Cloud computing is a new IT paradigm that allows IT infrastructure to be provided through the flexible pay-per-use model. The use is also fresh in the industry, as it has not yet been fully understood. This paper aims to educate the industry on the value of cloud computing to business, starting by defining it, outlining its pros and cons, and describing its applicability. The paper also discusses how to manage and secure devices on the cloud, cloud economics, and how to begin one’s journey to the cloud.
Table of Contents
- 1.0. Introduction
- 2.0. Pros and Cons of Cloud Computing
- 2.1. Infrastructure as a service
- 2.2. Platform as a Service
- 2.3. Software as a Service
- 2.4. Advantages of cloud computing
- 2.5. Disadvantages of Cloud computing
- 3.0. Applicability
- 4.0. Applications in the Industries
- 4.1. Amazon Web Services
- 4.2. Netsuite.com
- 5.0. The Value of the Cloud for Business
- 6.0. Managing and Securing Cloud Services
- 7.0. Managing Desktops and Devices in the Cloud
- 8.0. Virtualization and Private Clouds
- 9.0. Banking on Cloud Economics
- 10.0. Starting Your Journey to the Cloud
- 11.0. Conclusion
Cloud computing is arguably the most popular emerging computing paradigm of the last decade (Hayes, 2009) and Gartner hype cycle peak technology (Schonfeld, 2008). Cloud Computing seeks to reduce the costs associated with hardware and software resource management by moving the computing resources from on-site to on-network by using a variety of technologies offering everything as a service under what might be generalized as ‘XaaS’ (Rimal et al., 2009). X could refer to software, platform, hardware, Infrastructure, database, business, framework, organization, and so on.
One of the significant challenges for cloud computing proponents has been to clear the confusion over the definition of cloud computing. Geelan (2009 ) analyzed descriptions from 21 experts in cloud computing and none of them provided a unified explanation as they all seemed to focus on various aspects of the cloud. We shall use the concept suggested by Vaquero et al to remove ambiguity with regard to what the cloud is in this study (2009) in this paper. Vaquero et al. (2009) built upon Geelan (2009) work and additional definitions from other experts to arrive at the description below:
Clouds are a large pool of virtualized resources (such as hardware, development platforms, and services) that are easily utilizable and accessible.
These resources can be dynamically reconfigured to adjust to a variable load (scale), allowing for optimum resource utilization. This pool of resources is typically exploited by a pay-per-use model in which the Infrastructure Provider offers guarantees using customized Service Level Agreements (SLAs) (Vaquero et al., 2009, p.51).
2.0. Pros and Cons of Cloud Computing
To appreciate the advantages of cloud computing and to analyze its disadvantages, we first have to comprehend the different modes of delivery of this new paradigm. Each of these forms of transportation offers various advantages and disadvantages to multiple businesses.
Cloud computing allows the delivery of computing resources as services in the form of Infrastructure as a Service (IaaS), Platform as a Service (PaaS), or Software as a Service (SaaS) depending on the abstraction level the client wishes for.
Figure 1: Cloud abstraction layers
2.1. Infrastructure as a Service
Under IaaS, instead of the traditional purchase of physical servers and software needed to set up a datacentre, a business opts to access this computing infrastructure from a Cloud provider through software known as Application Programming Interfaces (APIs). Examples of IaaS providers are Amazon S3, Rackspace, and Flexiscale.
2.2. Platform as a Service
In PaaS, the Cloud provider avails all the facilities that an application developer would require to build, test, and deliver applications over the Internet from a single cloud. This means supporting the entire software lifecycle in the same computational environment, which reduces the cost of growth, project risk, and time-to-market (Bhattacharjee, 2009). Examples of PaaS providers are Microsoft Azure and Google App Engine.
2.3. Software as a Service
This is the most common form of Cloud services delivery; here, applications are delivered across the Internet with the web browser being the interface for delivery(Gerhardt, 2008). Examples of SaaS providers are Salesforce, NetSuite, and Google Apps.
2.4. Advantages of Cloud Computing
To start with, cloud computing gives companies / XaaS users the ability to develop new business models to expand their markets or meet new consumer demands. Accompanying the emergence of Web 2.0, a new category of consumers that was rapidly increasing in size and influence and referred to as “Prosumers” also emerged. A prosumer is someone who blurs the distinction between a producer and a consumer, primarily through the adoption of Web 2.0 technologies such as social networking, video on demand, blogging, mobile communications, virtual realities, and so on (Gerhardt, 2008). SaaS enables services to be accessed anywhere and at any time, more open data sharing and collaboration, and better data storage redundancy in the Infrastructure that meets the demands of such new and growing markets.
Secondly, cloud computing offers organizations the capacity to meet the increasing need to perform analytics. Increasing proportions of computing resources are now being spent on understanding customers, supply chains, buying habits, etc. Whereas this growth of decision support requires higher computing power, many IT departments are finding it challenging to match these new business requirements while maintaining control of their IT spend (Staten et al., 2008). With the cloud, computing businesses need to only hire the computing power on demand.
Another advantage of cloud computing is that it supports one of these centuries great game changers; mobile technologies. Mobile applications require more resources than can be made available on the devices for real-time information processing and interactivity to enhance user and community experiences (Kovachev et al., 2010). With cloud computing, businesses can exploit mobile technologies’ use with the comfort that the extra computing power shall be derived from the cloud.
Finally, the commonly cited advantage of cloud computing is that it enables businesses to convert IT from fixed costs to operating expenses. This implies that consumers will be able to pay for the use of computing resources on a short-term basis and relinquish them as needed.
2.5. Disadvantages of Cloud Computing
The commonly cited reason for business apathy towards the cloud is data confidentiality, security, and trust. First, the non-uniform structure of legislations across the world, such as the United States’ Patriot Act, makes European businesses unwilling to move their data into the cloud. Cloud providers are trying to work around this by building data centers in more parts of the world, but this only solves the legislation aspect.
Then there is the difficulty of winning consumer trust.
The end-user perspective of trust makes this a highly personal property. According to Savola et al. (2010), the most critical aspects that enforce belief in the cloud are good security and privacy.
Another disadvantage of cloud computing is the lack of a variety of services. With the technology uptake still low, many application developers have shied away from the cloud, reducing the range of “every day” enterprise applications available (Bhattacharjee, 2009). This means that for organizations contemplating moving to the cloud, they must be willing to use a hybrid system that comprises both off-network and on-network solutions.
The switching costs could be included as a disadvantage of cloud computing, depending on the size of the business and its previous investment in IT resources. To migrate to the cloud, enterprises have to be prepared to incur the charge of migrating data and application and the cost of restructuring their organizations to fit this new computing paradigm.
There have been lots of successful work done with regards to the progress of Cloud computing over the last few years, and the future appears brighter. The significant barriers to the adoption of cloud computing have been identified and solutions proposed.
Cloud computing bears the ability to make commercial sense to Cloud providers irrespective of the enormous capital required to build and run them. Cloud providers can profit by statistically multiplexing among a large group of customers (Armbrust et al., 2009). On the other hand, new software start-ups are especially advantaged by the Cloud computing model because it removes the need to invest in acquiring software and hardware slowly. With Cloud computing, these smaller companies now have access to competitive IT infrastructure, despite their fewer resources, and can still quickly ramp demand up or down as needed.
Furthermore, Leavitt (2009) predicts that the current challenging economic climate will boost the appeal of Cloud computing to companies running on tight budgets. He adds that companies want to spend less of their resources on the traditional IT vendor management, procurement, estimating future needs, and managing large in-house IT staff.
4.0. Applications in the Industries
Currently, there are many companies offering cloud computing services. These companies could be categorized as either cloud providers or SaaS providers. Cloud providers are the large internet companies that have invested in massive data centers to leverage economies of scale and similar huge investments in large-scale software infrastructure and technical human resources to run these data centers. Examples of these companies and their services are Amazon Web Services, Google App Engine, and Microsoft Azure. On the other hand, SaaS providers are those organizations that develop applications on the cloud and provide them to SaaS users on demand. Examples of SaaS providers are SalesForce.com and NetSuite.com.
4.1. Amazon Web Services
Amazon pioneered the cloud computing industry and dominates the industry with its Amazon Web Services, a set of four services: Elastic Compute Cloud (EC2), Simple Storage Service (S3), Simple Database Service (SDB) and Simple Queue Service (SQS).
Amazon EC2 provides on-demand processing power to developers. It gives developers complete control of their computing resources while reducing the time needed to obtain and boot new server instances to minutes (Sainath et al., 2010). Amazon S3 offers a simple web services interface that can be used to store and retrieve any amount of data, at any time, from anywhere on the web. Amazon S3 allows read, write, and delete objects, and these objects can be made private or public, or rights can be granted to specific users of each particular purpose. Amazon SQS offers a highly scalable, reliable, hosted queue for storing messages as they travel between computers. Finally, Amazon SDB is a web service for running queries on structured data in real-time. It works closely with the Amazon S3 and EC2 providing the ability to collectively store, process, and query data sets in the cloud.
Netsuite is a global leader in the provision of accounting, inventory, ERP, CRM, and eCommerce as SaaS. Its flagship product, Netsuite ERP, is the world’s premier cloud ERP solution. NetSuite CRM+ provides powerful Customer Relationship Management ( CRM) capabilities including sales force automation (SFA), marketing automation, customer care and service, and customizable configuration, all in single cloud CRM applications. (Anon, 2011).
5.0. The Value of the Cloud for Business
As elaborated under the advantages of cloud computing, the value of this new paradigm to modern businesses is numerous. First, cloud computing offers a platform that supports the high need for analytics in companies. As Staten et al. (2008) argue, most businesses are faced with the dilemma of controlling their IT spend while at the same time needing to invest in better IT infrastructure to be responsive to the new business requirements. There is an increased need for computing resources to understand customers, suppliers, buying habits, and so on.
The second value of cloud computing to business is that it offers a highly scalable and affordable IT infrastructure to meet the spikes in market demand while minimizing the risk of overinvestment in IT. Cloud computing allows deploying SaaS and scaling on-demand without building or provisioning a datacentre (Armbrust et al., 2009). The paying for the use of computing resources on a short-term basis as needed and releasing them as required rewards businesses with the flexibility to let machines and storage go when they are no longer useful.
Finally, cloud computing supports the deployment of new business models and offers a platform for new application opportunities. Adoption of Web 2.0 technologies such as social networking, video on demand, blogging, mobile communications, virtual realities, and so on is a clear indicator of the new “low-touch, low-margin, low-commitment” self-service business model supported by cloud computing.
6.0. Managing and Securing Cloud Services
Managing security begins with policy, not with technology (Herrin, n.d.). Many a business leader believes that they need to purchase best-of-breed technology solutions to manage information security effectively. Instead of rushing to buy technology, Michael Schrage advises business leaders first to appreciate that information security starts with an organization’s culture for accessing and processing information and sound policies.
In cloud computing, end users’ data is stored in the service provider’s data centers rather than on the user’s computer. This naturally makes users concerned about their privacy. The concern over whether the Cloud environment can be made as secure as that for most in-house IT environments is downplayed by Armbrust et al. (2009). They state that the use of well-understood technologies such as encryption, Virtual LANs, and network middle-boxes could easily make the cloud as secure as that on any local data center.
Security depends on the level of abstraction that company acquires from the cloud. At the network level, the cloud provider will monitor, maintain, and collect information about the firewalls, intrusion detection, or/and prevention systems and data flow within the network. It is essential to collect information about system logfiles at the host level, to know where and when applications have been logged. At the application level, auditing application logs, which then can be required for incident response or digital forensics, are used (Almulla & Yeun, n.d.).
7.0. Managing Desktops and Devices in the Cloud
Every company today has to deal with employees from the low level to the corporate suites who want to use smartphones and iPads to conduct the business. Michael Schrage advises organizations to approach the management of desktops and devices in the cloud by creating scenario-driven use cases that illustrate how methods are used, what information is shared, and how it is used (Herrin, n.d.). Unlike in the past, when device management and device security were handled as two separate issues, organizations now need to renegotiate their roadmap to accommodate these two functions.
As a start, Schrage advises organizations to consider finding answers to the following key questions: What are the 20 most common uses for devices today? How do people want to use methods in the future? What data do employees want to access through devices? Who are the three highest-ranking employees using methods to access information in the cloud? And what are the most significant risks associated with frontline employee and executive activity (Herrin, n.d.)?
The good news for companies is that today numerous tools and technologies exist to help manage desktop and devices in the cloud. Having honest answers to the above questions and conducting use cases should enable organizations to shop more wisely for the precise device management and device security automation tools that will meet their specific needs. An example of a machine that an organization can use here is a virtual sandbox administrator (VBA). VBAs can monitor which applications come into the company, identify apps that are accessing data, and determine which applications initiate device-to-device connections.
8.0. Virtualization and Private Clouds
Virtualization refers to the abstraction of logical resources away from their underlying physical resources that make it possible for the dynamic creation, expansion, shrinking or moving of computing resources as demand varies (Rimal et al., 2009). Virtualization has existed in one form or another since the days of the IBM mainframe. Thus it is not a new phenomenon. It increases the agility and flexibility of computing resources that ensure scalability and high availability of resources (Rimal et al., 2009; Armbrust et al., 2009). The latest virtualization technologies allow different operating systems to be hosted on the same physical hardware at a datacentre. Virtualization can be of various types, such as server virtualization, storage virtualization, and network virtualization.
Private Clouds are internal datacentres of organizations that are not made available to the public (Armbrust et al., 2009). The drivers behind private clouds are large corporations that want to have greater control over their IT infrastructure. Such companies plan to create scalable computing networks in the wake of public providers including Amazon and Google. The technologies behind private clouds are virtualization for flexible management of resources and data center automation for the auto-provisioning of physical hosts. The companies also implement chargeback metering to enable them to see the real cost of IT and identity-based security to restrict access and thus enhance security (Knorr, 2010).
9.0. Banking on Cloud Economics
The commonly cited economic appeal of Cloud Computing is that it converts capital expenses to operating expenses. Armbrust et al. (2009) do not dispute this, though they argue that a better phrase that directly captures the buyer’s economic benefit is that cloud computing offers a pay-as-you-go model. First, the absence of up-front capital expense in cloud computing allows the enterprise to redirect this capital to core business investment.
Secondly, Cloud Computing offers the superior economic benefits of elasticity and transference of risk, especially the dangers of overprovisioning (underutilization) and under-provisioning (saturation) (Armbrust et al., 2009). With Cloud Computing, an organization can add or remove resources at a time and with a lead time of minutes rather than weeks. This enhances the accuracy of matching funds to workload. In real-world estimates of server utilization, the observation is that for many services, the peak workload exceeds the average by factors of 2 to 10 (Armbrust et al., 2009). Few companies purposely pay for less than the planned peak, so they must provide for the height and allow the capital to remain idle at non-peak times. This leads to increased waste of computing resources to handle the spikes in demand. Elasticity is valuable to both established companies and start-ups.
Under cloud computing, the risk of misestimating workload is shifted from the company that pays for the service to the SaaS provider and Cloud Provider. Other additional benefits to the cloud computing user are that: (1) it eliminates the penalty that a business will ordinarily pay for unexpectedly scaling down its operations; and (2) if new technologies or pricing plans become available to a cloud provider, existing applications and customers can benefit immediately from them without incurring capital expenditure (Armbrust et al., 2009).
10.0. Starting Your Journey to the Cloud
Dell (2011) suggests that an organization uses a three-step approach towards moving to cloud computing: investigation, experimentation, and adoption. In step one, research, the company needs to conduct a shared learning program where the executive and IT staff are taken through educational sessions to acquire an in-depth comprehension of cloud computing. Here too, the company conducts a thorough assessment of its current environment. The executives view cloud computing from a business perspective, whereas IT staff view it from a technical perspective. The organization then comes up with a strategic plan for using cloud computing.
The second step is experimentation. Armed with a deeper understanding of cloud computing from step one, and transparent business strategy and needs from business and technical perspectives, the company can now decide to start with a pilot project to test this new computing paradigm. The pilot project allows the firm to have the first-hand experience of the pros and cons of cloud computing without committing its financial resources (Dell, 2011).
The final step is adoption. It is only advisable to move to the adoption phase if the experimentation phase was successful. At this phase, we assume that the company has already assessed its needs and experimented successfully (Dell, 2011). The critical thing to remember here is that the adoption strategy adopted should be led by business needs and not technology. The business needs will help the organization decide whether to evolve current IT infrastructure or whether to build everything into the cloud from scratch. Other questions here include whether to move all functions to the cloud or just some of the services, whether to create a private cloud or outsource from a public cloud and so on once the company has decided how it would like to run its business in the darkness that is when it can begin looking for the technology that will match its business needs.
Cloud computing has made real the long-held dream of having computing as a utility. Under this new IT infrastructure, organizations do not have to make huge investments from the outset since they can easily acquire these computing resources using a pay-as-you-go model. This means that start-ups have lower entry barriers in so far as competing on IT infrastructure is concerned. That said, cloud computing has still got numerous obstacles that it needs to overcome. Winning consumer trust is probably the most significant challenge considering that this is mostly a subjective issue. Also, the lack of a variety of services on the cloud compared to traditional IT infrastructure may cause apathy towards adopting this new IT paradigm. The motivating fact is that Cloud providers are aggressively seeking solutions to reduce, if not to eliminate, these downsides of cloud computing.
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