BI 101: What is Cloud Computing?

Admit it—when you first heard the term cloud computing bandied about, you thought, wow, that sounds…heavenly. It sounded lightweight and sexy. You wanted to hear more.

You were not far off. The concept is not really new, and has existed by many other names, including virtualization, managed hosting or simply “the Internet.” But the power, accessibility and reliability of remotely hosted, on-demand services (SaaS), products (PaaS) and infrastructure (IaaS) have greatly improved in the past couple of years. For most companies, the prospect of lower-cost, high-availability browser-based tools is very appealing. They understand the value of keeping operating investment down so they can spend their time and money on their core business.

By most accounts, the term “cloud computing” came from textbooks using clouds to represent the Internet. The telecom industry also used clouds to explain Virtual Private Networks (VPNs) in the 1990s. VPNs were a great improvement over point-to-point circuits.

It was not until 1999, though, when Salesforce.com launched its eye-opening “portal” for enterprise applications—they made “cloud” a buzzword and people started to consider the advantages of this business model. In 2002, Amazon Web Service debuted with much fanfare. The next big thing was Google Docs in 2006, when the potential of public cloud computing became more mainstream. That was the same year that Amazon’s Elastic Compute cloud (EC2) hit the streets, offering IT folks and developers a way to spin up new servers in minutes and scale capacity at a manageable cost.

This was especially important to startups and webtrepreneurs who could not always predict spikes in load (or afford to pay for unnecessary capacity). Take Instagram for example. This hip photo-sharing app that started with one server gained 1 million active users in 12 hours after they launched their Android app. And they were ready, because they could just add more capacity on demand (and because wisely they built it to scale, as should others).

Fast-forward to 2012 and pretty much everyone is on the cloud computing bandwagon. For many IT executives, the evolution continues as they move toward platforms and weigh the ever-improving cost-benefit tradeoff of public cloud adoption.

Interested in the origin of the term, “cloud computing”? Here’s one opinion on cloud computing. Agree? Disagree? Tell us who you think originated the term.