Establishing a robust infrastructure is the cornerstone of cloud computing. It often accounts for a third of the total amount spent on IT in a majority of businesses. Instead of taking computer workloads through the internal IT team, this traditional approach seemed to be long gone. Modern industries that embrace digital transformation with open arms gradually transfer systems into the cloud. Whether the information is on a private or public cloud, it offers increased security and safety against cyber threats. The result of increased cloud usage opens doors for cloud computing services provided by vendors and enterprises.
What is Cloud Computing?
Cloud delivery accounts for streamlining the delivery of services through the internet. When data gets stored in cloud software, servers in a comprehensive database secure it. IT professionals prefer data storage in the cloud instead of proprietary hard drives and local storage devices. Cloud-storage is more convenient, allowing users to store and access files to a remote database. Almost everyone in the world has access to the internet. Thus, you can run data and software through the cloud as long as you have an electronic device and internet connectivity.
Businesses are slowly adopting cloud computing into their existing framework for several reasons. Cloud offers convenience, speed, security, and cost-savings. Not only can it provide efficiency but it also increases the overall productivity of businesses.
How Does Cloud Computing Work?
As previously mentioned, cloud computing is used in both public and private clouds. Both public and private cloud services are networks that supply hosted services. Storing data in the public cloud means that you can acquire its services for free. In contrast, private cloud services require a fee that can only be accessed by many people.
In general, cloud computing features vast services, including the following:
Consumer Services (cloud back-up for data on smartphones, desktop, and laptops)
Hosted services to run several applications in the cloud (often used by companies)
A growing number of applications and software utilize cloud computing to offer innovative solutions and quality services. Extensive video streaming services like Hulu, Netflix, Disney+, and Amazon slowly transition to a subscription model. Through cloud computing, they can offer their applications as services instead of a standalone product. It may increase the costs for the users, but these often make up for the constant improvements made.
Types of Cloud Computing
The “as-a-service” models are typical of the second wave of the Web 2.0, built on top of cloud computing. Indeed, these models’ basic premise is to offer a solution to the final customer without having to host it on-premise, with complex implementations and large overhead. Yet while PaaS and IaaS are skewed toward development teams. SaaS has wider applications toward end-users, also in non-technical departments.
Cloud computing is composed of the following services:
Software-as-a-service (SaaS)
SaaS refers to the license to apply the services offered by software applications. An example of this is Microsoft 365, or the entirety of Microsoft applications in a single cloud. There are different payment models for SaaS cloud computing services, depending on the product. Often, it is large enterprises that obtain these licenses.
Infrastructure-as-a-service (IaaS)
IaaS yields the delivery of products and services through servers. Products, including operating systems and data, get stored through IP-based connectivity as part of an on-demand service. IaaS uses programs like IBM Cloud and Microsoft Azure. Instead of purchasing software, users can procure them as an on-demand service.
Platform-as-a-service (PaaS)
PaaS is often used interchangeably with SaaS. The main difference between the two is that the platform for establishing software gets delivered through the internet. Popular platforms that offer PaaS include Salesforce.com and Heroku.
Benefits of Cloud Computing to Digital Entrepreneurs
Cloud computing provides a plethora of benefits to different sectors of businesses. From the ability to manage software from any device on a native app or web browsers, users can handle data seamlessly. It is the foundation of a reliable IT infrastructure that aims to support business growth.
To better understand why more businesses are moving to the cloud, here are the benefits of cloud computing:
Scalability
Digital entrepreneurs and businesses that invest in cloud computing can take advantage of its efficiency and flexibility. Cloud-based services let companies use unlimited bandwidth and storage space, promoting scalability. Scalability means that companies can scale up and down, depending on their capacities and goals. Scalability in business plays a fundamental role in coping when traffic increases or fluctuates.
Simply put, playing your data in the cloud eliminates the need for the installation of programs on-site. On top of that, enterprises can update their software remotely, without the entire IT workforce present. Not only does it promote workforce flexibility but also convenience. Several uses can access applications and data anywhere and any time, as long as they have internet connectivity.
Reliability
A robust infrastructure supported by cloud computing means that businesses can rely on the cloud in case of issues that arise. Cloud-based services offer reliable disaster recovery and comprehensive back-up in the event of a system breach, malfunction, or cyber threat. It gives digital entrepreneurs peace of mind that they can recover data within a few hours. Cloud computing mirrors data across servers from the beginning to instantly provide back-up solutions, minimizing downtime.
Cost-Effective
One of the most valuable benefits of cloud computing is getting a lot of bang for your buck. It reduces IT operational costs with remote servers used for storage. Instead of gathering an in-house team to install applications and situate storage segments, you can simply leverage the cloud. From the overhead expenses, management efforts, and constant software upgrades, cloud computing does it all at a fraction of the price. Most cloud-based services are cost-effective and on a pay-per-use basis. This model means that businesses can obtain only the services they need at a given time.
Initiate Steadfast Collaboration
The cloud environment aims to initiate true collaboration across business sectors. Different departments can access, modify, and manage the same files without having to be in one room. Such a transparent form of collaboration eliminates the communication and geographical barriers since both parties can work with data as long as they have internet. With a true collaboration across teams, timeframes and scheduling is a much smaller issue.
Accelerate Business Growth
Cloud computing is applied to meet the ever-changing market demands and technological advancements. It is integrated into an existing framework to accelerate business growth. With increased storage space and bandwidth, webpages can handle considerable traction and anticipate traffic. The seamless deployment of the cloud makes it easier for digital entrepreneurs to grow. They can match their business operations with the growing IT requirements while maintaining optimum performance.
Automatic Software Updates and Integration
Cloud-based services feature regular software updates to meet the ever-changing IT demands. Constant monitoring is performed across cloud servers to make sure that systems are secured and safe. Instead of relying on your internal IT team, you can delegate the task to a cloud computing specialist. They are also the ones tasked to integrate software across cloud servers. Although it can occur automatically, professionals can modify software applications suitable for their business objectives.
Sustainability
Businesses are now taking the initiative of maintaining sustainability. One way to do so is through cloud computing. Cloud computing does not require much hardware equipment in the office. Cloud-based services reduce as much carbon footprint as possible, considering that they are remote. Data, applications, and servers can be stored and run in a virtual environment, meaning less energy consumption.
An effective business model has to focus on two dimensions: the people dimension and the financial dimension. The people dimension will allow you to build a product or service that is 10X better than existing ones and a solid brand. The financial dimension will help you develop proper distribution channels by identifying the people that are willing to pay for your product or service and make it financially sustainable in the long run.
Business modelinnovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.
Digital and tech business models can be classified according to four levels of transformation into digitally-enabled, digitally-enhanced, tech or platform business models, and business platforms/ecosystems.
A digital business model might be defined as a model that leverages digital technologies to improve several aspects of an organization. From how the company acquires customers, to what product/service it provides. A digital business model is such when digital technology helps enhance its value proposition.
A tech business model is made of four main components: value model (value propositions, mission, vision), technological model (R&D management), distributionmodel (sales and marketingorganizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.
A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success.
A Blockchain Business Model is made of four main components: Value Model (Core Philosophy, Core Value and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
In an asymmetric businessmodel, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.
In an asymmetric businessmodel, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.
While the term has been coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation who developed the software/platform. An example of the GitLab open core model, where the hosted service is free and open, while the software is closed.
Cloud business models are all built on top of cloud computing, a concept that took over around 2006 when former Google’s CEO Eric Schmit mentioned it. Most cloud-based business models can be classified as IaaS (Infrastructure as a Service), PaaS (Platform as a Service), or SaaS (Software as a Service). While those models are primarily monetized via subscriptions, they are monetized via pay-as-you-go revenue models and hybrid models (subscriptions + pay-as-you-go).
Open source is licensed and usually developed and maintained by a community of independent developers. While the freemium is developed in-house. Thus the freemium give the company that developed it, full control over its distribution. In an open-source model, the for-profit company has to distribute its premium version per its open-source licensing model.
The freemium – unless the whole organization is aligned around it – is a growth strategy rather than a business model. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through the sales funnel. Free users will help spread the brand through word of mouth.
A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.
A marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.
B2B, which stands for business-to-business, is a process for selling products or services to other businesses. On the other hand, a B2C sells directly to its consumers.
A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.
Direct-to-consumer (D2C) is a business model where companies sell their products directly to the consumer without the assistance of a third-party wholesaler or retailer. In this way, the company can cut through intermediaries and increase its margins. However, to be successful the direct-to-consumers company needs to build its own distribution, which in the short term can be more expensive. Yet in the long-term creates a competitive advantage.
The C2C business model describes a market environment where one customer purchases from another on a third-party platform that may also handle the transaction. Under the C2C model, both the seller and the buyer are considered consumers. Customer to customer (C2C) is, therefore, a business model where consumers buy and sell directly between themselves. Consumer-to-consumer has become a prevalent business model especially as the web helped disintermediate various industries.
A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.
The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.
The term “crowdsourcing” was first coined by Wired Magazine editor Jeff Howe in a 2006 article titled Rise of Crowdsourcing. Though the practice has existed in some form or another for centuries, it rose to prominence when eCommerce, social media, and smartphone culture began to emerge. Crowdsourcing is the act of obtaining knowledge, goods, services, or opinions from a group of people. These people submit information via social media, smartphone apps, or dedicated crowdsourcing platforms.
In a franchained business model (a short-term chain, long-term franchise) model, the company deliberately launched its operations by keeping tight ownership on the main assets, while those are established, thus choosing a chain model. Once operations are running and established, the company divests its ownership and opts instead for a franchising model.
Businesses employing the brokerage business model make money via brokerage services. This means they are involved with the facilitation, negotiation, or arbitration of a transaction between a buyer and a seller. The brokerage business model involves a business connecting buyers with sellers to collect a commission on the resultant transaction. Therefore, acting as a middleman within a transaction.
Dropshipping is a retail business model where the dropshipper externalizes the manufacturing and logistics and focuses only on distribution and customer acquisition. Therefore, the dropshipper collects final customers’ sales orders, sending them over to third-party suppliers, who ship directly to those customers. In this way, through dropshipping, it is possible to run a business without operational costs and logistics management.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
