What is cloud computing?

Cloud computing is the on-demand access of computing resources—physical servers or virtual servers, data storage, networking capabilities, application development tools, software, AI-powered analytic tools and more—over the internet with pay-per-use pricing. This model offers customers greater flexibility and scalability compared to traditional on-premises infrastructure.

Cloud computing plays a pivotal role in our everyday lives, whether accessing a cloud application like Google Gmail, streaming a movie on Netflix or playing a cloud-hosted video game.

Cloud computing has also become indispensable in business settings—from small startups to global enterprises. Its many business applications include enabling remote work by making data and applications accessible from anywhere, creating the framework for seamless omnichannel customer engagement, and providing the vast computing power and other resources needed to leverage cutting-edge technologies like generative AI and quantum computing.

Cloud-based technology services are hosted at a remote data center managed by a cloud services provider (CSP), and these resources are typically available on a pay-as-you-go or a monthly subscription fee basis.

Benefits of cloud computing

Compared to traditional on-premises IT that involves a company owning and maintaining physical data centers and servers to access computing power, data storage and other resources (and depending on the cloud services you select), cloud computing offers many benefits, including the following.

Cost-effectiveness
Cloud computing lets you offload some or all of the expense and effort of purchasing, installing, configuring and managing mainframe computers and other on-premises infrastructure. And you pay only for cloud-based infrastructure and other computing resources as you use them.

Increased speed and agility
With cloud computing, your organization can use enterprise applications in minutes instead of waiting weeks or months for IT to respond to a request, purchase and configure supporting hardware, and install software. This feature empowers users—specifically DevOps and other development teams—to help leverage cloud-based software and support infrastructure.

Unlimited scalability
Cloud computing provides elasticity and self-service provisioning, so instead of purchasing excess capacity that sits unused during slow periods, you can scale capacity up and down in response to spikes and dips in traffic. You can also use your cloud provider’s global network to spread your applications closer to users worldwide.

Enhanced strategic value
Cloud computing enables organizations to use various technologies and the most up-to-date innovations to gain a competitive edge. For instance, in retail, banking and other customer-facing industries, generative AI-powered virtual assistants deployed over the cloud can deliver better customer response time and free up teams to focus on higher-level work. In manufacturing, teams can collaborate and use cloud-based software to monitor real-time data across logistics and supply chain processes.

Origins of cloud computing

The origins of cloud computing technology go back to the early 1960s, when Dr. Joseph Carl Robnett Licklider (link resides outside likhantu.com), an American computer scientist and psychologist known as the ‘father of cloud computing’ introduced the earliest ideas of global networking in a series of memos discussing an Intergalactic Computer Network. However, it wasn’t until the early 2000s that modern cloud infrastructure for business emerged.

In 2002, Amazon Web Services launched cloud-based storage and computing services. In 2006, it introduced Elastic Compute Cloud (EC2), an offering that allowed users to rent virtual computers to run their applications. That same year, Google introduced Google Apps suite (now called Google Workspace)—a collection of SaaS productivity applications. In 2009, Microsoft launched its first SaaS application, Microsoft Office 2011. Flash forward to today and Gartner predicts worldwide end-user spending on public cloud will total $679 billion and is projected to exceed $1 trillion in 2027 (link resides outside likhantu.com).

Cloud computing components

The following are a few of the most integral components of today’s modern cloud computing architecture.

Data centers

CSPs own and operate remote data centers that house physical or bare metal servers, cloud storage systems and other physical hardware that create the underlying infrastructure and provide the physical foundation for cloud computing.

Networking capabilities
In cloud computing, high-speed networking connections are crucial. Typically, an internet connection known as a wide-area network (WAN) connects front-end users (e.g., client-side interface made visible through web-enabled devices) with back-end functions (e.g., data centers and cloud-based applications and services). Other advanced cloud computing networking technologies, including load balancers, content delivery networks (CDNs) and software-defined networking (SDN), are also incorporated to ensure data flows quickly, easily and securely between front-end users and back-end resources.

Virtualization
Cloud computing relies heavily on the virtualization of IT infrastructure—servers, operating system software, networking and other infrastructure that’s abstracted, using special software, so that it can be pooled and divided irrespective of physical hardware boundaries. For example, a single hardware server can be divided into multiple virtual servers. Virtualization enables cloud providers to make maximum use of their data center resources.

Cloud computing services

IaaS (Infrastructure-as-a-Service), PaaS (Platform-as-a-Service), SaaS (Software-as-a-Service) and serverless computing are the most common models of cloud services, and it’s not uncommon for an organization to use some combination of all four.

1. IaaS (Infrastructure-as-a-Service)
IaaS (Infrastructure-as-a-Service) provides on-demand access to fundamental computing resources—physical and virtual servers, networking and storage—over the internet on a pay-as-you-go basis. IaaS enables end users to scale and shrink resources on an as-needed basis, reducing the need for high, up-front capital expenditures or unnecessary on-premises or ‘owned’ infrastructure and for overbuying resources to accommodate periodic spikes in usage.

According to a Business Research Company report (link resides outside likhantu.com), the IaaS market is predicted to grow rapidly in the next few years, growing to $212.34 billion in 2028 at a compound annual growth rate (CAGR) of 14.2%.

2. PaaS (Platform-as-a-Service)
PaaS (Platform-as-a-Service) provides software developers with an on-demand platform—hardware, complete software stack, infrastructure and development tools—for running, developing and managing applications without the cost, complexity and inflexibility of maintaining that platform on-premises. With PaaS, the cloud provider hosts everything—servers, networks, storage, operating system software, middleware and databases—at their data center. Developers simply pick from a menu to spin up servers and environments they need to run, build, test, deploy, maintain, update and scale applications.

Today, PaaS is typically built around containers, a virtualized compute model one step removed from virtual servers. Containers virtualize the operating system, enabling developers to package the application with only the operating system services it needs to run on any platform, without modification and the need for middleware.

Red Hat OpenShift is a popular PaaS built around Docker containers and Kubernetes, an open-source container orchestration solution that automates deployment, scaling, load balancing and more for container-based applications.

3. SaaS (Software-as-a-Service)
SaaS (Software-as-a-Service)—also known as cloud-based software or cloud applications—is application software hosted in the cloud. Users access SaaS via a web browser, a dedicated desktop client or an API that integrates with a desktop or mobile operating system. Cloud service providers offer SaaS based on a monthly or annual subscription fee. They also may offer these services through pay-per-usage pricing.

SaaS is the primary delivery model for most commercial software today. Hundreds of thousands of SaaS solutions are available, from focused industry and broad administrative (e.g., Salesforce) to powerful enterprise database and artificial intelligence (AI) software. Based on an International Data Center (IDC) survey (link resides outside LIKHANTU), SaaS applications represent the largest cloud computing segment, accounting for more than 48% of the $778 billion worldwide cloud software revenue.

4. Serverless computing
Serverless computing (also called simply serverless) is a cloud computing model that offloads all the back-end infrastructure management tasks–provisioning, scaling, scheduling, patching—to the cloud provider, freeing developers to focus all their time and effort on the code and business logic specific to their applications.

Moreover, serverless runs application code on a per-request basis only and automatically scales the supporting infrastructure up and down in response to the number of requests. With serverless, customers pay only for the resources used when the application is running—they never pay for idle capacity.

FaaS, or Function-as-a-Service, is often confused with serverless computing when, in fact, it’s a subset of serverless. FaaS allows developers to execute portions of application code (called functions) in response to specific events. Everything besides the code—physical hardware, virtual machine (VM) operating system and web server software management—is provisioned automatically by the cloud service provider in real-time as the code executes and is spun back down once the execution is complete. Billing starts when execution starts and stops when execution stops

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