There are several benefits of the cloud for businesses. In fact, the first returns from cloud applications are often impressive. Therefore, companies using cloud applications are increasing the number of standard applications and business processes. This helps to reduce cycle times to increase IT resources, IT costs and helps launch more new products and processes.
Operational and financial improvements in moving from on-premises applications to the cloud
In a survey by the North American consultancy TCS, participating companies were asked whether they use of cloud applications generated benefits. In this case, the question addressed specifically cloud applications that have moved from local computers. This, in addition to brand new cloud applications for which they previously did not have local versions. For both types of applications, responses indicate that cloud applications generate significant improvements in operational and financial performance.
Benefits of moving existing applications to the cloud
In all four regions of the world, the average benefits of cloud applications of this type have been impressive, especially for companies in Latin America and Asia-Pacific:
- In IT costs, there were 28% (Europe) to 55% (Latin America) of average reductions;
- In standard applications and business processes, there was between 34% (Europe) and 60% (Latin America) of an increase in the number of applications and business processes that have become common in a company;
- There were between 35% (USA) and 64% (Latin America) in reductions in cycle time to increase or decrease IT resources (a measure of “flexibility”);
- In inactivity systems, there were reductions from 33% (Europe) to 59% (Latin America);
- In the time it takes to improve applications, there were reductions from 37% (the USA and Europe) to 57% (Latin America);
- There were from 35% (USA) to 64% (Latin America), reductions in the number of corrections;
- There was a 34% (Europe) to 66% (Latin America) increase in the number of reports in analytical reports. This gives companies greater capacity to mine and analyze data volumes.
The most aggressive adopters of cloud computing are companies from Latin America and the Asia Pacific. After all, they showed higher percentages of applications in the cloud for total enterprise applications. Therefore, they reported achieving much greater benefits with their applications in the cloud. Why does it happen? Perhaps greater benefits are a function of experience. That is, the more you use cloud applications, the more knowledge you get about how to deploy and use them. Therefore, the strategy is more likely to generate benefits. Or it could be that using a larger number of cloud applications brings more cumulative benefits.
Cloud benefits for businesses are considerable.
TCS also asked survey respondents to report the benefits received from the new applications they have launched in the cloud so far. Specifically, they were asked to indicate improvements in six areas:
- Testing new business processes that they would have considered too expensive to test before the advent of the cloud (because of high technology costs). Here, we ask you to indicate the percentage increase in the new tested business processes;
- The number of new business processes that they have actually launched or instituted
- The number of new products/services tested;
- The number of new products/services they have launched;
- The annual increase in revenue resulting from the launch of new products/services in markets that they have already served;
- The average reduction in the time it took to enter new markets with new products/services.
Although the average percentage improvements in these areas were about half of those that companies have reported since moving from on-premises applications to the cloud, they were noteworthy:
- Increase from 15% to 19% in the number of new business processes tested and launched by companies in the USA, Europe, and the Asia Pacific. Latin American companies, however, reported higher average numbers (22-27%);
- Increase from 13% to 19% in the number of new products or services tested and launched by companies in the USA, Europe, and the Asia Pacific. This, again, accompanied the increase of 31-32% in new products/services in Latin America;
- An average reduction of 14% to 17% in the cycle time to enter new markets with new products/services in the USA, Europe, and Asia-Pacific. Again surpassed by Latin American companies, who claimed an average reduction of 35% in cycle time;
- Average revenue increases of 13% to 17% in the launch of new cloud-based products and services in existing markets. These values compete with an average revenue increase of 32% reported by Latin American companies.
How does cloud computing work?
In practice, three main types of cloud computing service models are available. Get to know them:
- Software as a service (SaaS);
- Infrastructure as a Service (IaaS);
- Platform as a service (PaaS).
The adoption of a particular cloud model will depend on the needs of the company. In fact, to ensure the benefits of the cloud for companies, it is possible to combine all three.
Software as a Service (SaaS)
This is the most common form of cloud computing adopted by small businesses. In this model, it is possible to access software applications hosted on the internet through a browser. That is, without the need to use traditional applications stored on the PC or server itself. In SaaS, the software application host is responsible for controlling and keeping the application running. This includes software updates and configurations. Therefore, the user has limited control over application settings. A good example of SaaS is a customer relationship management system.
Infrastructure as a Service (IaaS)
Computer power is usually purchased or rented in this model, such as disk space from an external service provider. In this option, access via a private network or internet is feasible. It is worth mentioning that all physical hardware of the computer is in charge of the provider. Amazon EC2, Windows Azure, and Rackspace are good examples of IaaS.
Platform as a Service (PaaS)
A PaaS consists of the cross between SaaS and IaaS. In general, the user rents the hardware, storage, network capacity, and operating systems offered by IaaS. However, PaaS provides greater control over the technical aspects of the configuration and the ability to customize.
Benefits of Cloud Computing
Cloud computing offers many benefits to companies. After all, it allows you to configure what is essentially a virtual office to give you the flexibility to connect to your company from anywhere, anytime. With the growing number of web-enabled devices used in the business environment, accessing data is even easier. So there are many benefits of the cloud for businesses. Meet some of them:
Reduced IT costs
The move to cloud computing can reduce the cost of managing and maintaining IT systems. Rather than buying expensive systems and equipment for the business, it is possible to mitigate costs using the resources of the cloud computing service provider. Operating expenses can also be reduced. After all, the cost of system upgrades, new hardware, and software can be included in the contract. Besides, the company does not have to bear the wages of a specialized team and energy costs.
The company can quickly expand or reduce its operating and storage needs, as needed. Besides, instead of buying and installing expensive updates, the service provider can handle this. Using the cloud also frees up time so that managers can continue to manage their business.
Protecting data and systems is an important part of business continuity planning. Whether you have a natural disaster, a power outage, or another crisis, having your data stored in the cloud ensures backup and protection in a safe place. Reaccessing data quickly allows the company to do business as usual, minimizing any downtime and lost productivity.
Collaboration in a cloud environment gives the company the ability to communicate more easily outside of traditional methods. When working on a project in different locations, it is possible to use cloud computing to allow employees, contractors, and third parties to access the same files. You can also choose a cloud computing model that makes it easy to share records with your consultants.
The flexibility of work practices
Cloud computing allows employees to be more flexible in their work practices. For example, you can access home, vacation, or commute data. Just have a good Internet connection. That is, if necessary, employees will be able to connect to your virtual office quickly and easily.
Access to automatic updates
Access to automatic updates for your IT requirements can be included in the service fee. Depending on the cloud computing service provider, the system will be updated regularly with the latest technology. This may include updated versions of software, as well as updates to servers and computer processing power.
Cloud computing is much more reliable and consistent with a managed services platform than the internal IT infrastructure. After all, most providers offer a Service Level Agreement (SLA) that guarantees 99.99% availability. Your organization can then benefit from a large set of redundant IT resources. Like, for example, a fast failover mechanism. If a server fails, hosted applications and services can be easily transferred to any of the available servers.
Cloud computing offers enhanced and simplified IT management and maintenance capabilities through central resource management, vendor-managed infrastructure, and SLA-supported contracts. Updates and maintenance of the IT infrastructure are eliminated, as all service providers maintain all resources. The company enjoys a simple web-based user interface to access software, applications, and services. This, without the need for installation. Besides, the SLA guarantees the delivery, management, and timely and guaranteed maintenance of IT services.
Increasing computing resources offer a competitive advantage over competitors. This is because the time required for the acquisition of IT is practically nil. The company can deploy critical applications that provide significant business benefits, with no upfront costs and minimal provisioning time. Cloud computing allows managers to focus on their main activities and business objectives. It can also help reduce the time it takes to market the latest applications and services.
Disadvantages of cloud computing
Despite the various benefits of the cloud for companies, like all technology, there are setbacks. Meet the main cloud computing below:
Because cloud service providers look after a large number of customers every day, they can become overwhelmed. As a result, possible technical failures may arise. This can cause some business processes to be temporarily suspended. Besides, if the internet connection is offline, you will not be able to access any applications, servers, or data from the cloud.
Cloud service providers implement the best security standards and certifications in the industry. However, storing important data and files at external service providers always poses risks. The use of cloud-based technologies means that it is necessary to provide the service provider with access to important company data.
The ease of obtaining and accessing cloud services can also give malicious users the ability to scan, identify and exploit loopholes and vulnerabilities within a system. For example, in a multi-tenant cloud architecture, where multiple users are hosted on the same server, a hacker may attempt to break into the data of other users hosted and stored on the same server. However, such exploits and loopholes are unlikely to appear, and the likelihood of a compromise is not great.
It is common for cloud service providers to promise that the cloud will be flexible to use and integrate. However, changing cloud services is something that has not yet fully evolved. Therefore, organizations may find it difficult to migrate their services from one provider to another. Hosting and integrating current cloud applications on another platform can lead to interoperability and support issues. For example, applications developed on the Microsoft Development Framework (.Net) may not work correctly on the Linux platform.
The cloud infrastructure is wholly owned, managed, and monitored by the service provider. Therefore, it grants minimal control to the customer. The customer can only control and manage the applications, data and services operated. That is, it does not have access to the backend infrastructure itself. As a result, the main administrative tasks, such as accessing the server shell, updating and managing firmware, cannot be passed on to the client or end-user.
Still, it’s easy to see how the advantages of cloud computing easily outweigh the disadvantages. After all, reduced costs, reduced downtime, and less management effort are benefits that speak for themselves.