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Cloud computing

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Cloud computing is a modern way to access digital resources over a network. The International Organization for Standardization (ISO) defines it as a paradigm for enabling network access to a scalable and elastic pool of resources. These resources can be physical hardware or virtual ones. This system allows for self-service provisioning, which means users can manage resources on demand. Instead of owning a single computer, users tap into a massive, shared pool of computing power.

Cloud computing
Cloud computing

This flexibility is essential for the modern digital economy.

In 2011, the National Institute of Standards and Technology (NIST) identified five essential characteristics of cloud systems. The first is on-demand self-service, where a consumer can automatically provision server time or storage without human interaction. Second is broad network access, allowing tools to be used on mobile phones, tablets, or laptops. Third is resource pooling, where a provider uses a multi-tenant model to serve many consumers. In this model, different resources are dynamically assigned based on demand.

Cloud computing types
Cloud computing types

Fourth is rapid elasticity, which allows the system to scale outward or inward very quickly. Finally, measured service uses metering to monitor and report resource usage, such as bandwidth or storage.

Cloud computing is organized into different service models. These models represent different layers of control and responsibility. Infrastructure as a Service (IaaS) provides the most control to the user over the underlying hardware. Platform as a Service (PaaS) offers more managed tools for developers. Software as a Service (SaaS) provides the least control but the most convenience for the end user.

Cloud computing service models (1)
Cloud computing service models (1)

Under a shared responsibility model, providers handle physical hardware and security updates. However, customers remain accountable for their own data encryption and identity access management.

Comparison of on-premise, IaaS, PaaS, and SaaS
Comparison of on-premise, IaaS, PaaS, and SaaS

This balance of responsibility changes depending on which model a company chooses.

The history of these concepts dates back to the 1960s. During that era, time-sharing and remote job entry (RJE) were common. Users would submit jobs to operators to run on large mainframe computers. The specific "cloud" metaphor was used by General Magic in 1994. A communications specialist named David Hoffman is credited with this metaphor. By 1996, Compaq Computer Corporation used the term in a business plan. They believed that online file storage would be a successful commercial venture.

Cloud computing
Cloud computing

Many major companies have shaped the industry since the early 2000s. Amazon Web Services (AWS) began in 2002 to help developers build applications independently. Amazon released Amazon S3 and Amazon EC2 in 2006. In 2008, NASA developed the first open-source software for private and hybrid clouds. Microsoft launched Azure in 2010, and IBM introduced its SmartCloud framework in 2011. Oracle announced its cloud in 2012. More recently, in 2019, Amazon launched AWS Outposts to extend its infrastructure to customer data centers.

Cloud computing offers a significant value proposition for many organizations. It allows companies to shift from capital expenditures to an operational expenditure (OpEx) model. This means they pay for what they use rather than buying expensive hardware upfront. The cloud also provides access to advanced tools like machine learning and data analytics. However, managing these costs can be difficult. A Gartner survey of 200 IT leaders found that 69% experienced budget overruns in 2023.

Supply and demand-stacked5-law
Supply and demand-stacked5-law

To help, many use tools like AWS Cost Explorer to monitor spending.

Despite the benefits, there are notable challenges and limitations to consider. Security and privacy are primary concerns because users must entrust data to third-party providers. Companies must also follow strict regulations like GDPR or HIPAA. Migration is another hurdle, as moving data between environments can be expensive and complex. According to a 2024 Flexera report, 50% of respondents cited challenges like understanding application dependencies. Some industries, such as high-frequency trading, still prefer on-premises systems for ultra-low latency. Many organizations now use a hybrid cloud to balance these needs.

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File:Cloud computing.svg
Cloud computing.svg
File:Supply_and_demand-stacked5-law.png
Supply_and_demand-stacked5-law.png
File:Comparison of on-premise, IaaS, PaaS, and SaaS.png
Comparison of on-premise, IaaS, PaaS, and SaaS.png
File:Cloud computing service models (1).png
Cloud computing service models (1).png
File:Cloud computing types.svg
Cloud computing types.svg
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