As the new year moves ahead at full speed, I’d like to talk a bit about some of the new business innovations that have recently become mainstream.  In this particular blog, I’ll be focusing on The Cloud and the various ways you can take advantage of this technology.  If your business doesn’t already utilize a service in the cloud, you’ve most likely at least heard about it.  It has become quite a buzz-word over the last year.  In fact, it was just featured as number one on the list of CIO.com’s “5 Innovation Opportunities for CIOs in 2011.”

Because we’re dealing with such a widely used buzz-word, it’s important that we define it before we go any further.  The word “cloud” refers to the internet, and when something is “in the cloud,” as we say, it means that it is run on a remote server that is accessed through the web.  Beyond this, there are many different ways to implement a cloud-based technology.  So I’d like to talk about two in particular: Cloud Computing, and Software as a Service (SaaS).

Cloud computing is the practice of paying a cloud service provider for the use of their remote infrastructure.  Essentially, this means that a cloud provider supplies you with remote servers on which you can host your software and data.  These servers can then be accessed by your users through the internet.

An advantage to cloud computing is that you only pay for the capacity that you need–so it’s easily scaleable.  Depending on your provider, it can be as simple as calling them up and saying, I need more (or less) server space.  Another advantage is that all the infrastructure maintenance and management is handled by your provider.  So you don’t have to worry about cache control, virus control, upgrades, security backups etc.  All of these tasks are managed by the provider.

Cloud computing can also be done privately.  Meaning, you can buy your own servers and place them at a colocation which is then run remotely over the web.  This approach doesn’t provide the same level of flexibility.  But it’s still considered cloud computing because you have established remote access to your servers through the internet.

Software as a Service is conceptually very similar to cloud computing, with one main difference.  With SaaS you pay for a package application that is hosted and maintained for you on remote servers.  This is different than cloud computing which allows you to host your own custom systems.  Popular examples of SaaS are SharePoint and Salesforce.  These are package applications that you can pay to subscribe to, and use over the web.

You can customize SaaS somewhat, but it’s actually very limited in this regard.  As with most package software, the code is owned and managed by companies who aim to meet the requirements of thousands of users rather than individual operations.  Therefore, the functionality and flexibility tend to be standard and limited.  So if your processes are specific, it might not work well for you.  The advantage of SaaS is that you’re not maintaining your own applications and it’s inexpensive to get into.  You can add users as you go.  However, your data is stored by your host company and in order to interface the rest of your system with this data, it’s a bit more challenging than with cloud computing.  On the other hand, if your processes are standard and your functionality needs are basic, SaaS can be a good option.

Many of these new solutions that are becoming mainstream are possible because of recent innovations in the ability to virtualize servers and desktops.  In the last five years this technology has evolved into an extremely flexible and scaleable model.  IT departments are experiencing tremendous benefits from the cloud technology, and it’s only going to become more prevalent.