Nick Cucci

Nick Cucci

July 8, 2019

What Exactly Is 'The Cloud' Or 'Cloud Computing'?

Our industry, which is part of the tech industry, is no different than any other. We like to use buzzwords or terms that sometimes don't clearly convey to consumers what they actually mean. For example, "the cloud." What does it mean when you say your data is stored in the cloud? And what are the benefits or lack thereof?

When tech companies say your data is in the cloud, or that you can work in the cloud, it means that instead of being stored locally on your own device or computer, your data is now stored on offsite servers that can be accessed quickly and easily through web browsers like Chrome and Safari.

The cloud is not necessarily new architecture or methodology; it is more a way of accessing complete applications across any device with an Internet connection. This is what allows you to "store" music in your app, save project documents at any point, and later return to them where you left off, and on a different device, or even collaborate with others on those same documents.

Cloud computing has been around for a while (for about the last 10 years) but has only recently started to become adopted by large corporations that now realize the potential of cloud computing. This will continue to be a trend in the near future. However, large companies are facing problems associated with their hosted data center solutions while they migrate completely to the cloud.

As cloud technology gains more traction, it will, like any advancement, pave and streamline the way for new products and new thinking. Indeed, increased adoption of cloud and virtual computing is having a major impact on the payments industry. Traditional roles are beginning to change as it becomes harder to keep up with the raw computing power of the cloud.

This is becoming an issue not only for older companies, but also for all businesses managing the flow of money. It may be cheaper to deploy products and services in the cloud, but to be 100 percent cloud based, companies would have to transition all of their systems to the cloud. Even in a hybrid situation, you're going to be limited by what you have stored on physical servers if you are server based.

Why cloud computing matters

Cloud computing offers many benefits. Described below are some of the advantages, along with a discussion of why this shift matters:

  • Cost: This is a simple one. Cloud computing enables services like Amazon Web Services and Google Compute Engine to lease out machines (virtual machines) as needed. No more rack space, power, air conditioning and maintenance. Companies can grow and scale as needed without data center limitations. And the money shift is another aspect of cost. This is where you will see a major change. Companies, understandably, want to shift from capital expenditure (CAPEX) to operational expenditure (OPEX).

    Basically, this means that companies are trying to reduce costs by buying computing power instead of purchasing computer hardware, which they know will fail or break at some point. Letting the burden of maintenance fall on the computing company reduces overall operational costs. Another aspect to consider is the fact that most companies are strongly underutilizing their current datacenter setup anyway.

  • Availability: Using a cloud-based service provides high availability and bundled pricing while also offering many other infrastructure solutions. This makes it much easier to integrate to or even have redundant data backups in multiple Internet grids. For instance, instead of large payments companies having to host in multiple data centers on different Internet grids, the company can spin up virtual machines in each grid using cloud systems like Google Compute Engine or Amazon Web Services.

    Also take into consideration the cost of buying servers for each location. It can quickly reach millions of dollars, depending on the infrastructure the business wants to achieve. Plus, if a company is sever based in multiple data centers, are you really "hot swap" capable? More than likely not. (A hot swap, as defined by technology content provider TechTarget, is the replacement of a hard drive, CD-ROM drive, power supply or other device with a similar device while the computer system using it remains in operation. The replacement can be because of a device failure or, for storage devices, to substitute other data.)

  • Multiple products: In addition to everything else offered by cloud services, further benefits to becoming cloud based include products like static storage, automated backups and management services.

  • Scaling: Resource scaling is a major advantage to using cloud-based systems. You no longer have to worry about the size of physical servers and their performance limitations; you can now simply scale your virtual machines to provide the desired performance and scale systems on the fly. One con of cloud computing is that for some companies, replacing physical servers with virtual ones can cause negative performance changes because of the lack of understanding of how cloud computing actually works. It all depends on the type of data and application. For example, running a report of 1 million records stored on a physical server can take 10 to 15 minutes. Running the report via a 100 percent cloud-based system can be done in 2 to 3 seconds. The key, here, is that it be fully cloud based. It's difficult to have partial hosting that involves physical servers and cloud-based servers. To fully appreciate the cloud-based performance pickup, it is strongly recommended that your whole system be cloud based. It is hard to piecemeal this. I am seeing more companies than ever begin to migrate over to the cloud, and I don't see it slowing down anytime soon. Those who choose to not adapt may not survive due to an inability to compete at as high a level as competitors who do embrace the cloud. As Charles Darwin said, "It is not the strongest or most intelligent who will survive but those who can best manage change."