Did you know that the monthly cost of running a basic web application was about $150,000 in 2000?

Cloud computing has brought it down to less than $1000 a month.

As explained by Marc Andreessen, co-founder of Netscape and a Board Member of Facebook, this was “the dream of every cyber-visionary of the early 1990s.” Cloud computing fundamentally changed the IT economy, introducing new opportunities, new business models, and a whole new business era.

What is Cloud Computing and How Does It Work

A simple definition of cloud computing involves delivering different types of services over the Internet. From software and analytics to secure and safe data storage and networking resources, everything can be delivered via the cloud.

You probably use different cloud-based applications every day. You are benefiting from cloud solutions every time you send a file to your colleague via the web, use a mobile app, download an image, binge a Netflix show, or play an online video game. All these services are stored in the cloud and exist in some digital space.

Storing your information on OneDrive, SharePoint, or an email server is much different from keeping that data on a desktop hard drive or a USB stick. You can access it from just about any computer that has internet access.

For businesses, cloud computing means improved collaboration and productivity, as well as significant cost reductions. It means better data protection, improved availability, and expanded access to cutting-edge technologies.

Five Characteristics of Cloud Computing

What exactly makes something a cloud? According to the National Institute of Standards and Technology (NIST), there are five defining characteristics of cloud computing:

  1. On-demand self-service: You can use it whenever you need it and pay per use. Think of it as electricity. In essence, the cloud is a form of utility computing. You create an account or pick your provider, and your services will be available to you anytime. You are billed at the end of the month only for what you used. This form of storing and accessing your data gives you full control over your resource usage and spending.
  2. Broad network access: You must be able to access from across the web using any device with internet connectivity. Wherever you are, your cloud data will be accessible through web browsers, as well as on a laptop or mobile devices. The reason for this is the fact its underlying infrastructure includes servers on multiple locations.
  3. Resource pooling: Multiple tenants can share the same space, and resources can be assigned, re-assigned, and distributed as needed. You can be anywhere in the world and still have equal access as everyone else, provided you have internet access.
  4. Rapid elasticity: Cloud can grow and shrink as much as possible without affecting any of its users or their information. For example, if your business is experiencing peak traffic, the cloud can expand to accommodate all the new requests.
  5. Measured service: You can examine how often people are using the cloud. Many cloud service providers utilize a pay-as-you-go model to ensure that their clients are getting what they pay for, no more and no less. Once again, this can be compared to electricity as you get billed for the amount that you use.

There are three kinds of clouds, each with their unique benefits. You should evaluate cloud options to decide which is best for you and your business.

budgeting for Cloud Computing

Types of Cloud Computing

Public Cloud

Public cloud services are best for development systems and web servers. Your cloud computing provider will give you a slice of their digital space that they must share with other tenants.

These types of clouds are cost-efficient since a pay-as-you-go model operates most. You pay for the number of hours you need to use the cloud and can exit whenever you complete your work. There are no obligations that require you to pay more than you need.

Private Cloud

Private clouds offer what their name suggests: privacy. You do not have to share your digital space with anyone else. Private cloud platforms are typically built in-house, and they belong to you and your business. They can also be configured in a  third-party data center and still provide an advanced level of privacy.

Larger organizations and clients who are concerned about security favor private clouds. The reason for this is primarily the fact that these clouds offer more defense than their public counterparts. Companies that need to protect sensitive information like customer data rely on private clouds.

If you are using a private cloud, you know who has access to the data, know if anyone made changes, and know what to do in case of an emergency. You have full control over what happens to the cloud and don’t have to worry about some third party vendor making changes that would negatively affect you. A firewall protects everything in your cloud from outsiders.

Hybrid Clouds

Hybrid clouds are the best of both worlds. If you are using a hybrid cloud, you can control an internal database and use the public cloud when needed. There might be times when you will need to move data and applications from the private cloud to the public cloud, such as scheduled maintenance, blackouts, and natural disasters. The ability to seamlessly migrate information is perfect for cloud-based disaster recovery and preventing data loss.

The flexibility of hybrid clouds is excellent for scaling as any overflow can regulate in the public cloud. Furthermore, you can keep all non-sensitive tasks in the public cloud while safeguarding the essential data in the private cloud.

Regardless of how large your company is or what industry it serves, there will always be a cloud solution that best fits your needs. Take the time to compare the advantages and disadvantages of each kind before deciding.

As mentioned earlier, companies now use the cloud in multiple forms. Below are some common cloud uses:

DR in the cloud

Examples of Cloud Computing Services

Cloud Storage and Hosting

Keeping essential documents in a central online storage location makes it easier for everyone to access them. Cloud storage is vital for businesses with employees whom all need to obtain the same information to do their work. It increases collaboration and efficiency among organizations.

Cloud storage is also handy for personal use as you can keep your necessary documents on a web server to access later. Just look at Google Docs or OneDrive. You no longer need to carry around a flash drive to edit your spreadsheets or read your files.

Cloud Backup

Backing up files in the cloud is by far the most efficient way to ensure their availability. Cloud backup solutions create multiple copies of files and store data in different locations. This way, you do not have to worry that your files will be lost in case one of your or your provider’s cloud server goes down.


People send about 105 billion emails every single day. Millions of newsletters, greetings, and reminders make their way into people’s inboxes across the world. None of this would be possible without the cloud infrastructure.

Business Intelligence

The availability of cloud-based BI systems triggered some of the most revolutionary changes in businesses. Complex data analytics, processing, and reporting systems are now available via the Internet at low price points. A single license can be transferred to multiple users, requiring no lengthy installation or setup.

Benefits of Cloud Computing

The examples mentioned above are just the tip of the iceberg. Cloud computing has so many uses that it seems almost impossible to count them all. Every company can find a use for cloud services one way or another.


Once again, the cloud provides an easy way to hold all your necessary data. You can rent cloud storage at a low price and scale it according to your demands. You no longer have to use an external hard drive or build an in-house data center.


You need data protection when catastrophe strikes. Preventing as much data loss as possible is critical regarding time, money, and efficiency. Cloud provides a much faster, and cost-effective disaster recovery than traditional solutions could ever offer.

Sometimes, the best way to deal with a tragedy is to prepare for it beforehand. You should always consider any worst-case scenarios since most catastrophic events are unplanned. Before cloud computing, you would have to distribute and collect various tapes and drives and then transfer the data to a central location. Now, you can just click a few buttons and have it done for you.


You no longer need to buy a ton of external hard drives to keep your critical information. Companies can save up to 43% annually by migrating virtualized operating system instances in the cloud. In addition to that, the cloud gives you access to professional staff, advanced security systems, and cutting-edge hardware and software, which adds up to the projected savings.

Cloud service providers that utilize a pay-as-you-go model are especially useful since you will never have to spend money on services that you are not using.

Compare this to a monthly subscription service where you must pay to apply for the entire month regardless of how often you use it. If you use a monthly subscription service for only two weeks, you will get half of your money’s worth.


The software is continuously being improved to increase security, efficiency, speed, capability, and reliability. On the other hand, updated hardware would require you purchasing a new device to enjoy the recent improvements. Software updates are consistent and usually don’t need any extra costs.


Ensuring business operability in case of a disaster is a significant challenge for most organizations. However, when a single minute of downtime can cost you more than implementing a backup and disaster recovery solution, business continuity management becomes a priority.

The cloud offers disaster recovery and business continuity solutions. You can rely on it to keep your data and applications active even if a disaster physically strikes your business. With a solid business continuity plan and right cloud solutions, you can minimize the effects of potential disruptions.


People can work together more efficiently and efficiently than ever before. Who needs to book a conference room or take an international flight when large groups of people from all over the world can merely meet over a Skype call? Nobody needs to print out copies of the latest report since they can all access it from the cloud.

You might work for a large international company with locations across the world. Whether your offices are in India, China, Australia, Ireland, Brazil, or America, every employee has the same access to relevant information via cloud technology. Plus, you can utilize cloud solutions by merely opening your phone. How convenient is that?

Cloud collaboration tools offer important advantages to employees. They can make use of file versioning or real-time editing any time. They can access data, applications, and services remotely from any device. All that boosts their productivity and, eventually, company’s profits.


You no longer need to guess if you will have enough ability to build or destroy an application. Clouds can adjust upwards and downwards depending on what your business needs. The flexibility ensures that you will always be able to utilize cloud services regardless of what your business is doing.


The cloud commoditizes enterprise-grade technology, making it available to smaller companies as well. This form of utility computing makes emerging technologies available to businesses at an affordable price point.

You can access high-performance hardware and software to improve your operations. The opex-based delivery model makes cloud resources accessible to businesses of any sizes. You just need to pick the solution that meets your needs best.


Keep your data secure and make sure that it does not fall into the wrong hands.

Cloud backups are an ideal solution to ensure business continuity and always-on availability of your files. All clouds offer some degree of encryption, deterrent, and compliance, but private clouds remain the most secure from outsiders. Even so, you must beware of internal attacks.

A shocking 43% of data security breaches come from inside threats, so you must be incredibly careful about monitoring your workers.

What is Cloud Computing Data Security

Disgruntled employees and people who would use your data to their advantage may pose a threat. Be sure to keep a watchful eye and conduct background checks on anyone you hire. You must also revoke any ex-employees access to your data.

Types of Cloud Services

Cloud services are as varied as the types of clouds themselves. You can purchase three different kinds of cloud services:

Infrastructure as a service (IaaS) saves you money on buying physical data centers or servers. You pay as you go and only pay for as long as you need or use the service. IaaS allows you to adjust your scale depending on your demand quickly.

Platform as a service (PaaS) has everything you need for your business applications. It comes complete with infrastructures such as networking, online storage, and servers, as well as database management systems, development tools, and more. PaaS is designed to help create, test, develop, and update your application.

Software as a service (SaaS) is what you get whenever you download a new app for your phone. Companies create and develop their software and then lend it out to buyers. Businesses such as Autodesk, Lending Club, Microsoft, and IBM all generate revenue from SaaS.

Figure out which service is best for you and your company. Cloud platforms are so diverse that it would be impossible to find a solution that didn’t fit your needs.

A cloud computing service that you should also consider for your company is DBaaS. Read our article What is Database-as-a-Service to learn how it simplifies database management.

Future of Cloud Computing For Business

More companies are abandoning on-prem computer hardware in favor of the much more advanced cloud architecture. As computing technology develops, businesses naturally leave behind their older ways and switch to cutting-edge solutions.

Experts know that the influence of cloud technologies will only expand, but the question remains as to how quickly they will grow. Here are some expert predictions:

  • Global cloud spending is anticipated to reach $390 billion by 2020.
  • 92% of all data will be in the cloud by 2020.
  • Cisco Global Index estimates that 74% of total cloud workloads will be SaaS workloads, 17% will be IaaS, and 8% will be PaaS by 2020.
  • Public cloud infrastructure will store 68% of cloud data, and private clouds will save 32% of cloud data.
  • Forrester predicts that customers who were hesitant to cloud adoption will become the fastest-growing user segment and will grow by 30% in 2018.

The distributed cloud is one of the latest trends in cloud computing, a deployment type that allows users to spread a single public cloud across different locations.

Only the future can confirm how accurate these predictions are, but there’s one thing you can be confident of: the cloud is here to stay. The future is evolving, and it is almost impossible to tell just what crazy new ideas will dominate the world five years from now.

We no longer need dial-up, film development, CDs, maps, floppy discs, movie rental stores, maps, VCRs, CDs, or PDAs anymore. Those technologies have all been outdated and made obsolete by newer and better inventions. It is only a matter of time before we have A.I. and self-driving cars.

There may still be applications for USB drives and similar devices, but you will probably always back them up on your cloud anyways. Hardware might not ever become entirely obsolete, but it is no longer in its heyday. Similar to how Netflix killed Blockbuster and how eBooks brought the death of Borders, cloud services will reign supreme over hardware in the years to come.