Cloud computing is one of the most influential IT trends of the 21st century. Over two decades it has revolutionized enterprise IT, and now most organizations take a “cloud-first” approach to their technology needs. The boom in cloud has also prompted significant growth in related fields, from cloud analytics to cloud security.
This ultimate guide explains everything you need to know about cloud computing, including how it works, the difference between public and private clouds, and the benefits and drawbacks of different cloud services.
What Is Cloud Computing?
There are many definitions of cloud computing, but the most widely accepted one was published in 2011 by the U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) and subsequently summarized by Gartner as “a style of computing in which scalable and elastic IT-enabled capabilities are delivered as a service using Internet technologies.”
NIST’s longer definition identifies five “essential characteristics” shared by all cloud computing environments:
- On-demand self-service: Consumers can unilaterally provision computing capabilities (such as server time and network storage) as needed.
- Broad network access: Capabilities are available over the network and accessed through standard mechanisms.
- Resource pooling: Resources are pooled to serve multiple consumers using a multi-tenant model, with different physical and virtual resources dynamically assigned and reassigned according to consumer demand to allow for location independence and high resource availability.
- Rapid elasticity: Capabilities can be elastically provisioned and released to scale rapidly with demand. To the consumers, provisioning capabilities appear unlimited and highly flexible.
- Measured service: Cloud systems automatically control and optimize resource use by metering appropriate to the type of service (e.g., storage, processing, bandwidth, and active user accounts). To codify technical aspects, cloud vendors must provide every customer with a Service Level Agreement.
Cloud also makes use of a number of key technologies that boost the efficiency of software development, including containers, a method of operating system virtualization that allows consistent app deployment across computing environments.
Cloud Computing Services
Cloud computing comprises a lot of different types of cloud services, but the NIST definition identifies three cloud service models: software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS). While these three models continue to dominate cloud computing, various vendors have also introduced other types of cloud services that they market with the “as-a-service” label. These include database as a service (DBaaS), disaster recovery as a service (DRaaS), function as a service (FaaS), storage as a service (SaaS), mobile backend as a service (MBaaS), security as a service (SECaaS), networking as a service (NaaS), and a host of others.
All of these cloud services can be gathered under the umbrella label “everything as a service,” or XaaS, but most of these other types of cloud computing services fall under one of the three original categories.
Software as a Service (SaaS)
In the SaaS model, users access applications via the Web. Application data resides in the software vendor’s cloud infrastructure, and users access it from any internet-connected device. Instead of paying a flat fee, as with the traditional software model, users purchase a subscription on a monthly or yearly basis.
The SaaS market alone is expected to grow from $273.55 billion in 2023 to $908.21 billion by 2030, representing a compound annual growth rate (CAGR) of 18.7 percent. The world’s largest SaaS vendors include Salesforce, Microsoft, Google, ADP, SAP, Oracle, IBM, Cisco and Adobe.
Infrastructure as a Service (IaaS)
IaaS vendors provide access to computing, storage, networks, and other infrastructure resources. Using an IaaS is very similar to using a server, storage appliance, networking device, or other hardware, except that it is managed as a cloud rather than as a traditional data center.
The IaaS cloud market, which was estimated at $118.43 billion in 2022, will be worth $450.52 billion by 2028, maintaining a CAGR of 24.3 percent over the analysis period. Amazon Web Services is considered the leading public IaaS vendor, with over 200 cloud services available across different industries. Others include Microsoft Azure, Google Cloud, IBM SoftLayer, and VMware vCloud Air. Organizations like HPE, Dell Technologies, Cisco, Lenovo, NetApp, and others also sell infrastructure that allows enterprises to set up private IaaS services.
Platform as a Service (PaaS)
PaaS occupies the middle ground between IaaS and SaaS. PaaS solutions don’t offer applications for end-users the way SaaS vendors do, but they offer more than just the infrastructure provided by IaaS solutions. Typically, PaaS solutions bundle together the tools that developers will need to write, deploy, and run applications. They are meant to be easier to use than IaaS offerings, but the line between what counts as IaaS and what counts as PaaS is sometimes blurry. Most PaaS offerings are designed for developers, and they are sometimes called “cloud development platforms.”
The global PaaS market is worth $61.42 billion, an increase of 9.8 percent over 2022. The list of leading public PaaS vendors is very similar to the list of IaaS vendors, and includes Amazon Web Services, Microsoft Azure, IBM Bluemix, Google App Engine, Salesforce App Cloud, Red Hat OpenShift, Cloud Foundry, and Heroku.
Public vs. Private vs. Hybrid Cloud
Cloud computing services can also be categorized based on their deployment models. In general, cloud deployment options include public cloud, private cloud, and hybrid cloud. Each has its own strengths and weaknesses.
As the name suggests, a public cloud is available to businesses at large for a wide variety of remote computing needs. These cloud services are managed by third-party vendors and hosted in the cloud vendors’ data centers.
Public cloud saves organizations from having to buy, deploy, manage, and maintain their own hardware. Instead, vendors are responsible in exchange for a recurring fee.
On the other hand, public cloud users give up the ability to control the infrastructure, which can raise security and regulatory compliance concerns. Some public cloud providers, like AWS Outposts rack, now offer physical, on-premises server racks for jobs that need to be done in-house for security and compliance reasons. Additionally, many vendors offer cloud cost calculators to help users better predict and understand charges.
A private cloud is a cloud computing environment used only by a single organization, which can take two different forms—organizations build their own private clouds in their own data centers, or use a hosted private cloud service. They’re also the most commonly used and best option for businesses that require a multi-layered infrastructure for IT and data protection.
Like a public cloud, a hosted private cloud is operated by a third party, but each customer gets dedicated infrastructure set aside for its needs rather than sharing servers and resources. A private cloud allows organizations to enjoy the scalability and agility of cloud computing without some of the security and compliance concerns of a public cloud. However, a private cloud is generally more expensive and more difficult to maintain.
A hybrid cloud is a combination of public private clouds managed as a single environment. They can be particularly beneficial for enterprises that have some data and applications that are too sensitive to entrust to a public cloud but need it to be accessible to other applications that do run on public cloud services.
Hybrid clouds are also helpful for “cloudbursting,” which involves using the public cloud during spikes in demand that overwhelm an organization’s private cloud. Managing a hybrid cloud can be very complex and requires special tools.
It’s important to note that a hybrid cloud is managed as a single environment. Already the average enterprise is using more than one cloud, and most market researchers expect multi-cloud and hybrid cloud environments to dominate the enterprise for the foreseeable future.
Cloud Computing Benefits
As already mentioned, each type of cloud computing has advantages and disadvantages, but all types of cloud computing generally offer the following benefits:
- Agility and Flexibility: Cloud environments enable end users to self-service and quickly provision the resources they need for new projects. Organizations can move workloads around to different servers and expand or contract the resources dedicated to a particular job as necessary.
- Scalability: The same virtualization and pooling features that make it easy to move workloads around also make it easy for organizations to scale up or down as usage of particular applications increases or decreases. It is somewhat easier to scale in a public cloud than a private cloud, but both offer scalability benefits in comparison to a traditional data center.
- Availability: It’s easier to recover data if a particular piece of infrastructure experiences an outage. In most cases, organizations can simply failover to another server or storage device within the cloud, and users don’t notice that a problem has occurred.
- Location Independence: Users access all types of cloud environments via the internet, which means that they can get to their applications and data from any web-connected device, nearly anywhere on the planet. For enterprises seeking to enable greater workforce mobility, this can be a powerful draw.
- Financial Benefits: Cloud computing services tend to be less expensive than traditional data centers. However, that isn’t true in every case, and the financial benefit varies depending on the type of cloud service used. For all types of cloud, however, organizations have a greater ability to chargeback computing usage to the particular business unit that is utilizing the resources, which can be a big aid for budgeting.
Cloud Computing Drawbacks
Of course, cloud computing also has some drawbacks. First of all, demand for knowledgeable IT workers remains high, and many organizations say it is difficult to find staff with the experience and skills they need to be successful with cloud computing. Experts say this problem will likely diminish over time as cloud computing becomes even more commonplace.
In addition, as organizations move toward multi-cloud and hybrid cloud environments, one of their biggest challenges is integrating and managing the services they use. Some organizations also experience problems related to cloud governance and control when end users begin using cloud services without the knowledge or approval of IT.
But the most commonly cited drawbacks of cloud computing center around cloud security and compliance. A hybrid infrastructure model that integrates public cloud with on-premises resources—and sometimes with a private cloud—can offer many of the advantages of both cloud and on-premises models while mitigating security and compliance risks by maintaining full control over data centers and virtual machines.
Most of the security concerns around cloud computing relate primarily to public cloud services. Because public clouds are shared environments, many organizations have concerns that others using the same service can access their data. And without control over the physical infrastructure hosting their data and applications in the public cloud, enterprises need to make sure vendors take adequate measures to prevent attacks and meet compliance requirements.
However, some security experts argue that public cloud services are more secure than traditional data centers. Most cloud vendors have large security teams and employ the latest technologies to prevent and mitigate attacks. Smaller enterprises simply don’t have as many resources to devote to securing their networks.
But organizations should not just assume that cloud vendors have appropriate safeguards in place—vendors and users share responsibility for cloud security and both need to play an active role in keeping data secure.
Bottom Line: Cloud Computing
The popularity of cloud computing has grown steadily with no signs of slowing down since the phrase “cloud computing” was first used in the mid-1990s. It’s nearly ubiquitous among enterprises, with 87 percent operating a multi-cloud strategy and 72 percent a hybrid cloud strategy. Experts predict the market will continue to grow as organizations migrate more applications and data to the cloud. There are multiple models and a wide range of services available, giving organizations a lot of flexibility when it comes to cloud computing. From public to private to hybrid cloud, businesses can find or build the right configuration to meet their own particular budget, requirements, and needs.
Read next: Cloud Services Providers Comparison.