What is the cloud?

Cloud computing — also known as simply “the cloud” — consists of networks of distributed datacenters to which users can connect their personal devices, allowing for the provision of scalable computing resources over the internet. The cloud has a number of distinguishing features when compared to conventional “on-premises” systems that people have traditionally used to do their computing.

  1. A cloud’s system of networked datacenters offers users access to immense computing storage capacity. Users are then able to access this storage in a scalable fashion, paying for more capacity in times when they require more storage. Think, for example, of a rapidly growing company that is able to smoothly scale the amount of computer storage it needs to hold its customer data, without having to continually upgrade its own infrastructure as it grows.

  2. In addition to storage capacity, a cloud provider’s network of datacenters — each in effect housing many individual computer servers — offers users the ability to draw on large amounts of computing capacity, again in a scalable fashion. This is very convenient for organizations that experience seasonality in their computing needs (think, for example, of a tax authority that has to rapidly scale up its capacity around the deadline for tax filings).

    The step change in computing power provided by this ability to network servers is significant. Microsoft recently worked with the insurance firm Willis Towers Watson to calculate the cost of providing everyone on the planet with life insurance. An enormous calculation that would have taken 19 years using a conventional computer took just over 100 minutes.

    It is the cloud’s ability to store and process immense amounts of data with huge amounts of computing power that is at the core of data-driven technologies like AI and data analytics.

  3. Due to the distributed and networked nature of the cloud, users can access it anywhere, allowing them to work, record and access data wherever they happen to be.

The shift to the cloud among organizations has been rapid. According to Gartner, 89 percent of companies were using cloud computing in some form by the end of 2016. Many people may be using the cloud today without realizing it. For example, if someone subscribes to online services such as Dropbox, Box, Gmail, Office 365 or Salesforce, they are using a cloud-based service.

Cloud service models

Although numerous service models exist, there are three core types of cloud service:

  • Infrastructure as a service (IaaS): The provision of processing, storage, networks and other fundamental computing resources. The customer does not manage or control the underlying cloud infrastructure but has control over the operating systems, storage and deployed applications. This in effect allows customers to outsource the provision of their core computing functions, utilizing the reliability, scalability and cost-effectiveness of the cloud.
  • Platform as a service (PaaS): This allows the customer to create and deploy custom applications that run in the cloud using programming languages and tools supported by the provider. The customer does not manage or control the underlying cloud infrastructure but has control over the deployed applications.
  • Software as a service (SaaS): The provision of “off-the-shelf” applications running on cloud infrastructure. The applications are accessible from any device with an internet connection via a web browser. The most common example of a SaaS solution is cloud-based email as a service, such as the Exchange Online functionality included in Microsoft Office 365.
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