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What’s All the Investment Fuss About Cloud Computing?

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As data computing needs become more demanding, traditional onsite data storage methods prove outdated. Just like the iconic line from the movie Jaws that quips, “You’re going to need a bigger boat,” cloud computing provides a broader, more encompassing solution for modern business challenges.

The cloud provides remote data storage, allowing the internet to support access to shared resources, software, and information. Its expansion in recent years has left some investors wondering if cloud ETFs could be a suitable investment vehicle for this burgeoning market.

An overview of the cloud

Cloud computing makes companies more secure, cost-efficient, and agile. The cloud offers technology solutions to businesses of all sizes, allowing them to manage an ever-increasing influx of big data. In fact, by 2025, it is estimated that over 100 zettabytes of data will be stored in the cloud. (Steve Morgan, Cybercrime Magazine, June 8, 2020)

Why has cloud computing experienced such rapid growth? Let’s look at its numerous advantages:

Cost reduction

“Cloud computing is empowering; companies leveraging cloud will be able to innovate cheaper and faster.” – Jamal Mazhar, Founder, and CEO, Kaavo.

Cloud computing allows businesses to significantly cut their IT expenses. It is costly for companies to maintain all the hardware infrastructure they need onsite. Physical hardware costs include the use of space, the cost to replace and repair equipment, and even the need to manage excessive heat in the office space.

With the cloud, fewer in-house IT staff members are needed, and the company’s existing IT staff can devote their time to company development rather than maintenance. Cloud applications are generally simple to adopt, making company time more productive.

Furthermore, businesses can pay only for the services they need and only when they require them. This is vital to so many companies that have varying needs over the course of a typical year. Such flexibility of pay-as-you-go pricing offered by cloud solutions is very attractive to businesses.

Scalability

Cloud computing services include data storage, network sharing, software application, and processing power. Companies need these services, but they likely can’t afford or don’t require all of them at once. When a company needs to increase its technology functionality, the cloud makes it quick and easy to do so, eliminating the need for businesses to purchase servers and licenses while still in the growth stage.

The cloud allows companies to scale without needing to purchase and manage hardware and software that they require only periodically. It also reduces the need for dedicated technical expertise within the company. In this way, companies can utilize the cloud to access technology on an as-needed basis without needing to invest in additional infrastructure before they are ready to do so.

Data storage, security, and recovery

Cloud computing allows businesses to back up their data for secure and effective storage. Data stored safely in the cloud is very difficult to breach compared with data stored on a physical device that could be stolen or lost. Sensitive data stored in the cloud can be deleted remotely. Cloud vendors often provide multi-layered security and encryption that’s built right into the cloud environment.

What’s more, cloud storage is retrievable from any location with internet access. Data can be accessed from anywhere in the world with internet access, so recovery is easier. If some servers have a problem, a company’s data is safe and immediately accessible elsewhere.

Collaboration

Cloud computing allows for better data sharing and communication within a business. This has become especially important as remote work is more of a reality than ever before. The COVID era drove this point home, but remote work has long been an important trend for companies. Cloud computing allows company stakeholders to collaborate seamlessly, benefiting everyone.

Companies increasingly rely on cloud computing to work remotely, share documents, and access data from anywhere. Through cloud technology, coworkers can access and work on files simultaneously and in real-time. Companies can be more agile and productive, completing tasks with greater flexibility.

Why invest in cloud computing?

Cloud computing is already proving its worth for businesses of all kinds, and its future seems bright. According to Gartner, it is expected that by 2024, “more than 45% of IT spending on system infrastructure, infrastructure software, application software, and business process outsourcing will shift from traditional solutions to cloud.”

Businesses are rapidly incorporating today’s technological innovations such as artificial intelligence, machine learning, and the internet of things. These innovations often interface with the cloud and support its further application.

As for subtypes within the cloud, companies can opt to utilize the public cloud, taking their workload onto the data center of a commercial provider. There is also a dedicated, private cloud model. Many companies opt to adopt a hybrid cloud model, which includes aspects of both public and private cloud computing. Finding the right balance between these models can yield a competitive advantage.

Cloud companies that are doing very well in today’s market include Australian software development company Atlassian Corp (TEAM), which builds platforms and tools for businesses. Atlassian has exceeded analysts’ expectations and is a leader in moving clients to the cloud. Another cloud migration leader is Perficient (PRFT), which has been rapidly transforming business processes by providing cloud consulting for some of the world’s biggest companies. Cloudflare (NET) and Sprout Social (SPT) are some other big names to watch as companies involved in cloud computing become increasingly prominent in the investment world.

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Written by mettablog

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