According to Flexera's 2021 State of the Cloud Report, 92% of enterprises use multiple cloud services while 90% are migrating to the cloud faster than expected due to COVID-19.
How do different clouds work? What are the benefits of cloud computing for businesses? And what's the advantage of using a single-cloud provider whenever possible?
What Is Cloud Computing?
Cloud computing is the delivery of IT resources — servers, software, data storage, and processing power — via the internet on a pay-as-you-go basis. Instead of investing in expensive equipment and building large server rooms on the premises to host data and communications, businesses outsource services to a cloud provider with a global network of secure data centers. And instead of buying software licenses, installing the software on multiple computers, and regularly updating it on each machine, businesses pay subscription fees to use online portals and platforms that are hosted and maintained by cloud providers.
Users can access these cloud-based solutions by logging in from any location and using any internet-connected device. And they can store files in shared online databases, rather than company servers with limited space and processing power, or on their computer hard drives, where other team members can't access them.
Common Uses of Cloud Computing
Cloud computing spans a wide range of services, replacing legacy enterprise software and offering new capabilities that were born in the cloud:
File storage and sharing — Cloud storage solutions like Google Drive and Dropbox give businesses unlimited storage capacity and the ability for teams to access information from anywhere, collaborate on documents in real time, and ensure version control.
Data backups and disaster recovery — Cloud-based data backup solutions like Backblaze, Acronis, and Amazon Web Services let businesses automatically backup critical data into cloud storage, where it's safe and easily restored if a natural or IT disaster wipes out data stored in servers on the premises.
Big-data analytics — When raw corporate data is synced in the cloud, companies can use it for predictive analytics, strategic planning enhanced by artificial intelligence (AI), internet of things (IoT) automation, and a variety of other next-gen capabilities. Cloud-based big-data analytics solutions can be task-specific, industry-specific, or a native component of other cloud-based software.
Business processes — There are cloud-based solutions for CRM (Salesforce, HubSpot), enterprise resourcing planning (Oracle, SAP), accounting (FreshBooks, Quickbooks), human resources (Bamboo, Namely), and practically every other type of enterprise software that would have once required an installation disk.
Communications — Cloud communication solutions include unified communications, team collaboration apps, virtual presentation tools, contact center solutions, and communications APIs.
Types of Cloud Computing Services
There are four primary service models for cloud computing, based on the types and scale of IT resources that are delivered:
Software-as-a-service (SaaS) — The most popular type of cloud service, SaaS is a complete third-party application built for a specific function, such as customer relationship management (CRM) or document sharing. The SaaS vendor manages the cloud application remotely, providing maintenance, troubleshooting, and updates.
Platform-as-a-service (PaaS) — PaaS provides a development framework for software creation so users can build custom apps and tech stacks without starting from scratch. The back end is already built out with a secure infrastructure, data integration, hosting capabilities, and a programming environment with API libraries and preconfigured app functionality.
Infrastructure-as-a-service (IaaS) — Like PaaS, IaaS provides a secure IT infrastructure with hosting capabilities and storage, but enterprise users bring their own applications, operating systems, and middleware, as well as manage their own data. This gives IT greater control but provides a virtual data center without requiring the purchase of hardware.
Desktop-as-a-service (DaaS) — DaaS is a cloud-based virtual desktop that provides a consistent workspace without the need for a consistent device. Users can access their "desktop," including SaaS solutions and virtualized legacy applications, via a web portal from any internet-connected device.
SaaS represents the largest segment of the public cloud services market, according to Gartner. Overall, the market grew 21% over the past year, topping $332.3 billion in 2021, with SaaS valued at $122.6 billion in 2021. But IaaS and DaaS experienced the fastest year-over-year growth, increasing 38.5% and 67.7% respectively since 2020.
Types of Cloud Hosting
There are four types of cloud infrastructures — public, private, hybrid, or multi-clouds — each with differences about who owns and manages what:
Public cloud — With public clouds, the IT infrastructure is owned and maintained by a third-party cloud provider, and businesses pay a subscription fee to use the service. Resources are shared with other cloud "tenants," but data is kept separate and secure.
Private cloud — With a private cloud, the IT infrastructure and cloud-computing resources are owned and managed by the enterprise. They pay a subscription fee to use third-party software but host the data on their own cloud. Also referred to as "data centers," private clouds either reside on on-site servers or are managed by a third-party vendor. Either way, the network is private, and IT resources are not shared.
Hybrid cloud — In a hybrid cloud environment, companies host some applications and particularly sensitive data on a private cloud and host other applications and data on public clouds, where they enjoy the pay-as-you-go advantages of cloud computing.
Multi-cloud — In a multi-cloud environment, companies utilize multiple SaaS and/or PaaS solutions, often from different providers. These solutions might be integrated, but there is no private cloud.
Multi- and hybrid clouds have become increasingly popular. According to Flexera's report, 92% of enterprises utilize a multi-cloud strategy, and 82% use a hybrid cloud strategy. On average, companies use 2.5 public clouds and 2.7 private clouds.
What Are the Benefits of Cloud Computing Technology?
With an effective cloud migration strategy and the right vendors, companies gain access to technology that can offer these advantages:
1. Support Remote and Hybrid Workforces
Now that knowledge workers have experienced working from home, many don't want to go back into the office full-time, and employers are now exploring hybrid work models that offer their teams flexibility beyond the pandemic. In September 2021, 76% of employees who have worked from home during the pandemic told Gallup their employers would let them work remotely at least part-time going forward.
With cloud computing, employees can access their work tools and business communications from anywhere. All they need is an internet-connected device and log-in.
2. Integrate Systems and Optimize Data
Cloud-based solutions can often be integrated for enhanced collaboration and greater workflow efficiency. For example, a unified communications platform can be integrated with CRM, which lets employees see customer information at a glance when they answer incoming calls and then automatically log those calls into CRM.
Integrating systems enables companies to get data out of silos and apply predictive analytics that yield valuable insights for strategic decision-making. Gartner predicts that by 2022, 90% of corporations will view "information as a critical enterprise asset and analytics as an essential competency."
3. Leverage AI and IoT Technology
Once data is all in one cloud (or interconnected clouds), businesses can apply machine-learning algorithms to automate processes, use IoT technology to optimize supply chains, and look to predictive analytics to help shore up inefficiencies and future-proof the organization.
Cloud services also let businesses deploy new tools and capabilities, such as virtual assistants, chatbots, and other AI-enabled solutions.
4. Enable Agility and Innovation
Across industries, markets are getting more and more competitive, and consumer expectations are higher than ever. To survive and thrive, organizations must expect disruption and be prepared to adapt quickly lest they become irrelevant. They must also stay focused on always improving the customer experience, or they might start losing out to competitors.
With an effective cloud strategy, businesses can innovate faster, deploy resources strategically, and gain valuable insights into the customer journey and how to improve it. Good cloud providers are continually adding new functionality and product upgrades, giving businesses access to the latest and greatest features.
5. Ensure Reliability, Security, and Disaster Recovery
If enterprise technology stops working, so does the enterprise. And if data is compromised, so is the business's reputation and (in some industries) legal standing.
With a public cloud infrastructure, servers are resilient and reliable because they're upgraded constantly and dispersed geographically, protecting them from local disasters that could interfere with service availability and disaster recovery. Data is secured by IT engineers whose full-time jobs are to monitor security and ensure that data privacy protocols remain effective and up-to-date.
6. Reduce IT Complexity
With a public cloud, there's no hardware or servers for IT to maintain, no updates to install across fleets of computers, and no responsibility to secure data or troubleshoot problems. This frees up IT's time to focus on more innovative projects.
Managing a private cloud is more complex and requires more IT resources, but having the ability to leverage SaaS, IaaS, or PaaS saves IT from building everything from scratch and routinely updating software.
7. Reduce Costs
With on-demand subscription pricing for key business systems and applications that never become outdated, cloud solutions save companies on hardware costs, integrations, and IT support.
Migrating to a SaaS solution typically saves companies 30% to 40% over five years, according to ZK Research. Similarly, Accenture found that migrating parts of a business to public clouds reduces the total cost of ownership by up to 40%.
8. Scale With Ease
For most companies, the size of the workforce tends to fluctuate over time, expanding during particularly profitable years or high-traffic seasons and thinning out during bad economies or slow seasons. With traditional software, that meant guessing how many licenses the company would need for the subscription period.
With cloud services, businesses pay based on how many users they currently have or how many services they need. It's quick and easy to add or remove users and to get new ones up and running. Most cloud applications are highly customizable, so businesses can turn features off and on based on the business's size and needs and increase power, storage, and bandwidth as those needs change over time.
Of course, the level of customization and scalability and the ability to achieve all the other aforementioned benefits of cloud computing depends on the cloud provider.
Choosing a Cloud Provider
How can businesses find the right providers to meet their needs? When evaluating potential technology partners, it's important to consider certain aspects about each vendor:
Features and roadmap — Does the solution have all the features that the organization or relevant departments need or might need in the future? Does the vendor's development roadmap align with the company's IT vision? Are there AI-based features that support automation and reduce heavy lifting for end users?
Location — Are services available and, more importantly, reliable in each of the business's locations? If the workforce is remote or the client base is global, will the service work well for everyone?
Service and support — What is the cloud provider's average uptime rate? Do they reimburse customers for lost time if service does go down? How much support does the vendor provide? What is the average response time for customer support inquiries or requests?
Integrations and APIs — Does the solution integrate with other key business software? Does the vendor have tools to integrate legacy or on-premises technology? Do they offer open APIs that enable customers to integrate custom apps?
Scalability — Scalability is one of the key advantages of cloud computing, but does the vendor have the bandwidth and capacity to meet the business's evolving needs? How quickly can users be added or removed?
Security and data privacy compliance — How is data secured? Is the solution certified to comply with industry-wide regulations, such the Health Insurance Portability and Accountability Act (HIPAA) or the Payment Card Industry (PCI) standard? How does it comply with global privacy laws, such as Europe's General Data Protection Regulation (GDPR)?
History and reputation — How long has the vendor been in business, and what is their track record of success? What do existing or past customers say about the service and customer support?
It's wise to gather as much information as possible about potential vendors. But with cloud providers, if a solution doesn't meet the business's success metrics, switching to a new one doesn't mean scrapping major hardware and infrastructure investments. All they have to do is learn a new (hopefully better) system.
The Fewer Cloud Vendors, the Better
The vast majority of businesses now operate in a multi-cloud environment. And for good reason — there is no single solution that meets all the IT needs of an entire organization. But there are cloud solutions that meet all the needs of a single department or a single function.
Take cloud communications, for example. A complete, modern communications stack includes all of these:
Unified Communications (UCaaS) — multichannel communication platforms that replace traditional phone systems with advanced features like calling recording and mobile phone syncing
Contact Center-as-a-Service (CCaaS) — multichannel communications platforms designed specifically for customer interactions, offering features like voice assistant and intelligent call routing
Communications Platform-as-Service (CPaaS) — development platforms that let companies integrate different communication APIs like chatbots and SMS marketing
Team collaboration — applications that let teams connect and share information
Virtual presentation tools — video-based software that can be used for webinars, training, or conferencing
Some cloud communication providers combine these, but in many cases different functionality is actually provided by different cloud vendors and pre-integrated into one platform. The experience might be seamless enough for end users, but from an IT perspective, it can become complex when there are service outages or tech support issues the vendor can't solve or when customers want new functionality the vendor can't offer because they don't own the technology.
Vonage owns its entire technology stack, which includes UCaaS, CCaaS, CPaaS, team collaboration, and virtual presentation tools — all of which can be combined into a single platform. Vonage controls the technology and development roadmap, so it's responsible for customer data and responsive to customers' evolving communications needs. There's only one bill to pay and one party accountable if tech issues arise.
There are many benefits of cloud computing, and outcomes vary based on each company's cloud infrastructure and technology stack. But there's one overarching reason behind most cloud migrations — in this hypercompetitive digital age, where change is the new norm, customers expect seamless interactions, and employees expect to work from anywhere, businesses must be flexible and agile. Cloud computing paves the way.
Learn more about how to move your business to the cloud.