Cloud Computing – What is it?

Nowadays, everyone talks about Cloud and Software as a Service (SAAS) but is often paired with inflated expectations and misunderstandings.  Many people still misunderstand ‘hosted’ solution as ‘cloud’ solution and in fact, many vendors attracted by lucrative additional revenue are claiming to be ‘Cloud’ provider whereas they actually host traditional solution in a virtual platform 🙁

In this post, I will try to explain about Cloud & its characteristics and difference between hosted and cloud environment.

What is ‘Cloud’?


Cloud computing is the delivery of computing as a service rather than a product, whereby shared resources, software, and information are provided to computers and other devices as a utility (like the electricity grid) over a network (typically the Internet). 

The term “moving to cloud” also refers to an organization moving away from a traditional CAPEX model (buy the dedicated hardware and depreciate it over a period of time) to the OPEX model (use a shared cloud infrastructure and pay as one uses it).

Source : Wikipedia

Difference between Cloud and Hosted Solution


According to NIST( National Institute of Standards and Technology), cloud computing is characterized by

  • Resource Pooling – Computing resources are pooled to serve multiple consumers in multi-tenant model, with resources dynamically assigned and reassigned according to consumer demand
  • On-demand self service – Consumer can provision computing capabilities without requiring human interaction with service provider. For example,  on Windows Azure, you can scale your virtual machine RAM by web based management portal.
  • Rapid elasticity – Capabilities can be provisioned and released (some cases, automatically)
  • Broad network access – available over the network and accessed through standard mechanisms
  • Measured Service – Automatically control and optimize resource usage. It can be monitored, controlled and reported providing transparency for provider and consumer

Although hosted solution exhibits little bit of elasticity and measured service characteristics, it lacks a lot in other areas

Main difference between cloud and hosted solution are

  • Cloud vendors design their software to perform better as fully hosted solution and managing the software across hundreds of servers and across multiple level of data redundancy in their multi-tenant environments.
  • Product upgrades are applied for all customers and typically access same solution from same cloud.
  • With multi-tenant and resource pooling options, cloud based solution is very cost effective
  • Cloud based services are very efficient as they have to support single version of software and uniform hardware environment

Simply, if you need electricity for your new home,

  • if you build your own plant, it is on-premise solution
  • if you ask your neighbor to build plant for you, it is hosted solution
  • If you get it from National Grid, it is cloud solution