What is it?

Cloud refers to the provision of computing resources — processing power and storage — over the internet, paying on demand.

There are several cloud computing models, the two most common being public cloud and private cloud.

With public cloud, hardware, storage and networking devices are shared. As a purchaser of public cloud solutions, you have no ability to dictate what infrastructure is used. You simply access services via a web browser. 

Private cloud gives you exclusive access to computing resources — either in your own data center or a third-party provider’s. But private cloud can be expensive and may offer less opportunity to scale than public cloud. Private cloud is often used by public sector organizations, financial services companies, and other regulated industries, where absolute control over their computing systems is business-critical.

What’s in for you?

Historically, businesses were faced with having to build their data centers for operating at maximum capacity — even if that capacity was needed for only a few weeks each year. A prime example of this is the retail industry where capacity needs spike prior to the holiday season.

With cloud, you buy the capacity you need at any given time. You can quickly add additional capacity, or switch it off, as your needs change. Because traditional data centers require large upfront investments, with costs amortized over many years, cloud can significantly reduce your CAPEX. The cloud allows you to turn fixed costs into variable costs.

Cloud can lower the barriers to innovate. It’s relatively quick and easy for teams to access computing resources — that can be wound down as readily as they’re spun up, without leaving your business more computing capacity than it needs.

Innovation is also encouraged since cloud service providers now offer additional services, such as artificial intelligence and machine learning tools. This opens up access to powerful capabilities that may previously have been prohibitive to build in-house for many organizations.

What are the trade offs?

Not every business application was designed to run in the cloud, so you need to evaluate whether full-blown cloud adoption is right for your organization. In some circumstances — for example those financial services companies that have applications dependent on ultra-fast response times — on-premise solutions may be a better choice.

Where the cost, scalability and flexibility of cloud is a good fit, you still have decisions to make. How much re-engineering is required to optimize your applications for the cloud? What service levels are appropriate? The transition to cloud can be slow, complex and costly.

You’ll also want to consider whether to go with a single cloud supplier or embrace a multi-vendor approach. The big three cloud providers — Amazon, Google and Microsoft — all now provide the same core services. They differentiate themselves through the add-on tooling they provide. That may be useful in, say giving you access to powerful AI tools — but it might also make it more difficult for you to migrate your applications to an alternative provider.

Given the global nature of cloud, it’s important to ensure that whichever provider you go with gives you appropriate data protection — this is particularly important for those companies with customers in the European Union. During the early years of cloud deployment, security was a common concern for companies.

How is it being used?

Cloud is widely used across all industries, regardless of organizational size. It has been the enabling platform for many of today’s digital champions but you’ll also find it common in long-established companies too.

While it first gained traction in small, innovation-focused teams, many organizations now use cloud for business-critical applications.

For instance, Porsche as part of its transformation efforts to build the sports cars of the future, it had the goal to move services to the cloud in order to be independent of central data centers and enable deployment from anywhere. The results were fewer, long service outages and an improved customer experience.