What is cloud computing?
Cloud computing refers to the delivery of computing services—such as servers, storage, databases, networking, software, and more—over the internet (“the cloud”) to offer faster innovation, flexible resources, and economies of scale.
Cloud services also expand the traditional IT offerings to include things like Internet of Things (IoT), machine learning (ML), and artificial intelligence (AI).
Essentially, instead of owning physical hardware and managing on-premises servers, companies can access computing resources on-demand from a cloud provider like Microsoft Azure. This model enables organizations to scale resources up or down as needed, pay only for what they use, and benefit from the provider’s expertise in managing infrastructure and security.
Shared responsibility model
The shared responsibility model refers to the distribution of security and compliance responsibilities between cloud service providers (CSPs) like Microsoft Azure and their customers.
Provider Responsibility: The cloud service provider (CSP), such as Microsoft Azure, is responsible for the security of the cloud—the underlying infrastructure and services offered. This includes securing the physical data centers, the network infrastructure, and ensuring the availability of services. In the case of Azure, Microsoft manages the security of the hardware, software, networking, and facilities that run Azure services.
Customer Responsibility: Customers using cloud services have their own set of responsibilities, typically depending on the type of service they are using (Infrastructure as a Service (IaaS), Platform as a Service (PaaS), or Software as a Service (SaaS)). The customer is responsible for securing their data and applications in the cloud, configuring access controls, managing user identities and permissions, encrypting data, and ensuring compliance with relevant regulations.
When using a cloud provider, you’ll always be responsible for:
- The information and data stored in the cloud
- Devices that are allowed to connect to your cloud (cell phones, computers, and so on)
- The accounts and identities of the people, services, and devices within your organization
The cloud provider is always responsible for:
- The physical datacenter
- The physical network
- The physical hosts
Your service model will determine responsibility for things like:
- Operating systems
- Network controls
- Applications
- Identity and infrastructure
Define cloud models?
Private Cloud:
- Dedicated cloud infrastructure for a single organization.
- Typically deployed within the organization’s own data center or hosted by a third-party provider.
- Offers greater control, security, and customization.
- Suitable for organizations with strict compliance or security requirements.
- Requires the organization to manage and maintain the infrastructure.
- Example: Azure Stack by Microsoft Azure.
Public Cloud:
- Cloud services provided over the internet by a third-party provider.
- Resources are shared among multiple tenants.
- Pay-as-you-go pricing model.
- Offers scalability, flexibility, and cost-effectiveness.
- Managed and maintained by the cloud provider.
- Example: Microsoft Azure, Amazon Web Services (AWS), Google Cloud Platform (GCP).
Hybrid Cloud:
- Combination of public and private cloud environments.
- Integrated and interconnected to form a unified infrastructure.
- Allows seamless movement of workloads, applications, and data between environments.
- Offers flexibility, scalability, and the ability to leverage benefits of both public and private clouds.
- Addresses specific business needs and regulatory requirements.
- Example: Azure Arc by Microsoft Azure.
Multi-cloud
A fourth, and increasingly likely scenario is a multi-cloud scenario. In a multi-cloud scenario, you use multiple public cloud providers. Maybe you use different features from different cloud providers. Or maybe you started your cloud journey with one provider and are in the process of migrating to a different provider. Regardless, in a multi-cloud environment you deal with two (or more) public cloud providers and manage resources and security in both environments.
Describe the consumption-based model
Capital expenditure (CapEx) and operational expenditure (OpEx) are two distinct financial models used by organizations to manage their investments and expenses, particularly in the context of IT infrastructure and services:
Capital Expenditure (CapEx)
- CapEx refers to the funds spent by a company to acquire, upgrade, or improve physical assets such as buildings, machinery, equipment, and IT infrastructure.
- It typically involves large upfront investments in assets that have long-term value and are expected to generate benefits over an extended period.
- CapEx investments are recorded on the balance sheet and depreciated over their useful life, meaning their costs are spread out over time.
Operational Expenditure (OpEx)
- OpEx refers to the ongoing day-to-day expenses incurred by a company to maintain its operations and support its business activities.
- It includes costs related to running the business, such as salaries, rent, utilities, maintenance, consumables, and services procured on a subscription or usage basis.
Cloud computing falls under OpEx because cloud computing operates on a consumption-based model. With cloud computing, you don’t pay for the physical infrastructure, the electricity, the security, or anything else associated with maintaining a datacenter. Instead, you pay for the IT resources you use. If you don’t use any IT resources this month, you don’t pay for any IT resources.
Pay-as-You-Go Pricing: In a consumption-based model, customers are charged based on their actual usage of resources such as computing power, storage, network bandwidth, and other services. This pay-as-you-go approach allows for flexibility and scalability, as customers can scale resources up or down according to their needs and are only billed for what they consume.
- Usage-Based Billing: Billing in a consumption-based model is typically based on metered usage, where customers are charged based on the quantity of resources they consume over a specific period, such as per hour, per gigabyte, or per transaction. This usage-based billing ensures that customers only pay for the resources they utilize, making it cost-effective and efficient.
- Elasticity and Scalability: One of the key benefits of the consumption-based model is its elasticity and scalability. Customers can easily scale resources up or down in response to changes in demand or workload without incurring additional upfront costs or waiting for hardware procurement. This agility enables organizations to adapt quickly to changing business needs and optimize resource utilization.
- No Upfront Investments: Unlike traditional IT infrastructure models where organizations make significant upfront investments in hardware and infrastructure, the consumption-based model eliminates the need for upfront capital expenditures. Instead, customers can leverage cloud services on a pay-as-you-go basis, reducing financial risk and allowing for better alignment of IT costs with business outcomes.
- Cost Transparency and Control: Consumption-based pricing offers greater transparency and control over IT costs, as customers have visibility into their usage and spending patterns. This visibility allows organizations to optimize resource utilization, identify cost-saving opportunities, and make informed decisions about resource allocation and provisioning.
