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Technology / Cloud technology

Introduction to cloud computing

Proponents argue that cloud computing will deliver wonderful productivity gains at low costs. So what is it, and could it be useful for your business? Here is a great introduction to cloud computing.

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The cloud is arguably top of the list of seismic shifts in the computing world in recent times. Having grown from the fringes just a few years ago, cloud computing services were valued at more than $70 billion in 2010, and are projected to grow by almost 20 percent per annum for the next 5 years. It’s anticipated that cloud services will contribute more than $175 billion to the global economy by 2015. That’s a lot of dollars!

But what is it? The name “cloud” is taken from those cute little network diagrams with a couple of computers, a couple of squiggly lines and a fluffy cloud in the middle joining them all up.  In reality there is something in that cloud, and for most small business users that will be a bank of computers in a server centre hosting your application.

In the past, businesses of all sizes have installed computers to store their data and run their applications. Businesses with more than a single employee have installed servers (and hired IT people to manage them) to allow their employees to share that data. With a cloud solution, organisations are able to effectively rent a small slice of capacity in a server centre (via the apps they sign up to), taking away all the issues around maintaining their own hardware.

This might mean paying for a hosted email service (rather than installing your own exchange server), paying for a file data storage service rather than storing data on your own file server (and managing security, backups and so on), or paying for an application such as customer relationship management (CRM), payroll or accounting rather than installing the equivalent applications on your PC or server.

"The cloud opens up opportunities for collaboration (either within a business, or with clients or external service providers)."

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This is generally taken to mean a little bit more than simply taking an existing (desktop) solution, putting it on a remote server, then paying to access that on a monthly basis. The ability to do that has been around for a decade or more, and you may have heard suppliers of this option referred to as application service providers (ASPs). Cloud solutions differ from ASPs in a number of crucial ways:

1. Most cloud apps involve sharing of the actual software. For example, with Gmail (one of the most widely used cloud solutions) users are moving from each having their own copy of a mail program (such as Outlook) installed locally on their PC, to sharing a common instance of an email solution hosted somewhere in the cloud. This is commonly referred to as “multi-tenancy” – lots of different users with their data in the same database, running on the same program (rather than lots of copies of the same program).

2. Most cloud apps allow you to sign up for a monthly fee, and exit again anytime you want to.  This is very different from having to buy software upfront, which if it is not suitable for your business you are then stuck with (it is often very difficult to sell software second hand).

3. With what are generally referred to as “web 2.0” applications, users are able to share data on-line, in real-time. In this way the cloud opens up opportunities for collaboration (either within a business, or with clients or external service providers).

This introduction to cloud computing is the first article in a three-part series. The next article will cover some of the claimed benefits and potential dangers of cloud computing solutions, and the final article in the series will look at some specific applications, and compare desktop and cloud solutions that might be suitable for small businesses.

Have you embraced cloud computing yet, or are you still considering your options?

Rhys Roberts

is a commercial accountant who provides the range of services a CFO typically provides to a larger business. He will help you implement financial systems, run your accounts department and provide the information you need to improve the performance of your business.

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