What is Cloud Computing?

Let’s start with the Wikipedia definition: “Cloud computing is the use of computing resources (hardware and software) which are available in a remote location and accessible over a network (typically the Internet). The name comes from the common use of a cloud-shaped symbol as an abstraction for the complex infrastructure it contains in system diagrams. Cloud computing entrusts remote services with a user’s data, software and computation.”
The concept of centralized computing resources accessible through a form of thin client (a computer or a computer program that depends heavily on some other computer to perform its computations) is not a new one. The combination of the dumb terminal and mainframe application combination began in the late 1950s. This original model is very close to the same model as the modern browser and Software as a Service (SaaS) applications – a minimally functional client concentrating on input and output and display combined with a powerful centralized and computation heavy server.
To a credit union or bank, the cloud can mean many things which all revolve around this simple internet-based topology: back-up and recovery services, email services, file and collaboration services, regulatory audit and review services and sales force management services to name a few. The cloud basically commoditizes what had been in-house client server application and enables enterprise services to be run on state of the art hardware without the large infrastructure investment required for an enterprise-ready client-server application.
The modern cloud has its origins in the pioneering online retail giant Amazon.com. Like every other retailer, Amazon’s sales season is a series of peaks and valleys. However, unlike traditional brick and mortar retailers, Amazon cannot hire temp workers to cover the peaks and then shrink staff to be competitive in the valleys. Amazon’s computer infrastructure always has to be “staffed” to handle the peaks. This requirement led Amazon to develop infrastructure and computational capability that would by necessity be idle a majority of the time but would always be available during the peaks so that Amazon could ramp up and handle very large amounts of customer orders. Somewhere along the line it occurred to Amazon that this excess computational ability and redundancy could be used to help run other businesses. This led to the creation of private cloud computing in which bundles of excess capacity and infrastructure were leased to businesses that would move some traditional data center applications onto Amazon’s infrastructure.
These virtual private clouds evolved over time into three distinct patterns: Software as a Service (SaaS), Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). IaaS is positioned mainly as a corporate datacenter supplement/replacement in which various components of a traditional data center are virtualized and can be assembled in an ad-hoc manner to create application stacks. Examples of IaaS would be Amazon EC2, Rackspace and Azure Services Platform. PaaS is a specialized version of IaaS in which certain prebuilt appliance type servers – what would traditionally be considered to be nodes of an application server – are made available to the customer and can be scaled up or scaled down based on demand or projected capacity needs. Examples of PaaS are Engine Yard, Google App Engine and Open Shift. SaaS enables specific business software functionality to be delivered through the cloud. Examples of SaaS applications are Google Apps, Trade Card and, of course, AffirmX. SaaS applications can be made available through either a private contractual model or a public on-demand subscription model.