Cloud Computing and Software as a Service (SaaS) Point the Way to the Future

Cloud computing is the use of remote servers, often owned and operated by third-party service providers, to store and access data and software, as opposed to servers owned by the user. Cloud services enable a client company to immediately increase computing capability without any investment in physical infrastructure. (The word “cloud” is also broadly used to describe any data or application that runs via the internet.) The concept of cloud computing is key to the growing use of SaaS.

The Coronavirus pandemic accelerated movement of data from in-house servers to the cloud significantly. Gartner forecasted that global spending on public cloud services on a broad basis would reach $723 billion in 2025.

Amazon.com was one of the earliest companies to offer cloud services, and it remains a leader in this field. Since it must operate immense server capacity anyway, and is required to maintain massive amounts of spare capacity to meet holiday shopping demand and other short-term bursts of demand on its servers, Amazon decided in early 2006 to offer cloud computing services to outside parties. The Amazon Web Services (AWS) unit has been spectacularly successful, bringing in more than $100 billion in annual revenue as of 2024. Using AWS requires no long-term contract or up-front investment. Charges are reasonable and usage-based. Remote servers, remote storage and the Amazon SimpleDB database are among the most popular AWS tools. Artificial intelligence (AI), including tools like ChatGPT, is a key trend driving cloud services demand. Amazon’s top competitors in cloud services include Microsoft Azure, Google, Oracle and Alibaba.

SPOTLIGHT: Hybrid Cloud

The hybrid cloud is a data strategy where some applications and data are moved to cloud-based systems, while highly sensitive data or certain functions are kept on client-owned, local systems. Microsoft offers cloud services by allowing customers to run a portion of its Azure cloud tools on in-house servers (built to Microsoft specifications) which work smoothly with Azure data centers. The firm added Azure Stack, a rugged platform designed to support military data needs. Another option is Azure Arc, which affords customers the ability to store more data on their own servers. In 2020, Amazon joined the hybrid cloud movement by offering AWS (Amazon Web Services) server racks called Outposts for local use combined with software that connects it to the AWS cloud. Outposts customers include Disney animators (who demand almost instantaneous connections between in-house data and cloud data), Verizon Communications (needing faster 5G browsing speeds) and Fox Corp. (for video production needs).

The result of these efforts has become a wide variety of software that is accessed only via the internet, as opposed to being installed locally on PCs. Some software can be accessed for free, but many rich software applications are rented to the user by subscription or by fees based on the amount of time used. The sharing of data, whether for business collaboration (such as Microsoft’s Office 365 and Salesforce’s customer management solutions) or simply for fun (such as Facebook), has simplified dramatically thanks to the cloud.

A major goal of publishing software in the cloud is for the user to be able to eliminate much of the money and staff effort that an organization previously was forced to invest in installing, managing and updating software in the traditional manner on local computers. At the same time, the cloud enables software providers to build steady streams of renewable subscription revenues.

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