Cloud computing: why it works

February 3, 2020
business professionals working on the cloud

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2020-07-09 20:01:49i-Tech Ranks Among the Top 100 ERP VARS

Cloud computing:
why it works

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Your business is likely already using cloud computing solutions. You probably use cloud-based apps on your smartphone or computer and are already familiar with the concept of cloud storage services such as Google Drive, Apple iCloud, and the like. But, those are just examples of a tiny part of cloud computing. Cloud technology is a vast industry worth more than $200 billion in the U.S. market alone.
So, what is cloud computing, how does the technology work, and what do businesses stand to gain from implementing cloud computing solutions in their enterprise? These are the critical questions we’ll be answering in this article, hopefully delivering you a solid understanding and appreciation of the value of this revolutionary innovation.

What is cloud computing?

Cloud computing refers to the technology used in delivering raw computing resources and tools such as software, storage, network infrastructure, and processing power over the internet. It’s a simplified and convenient way for businesses to access and utilize powerful IT infrastructure to meet their digital demands. Think of cloud computing systems as a virtualized pool of computing resources accessible remotely via an end-user device.

How does cloud computing work?

The word “cloud” basically means “the internet” – so the term loosely translates to “internet computing,” or the deployment of computing resources and capabilities in an online space, rather than in physical infrastructure. Cloud computing solutions are an alternative to on-prem IT infrastructures. The cloud service provider hosts various IT resources such as data centers, servers, and work stations on an online platform. The service provider then packages the services into various tiers and charges a subscription fee (usually monthly or annually) for access and use of the service packages. The computing hardware itself does not necessarily reside in one location. The servers and storage units may be placed in separate locations and linked via robust network systems. The provider virtualizes the resources and shares them among the subscribers using sophisticated VM algorithms and protocols. [/av_textblock] [av_textblock size=” font_color=” color=” av-medium-font-size=” av-small-font-size=” av-mini-font-size=” av_uid=’av-k1auukwa’ custom_class=” admin_preview_bg=”]

Cloud technology is a vast industry worth more than $200 billion in the U.S. market alone.

– STATISTA

The different types of cloud computing services

There is a wide variety of different cloud computing services designed to meet various enterprise and computing needs. The type of service depends on the resources involved in enabling the service and the features available.

Software as a Service (SaaS)

SaaS is probably the most popular type of cloud services among businesses. According to a recent report by Markets and Markets, North America and the Asia Pacific regions have the highest rate of SaaS adoptions, and the two are regarded as mature markets when it comes to SaaS implementation. SaaS describes a cloud-based software product distribution model in which vendors sell subscriptions to businesses to access and use software applications instead of licensing. So, rather than sell the software product, they turn it into services. The users pay an annual or monthly subscription fee for continued use, which is much cheaper than buying a software license or custom building one from scratch.

Platform as A Service (PaaS)

PaaS delivers third-party software and hardware tools, usually designed to create a development environment for application design, testing, and deployment. PaaS offers essential development tools and facilities such as processing platforms, operating systems, middleware, system software, database systems, and programming libraries. Platform as a Services can be packaged as a generic model or a highly specific service for particular development environments.

Infrastructure as a Service (IaaS)

IaaS is a type of cloud computing service that provides a wide variety of computing resources and infrastructure to support and enable enterprise operations. These resources typically include computing hardware, storage facilities, database systems, system software, and networking infrastructure. The variety of features and the scope of the service largely depends on the cloud service provider. However, IaaS is dynamically scalable, and you only pay for the services and resources you need.

Functions as a Service (FaaS)

FaaS is also referred to as serverless cloud computing, although that term often creates confusion. It’s an abstracted version of PaaS where the end-users are not exposed to the intricate technical details enabling the various services. The programs and routines run on FaaS platforms invoke the various resources and tools needed to complete their processes. FaaS is an efficient way of using cloud resources without the complexities of the underlying code and hardware architecture.

Public vs. private cloud service

In a public cloud, the hardware and software resources are owned and hosted by a third party, which then shares them amongst several users. You don’t get a dedicated server or facility, but the cost is low and flexible. A private cloud is a virtualized or hosted IT infrastructure exclusively used and/or owned by a single business or organization. A combination of the two, known as a hybrid cloud system, allows for the convenience and efficiency of the public cloud and the flexibility of the private cloud. Resources such as apps and functions can be moved between a private and a public system within a hybrid system.

hybrid cloud system, allows for the convenience and efficiency of the public cloud and the flexibility of the private cloud.

The benefits of using cloud services

Cloud computing presents several benefits from a business perspective. Here’s a look at some of the most attractive of these benefits.

IT efficiency and cost reduction

With cloud-based IT solutions, you don’t have to purchase and set up expensive hardware and software to build an on-prem IT infrastructure. You don’t even need to hire an in-house IT support team to take care of the system; the cloud provider is responsible for maintaining and servicing the various resources and ensuring their uninterrupted availability.

Scalability

As your business grows, IT demands also increase. The cloud allows you to scale your digital performance and capability as needed. What’s more, you have access to the latest cutting-edge software applications and hardware. The good thing is that you pay-as-you-go, so there is no problem with scaling up or down.

IT security and disaster recovery

Cybercrime is on an alarming upward trend, and the cost of data breaches just keeps going up, as is evident in the Ninth Annual Cost Of Cybercrime Study by Ponemon Institute. Cloud computing is a preferred and highly recommended method of combating cyber threats, especially for small and medium-sized businesses. The service provider can add as many layers of security protocols as needed on just about any service. And since the data is not stored in the typical style on a physical machine, you can have unlimited backups and disaster recovery measures.

Workplace flexibility and mobility

Cloud services are accessible via the web, which means they can be used from anywhere as long as there is a stable internet connection. So, your work doesn’t have to stop once you leave the office, and you can easily collaborate with remote workers, freelancers, and contractors on a common platform. This gives way to the possibility of a highly flexible work environment that ultimately boosts productivity.

Bottom line

Cloud adoption is growing incrementally every year; don’t get left behind in taking advantage of cloud computing to streamline your business operations, improve enterprise efficiency, save operational cost, and gain a competitive edge over your business rivals. Get in touch with us today and learn more about digital business solutions. [/av_textblock] [/av_one_full] [/av_section] [av_section min_height=” min_height_px=’500px’ padding=’default’ shadow=’no-border-styling’ bottom_border=’no-border-styling’ bottom_border_diagonal_color=’#333333′ bottom_border_diagonal_direction=” bottom_border_style=” custom_margin=’0px’ custom_margin_sync=’true’ custom_arrow_bg=” id=” color=’main_color’ background=’bg_color’ custom_bg=” background_gradient_color1=” background_gradient_color2=” background_gradient_direction=’vertical’ src=” attachment=” attachment_size=” attach=’scroll’ position=’top left’ repeat=’no-repeat’ video=” video_ratio=’16:9′ overlay_opacity=’0.5′ overlay_color=” overlay_pattern=” overlay_custom_pattern=” av_element_hidden_in_editor=’0′ av_uid=’av-k1ay5kpk’ custom_class=’more-blogs-section’] [av_one_full first min_height=” vertical_alignment=” space=” custom_margin=” margin=’0px’ row_boxshadow=” row_boxshadow_color=” row_boxshadow_width=’10’ link=” linktarget=” link_hover=” padding=’0px’ highlight=” highlight_size=” border=” border_color=” radius=’0px’ column_boxshadow=” column_boxshadow_color=” column_boxshadow_width=’10’ background=’bg_color’ background_color=” background_gradient_color1=” background_gradient_color2=” background_gradient_direction=’vertical’ src=” background_position=’top left’ background_repeat=’no-repeat’ animation=” mobile_breaking=” mobile_display=” av_uid=’av-2gsifi’] [av_textblock size=” font_color=” color=” av-medium-font-size=” av-small-font-size=” av-mini-font-size=” av_uid=’av-k1awjv8z’ custom_class=’centered-text ‘ admin_preview_bg=”]

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01 CORE FINANCIAL CAPABILITIES

General ledger and multi-dimensional reporting

Does the system support dimensional reporting by project, department, and location without custom coding?

Multi-entity and intercompany accounting

Can it manage multiple legal entities, consolidations, and intercompany eliminations natively?

Multi-currency support

Real-time exchange rate updates and full transaction-level currency tracking, not just display formatting.

AP / AR automation

What level of workflow automation exists for approvals, matching, and exception handling?

Month-end close timeline

What is the realistic close time post-go-live for a company of your size?

Fixed assets management

Depreciation scheduling, disposals, and audit trail, all within the same system?

Audit trail and access controls

Is the audit trail immutable? Are segregation of duties and role-based access enforced natively?

FP&A, budgeting, and forecasting

Does integrated planning come standard, or is it a separate module with a separate cost?

SOX and regulatory compliance controls

How does the system document and enforce compliance controls? What does the auditor workflow look like?

Open API architecture

Can the system connect to your CRM, HRIS, and banking tools?

02 OPERATIONS INTEGRATION

Note: Evaluate these based on your industry. Not every item applies to every business.

Manufacturing: MRP and production planning

Multi-level BOM, MRP runs, capacity scheduling, and shop floor data collection. How native vs. bolted on?

Manufacturing: quality and compliance

Lot and serial traceability, non-conformance tracking, and certificate generation within the same system?

Construction: job costing and POC billing

CSI MasterFormat cost codes, percentage-of-completion revenue recognition, retainage tracking, and AIA billing?

Construction: change order management

Approval workflows, commitment tracking, and impact to project financials. All connected?

Distribution: warehouse management

Pick, pack, ship, barcode and RFID, wave picking. Native WMS or requiring a separate add-on?

Distribution: multi-channel order management

EDI, ecommerce, and marketplace orders flowing into a single order management system?

Field service: mobile workforce

Dispatching, field time entry, and customer billing accessible on mobile without a separate app?

Inventory optimization

Demand forecasting, safety stock calculations, and ABC classification. Built-in or third-party?

Project accounting

Cost tracking by project, resource billing, and project-level P&L without manual workarounds?

Subcontractor and vendor compliance

Certificate of insurance tracking, lien waiver management, and vendor performance benchmarking?

03 AI AND AUTOMATION READINESS

Live vs. roadmap

Which AI features are in production today? Which are on the roadmap, and what is the committed delivery timeline?

AI-native vs. AI-enhanced

Is AI built into the database layer, enabling predictive insights from live transactional data, or is it a sidecar module that summarizes outputs after the fact? The distinction affects what the system can do in real time vs. what it can only report on retroactively.

Automated reconciliation

What is the documented match rate for automated bank and AP reconciliation?

Anomaly detection

Does the system flag unusual transactions in real time, or does this require a separate analytics layer?

Natural language querying

Can finance users query data without relying on IT or writing custom reports?

Cash flow forecasting

Is Machine Learning-based forecasting included in the base platform, or is it an add-on with a separate cost?

AI data governance

Where is AI-processed data stored? Can AI-driven decisions be audited and explained?

Pricing transparency

Are all AI capabilities included in your licensing tier, or will they be billed separately as usage scales?

04 IMPLEMENTATION AND TOTAL COST OF OWNERSHIP

Implementation methodology: big bang vs. phased standup

Is the partner proposing a single large go-live or a phased approach? Do they get you live on a minimum viable product first, then coach you through how to expand as your business grows? Methodology choice directly impacts risk exposure and time to value.

Realistic go-live timeline

What is the actual go-live time for companies your size and complexity? Talk about a milestone-level schedule.

Data migration approach

How is historical data validated post-migration? What is the tolerance for data gaps?

Customization scope

Heavy customizations require deep discovery before you commit. Have you and your partner mapped out exactly how each integration would work, what data moves between systems, and who owns troubleshooting when something breaks? The time spent on that mapping before go-live is far less expensive than finding the gaps after.

All-in 5-year cost

The full return on an ERP investment rarely shows up in year one. It builds as manual processes are eliminated, close cycles shorten, and operational data becomes reliable enough to drive decisions. Together we can map out total costs across five years, licensing, implementation, support, integrations, and upgrades, and then ask them to show you where the savings accumulate over that same period.

Internal headcount required

How many internal FTEs will be needed to support and administer this system post-go-live? And look at the other side of that equation too: how much time does your current team spend on manual processes that this system eliminates? How many additional hires will you not need to make as the business grows? The right ERP should reduce administrative burden, not just redistribute it.

Upgrade policy

What does the upgrade process look like? Is it included in your subscription, or billed separately?

On-time and on-budget track record

How does the partner guarantee the project goes live on time and on budget? Get the details.

05 EVALUATING YOUR IMPLEMENTATION PARTNER

Industry experience

How many implementations have they completed in your industry in the last 12 months?

Reference calls

Can they provide three reference calls with companies of similar size and complexity in your vertical?

Gold-level certification

Does the partner hold the software publisher’s highest certification tier? Gold-level certification requires a verified track record of successful implementations, multiple credentialed consultants, and ongoing performance benchmarks. It also means priority escalation access to the publisher’s engineering team when problems go beyond standard support.

Dedicated support model

Will you have a named account manager and a dedicated support team, or shared resources?

ISV selection and vetting

Partners with real industry expertise do more than implement software. They solution architect your entire environment, including the third-party tools that connect to your ERP. Ask whether they have hands-on experience with the specific solutions your business relies on for tax, compliance, warehouse management, or construction project tracking. The right partner has done this before in your industry and can tell you what works in production, not just what looks good in a demo.

Hypercare post go-live

First 30 to 90 days of support. Is it included, dedicated, or the same shared queue as general support?

Staff continuity

What is the project staffing model?

WATCH FOR THESE DURING EVALUATION

  • Unclear data ownership or exit terms
  • AI features without audit trails or explainability
  • Implementation timeline promises that do not account for data migration

READY TO WALK THROUGH THIS WITH SOMEONE WHO KNOWS THE ANSWERS?

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