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STRATEGIC IMPORTANCE OF CLOUD

COMPUTING IN BUSINESS

ORGANIZATIONS

Research Paper BA633 Information Systems Infrastructure

 

Venkata Vallabhaneni

12/17/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Abstract:

Cloud computing is a recent trend in Information Technology that has the potential to change a large part of IT industry making software even more attractive as a service. Cloud computing is no more about technology, it is about business values like business agility, new business models, less operational issues, better use of resources, and fewer capital expenses. It is predicted that by 2018 the global market for cloud computing should reach as high as $200 billion. This paper discusses the architecture, characteristics of cloud computing, cloud technology service models, and deployment models. It also discusses the advantages, limitations, and impact of cloud technology on businesses.

1.      Introduction:

             The evolution of IT is a continuous process. Cloud computing offers services to the companies to manage data, applications, and technology. Cloud is self-service oriented and instead of running applications on PC or a LAN, they share multi-tenant. To use a cloud application, it should be logged in, customized to business needs and can be used. Cloud computing allows access to data and programs outside of personal computers. It can deliver hosted services over the internet. It is less expensive since the customer does not pay for all hardware, software, and maintenance of technology. Cloud is generally provided by large distributed data centers which are often organized as grids. The cloud is built on top of the grid services. Virtualization is the key concept of cloud computing. Cloud providers have physical machines in the data center. Virtualization is provided on top of this physical machines and given to cloud users. Many cloud applications are gaining popularity for their availability, reliability, scalability, and utility models.

2.      Architecture:

           National Institute of Standard and Technology (NIST) Cloud computing architecture mainly focuses on “what” cloud services provide but not “how” to design or implement. This architecture is a tool for describing, discussing, and developing system-specific architecture using a common framework of reference. The objectives of cloud computing reference architecture are:

?     To understand various cloud services in the context of an overall cloud computing conceptual model.

?     To provide a technical reference for consumers to understand, discuss, categorize, and compare cloud.

?     To provide standard analysis for security, interoperability, portability, and reference implementations.

        

                              Fig:1 NIST Cloud computing reference architecture

Figure 1 describes five major participants in terms of roles and responsibilities:

Cloud Consumer:  A person/organization that maintains a business relationship and uses services from cloud providers.

Cloud Provider: A person/organization that makes cloud services available to an interested party.

Cloud Auditor:  An entity that conducts an independent assessment of cloud services, information systems operations, performance and security of the cloud implementation. Cloud Broker:  An entity that negotiates the relationship between cloud consumer and cloud provider. They manage the use, performance, and delivery of cloud services.

Cloud Carrier: It provides connectivity and transport of cloud services from cloud providers to cloud consumers.

3.    Characteristics of Cloud Computing: 

?     Broad Network Access:  Capabilities are available and accessed through the internet using standard mechanisms that promote heterogeneous thin or thick client platforms as well as other cloud-based services.

?     Rapid Elasticity:  In cloud computing, there is an unlimited availability of resources. It gives the ability to reduce or increase the resources when needed. The customers pay only for the resources used.

?     Measured Service:  Cloud computing systems are adaptive systems. They optimize the use of resources. A user can monitor, control, and report the use of resources providing transparency to both provider and consumer of the utilized services.

?     On-Demand Self-Service:  Any computer resource such as processing power, storage space, a bandwidth that are contracted can be easily availed without any human interactions.

?     Resource Pooling:  The provider’s computing resources use multi-tenant model. There is a degree of location independence. The customer does not exactly know the location of the provided resources. They may be able to specify the location at a higher level like the country and data center. The pooled resources are geographically spread and may be shared by several customers. The resources are assigned to customers depending on demand.

 4.    Cloud Technology Service Models:

 Software as a Service (SaaS):  The consumer has the capability to access provider’s applications on the cloud infrastructure. The applications are accessed from various client devices through web browsers. SaaS eliminates the process of software installation, upgrades, maintenance, and patches. Instead of obtaining server licenses for the software it uses, it gets the same functions from cloud services.

Platform as a Service (PaaS):  It is an operating system in the cloud.  It provides database and component services for use by applications. The consumer can deploy onto the consumer-created cloud infrastructure or acquire applications created using programming language and tools supported by the provider.

Infrastructure as a Service (IaaS):  The consumer is provided to provision processing, storage, networks, and other resources where the consumer can deploy and run operating systems and applications. It enables customers to combine basic computing services to build highly adaptable computer systems.

 

 

Figure 2: Presented by CEO John Keagy at CloudWorld09

 

    5.    Cloud Deployment Models:

   Public Cloud:  It is available to large industry groups and the public. It is owned by the service provider. The infrastructure and the control of the cloud are done by the service provider.

    Private Cloud:  It is operated by an organization. It is managed by the organization or the third party. It exists on premises or off premises. The service provider is only responsible for the infrastructure and not for the control.

    Community Cloud:  The infrastructure is shared by several organizations that have specific concerns and supports specific community. It is managed by the organization or the third party. It exists on premises or off premises.

    Hybrid Cloud:  The infrastructure is a combination of two or more clouds (Private, community, or public). They remain as unique entities but are bound together by standardized technologies that enable data and application portability.

         6.    Reasons for Emergence of Cloud Technology:

               Cloud computing has numerous benefits when compared to traditional methods.

Cost Savings:  Cloud computing eliminates the need to pay for disk and storage space.  It also eliminates the need to pay for buying or installing software. Cloud services have pay per use system which means the service only needs to be paid when used. With SaaS, there is also no need to install any software on the desktop which saves both time and money.

 Ease of Use:  Since all the business data is stored in the cloud, it makes easy for the employees to access the data anywhere from any devices that have an internet connection. The cloud is highly adaptable. If more space is required, it is instantly available for a slightly higher fee per month.

Increased Storage Capacity and Automation:  The cloud is highly flexible as it offers unlimited storage capacity. It automatically updates the software when necessary and eliminates manual interference. The file syncs and file backups are fully automated.  Agility, Flexibility, and Scalability:  Employees can access the data and files anytime, anywhere by giving them more flexibility. Cloud usage is scalable based on the requirements and can be paid for only what is used. 

Freeing up the employees:  Since cloud does most of the things like automating software’s, maintaining servers, and fixing bugs, the employees can spend more time on strategic initiatives to increase company’s profitability.

 

 

 

7.          Advantages of Cloud:

?     It benefits the small firms to enter compute-intensive business analytics with minimum cost. It also enables third world countries to have access to IT services which were not readily available.

?     It reduces the upfront capital investments for companies leading faster time to market.

?     It can lower IT barriers to innovation E.g. Apps like Facebook, YouTube, Mint.

?     The deployment of the services for enterprises is very fast since the computing resources are managed through software.

?     Delivers services through new kind of applications which were not possible earlier. E.g. Mobile interactive applications like humidity and stress sensors.

8.          Limitation of Cloud:

?     Downtime:  Since cloud is internet based, it is very much dependent on internet connection. So, cloud platforms can fail for many reasons. This can be minimized by getting Service Legal Agreement (SLA) from provider guaranteeing uptime of

99.55%.

?     Security and Privacy:  Cloud provider must manage and safeguard the underlying hardware infrastructure of deployment and the customer is responsible for remote access. Cloud hacks can be prevented by providing correct access to resources and services, by providing limited access based on user context, adding security to the device, and adding network protection.

?     Vulnerability to Attack:  In cloud computing, every component can be accessed through internet and, so it is vulnerable to attack. The best ways to reduce cloud attacks are by identifying threats by correlating alerts with global security, by protecting information, by automating security, and by authenticating identities.

?     Limited Control and Flexibility:  Cloud users have limited access and control over the function and execution of cloud infrastructure. Cloud providers can impose restrictions on what customers can do with the deployments. Customers have control on management of their applications, data, and services but not on the infrastructure.

?     Platform Dependencies:  Vendor lock-in is another disadvantage of cloud computing.  The differences in the vendor system makes it hard to migrate from one platform to another platform. The migration could expose data to additional security and privacy vulnerabilities. This can be decreased by properly understanding what vendors are selling to avoid vendor lock-in problems. 

?     Cloud Computing Costs:  Cloud computing is costly for small business and short-term projects. Though it reduces staff and hardware costs, the overall price can end up higher than expected. 

9.          Impact of adopting Cloud Technology in Business Organization: 

                    Below are few major consequences of adopting cloud in business organizations:

?     Ease of Use and Convenience:  Cloud provides easy access to data for small businesses and for the businesses which work outside the offices. The need for employees to have access from remote locations and increased number of online transactions paved path for cloud computing. Accounting and finance has been outsourced to cloud allowing employees to spend more time on strategic work and initiatives. Cloud allows access from any geographical location, any device, and from any organization.

?     Cost Reduction:  Cloud computing reduces cost for small firms that uses business analytics and intelligence. Small businesses can afford applications like Enterprise Resource Planning (ERP), CRM (Customer Relationship Management), SFA (Sales Force Automation), SCM (Supply Chain Management) due to economical subscription fees. Hardware and software resources are easily accessible due to no upfront capital investment. IaaS reduces capital expenses and IT costs. 

?     Reliability:  The cloud is more reliable since it is available round the clock. Cloud storage solutions have data redundancy built-in so that the files are always obtainable even at the times of network downtime, and power failures. 

?     Security and Privacy: Cloud security reduces the risks of authentication and encryption. Security is increased by monitoring activities, tracking transactions, providing selective access to users, and choosing strong passwords. 

?     Sharing and Collaboration:  With the increase in social media, and smartphones small companies have increased collaboration among the team members. Cloud file storage allows various stakeholders to access and share files easily. Document sharing and editing of the same document at the same time by different stakeholders as possible.

       Conclusion:

      Cloud computing is certainly making an impact on businesses by slowly penetrating their business strategy. Even with the few disadvantages, it has the capability for many business models. As the cloud evolution takes place and more cloud providers emerge, the costs will continue to fall, and reliability and security standards will improve. However, a  detailed research and planning should be done before bringing the cloud into the businesses.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 References:

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Ingthorsson.O (2012, June 25). 5 Reasons Cloud Computing Is Key to Business Success, from http://www.datacenterknowledge.com/archives/2012/06/25/5-reasons-cloud-computing-is-key-to-businesss-success.

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