Cloud computing is a term used to describe the on-demand access to IT services that comprise compute, network, storage, and software services from third-party suppliers, usually via the public internet or some form of direct wide-area network (WAN) access. Companies can provision necessary IT applications for their organization without having to procure and manage their own infrastructure to host those applications. Instead, they lease/rent the required IT infrastructure from such third-party providers.

Cloud computing has existed for many years in some form, since the invention of the internet. In the old days, Hotmail (first launched in 1996 and now branded as Microsoft Outlook) was a prime example of early cloud computing. You could set up email accounts for your colleagues and yourself on Hotmail and use them to communicate. An alternative would be to host your own email servers' (the infrastructure) network connectivity, as well as the email application (the email software). This would ultimately mean additional costs as well as management overheads to maintain the email servers you hosted.

Today, cloud computing has become mainstream and is, in several cases, the default option for many companies and start-ups. Currently, Amazon Web Services (AWS) is the largest provider of cloud computing services, offering a variety of cloud IT services in the form of infrastructure, platform, and software solutions. You can opt to consume these services rather than creating your own dedicated environment to host your business applications. The sheer size of AWS enables it to actually provide the necessary components to host your business applications at a fraction of the cost, while providing high availability (HA), security, and resilience.

The six advantages of cloud computing

Let's take a look at the six advantages of cloud computing, according to AWS (AWS, Six Advantages of Cloud Computing, https://docs.aws.amazon.com/whitepapers/latest/aws-overview/six-advantages-of-cloud-computing.html), as depicted in the following screenshot:

Figure 1.1 – The six advantages of cloud computing

Tip

The AWS Certified Cloud Practitioner examination assumes that you have these six advantages memorized when testing the Define the AWS Cloud and its value proposition objective.

Let's look at these advantages in detail, as follows:

• Trade capital expense for variable expense: One of the primary benefits of moving to cloud computing instead of hosting your own on-premises infrastructure is the method of paying for that infrastructure. Traditionally, you would have to procure expensive hardware and invest precious business capital to acquire infrastructure components necessary for building an environment to host applications.

  With cloud computing, you pay for the same infrastructure components only as and when you consume them. This on-demand, pay-as-you-go model also means that you save costs when you are not utilizing resources.

  The shift away from capital expense (CAPEX) for variable expense, also known as operating expense (OPEX), means that you can direct your precious business capital to more important areas of investment, such as developing new products or improving your marketing strategy.

• Benefit from massive economies of scale: As an individual business, you would generally have to pay retail rates to purchase necessary IT hardware and build an environment that can be used to host your applications. Cloud providers such as AWS, however, host infrastructure for hundreds of thousands of customers, and even get involved in innovating and having components manufactured to their specifications. This gives even greater economies of scale and allows them to offer lower pay-as-you-go rates to customers.
• Stop guessing capacity: Traditionally, while carrying out capacity planning, you would procure necessary hardware components for future growth. Predicting future growth is extremely difficult, and this often meant that you would overprovision your environment. The result would be expensive idle resources simply going to waste. The fact that you would have made large CAPEX to acquire those components would ultimately be detrimental to the balance sheet due to the rapid loss in value arising from depreciation. On the flip side, some companies may end up underprovisioning capacity to save on costs. This can have an adverse effect on corporate image, if—for example—due to underprovisioned resources your customers are not able to complete transactions or suffer from poor performance.

With cloud computing and sophisticated management software, you can provision the necessary infrastructure when you need it most. Moreover, with monitoring and automation tools offered by cloud vendors such as AWS, you can automatically scale out your infrastructure as demand increases and scale back in when demand falls. Doing so will allow you to pay only for what you consume, when you consume it.

• Increase speed and agility: Cloud vendors such as AWS enable you to launch and configure new IT resources in a few mouse clicks—for example, you can provision a new fleet of servers for your developers within minutes, allowing your organization to exponentially increase its agility in building infrastructure and launching applications. If you are building test and development environments or performing experimental work as part of researching a new product/service, then once those tasks are complete you can just as quickly terminate those environments. Equally, if a particular project is being abandoned midway, you do not need to be worried about having any physical wastage—you just turn off or terminate what you no longer need. By contrast, prior to the invention of virtualization technologies (discussed later), provisioning a new server to host a database would often take weeks. This would include the time it takes to place an order with a supplier for suitable hardware, having it delivered, installing additional components such as storage and memory, and then finally implementing the manual process of installing operating systems and securing them. This process of building data centers also means that you are diverting money away from the main business—precious capital that could be spent on innovating existing products or developing new ones.
• Stop spending money running and maintaining data centers: Hosting your own on-premises infrastructure consumes several hidden costs. In addition to using up precious capital to purchase expensive hardware, you also need a team of engineers to efficiently configure every infrastructure component and lease necessary real estate to rack, stack, and then power up your servers. You would also be required to keep the servers cool with appropriate air-conditioning systems—and that's not all. You would also have to spend money on expensive maintenance contracts to handle the wear and tear of the hardware.

  By hosting your applications on AWS's infrastructure, you no longer need to worry about these hidden costs. Your real-estate costs and utility bills can be dramatically reduced, making your business more competitive.

• Go global in minutes: AWS host their data centers in various regions across the globe. Although you may be based in one country, you will have complete access to all regions. This will help you offer lower latency and a superior customer experience, regardless of where your customers are located. Hosting copies of your resources in additional regions can also help you design for disaster recovery (DR) and business continuity requirements.

By way of contrast, the cost of setting up physical data centers in other countries in which you may not have a presence may be cost-prohibitive and might prevent you from rapid global expansion. Access to multiple regions also enables you to meet any compliance or regulatory requirements related to where data is stored and how it is managed.

In this section, we learned about the basics of cloud computing and discussed its six key advantages. We understood that adopting cloud technologies helps customers manage their costs better, while also enabling them to scale their applications much faster and become more agile. In the next section, we'll discuss one of the most important underlying components of a cloud computing service—virtualization.