Cloud computing is one of those things everyone hears about, but most people don’t really understand. If you are a business person, you don’t need to know about network layers, connectivity protocols, and other technical stuff. What you do need to understand is how cloud computing affects the business world, and how you can use it. This article is a primer on cloud computing for any business owner or employee.

Cloud computing is a relatively new term, but the concept dates back to the 1950s, when mainframe computers were seen as the way forward. By centralizing computing power and installing “dumb terminals” for users to communicate with the central machine, greater bandwidth and processing balance could be achieved. So how does this translate to modern cloud computing, and how can you use it to achieve more in business?

The term “cloud” in cloud computing refers to a network of computers, connected to the Internet from somewhere in the world. It doesn’t matter too much where the servers are physically located, or how many there are, since cloud computing is based heavily on the concept of virtualization. Most cloud computing companies try to have servers in a variety of locations around the world, to reduce data transmission times for a global audience.

Cloud computing offers software as a service (SaaS), by putting as many applications as possible into the online “cloud” (i.e. installing them on the network), then offering them to subscribed users anywhere in the world, via the Internet. Such services include email, customer relationship management, web conferencing, database management systems, data storage, data backup, and many others.

Benefits of Cloud Computing

Many of cloud computing’s advantages are achieved through virtualization. This is when a single installation of an application gets shared among multiple customers, by the use of virtual private networks, application instances, and logical names. A great example of such virtualization is Google’s online email application, Gmail: a single platform is used for everyone, but millions of individuals and companies use Gmail as if they had their own copy of the application, installed on their local computer.

Despite the advantages of virtualization, data storage is still the biggest use for cloud computing, with block and file storage devices located at the provider’s premises used to hold customers’ data. Such data is always encrypted, though many companies also encrypt their data before sending to cloud storage, to double the security.

For the more technically minded, the technologies at work behind the cloud are well-established, and constantly advancing: service oriented architecture, grid computing, utility computing, virtualization, encryption, network security and many others.

The benefits of cloud computing are manifold. As a business resource, it offers lower real costs than maintaining an in-house network, and ensures efficient utilization of resources and reliability. Since everything is centralized, individual workers do not need to have “their” computer: they can use any machine that has been set up with a default installation to access the cloud, and thus their applications and data. This is commonly known as “virtual desking”. The cloud can also provide additional services and pre-configured applications on demand, simply by requesting them from the provider. Those services are assigned to a user’s account, rather than a specific computer, so they “follow” the user to whichever device they use to access the cloud.

Cloud computing also offers greater collaboration for businesses, by incorporating applications like MailChimp, Chatter, and Google Apps. With all these applications stored remotely, the processor load on local devices is much lighter (a standard browser with Java is all that is commonly required), so your employees can collaborate from virtually anywhere, using smartphones, tablets, and laptops. It doesn’t even matter what operating system they run, provided it includes a capable browser: iOS, Android, and Windows devices can all use the same cloud-based applications and collaborate without incident.

As a business tool, cloud computing’s main aim is to better manage resources and improve performance. Fuller utilization of resources should be the driving force behind any cloud computing strategy, as it improves efficiency in many areas, such as system backup, data storage, performance analysis, and load balancing. If you’re going to be responsible for your company’s cloud use, you will need to understand how to audit system backups, plan monitor capacity, and manage system data flow. You will also need to be familiar with your cloud provider’s security procedures, such as encryption policies, e-Commerce processing, employee screening, and so on.

Challenges Associated With Cloud Computing

Although it may seem like an ideal solution to every problem, cloud computing is not perfect. The most significant concern is that of data security and privacy. Your company’s data is stored on a third party’s systems, alongside dozens (or hundreds) of other companies’ data, and is accessible via the Internet, so there is a much-increased risk from hackers, malware and other digital attacks.

In-house networks suffer from similar problems, of course, but the fact that they are physically stored inside your company’s premises, and only used by your company, makes it easier to secure them.

A smaller, yet important problem is that cloud computing relies on stable connections. If your business is based in a geographic location with poor connectivity, or you are relying on unstable mobile networks to send and receive, there is a greatly increased risk of data loss in transmission. Complex data checking algorithms reduce the risk, but it can still be a significant problem for businesses in remote locations, or those in countries with poorly developed networks.

Cloud computing also brings unique challenges to the business world. Your technical team will need a small, highly skilled group to support and maintain your cloud connection, standard installations, and employee devices. Recruitment and retention of that group can pose a real problem, especially with these skills in such high demand.

There’s also the risk of losing sight of the goal of switching to cloud computing. It’s very easy to become enamored with all the possibilities the cloud offers, and get caught up in playing with all the permutations. Always remember that cloud computing is a resource; it is a means to an end, and should never become an end in itself.