By Frank De Pasquale| December 21, 2018

What is the cloud and why do I need it?

Where did the cloud come from? What can we use the cloud for? What are the benefits of the cloud? I promise that by the end of this article, you’ll have your head wrapped around these concepts (at least, at a high level).

“I’ve looked at clouds from both sides now
From up and down and still somehow
It’s cloud’s illusions I recall
I really don’t know clouds at all” — Joni Mitchell

When Joni Mitchell wrote those lyrics fifty years ago, she had no idea how prophetic they would become, or that they would speak to an industry that didn’t yet exist. But, despite the increasing prominence of “The Cloud” as in cloud computing, there are many who still really don’t know the cloud at all. So, let’s begin at the beginning.

First, a definition, courtesy of the Oxford English Dictionary. The Cloud is, “the practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server or a personal computer.”

The cloud, then, consists of the remote servers that do the tasks described above. It’s quite a simple concept, though the terminology often seems abstract to the layperson, for whom cloud connotes vaporous, ethereal, even mystical images. Whoever coined the term may have had that in mind.  We’ll never really know. But, in fact, there is no “cloud” per se.  It’s just a number of data centres with almost infinite data processing power that you can connect to via the internet. Sounds simple, doesn’t it?

From the beginning – a very simple history of the Cloud.

For today’s businesses, there are really four major developments that led to the cloud becoming a mainstream, if not dominant, resource.

1960s: Bolt, Baranek and Newman

The first was the rise of the internet. Without going into great detail, the internet blossomed out of work done in the 1960s by Bolt, Baranek and Newman (BBN) for the U.S. government. It was little more than a time-share arrangement for Universities and research facilities, but it demonstrated that computers many miles apart could share information.

1993: The World Wide Web

The second major step was the rise of the World Wide Web and the development of Mosaic, the first web browser, at the University of Illinois. This was in 1993. Now, there was not only a way to put graphical content on the internet, but there was also a way for users to view it.

2000: Salesforce

The third major step was the launch of a business software solution called Salesforce.com in 2000.  Hesitant at first, businesses came to prefer Salesforce over its client-based competitors like Seibel and Vantive for several reasons.  It was easier to deploy, involved no client software and was reasonably priced via a subscription model vs software purchasing that was costly, tedious and expensive to deploy and subject to more tedious and expensive to deploy mandatory updates. And, it worked as promised. Today, Salesforce is a powerhouse CRM platform.

2006: Amazon Web Services

Next came the fourth and arguably the pivotal development, the introduction of Amazon Web Services, or AWS, in 2006.  Spawned by the knowledge that Amazon.com was only utilising 10% of its server capacity, AWS was launched to take advantage of the surplus processing power and storage.

Is any of this really important? Yes, because today, the cloud has continued to grow, and its reach has extended to every corner of the commercial, business and personal worlds. Knowing how cloud computing came to be de-mystifies the cloud and debunks the quasi-magical, obtuse and abstract view that has made people sceptical about it, if not downright afraid of it.

Now that we know what it is, what do we do with it?

From the historical to the practical, it still remains to be pointed out why the cloud can be important to your business. Let’s look at some of the most prominent reasons:

Only pay for what you use

When you conduct business in the cloud, you realise some real advantages. Instead of capital expenditures, you’re paying operating expenses (OPEX). Again depending on the country in which your business is located, OPEX expenses (excuse the redundancy) are 100% deductible, making your tax situation far less complicated to manage. In fact, operating expenses are far more manageable than capital expenses when it comes to computing because you pay only for what you need when you need it.

No more hardware procurement guess-work

Additionally, with computer processing power increasing exponentially seemingly overnight, the equipment you have paid for may have to be scaled as the need arises. That means more hardware purchases and yet more CAPEX.  Plus, you have to estimate what equipment you’ll need to meet future growth demands. That is definitely not an exact science.

Focus on your business, not your infrastructure

Physical infrastructure comes with other requirements; for instance, increased power usage and the capacity to handle that increase; highly-skilled and high-cost human resources to run your systems; security software and procedures to keep your data safe from outside miscreants or disgruntled employees and on and on and on. Cloud vendors like AWS take care of the physical infrastructure for you, so that your business and your IT people can focus on the applications your people use and the way they sue them.

Better business intelligence (BI)

Doing business in the cloud can also provide myriad opportunities to increase your analytics capabilities. AWS, for instance, offers Amazon Analytics. This gives any business access to the same analytical capabilities of the biggest players without having to invest thousands of dollars in business intelligence software and implementation services.  With Amazon Analytics, you can get to know more about your customers and their buying habits than you ever thought possible.  What’s more is that you don’t have to abandon your on-prem infrastructure to do so, either. AWS provides the tools you need to move your data into the cloud for analysis purposes, and you can do this in real-time if you so desire.

Better money management

IT Infrastructure is a capital expense. While it can be depreciated for tax purposes (depending on your country’s tax laws), the depreciation schedule may be as long as ten years.  Typically, this infrastructure is covered by a three to a five-year warranty. This means it’s very possible that the equipment will be in a recycle bin before those years are up, which means another dip in the CAPEX pond.

How the cloud promotes business agility

One of the main challenges businesses face today is how to be more flexible, more agile. Like an athlete, your business has to be agile.  The world is changing fast and businesses have to be able to adapt and adapt quickly.

Business agility doesn’t just apply to your IT, it applies to your entire organisation. But, if your IT department isn’t agile, can your business be?

Companies often fight a constant battle against resource and budget constraints and employee turnover. As such, long project queues are the rule, and changes happen at a glacial pace. Additionally, software that was purchased and implemented at great cost can become “too big to fail”; in other words, even if it doesn’t accomplish what it was intended to accomplish, and even if users dislike it, the corporate emphasis by necessity becomes finding a way to compel people to use it rather than finding a better solution.

As such, people are often forced to adapt their processes to fit the software instead of the other way around. To combat this, they end up devising ad hoc spreadsheet-based processes and solutions. This not only leads to employee dissatisfaction, it puts the enterprise at the mercy of a labyrinth of spreadsheets with no link to a single version of the truth. Can you think of anything less agile?

The cloud and business agility are practically synonymous. The cloud can not only save your business money and increase employee productivity, but it can also change the trajectory of your business’ future.

Work from anywhere, anytime.

There is no physical office constraint. With the cloud, anyone can work from anywhere, because the cloud eliminates geographical limits or constraints. As long as there is an internet connection available, anyone with proper permission can access your business’s data and applications from anywhere.

This opens the possibility for a remote workforce, which means less of a need to lease inflexible office space that caters for booms or busts.

Automated updates and data management

The cloud eliminates logistical constraints or limits. Data can be backed up and applications updated without IT involvement.  If your business has multiple locations, there is no need to send the IT staff or third-party consultants on an office-by-office update caravan.

Scale your IT resources with demand (or lack thereof)

Cloud computing has none of the scalability problems inherent with owning your systems. When you need more capacity, you simply subscribe to more; and, conversely, if there is a downturn, you can subscribe to less.  For example, let’s say you have 75 user subscriptions to Salesforce, then acquire a new business with 20 staff. You can immediately purchase a subscription for each new user. This same concept applies to cloud computing. When your needs change, you can immediately adapt in any direction. What’s more is that AWS has clever technology (called Auto Scaling) that enables you to adapt automatically. If you’d like to learn more about Auto-Scaling (or other smart cost-saving ideas), check out our AWS Cost Optimisation guide.

“Culture of Innovation”

The self-service, pay for what you use model of the cloud means that your business can foster a culture of experimentation, where staff can come up with ideas, build a proof of concept, measure the results and iterate (for more on this, check out our short video on How does the cloud make you agile?”).

More importantly, this culture accepts the idea that failure is not only acceptable, it’s par for the course. Freedom to experiment and failure are two necessary ingredients for innovation, and innovation is necessary to progress your business in an increasingly competitive market.

Amazon themselves actually coined the phrase “Culture of Innovation”. Internally, they’ve found that ‘two pizza teams’ (i.e.: teams where there are enough members to share two pizzas) is the right number of people to make real change. You can learn more about Amazon’s culture of innovation here below:

Is the cloud an “all or nothing proposition”?

From reading this article so far, you may have got the impression that you have only one choice when deciding on a cloud strategy; that is, move everything into the cloud and completely abandon your homegrown infrastructure.  Nothing could be further from the truth.

Your ‘cloud profile’ can take any shape, and it evolves over time. In fact, we advise almost every customer to begin their journey to the cloud with a single important (but not mission-critical) workload, and progress from there as need and appetite determine. For example, you might start with:

  • Business services and applications. You can run one or multiple business applications (like Microsoft Exchange, Active Directory, your favourite CRM or ERP) in the cloud, even proprietary ones.
  • Low-cost data archiving with virtually (no pun intended) no data limit.
  • Backup and Disaster Recovery. A natural disaster destroys your physical system? No problem. With backup and restore, your data is in more than one place. Short of a meteor shower of apocalyptic proportions, it will be there when you need it.
  • Websites and Content Delivery. Need to deliver content through your web properties (which can also be hosted in the cloud!)? This can be done efficiently and quickly through the cloud.

The bottom line is, the cloud is a powerful and secure resource that you very likely cannot replicate without busting your IT and HR budget. It’s not an all-or-nothing and not a one-size-fits-all service. It’s a “virtual supermarket’ of storage options and usage options.

The road to the cloud kingdom

It’s one thing to utilise the cloud; it’s quite another to optimise its usage for your unique situation.  Fortunately, you don’t need to get your own formal qualifications to implement the cloud in your business.

There are smart people out there to help, and some of the smartest of the smart work with us.  We’re Tekspace, and we offer all the services you need to become a player in the cloud universe.

The more you know about cloud computing, the more obvious it becomes.  The cloud is more than just a bunch of servers hidden away in a Melbourne bunker. The cloud is a resource of incomparable value, but only if you choose to exploit it. At Tekspace, our job is to put the power of the cloud in your hands.

If you’re interested in moving your business to the cloud but want to find out more, please come along to our live event, Gaining Altitude in February 2019.

Gaining Altitude, 2019

Our goal when we put this together was to give you the benefit of hindsight, without having to go through a cloud migration yourself. We’ve got a fantastic lineup of experts from AWS who will give practical advice and steps to follow, and we’d love to see you there.