Cloud computing encompasses the modern reality of doing business online. Increasingly, business applications and data are accessed through a web browser instead of directly on your computer or internal network. The "cloud" is the Internet, or more specifically, the data centers where the web servers and databases live.
If you've used a web-based email service like Hotmail or Gmail, then you already know how this works: you can access your email from any computer connected to the Internet, because all your data is stored online, and the app itself runs online. This model is now extended to all kinds of enterprise software for companies of all sizes.
Software as a Service (SaaS)
With cloud computing, you can forget about the headache and expense of setting up and managing your own servers or internal data center. Instead, you just pay per use or subscribe to only the services you need. Users can get started quickly without lenghty installation and configuration procedures.
The subscription fee typically includes:
Software license for all users
Managed hosting in a secure data center
System maintenance, including offsite backup and server upgrades
Studies have shown that cloud-based or hosted software provides significant cost savings over traditional client-server systems, when one considers the total cost of ownership (TCO). A study by the Yankee Group showed a saving of over $1.5 million over five years for a system with 400 users.
Traditional client-server systems are maintained by the customer's IT staff who will customize interfaces and reports, deploy changes to servers and desktops, apply patches as needed, support remote users, troubleshoot performance problems and provide disaster recovery. With the Software as a Service model (SaaS), all of this is taken care of by the cloud computing provider.
Scalability, Reliability and Accountability
Growth and redundancy are handled by the cloud computing provider (e.g. you can add users or increase the number of transactions at any time). Server maintenance and upgrades, and 24x7 monitoring, are all included.
The SaaS model has the added benefit of keeping the service provider accountable, since the subscription fee must be continuously earned. With traditional software, there is often no vendor obligation after the initial purchase and setup.
Access, Accuracy and Communication
Users can login and work from anywhere, with no software to install. Information is updated in real time, instead of being posted daily or weekly as in legacy systems. Instead of using the traditional mail room, communication is electronic -- by EDI or email -- and documents are often made available in multiple, standard file formats such as PDF or CSV (Excel).
Users only have permission to use the modules they need. Data is stored offsite in a secure data center instead of on each user's computer or on an internal network. Security updates are automatic.
Advantages of Cloud Computing
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