Rather than a new technology in itself, cloud computing is a new business model wrapped around new technologies – such as server virtualization – that take advantage of economies of scale to reduce the cost of using IT resources. It approaches computing as a service, rather than a product. Cloud computing refers to both the applications delivered as services over the Internet and the hardware and systems software in the data centers that provide those services.

Most businesses pay a cloud service provider, rather than setting up their own clouds, to take advantage of those economies of scale. However, you can still choose the types of cloud services you want and how they are used. There are several types of cloud services, called “deployment models.” Here’s a brief guide to each, and some factors small and medium-sized businesses should consider before paying to use the cloud.

There are four ways businesses and government agencies can deploy cloud services:

Private cloud. The cloud infrastructure is operated solely for an organization. It may be managed by the organization or a third party and may exist on premise or off premise.

Community cloud. The cloud infrastructure is shared by several organizations and supports a specific community that has shared concerns. It may be managed by the organizations or a third party and may exist on premise or off premise.

Public cloud. The cloud infrastructure is made available to the general public or a large industry group and is owned by an organization selling cloud services.

Hybrid cloud. The cloud infrastructure is a composition of two or more clouds that remain unique entities but are bound together by standardized or proprietary technology that enables data and application portability.

Which cloud model should you be using in your business? It depends on your contractual requirements and business needs. Factors to consider include migration costs, elasticity, security needs, multi-tenancy, and the critical nature of the information and services going to the cloud.

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