The-Future-CloudEven managers and professionals who aren’t tech-savvy or interested in Internet and IT trends have heard about “the cloud” – it is a term that has received a lot of attention from corporate marketers, advertisers and journalists. What is “the cloud”, cloud computing and Software as a Service (SaaS)?

What Is Cloud Computing?

Finding to technology experts who agree on a specific definition of “cloud computing” can be just about as definitive and easy and finding two people who agree that a specific cloud in the sky is shaped like a dog, or a car, or something else entirely. The strictest definition of cloud computing is one that relates to computing distributed among a system of networked computers, which is also known as distributed computing. Some experts (any many marketing professionals) have adopted a very broad definition of cloud computing to include almost any service offered over the Internet.

The Common Definition

A common definition of cloud computing, which we will adopt for this blog post, specifically refers to Internet-based, networked IT services that can be readily and easily expanded or contracted through the use of a network, usually the Internet. Services that used to require investments in expensive hardware and software, and the services of local IT professionals to administer and service said hardware and software, can now be acquired online.

CMS Is Not Cloud Computing

Although web hosting and server-based Content Management Systems (CMS) and platforms such as WordPress are often confused with cloud computing, the two are not exactly the same. Web hosting usually involves simply hosting a website and successfully delivering static content an end user, although many web hosts also provide Software as a Service (SaaS) as add-on products and features and many modern websites include interactive features and applications. CMS and content platforms are technically based “in the cloud”, but they aren’t applications specifically meant to provide a service to end users.

Expanding Capabilities

Web hosting and modern cloud computing are historically linked – modern cloud computing gained momentum as companies such as and Google realized that their larger collection of servers were, by design, underutilized simply as web servers for a majority of the time, only reaching capacity during peak times or “spikes” in Internet traffic. This led to corporate initiatives to expand the capabilities and the efficiency of these servers.

How It Used To Work

Before the rise of cloud computing, a small business or organization that wanted to provide email, office applications, and Customer Relationship Management (CRM) software to their employees usually had to do so “in-house”. To provide internal email service to an organization, an email server would have to be purchased and physically delivered. Expensive software for the server would also have to be purchased and an IT professional would have to be hired to setup and administer the server and service. A local email application, such as Microsoft’s Outlook, would have to be purchased and installed on each employee’s computer. Finally, if the business or organization wanted to expand beyond a certain point, new servers and software would have to be purchased and eventually more IT professionals would have to be hired to accommodate the expansion of services.

The Cloud’s Revolution

With cloud computing and the advent of SaaS, small businesses and organizations can now acquire products and services like email, office applications, and CRM software completely through the cloud. Companies like Google provide SaaS product suites such as Google Apps for Business, which includes email, calendars, office applications, and cloud storage completely over the Internet and through a web browser, eliminating the need for locally-installed applications. Other companies like and Insightly provide CRM SaaS in the same manner, integrating with other cloud services like Google Apps or with locally-installed applications such as Outlook to provide real-time CRM capabilities.

Expansion And Contraction

Both the expansion and contraction of services to match employee acquisitions and turnover are extremely easy, usually accomplished within minutes through an administrator’s online portal. Finally, since services and applications are hosted in the cloud aren’t tied down to applications installed on a local machine, users can access applications and data from any device, including mobile devices, quickly and seamlessly.

Drawbacks Of Cloud Computing

The drawbacks of cloud computing are mostly twofold. First, the Total Cost of Ownership (TCO) of acquiring certain SaaS services can prove to be significantly higher than licensing software in certain situations, especially if the SaaS is purchased strictly as a replacement of the licensed software. For instance, an office application suite may have a one-time licensing cost per machine of $350, or a monthly fee of $15 to subscribe to the equivalent SaaS product. Once the SaaS subscription is in use for 24 months, it would immediately have a higher TCO than its licensed counterpart that would continue to increase over time.

However, it is important to note that SaaS often includes features that aren’t included with licensed software, such as software version upgrades, cloud hosting for files, automatic file backups, mobile applications and others. Once these features are factored in to a side-by-side comparison, it is more difficult to strictly measure TCO.

Data Retention

The second drawback of SaaS involves security and data retention. By its very definition, cloud computing involves releasing your data “into the cloud”, or allowing it to be hosted on hardware owned by a third-party. This means that a company has less direct control over their own data. For almost every cloud-based and SaaS service, a Terms of Service (TOS) agreement must be reached between the two parties with the acknowledgment that data may be lost, corrupted or even stolen if criminals were to breech the security of the remote servers.

Unable To Use Cloud Services

Some companies and organizations in highly-regulated or highly-sensitive industries are unable to use many cloud-based products and services, simply because they must adhere to higher standards for data retention and security. It has also been recently publicized that using cloud-based and SaaS can leave companies more susceptible to “oversight” by government agencies such as the National Security Agency (NSA).