07 February 2012 20:46:00 AEDT 2 MIN READ

Demystifying the cloud

Cloud computing is the marketing buzzword of 2012. And quite rightly so.

Numerous analyses and reports track the rapid adoption and growth of cloud computing. For example, Deloitte and Gartner calculate the Compound Annual Growth Rate (CAGR) of the cloud computing market between 2008 and 2013 as 24%.

During this period, the size of the market will expand almost threefold from $9.1 billion to $26.6 billion. And beyond 2013, the prospect of further expansion looks just as rosy.

The cloud model for email alone shows market growth at a rapid rate: 10% in 2012, forecasts of 30% by 2015 and predictions of market penetration of greater than 60% by 2022.

As companies of all sizes realise the benefits of the cloud, it’s well worth evaluating the potential fit of cloud-based solutions with your own organisation’s IT strategy.

Cloud terminology

Whilst the hype surrounding the cloud reaches fever pitch and has global appeal, for many it is a rather nebulous expression and not widely understood. The analogy of a cloud is not necessarily the best term to illustrate how its applications work. After all, a cloud is quite an intangible phenomenon. It’s a really abstract concept that gives users no indication of the hardware and infrastructure involved.

As a metaphor for the internet, “the cloud” is just as fuzzy and confusing as the term cyberspace once was.

Given the problematic nature of the term “the cloud”, it’s time to demystify and define it using plain English.

What is cloud computing?

In most simple terms, cloud computing can be seen as any kind of service hosted over the internet. End users take advantage of the infrastructure and capabilities of the company offering cloud solutions, without any burden on their own business network. The infrastructure owned by cloud service providers is real and tangible.

The ultimate aim of the cloud is to provide simple, scalable access to computing resources and IT services that operate outside of the end user’s business network.

How does it differ from traditional business models?

The traditional business model of on-premises applications required businesses to plan ahead to configure and deploy fixed and inflexible levels of IT resources, including both hardware and software. As needs changed, IT capabilities were scaled up or down to suit. Whilst solutions might have been effective, the cost of up-front investment and the financial impact of its downtime had to be absorbed.

Unlike traditional models of computing, cloud computing effectively offers IT capabilities on demand. As demand for computing increases, so does capacity: so no downtime and no up-front investment costs are incurred. By paying only for those IT resources actually used, companies gain the cost advantages that cloud computing offers.

The impact on business

If you understand the cloud, you are more likely to adopt the technology and reap the rewards. Those who don’t face the danger of being left behind. What’s most important is to evaluate your IT strategy, and judge whether or not cloud technology is right for your organisation.