Cloud Computing 101: Just Exactly What Is A Cloud?

by drjim on January 4, 2012

CIOs need to understand just exactly what a cloud is

CIOs need to understand just exactly what a cloud is

So there I was the other day talking with one of my CIO customers and I was going on and on about how they could introduce cloud computing into their IT department. I had been working with this client for several years and we know each other very well so he felt comfortable in stopping me in mid-sentence.

He said “Jim, I’ve been hearing a lot about this cloud computing stuff and I sorta know what is it, but I’m not sure that I fully understand it. ” Oops, I hadn’t realized that there were still folks out there that hadn’t “drunk the cloud Kool-Aid”. Ok, so now we’re going to take care of this.

Say Hello To Cloud Services

So why are CIOs (and everyone else) struggling to get their hands around just exactly what cloud computing is? I believe that the cause of the confusion is simply that there are a bunch of different things that have been lumped together and are now being called “cloud computing”.

Let’s start with the most basic form: subscription services. In the old days, when an IT department purchased some software disks would arrive in the mail, get installed on servers, and you’d be up and running. That’s not the way that it works when you are using the cloud.

When you are using cloud computing, instead of having to physically touch hardware and software in order use an application, now all you have to do is to subscribe to it and you can access it over the Internet. No disks, no servers. Great examples of these types of subscription services include Google’s Gmail email service and’s CRM application.

This is where things can start to get confusing. There’s more to cloud computing than just subscribing to someone else’s application. The company applications that are currently running on servers located in your data center can be moved “into the cloud”. What this means is that you can use servers and storage systems that are remotely located in a cloud provider’s data center to run your company’s applications. You would access your applications and data via your Internet connection.

How Much Is All Of This Going To Cost Me?

The fact that cloud computing is even an option is pretty cool. However, just being a shiny new technology is not enough – there has to be a solid business reason for moving your IT operations into the cloud.

Let’s take a look at costs. First, if you choose to not take advantage of cloud computing then you are still going to have IT costs — these costs come along with the very definition of information technology. In order to stand up new IT applications (and expand what you already have in order to meet growing user demand) you are going to have to buy and install more servers. As long as you are getting more servers, you’ll also have to get more storage. All of these new boxes will need to be maintained and so you’ll need to hire more staff to administer them.

In order to avoid these upfront IT costs, CIOs can make use of the cloud. If you are going to make use of cloud computing’s application subscription services, you need to be ready to pay per user, per month. charges between $5-$25 per user per month. Google’s office suite of applications costs $50/user per year.

If you choose to run your existing IT applications in the cloud, then you’ll end up paying for how much computing horsepower and storage you use. One cloud computing firm charges six cents per processor per hour of usage.

Oh, and one more item. The way that you’ll connect to your applications in the cloud will be via your Internet connection. Given the importance of information technology, this connection that used to be important will have just become vital. This means that you’ll need to get a larger bandwidth connection and you’ll probably need to invest in a redundant connection in case your primary connection goes down.

What All Of This Means For You

Cloud computing seems to have shown up almost overnight. CIOs might have initially thought that it was another one of the seemingly countless IT fads that have come along in the past few years and shrugged it off. However, for some compelling financial reasons, it’s starting to look like it’s taken hold in the IT sector and is here to stay.

Some of the reasons that cloud computing has caused so much confusion among CIOs is because it is so many different things. In its simplest form, cloud computing is a subscription service where software is delivered over the web. One step beyond this is using remotely located computing power (servers and storage) to execute company IT applications which are then accessed via the web.

All of this functionality comes at a cost, of course. CIOs can avoid the upfront costs of having to purchase IT hardware in order to launch a new application by using the same resources located in a cloud. However, they need to do some investigations in order to make sure that they’ll be comfortable with having their data and applications being stored someplace else.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: Do you think that CIOs should insist that their applications and data be stored in their own country?

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What We’ll Be Talking About Next Time

It seems as though at least once a year CIOs get a bee in their bonnet and decide that the company’s IT department needs to knuckle down and improve its processes. This means that it’s time to implement one of those far-reaching process improvement programs. Oh, oh. No matter if it’s Six Sigma or some other flavor-of-the-week program, they all seem to end up the same way – having no lasting impact. Let’s take a look and see why this happens…

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{ 2 comments… read them below or add one }

Haresh Thevathasan April 18, 2012 at 9:58 am

Great Article, one of things that the article may improve upon is defining the difference between each service offering in the Cloud. The article defines infrastructure as a service and software as a service well but fails to touch on platform as a service. Platform as a service allows consumers to deploy acquired or created applications into the cloud without having to have programming languages, libraries and tools to do so. Sometimes confused in the industry with IAAS which focuses on providing the actual hardware resources such as storage, cpu etc. Just thought the clarification should be mentioned, otherwise an excellent article.
Haresh Thevathasan CEO, The Cloud IT.


Dr. Jim Anderson April 19, 2012 at 9:31 pm

Haresh: You make a very good point. In fact, platform-as-a-service even has it’s own acronym: PaaS!


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