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What Is the Cloud? 5 Key Questions Answered

Now that Cloud Computing has been around for over a decade, many of us are wondering, “How did we get from there to here?” It’s been many years in the making, but cloud-based systems provide businesses with more security, higher levels of reliability and best of all, it gives businesses flexibility.

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Keep reading to better understand the origin of the cloud and how cloud computing benefits your business with lower costs, higher productivity, and a futureproof infrastructure that keeps you focused on your business. 

5 Questions to Help You Understand the Cloud

1. Where Did the Cloud Originate?

The “cloud”—while not a new industry term—some might caution is a new technology requiring a pause before taking that proverbial “leap of faith.”

Those “some” might not have been around for the birth of the computer age when mainframes delivered application services to companies that couldn’t afford them or support them and didn’t want to have to program them. Centralized services delivered to companies through dumb terminals were the dominant infrastructure solution of the day.

Those services are what started the computer revolution and gave companies tremendous productivity advantages to compete in the world. Enterprises that embraced this early form of “cloud” computing created a competitive edge that ultimately allowed them to dominate their slower-to-adopt competitors.

In the 1980s, along came the “personal computer” revolution. This brought tremendous improvements in personal productivity and the ability to personalize the computing environment. Personal computing and the rise of high-speed local area networks (LANs) created an environment ideal for localized servers and distributed computer infrastructures, which epitomized the last two decades.

Unfortunately, along with localized infrastructures came tremendous responsibility in configuring, managing, and supporting these local data centers and network infrastructures. With the exploding complexities of data centers, companies are faced with ever-increasing and sprawling IT departments, rising and redundant capital expenditures, and the increased challenge of dealing with infrastructure obsolescence.

Indeed, companies are faced with a constantly escalating portion of their operating expenses going toward managing their data centers and infrastructures. This is a pain point for many, especially when that isn’t their core expertise or even their unique value add from their customers’ point of view!

Knowledgeable enterprises realize that trying to manage their own data centers and IT infrastructure in today’s competitive world is a no-win situation. Doing so can turn what once might have been a competitive advantage into a boat anchor tied around their necks. It even has the potential to take a company down. These smart enterprises are quickly embracing the IT infrastructure of the 21st century...Cloud IT Services.

In a Cloud IT Services environment, all IT services reside in a secure, reliable, high-performance, infinitely scalable “cloud” data center. It is delivered by a company that is an expert in creating, delivering, and maintaining those services. Services such as communications, computing, storage, and mobility can now be delivered from the cloud by service providers that understand how to configure, deploy, and maintain those services reliably and securely.

Once deployed, Cloud IT Services can be easily self-managed and deliver incredible benefits to an enterprise. Those benefits come in the form of:

  • Lower total cost of ownership
  • Higher productivity
  • Higher levels of business continuity
  • Incredible infrastructure flexibility
  • Ability to focus virtually all resources on the core business and customers 

2. What Is the Cloud Used For?

Cloud-based computing is a relatively new paradigm in which a third-party pool of systems are connected by networks—usually, but not necessarily, the internet. They provide infrastructure, applications, and platforms as a service, all of which are dynamically scalable.

The costs of computation, content storage, and application hosting and delivery are significantly reduced. This is due to the reusable, trans-organizational nature of the cloud. In other words, because the SaaS is offered to multiple clients at once from a single source and from a single code base, the cost to each of those clients is reduced.

Simply put, cloud-based computing means that the applications you use aren't hosted on a machine you own. They aren't restricted to use by your company. In addition to the cost benefits, the net effect of using the cloud for your applications is that you can quickly log into your SaaS servers and have your secure personal files, programs, and even settings exactly as you left them, from any internet-enabled computer. 

3. What Benefits Does the Cloud Offer?

Benefit #1: Lower Total Cost of Ownership (TCO)

IT services today are numerous and daunting. IT departments must deal with everything from file/storage services to communication services.

Unfortunately, for many IT departments, these services typically have been implemented individually over a long period of time. This often results in a mish-mash of on-premise obsolete equipment, disjointed connectivity pipes (from PRIs to T1s), and a confusing array of administration portals and support/maintenance agreements to manage.

As a result, IT staffing resources dramatically expand. This causes capital equipment budgets to explode and ongoing operating expenses to continually rise, driving the total cost of ownership (TCO) for IT services through the roof. For many enterprises, the insidious nature of this inefficient IT structure may be hidden in multiple places on a P&L or balance sheet, further masking the high TCO.

Disparate on-premises equipment and services hobbled together over time can cost an enterprise significantly in obsolescence costs, as well as inefficient connectivity and IT resource costs required to manage and administer disjointed services.

In stark contrast, with a cloud-based unified IT infrastructure, enterprises can achieve a much lower TCO through a number of improvements.

  • First, by moving IT services to a common unified managed Cloud IT Service provider, capital equipment expense is eliminated along with equipment obsolescence costs. The cloud service provider absorbs all of the ongoing upgrade and maintenance costs of the service. An important aspect of this transition is that as new technologies and features are developed by the service provider, they are instantly available to the enterprise, generally at no extra cost. In essence, futureproofing the enterprise’s infrastructure.
  • Secondly, by combining several inefficient IP pipes into a smaller number of more efficient Ethernet-Over-Copper (EoC) connections, enterprises can realize significant savings on recurring communications costs.
  • Finally, deploying unified Cloud IT Services can significantly reduce administration and maintenance overhead in the enterprise’s IT department. With cloud services, self-management of the services becomes a snap with a consistent easy-to-use and universally available browser administration portal. This can allow enterprises to reduce overhead costs while actually providing better service to the enterprise.

Taken together, the reduction in TCO benefits received from moving an enterprise’s IT services to a cloud service provider can be huge.

Benefit #2: Increased Productivity

Employee productivity depends on a number of aspects. Low productivity can be a result of inefficient IT services or the lack of effective IT services. In either case, when you have an enterprise that is saddled with multiple disjointed on-premises IT services being managed and supported from a resource- and knowledge-limited IT staff, the result will undoubtedly be lower productivity for every employee.

In many circumstances, the challenges of current inefficient services will prevent IT departments from deploying new services that can improve employee efficiencies. Instead they opt to simply “maintain the status quo.”

As employees become more mobile, these inefficiencies and limited services can dramatically lower employee productivity to the point of impacting sales and customer satisfaction.

Fifteen minutes a day in increased productivity can save an average-sized enterprise hundreds of thousands of dollars in below-the-line expense reductions.

By moving to a unified cloud IT service provider, enterprises and their employees gain access to the latest and greatest services. This is possible because it is the service provider’s sole focus and their capabilities center on developing and deploying leading-edge IT services.

In addition, cloud-based IT services are consistently available from any device anywhere in the world, making mobile employees more productive because they have access to all their IT services in a consistent manner.

An example of this is unified communications services. On-premise solutions across an enterprise can be inconsistent and potentially incompatible for mobile employees, resulting in inefficient or no access to information or communications critical to doing business. Cloud-based unified communications can deliver consistent information and communications to employees throughout the world in real time, thus maximizing employee productivity. 

Benefit #3: Global Enterprise Continuity

Enterprise continuity is often overlooked until disaster strikes. Then it is often too late to save an enterprise from thousands and even millions of dollars in lost business.

Indeed, for every minute an enterprise’s access to a critical IT service or information is unavailable, damage to existing customer relationships—as well as potential new clients—can mount until the damage is unrepairable. This is especially true in this age of service-oriented products.

Customers can and will take their business to another vendor rather than risk working with a company that cannot guarantee features and services at all times. When providing IT services from on-premise resources, those services are susceptible to a multitude of frequently occurring local events that can take that service down.

From weather-impacting phenomenon such as tornadoes, hurricanes, and snowstorms to other natural disasters such as fires and power outages, many enterprises are simply not equipped to inoculate their on-premise services from these impacts.

With one of the worst natural disaster years in a decade for U.S. enterprises and billions of dollars lost in potential customer revenues, enterprise continuity has become front and center in the minds of many C-level executives.

With unified Cloud IT Services, enterprises become much more immune to “local” impacting events. A local event doesn’t impact services being delivered from a safe and secure cloud infrastructure. Since most cloud services can be accessed from a multitude of devices, employees typically can continue to access what they need.

In other cases, most cloud services have a “disaster mode” in which they can re-route communications and/or access to pre-defined alternative end devices (such as cell phones). In either case, customers and partners typically won’t see any business disruption at all.

Unified Cloud IT Services can ensure that your enterprise maintains business continuity, no matter where your employees or offices are located and no matter what local negative impacting event occurs.

Benefit #4: Elastic Futureproof Infrastructure

In the 21st-century business world, flexibility and adaptability will define successful enterprises.

Do you need to quickly set up new offices in locations around the world? Fluidly move employees to new locations when the need arises? Can you instantly respond to changing financial demands by efficiently and effectively reducing or expanding your infrastructure?

An elastic infrastructure can mean the difference between a responsive organization and a non-responsive one. And in today’s world, responsiveness wins.

Enterprises that deal with on-premise IT services have to inherently deal with hard assets. In many instances those assets are obsolete the day they are installed and simply cannot respond to the ever-changing demands of a dynamic environment. Many on-premise hardware companies have resorted to 5-year leasing options to defer upfront capital costs for enterprises. However, this trade-off can result in being saddled with a long-term equipment lock which is inflexible and inefficient at best, and virtually ensures feature and equipment obsolescence.

Unified Cloud IT Services offer an elastic futureproof service resource that gives an enterprise infinite flexibility and ensures that their infrastructure will remain world class and leading edge at all times.

The unified Cloud IT Service provider absorbs all the capital asset expense and management necessary to deliver the service at any scale necessary. This means that an enterprise can leverage this benefit by dynamically adjusting their infrastructure to minimize excess costs and overhead.

And because the unified IT service provider is an expert at developing and deploying Cloud IT Services, the enterprise can be sure that as new technologies are made available, their infrastructure will instantly have access to those new features and technologies. This will further enhance their competitive edge without the costly investment normally associated with on-premise infrastructure. 

Benefit #5: Focus on Business, Not Infrastructure

Let’s face it, in order to compete in today’s business world, you have to focus and be an expert in something. This is what customers value and are willing to pay for. In general, an enterprise’s core competency is NOT their IT infrastructure. In fact, in most cases, it is a complete distraction to their core competency.

While this distraction might have been hidden under the radar several years ago, that’s not the case now. The critical reliance on so many IT services today makes that distraction visible to everyone in the enterprise who has to deal with inefficiencies and the lack of leading-edge services.

This “distraction” can amount to as much as 5% of an enterprise’s revenue. You have to ask yourself: “If you knew that 5% of your revenue stream was being lost because you didn’t have the right solution for the customer, would you continue to push the wrong product?”

By outsourcing your IT services to a unified Cloud IT Service provider, you move a non-core “distraction” into the hands of industry experts. Their core competency is to develop and deliver those services to your enterprise.

Suddenly, what was a frustrating deficit and distraction becomes a simplified self-managed Cloud IT Service. The enterprise can enjoy all the benefits of being a customer instead of a provider. And resources and capital previously dedicated to these non-core IT services can be redeployed to have a direct positive impact on your business. 

4. Where Am I Already Using the Cloud? 

We are all using the “cloud” in our daily lives. One example is when we place a phone call with our mobile phones. We simply take it for granted that the mobile phone isn’t connected to any “telephone lines,” so we just press a few numbers and before you know it, you’re speaking to someone miles away. 

Suppose you are working on a Word document for business or personal reasons. When you access that document via Dropbox, Box, or any other of a number of storage vendors, that document is uploaded to the cloud. You can open that document on your smartphone, on your laptop, and on your desktop computer, because the point of origin for that document is a cloud-based service provider. 

Have you ever wondered how you’re able to access your favorite website? Or, how you are able to search for that perfect birthday gift for your wonderful spouse online? Well, most websites and online services are delivered via the cloud. 

Every day we all access the cloud without even thinking a thing about it. We don’t really care how our phone works or how the internet magically delivers all of the content we desire at a moment’s notice. All we care about is that it’s available when we need it and that it’s safe to use.

5. How Safe Is the Cloud?

When a cloud solution is delivered from a network of secure, hardened cloud data centers, these data centers provide multiple layers of both physical and cyber security. They protect customer content and ensure reliable nonstop operation of the service.

Redundant components at virtually every level ensure that no single point of failure—including a massive data center failure—can cause a service outage. This is critical when businesses consider migration to the cloud.

However, hardware redundancy is not the only important factor to consider when looking at a cloud service provider. In fact, there are seven key cloud attributes that are critical for any cloud service provider. These include:

  1. Reliability – Reliability is the measurement of how often a service “fails.” The inverse of this is Mean Time Between Failure (MTBF) which is the average uptime between failures of the service. The higher the MTBF, the more reliable the service can be and the less likely the service will fail.

With cloud services, there are many components to delivering the service, including the local LAN and networking equipment, the last-mile circuit, the backbone carrier, and the data center with all its various components. Each one of these components has an MTBF and reliability number. Taken together, the reliability of the whole system can be less than the reliability of the least reliable component.

2. Availability – Availability goes hand in hand with reliability in determining how available the service is or, conversely, how long a service is unavailable. Availability is the inverse of how long a service is unavailable (outage time) when it does fail. Taken together with Reliability, these terms determine how often and how long a service will be “down” and unavailable, which means your employees are “down” and non-productive. Both terms are important.

You can have a service that is reliable (doesn’t fail often) but has low availability, indicating that when the service does fail, it is “down” for long periods of time. Conversely you can have a service that recovers faster from an outage (higher availability) but has a lower reliability, i.e. it fails more often. In both cases, company impact and employee productivity can be significantly impacted. 

3. Scalability – One of the biggest advantages of the cloud is the ability to scale service globally through the theoretical addition of new data centers. While this may sound easy, adding data centers and interconnecting them in such a way that service can be consistently accessible is not easy.

Some cloud service providers that depend on third-party technology vendors to provide the service have a challenge. They must deploy and maintain the same version of that technology across all data centers or be faced with inconsistent features or operations between each data center. This can be very counter-productive to a company that depends on service consistency.

4. Security – Cloud security has been a much talked-about topic for many years. Extending the IT infrastructure outside of the physical confines of a corporate building can pose security challenges, both physically as well as in cyberspace. Over the past couple of years, however, business cloud service providers have made tremendous progress in securing the cloud environment for enterprises to confidently migrate to the cloud.

The key to ensuring a secure cloud service environment is working with a service provider that can provide end-to-end security from endpoints (IP phones, desktops, and mobile devices) to secure broadband connections and secure cloud services themselves. 

Be sure to check out our post on cloud security to learn even more about secure cloud computing.

5. Quality of Service (QoS) – Quality of Service is one of the most important cloud service attributes. It can negatively impact productivity for every employee in the company and it can occur instantaneously at any time without warning. Additionally, QoS may be impacted by external factors; more so in certain cloud service providers than others.

As more IT services are moved to the cloud, interservice QoS issues will also become a more frequent occurrence, challenging even the best cloud service provider to be able to resolve. Third-party circuits, networking equipment, data center bandwidth, and scalable software architectures all play a role in determining QoS.

6. Service Level Agreement (SLA) – The SLA represents the actual legal “meat” behind all the service attributes. It is how the cloud service provider stands behind their service and exactly what guaranteed service levels it will deliver. The SLA should be reviewed for level and completeness in covering all service attributes listed here.

7. Support – Support is key when outsourcing your business-critical IT services to a cloud service provider. When an issue arises, getting fast and accurate support can have a major impact on your bottom line. Understanding the support escalation process is critical to resolving issues in a timely manner.

Final Thoughts

Migration of IT services to the cloud has become mainstream, as the benefits are substantial while the risks/challenges continue to be mitigated. However, all cloud service providers are not created equal (just like on-premise equipment providers). Indeed, there are many factors that differentiate cloud service providers that enterprises must consider to have a successful and pain-free migration and continued operation of cloud services.

 Frost & Sullivan Award