Remember the days when clouds were those puffy white things in the sky? Not anymore. In the 21st century, clouds are a computing revolution that financial investors are going to need to understand.
You’ve no doubt heard about cloud computing, and you’re likely already using it and don’t even know it. Gmail and Google Docs are two examples of cloud computing. According to a recent survey, 50% of consumers say they’re aware of the cloud, but only nine percent claimed to understand it fully. So what is “the cloud”?
Simply put, the cloud is a term for anything that involves delivering hosted services over the Internet. Cloud services have three distinct characteristics that make it different than traditional hosted services:
1. It is sold on demand. You can buy minutes, hours or other time frames.
2. It is elastic, meaning you can use as much or as little services at any time.
3. It’s managed by the provider. All the customer needs is a computer and Internet access.
Just like nature gives us different types of clouds, so does cloud computing. There are four main categories of clouds:
• Public: This is available to everyone on the Internet. The cloud provider owns and manages everything. Examples include Google App Engine and Microsoft Azure.
• Private: Can only be accessed by approved users of an organization. It is managed either by the organization or the cloud provider.
• Community: Available to members of a community made up of several groups/organizations. The organization and the provider co-manage the cloud.
• Hybrid: Mix of several public and private clouds.
There are a variety of uses for clouds including software as a service (SaaS) like Google Docs, Platform as a Service (PaaS) like Google App Engine, Infrastructure as a Service (IaaS) like Amazon EC2, Business Process as a Service (BPaaS) like ADP Employeasae, and Data as a Service (DaaS) like Google Public Data. This gives organizations greater manageability of their resources, making them more flexible and able to react to change more rapidly.
The financial industry is already beginning to embrace the cloud and is addressing the issues surrounding security, privacy and compliance in the new environment. Some of the first adaptors of the new technology include the NASDAQ which created a SaaS cloud that provides historical data and the NYSE Euronext which developed a PaaS community cloud for financial industry professionals. The parent company of eShareholder, Networth Services, uses cloud computing for many of its internal applications.
The global cloud computing market is expected to grow from $40.7 billion in 2011 to $241 billion in 2020, Forrester Research forecasts. Infrastructure-as-a-service will grow from $2.9 billion in 2011 to peak at $5.9 billion in 2014. With this burgeoning industry it’s clear that financial services will continue to migrate to the Cloud and that the more you understand this new environment, the more you can capitalize on it.
What does this mean for you? The advantage of the cloud is that it travels with you, an important feature in our increasingly mobile and global economy. You can access your documents, music, address book etc. from any computer, anywhere. For an active investor, this can be especially critical.
For the public consumer, companies such as Carbonite exist solely because of this technology and allow you to back up your computer automatically to the Carbonite Cloud every time you log on so you never lose your data. This is an invaluable service that guarantees your data will never be lost when your computer crashes.
With the increasing trend toward Cloud computing, the companies that specialize in providing this technology hold great growth potential for the technology investor.