Here’s Why Cloud Computing Is So Hot Right Now

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Cloud computing is hot these days, with nearly every enterprise vendor using the term. In some cases, companies even use it to describe products they’ve sold for years. Oracle’s Larry Ellison tried to resist — a couple of years ago, he famously called the hype about cloud computing “complete gibberish” — but now even Oracle has gotten on board.So what is cloud computing and why are businesses embracing it?

What Is The Cloud?

At its simplest, cloud computing means that users are connecting to applications that run on a set of shared or pooled servers, rather than running on a single dedicated server.

This is a subtle but important change from the client-server computing that has dominated IT for the past 20 years, where each application was “assigned” to a particular piece of hardware in a data centre. If that hardware was down, the user either had to connect to a backup (which had to be standing by and ready) or would suffer an interruption in service.

In the earliest instances, these shared resources were physically located away from the company’s premises, and users would connect to them over the public Internet. For instance, a user would connect to or Rackspace to run business management apps or email, or a developer would tap into Amazon’s Web servers for storage and computing power.

So the “cloud” in cloud computing was the Internet, which is often represented with a physical cloud on software design and networking charts.

But in the last two or three years, vendors like Microsoft and IBM have been pushing the idea of “private clouds.” These are sets of servers run by large companies or government agencies for the exclusive use of their employees, who usually connect to them over a private area network.

Types Of Cloud Computing

In addition to public and private clouds, several types of services are often lumped together under the term.

  • Software as a service (SaaS). These are end-user applications, like productivity or business management software, that run on a set of pooled hardware resources and are accessed over a network. Pioneers here include’s CRM and business management services and Google Apps, as well as startups like Zoho, but other companies have recently gotten into the act — particularly Microsoft, with its Office 365 services. SaaS is usually contrasted with products like Microsoft Office, which run on a user’s PC.

  • Platform as a service. Here, service providers offer a set of application “components” which developers can put together into applications — a bit like building with Legos. Examples here include’s platform and Microsoft’s Windows Azure platform.
  • Infrastructure as a service. Sometimes called “utility computing,” in this case a developer builds an application from scratch — no building blocks are provided. But when it comes time to run the app, they run it in a virtual machine (software that imitates a dedicated server) rather than on a dedicated physical machine. That means that as more users need the application, the provider can quickly easily serve them by spinning up new virtual machines. Amazon Web Services, Rackspace, and Xerox (through Affiliated Computer Services) are among the players who offer this kind of cloud computing.

What Are The Benefits?

So why are so many businesses embracing cloud computing?

  • Efficiency: lower hardware and IT costs. Instead of companies filling their own data centres with servers that need to be powered, cooled, and managed by IT staffers, companies effectively outsource their hardware needs to providers who already run huge data centres and know how to configure them for maximum efficiency, like Microsoft, Amazon, and Rackspace. In the case of private clouds, having virtualized applications run on pooled resources makes much more efficient use of hardware, requiring fewer servers to be purchased — and fewer IT staffers to maintain them.
  • Agility: add capacity fast. Five years ago, if a Web startup got featured on CNN, the resulting traffic load would almost certainly crash its servers. But today, a company can simply buy more capacity from a cloud computing provider. But agility is also important for bigger companies. For instance, a certain accounting application might get particularly heavy usage around tax time. Before cloud computing, companies would have to devote hardware to this app, and have it sit idle through most of the year. Now, they can simply add and remove resources at will. 
  • Flexibility: pay for what you need. Most SaaS services are billed per user per month, and platform and infrastructure services are billed based on the capacity actually being used. In the old world, businesses had to estimate how many software licenses they would need for the coming year. If they overbought, they were stuck with those licenses.

Cloud computing isn’t a perfect panacea — with public clouds, companies still have reason to worry about data security and support, and proprietary lock-in to a particular cloud vendor’s solution is a concern with both public and private clouds.

But overall, the trend is clear — cloud computing is here to stay.