Cloud computing is an on-demand, “pay as you go” business model that reduces the time, money, and people it takes to build and deploy infrastructure and applications. It boasts of five vital features, three service models, and four deployment models, which ensures that it is a complex IT initiative.
Note that every blend of service and deployment model affects cost, control, responsibility, accountability, and security. Each also influences the necessary infrastructure, applications, and project teams differently, making cloud computing a new business model for IT.
Cloud computing as a term has been around since the early 2000s, and the concept of computing-as-a-service has been around for much longer – as far back as the 1960s, when computer bureaus would let companies rent time on a mainframe, instead of having them buy one themselves. These ‘time-sharing’ services were massively overtaken by the advent of the PC that made owning a computer very easy and affordable.
Most cloud-based business models can be classified as IaaS (Infrastructure as a Service), PaaS (Platform as a Service), or SaaS (Software as a Service). While those models are most often monetized via subscriptions, they are monetized via pay-as-you-go revenue models and hybrid models (subscriptions + pay-as-you-go).
Cloud computing services cover a wide range of options, from the very basics of storage, networking, and processing power through to natural language processing and artificial intelligence, and even standard office applications.
Note that almost any service that doesn’t require you to be physically close to the computer hardware that you are using can now be delivered via the cloud. Cloud computing bolsters a wide range of services that includes consumer services like Gmail or the cloud backup of the photos on your Smartphone.
Netflix is also another company that depends on cloud computing services to make available its video streaming service and its other business systems to clients. Today, cloud computing has become the default option for a good number of apps. However, there is a potential downside to cloud computing, especially since it introduces extra costs and new risks for companies using it.
How Does Cloud Computing Work?
Instead of maintaining their own computing infrastructure or data centers, businesses in this modern age now prefer to rent access to anything from applications to storage from a cloud service provider.
One primary advantage of using cloud computing services is that businesses can do away with the upfront cost and complexity of putting together and maintaining their own IT infrastructure, and instead just pay for what they use when they use it. In the same vein, providers of cloud computing services can benefit from massive economies of scale by making available the same services to a vast range of clients.
How Does Cloud Computing Business Make Money?
There are 5 ways cloud computing companies/vendors/service providers can make money. These ways include;
Table of Content
Software as a Service (SaaS)
SaaS remains the most common model to make money when it comes to cloud computing and can also be referred to as tiered pricing. Some of the best examples of companies making money via this model are Salesforce.com and HubSpot. This cloud computing model also helps companies to establish long-term relationships with their customers.
Security as a Service (SECaaS)
Another way to make good money with cloud computing is the Security as a Service Model. Note that in this revenue model, a service provider infuses their security services into a corporate infrastructure making it more cost-effective. Security services include antivirus/malware, hacking detection, authentication, etc.
Platform as a Service (PaaS)
This is more or less the most effective strategy to make money in the cloud computing business. In this model, vendors more or less offer a development environment that features a toolkit and standards for application developers.
Some of the best examples are Microsoft Azure, Google App Engine. When getting PaaS, customers will have to pay one huge sum upfront to buy it for a lifetime. This strategy is also referred to as Perpetual License Model.
Infrastructure as a Service (IaaS)
This is the most basic form of cloud service made available by any Cloud service provider. It provides adequate computing infrastructure like virtual machines and other resources to customers. IaaS will most often consult online services that provide high-level APIs used to develop low-level details like underlying network infrastructure, location, data portioning, security, etc. The best example is Amazon Web Services or AWS.
Mobile Backend as a Service (MBaaS)
Another cloud computing strategy businesses use to make money is Backend as a Service or BaaS. Here, vendors can exploit the Cloud services of handheld devices like smartphones. In addition, you can learn from customers’ shopping habits and suggest them items on the list they can shop for. Note that cloud App is very profitable for companies because there are very few good mobile cloud service providers in the market.
Top 20 Companies Operating Cloud Computing Business Model
- NTT Communications
- Hewlett Packard Enterprise (HPE)
- CISCO (CSCO)
Cloud computing is quickly picking up the pace with more and more companies moving towards these services in their day-to-day business. Note that within the last 10 years, Cloud Computing had become a key focus area for tech giants like Amazon, Google, Microsoft, IBM, Oracle, etc.
According to industry reports, by the end of this year, IT Cloud Services revenue is expected to reach over $133 billion. Truth be told, moving to the cloud can help companies rethink business processes and accelerate business change by helping to break down data and organizational silos.