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Cloud Computing

Cloud computing refers to the on-demand delivery of computing resources over the internet, including physical or virtual servers, data storage, networking tools, application development platforms, software, AI-driven analytics, and more. These services are offered on a pay-as-you-use basis.

The cloud computing model provides customers with enhanced flexibility and scalability compared to traditional on-premises infrastructure.

It is deeply integrated into our daily lives, whether it’s using a cloud-based application like Google Gmail, streaming movies on platforms such as Netflix, or enjoying cloud-hosted video games.

In the business world, cloud computing has become essential, supporting organizations of all sizes—from small startups to multinational corporations. Its applications in business are vast, including enabling remote work by ensuring data and applications are accessible from anywhere, facilitating seamless omnichannel customer interactions, and delivering the immense computational power required for advanced technologies like generative AI and quantum computing.

A cloud service provider (CSP) delivers and manages cloud-based technology services through remote data centers. These services are typically offered on a pay- as-you-go basis or through monthly subscription plans.

History of cloud computing

The concept of cloud computing traces back to the early 1960s, when Dr. Joseph Carl Robnett Licklider, an American computer scientist and psychologist often referred to as the “father of cloud computing,” introduced the idea of global networking through his vision of an “Intergalactic Computer Network.” However, modern cloud infrastructure for business use did not take shape until the early 2000s.

 

In 2002, Amazon Web Services (AWS) launched its first cloud-based storage and computing services. By 2006, AWS introduced Elastic Compute Cloud (EC2), allowing users to rent virtual machines to run their applications. That same year, Google debuted Google Apps (now Google Workspace), a suite of SaaS productivity tools. Microsoft followed in 2009 with its first SaaS offering, Microsoft Office 2011.

Today, cloud computing continues to grow at an unprecedented rate. Gartner predicts that global end-user spending on public cloud services will reach $679 billion in 2024 and is expected to surpass $1 trillion by 2027.

Cloud computing components

Data Centers

Cloud service providers (CSPs) manage remote data centers that house the physical infrastructure required for cloud computing, including servers, storage systems, and other essential hardware. These facilities form the backbone of cloud computing, providing the foundational resources that power cloud-based services.

Networking  Capabilities

High-speed networking is vital for cloud computing. Typically, a wide-area network (WAN) connects front-end users—such as client interfaces accessed via web-enabled devices—with back-end systems, including data centers and cloud- based services. Advanced networking technologies, such as load balancers, content delivery networks (CDNs), and software-defined networking (SDN), are also utilized. These ensure that data flows seamlessly, efficiently, and securely between users and the cloud infrastructure.

Virtualization

Virtualization plays a key role in cloud computing by abstracting IT resources— such as servers, operating systems, and networks—through specialized software. This abstraction allows physical hardware to be divided into multiple virtual resources. For instance, a single physical server can operate as several virtual servers. Virtualization helps cloud providers optimize their data center resources, maximizing efficiency and scalability.

Benefits of cloud computing

Compared to traditional on-premises IT, where businesses manage their own physical data centers and servers to access computing power, storage, and other resources, cloud computing offers several advantages depending on the services chosen:

Cost-effectiveness

Cloud computing eliminates the need for businesses to invest in and maintain expensive on-premises infrastructure, such as mainframe computers and servers. Instead, organizations pay only for the cloud resources they use, reducing upfront costs and operational effort.

Speed and Agility

Cloud computing enables businesses to deploy enterprise applications within minutes, bypassing the lengthy process of hardware procurement, configuration, and software installation. This agility allows teams, particularly DevOps and development teams, to quickly access cloud-based tools and infrastructure to accelerate innovation.

Unlimited Scalability

With cloud computing, organizations can easily scale resources up or down to match demand, avoiding the inefficiencies of maintaining unused capacity during slow periods. Additionally, businesses can leverage their cloud provider’s global network to distribute applications closer to end users around the world, improving performance.

Enhanced Strategic Value

Cloud computing empowers businesses to adopt advanced technologies and innovations to gain a competitive edge. For example, generative AI-powered virtual assistants hosted in the cloud can improve customer response times in industries like retail and banking, freeing up teams for higher-value tasks. In manufacturing, cloud-based solutions enable real-time collaboration and monitoring of logistics and supply chain data for better decision-making.

Cloud computing services

IaaS, PaaS, SaaS, and Serverless Computing are the most common cloud service models, often used in combination by organizations to meet their diverse needs.

IaaS (Infrastructure-as-a-Service)

IaaS offers on-demand access to essential computing resources such as physical and virtual servers, networking, and storage. Delivered over the internet on a pay- as-you-go basis, IaaS allows businesses to scale resources up or down as needed. This eliminates the need for significant upfront investments in infrastructure and prevents over-provisioning to accommodate occasional spikes in usage.

The IaaS market is expected to grow significantly, with projections reaching

$212.34 billion by 2028, at a compound annual growth rate (CAGR) of 14.2%, according to a Business Research Company report.

PaaS (Platform-as-a-Service)

PaaS provides developers with an on-demand platform that includes hardware, complete software stacks, infrastructure, and development tools. It allows them to build, deploy, and manage applications without the complexity of maintaining the underlying infrastructure.

PaaS platforms are often container-based, using technologies like Docker and Kubernetes. Containers allow developers to package applications with only the necessary operating system services, making them portable across different environments.

Popular PaaS solutions include Red Hat® OpenShift®, which leverages Docker containers and Kubernetes for automating tasks like deployment, scaling, and load balancing for containerized applications.

SaaS (Software-as-a-Service)

SaaS delivers application software hosted in the cloud, accessible via a web browser, a dedicated client, or APIs. Users typically subscribe to SaaS on a monthly or annual basis, with some services offering pay-per-use pricing.

SaaS provides key benefits:

  • Automatic Updates: Users access new features as they’re released by the provider, avoiding the need for manual upgrades.
  • Data Loss Protection: Application data is securely stored in the cloud, safeguarding it even if a device fails.

SaaS is now the leading delivery model for commercial software. Popular SaaS solutions include industry-specific tools, enterprise software like Salesforce, and AI-powered applications. SaaS accounted for over 48% of the $778 billion global cloud software revenue in 2023, according to an International Data Center (IDC) survey.

Serverless Computing

Serverless computing shifts the responsibility for back-end infrastructure management—such as provisioning, scaling, and maintenance—to the cloud provider. Developers can focus solely on coding and business logic, while the cloud provider handles the infrastructure.

Serverless platforms automatically scale resources in response to application demand and charge customers only for the resources used during execution.

FaaS (Function-as-a-Service) is a subset of serverless computing. It allows developers to execute specific application functions in response to events. All back-end infrastructure is provisioned automatically in real-time and deactivated after the function completes. Billing is based on the duration of execution.

Serverless computing is ideal for applications with unpredictable workloads, offering cost-efficiency and scalability without the need to manage infrastructure.

Types of Cloud computing

Public Cloud

A public cloud is a cloud computing model where a cloud service provider (CSP) offers computing resources over the internet to users. These resources can include SaaS applications, virtual machines (VMs), bare-metal servers, enterprise-grade infrastructures, and development platforms. Access is typically based on subscription plans, pay-as-you-go pricing, or sometimes even offered for free.

The CSP owns and manages all the infrastructure, including data centers, servers, and networks, ensuring high-performance access and reliability. Public clouds operate in a multi-tenant environment, where customers share the provider’s infrastructure. Leading public cloud providers, such as AWS, Google Cloud, IBM Cloud®, Microsoft Azure, and Oracle Cloud, serve millions of users globally.

Public cloud services are highly elastic and scalable, allowing organizations to efficiently manage changing workload demands while saving costs. Many businesses transition to public cloud solutions to reduce their reliance on on- premises infrastructure. According to Gartner, by 2026, 75% of organizations will adopt digital transformation models that rely on cloud platforms as their foundation.

Private Cloud

A private cloud is a dedicated cloud environment where all infrastructure and resources are exclusively used by a single organization. It combines the benefits of cloud computing—such as scalability, elasticity, and simplified service delivery— with the security, access control, and customization of on-premises setups.

Private clouds are often hosted within the organization’s own data center but can also be hosted by a third-party provider or on rented infrastructure in an offsite facility.

Private clouds are particularly suitable for industries like government, healthcare, and finance, where compliance with regulatory standards is critical. These environments are ideal for workloads that involve sensitive data, including personal information, intellectual property, or confidential records.

By designing private cloud architectures with cloud-native principles, organizations can transition workloads to public cloud platforms or operate within hybrid cloud setups when needed.

Hybrid Cloud

A hybrid cloud combines public clouds, private clouds, and on-premises infrastructure into a single, interconnected environment. This flexible architecture allows organizations to run applications and workloads across different environments, optimizing performance and cost.

Initially, hybrid clouds were used to migrate on-premises data to private cloud environments, which could then connect to public clouds. Modern hybrid cloud solutions, such as Red Hat® OpenShift®, integrate tools to offer unified management and seamless operation across environments.

Today, hybrid clouds enable workload portability and automated deployment across various infrastructures, offering flexibility, security, and cost-efficiency. For example, hybrid clouds are ideal for application development and testing, allowing teams to leverage public cloud resources without investing in additional hardware. Once applications are developed, they can be moved to private cloud environments as required.

A hybrid cloud also supports cloud bursting, where public cloud resources are temporarily used to handle traffic spikes without impacting private cloud workloads. This feature is widely used by streaming platforms like Amazon to manage sudden surges in viewership.

More than 77% of businesses now rely on hybrid cloud solutions due to their flexibility and cost advantages, as reported by the IBM Transformation Index: State of Cloud.

Multi Cloud

Multicloud involves using services from two or more different cloud providers, including SaaS, PaaS, and IaaS. While some organizations use multi cloud environments for simple combinations (e.g., email from one provider and image

editing software from another), enterprises typically leverage multiple providers to access a wider range of features and innovations.

Multi Cloud strategies allow businesses to avoid vendor lock-in, select best-of- breed solutions, and customize their cloud environments to meet specific needs. For instance, an organization might use AWS for global hosting, IBM Cloud for data analytics, and Microsoft Azure for enhanced security.

Multi Cloud environments also help address challenges like “shadow IT,” where unapproved tools or resources are used without the IT department’s oversight, potentially causing compatibility or security issues.

Modern Hybrid Multi Cloud

Most enterprises now adopt a hybrid multi cloud model, combining the flexibility of multi cloud with the efficiency and control of hybrid cloud environments. This approach allows organizations to deploy workloads strategically across different platforms, optimizing performance, cost, and security.

While hybrid multi cloud offers significant benefits, managing multiple cloud providers can be complex. Each provider has unique tools, data transfer rates, and security protocols, making unified management essential.

Hybrid multi cloud management platforms help streamline operations by providing a central dashboard where:

  • Development teams can track projects and
  • Operations teams can monitor resources like clusters and
  • Cybersecurity teams can detect and address

With over 97% of enterprises now using multiple clouds and many running 10 or more, a robust hybrid multi cloud strategy is critical for operational success and innovation.

Cloud Security

Traditionally, security concerns have been a significant barrier for organizations considering cloud services, especially public cloud solutions. Ensuring security in the cloud requires distinct processes and skillsets compared to legacy IT systems. Key best practices for cloud security include:

  1. Shared Responsibility Model

Cloud security operates on a shared responsibility framework:

  • Cloud service providers (CSPs) are responsible for securing the underlying cloud infrastructure.
  • Customers are responsible for protecting their data within the It is also crucial to establish clear data ownership agreements between private and third-party public entities.
  1. Data Encryption

To safeguard information, data should be encrypted:

  • At rest (stored data)
  • In transit (data being transmitted)
  • In use                            (active processing) Organizations should retain full control of encryption keys and hardware security modules to enhance security.
  1. Collaborative Management

Effective communication and well-defined processes between IT, operations, and security teams are vital. This collaboration ensures secure and sustainable cloud integrations.

  1. Security and Compliance Monitoring
    • Start by understanding the regulatory compliance standards applicable to your industry.
    • Actively monitor all connected systems and cloud-based services across environments, including on-premises systems, private clouds, hybrid clouds, and edge computing setups, to maintain full visibility of data exchanges.

Cloud Security Tools Offered by CSPs

Cloud security evolves constantly to counter new threats. CSPs provide advanced tools and services to help organizations secure their cloud environments. These include:

  • Identity and Access Management (IAM):

Automates and enforces policies to control user access to both on-premises and cloud-based resources.

  • Data Loss Prevention (DLP):

Combines real-time alerts, encryption, and other preventative measures to protect data in motion and at rest.

  • Security Information and Event Management (SIEM):

SIEM tools use AI to automate threat detection, monitoring, and response. By analyzing log data from various platforms and digital assets, they enable IT teams to quickly address potential security threats.

  • Automated Compliance Platforms:

These tools centralize compliance controls, data collection, and regular updates. They help organizations adapt to evolving industry-specific regulatory standards efficiently.

By implementing these strategies and leveraging modern security tools, organizations can effectively navigate cloud security challenges and protect their data in increasingly dynamic environments.

Cloud sustainability

Sustainability in business—referring to a company’s efforts to minimize the environmental impact of its operations within a specific market—has become a crucial component of corporate governance. In fact, Gartner forecasts that by 2025,

carbon emissions from hyperscale cloud providers will rank among the top three factors influencing cloud purchasing decisions.

As organizations aim to achieve their sustainability goals, cloud computing is increasingly instrumental in helping reduce carbon footprints and manage climate- related challenges. Unlike traditional data centers, which rely heavily on power- intensive supplies and cooling systems, migrating IT resources and applications to the cloud offers several advantages:

  • Enhanced energy efficiency: Cloud Service Providers (CSPs) optimize energy use by pooling resources across their data centers.
  • Reduced operational costs: Organizations benefit from streamlined processes and decreased dependency on energy-heavy infrastructure.

By leveraging cloud technology, businesses can align their operational efficiency with environmental sustainability objectives.

Cloud use cases

According to a forecast by the International Data Corporation (IDC), global spending on cloud-related offerings, infrastructure, and services is expected to exceed USD 1 trillion in 2024, maintaining a robust compound annual growth rate (CAGR) of 15.7%. Here are some of the key benefits businesses are gaining from cloud computing:

  • Scalable infrastructure: Easily adjust resources up or down to meet changing business needs.
  • Business continuity and disaster recovery: Cloud solutions provide affordable redundancy to protect data and ensure recovery during local disruptions or disasters. Major public cloud providers offer Disaster Recovery-as-a-Service (DRaaS) to help businesses recover quickly.
  • Develop and test cloud-native applications: Cloud services support Agile,

DevOps, and DevSecOps practices by providing on-demand self-service resources, preventing bottlenecks in development and testing phases.

  • Support for edge computing and IoT: Minimize latency and reduce

downtime by bringing data closer to the edge, enabling real-time data

collection from IoT devices, such as patient monitoring systems or

production line sensors.

  • Harness advanced technologies: Cloud computing allows for the processing and storage of large amounts of data at high speeds, enabling cutting-edge technologies like blockchain, quantum computing, and large language models (LLMs) that power tools such as generative AI for customer service automation.

Top 3 Leading Cloud Service Providers

The global cloud computing market is currently dominated by three major players: AWS (31% market share), Microsoft Azure (25% market share), and Google Cloud (11% market share). Here’s a breakdown of these top providers:

  1. Amazon Web Services (AWS) – 31% Market Share

Launched in 2006, AWS is the oldest and most established cloud service provider. It was created by Amazon.com and has since gained significant popularity, becoming the most trusted name in cloud computing.

AWS’s reputation for security has contributed greatly to its success, making it a top choice for both startups and established companies that prioritize data security.

Services Offered: AWS covers a wide range of services including computing, storage, management, networking, analytics, development, security, and IoT (Internet of Things).

Availability Zones: AWS operates 77 Availability Zones in 24 geographic regions globally. They are expanding, with plans to add 18 more Availability Zones and 6 regions in India, Australia, Spain, Indonesia, Switzerland, and Japan.

Notable Customers:

  • Netflix
  • Samsung
  • BMW
  • Unilever
  • Zynga
  1. Microsoft Azure – 25% Market Share

Launched in 2010, Microsoft Azure quickly gained popularity and became a formidable competitor to AWS, offering high-quality services and attractive packages to customers.

Services Offered: Microsoft Azure’s services span several domains, including machine learning, analytics, databases, computing, blockchain, IoT, developer tools, networking, security, and storage.

Availability Zones: While Azure has fewer Availability Zones than AWS, it still maintains a strong position in terms of customer satisfaction and service offerings.

Notable Customers:

  • Bosch
  • Walgreens Boots Alliance
  • Citizen Care Pod
  • BBC
  1. Google Cloud Platform (GCP) – 11% Market Share

Introduced in 2011, Google Cloud Platform (GCP) is the newest of the top three cloud providers but has quickly become a strong contender in the market, competing effectively with AWS and Azure.

Services Offered: GCP primarily offers services in computing, storage, and networking, with continuous additions to its offerings, including services like Cloud Scheduler, Cloud Key Management, Virtual Private Cloud, and Cloud Dataproc.

Availability Zones: Google Cloud operates in 24 regions and 73 zones, with plans for expansion into countries like India, Canada, Chile, Spain, Italy, Qatar, Poland, France, and Australia.

Notable Customers:

  • Cardinal Health
  • Twitter
  • PayPal
  • Blue Apron
  • Airbus

Each of these top cloud providers continues to innovate and expand their services, with AWS maintaining the largest share, followed closely by Microsoft Azure and Google Cloud.

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