In recent years, perhaps the most influential and transformational piece of technology to impact on the business world has beens cloud computing – but, what exactly is it? In simple terms - cloud computing is the commercial storage of data, and the provision of computing services over the internet. Cloud service providers are specialist technology companies that offer a range of cloud computing services over the Internet to paying clients.

Business benefits

There are many recognisable benefits to business from utilizing cloud service providers, including:

1. Significant cost savings
Once operating on the cloud, the client no longer needs to spend money to continuously upgrade their information technology systems to cope with the ever- growing amount of data captured and stored in the normal course of business. Significant money can be saved by not needing to invest in expensive new technology to meet changing business data processing needs.  As most cloud services are available on a ‘pay as you use’ basis, only those cloud services that are actually required by the client incur any costs.

2. Enhanced security
Quite understandably many organisations have legitimate security concerns when it comes to using cloud services, as the internet is prone to cyber-attacks and resultant data losses. Therefore, assurances are needed to confirm that cloud services are very secure, since if authorised users can remotely access data, what is to prevent hackers from doing the same thing? Cloud service providers are able to ensure enhanced security to clients through the encryption of data that is transmitted and stored in cloud databases. Through encryption, data is incomprehensible and of no intrinsic value to hackers.

3. Flexibility
Cloud service providers offer their clients greater flexibility when compared to local on-site arrangements. For example, should the client require additional data storage capacity to meet changing business needs, a cloud service provider can deliver this instantly, rather than requiring complex, expensive and time-consuming enhancements to the client’s in-house infrastructure. The resultant operational flexibility can make a considerable difference to the overall efficiency of clients, allowing them to grasp business opportunities as and when they arise and focus on delivering planned objectives. 

4. Mobility
Cloud services allow mobile access to data stored through any authorised smart device, which is a great way for a client to ensure that everyone who requires data access has it whenever required and wherever they are. As a result, cloud services make collaborative working a more simple process, with all users viewing and sharing data and information effortlessly and securely across a cloud-based technology platform. Some cloud service providers even offer additional collaborative social spaces to connect the employees of clients, which can further increase the level of interaction and engagement.

5. More effective control
There are few things more harmful to business success than poor quality and inconsistent reporting and decision making. Cloud service providers ensure that all data is stored in one place and in a standard format. Therefore, by accessing consistent data sources, it reduces the likelihood of human error and provides clients with a clear audit trail of any changes and updates.

6. Greater business insights
Within the vast amount of data that businesses continuously collect, are trends and patterns waiting to be identified and acted upon. Filtering the data to find such connections is very challenging and time-consuming, particularly without access to good analytical tools. Cloud service providers can offer analytical tools to track and analyse data, and create tailored reports that meet the specific needs of clients. As a result, business insights can be drawn to enhance operational performance and develop plans to deliver business goals and strategies.

Cloud service delivery models

There are three types of delivery models that cloud service providers offer: private, public, and hybrid. A client’s business requirements, which can be largely influenced by the size and complexity of its operations, largely determines which model should be adopted.

1. The private cloud
The private cloud provides a technological infrastructure that is used exclusively by a single business client .  The private cloud can be either hosted on-site or externally at the cloud service provider’s premises. This model is best suited for large organisations that have substantial data processing needs as it primarily focuses on the provision of massive computing power. The private cloud is highly customizable so that it can meet the exact needs of the client’s business operations, and it has the highest level of security of all the cloud delivery models. However, it is the most expensive option compared to the two other models, and also requires the client to employ expert IT personnel to successfully function.

2. The public cloud 
On the other extreme, the public model comprises various services and a technological infrastructure shared by all clients. The public cloud infrastructure has enormous data storage space, enabling it to be scalable to meet the continuously changing needs of its client users. The model  operates on a ‘pay as you use’ basis, making it an affordable and more cost-effective data management solution for smaller clients. However, unlike the private cloud, the public cloud offers significantly less customization for clients, making it less useful. Also any unforeseen adjustments to service levels, or unplanned downtime, can potentially cause significant problems to the clients’ business operations.

3. The hybrid cloud
The hybrid cloud combines both public and private cloud delivery models to create a tailored solution enabling both platforms to work together seamlessly. This permits clients to put their business-critical operations on a private cloud platform, while utilising the public cloud for non-core activities. This can make the hybrid model a more flexible and cost-effective solution for businesses. 

Cloud service models

Irrespective of the delivery model selected, cloud services providers can offer three, progressive levels of service to their clients.

1. Infrastructure as a Service (IaaS)
IaaS is the most basic form of cloud computing service, and offers very limited computing, networking, and storage resources on a ‘pay-as-you-use’ basis. IaaS providers operate extremely powerful and resilient cloud-based technology to provide these restricted on-demand and scalable computing services to clients.

In particular, start-up businesses opt for the IaaS model to avoid the costly, slow, and complex process of setting up an on-site IT infrastructure. However, larger more established  organisations can also utilise IaaS if they want to retain control over their in-house IT systems but have the flexibility for acquiring additional IaaS resources as and when they are required.

Examples of IaaS include Amazon Web Services and Microsoft Azure.

2. Platform as a Service (PaaS)
With the PaaS model, clients in effect rent those components of the cloud service provider’s infrastructure that they need to develop, test, deploy and maintain their own computer applications. PaaS cloud service providers manage all aspects of the technological support infrastructure allowing clients to concentrate on developing their required applications. Like IaaS, PaaS clients can also access networking, and data storage components.

Examples of PaaS providers include the Google App Engine and Red Hat OpenShift.

3. Software as a Service (SaaS)
SaaS cloud providers host a wide range of software applications on their servers and contract their use to clients on a subscription basis. This means that rather than developing and installing software on their own systems, the SaaS model allows clients to instantly access those applications they require directly via an internet browser. Under the SaaS model, organisations can lease a wide range of business applications ranging from enterprise resource planning to document management systems. In addition, those services provided under the IaaS and SaaS service models are available to SaaS clients.

Widely used examples of SaaS that you may be familiar with include Dropbox, Cisco Webex, and GoToMeeting.


It is fair to say that the cloud is here to stay, and over the next few years many businesses, and individuals, will become very dependent on it. Indeed, the cloud could fundamentally change the way businesses operate, how entire industries are structured, and how markets are served.

Written by a member of the SBL examining team