What are the Benefits of Cloud Computing?

Cloud computing has changed the way organizations think about building an IT infrastructure. By enabling users to access computing resources over the internet, the cloud delivers a host of benefits, including greater efficiency and productivity, enhanced agility, cost savings and more. 

This article describes the main types of cloud computing and details common use cases. It then breaks down the benefits of cloud computing into several key categories.

In This Article:

• What is Cloud Computing?
• Importance of Cloud Computing
• Types of Cloud Computing
• What are the Main Uses of Cloud Computing?
• Five Key Advantages of Cloud Computing
• The Cost Benefits of Cloud Computing
• What are the Risks of Cloud Computing?
• Scalability in Cloud Computing
• Five Cloud Computing Future Trends To Watch

Cloud computing is an internet-based concept that delivers computing resources and IT services to customers on demand. These resources are hosted by cloud service providers in remote data centers and can include servers, storage, databases, networking and software. 

A key characteristic of cloud computing is that customers don't own or maintain the physical IT infrastructure they use—they rent it. Rather than paying a hefty upfront fee for these resources and services, customers pay as they go for whatever they consume. 

Other characteristics of cloud computing include: 

• On-demand self-service: Users can access needed cloud resources without interacting with service provider representatives.
• Broad network access: Customers can access their services over the network using standard mechanisms.
• Resource pooling: The cloud service provider aggregates its resources to serve many customers using a multi-tenant model. 
• Rapid elasticity: Cloud systems can provision and release resources as needed to scale quickly in response to spikes in demand. 
• Measured service: Customers can monitor, control and report resource usage, providing transparency to themselves and their provider.

Related articles:

• What is SaaS?
• What is Cloud ERP?

Cloud computing has dramatically changed business operations by providing organizations with cost-effective, scalable and flexible IT solutions. It enables businesses to access the computing resources they need—remotely—and stay focused on core tasks. 

Cloud computing has become increasingly important for businesses due to several key benefits:

• Cost Efficiency: As mentioned above, cloud computing eliminates the need for companies to purchase costly hardware and software to establish their IT infrastructure. Customers also avoid maintenance and upgrade fees because cloud providers manage the infrastructure. 
• Environmental Sustainability: Many companies find the cloud more efficient for using computing resources. They access the exact amount of resources they need, reducing their carbon footprint rather than building out an infrastructure on-premises. As an added benefit, many cloud data centers use renewable energy sources. 
• Faster Innovation: Companies can access emerging technologies such as AI, machine learning and big data analytics in the cloud, which gives them a competitive advantage. Startups hoping to disrupt their industries without making large capital investments in hardware can conveniently access the technologies they need. 
• Support for Global Expansion: Using the cloud, businesses can deploy applications and services quickly to employees across geographic regions. Employees and customers can enjoy a better user experience with less latency. 

Although cloud computing is characterized by its openness and scalability, it's not a one-size-fits-all technology. Within cloud computing, there are distinct deployment and service models. Each differs in the level of control, flexibility and management it offers customers. 

Cloud deployment models include:

• Public cloud. In this model, cloud providers deliver cloud services over the Internet. Multiple organizations share the services on a subscription basis. 
• Private cloud. In this model, a single organization accesses dedicated computing resources. The organization either hosts these resources in its own data center or engages a hosting provider.
• Hybrid cloud. A company using this model shares data and applications across both public and private clouds.

Cloud service models include:

• Infrastructure as a Service (IaaS): IaaS lets companies access virtualized computing resources over the internet rather than implementing them on-premises.
• Platform as a Service (PaaS): PaaS delivers hardware and software tools for application development and deployment over the internet, freeing developers to write code instead of managing a platform. 
• Software as a Service (SaaS): Companies can subscribe to access SaaS solutions, eliminating the need to install application software locally. 
• Function as a Service (FaaS) or Serverless Computing: Rather than provisioning and maintaining servers, software developers can use FaaS to run code on remote servers. 
• Containers as a Service (CaaS): Software developers sometimes package applications into a portable unit called a container. With CaaS, they can deploy and manage their applications without having to manage the computing infrastructure underneath. 

Cloud computing offers solutions for virtually any kind of business. Here are some of the most popular use cases:

• File Storage and Data Backup: With cloud storage, users can store, access, share and sync files from any device with an internet connection. They can also back up and archive data to implement disaster recovery and business continuity.
• Big Data Analytics: Cloud computing gives companies the infrastructure and tools they need to handle large, complex datasets. From there, they can perform advanced analytics or delve into AI and ML.
• Software Development and Testing: Developers can speed up the development process by using cloud platforms to access tools and environments for building, testing and deploying applications.
• Infrastructure Scaling: In industries with fluctuating needs, cloud computing helps businesses scale their computing resources up or down based on demand.
• Collaboration and Communication: Companies can enhance remote teamwork using cloud-based document sharing, video conferencing and project management tools.
• Business Applications: One of the most common uses of cloud technology is the SaaS model, which is how many companies now access their enterprise software solutions. Popular solutions include customer relationship management (CRM), enterprise resource planning (ERP) and productivity suites.
• E-commerce: Cloud computing provides scalable infrastructure and services businesses need for inventory management, payments and customer data handling.
• Education and e-learning: Cloud-based platforms support online learning, curriculum development and educational resource sharing.
• Gaming: By streaming their games through cloud gaming services, creators can avoid implementing powerful hardware locally.
• Internet of Things (IoT): Collecting, processing and analyzing data from IoT devices requires a robust computing infrastructure, which many companies access in the cloud. 

Companies use various types of cloud computing across many use cases because of the distinct business benefits they gain. Here are some of the main advantages of cloud computing: 

1. Scalability and Flexibility: As its computing needs change, a business can quickly scale its resources up or down in the cloud. Firms can also experiment more rapidly because they access new technologies as they emerge, without a need to install them locally.
2. Better Collaboration: Cloud computing allows teams to work on the same documents and projects from anywhere. They can log onto mutual applications from devices with an internet connection, bringing teams closer together.
3. Greater Security and Reliability: Cloud providers often provide stronger security measures and disaster recovery technology than companies would implement independently. Because cloud providers back up and protect all data, there's less risk of data loss. Disaster recovery capabilities help ensure that cloud customers achieve business continuity.
4. Increased Speed and Agility: In the cloud, businesses can deploy resources and applications very quickly, accelerating their time to market for new products and services.
5. Ability to Focus on the Core Business: Cloud solutions reduce the infrastructure management burden on companies' IT staffs. As a result, they can focus more of their time on strategic initiatives and avoid growing their IT headcount at the same rate as the rest of the business. 

Of all the reasons organizations move their business processes to the cloud, cost savings is among the top benefits. Here's where those lower costs come from: 

• Reduced Infrastructure Costs: Cloud solutions eliminate the need to buy and maintain on-premises hardware and infrastructure. That's why 39% of enterprises have fully achieved their cost-saving goal from cloud adoption.
• Greater Scalability at a Lower Cost: Cloud computing features an incremental payment model in which companies are billed only for the resources they use. Companies can scale their computing resources up or down without significant capital investments.
• Lower Maintenance costs: Because cloud providers handle maintenance and updates for their systems, cloud users often reduce their IT labor costs. Automatic updates to cloud systems eliminate the expenses businesses frequently incur due to system downtime.
• Reduced Operational Costs: Companies that rely on cloud computing solutions have less need to employ large in-house IT teams. They can also reduce electricity costs by not maintaining on-premises data centers or server rooms.
• Speedy, Cost-Effective Disaster Recovery: Rather than running expensive on-site backup systems, companies can achieve quick data recovery in the cloud. Cloud-based backup helps reduce the costs usually associated with data loss and downtime. 

Although businesses can reap many benefits from cloud computing, they must be cautious. As with any technology purchase, there are potential downsides. Here are some of the possible risks of cloud computing:

• Data Privacy Concerns: Security vulnerabilities in a cloud solution could lead to data and privacy breaches, as companies that use cloud solutions have no control over where and how providers store their data. It's also possible that cloud provider employees could access customer data.
• Compliance Issues: When companies store data in the cloud, it can be more challenging to ensure compliance with regulations such as GDPR and HIPAA.
• Downtime and Service Interruptions: Businesses can't access their cloud services without an internet connection, and access interruptions can cause business disruptions. 
• Vendor Lock-In: Migrating data and services from one cloud provider to the next can be difficult, and companies may become dependent on proprietary technologies from specific vendors.
• Limited Visibility and Control: Organizations have little insight into the infrastructure and operations of their cloud providers. Compared to on-premises solutions, cloud services are minimally customizable. 
• Cost Management Challenges: It can be difficult for companies to predict and control their cloud spending, especially if they consume many resources. Depending on the provider, there may also be hidden data transfer and storage costs. 

Cloud infrastructures are scalable because they can adjust their resources dynamically to meet workload demands. This scalability is one of the most appealing aspects of cloud computing. It enables businesses to manage their IT resources efficiently even as business needs continue to change. 

Types of Cloud Scalability

Cloud infrastructures offer three main types of scalability:

1. Horizontal Scalability (Scale Out): When workloads increase, cloud infrastructures can scale out by adding more instances of resources—for example, by involving more servers and distributing the workload across them. With horizontal scalability, cloud infrastructures can theoretically achieve infinite scaling. Scaling out is ideal for handling large-scale web traffic or data processing needs.
2. Vertical Scalability (Scale Up): Cloud infrastructures can also respond to increased demand by increasing the capacity of resources that are already in use—for example, by adding more CPU, RAM or storage to a server. Unlike horizontal scalability, vertical scalability can’t achieve infinite scaling because it’s limited by the capacity of each individual resource. But it’s suitable for applications that require more processing power on a single instance.
3. Diagonal Scalability (Hybrid): Combines horizontal and vertical scalability. With this hybrid form of scalability, the cloud infrastructure can optimize existing resources while adding new instances as needed. This scalability approach provides maximum flexibility in managing resources. 

Benefits of Cloud Scalability

By using the three types of scalability, organizations are building efficient, highly responsive cloud infrastructures that support their goals for growth and innovation. Scalability helps these organizations:

• Deliver Better Computing Performance: Businesses can quickly add resources during periods of peak demand. This flexibility ensures they’ll deliver an optimal user experience with even maximized performance levels.
• Adapt to Changing Market Conditions: Changes in the business landscape often force organizations to rethink their business strategies on the fly and remake their computing infrastructures quickly. Scalable cloud technology allows companies to deploy new applications or services with ease.
• Reduce Downtime: Hardware failures can bring business processes to a crawl. Cloud computing improves fault tolerance by distributing workloads across multiple resources.
• Achieve a Global Reach: With scalable cloud technology, businesses can expand into new geographic regions more efficiently and deliver services to a worldwide customer base. 

Cloud computing continues to evolve. In the coming years, cloud services providers will most likely incorporate many emerging technologies into their platforms in response to the diverse business demands of their customers. Here are a few examples: 

1. AI and ML integration: Seeking to help their customers deploy intelligent applications, cloud providers have begun offering AI and ML services. For example, some providers already provide AI-as-a-Service (AIaaS), which allows companies to use AI capabilities even if they lack in-house expertise.
2. Edge Computing: Thanks to the growth of the Internet of Things (IoT)—a technology approach in which computers and other devices can talk to each other without a human intermediary—businesses want to process data closer to where it's generated. By enabling processing on the "edge," cloud providers can help reduce latency and enable real-time analysis for some applications.
3. Sustainable Computing: Companies around the globe want to reduce their environmental footprint. Cloud services providers are catering to these needs by committing to renewable energy use and striving towards carbon neutrality goals.
4. Enhanced Security and Compliance: As cyber threats evolve and intensify; companies demand more robust security technology. Cloud providers are responding by implementing advanced security frameworks. For example, it's becoming more common to see built-in compliance tools that help businesses navigate complex security and data privacy regulations.
5. Blockchain: Blockchain enables companies to record transactions across an entire network of computer systems so that it will be difficult or impossible to change, hack or cheat the system. It's an increasingly important technology in a time of constant cyberattacks, so some cloud service providers have begun providing Blockchain-as-a-Service (BaaS) solutions.

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