Cloud Computing, Part 1: How it Works and Risks to Consider

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Cloud computing can be a confusing concept at first. Part of this confusion can be attributed to the term “cloud,” which can lead people to believe their data and applications simply float through the air – like a cloud – until users click an icon on their computers to retrieve them. Though often misunderstood, the general concept of cloud computing is actually quite simple.

In a cloud environment, your data and applications are stored remotely on shared servers – not onsite servers and computers – and accessed through the Internet via your desktop computers and mobile devices. Basically, the cloud allows you to leverage enterprise-class hardware, software and applications from a service provider without actually buying and maintaining the technology.

There are three cloud computing service models:

  • Infrastructure-as-a-Service (IaaS). Users can purchase essential computing resources and deploy their own applications and software in a cloud infrastructure managed by the service provider.
  • Platform-as-a-Service (PaaS). Users can access tools and services required for application development, testing, deployment and maintenance. Users control their applications in a cloud infrastructure managed by the service provider.
  • Software-as-a-Service (SaaS). Users access the service provider’s applications through a cloud infrastructure managed by the provider.

Risks of Moving to the Cloud

Security is the concern most often raised by small to midsize businesses when discussing the cloud — rightly so. Because sensitive data leaves the confines of your data center to live in a shared environment, you need assurances that the entire cloud infrastructure and the data that passes through it are properly secured. Access controls, data encryption, firewalls, patch management, system testing and other security issues are the responsibility of the service provider, so it’s important to understand exactly how your data will be protected before entering into an agreement with a provider.

If your industry or organization is subject to data security and privacy regulations, you need to ensure that regulatory compliance can be maintained in a cloud environment. This is especially important if you store medical or financial information or accept payments by credit or debit card.

Connectivity is another consideration. A lost Internet connection results in a lost connection to the cloud environment, which can put business operations in a costly holding pattern until the connection is restored. Redundant Internet connections should be implemented to avoid disruptions to business continuity. Your service provider should also have a reliable, well-tested disaster recovery and data backup plan to minimize the impact of an outage and prevent data loss.

But while there are certain risks associated with cloud computing, the rewards generally outweigh them. In Part 2 of this post, we’ll discuss the many benefits of cloud computing for small businesses, from capital and operational cost savings to improved productivity.