The document discusses the benefits of cloud computing for businesses. It describes the three main types of cloud services - Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS). It outlines how cloud computing allows businesses to shift from a capital expenditure (CapEx) model to an operational expenditure (OpEx) model, providing more flexibility. Cloud also enables faster staff onboarding, responsiveness to changing business demands, and enhanced productivity across departments through a standardized environment. The cloud market is growing significantly and cloud adoption is becoming essential for businesses to thrive.

1. WHAT’S INSIDE
OVERVIEW OF CLOUD APPLICATIONS:
SAAS, PAAS, AND IAAS
CLOUD’S IMPACT ON BUSINESS
- CapEx to OpEx: A New
Spending Model
- Staffing Advantages
- Responsive to Business
Demands
- Enhanced Production Output
- The Upward Trend in Cloud
Adoption
WHERE YOU CAN BEGIN
THE CLOUD GUIDE FOR
THE BUSINESS MIND

2. OVERVIEW OF CLOUD APPLICATIONS: SAAS, PAAS, AND IAAS
“Cloud” has become an amorphous term. A general definition of cloud computing is
when a user interacts with a given program in one environment, while the computations,
data storage, and other background processes occur at an off-site data center. We’ve
represented the workflow of cloud computing in a simple visual here:
Although this describes the overarching functionality of cloud, it can be deployed in a
number of ways. The three most frequently used deployment methods are
Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and
Infrastructure-as-a-Service (IaaS).
SaaS
Think of an application or a set of personal information that you access directly through
a web browser (for example, Office 360, Google Docs, ect). These SaaS applications rely
primarily on an internet connection in order to display data. Regardless of whether
you’re simply checking email messages or doing something substantial like making
large calculations, those actions do not rely on the physical hardware or processing
power of the device you’re accessing the application from.
PaaS
Platform-as-a-Service is a software environment that hosts applications, sort of how
Microsoft Office (the software) applications run on the Windows OS (the platform).
Businesses who develop SaaS applications typically rely on PaaS cloud environments to
test those applications and perform debugging prior to public release. Business
intranets, or internal websites with resources for employees, can also be considered
PaaS cloud.
IaaS
Businesses that deploy either SaaS, PaaS, or both often rely on
Infrastructure-as-a-Service from a third-party cloud provider. This means that all of the
hardware that performs the processing for the software applications is kept off-site from
the business, at the third-party provider’s data center. If a business’s hardware is located
and maintained on-site, they could be considered their own IaaS provider… but that
setup is more commonly referred to as “private cloud.”
So that explains what cloud is – but what does it do for business? Read on
Input
[onsite]
Output
[onsite]
Processing
[offsite]

3. CLOUD’S IMPACT ON BUSINESS
Cloud computing can raise production, lower costs, and keep businesses competitive in
the modern age of technology. That sounds great up front… but every cloud provider
says that. Let’s look at the reasons why third-party IaaS cloud services provide these
benefits.
CAPEX TO OPEX: A NEW SPENDING MODEL
One of the biggest cost benefits of cloud is the elimination of Capital Expenditures, or
CapEx. CapEx budget is traditionally used to make hardwareis traditionally used to make
hardware purchases and initial signups for contracted professional services. CapEx is
accompanied by an Operational Expenditure, or OpEx, budget, which is used for
maintenance costs, energy consumption, and other ongoing costs. Every time a business
utilizing private, on-site hardware wants to add more resources, they must pull funds
from their CapEx budget. If that money is already spoken for, they'll have to cut into an
unplanned revenue source. Unfortunately, that source is often the company's profits.
To illustrate the pain points of a CapEx spending plan, let’s use an example.
“A hypothetical major online retail business, Thrift City, anticipates
that they will receive a high volume of customer orders and
customer service requests during their busy season in Q2 & Q3.
Thrift City contacts their vendor and purchases an additional
server, like they did last year, and installs it over the course of a
week.
Problems arise when projected customer activity is poorly
predicted, however. In Q2, Thrift City has to scramble to purchase
another server due to a much higher volume of customer
transactions. This volume increase is highly irregular, and Thrift
City hasn't budgeted for an expensive server, so they cut into their
profits to buy it. In addition to making an unplanned capital
purchase, Thrift City also cannot quickly install the server because
they need to find physical space on-site for the hardware.
Eventually they install and provision the server, just in time for Q3.
By that time, however, customer activity dips back to normal
levels, and Thrift City is left with an unused server that they
already paid for. It remains unused during the slow season of Q4
and Q1.
Finally, the very next year their vendor announces a new server
model with better processing power for the same price they paid as
the second server.”
From here on out, we'll be discussing the benefits of IaaS
cloud provided by a third-party.

4. This Thrift City example highlights four primary challenges of relying on a CapEx model
to purchase on-site hardware:
It is unforgiving in circumstances where business needs change quickly
Making capital purchases is a gamble, where businesses must assume they will
experience continued growth to justify their expense
With rapid technology changes, a better and more affordable technology may
emerge within months of making a purchase
Purchasing physical systems also introduces delays and challenges associated
with on-site equipment storage
By partnering with an IaaS cloud provider, enterprise businesses are able to quickly
adjust their resources under an Operational Expenditure, or OpEx, spending model. This
means the enterprise maintains a single budget for all growth and maintenance-focused
expenditures. As a result, the business gains cash flow flexibility and funds that were
once identified as CapEx can be reassigned; they can be added to the OpEx budget, put
towards workforce growth, or added to the business’s bottom line.
STAFFING ADVANTAGES
With access to a virtual administration center, IT managers at enterprises can quickly and
easily provision resources and add new users. This makes activities like hiring additional
personnel a faster and significantly less arduous process than without cloud. During
periods of rapid growth, cloud-enabled businesses may still need to buy desks and
chairs, but additional servers, CPUs, and other hardware are no longer on the list of
CapEx expenditures. Instead, provisioning IT systems requires either:
A. A single phone call to the cloud account manager, or
B. A log-in to the admin UI and a few clicks
The total setup time for onboarding a new employee into the system, or for changing an
existing employee’s role, can take minutes instead of days or weeks.
A streamlined employee onboarding process makes a positive impact on the efficiency
of several functions:
The enterprise’s HR department is able to quickly move qualified candidates
along in the hiring process, leaving more time to seek out and bring in high
quality talent to the organization.
The IT team is not as deeply embedded in the onboarding process, allowing
them to focus on innovation and other operational functions.
The executive team is given the confidence that if they direct the team to raise
production in a given area, they are able to quickly acquire the resources
necessary to meet those needs.
Production, sales, and other departments are able to distribute work evenly and
take on a higher volume of work while maintaining quality standards.

5. A cloud infrastructure is an infrastructure that fosters growth. Let’s explore how cloud
also fosters productivity and profit.
RESPONSIVE TO BUSINESS DEMANDS
Figure 1 depicts an example of traditional, on-site private cloud IT spending over time. As
we discussed in the first section, there are risks associated with CapEx investments that
prove them to be more costly to a business in the long-term. CapEx is also unforgiving to
any businesses with inaccuracies in their workload forecasting.
For businesses relying on private cloud or on-site data centers, hardware is the single
most limiting factor of their capabilities. The best CFOs and financial planners are able to
anticipate the future needs of the business to plan ahead and acquire the proper
hardware, but there is no foolproof way to prepare for every unforeseen scenario.
Businesses will eventually hit periods of lower or higher demand than they are equipped
to handle. Fortunately, IaaS cloud services enable enterprises to procure additional
resources in minutes, enabling them to act and react with more agility than would ever
be possible with CapEx spending.
Responding to loyal consumers’ demands is important, but so is preserving that loyalty
by staying competitive in the market. An additional benefit of operating on cloud IaaS is
that businesses can be confident that their cloud partner is constantly upgrading and
maintaining their systems on the most powerful and efficient technology available. As a
result, the enterprise, with no additional effort, is as responsive and capable as the best
members of their industry.
Cloud is the key to more efficient and cost-effective business planning, but its benefits
can be seen at the heart of an enterprise, as well – the workforce.
FIGURE 1

6. ENHANCED PRODUCTION OUTPUT
Cloud is a unifying tool. On cloud IaaS, various departments of an enterprise would all
operate on the same platform, which eliminates barriers when responsibility shifts to
another team in the production process. Here’s another scenario from Thrift City to
describe the importance of a standardized environment:
“At the request of leadership, Thrift City’s IT team develops an
application for the sales team to use that will make cataloguing
leads’ data faster. The IT team uses their development suite to
create the application, but the sales team does work using a
different OS. As a result, multiple trouble tickets are sent to
support, overwhelming the IT team and preventing them from
moving on to the next project.”
The standardized environment on cloud IaaS mitigates and even eliminates obstacles
like the one that Thrift City faced. With fewer trouble incidents, employees can take on
more work, and, consequently, produce more revenue for the enterprise. The IT team
can also be used more effectively, focusing their efforts on building new, innovative
systems instead of responding to internal service request tickets.
The benefits of a cohesive platform also extend beyond company headquarters, where
remote workers and frequently traveling employees are able to log in to the same virtual
environment through a given device as if they were on-site.
Cloud is elevating businesses’ teams and keeping them more productive than ever –
and it shows no signs of slowing down.
THE UPWARD TREND IN CLOUD ADOPTION
The cloud market is approximately a USD$155 billion industry in 2015, and it’s expected
to grow by another USD$60 billion by the time we hit 2018. There are very few, if any,
reports that suggest cloud adoption even has the potential to slow down. This indication
serves as a testament to the low risk of making an investment into cloud computing. The
question remains, however – who is facilitating this growth?

7. Although it is possible to engineer a cloud infrastructure and model it around a specific
business, cloud has been implemented in enterprises from various industries. Power &
utility providers, healthcare facilities, financial institutions, higher education – any
business that is dealing with large volumes of data can benefit from cloud IaaS. And they
have. The bottom line takeaway from these market trends is that businesses have
realized they must adopt cloud not only to thrive, but to survive.
The only question business leaders should ask is, “How do we get started?”
WHERE YOU CAN BEGIN
TeraGo Networks is an IaaS cloud provider for Canadian enterprise-level businesses
nationwide. Our RackForce hybrid cloud solutions are more than just “click to order”
cloud – we customize your cloud infrastructure so that it’s optimized to fit the way you
work from end to end. In addition to IaaS, we offer colocation services, disaster recovery
solutions, and a reliable network all protected by top-level security and Canadian data
sovereignty. Combine fully managed cloud with TeraGo’s Voice and Internet solutions to
give your enterprise everything it needs to be fast, agile, and scalable all from one
partner.
For a closer look at the cloud journey and the steps to a successful build-out, click here
to go straight to our visual guide, “The 14 Milestones in the Cloud Adoption Timeline.”
2012 2013 2014 2015 2016 2017 2018
FIGURE 2
http://www.terago.ca