The cloud: function & benefits for companies

What is the cloud?

The cloud refers to the provision of IT resources such as storage space, computing power or software via the internet. Instead of storing data and applications on local servers or computers, they are operated in external data centers. This allows companies and users flexible, scalable and location-independent access to their digital resources.

What role does the cloud play in companies?

The cloud provides digital resources such as storage space, computing power and software .

Access is via secure connections, usually over the internet. This has many advantages for users: they can access the services from anywhere, do not have to set up their own servers and do not have to worry about their operation and maintenance. Companies in particular can save significantly on personnel and IT costs with the help of the cloud.

The term cloud computing is often used synonymously with the cloud. However, it is also sometimes used to describe the process of users using resources from the cloud.

Why do we talk about the cloud at all? There are various explanations as to why remote servers are referred to as the cloud. One theory: In its early days, the internet was often visualized in graphics as a cloud. The cloud was then adopted for the provision of resources via the internet.

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Cloud services: What is the difference between IaaS, PaaS and SaaS?

Cloud services can be divided into various categories that cover different IT requirements. The most important are Infrastructure as a Service, Platform as a Service and Software as a Service.

Infrastructure as a Service (IaaS)

Basic IT resources such as computing power, storage and networks are provided via the cloud. Companies can use these resources flexibly without having to operate their own servers. This gives them maximum control and allows them to implement even complex requirements.

Platform as a Service (PaaS)

These services start at a higher level and provide a development environment in the cloud. Companies can develop, test and operate their software directly in the cloud. They do not have to worry about the underlying infrastructure. This saves time and simplifies the development process.

Software as a Service (SaaS)

SaaS beschreibt cloudbasierte Software-Lösungen – von E-Mail-Anbietern bis zu ERP-Lösungen. Software as a Service kann sich, je nach Produkt, an Privat- oder Unternehmenskunden wenden. Die Anwendungen sind damit die am weitesten verbreitete Form von Cloud Services. Sie lassen sich bequem über eine App oder den Webbrowser nutzen – unabhängig von Ort und Endgerät.

The growing importance of cloud computing

The development of cloud computing began back in the 1950s. However, it was only with the availability of more powerful computers, faster internet connections and virtualization technologies that the cloud began its triumphant advance at the turn of the millennium. Today, cloud solutions have become an integral part of the everyday lives of private individuals and companies.

The use of cloud computing in companies has risen rapidly in recent years: While only 28% of companies used cloud solutions in 2011, this figure had risen to 84% by 2022(Statista).

In many cases, companies have not yet moved their core applications to the cloud, or not completely. However, a trend reversal is emerging here: Companies can no longer do without the benefits of the cloud. With cloud systems, they can efficiently manage the constantly growing volumes of data, adapt their IT to the rapidly changing market conditions and remain competitive.

3 different types of clouds

Users can obtain infrastructure, platforms and applications from the cloud in three different models.

Public

The public cloud is the most widespread form of cloud. Cloud providers, such as Google or Microsoft, store users’ data in a shared physical infrastructure. This can harbor risks if the provider does not take optimal security measures. It is therefore important to choose a provider that ideally operates its servers in the EU or Germany. Then the provisions of the GDPR also apply. This guarantees particularly good data protection.

Private

The private cloud is the cloud ofchoice for digital solutions that require special protection. Here, hardware resources are provided exclusively for users. There is no shared use of infrastructure. Companies generally opt for this model, rather than private individuals.

Hybrid

Companies manage data at different security levels and have established IT infrastructures that often cannot simply be moved to the cloud. This is where hybrid clouds come into their own: some of the applications and resources are moved to the cloud to improve cost efficiency and agility. Particularly sensitive data or legacy applications remain stored on our own servers.

Cloud, on-premise or hybrid: what to consider when choosing an ERP system

The advantages of cloud computing for companies

Speed and scalability

Speed is critical to a company’s success. Cloud solutions help in several ways: they can be implemented quickly, often in just a few hours, without high initial investment or development costs.

If additional functions or resources are required during operation, this can be done with just a few clicks. Cloud services allow companies to react to market changes faster than before.

Cost efficiency

Cloud services are much more cost-efficient than locally hosted applications and infrastructure. This is because companies no longer have to invest in expensive servers. They can reduce their local hardware, which also means that they have to plan for less personnel costs for maintenance and optimization. The cloud provider ensures the smooth operation of the services and provides support in the event of problems.

Another advantage is that cloud solutions can be booked on an as-needed basis so that companies only pay for the digital resources they need.

Flexibility

Cloud services are generally designed for easy integration with other applications and systems. With their help, companies can put together a flexible digital ecosystem of modern applications that they can adapt and expand at any time. Given the rapid pace of digital evolution, this flexibility is essential.

Data availability

More and more companies are working in remote teams or supporting flexible working models with the option of working from home. Cloud computing ensures that employees have convenient, location-independent access to company applications and that these run at the usual speed – a clear improvement compared to complicated access to on-premise applications via VPN clients.

Security

While security concerns about the cloud used to be justified, cloud computing is now often more secure than local hosting. This is because reputable and established cloud providers automatically integrate backups and sophisticated security measures that users often do not implement in the same way in a local setting. Companies therefore benefit from comprehensive protection against unauthorized data access and data loss. This reduces the risk of business interruptions.

Innovation

Innovative technologies can provide a decisive competitive advantage. Cloud computing gives companies the opportunity to test new tools and technologies without a high initial investment. Cloud solutions also lower the barrier to entry in the development of new business models and products as well as in process optimization.

Challenges of the cloud for companies

No technology is without weaknesses. Not even cloud computing. It is important to be aware of the risks and challenges of the cloud and to manage them proactively. Then the advantages clearly outweigh the disadvantages. Companies should pay particular attention to three areas before and during cloud use.

Data migration

The hurdle of data migration prevents many companies from moving central systems to the cloud. Migration can indeed be complex and time-consuming. Companies need to ensure that downtime is limited, all data is transferred securely and interfaces to other applications work flawlessly in the end. Careful planning and the use of the right tools are crucial to ensure that the transformation goes smoothly.

For most companies, it makes sense to get the support of an experienced IT partner, whether it is the cloud provider itself or a certified IT partner. It is important that experienced consultants guide you through the process from the initial strategic planning to the go-live in the cloud.

Dependence on third-party providers

By switching to the cloud, companies are giving up some control. They must rely on the reliability and availability of cloud providers. To minimize dependency and the risk of vendor lock-in, companies should rely on flexible multi-cloud strategies, i.e. they should combine cloud services from different providers.

Security and compliance

Unternehmen müssen sicherstellen, dass ihre Daten in der Cloud angemessen geschützt sind und alle gesetzlichen Vorschriften, wie etwa die DSGVO, eingehalten werden. Etablierte Cloud Provider bieten umfassende Sicherheitsfunktionen. Die letzte Verantwortung für den Schutz der Daten bleibt allerdings beim Unternehmen.

It is up to companies to make full use of the security options provided, for example to consistently use data encryption, set up access control and make regular security checks mandatory. With the help of special tools, companies can also seamlessly document data processing so that compliance risks are minimized with careful configuration.

The future of the cloud: trends and developments

From artificial intelligence to edge computing – the future of the cloud is being driven by various technological developments. This enables companies to make their IT infrastructures increasingly efficient and secure. Changing business requirements, legislation and social priorities are also reflected in new cloud technologies.

Artificial intelligence (AI)

Künstliche Intelligenz revolutioniert die Art und Weise, wie Unternehmen große Datenmengen verarbeiten – und sie kommt zunehmend aus der Cloud (KI as a Service, Cloud-KI). Denn deren Vorteile greifen auch hier: Sie hat die benötigte Rechenleistung, damit Unternehmen KI-Anwendungen kosteneffizient und skalierbar betreiben und ihre Prozesse und Geschäftsmodelle optimieren können.

Edge Computing

Edge computing brings data processing closer to the location where the data is generated, e.g. IoT devices. This reduces latency and relieves the strain on networks. Companies benefit from faster response times, which is particularly important for real-time applications in areas such as autonomous driving or Industry 4.0.

Sustainability

Sustainability is moving into focus in cloud computing. Companies and cloud providers are working to reduce their_{carbon footprint}, for example by using energy-efficient data centers. “Green cloud” solutions offer companies the opportunity to make their IT processes more environmentally friendly and reduce costs at the same time.

Cloud security

In the area of security, developments in cloud computing remain dynamic. Modern security architectures work according to zero-trust models. These ensure that every access to company data is carefully checked – regardless of whether the request comes from inside or outside the company. This increases security and helps companies to meet compliance requirements.

Quantum Computing as a Service (QCaaS)

Companies can gain access to powerful quantum computers via the cloud. The technology is still in its early development phase and currently plays no role in the economy, but this could change in just a few years. In any case, the potential is enormous: the technology can quickly solve highly complex problems that would be too complex for conventional computers. This could open up exciting use cases, particularly in the field of artificial intelligence.