Cloud Computing - A Glance

Published by MBA Skool Team, Published on February 03, 2015

What does it exactly mean?

National Institute of Standards and Technology (US Department of Commerce) defines Cloud Computing as “A model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.” Simply put, it means to store and process data over the internet instead of one’s own personal storage/processing device, the ‘Cloud’ is just a synonym for the network infrastructure that provides this service (paid or free) and hence it can be accessed from anywhere through an internet connection.

Image Courtesy:, hywards

If you are using any of the following (list not exhaustive) then you are relying on the Cloud:

• Social Media (Facebook, LinkedIn, MySpace, Twitter)

• E-Mail (Gmail, Hotmail, Yahoo Mail)

• Online storage of photographs (Flickr, Picasa)

• Google Docs

• Entertainment (YouTube, Netflix)

• Online file storage (Dropbox, Google Drive, Box)

• Web hosting services (GoDaddy, Big Rock)

Back in the 1950s, when mainframe computers were expensive and could not be bought for every user, organizations implemented time-sharing methods using terminals that had no processing power and thus reduced cost. A similar event happened in 1969 when J. C. R. Licklider, an American Computer Scientist developed the Advanced Research Project Agency Network (ARPANET), the so-called predecessor to the internet. He had a vision where everyone would be connected, accessing data from anywhere and anytime. Occurrences between 1970s and mid-90s such as the launch of VM operating system by IBM and offering of virtualized private networks by telecom companies in the 90s added more color to the canvas. So the concept is not something totally unfathomable, rather similar technologies have existed for a while.

How does it run?

The network is technically split into two regions, the front-end and the back-end. The client’s computer (or mobile/tablet) which also has a cloud interface (varies with service) is the front-end while the set of high speed computers, storage devices and servers which store and process the data (usually has a dedicated server for each application) required by the front-end user constitutes the back-end region.

Few points to be taken note of:

• A central administrator (server) is usually setup to monitor the functioning and traffic demands so that everything runs smoothly and it follows a protocol (a set of rules) to do so.

• Middleware is a software package which helps in communicating connected computers.

• Often, a physical server can be fooled to think that there are multiple servers contained within itself and hence is made to run different applications on the same machine through server virtualization. This is done to curb under-utilization of computational power.

• Redundancy is the backing up of users’ data which makes the cloud storage requirement twice that of the users’ data volume in the cloud.

What business solutions can it provide?

The solutions that Cloud Computing provides fall into three categories SaaS (Software as a Service), PaaS (Platform as a Service) and IaaS (Infrastructure as a Service). Let us have a look at all three of them:


It is the process of renting the services of a software rather than buying it. The third party vendor takes care of the computational power, storage, software license, periodic upgrades, interface, maintenance and all the other requirements for an uninterrupted service of the software against a periodic fee. The client logs in from an end user terminal (usually via web browsers or a simple extension) and accesses the required data. The basic difference between ASP (Application Service Providers) and SaaS lies in the operation where ASPs run third party independent software vendors’ software and its software architecture maintains separate instances for each business line, SaaS vendors usually develop their own software and employ tools in which the application serves multiple business lines while storing just the data separately.

Examples: Microsoft365, Cisco WebEx, Gmail, Salesforce


When cloud services are provided to run software packages the service is known as PaaS. The client has to manage the development of the application whereas the vendor is responsible for the infrastructure and the building and maintenance of the platform for the deployment and execution of the client’s application. PaaS vendors usually provide a self-service facility to their clients whereby the clients can dynamically allot the required infrastructure for their software. The PaaS enterprise can also be deployed through a hybrid IaaS model which enables the clients to instantaneously increase the infrastructure capacity unlike the conventional model where it may take a couple of days.

Examples: Apprenda, Google App Engine, Heroku, OpenShift


Cloud services limited only to infrastructure. In this case, it is the client who develops, manages, deploys and executes the application as well as the platform required for it while vendors still manage virtualization, storage, servers, hard drives and networking. Though IaaS is limited in deliverables, it gives the client the freedom of developing any platform which can be more suited to the business’ needs.

Examples: Google Compute Engine, Microsoft Azure, Amazon Web Services, NaviSite NaviCloud

Note: Along with the ones stated above BaaS (Backend as a Service) or MBaaS (Mobile Backend as a Service) is also an emerging market which provides backend support to mobile developers to link their apps to backend cloud storage and social networking sites. According to a study by MarketsandMarkets the BaaS market will be worth $7.7 Billion by 2017.

Growth and Potential

“In India, cloud services revenue is projected to have a five-year projected compound annual growth rate (CAGR) of 33.2 percent from 2012 through 2017 across all segments of the cloud computing market. Segments such as software as a service (SaaS) and infrastructure as a service (IaaS) have even higher projected CAGR growth rates of 34.4 percent and 39.8 percent,” said Ed Anderson, research director at Gartner. “Cloud computing continues to grow at rates much higher than IT spending generally. Growth in cloud services is being driven by new IT computing scenarios being deployed using cloud models, as well as the migration of traditional IT services to cloud service alternatives.”

Some key highlights:

• According to a recent IBM Global Study, 64% of CIOs in 2013 see Cloud Computing as a crucial customer engagement tool as compared to 30% in 2009

• In 2008, the global cloud computing industry was estimated to be worth $46 Billion, by the end of 2014, the industry according to Eclipse UK will be worth more than $150 Billion.

• On the 21st of August, 2014 a leader in cloud services announced its quarterly report for the second quarter, with the earnings per share at $0.13 a 40% increase on a y-o-y basis and its revenues rose 37.8% to $1.32 Billion.


If one needs eggs, why buy a hen? In other words, if the business demands IT solutions why to procure the entire hardware infrastructure when the organization can make use of the same service at a fee? Cloud Computing adds as an OpEx (Operating Expenses) rather than CapEx (Capital Expenses) which requires a hefty investment and the value too depreciates over time. Below is a tabular representation of cost analysis for Internal IT, Managed Services and Cloud Computing as presented by O’Riley Media in one of their reports. It should also be noted that the Cloud services provided by a reputable vendor will be of much higher quality and availability.

In a recent survey conducted by a market research firm Vanson Bourne in the UK and the US on Cloud Computing which included 1,000 SMEs and 300 organizations with 1,000 employees or more, organizations were also asked as to where is the money that is saved from utilizing the cloud is being invested. The response is shown below:

Base: Respondents who have saved money on IT by using cloud services




Product/service innovation




Boosting sales efforts




Expanding product/service offering








Boosting profitability/bottom line




Increase wages/bonuses




Increasing headcount




Increasing access to expert advice








Source: Vanson Bourne


"The more we transfer everything onto the web, onto the cloud, the less we're going to have control over it." – Steve Wozniak, Apple co-founder.

After Google launched its Drive, doubts emerged as to who owns the uploaded content. Technically, it is the users who own the content but according to the policy, Google has the right to use it for the pre-listed purposes.

The following picture shows comparison of the number and diversity of data attacks between cloud providers and enterprises:

Source: Alert Logic

The possibilities that cloud provides is certainly endless but one has to be concerned about ownership, security, privacy and energy consumption too. With the recent unveiling of Google Fiber, we are only heading towards the era of cloud computing.

This article has been authored by Shariq Haroon from FMS Delhi



















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