Case Study Should Business Move to the Cloud

     

INTRODUCTION

Cloud computing is a model of computing in which computer processing, storage, software, and other services are provided as a pool of vitalized resources over a network, primarily the Internet. These clouds of computing resources can be accessed on an as-needed basis from any connected device and location. The term "Cloud Computing" has appeared on the radar screen of information systems/information technology and business professionals over the last few years. The term "Cloud" refers to the Internet and "Computing" refers to the use of technology. 

In 2009 the US National Institute of Standards and Technology (NIST) Information Technology Laboratory developed a considered and well-written definition distilled from a number of perspectives. Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is composed of five essential characteristics. The essential characteristic are on demand self services, ubiquitous network access, location independent resource pooling, rapid elasticity and measured services. Cloud computing consists of three different types of services. The types are infrastructure as a service, platform as a service and software as a service. Deployment models are private cloud, community cloud, public cloud and hybrid cloud. The emerging cloud abstracts infrastructure complexities of servers, applications, data, and heterogeneous platforms.

The NIST definition arguably comes closest to capturing in a minimal number of words all of the essential ideas of cloud computing. Some other definitions below are more industry or commercially oriented. For example, Wikipedia states that “Cloud computing describes a new supplement, consumption and delivery model for IT services based on the internet, and it typically involves the provision of dynamically scalable and often virtualised resources as a service over the internet. Others have suggested that cloud computing is a general term for anything that involves delivering hosted services over the internet. Cloud computing have lot of potential to explore the telecom industry. 

Characteristics

The Working Group has identified four major drivers of cloud computing :

1.      Everything As A Service

Service-oriented architectures define standard interfaces and protocols (e.g. for discovery, quality, and data transfer) to allow developers to utilise information tools and functions as services that users can  access without knowledge of, or control over, their internal workings. Services in the cloud can be set up to form business workflows. The advent of XML in the nineties and standards, such as BPEL in the early 2000s, fuelled this growth.

2.      Availability Of Broadband

Both the reach and capacity of Internet Protocol networks are drivers of cloud computing. Moreover, as capacity grows, more demanding types of data can be used in commerce, entertainment, government, and business. In the early days of the web, data and an occasional image were retrieved by web browsers. Today users routinely download music and short video clips. However, full-length movies at high quality are still beyond most broadband connections.

3.      Warehouse-Size Data Centres

Another driver of cloud computing is an evolution from small, distributed, data-oriented computing centres (e.g. 1000 node3, one petabyte 4) to more cost-effective, very large scale commercial cloud services (e.g. 100,000 node, 100 petabyte). This is likely to continue.

4.      Energy Efficiency

In some data centres, only 30 per cent of the electric power is used by the IT equipment, with the remaining 70 per cent going to cooling, backup, etc. The last few years has seen rapid learning in warehouse-size data centres on the design of cooling systems (Google, 2009), environment monitoring (Liu, 2007), and backup with the result that power utility efficiency is improving.

SWOT ANALYSIS

Strength

1.      Shared computer resources

Instead of wasting precious and costly computing power, an inherent drawback of the current client server model, cloud computing allows for a more efficient and affordable use of computing resources.

2.      Cost savings

The end user is no longer burdened with the expense of maintaining and updating servers, data centres and software. Instead, the cloud computing provider carries these IT costs, while organisations simply pay a low monthly subscription fee.

3.      No licensing

The all-in one package based upon a subscription fee does away with complicated and expensive software licences that need managing and updating regularly.

4.      Reduced reliance on external consultants 

The provider now handles the updates and installation of software patches – dangerous security loop holes. Conflicts in software incompatibility is no longer your problem so there’s no need for external IT consultants to troubleshoot your business systems.

5.      Mobility

Data stored in the cloud can be accessed from virtually anywhere with an internet connection.

6.      Flexibility

The second a company needs more bandwidth than usual, a cloud-based service can instantly meet the demand because of the vast capacity of the service’s remote servers. In fact, this flexibility is so crucial that 65% of respondents to an InformationWeek survey said “the ability to quickly meet business demands” was an important reason to move to cloud computing.

7.      Disaster recovery

When companies start relying on cloud-based services, they no longer need complex disaster recovery plans. Cloud computing providers take care of most issues, and they do it faster. Aberdeen Group found that businesses which used the cloud were able to resolve issues in an average of 2.1 hours, nearly four times faster than businesses that didn’t use the cloud (8 hours). The same study found that mid-sized businesses had the best recovery times of all, taking almost half the time of larger companies to recover.

8.      Automatic software updates

In 2010, UK companies spent 18 working days per month managing on-site security alone. But cloud computing suppliers do the server maintenance – including security updates –themselves, freeing up their customers’ time and resources for other tasks.

9.      Cap-Ex Free

Cloud computing services are typically pay as you go, so there’s no need for capital expenditure at all. And because cloud computing is much faster to deploy, businesses have minimal project start-up costs and predictable ongoing operating expenses.

10.   Increased collaboration

Cloud computing increases collaboration by allowing all employees – wherever they are – to sync up and work on documents and shared apps simultaneously, and follow colleagues and records to receive critical updates in real time. A survey by Frost & Sullivan found that companies which invested in collaboration technology had a 400% return on investment.

11.  Work from anywhere

As long as employees have internet access, they can work from anywhere. This flexibility positively affects knowledge workers' work-life balance and productivity. One study found that 42% of working adults would give up some of their salary if they could telecommute, and on average they would take a 6% pay cut.

12.  Document control

According to one study, "73% of knowledge workers collaborate with people in different time zones and regions at least monthly". If a company doesn’t use the cloud, workers have to send files back and forth over email, meaning only one person can work on a file at a time and the same document has tonnes of names and formats. Cloud computing keeps all the files in one central location, and everyone works off of one central copy. Employees can even chat to each other whilst making changes together. This whole process makes collaboration stronger, which increases efficiency and improves a company’s bottom line.

13.  Security

Some 800,000 laptops are lost each year in airports alone. This can have some serious monetary implications, but when everything is stored in the cloud, data can still be accessed no matter what happens to a machine.

14.  Competitiveness

The cloud grants SMEs access to enterprise-class technology. It also allows smaller businesses to act faster than big, established competitors. A study on disaster recovery eventually concluded that companies that didn’t use the cloud had to rely on tape backup methods and complicated procedures to recover – slow, laborious things which cloud users simply don’t use, allowing David to once again out-manoeuvre Goliath.

15.  Environmentally friendly

Businesses using cloud computing only use the server space they need, which decreases their carbon footprint. Using the cloud results in at least 30% less energy consumption and carbon emissions than using on-site servers. And again, SMEs get the most benefit: for small companies, the cut in energy use and carbon emissions is likely to be 90%.

Weakness

1.      Legacy systems

Small and medium-sized organisations are more likely to embrace the benefits of the cloud than larger companies which may have complicated legacy systems.

2.      User attitude and control

Organisations will still need to have ‘control’ over data and information to meet business, legal and regulatory requirements. For many, the idea of giving up control of the hardware that carries business critical data and outsourcing confidential customer data to a third party is an unsettling concept.

3.      Global economy

All segments of the cloud computing market – Software as a Service (SaaS), Infrastructure-as-a-service (IaaS) and Platform as a Service (PaaS) - will be influenced by the overall state of the economy and global demand for IT services.

Opportunities

1.      Agility and flexibility

Smaller firms are nimble and thus more easily able to move to the cloud and take advantage of cloud computing many cost-saving benefits.

2.      Growth in cloud services

Cloud services will continue to grow with increasing competition from both established players and new entrants. Some observers estimate that the cloud market will top $270 billion in 2020 with SaaS offering more growth opportunities than any other segment

3.      Consolidation in legal and regulatory environment

We will see the publication of more business guidance from law makers and regulators over the next few years. The UK Information Commissioner has already published his Guide to Keeping Personal Information Online and the European Commission is currently looking into providing standard contracts for cloud services.

Threats

1.      In house IT Personnel

Many IT professionals will need to re-invent themselves as organisations do away with expensive IT Departments.

2.      Data Protection

European Union (EU) law states that organisations can only transfer data outside the EU if that country’s data protection laws are adequate (to European standards). With cloud computing, you don’t know where in the world your data is held even though you are still liable for it.

3.      Ediscovery

Should a court or tribunal require your organisation to produce data or information (e.g. to defend allegations of breach of contract or for an employment disciplinary), can it retrieve them easily and guarantee that they meet evidential standards?

4.      Security

How secure is your data? What track record does you cloud supplier have in the technology markets. No type of data storage system is risk free and for that reason, absolute security is impossible. 

QUESTION 1 : What business benefits do cloud computing services provide? What problems do they solve?

Cloud computing has become a standard method of software operation for many businesses. It offers many significant advantages, such as a potential cost savings, ease of sharing data and applications, quickly find the desired information, automatic backups, reduced support and maintenance costs and improve the efficiencies.

In the case they give us an example which uses cloud computing at the marketplace that is Amazon. Amazon they use the Web services division (AWS) to get flexible computing power and data storage. This cloud application helps Amazon get a large amount of computing resources. According to the customer provided information, the AWS can help Amazon separate, allocate and arrange these resources. The AWS also can help Amazon’s computing resources. On the one hand, Cloud computing has brought a lot of convenience for Amazon, making them save costs and increase profits. 

Moreover, cloud computing let Amazon spend more time on other work which had more value. Because of that using cloud computing can store large amounts of data and information, many companies are using cloud computing. Cloud computing helps us build a large database, and can help us to quickly find the desired information. This improves the work efficiency. “Big Data analytical techniques are being used to deliver more detailed data and deliver it quicker”(Top 10 business reasons to move to the cloud). Another example for using the cloud is that it can help the company save cost, like the Outback company who used the cloud “to avoid taxing in-house system unnecessarily”. In the case, the Zynga Company uses cloud computing to automatic backup data and transmits data. “Storing information in the cloud gives you almost unlimited storage capacity” (Cloud Computing - Is it Really All That Beneficial?). Cloud computing also can reduce support and maintenance costs by storing large amount of data and information as backup to improve the efficiencies.

When a new game is in the test phase and the company is not sure how many customers, they use the Amazon cloud. “Then once game traffic stabilizes and reaches a steady number, they would move the game on to their private zcloud”. This cloud transfer can help the Zynga Company solve the space storage problems, and only pay for the resources it ends up using. Using the cloud to transfer one game’s large data is easier than using other old applications. In the case, the InterContinental company use the cloud to provide customers with more convenient services. According to use the cloud, the InterContinental company lets their customers receive data faster if the data is located on a server that is physically close to them. With the development of society, more and more multinational companies are using the cloud, not only because of cost savings, but because people worldwide can access the cloud, provided they have an Internet connection.

QUESTION 2 : What are the disadvantages of cloud computing?

Using the cloud computing, the two major disadvantages are security and reliability. In this case study, Amazon's cloud service has shown significant outages in 2011 and 2012, causing serious consequences. There are many large sites are using Amazon's cloud computing, so Amazon's cloud computing failure will not only affect  Amazon, but also spread to many other companies and have a great impact on them. It also because the user loses control over the software application and becomes dependent on the provider to maintain, update and manage it. If something goes wrong, the user does not have direct access to the software and must depend on the provider to fix the problem. If the provider is unresponsive or unable to fix the problem quickly, the user can experience significant issues. According to the Paris International Group of a report, after investigation they found that each year there are about ten hours or more the server fails. Even this small amount of downtime can lead to large revenue losses for firms that need 24/7 availability. 

Another important issue is security. “By leveraging a remote cloud based infrastructure, a company essentially gives away private data and information, things that might be sensitive and confidential. It is then up to the cloud service provider to manage, protect and retain them, thus the provider’s reliability is very critical.”(Advantages and Disadvantages of Cloud Computing – Cloud computing pros and cons) In addition to these two major drawbacks, another drawback is that cloud computing is prone to attack. “Store information in the cloud could make your company vuln  erable to external hack attacks and threats.” As we know, the Internet is virtual, so we do not know what is safe. Cloud computing can also bring substantial risks in the privacy and confidentiality areas. By using a cloud system, your company’s sensitive data and information will be stored on third-party servers, and you will probably have very limited knowledge or control regarding this information. If the provider has inadequate security or encryption systems or procedures, or if a breach of these systems or procedures occurs for any reason, your company’s private and confidential data may become compromised. This could have devastating effects, and could cause legal problems for your company if third party confidential information (for example, customer information) is compromised.

QUESTION 3 : How do the concepts of capacity planning, scalability, and TCO apply to this case? Apply these concepts both to Amazon and to subscribers of its services.

Capacity planning is defined as the process of predicting when a computer hardware system becomes saturated to ensure that adequate computing resources are available for work of different priorities and that the firm has enough computing power for its current and future needs. Indeed, Amazon must plan its future needs to be capable of providing sufficient computing power for both AWS and Amazon retail services, a lack of which will result in the a fore mentioned rejection by subscribers. 

Related to capacity planning is scalability, which is defined as the ability of a computer, product, or system to expand to serve a large number of users without breaking down. Scalability is a ability of a system, network or process to handle a growing amount of work in capable manner or its ability to be enlarged to accommodate that growth. Scalability relates to both Amazon and AWS subscribers. Amazon must be able to provide its customers with services that are scalable, as it claims to do on its website: “Take advantage of our massive compute capacity and storage to build whatever kinds of applications your business demands, no matter how fast it grows or how big it gets”. 

Total Cost Ownership (TCO) is a financial estimate intended to help buyer and owners determine the direct and indirect cost of a product or system.

Amazon must provide hardware capacity planning and scalability. With the development of information technology, Amazon will have more and more customers. Not just Amazon, but Amazon's customer requires a large database to store a variety of data and information. This will help the company grow. Amazon must bear the total TCO of its services, while Amazon is also needed to maintain the profitability of the company. However, the services' subscribers benefit from not having to worry about these issues.

QUESTION 4 : What kinds of businesses are most likely to benefit from using cloud Computing? Why?

As information technology and social development, there have been more and more companies need cloud services. First, the information Internet companies need to use cloud services, such as Facebook, Google, Instagram, Blogspot, Ebay, etc. Because the cloud computing can store large information, and share the information. Second, large multinational corporations, one of the advantages about the cloud computing is that people from around the world can get a faster connection. Cloud services can help employees of multinational corporations to establish good communication channels and share the company's resources. This saves the cost of the work to help multinational companies, improve work efficiency. Meanwhile, cloud computing is not perfect, it is sometimes also appear outage. Therefore, it is recommended to use cloud computing company “would be a major risk consider using another computing service as a backup.” Enterprise-class business cloud services can be hugely beneficial, even for quite small businesses. If data security, complete technical management and maintenance, including user support, and high availability and reliability of the cloud-based software applications are important to your business, then integrated cloud services will be an excellent fit. The business can have very sophisticated and highly available IT, which can be flexibly provisioned and accessed from any device at any time for a monthly fixed price per user – it dispenses with the need for upfront capital expenditure on IT related hardware, software and overheads.

Microsoft and Google are focusing on ‘commodity cloud services:’ basic functionality limited customisation potential. Their business model is based on user bases of millions of users at very low prices. In fact, competition will be almost exclusively on price, which means levels of customer service and support may be low. The offerings from these companies can without question meet the needs of some businesses, but they shouldn’t be seen as a universal solution. These companies have created much greater awareness of the cloud model for IT but, at the same time, they have also created an expectation that all cloud services will be very low cost. The reality is that enterprise-class sophistication and customised services that will fit perfectly with developed business processes will cost substantially more than basic ‘out-of-the-box’ software functionality that can’t integrate with other parts of a company’s IT infrastructure.

CONCLUSION

The use of cloud computing utility has increased significantly in recent years and it appears to be a natural evolution of the data centre to execute computing and storage in a more scalable way. With such a significant increase, the market is growing quickly and more companies are providing new services with better features, including isolated services.

With greater flexibility, lower infrastructure cost, and lower operations overhead, there’s a lot to love about a move to a cloud architecture and with private and hybrid cloud options offering all the control and transparency an organization could want, there’s no reason to fear cloud computing anymore. We predict cloud computing will grow, so developers should take it into ac-count. Regardless of whether a cloud provider sells services at a low level of abstraction like EC2 or a higher level like AppEngine, we believe computing, storage, and networking must all focus on horizontal scalability of virtualized resources rather than on single node performance.