Case 6: Should Businesses Move to the Cloud

About Cloud Computing

Cloud computing is a general term for anything that involves delivering hosted services over the Internet. These services are broadly divided into three categories: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS). The name cloud computing was inspired by the cloud symbol that's often used to represent the Internet in flowcharts and diagrams.

A cloud service has three distinct characteristics that differentiate it from traditional hosting. It is sold on demand, typically by the minute or the hour; it is elastic -- which means that a user can have as much or as little of a service as they want at any given time; and the service is fully managed by the provider (the consumer needs nothing but a personal computer and Internet access). Significant innovations in virtualization and distributed computing, as well as improved access to high-speed Internet and a weak economy, have accelerated interest in cloud computing.

A cloud can be private or public. A public cloud sells services to anyone on the Internet. (Currently, Amazon Web Services is the largest public cloud provider.) A private cloud is a proprietary network or a data center that supplies hosted services to a limited number of people. When a service provider uses public cloud resources to create their private cloud, the result is called a virtual private cloud. Private or public, the goal of cloud computing is to provide easy, scalable access to computing resources and IT services.

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

The tiny internet start-up companies and smaller companies are benefited do cloud computing, due to tight budgets have prevented many enterprises from making IT investments, such as new hardware or the latest version of business-critical software. The cloud computing has become a way for enterprises to more cost-effectively upgrade their IT infrastructure, compared to the price tag of a forklift upgrade of in-house hardware and software. The process of enterprise harness simply and saving cost of no longer need to build a data center and handle all of the maintenance and upkeep of IT infrastructures by themselves. Another reason is utility pricing. By do cloud computing, enterprises can easily scale up or down to meet their changing needs. Cloud providers offer best-in-breed IT infrastructure. Because the underlying infrastructure is leveraged across many organizations, the cost per organization is a fraction of maintaining IT infrastructure in-house. The enterprise just pays for exactly what they use. 

What are the disadvantages of cloud computing?

Possible downtime

Cloud computing makes your small business dependent on the reliability of your Internet connection. When it's offline, you're offline. If your internet service suffers from frequent outages or slow speeds cloud computing may not be suitable for your business.

Security issues

How safe is your data? Cloud computing means Internet computing. So you should not be using cloud computing applications that involve using or storing data that you are not comfortable having on the Internet. Established cloud computing vendors have gone to great lengths to promote the idea that they have the latest, most sophisticated data security systems possible as they want your business and realize that data security is a big concern; however, their credibility in this regard has suffered greatly in the wake of the recent NSA snooping scandals.

Cost

At first glance, a cloud computing application may appear to be a lot cheaper than a particular software solution installed and run in-house, but you need to be sure you're comparing apples and apples.

Inflexibility

Be careful when you're choosing a cloud computing vendor that you're not locking your business into using their proprietary applications or formats.

Lack of support

In These Issues Need to be Resolved before Cloud Computing Becomes Ubiquitous, (OPEN Forum) Anita Campbell writes, "Customer service for Web apps leaves a lot to be desired -- All too many cloud-based apps make it difficult to get customer service promptly – or at all. Sending an email and hoping for a response within 48 hours is not an acceptable way for most of us to run a business".

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 aforementioned 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 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”

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

1. Data Loss Prevention

Loss of data in an information economy can be one of the most devastating things that can happen to a business. A company that previously had a great reputation could quickly lose its popularity if it loses a significant portion of its data. This is especially true if data about customers and business partners is lost, which can bring the daily grind of commerce to a halt. Since backing up data using cloud computer is incredibly easy, and requires fewer upfront costs, it will be the better choice for many companies.

2. Applications

It is becoming more common for businesses to choose the "software as a service" model rather than the in house model. While common business sense might suggest that it makes more sense to pay for a product once and move on, rather than paying a monthly fee, this is not necessarily the case with software, especially in rapidly changing fields such as customer relationship management. These tools are constantly being improved upon, and choosing the pay as you go model allows a business to use the latest software at all times.

3. Tracking Employee Performance

Global companies hoping to monitor the performance of employees, sales force, and various locations throughout the globe can highly benefit from cloud computing. The bird's eye view provided by this kind of network software was very difficult to implement before the existence of cloud computing. Today, it is surprisingly simple to implement, regardless of the size of a business.

4. Online Business

It shouldn't be surprising to say that online businesses will use cloud computing. The primary benefit is web server space. The costs of purchasing a sever and getting a website up and running are high, especially if a significant level of traffic is expected. Using cloud computer for hosting is the ideal solution, especially for smaller businesses.

5. Collaborative Businesses

In order for large scale projects to be completed, it is often necessary for people who are geographically separated from one another to collaborate. Bigger businesses have the option of flying everybody into the same room, and there will probably always be cases where this will be necessary, but there are many cases when it isn't. Applications running on cloud based software make this process very convenient. With the ability to communicate and share files over the network, it is sometimes possible to avoid the costs of face to face communication.