Cloud computing is destined to deliver hefty benefits to businesses, but it’s not always clear what the term means. In the years since it was coined, its usage has come to encompass a number of differing models; all of them can deliver improvements to business processes.

Public cloud

A public cloud provider makes resources, such as applications and storage, available to businesses or consumers over the internet. Some consumer offerings are free, but on the whole, customers pay for how much resource they use. A key feature of the public cloud is that it offers a multi-tenanted environment: several customers share the same computing resources, allowing providers to offer economies of scale.

There are clear advantages to using the public cloud. The pay-by-usage model means that businesses can avoid large capital outlays for new hardware and software. This is particularly beneficial for smaller business units and start-ups that may not have major capital investments. It also represents a more efficient way of delivering computing resources to users: businesses pay more at times of peak usage and less at times of low usage. They no longer have to pay to keep servers running at quiet times and, if the business grows, they can buy in more resource. This enables businesses to respond more quickly to changing circumstances.

Despite the cost savings, there are downsides to the public cloud; some organisations worry that handing over confidential data to a third party provider will compromise security. They may have particular concerns about data storage, because UK law requires organisations to store personal data in particular European countries or in countries that have guaranteed a similar level of protection.

Some organisations are worried about being locked into a single vendor’s infrastructure, about the robustness of the service (disruption to connectivity will hamper productivity) and about the additional expense and complexity that may be incurred in transferring from their existing infrastructure to one provided by a third party.

Private cloud

The private cloud model avoids some of the downsides of the public cloud, particularly the concerns about security and data protection. It uses a set of technologies (in particular, virtualisation) to deliver computing resources to its internal users, who can be charged for usage in the same way as users of the public cloud. Private cloud offers some of the efficiencies of the public cloud, but because it exists behind the firewall, organisations need not worry about the implications of sharing computing resources with their provider’s other customers. The cost savings will be smaller, however.

An increasingly popular variant on the private cloud is a vendor-hosted private cloud, also known as a partner cloud. The cloud is hosted in the vendor’s secure data centre, but resources are not shared with other customers, easing concerns about data privacy. This model reduces costs because the customer rents the service rather than making a capital investment. It does not, however, offer the economies of scale associated with the public cloud.

Hybrid cloud

In a hybrid cloud, the organisation provides some computing resources in-house via a private cloud, and some through a third party public cloud provider. Some organisations, for example, may prefer to put some IT functions in the public cloud, but keep more sensitive ones in a private cloud. This means they can derive benefits from the public cloud without sacrificing security and privacy.

Other organisations might use the public cloud to extend the capabilities of the private cloud as and when needed – for example, at times of peak demand on the network. This offers greater flexibility to the organisation than other models, and may well become the dominant model over time. The drawback, however, lies in the potential complexity of managing multiple technologies and vendors.

Cloud service models

Under the broad banner of cloud, there are three main models for delivering services. Although often associated with the public cloud, they can also be offered as private cloud options:

  • Software-as-a-service (SaaS). Software applications and associated data are hosted by the cloud provider and accessed by users via a web browser over the internet. The most well-known example of this model is salesforce.com, which has enabled businesses to adopt customer relationship management (CRM) software that might otherwise be unaffordable. SaaS enables organisations to deploy or upgrade applications more quickly than if the software is installed and managed in-house – a particularly useful feature when it comes to deploying applications to mobile users. Perhaps the key disadvantage is that users are limited to using the software on offer, which may not exactly match their needs.
  • Platform-as-a-service (PaaS). The organisation runs its own applications, but on the cloud provider’s platform. In-house software developers can develop and run their own applications on a cloud platform without having to worry about the cost involved in managing the underlying hardware or operating system. PaaS is particularly useful if developers in different geographies need to collaborate on a particular solution. Amazon’s EC2 cloud and Microsoft’s Windows Azure are two of the best-known examples of the PaaS model.
  • Infrastructure-as-a-service (IaaS). The organisation runs its own software on its own operating system, but uses the cloud provider’s hardware ­– effectively the customer is running a virtual server on the provider’s IT infrastructure. For organisations simply looking to increase the amount of computing power they have access to, and reduce their own investment in hardware, IaaS is a good option. Well-known providers include CSC, IBM, and Amazon.

Essentially, the difference between SaaS, PaaS and IaaS lies in the split between what the cloud provider manages and what the customer manages. In the SaaS model, the cloud provider runs every layer of the stack. In the PaaS model, it runs the hardware, middleware and operating systems, while the customer manages the applications and data. In the IaaS model, the provider runs the hardware, including the virtualisation environment, storage and networking, and the customer manages everything else.  

Analysts expect the cloud eventually to become the dominant model of IT provision. Customers will face difficult choices, however, about which model suits them best, and much will depend on how risk-averse they need to be and what their current infrastructure looks like. Long-term, however, cloud is likely to offer greater cost-efficiency, flexibility and agility to the business.