Cloud: What Business Leaders Need to Know
Of all the topics in this series, cloud is likely to be the most familiar. The term itself was first coined in the 1980s, but it was only in this millennium that cloud computing as we know it has made a significant and growing contribution to the evolution of work, society and the economy. Today, cloud computing ranks as the top three priorities for investment in over one-third of organisations.
But what is it?
Basically, the cloud is a virtual environment where you can access a full array of computing resources that you used to have to buy in stores or build on-premise. The cloud makes available the software, servers, networks, storage, infrastructure and services you require. You can access them on demand from any device connected to the internet, at a fraction of what it costs to own and maintain physical versions.
The cloud does exist in the real world, of course, hosted in machines and data centres that could be anywhere in the world. While sometimes data centre locations have to be known for security or compliance reasons, generally users neither can nor care to pinpoint the exact origin of the cloud-based resources they use.
According to NIST (National Institute of Standards and Technology) in the U.S., cloud only qualifies as such if it provides:
- On-demand self-service computing capabilities
- Broad network access via standard devices such as laptops, smartphones, etc.
- Resource pooling
- Rapid elasticity, allowing you to add and end resources as you need them
- Measured service whereby the provider keeps track of how you use cloud-based resources
For business purposes, three deployment models – public, private and hybrid cloud – offer three major service models (software, platform, and infrastructure).
With private clouds, you own and manage your own cloud, or have a secure connection to a vendor’s cloud. Either way, it exists behind firewalls, and no one can access it without your permission. Having your own cloud is extremely expensive, especially if you build and maintain it from scratch. Organisations that deal with highly sensitive or classified information (government agencies, energy companies, hospitals, banks, etc.) agencies mostly use private clouds.
The public cloud is available to anyone who wants to use or purchase its vast collection of resources. As a far cheaper option than private cloud, it is the top choice of individuals, start-ups, and small to medium businesses. Even larger organisations tend to prefer the public cloud unless they are cloud providers themselves or are still using legacy private clouds from a time before public cloud was as widespread, efficient, and secure as it is today.
Worth US$182.4 billion (RM758.8 billion) in 2018, Gartner forecasts that the public cloud service market will grow to US$331.2 billion (RM1.4 trillion) in the next couple of years.
For cost management and convenience, most companies use a combination of private and public clouds. For example, highly classified information may reside on a private cloud while day-to-day operations take place on the public cloud.
Who owns the biggest cloud?
The world’s top three providers are Amazon Web Services (AWS), Microsoft Azure and Google cloud. Together they own approximately two-thirds of all rentable computing space. In Asia, the top provider by far is Alibaba Cloud (19% of the market) followed by AWS (11%). Not only does Alibaba have the lion’s share of the cloud in China, but it also enjoys a strong presence in the region. It is the only large cloud provider (so far) to have set up a data centre in Malaysia. In Southeast Asia, an increasing number of small and medium-sized enterprises are shifting to the cloud, set to drive market revenue to US$40.32 billion (RM168 billion) by 2025.
The cloud does exist in the real world, of course, hosted in machines and data centres that could be anywhere in the world.
The as-a-service model: a great equaliser
One of the most valuable aspects of the cloud has been its ability to offer a wide range of IT resources ‘as a service’. In simple terms, instead of buying physical items that help you achieve an outcome, you buy the outcome itself. The payment models let you test offerings on small scales before scaling up to enterprise-wide use, so its no wonder that the past decade has seen the rise of everything from marketing to products offered as a service. Cloud computing offers three major as-a-service models.
Software as a service (SaaS) are applications on the cloud and the most commonly used cloud computing service. Some, such as Gmail, are free (though there is a strong argument that we ‘pay’ for such services with the personal data we allow them to collect or by being subjected to frequent ads). Most enterprise software, such as Microsoft Office 365 requires payment, usually on a per-user subscription basis. Purchase and consumption of software are all done online, cutting out the inconvenience (while often lowering the cost) of having to buy physical copies of the software at a store every time your company adds a user.
Platform as a service (PaaS) drives innovation as it provides a virtual operating system or environment where developers can create applications online. Once the applications are completed, they can be shared with or sold to others as SaaS.
Infrastructure as a service (IaaS) mimics hardware you once required to build and manage your data. IaaS vastly reduced the cost of building and maintaining expensive IT infrastructure by allowing you to rent the exact amount of computing power and storage you need.
The fastest-growing segment among cloud services, this year, IaaS is expected to reach nearly US$39 billion (RM161 billion), a 28% increase over last year’s US$30 billion (RM124 billion).
In the cloud, rewards are clear
The ease of access and pay-as-needed model is one of the top benefits offered by the cloud. In addition to ensuring that all your staff have what they need to do their work, it offers the flexibility to increase or decrease services as needed. For example, during busy seasons or if a project requires additional processing power or software for temporary staff, a cloud-based service allows you to temporarily sign up for these additional resources. It also improves productivity; work parked on the cloud is easier for teams to access as needed, wherever they happen to be.
Advancements in broadband connectivity have made it not only possible but cost-effective to transfer large amounts of data over the internet. This has vastly reduced the need for things to happen on your machines in your office. It has improved what resources you have access to and how you access them. Today, most of the latest technology innovations are born on the cloud. It is where they first (often exclusively) become available and where they are maintained and upgraded. In other words, cloud technology enables anyone with internet access to benefit from newest, most advanced, and most secure technologies.
Generally speaking, cloud service providers are able to offer higher levels of stability, support, and security than companies could afford in-house. Top cloud providers promise 99.99% uptime as well as 24/7 support, reducing your need for on-site troubleshooting IT staff.
Cloud computing was responsible for a big chunk this year’s US$3.76 trillion (RM15.55 trillion) global IT spend, ‘fueling everything from data centre spending to enterprise software.’ While often elbowed out of IT headlines by newer innovations, all evidence points to the cloud continuing to have a strong and growing effect on business.