and greater economies of scale.

Reliability and Redundancy

Cloud computing makes data backup, disaster recovery and business continuity easier and less expensive because data can be mirrored at multiple redundant sites on the cloud provider’s network.

Security

Many cloud providers offer a broad set of policies, technologies and controls that strengthen your security posture overall, helping protect your data, apps and infrastructure from potential threats.

How to build a business case for cloud movement?

To build a business case for moving systems to the cloud you first need is to understand what your existing infrastructure actually costs. There's a lot to factor in: obvious things like the cost of running a data centers, and extras such as leased lines. The cost of physical hardware such as servers and details of specifications like CPUs, cores and RAM, plus the cost of storage. You'll also need to calculate the cost of applications -- whether you plan to dump them, re-hosting them in the cloud unchanged, completely rebuilding them for the cloud or buying an entirely new SaaS package, each option will have different cost implications. The cloud business case also needs to include people costs (often second only to the infrastructure costs) and more non tangible concepts like the benefit of being able to provide new services faster. Any cloud business case should also factor in the potential downsides, including the risk of being locked into one vendor for your tech infrastructure.

Which are the big cloud computing companies?

As of February 2020, Canalys reports AWS with 32.4% of the market, Azure at 17.6%, Google Cloud at 6%, Alibaba Cloud close behind at 5.4%, and other clouds with 38.5%.

What is the future of cloud computing?

Cloud computing is still at a relatively early stage of adoption, despite its long history. Many companies are still considering which apps to move and when. However, usage is only likely to climb as organisations get more comfortable with the idea of their data being somewhere other than a server in the basement. Organisations are still relatively early into cloud adoption, some estimates suggest that only 10% of the workloads that could be moved, have actually been transferred across. These workloads are the easy ones where the economics are hard for CIOs to argue with.

For the rest of the enterprise computing portfolio the economics of moving to the cloud may be less clear cut. As a result cloud computing vendors are increasingly pushing cloud computing as an agent of digital transformation instead of focusing simply on cost. Moving to the cloud can help companies rethink business processes and accelerate business change, goes the argument, by helping to break down data and organisational silos. Some companies that need to boost momentum around their digital transformation programmes and have their hardware reaching EOL (End of life) may find this argument appealing; others may find that the enthusiasm for the cloud is decreasing as the costs of making the switch add up.

For startups, cloud makes a better business case (because the cost of making the switch doesn't exist) than for companies who already have hardware and applications running in their own datacentres.