Cloud Computing Effectiveness In Enterprises

Published Date: 02 Nov 2017

The research provides an insight into the cloud computing effectiveness in the enterprises.

As cloud computing is in a very nascent stage now many companies are reluctant in going on cloud. This research will provide an insight as to what exactly is cloud computing to the enterprises, what are the factors that affects the adoption of cloud computing and what steps the cloud providers are taking to reduce the concerns of the enterprises in going for cloud computing.

Mainly two factors will be discussed in terms of cloud computing effectiveness they are cost factor and security factor.

Chapter 1

Introduction

Cloud computing is the use of computing resources (hardware and software) that are delivered as a service over a network (typically the Internet).

Using software as a service (SAAS) in business model, users are provided access to application software and databases. The cloud providers manage the infrastructure and platforms on which the applications run. SaaS is sometimes also referred to as "on-demand software" and is usually priced on a pay-per-use basis. Generally subscription fee is used for pricing applications by Saas providers.

SaaS allows a business the potential to reduce IT operational costs by outsourcing hardware and software maintenance and support to the cloud provider. This will enable a business to reallocate IT operations to focus on other IT goals. In addition, the application is hosted centrally, so updates can be released without users having to reinstall new software. The drawback of SaaS is that the user stores their data on the cloud provider’s server. As a result, there could be unauthorized access to the data.

End users access cloud-based applications through a web browser or a light-weight desktop or mobile app while the business software and user's data are stored on servers at a remote location. Cloud computing allows enterprises to get their applications up and running faster, with improved manageability and less maintenance, and enables IT to more rapidly adjust resources to meet fluctuating and unpredictable business demand.

Cloud computing relies on sharing of resources to achieve coherence and economies of scale similar to a utility (like the electricity grid) over a network. At the foundation of cloud computing is the broader concept of converged infrastructure and shared services.

Characteristics

Cloud computing exhibits the following key characteristics:

Agility as the resources can be accessed on demand and quickly imparting agility to system.

Application programming interface (API) Smooth interaction between humans and machines.

Cost is one of the biggest advantages of cloud, several cost models exists like pay-as-you-go, subscription, etc.

Mobility which is the ability of users to access information from anywhere, anytime.

Virtualization technology allows for better utilization of already available hardware.

Multitenancy which means running of multiple instances on a single server thereby increasing our hardware efficiency.

Reliability which is a result of multiple sites where the data is stored thus increasing the redundancy and with it the reliability.

Scalability and elasticity which is basically scaling up according to the load administered.

Security as the data is centralized however it is still a debatable topic whether security aspect can be considered as an important characteristic while going for cloud.

Maintenance as the application can be directly delivered from the host’s location so managing the applications is relatively easier.

Architecture

http://upload.wikimedia.org/wikipedia/commons/thumb/7/79/CloudComputingSampleArchitecture.svg/325px-CloudComputingSampleArchitecture.svg.png

Cloud computing sample architecture

Cloud architecture, the systems architecture of the software systems involved in the delivery of cloud computing, typically involves multiple cloud components communicating with each other over a loose coupling mechanism such as a messaging queue. Elastic provision implies intelligence in the use of tight or loose coupling as applied to mechanisms such as these and others.

The Inter-cloud

The Inter-cloud is an interconnected global "cloud of clouds"[59][60] and an extension of the Internet "network of networks" on which it is based.[61][62][63]

Cloud engineering

Cloud engineering is the application of engineering disciplines to cloud computing. It brings a systematic approach to the high-level concerns of commercialisation, standardisation, and governance in conceiving, developing, operating and maintaining cloud computing systems. It is a multidisciplinary method encompassing contributions from diverse areas such as systems, software, web, performance, information, security, platform, risk, and quality engineering.

Service models

Cloud computing providers offer their services according to three fundamental models:Infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS) where IaaS is the most basic and each higher model abstracts from the details of the lower models.

Cloud computing layers.png

Infrastructure as a service (IaaS)

In this model the computers are provided by the service provider as abstraction of either a single or more than one virtual machine and some other resources.

Basically in infrastructure as a service the infrastructure part is provided by the service provider as a service to the client, the client then can install the programs or even operating system on his end to facilitate the access from his end. Usually the security aspect at the infrastructure end is provided by the service provider and at the application level is done by the client.

e.g. Amazon web services.

Platform as a service (PaaS)

In this model the service provider provides the platform, which includes the operating system, execution environment, database, etc, as a service to the client. This facilitates the developers to develop the application on the platform without even buying the platform.

E.g. Amazon Elastic Beanstalk

Software as a service (SaaS)

In this model the software is provided as a service to the customer. The service providers installs the applications on the client’s machine and the client can access these applications which are located on the cloud managed by the provider as and when they need. This model helps the client to save the cost of keeping unnecessary applications at his end and also he can use the application as and when he needs and pay for the same only when he has used the application.

E.g. Google Apps

Cloud clients

Users access cloud computing using networked client devices, such as desktop computers, laptops, tablets and smartphones. Some of these devices - cloud clients - rely on cloud computing for all or a majority of their applications so as to be essentially useless without it. Examples are thin clients and the browser-based Chromebook. Many cloud applications do not require specific software on the client and instead use a web browser to interact with the cloud application. With Ajax and HTML5 these Web user interfaces can achieve a similar or even better look and feel as native applications. Some cloud applications, however, support specific client software dedicated to these applications (e.g., virtual desktop clients and most email clients). Some legacy applications (line of business applications that until now have been prevalent in thin client Windows computing) are delivered via a screen-sharing technology.

Deployment models

http://upload.wikimedia.org/wikipedia/commons/thumb/8/87/Cloud_computing_types.svg/395px-Cloud_computing_types.svg.png

Cloud computing types

Public cloud

Public cloud applications, storage, and other resources are made available to the general public by a service provider. These services are free or offered on a pay-per-use model. Generally, public cloud service providers like Amazon AWS, Microsoft and Google own and operate the infrastructure and offer access only via Internet (direct connectivity is not offered).

Community cloud

Community cloud shares infrastructure between several organizations from a specific community with common concerns (security, compliance, jurisdiction, etc.), whether managed internally or by a third-party and hosted internally or externally. The costs are spread over fewer users than a public cloud (but more than a private cloud), so only some of the cost savings potential of cloud computing are realized.

Hybrid cloud

Hybrid cloud is a composition of two or more clouds (private, community or public) that remain unique entities but are bound together, offering the benefits of multiple deployment models.

By utilizing "hybrid cloud" architecture, companies and individuals are able to obtain degrees of fault tolerance combined with locally immediate usability without dependency on internet connectivity. Hybrid cloud architecture requires both on-premises resources and off-site (remote) server-based cloud infrastructure.

Hybrid clouds lack the flexibility, security and certainty of in-house applications. Hybrid cloud provides the flexibility of in house applications with the fault tolerance and scalability of cloud based services.

Private cloud

Private cloud is cloud infrastructure operated solely for a single organization, whether managed internally or by a third-party and hosted internally or externally.Undertaking a private cloud project requires a significant level and degree of engagement to virtualize the business environment, and it will require the organization to reevaluate decisions about existing resources. When it is done right, it can have a positive impact on a business, but every one of the steps in the project raises security issues that must be addressed in order to avoid serious vulnerabilities.

They have attracted criticism because users "still have to buy, build, and manage them" and thus do not benefit from less hands-on management, essentially "the economic model that makes cloud computing such an intriguing concept".

Chapter 2

Literature Survey

India Information Technology Report - Q2 2012

Publication info: India Information Technology Report (Second Quarter 2012)

Abstract:

This article talks about the continual growth of the I.T market which will create a good market for the I.T products in the years to come. The addressable market is expected to increase by USD $21 billion approximately. The trend of using cloud computing to lower the cost for enterprises is also on the rise and with the proper knowledge of cloud in various sectors this factor will pick up a good pace in the coming years. Many big players like Amazon, Google, Microsoft, etc have already started targeting companies from all the sectors. However a proper infrastructure must be in place before such mega projects can be taken up and also the awareness factor must be increased.

INDIA INFORMATION TECHNOLOGY REPORTQ2 2012

Summary

This article talks about the increasing trend in the expenses that the I.T companies are doing. There has been an increase in spending of 14% recorded by the organizations. There is a huge potential for the Indian market however proper penetration strategy targeting low computer and specifically in rural areas must be done.

Also according to the rating done based on the risk-return tradeoff ranks India 9th in the Asian countries ahead of countries like Indonesia, Thailand.

All of this presents a very good opportunity for businesses entering India and increase their presence in the country. This will allow them to bring new technologies like cloud to the country as well.

Enablers and inhibitors of advanced information technologies adoption by SMEs

Kannabiran, G. Journal of Enterprise Information Managementhttp://search.proquest.com/assets/r10.0.1-0/core/spacer.gif25. 2http://search.proquest.com/assets/r10.0.1-0/core/spacer.gif (2012): 186-209.

Summary

The article focuses on finding the factors which promotes and which inhibits the information technology adoption in SME. Multivariate regression was used to validate the findings. Findings - The survey findings show that the level of advanced IT adoption in auto ancillaries is low with only 17 per cent of SMEs having adopted technologies.

Following were the enablers and inhibitors that came out from the study:

Enablers:

Perceived benefits

Competitive pressure

Inhibitors:

Financial capacity

Small scale operation

Lack of in-house manpower

Lack of I.T infrastructure

SMEs push the cloud higher

Financial Express [New Delhi] 27 Sep 2010.

Summary

According to Gartner, worldwide cloud services revenue would surpass $56.3 billion of last year, a 21.3% increase over 2008 revenue of $46.4 billion. Hungama Digital Media Entertainment, an aggregator, developer, publisher and distributor of Bollywood and South-Asian entertainment content, runs about 80% of its websites and applications on the cloud.

Benefits for SMEs

There are 3.5 million SMEs in India and many of them are accelerating the growth of cloud computing technology because of its ability to cut costs and reduce the need for capital equipment-both hardware and software. "Indian companies are accelerating the adoption of cloud services and do not have to spend capital expenses on servers or datacentres. They get to turn capital expense to variable operating expense, which is a huge advantage for SMEs that either do not have a lot of capital or those who simply do not want to commit capital to infrastructure," says Regina Tan, spokesperson from Amazon Web Services. The company counts Hungama Digital Media, Red Bus, Market Simplified, 8K Miles, Rediff, Patni and Indiagames as its clients in the Indian market. Some of the large global companies that are already using Amazon Web Services cloud include: Nasdaq, NASA, Virgin Atlantic, among others.

Small businesses think big with Google

Juneja, Manjari. Express Computer (Dec 19, 2011).

Summary

This article emphasizes that the importance the small business enterprises gives to google as a vendor for providing cloud services to them. The application that google provides and the cost factor at which they provides makes google a good choice for small business to go with it as already they require cost advantage and scale of operation which gets better with google services.

SME Demand Leads to Carrier Cloud Opportunities for Operators in India: Indian operators now offer SMEs services that allow for easier cloud access, says Heavy Reading Insider

PR Newswire [New York] 04 Apr 2012

Summary

While Indian operators are emerging from a voice-era led low-ARPU regime to higher-speed data services enabled by 3G/4G infrastructure, large investments in network and spectrum are at stake," says Sridhar Pai, research analyst with Heavy Reading Insider and author of the report.

Hand in hand, a walk in the cloud: Start-ups with niche cloud-based applications are in turn drawing other start-ups as their first clients, creating rare synergies.

Khan, Taslima.Business Today (Jun 12, 2011).

Summary

They often involve complicated procedures as well, unsuited to a young company: having to pay upfront, for instance, installing servers and power backup. Using [SaaS], young companies can save at least 50-60 per cent of the cost of ownership of an on-premise software solution. "A talent management solution may typically cost over `25 lakh and take 12 to 18 months to implement," says Shyam Sunder, Chief Knowledge Officer at Ramco, a Chennai tech company that offers a cloud-based enterprise resource planning, or ERP, SaaS solution. "By then most of your talented people may have left you."

Apart from saving on costs, client start-ups also find the cloud vendors very useful for their hiring, project management and accounting tasks.

While cloud-based SaaS companies are empowering users to scale up, investors say their spread in the market will depend on the distinctiveness of these applications. At Springboard Ventures, who is currently screening eight start-ups with cloud applications, to choose one, cites the example of iDuple. com. It offers a package of a handheld device with a browser and all necessary web software required by an SME or start-up on the cloud. "That is the kind of differentiation needed," he says.

Chapter 3

About the project

3.1 Objective

Effectiveness of the use of cloud computing in SME’s in terms of cost and security.

Methodology Adopted

The methodology adopted mainly will deal with identifying the vendors that enables cloud computing and the operators that provide the cloud services.

Vendors that enable cloud infrastructure are:

Alactel Lucent

Cisco systems inc

HP

Huwei technologies

NEC corp

Nokia Siemens networks

Operators Profiled

Aircel Business solutions

Amazon web services

Reliance Globalcom

Sify Technologies

Tata communications

Tulip Telcom Ltd.

As any research requires data for the analysis , the data considered in this project falls under two categories which are:

Primary Data: - The objective is to identify what are the benefits and drawbacks of Cloud Computing, and the factors that shove the enterprises to shift to Cloud Computing technology. This will be done exploratory research. The essential variables of the subject, the phenomena, Cloud Computing, information systems in enterprises are:

Cost

Security

The data will be collected using questionnaire considering these two factors.

Secondary Data: - These data are generally the data which support the primary data and hold an important position in the analysis of the research. The secondary data includes information from the internet.

Chapter 4

Data Analysis

For the purpose of data collection and analysis the Questionnaire was divided into three sections:

Section1: This section was used to get to know about the company

Section2: This section focuses on the cost aspect associated with the cloud

Section: This section focuses on the security aspect related with cloud

Section1

This questionnaire covers following company related aspects:

company name

area of work

reason for adoption of cloud

cloud provider selected

effectiveness that the cloud provides

Following observations were made from the data collected:

The survey was done on 30 companies from various sectors these include:

Manufacturing sector

I.T sector

Travel

Hotel

Online retail

Online games and mobile service provider

Digital content provider

These companies have defined cloud computing as "the ability to have on demand access of resources which allows the company to scale up or down depending upon the load administered".

For different companies the reason to migrate to cloud services were different these were related to their area of work and the king of advantage that they were looking forward to however some common reasons for adoption of cloud services were:

Cost advantage

Flexibility

Scalability

Time to market

The services adopted by the companies fall under the general category of:

Iaas

Paas

Saas

There are various service providers that are providing the cloud services, top ones include:

Amazon

Microsoft

Google

Salesforce

Following are the percent market share of these providers in Indian market:

Before adopting the cloud services the companies were usually maintaining on-premise servers to run the services.

The reasons for migrating to specific cloud providers for different companies were different, for amazon web services the companies looked for the flexibility, scalability and the cost at which these services were provided.

To measure the effectiveness of the cloud computing following hypothesis is formulated:

Hypothesis 1

H0: Cloud computing doesn’t have any effect on the effectiveness of the enterprise

H1: Cloud services have played a significant role in improving the effectiveness of the enterprise

Accept H0 if mean<4

Reject H0 if mean>=4

Following question(s) are directed towards this hypothesis along with the average response:

Question no

Average response

10

4.066

The average response is greater than the mean that have been specified for significance, however proper hypothesis testing is required to be conducted to validate the hypothesis as there might still be outliers.

T-test for testing the significance of hypothesis is done on the data collected using the questionnaire. The reason for choosing t-test is because the variable is quantitative and because we know sample deviation or population deviation is not known to us. So t-test in this situation will provide a suitable testing measure.

t-Test: Two-Sample Assuming Unequal Variances

 

Variable 1

Variable 2

Mean

4.06666667

3.9

Variance

0.06436782

3.26E-30

Observations

30

30

Hypothesized Mean Difference

0

Df

29

t Stat

3.59811459

P(T<=t) one-tail

0.00058836

t Critical one-tail

1.699127

P(T<=t) two-tail

0.00117671

t Critical two-tail

2.04522961

 

Alpha

.05

Df

29

p-value

.000588

From the result we can clearly see that p-value<alpha (.000588<.05), hence we can reject the null hypothesis (H0) and can accept alternative hypothesis (H1).

Hence we can say that "Cloud services have played a significant role in improving the effectiveness of the company".

Section2

One of the major aspects that every enterprise considers before going for cloud services is the cost advantage that they will be getting with the adoption of cloud this can be talked as the cost-benefit analysis that enterprise does.

This section of the questionnaire is focused on the cost effect and will be used to evaluate whether cost is the primary reason why enterprise move towards cloud.

Following observations were made from the data collected:

Every enterprise thinks that cost advantage is provided by the cloud adoption and therefore is the reason to move towards cloud, some companies claim to have reduced their cost by 40% some even more.

The most common cost model for majority of the companies is the "pay as you go model" and the "subscription model".

Following other cost models are provided by the providers:

tiered,

per unit pricing,

Moreover there are four other factors that affect the cost factor these are:

Fast Access

Scalability

Availability

Durability

To monitor the role the cost factor plays in adoption of cloud services following hypothesis is formulated:

Hypothesis testing

Hypothesis 1

H0: cost doesn’t plays a significant role in the adoption of the cloud services

H1: cost factor is significant in adoption of cloud services

Accept H0 if mean<4

Reject H0 if mean>=4

Following question(s) are directed towards this hypothesis along with the average response:

Question no

Average response

12

4.1

The average response is greater than the mean that have been specified for significance, however proper hypothesis testing is required to be conducted to validate the hypothesis as there might still be outliers.

T-test for testing the significance of hypothesis is done on the data collected using the questionnaire. The reason for choosing t-test is because the variable is quantitative and because we know sample deviation or population deviation is not known to us. So t-test in this situation will provide a suitable testing measure.

t-Test: Two-Sample Assuming Unequal Variances

 

Variable 1

Variable 2

Mean

4.1

3.9

Variance

0.16206897

3.26E-30

Observations

30

30

Hypothesized Mean Difference

0

Df

29

t Stat

2.72107613

P(T<=t) one-tail

0.00544323

t Critical one-tail

1.699127

P(T<=t) two-tail

0.01088645

t Critical two-tail

2.04522961

 

Alpha

.05

Df

29

p-value

.00544

From the result we can clearly see that p-value<alpha (.00544<.05), hence we can reject the null hypothesis (H0) and can accept alternative hypothesis (H1).

Hence we can say that "cost factor is significant in adoption of cloud services".

It was observed during the study that following factors have a positive effect on the cost of the service that the providers provide:

Fast access

Scalability

Durability

Availability

So in-order to check the validity of the above statement following hypothesis was formulated:

Hypothesis 2

H0: fast access, scalability, availability and durability are correlated with cost

H1: fast access, scalability, availability and durability doesn’t have correlation with cost

Correlation test was conducted between cost factor and the above mentioned factors to see which factor affects the cost more.

Following question(s) are directed towards this hypothesis along with the average response:

Question no

Factor

Average response

17(a)

Scalability

4.533

17(b)

Durability

4.566

17(c)

Availability

4.5

17(d)

Fast access

4.166

Following are the observations:

Factors

Correlations

Scalability

0.57192503

Durability

0.61665436

Availability

0.72696047

Fast access

0.26063351

The pearson’s correlation rule states that:

If r = +.70 or higher Very strong positive relationship

+.40 to +.69 Strong positive relationship

+.30 to +.39 Moderate positive relationship

+.20 to +.29 weak positive relationship

+.01 to +.19 No or negligible relationship

-.01 to -.19 No or negligible relationship

-.20 to -.29 weak negative relationship

-.30 to -.39 Moderate negative relationship

-.40 to -.69 Strong negative relationship

-.70 or higher Very strong negative relationship

So comparing the results obtained with the pearson’s rule we can say that:

All the above mentioned factors have a positive correlation with cost since the correlation coefficient’s value lies between 0 and +1.

Of the four variable the correlation between availability and cost is the strongest, the coefficient being the highest i.e. 0. 0.72696047, and the correlation between cost and fast access is minimum (coefficient is 0.26063351). The reason for high correlation of availability is that every enterprise wants a 24*7 access to the cloud services with minimum down time so strong SLA’s are provided by the service providers.

The correlation between scalability, durability and cost factor is strong positive relationship as compared from the pearson’s correlation table.

So we can say that the hypothesis that "fast access, scalability, availability and durability are correlated with cost" is justified and the relationships are as follows:

Factors

Correlations

Relationship

Scalability

0.57192503

Strong positive

Durability

0.61665436

Strong positive

Availability

0.72696047

Very strong positive

Fast access

0.26063351

Weak positive

Section3

This questionnaire focuses on the security aspect associated with the cloud services. Since many enterprises doesn’t have a clear idea as to where their data will be stored, the connection is encrypted or not, uncertain of the security layer provided by the provider these enterprises are reluctant in adopting the cloud services.

This questionnaire targets these questions and will provide a better insight that whether these aspects are really this significant while going on cloud or whether the advantages provided by the cloud overweighs the security aspects. Also what steps the vendors are taking to make the customers more comfortable in-terms of the security aspects.

Following observations were made from the data collected:

According to the data collected most enterprises think that the advantages that cloud provides outweighs the security aspects that an organization is worried about.

Most organizations have uncertainty as to where their data is stored and hence believes that cloud computing is not-secured for their enterprise.

To elevate the security tension from the minds of the customers most cloud providers have implemented the infrastructure security aspect themselves and have given the flexibility of implementing the security at application level to the customers.

The cloud providers provides encrypted standards for the data and a secured connection for the data to travel, they have also provided TLS(transport layer security) facility for making data transmission secure.

Every cloud provider provides constant updates to make the system more secure.

To monitor the role the security factor plays in adoption of cloud services following hypothesis is formulated:

Hypothesis

H0: security doesn’t have a significant effect on cloud adoption

H1: security has significant effect on cloud adoption

Accept H0 if mean<4

Reject H0 if mean>=4

Following question(s) are directed towards this hypothesis along with the average response:

Question no

Average response

29

3.033

The average response is greater than the mean that have been specified for significance, however proper hypothesis testing is required to be conducted to validate the hypothesis as there might still be outliers.

T-test for testing the significance of hypothesis is done on the data collected using the questionnaire. The reason for choosing t-test is because the variable is quantitative and because we know sample deviation or population deviation is not known to us. So t-test in this situation will provide a suitable testing measure.

t-Test: Two-Sample Assuming Unequal Variances

 

Variable 1

Variable 2

Mean

3.03333333

3

Variance

0.65402299

0

Observations

30

30

Hypothesized Mean Difference

0

df

29

t Stat

0.22575785

P(T<=t) one-tail

0.41148664

t Critical one-tail

1.699127

P(T<=t) two-tail

0.82297327

t Critical two-tail

2.04522961

 

Alpha

.05

Df

29

p-value

.411

From the result we can clearly see that p-value>alpha (0.411>.05), hence we can accept the null hypothesis (H0).

Hence we can say that "security doesn’t have a significant effect on cloud adoption".