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What is Cloud Computing?

The cloud is simply the internet. Cloud computing, on the other hand, involves the use of resources on the internet to perform work. Back in the day, computers were centrally located (mainframes) and individuals would connect to the mainframe and have it run a series of instructions to support research or perhaps run payroll for a company.

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As computers got smaller and faster, people eventually started purchasing personal desktop computers to do the work for them. Businesses purchased more powerful computers called servers to run the tasks for their entire company. Today, more and more people and businesses are relying on the capabilities service providers connected on the internet to perform their work, requiring they only have a device capable of running a web browser.

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What is Cloud Computing?

Unlike the cloud, which is generally how end users perceive cloud computing, where media is stored online, email is accessed through a web browser, and files are backed up remotely, cloud computing is a combination of business model, vehicle for delivering services, and platform to conduct work. Cloud computing has been around for quite some time. Web based email is probably the most common form of cloud computing that most people are familiar with: the email application is accessed through a web-browser (instead of a desktop program such as Microsoft Outlook or Entourage), messages are stored online (not on your computer), and when you send and receive email messages, the work to accomplish this task is performed by a remote server (not your personal computer). This, in a nutshell, is cloud computing.

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What has made cloud computing so prevalent, and increasing in popularity, is the widespread availability of high-speed internet (both through broadband internet at home and 3G/4G cellular plans), advances in mobile computing (smart phones and tablets), and advances in the behind the scenes technology (grid computing for example).  In addition, many people are realizing the risk in keeping important data on a local computer, not backed up securely offsite at a facility that is designed to protect information.

As a small business owner, it is critical that my information is secure, accessible from anywhere, and not at risk of destruction. The cost to protect my data sufficiently would be enormous. By using cloud service providers, I can achieve this with minimal costs that scale as my business grows.

The Business Model

Cloud computing providers make their money in several ways. Below is the three general areas where service providers can charge a fee:

  1. Monthly licensing fee for using the service (this is generally a per-user fee)
  2. Monthly fee based on usage (generally defined in either bandwidth consumed or amount of storage space utilized)
  3. Monthly fee for support

NENS MSP mentions that some providers might only charge one or two of these areas, others all three. It all depends on the service and the provider. But generally, you can expect to pay for all three. The advantage to this model is two-fold. One, it allows a startup to incur nominal costs to implement a robust technology platform without large out-of-pocket costs that scale as the business grows. Two, the service provider is able to charge for the amount of service consumed, covering their expenses while earning a profit.

This model also presents a competitive advantage for the small startup that uses this model. For example, a business that has invested hundreds of thousands in a robust customer relationship management system, email servers and backup sites would have a very difficult time justifying a switch to a new technology or service provider due to the sunk investment. A company that paid for a cloud based service would simply stop paying the monthly fees, migrate the data to the new service, and continue on. This allows technology to change with the company over time.

In addition, because most cloud based service providers only require an end user to have a modern web browser, there is no software maintenance and installation or operating system issues. Users can work from Macs and PCs without any issues.

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