If you aren't well-versed in tech speak, the cloud may bring tomind images of programs that are just floating around–somewhere.You may have heard of it–and even use it–but don't know how todescribe what it means or what it offers.

Cloud computing relies on shared resources over a network.Moving to the cloud allows businesses to avoid infrastructure costsand make the most of limited IT budgets. According to a recentNovarica survey of 96 insurance CIOs, about half of insurancecarriers use the cloud.

But the cloud also benefits the small or midsize agency, whichtypically has a smaller IT budget and little or no IT staff.Vertafore and Applied Systems now offer their CRM solutions throughthe cloud. Larger agencies find that the cloud streamlines thevalue chain and provides a degree of structure and establishment ofstandards.

Analysts, cloud providers, and carrier CIOs detail the benefits of cloud adoption:

• Customers—improving experience, service, andretention.
• Innovation—rapid rollout of new businesslines, products, and geographies.
• Continuity—disaster preparedness andrecovery.
• Scalability—instant additional capacityon-demand.
• Resources—leverage in-house IT resources andthird-party expertise.
• Cost savings—reduced capital outlay, morerented vs. owned, and other efficiencies.

Read on about the three types of available cloud services.

Software-as-a-Service (SaaS)

Definition: Software that is deployed over the Internet. Aprovider hosts the network, services and storage, and licenses anapplication to customers either as a service on demand or through asubscription in a “pay-as-you-go” model. This eliminates the needto install and run applications on your own computer, whichsimplifies maintenance and support.

Examples: Google Docs, Salesforce and other typesof customer relationship management software, VertaforeAMS360, AppliedOnline

Benefits: Web access to commercial software, software ismanaged from a central location, the user is not required to handleupgrades or patches

Cons: Generally unable to provide real-time data, regulationslimit what data can be hosted externally, less secure than othercloud models, limited by compatibility to hardware or operatingsystems

Platform-as-a-Service (PaaS)

Definition: It is very similiar to SaaS, but rather thansoftware being delivered over the Internet, a platform that createssoftware is delivered. Vendors provide pre-built program librariesthat users can tweak to build a custom application.

Examples: Google App Engine, Force.com from Salesforce,Microsoft Azure Services

Benefits: Customization, no need to buy and maintain softwareand infrastructure, support for development team collaboration,software collaboration (can include tools to handle billing andsubscription management). It is ideal for situations where multipledevelopers will be working on a project or where external partiesneed to interact with the development process.

Cons: Not ideal in situations where the application needs to beportable in terms of where it is hosted, where propriatarylanguages impact development or switches to other PaaS providers,and where the appliation requires hardware customizations.

Infrastructure-as-a-Serivce (IaaS)

Definition: The vendor provides an environment–servers, storage,network and operating systems–to build or host applications. IaaScan be obtained as either a public or private infrastructure. Itallows for dybnamic scaling and has a variable costs.

Examples: Vertafore Sagitta 2014, Amazon Web Services

Benefits: Ideal for new or small businesses that cannot investin hardware, businesses in the midst of expansion where scalinghardware would be problematic. Suitable for trial or temporaryinfrastructure needs.

Cons: Problematic where regulations limit offshoring oroutsourcing of data storage, lack of dedicated infrastructure maynot meet an organization's needs.