Cloud Computing Concepts

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Cloud Computing Concepts

by Faulkner Staff

Docid: 00021042

Publication Date: 2209

Report Type: TUTORIAL


The advent of cloud-based computing
has forced a range of industries to quickly learn and employ new
concepts. Beyond introducing new technology, however, this development has also
changed the way
enterprises think about IT and even the way they think about
strategy. Keeping pace with the competitive pressures created by these
changes requires enterprises to master concepts that are continuously
evolving. This tutorial takes a look at today’s cloud computing

Report Contents:


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Cloud computing is a networking model that delivers processing, storage, and
applications "as-a-service" over the Internet.

Computing Trends Tutorial
Vendors’ Cloud Strategies Tutorial
Service Delivery Models & Market
Leaders Market
Virtualization Marketplace

While the technology has emerged in recent years, the basic concept behind
cloud-based computing dates back to the 1990s, and has been called by a number
of names including "utility computing" (due to the comparison of delivering IT
like a power company would deliver electricity). In its current form, however,
cloud-based computing has become more popular due to increased Internet
bandwidth accessibility, matured technology, and generally improved consumer
trust for the Internet-based service-delivery model.

These changes have also had a small ripple effect on how some companies
conduct business, including:

  • Selling SaaS (Software-as-a-Service) instead of as a product.
  • IT costs being treated as recurring rather than capital costs.
  • Accommodating faster deployments instead of large, slow ones.
  • Supporting data and services access from any device, with Web access
    and increased availability.


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In general, cloud-based computing has transformed many
different industries. This change is not simply that more organizations have Web
sites to market and sell their products. Instead, the shift includes the manner
in which organizations run their business, seek competitive advantages, and,
ultimately, grow. Take, for example, the operating model of online retailer
Amazon. The company began operations by marketing books and other
goods, but – in the process of building a massive data infrastructure and
sophisticated data analysis capabilities – has come to also offer business-grade
cloud hosting services through its Amazon Web Services (AWS) division, in addition
to its services that are aimed toward consumers. While Amazon as a whole made
$24.8 billion in profit in 2021, AWS accounted for 74 percent of that

Approach to IT

As cloud computing has
grown more
popular for a variety of corporate functions, there has been a
philosophical shift in how enterprises view IT.

Service Delivery Function. One way to look at the
growing popularity of cloud computing is the shift from treating IT as
an asset management function (i.e., the management of servers, software
licenses, and other assets owned by the company) to a service delivery
function (i.e., enabling users to communicate, store data, and perform
other activities). This concept is new for many corporate finance departments
(which must account for IT expenses in different ways) and IT departments (which
have become increasingly more involved in executive-level strategy). The shift is
also seen in the
popularity of organizational certifications such as ISO 27001 and ITIL,
which require that corporate strategy drive IT

Curbed Infrastructure Growth. This shift has curbed
the growth of many enterprise infrastructures, as more applications are
accessed over the cloud and therefore do not require as many locally
servers. This shift also means, however, that cloud-based service providers are
running extremely large data centers that can create numerous problems.

Technology Possibilities

Services Acquisition. Cloud
computing has also changed the ways that end-users acquire new services. In the
client-server or mainframe models, greater control rested in the hands of IT
administrators. To give a user access to a new application, the IT department
would have to issue a license and, depending on the architecture of the
application, install a client on the user’s desktop. But cloud computing
services are designed to be accessed via a browser with just a username and log
in, and users often choose and install new software and functionality
themselves. This self-service is enabled by cloud technology, but it has been
boosted by a broader range of trends that have popularized the model among

One of the concerns that
slowed the
adoption of earlier versions of Internet-based computing is that data
would be housed at a third party’s site. While this is a lingering
concern, companies and consumers alike have become much more accepting
of this scenario. For instance, they allow crucial data to be stored on
sites like and they publish marketing messages on a
variety of social media sites.

Big Data. The accumulation of
massive amounts of
data has led to a concept called “Big Data.” Web sites like Google and Facebook are accumulating data on scales that were once impossible, and
are – by using new software-based analytic techniques and the processing
power of modern data centers – doing work that is qualitatively
different than what was previously feasible. Companies that
make the most sophisticated use of Big Data consistently look for
opportunities to employ it. For instance, Netflix uses its extensive
data about customer habits not just
to make recommendations but also to shape its original content.2

Virtualization. Cloud computing services
make extensive
use of a concept called “virtualization” in which applications and
services are not associated with a single server (or a defined cluster)
but instead run across multiple systems. This flexible approach is
popular for cloud services because it is more effective for handling
variable demand and multiple customers who might have varying needs.
This has led to developments not only in server virtualization but also
storage, network, and desktop virtualization.

IT administrators need
to understand
virtualization to meet the demands of today’s businesses, which are
increasingly likely to feel competitive pressure to provide services
that require flexible, cloud-based approaches. But virtualization is
not a technology that can simply be plugged into a network. Instead, it
is a different architecture that has its own requirements for network
design and administration, and processes such as back-ups will be
conducted differently.

Current View

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Cloud computing is a potentially
attractive computing paradigm with a number of

  • Flexibility
    – Enterprises can
    access additional computing power quickly and without the need to
    purchase new hardware, software, or services.
  • Cost Efficiency– Cloud computing can lower
    overall costs by enabling customers to avoid paying for computing power
    they do not use.
  • Scalability
    – Cloud computing can provide resources as
    needed, in some cases enabling customers to scale up to supercomputer
    levels of power.
  • Reduced
    Technical Burdens
    – For any services outsourced to a cloud computing
    provider, enterprises do not have to address network computing concerns such as
    electrical requirements, hardware specs, switch-port availability, software
    patching, and staff training.

Cloud Computing Has Become More

Early on, there were no generally accepted cloud computing
standards, with the effect that cloud computing vendors were free to
define the concept in a manner befitting their product and service
offerings. In
2011, however, the US National Institute of Standards and Technology (NIST) of
US Department of Commerce published its “Definition of Cloud
Computing,” which aims to standardize key terms and concepts in the
field.3 The core of
this standardization
is as follows:

of Cloud Computing

Cloud computing is a model for enabling 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.

Table 1 looks at NIST’s description of cloud computing’s characteristics,
service models, and deployment models.

Table 1. NIST: Cloud Computing Characteristics, Service Models, and
Deployment Models
Category Description
  • On-demand self service
  • Broad network access
  • Resource pooling
  • rapid elasticity or expansion
  • Measured service
Service Models
  • Cloud
    Software as a Service

    The capability provided to the consumer is to use the
    provider’s applications running on a cloud infrastructure.
    applications are accessible from various client devices through a thin
    client interface such as a Web browser (e.g., Web-based email).
  • Cloud
    Platform as a Service (PaaS)
    capability provided to the consumer is to deploy onto the cloud
    infrastructure consumer-created or acquired applications created using
    programming languages and tools supported by the provider.
  • Cloud
    Infrastructure as a Service (IaaS)
    capability provided to the consumer is to provision processing,
    storage, networks, and other fundamental computing resources where the
    consumer is able to deploy and run arbitrary software, which can
    include operating systems and applications.
Deployment Models
  • Private
    cloud infrastructure is operated solely for an organization. It may be
    managed by the organization or a third party and may exist on premise
    or off premise.
  • Community

    The cloud infrastructure is
    shared by several organizations and supports a specific community that
    has shared concerns (e.g., mission, security requirements, policy, and
    compliance considerations). It may be managed by the organizations or a
    third party and may exist on premise or off premise.
  • Public
    cloud infrastructure is made
    available to the general public or a large industry group and is owned
    by an organization selling cloud services.
  • Hybrid
    The cloud infrastructure is a
    composition of two or more clouds (private, community, or public) that
    remain unique entities but are bound together by standardized or
    proprietary technology that enables data and application portability
    (e.g., cloud bursting for load-balancing between clouds).

provides a standard way
to define the core concepts of cloud computing. Many other
organizations are working to develop standards that define how cloud
technology works. The list below identifies the top organizations that
creating or fostering the
adoption of cloud-related standards4:

  • Cloud Standards Customer Council (CSCC)
  • Distributed Management Task Force (DMTF)
  • European Telecommunications Standards Institute (ETSI)
  • International Organization for Standardization (ISO)
  • Organization for the Advancement of Structured Information Standards (OASIS)
  • Open Commons Consortium (OCC)
  • Open Grid Forum (OGF)
  • The Open Group
  • Storage Networking Industry Association Cloud Data Management Interface
  • TM Forum Cloud Services Initiative

The Cloud Model as a Security Advantage

Previously, security
was widely considered the top issue with cloud-based computing. Over the past
few years, however, many
arguments have been made about the model’s actual security benefits.  Table 2 describes the
advantages and
disadvantages of cloud security compared with the security of a
traditional network.

Table 2. Advantages and Disadvantages of Cloud Security
Cloud computing enables
enterprises to relocate their
“public” data, i.e., data accessible to customers, suppliers, business
partners, and other third-party entities, to an external cloud, thereby
reducing the level of exposure of their “private” data, e.g., trade
secrets, business plans, employee information, etc.
The quality of
security relies on the cloud provider’s
security model, which may violate best practices, depend on proprietary
hardware or software, and not allow for in-depth security
Cloud “homogeneity” – a
trait that reflects the fact that
individual cloud components, servers, storage systems, etc., are
generally obscured from the cloud user’s view – simplifies security
testing by limiting the number and scope of cloud interfaces.
Enterprise users
adequately respond to adverse audit
findings involving third-party clouds or cloud providers.
Cloud computing helps
eliminate disaster recovery concerns –
or, more accurately, “outsources” those concerns to the cloud provider.
experience a loss of physical control over
their data
and their data processes.
Service providers typically
have much more security experience and expertise than their customers.
Cloud service providers
are often
attractive targets for hackers, in particular for attacks that aim to
permanently destroy a company’s data.


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According to the Global Cloud Computing Market report by Facts & Factors,
the total cloud market was valued at $429.5 billion in 2021 and is estimated
to grow to more than $1 trillion by 2028, at a compound annual growth rate
of 15.8 percent between 2022 and 2028.5 Analysts at International
Data Corporation (IDC) say that spending on compute and storage infrastructure
products for cloud data centers (including dedicated and shared environments)
increased 8.8 percent in 2021 to $73.9 billion. Long-term, IDC estimates
spending on cloud infrastructure will continue to grow, reaching $133.7
billion in 2026 and accounting for 68.6 percent of total compute and
infrastructure spending.6

Cloud computing is not simply a technology or a market, but an
actual overall philosophy of information management, service delivery, and
transformation that serves as the natural progression for network architectures.
The concept of anytime / anywhere availability describes a technology environment
and a broader cultural development in which business users and consumers alike expect
to be able to perform actions such as accessing email, viewing shared documents,
and communicating from a variety of devices using a variety of platforms.


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Cloud computing affects a broad range of business functions, often in
fundamental ways. Since the change is more than technological, departments
such as accounting and purchasing should have input into, and be kept
informed about, decisions that are made. And with the broad range of effects
in mind, it is wise for an enterprise to think carefully so that there are
not any implications that are unforeseen. For instance, it would be a
mistake to assume that transitioning a service to the cloud would not
impact regulatory compliance.

A fundamental difference between using locally hosted services and using
cloud services is the ownership of the data. As might be expected, data
generated by a user and uploaded to the cloud for storage and processing is
owned by the user. However, be aware that data generated after storage may
be governed by the Service Level Agreement (SLA) between the user / client
and the cloud vendor. “It is always advised not to use any cloud service
that retains ownership of partial or full user data,” warns consulting
firm Core IT. “It is always suggested to retain maximum ownership of data,
as much as possible, since valuable data exposed to third parties may pose
a treat to the business body.”7 In addition, an organization that
uses cloud services will need to plan for how to secure and manage its data.
In particular, the organization would be wise to make plans in advance for
re-assuming control of the services or transferring them to a different
cloud provider if needed.

Embracing the cloud
model should not mean significantly sacrificing flexibility or giving
up the ordinary autonomy of a customer. Working with providers and
partners to develop strong, detailed SLAs is a good step to take to
maintain a fair amount of control. In particular, an SLA should
define – and, as appropriate, restrict – a provider’s ability to
change aspects of the cloud hosting arrangement. When developing
an SLA or engaging in any other planning or operational aspect of
cloud services, deeply understanding the model’s core concepts will
help an organization to protect its interests and achieve its business


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