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HomeTopicsCloud Computing

What is cloud computing?

Explore IBM's cloud computing solutionSign up for cloud updates

• Overview
• Benefits of cloud computing
• Origins of cloud computing
• Cloud computing components
• Cloud computing services
• Types of cloud computing
• Cloud security
• Cloud sustainability
• Cloud use cases
• Related solutions
• Resources
• Next steps
Updated: 14 February 2024
Contributors: Stephanie Susnjara, Ian Smalley
What is cloud computing?

Cloud computing is the on-demand access of computing

resources—physical servers or virtual servers, data storage,
networking capabilities, application development tools,
software, AI-powered analytic tools and more—over the
internet with pay-per-use pricing.
The cloud computing model offers customers greater flexibility and scalability compared to
traditional on-premises infrastructure.

Cloud computing plays a pivotal role in our everyday lives, whether accessing a cloud
application like Google Gmail, streaming a movie on Netflix or playing a cloud-hosted video
game.

Cloud computing has also become indispensable in business settings, from small startups
to global enterprises. Its many business applications include enabling remote work by
making data and applications accessible from anywhere, creating the framework for
seamless omnichannel customer engagement and providing the vast computing power and
other resources needed to take advantage of cutting-edge technologies like generative
AI and quantum computing.

A cloud services provider (CSP) manages cloud-based technology services hosted at a

remote data center and typically makes these resources available for a pay-as-you-go or
monthly subscription fee.
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Benefits of cloud computing

Compared to traditional on-premises IT that involves a company owning and maintaining

physical data centers and servers to access computing power, data storage and other
resources (and depending on the cloud services you select), cloud computing offers many
benefits, including the following:
Cost-effectiveness
Cloud computing lets you offload some or all of the expense and effort of purchasing,
installing, configuring and managing mainframe computers and other on-premises
infrastructure. You pay only for cloud-based infrastructure and other computing resources
as you use them.
Increased speed and agility
With cloud computing, your organization can use enterprise applications in minutes
instead of waiting weeks or months for IT to respond to a request, purchase and configure
supporting hardware and install software. This feature empowers users—
specifically DevOps and other development teams—to help leverage cloud-based software
and support infrastructure.
Unlimited scalability
Cloud computing provides elasticity and self-service provisioning, so instead of purchasing
excess capacity that sits unused during slow periods, you can scale capacity up and down in
response to spikes and dips in traffic. You can also use your cloud provider’s global
network to spread your applications closer to users worldwide.
Enhanced strategic value
Cloud computing enables organizations to use various technologies and the most up-to-
date innovations to gain a competitive edge. For instance, in retail, banking and other
customer-facing industries, generative AI-powered virtual assistants deployed over the
cloud can deliver better customer response time and free up teams to focus on higher-level
work. In manufacturing, teams can collaborate and use cloud-based software to monitor
real-time data across logistics and supply chain processes.
Origins of cloud computing

The origins of cloud computing technology go back to the early 1960s when Dr. Joseph
Carl Robnett Licklider (link resides outside ibm.com), an American computer scientist and
psychologist known as the "father of cloud computing", introduced the earliest ideas of
global networking in a series of memos discussing an Intergalactic Computer
Network. However, it wasn’t until the early 2000s that modern cloud infrastructure for
business emerged.

In 2002, Amazon Web Services started cloud-based storage and computing services. In
2006, it introduced Elastic Compute Cloud (EC2), an offering that allowed users to rent
virtual computers to run their applications. That same year, Google introduced the Google
Apps suite (now called Google Workspace), a collection of SaaS productivity applications. In
2009, Microsoft started its first SaaS application, Microsoft Office 2011. Today, Gartner
predicts worldwide end-user spending on the public cloud will total USD 679 billion and is
projected to exceed USD 1 trillion in 2027 (link resides outside ibm.com).
Cloud computing components

The following are a few of the most integral components of today’s modern cloud
computing architecture.
Data centers
CSPs own and operate remote data centers that house physical or bare metal
servers, cloud storage systems and other physical hardware that create the underlying
infrastructure and provide the physical foundation for cloud computing.
Networking capabilities
In cloud computing, high-speed networking connections are crucial. Typically, an internet
connection known as a wide-area network (WAN) connects front-end users (for example,
client-side interface made visible through web-enabled devices) with back-end functions
(for example, data centers and cloud-based applications and services). Other advanced
cloud computing networking technologies, including load balancers, content delivery
networks (CDNs) and software-defined networking (SDN), are also incorporated to
ensure data flows quickly, easily and securely between front-end users and back-end
resources.
Virtualization
Cloud computing relies heavily on the virtualization of IT infrastructure—servers,
operating system software, networking and other infrastructure that’s abstracted using
special software so that it can be pooled and divided irrespective of physical hardware
boundaries. For example, a single hardware server can be divided into multiple virtual
servers. Virtualization enables cloud providers to make maximum use of their data center
resources.
Cloud computing services

IaaS (Infrastructure-as-a-Service), PaaS (Platform-as-a-

Service), SaaS (Software-as-a-Service) and serverless
computing are the most common models of cloud services,
and it’s not uncommon for an organization to use some
combination of all four.
IaaS (Infrastructure-as-a-Service)

IaaS (Infrastructure-as-a-Service) provides on-demand access to fundamental computing

resources—physical and virtual servers, networking and storage—over the internet on a
pay-as-you-go basis. IaaS enables end users to scale and shrink resources on an as-needed
basis, reducing the need for high up-front capital expenditures or unnecessary on-premises
or "owned" infrastructure and for overbuying resources to accommodate periodic spikes in
usage.

According to a Business Research Company report (link resides outside ibm.com), the
IaaS market is predicted to grow rapidly in the next few years, growing to $212.34 billion
in 2028 at a compound annual growth rate (CAGR) of 14.2%.
PaaS (Platform-as-a-Service)

PaaS (Platform-as-a-Service) provides software developers with an on-demand

platform—hardware, complete software stack, infrastructure and development tools—for
running, developing and managing applications without the cost, complexity and
inflexibility of maintaining that platform on-premises. With PaaS, the cloud provider hosts
everything at their data center. These include servers, networks, storage, operating system
software, middleware and databases. Developers simply pick from a menu to spin up
servers and environments they need to run, build, test, deploy, maintain, update and scale
applications.
Today, PaaS is typically built around containers, a virtualized compute model one step
removed from virtual servers. Containers virtualize the operating system, enabling
developers to package the application with only the operating system services it needs to
run on any platform without modification and the need for middleware.

Red Hat® OpenShift® is a popular PaaS built around Docker containers and Kubernetes,
an open source container orchestration solution that automates deployment, scaling, load
balancing and more for container-based applications.
SaaS (Software-as-a-Service)

SaaS (Software-as-a-Service), also known as cloud-based software or cloud applications,

is application software hosted in the cloud. Users access SaaS through a web browser, a
dedicated desktop client or an API that integrates with a desktop or mobile operating
system. Cloud service providers offer SaaS based on a monthly or annual subscription fee.
They may also provide these services through pay-per-usage pricing.

In addition to the cost savings, time-to-value and scalability benefits of cloud, SaaS offers
the following:

• Automatic upgrades: With SaaS, users use new features when the cloud service provider
adds them without orchestrating an on-premises upgrade.
• Protection from data loss: Because SaaS stores application data in the cloud with the
application, users don’t lose data if their device crashes or breaks.
SaaS is the primary delivery model for most commercial software today. Hundreds of SaaS
solutions exist, from focused industry and broad administrative (for example, Salesforce)
to robust enterprise database and artificial intelligence (AI) software. According to an
International Data Center (IDC) survey (the link resides outside IBM), SaaS applications
represent the largest cloud computing segment, accounting for more than 48% of the $778
billion worldwide cloud software revenue.
Serverless computing

Serverless computing, or simply serverless, is a cloud computing model that offloads all
the back-end infrastructure management tasks, including provisioning, scaling, scheduling
and patching to the cloud provider. This frees developers to focus all their time and effort
on the code and business logic specific to their applications.

Moreover, serverless runs application code on a per-request basis only and automatically
scales the supporting infrastructure up and down in response to the number of requests.
With serverless, customers pay only for the resources used when the application runs; they
never pay for idle capacity.

FaaS, or Function-as-a-Service, is often confused with serverless computing when, in fact,

it’s a subset of serverless. FaaS allows developers to run portions of application code
(called functions) in response to specific events. Everything besides the code—physical
hardware, virtual machine (VM) operating system and web server software management—
is provisioned automatically by the cloud service provider in real-time as the code runs and
is spun back down once the execution is complete. Billing starts when execution starts and
stops when execution stops.
Types of cloud computing

Public cloud

A public cloud is a type of cloud computing in which a cloud service provider makes
computing resources available to users over the public internet. These include SaaS
applications, individual virtual machines (VMs), bare metal computing hardware, complete
enterprise-grade infrastructures and development platforms. These resources might be
accessible for free or according to subscription-based or pay-per-usage pricing models.

The public cloud provider owns, manages and assumes all responsibility for the data
centers, hardware and infrastructure on which its customers’ workloads run. It typically
provides high-bandwidth network connectivity to ensure high performance and rapid
access to applications and data.

Public cloud is a multi-tenant environment where all customers pool and share the cloud
provider’s data center infrastructure and other resources. In the world of the leading public
cloud vendors, such as Amazon Web Services (AWS), Google Cloud, IBM Cloud®, Microsoft
Azure and Oracle Cloud, these customers can number in the millions.

Most enterprises have moved portions of their computing infrastructure to the public cloud
since public cloud services are elastic and readily scalable, flexibly adjusting to meet
changing workload demands. The promise of greater efficiency and cost savings through
paying only for what they use attracts customers to the public cloud. Still, others seek to
reduce spending on hardware and on-premises infrastructure. Gartner predicts (link
resides outside ibm.com) that by 2026, 75% of organizations will adopt a digital
transformation model predicated on cloud as the fundamental underlying platform.
Private cloud

A private cloud is a cloud environment where all cloud infrastructure and computing
resources are dedicated to one customer only. Private cloud combines many benefits of
cloud computing—including elasticity, scalability and ease of service delivery—with the
access control, security and resource customization of on-premises infrastructure.

A private cloud is typically hosted on-premises in the customer’s data center. However, it
can also be hosted on an independent cloud provider’s infrastructure or built on rented
infrastructure housed in an offsite data center.

Many companies choose a private cloud over a public cloud environment to meet their
regulatory compliance requirements. Entities like government agencies, healthcare
organizations and financial institutions often opt for private cloud settings for workloads
that deal with confidential documents, personally identifiable information (PII), intellectual
property, medical records, financial data or other sensitive data.

By building private cloud architecture according to cloud-native principles, an

organization can quickly move workloads to a public cloud or run them within a hybrid
cloud (see below) environment whenever ready.
Hybrid cloud

A hybrid cloud is just what it sounds like: a combination of public cloud, private cloud and
on-premises environments. Specifically (and ideally), a hybrid cloud connects a
combination of these three environments into a single, flexible infrastructure for running
the organization’s applications and workloads.

At first, organizations turned to hybrid cloud computing models primarily to migrate

portions of their on-premises data into private cloud infrastructure and then connect that
infrastructure to public cloud infrastructure hosted off-premises by cloud vendors. This
process was done through a packaged hybrid cloud solution like Red Hat® OpenShift® or
middleware and IT management tools to create a "single pane of glass." Teams and
administrators rely on this unified dashboard to view their applications, networks and
systems.

Today, hybrid cloud architecture has expanded beyond physical connectivity and cloud
migration to offer a flexible, secure and cost-effective environment that supports the
portability and automated deployment of workloads across multiple environments. This
feature enables an organization to meet its technical and business objectives more
effectively and cost-efficiently than with a public or private cloud alone. For instance, a
hybrid cloud environment is ideal for DevOps and other teams to develop and test web
applications. This frees organizations from purchasing and expanding the on-premises
physical hardware needed to run application testing, offering faster time to market. Once a
team has developed an application in the public cloud, they may move it to a private cloud
environment based on business needs or security factors.

A public cloud also allows companies to quickly scale resources in response to unplanned
spikes in traffic without impacting private cloud workloads, a feature known as cloud
bursting. Streaming channels like Amazon use cloud bursting to support the increased
viewership traffic when they start new shows.

Most enterprise organizations today rely on a hybrid cloud model because it offers greater
flexibility, scalability and cost optimization than traditional on-premises infrastructure
setups. According to the IBM Transformation Index: State of Cloud, more than 77% of
businesses and IT professionals have adopted a hybrid cloud approach.

To learn more about the differences between public, private and hybrid cloud, check out
“Public cloud vs. private cloud vs. hybrid cloud: What’s the difference?”
Watch the IBM hybrid cloud architecture video series. (link resides outside ibm.com)
What is Hybrid Cloud? (9:45)- This link plays a video

Multicloud

Multicloud uses two or more clouds from two or more different cloud providers. A
multicloud environment can be as simple as email SaaS from one vendor and image editing
SaaS from another. But when enterprises talk about multicloud, they typically refer to using
multiple cloud services—including SaaS, PaaS and IaaS services—from two or more leading
public cloud providers.

Organizations choose multicloud to avoid vendor lock-in, to have more services to select
from and to access more innovation. With multicloud, organizations can choose and
customize a unique set of cloud features and services to meet their business needs. This
freedom of choice includes selecting “best-of-breed” technologies from any CSP, as needed
or as they emerge, rather than being locked into offering from a single vendor. For example,
an organization may choose AWS for its global reach with web-hosting, IBM Cloud for data
analytics and machine learning platforms and Microsoft Azure for its security features.

A multicloud environment also reduces exposure to licensing, security and compatibility

issues that can result from "shadow IT"— any software, hardware or IT resource used on
an enterprise network without the IT department’s approval and often without IT’s
knowledge or oversight.
The modern hybrid multicloud

Today, most enterprise organizations use a hybrid multicloud model. Apart from the
flexibility to choose the most cost-effective cloud service, hybrid multicloud offers the most
control over workload deployment, enabling organizations to operate more efficiently,
improve performance and optimize costs. According to an IBM® Institute for Business
Value study, the value derived from a full hybrid multicloud platform technology and
operating model at scale is two-and-a-half times the value derived from a single-platform,
single-cloud vendor approach.

Yet the modern hybrid multicloud model comes with more complexity. The more clouds
you use—each with its own management tools, data transmission rates and security
protocols—the more difficult it can be to manage your environment. With over 97% of
enterprises operating on more than one cloud and most organizations running 10 or
more clouds, a hybrid cloud management approach has become crucial. Hybrid multicloud
management platforms provide visibility across multiple provider clouds through a central
dashboard where development teams can see their projects and deployments, operations
teams can monitor clusters and nodes and the cybersecurity staff can monitor for threats.

Learn more about hybrid cloud management.

Cloud security
Traditionally, security concerns have been the primary obstacle for organizations
considering cloud services, mainly public cloud services. Maintaining cloud security
demands different procedures and employee skillsets than in legacy IT environments.
Some cloud security best practices include the following:

• Shared responsibility for security: Generally, the cloud service provider is responsible for
securing cloud infrastructure, and the customer is responsible for protecting its data within
the cloud. However, it’s also essential to clearly define data ownership between private and
public third parties.
• Data encryption: Data should be encrypted while at rest, in transit and in use. Customers
need to maintain complete control over security keys and hardware security modules.
• Collaborative management: Proper communication and clear, understandable processes
between IT, operations and security teams will ensure seamless cloud integrations that are
secure and sustainable.
• Security and compliance monitoring: This begins with understanding all regulatory
compliance standards applicable to your industry and establishing active monitoring of all
connected systems and cloud-based services to maintain visibility of all data exchanges
across all environments, on-premises, private cloud, hybrid cloud and edge.

Cloud security is constantly changing to keep pace with new threats. Today’s CSPs offer a
wide array of cloud security management tools, including the following:

• Identity and access management (IAM): IAM tools and services that automate policy-
driven enforcement protocols for all users attempting to access both on-premises and
cloud-based services.
• Data loss prevention (DLP): DLP services that combine remediation alerts data encryption
and other preventive measures to protect all stored data, whether at rest or in motion.
• Security information and event management (SIEM): SIEM is a comprehensive security
orchestration solution that automates threat monitoring, detection and response in cloud-
based environments. SIEM technology uses artificial intelligence (AI)-driven technologies to
correlate log data across multiple platforms and digital assets. This allows IT teams to
successfully apply their network security protocols, enabling them to react to potential
threats quickly.
• Automated data compliance platforms: Automated software solutions provide
compliance controls and centralized data collection to help organizations adhere to
regulations specific to their industry. Regular compliance updates can be baked into these
platforms so organizations can adapt to ever-changing regulatory compliance standards.
Learn more about cloud security.
Cloud sustainability

Sustainability in business, a company’s strategy to reduce negative environmental impact

from their operations in a particular market, has become an essential corporate
governance mandate. Moreover, Gartner predicts (link resides outside ibm.com) that by
2025, the carbon emissions of hyperscale cloud services will be a top-three criterion in
cloud purchase decisions.

As companies strive to advance their sustainability objectives, cloud computing has

evolved to play a significant role in helping them reduce their carbon emissions and
manage climate-related risks. For instance, traditional data centers require power supplies
and cooling systems, which depend on large amounts of electrical power. By migrating IT
resources and applications to the cloud, organizations only enhance operational and cost
efficiencies and boost overall energy efficiency through pooled CSP resources.

All major cloud players have made net-zero commitments to reduce their carbon footprints
and help clients reduce the energy they typically consume using an on-premises setup. For
instance, IBM is driven by sustainable procurement initiatives to reach NetZero by 2030.
By 2025, IBM Cloud worldwide data centers will comprise energy procurement drawn
from 75% renewable sources.
Cloud use cases

According to an International Data Corporation (IDC) forecast (link resides outside

ibm.com), worldwide spending on the whole cloud opportunity (offerings, infrastructure
and services) will surpass USD 1 trillion in 2024 while sustaining a double-digit compound
annual growth rate (CAGR) of 15.7%. Here are some of the main ways businesses are
benefitting from cloud computing:

• Scale infrastructure: Allocate resources up or down quickly and easily in response to

changes in business demands.
• Enable business continuity and disaster recovery: Cloud computing provides cost-
effective redundancy to protect data against system failures and the physical distance
required to apply disaster recovery strategies and recover data and applications during a
local outage or disaster. All of the major public cloud providers offer Disaster-Recovery-
as-a-Service (DRaaS).
• Build and test cloud-native applications: For development teams adopting
Agile, DevOps or DevSecOps to streamline development, the cloud offers on-demand end-
user self-service that prevents operations tasks, such as spinning up development and test
servers, from becoming development bottlenecks.
• Support edge and IoT environments: Address latency challenges and reduce downtime
by bringing data sources closer to the edge. Support Internet of Things (IoT) devices (for
example, patient monitoring devices and sensors on a production line) to gather real-time
data.
• Leverage cutting-edge technologies: Cloud computing supports storing and processing
huge volumes of data at high speeds—much more storage and computing capacity than
most organizations can or want to purchase and deploy on-premises. These high-
performance resources support technologies like blockchain, quantum computing
and large language models (LLMs) that power generative AI platforms like customer
service automation.
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Resources
Related topicWhat is hybrid cloud?

Hybrid cloud integrates public cloud services, private cloud services and on-premises infrastructure into
a single distributed computing environment.

Learn more
Related topicWhat is DevOps?

DevOps speeds delivery of higher quality software by combining and automating the work of software
development and IT operations teams.

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Related topicWhat is cloud migration?

Cloud migration is the process of relocating an organization’s data, applications, and workloads to a
cloud infrastructure.

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ArticleCloud computing fundamentals

Although cloud computing is only a different way to deliver computer resources rather than a new
technology, it has sparked a revolution in the way organizations provide information and service.

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Blog postPublic cloud vs. private cloud vs. hybrid cloud: What’s the difference?
Determining the best cloud computing architecture for enterprise business is critical for overall success.
That’s why it is essential to compare the different functionalities of private cloud versus public cloud
versus hybrid cloud.

Learn more
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We’re excited to introduce a three-part lightboarding video series that will delve into the world of
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cloud architecture issues that we’re going to cover: Connectivity, Modernization and Security.

- This link opens in a new tab

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