Cloud Computing The Future For Businesses

Published Date: 02 Nov 2017

New Advances In Business

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LINH LUU

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MIKE KENNEDY

3/14/2013

Abstract

This report focus on cloud computing and ways to assess the effectiveness of cloud computing to business to understand how cloud computing can benefit businesses. This report is based on literature review practical research. It is a detailed analysis of the good affection of cloud computing over the businesses with cost-saving and deployment; issues and risks bearing while applying the technology into the work, organisations should be aware of privacy and data security issue and how enterprises adapt the technology into the business environment. Furthermore, giving prediction of experts about the trend of cloud computing. The main conclusion draw from this report were the improvement of technology offers enhancements for the business management, in term of reducing cost while improving the efficiency of the work but it is also a Pandora Box, might either bring prosperity or misfortune to the business.

Contents

Introduction – What is Cloud Computing in the context of business

In the past five years, the "Cloud Computing" has become popular, in both Technological and Business Field of works. The IT guys are fascinating with how the new technology solves the problems of transmitting, processing synchronizing data, etc. all at once; while the businessmen only concentrating on how it helps cut down the cost of maintaining the IT system of the company, probably because of the bad economy (Paul Lubic Jr., 2012, Paul’s Internet Security Blog).

So, what is the Cloud Computing that everyone is talking about? Basically, in an executive point of view, it is the technology that enable the companies, instead of investing tons of money into the computer systems, with all the expensive hardware and even more expensive software licenses; to purchase, or rent a services that allows the company’s computers to work in a similar manners at a cheaper price.

The main difference between the traditional way of working with computer and the "Cloud" technology was the centralization of software. Instead installing a suite of software for each computer, the computer now only need only one application, which lets the users to log on a Web-based interfaced service that enables all work functions that the employees would need for his or her job (Strickland J., "How Cloud Computing works"). Of course the physical hardware (the computers) are still being needed for each and every workers, but there will be much less cost spent on the software licenses.

Furthermore, since the "Cloud" typical work environment is over the Internet, it allows more flexibility and mobility for all the workers, as they can choose to work remotely from the office, or using alternative connecting devices such as tablets or smartphones rather than sitting in front of the office’s computers all the time. It sounds all bright for any innovative entrepreneur.

How the technology works

Early in June 2011, Apple announced free cloud service package throughout the operation of applications iPhone, iPad, iPod Touch, Mac or PC with the task of automated storage and wireless data to iCloud or download all of the user's devices, and any change on one device, all other devices will be updated almost instantly.

Even now, many people wonder what "cloud" is and why it is called "cloud", without knowing the fact that they were using at least one cloud service on the Internet. Danielle Levitas (14/5/2012, ABC News) once said on the channel that, internet users have access to and use of the cloud for a long time, they have shared millions of online photo album, however, they do not acknowledge that they are using cloud service.

Why is that? The answer is, before this, the cloud providers often focus only on persuading businesses to move to the cloud computing trend with the promise that the company will no longer have to purchase and maintain hundreds or even thousands of computers and software. The only thing company needs to handle is to concentrate on manufacturing and developing business, they have got others to worry about infrastructure and technology for them. This makes the "cloud" becomes an out of the ordinary concept because many consumers think that "cloud" service is some transcendent service for businesses. Basically, cloud computing is a concept that appears in 2007 but it was just considered as a long operation level with the advent of the Internet: data storage and access, remote software over the Internet.

In just a few years, a growing number of customers, from large organizations to small and medium-sized businesses try to start-up their businesses with cloud computing solutions, distribution analysis and computational intelligence to support business development, create distinct competitive advantage and a breakthrough in the market. Understand that, IBM, one of the largest providers of systems integration, application management services and consulting partnered with the dominator of the domestic wireless and fixed line market, SK Telecom to develop an intact cloud environment. IBM does not only offer a reliable partner working to gauge their business cloud promptness but also a service to tailor cloud strategy to all kind of businesses based on their in-depth analysis of their requirements, purpose and business goals. IBM's cloud computing capabilities helps businesses of all size transform their operations and technology by presenting a flexible IT environment which quickly adapt the changing requirements. With enterprise-grade file sharing function that IBM provides, organisations can also use web meetings, mail and calendar for any businesses, including unlimited guest access, clients can be at multi-places to access to the company's database, bringing organisation closer to its employees and customers. Moreover, the cloud's on-demand nature helps medium sized businesses do not need to worry about investing too much money into the cloud with installation, maintaining and upgrading cost, they have IBM done the work for them within a tight budget.

Cloud Computing has developed from a modular point solution in the form of SaaS deployments (e.g. talent management and expense management) to become an increasingly integral method for leveraging computing resources for IT and business. The rapid adoption of Cloud alternatives by the business has meant that management disciplines, standards and best practices are well behind where most organizations need them to be, in order to manage appropriately both IT and business risks.

Cloud Computing is defined as the set of hardware, networks, storage, services, and interfaces that combine to deliver aspects of computing as a service. Cloud services include the delivery of software, infrastructure, and storage over the Internet (either as separate components or a complete platform) based on users’ demand.

Cloud Computing has four essential characteristics: elasticity and the ability to scale up and down, self-service provisioning and automatic de-provisioning, application programming interfaces (APIs), billing and metering of service usage in a pay-as-you-go model. (Cloud Computing Characteristics discusses these elements in detail.) This flexibility is what is attracting individuals and businesses to move to the cloud.

http://static.ddmcdn.com/gif/cloud-computing-1.gif

A simple demonstration of Cloud Computing

(Jonathan Strickland, "How Cloud Computing works", Howstuffworks.com)

It sounds complicate for most of us, the non-technician people. Fortunately, the end users do not have to know anything about the underlying technology. Business management who needs to take responsibility for the governance of data or services living in a "Cloud". Cloud Services Providers must provide a predictable and guaranteed service level and security to all their constituents. It is the responsible of the provider to ensure that they provide an effective and reasonable data security complies with any data provisions to protect companies from hackers and data thieves.

The Cloud Services Providers are the ones who are responsible for IT assets and maintenance. In other words, the company can also save some more cash by cutting down the IT personnel.

Types of cloud computing

Depends on the needs of the company’s operations, there are many types of the Cloud services available, which are usually abbreviated as something-aaS (stands for "As A Service"), such as PaasS (platform as a service), SaaS (Software as a service) or NaaS (network as a service), etc., each serves difference purposes for the business

Also, a Cloud might be either private or public, again depends on how the organization want to communicate with the outside world. A public Cloud is the service offered for free or pay-per-use by a service provider (e.g. Microsoft’s Cloud Office or Google Docs). On the other hand, private Clouds are closed system, solely tailored to fit a single organization only; and can either be kept internally at the organization’s premise, or hosted and maintenance by a third party company such as HP or IBM, etc. There are other models of the Cloud, for example a community cloud to link several organization of the same community, or hybrid clouds which are the clouds combined more than one type of cloud.

Improvements of Cloud Computing Technology

Since the birth of the technology there have been many improvements in both the innovative techniques used and the fields of appliance for the Cloud Technology. The below figure present a summary of available technologies as well as future expectations of the Cloud:

http://blogs-images.forbes.com/louiscolumbus/files/2012/06/Hype-Cycle-for-CLoud-Computing.jpg

Gartner’s 2011 Hype Cycle of Cloud Computing

(Gartner, Hype Cycle for Cloud Computing, 2011 David Mitchell Smith Publication Date: 27 July 2011 ID Number: G00214915 © 2011)

Figure 1 is a summary of the consensus of the three principle components of a cloud model. This figure accurately reflects the scale of the blocks of information technology as it relates to cost, physical space requirements, maintenance, management, monitoring and management of obsolescence (Amrhein, 2012).

Hình 1. Giải phẫu đám mây

Cloud's model components (source: www.ibm.com)

The applications service is the most popular to Web users nowadays. This applications service stores apps which are suitable with the Software as a Service (SaaS) model. These are applications that run in the cloud and available upon request for user. Sometimes these services are provided free of charge and service providers to generate revenue from other things such as Web advertising and many application vendors generate revenue directly from the use of the service. These are just a few examples of these types of applications. In fact there are thousands of SaaS applications and the number of daily development using Web 2.0 technologies. For instance, when people use electronic mail such as Gmail or Yahoo Mail or keep appointments by using Google Calendar, they are using application on top of the cloud. Perhaps not entirely clear to the majority of the public about the many applications in the application services layer is transferred directly to the business community. For example, IBM ® Lotus ® Live, IBM Lotus Sametime ® or Salesforce.com provide enterprises business applications such as software to process payroll, human resources management, collaboration, business partnership, customer relationship management when companies purchase their cloud service.

The second floor of the cloud is platform service. It acts as supporting applications for services. These applications may be running in the cloud or can be running in a traditional corporate data center. To achieve the necessary scalability in a cloud, different services are given here often virtualized. Examples of the recommendations in this section of the cloud include the virtual image of the IBM ® WebSphere ® Application Server virtual images, Amazon Web Services or Google App Engine. This service platform allows consumers to make sure that their applications are fully equipped to meet the needs of users by providing application infrastructure based on demand.

The last but not the least is the infrastructure service. Infrastructure services focused on supporting the application infrastructure and help solving the problem of properly equipping data centers by ensuring computing capacity as needed. In addition, due to the fact that the virtualization techniques commonly used in this layer, it can be clearly seen the cost savings due to efficient use of resources bring.

Affection of the Cloud-Computing over the business

How it can benefit the company

Cloud Computing is suitable for small organisations (Sosinsky, 2011, p17-19). The most noticeable benefit of the system is the ability to access your data from anywhere with an internet connection; and the ability to replace occasional heavy expenditure on IT with regular and predictable operational expenditure (Anderson, 2010). Also, companies can use this technology in their daily operations with very low entry cost with minimum hardware requirement or physical installation.

In a company with a high level of computerised works and automated processes, the information technology system is usually consisted of numerous hardware and software which are expensive and require experienced technicians to put everything in place. Using such old school model of application, the company needs to hire IT specialists to install, test, deploy the system; and furthermore, spending a fortune to keep it up to date. Even in a company with not many automated processes, at least most of the paper works are prepared using a word editor. Certainly there is a lot of free software in the market that offers the feature of the costly ones (e.g. using Linux instead of Windows, or Star Office instead of Microsoft Words), but again will require more experiences in setting up the system, thus leading back to spending on IT specialists to set them up. For big companies, this is not a problem since they have already had a large capital, but the small and medium sized companies’ management would have a headache if they want to apply such a traditional method. This is where the cloud model starts to shine, as the end users do not need to worry about all that problems. All that they need are simply purchase a basic computer system from the vendor (with at least one operating system installed), get an Internet connection and sign up for a cloud service provider. The rest of the works (installing software, preparing synchronising process, storage system, etc.) is handled by the provider of course.

For example, Yammer, a private social network for enterprise, rival of LinkedIn now collaborating with Salesforces.com, one of the trusted leader in cloud computing and customer relationship management. After partnering up with Salesforce, Yammer grew triple in 2012 compare to the year 2011. Salesforce.com becomes a vendor of Yammer, provides all kinds of business application such as Human Resource, accounting and customer relationship management, engineering team, keep track of key contacts, prepare upcoming event and meeting, ect (Yammer.com). Yammer's own application programming interface seizes activity stream data such as sales leads, progress of accounts, marketing campaign and other activity that gets into Salesforce can appear directly within a Yammer stream, make it easier to integrate and easier to follow. Being a partner with Saleforce make it easier for Yammer when they can pull social data from multi-places with various business application. Beyond that point, Salesforce already has had its own social software Chatter.com used by Dell, Lenovo and other 100,000 companies, by collaborating with Salesforces, without spending millions of dollars for advertising, Yammer earned three million corporate end users, among them LG Electronics, eBay and Thomson Reuters, adding a rate of about 200,000 users per month, a half million of those customers purchase the paid version of Yammer, Hesseldadl reported (2012).

Scalability on demand is a key benefit that cloud service providers offer their clients. Cloud service providers allow their client to increase or decrease their existing resources to accommodate businesses' changes. Companies can determine and match their IT budget with their workload to upscale or downscale the cloud capacity as they needed. Hence, business can operate and develop supply chains easily.

Cloud computing is a solution of cost savings for organisations (Cloud service is paid incrementally depend on the need of end users). Cloud computing companies often offer a pay-as-you-use or on-demand self-service service, which enable users to pay as much as they use or buy budget package from the providers. Nonetheless, cloud computing helps companies cutting costs on system hardware whilst giving regularly updated (Cloud computing for business – qld.gov.au). As a matter of fact, enterprises will be able to significantly reduce the cost for purchasing, installing, maintaining and upgrading the whole system. Clearly, instead of having to send an expert to buy a server, server installation and maintenance of this server, you do not need to do anything in addition to accurately determine their resource needs and requirements.. If businesses build a large-scale system for themselves, the huge investment costs (purchase hardware, power management, cooling systems, human resources, operating system, etc.). And such costly projects often need a lot of time to be approved. The construction of such a system also requires a lot of time. Another factor reducing costs is that customers only pay for what they actually use (Usage-Based Costing). With the resources rent but not used (due to low demand), the client does not pay. This really is a huge benefit for businesses using Cloud Computing.

For instance, Google provides its users with 5 GB of free online storage in Google Doc for storing emails, documents and photos. And now, when Google announced their new product Google Drive, Google propose their users who want to have more storage different Google Drive Cloud monthly storage plans with reasonable prices, such as 25 GB storage for USD 2.49 per month or 100 GB storage for USD 4.99 per month with multi-application function like storing emails, transferring files from Google Doc to Google Drive, online editing documents or public sharing. (https://support.google.com).

There are also common law and civil law system to protect cloud computing users (Krutz and Vines, 2010). The legal system in the United Kingdom, United States, Australia, and Canada is common law. Civil law systems are used in Quebec, France, German and other countries. The law states that Cloud service supplier must have their privacy policies available to read online with commitment to protect client's privacy. Providers need to ensure that their policies cover the statement of the organisation's commitment to privacy and protection of sensitive data, personal identifiable information (for example, Health Insurance Portability and Accountability Act protects users' identifiers such as names, postal address, medical record number, social security number, etc); data control, ownership, data distribution and data disposition; mechanisms to secure information transmission; possible security and privacy risks; mechanisms to secure information transmission; rules for revealing personally identifiable information; providing personally identifiable information that is legally required Cloud computing service providers provide a safe, secure and resilient, prevent hackers and loss of information, supported service for businesses day and night. Following list is some significant legislations and suggested guidelines for privacy protection:

The Cable Communications Policy Act: applicable to the use of personal identifiable information by cable operators within, but requires restrictions on disclosures to third parties.

The Children's Online Privacy Protection Act (COPPA): provide protection to children under the age of 13 collected online.

Health Insurance Portability and Accountability Act (HIPPA): protects users' identifiers such as names, postal address, medical record number, social security number, etc.

Electronic Communications Privacy Act (ECPA): protect an individual's online connections from being interrupted by online service provider.

The Financial Services Modernization Act (Gramm-Leach-Bliley): apply on financial institution, protects clients' personal financial information.

Virtual accessibility and flexibility is one of the benefits cloud computing brings to businesses, it makes anywhere become office. Instead of using a traditional PC environment, company can access to their database whenever, wherever and by any devices they have such as tablets, laptops, PC pocket or even on their mobile phones with an Internet connection. Plus, by providing a flexible working environment and multi-location without the need of staying in their office all day to do the work, company can win more employees' allegiance, and by being accessible from anywhere, company can enhance productivity.

One of the painful questions of the investment in resources (e.g. servers) is how long it would take to fully decrease in value and is it a profitable investment and outdate technology or not. When using resources on the cloud, you do not have to care about this anymore. Cloud service increases storage capacity, organisations can store more data on their own computer systems, servers, etc and also increases use of computing resources, making it easier to integrate with existing infrastructure and platforms.

Reduce complexity in the structure of the enterprise is another advantage of cloud computing. It would costs a lot of money for organisation to have both IT professional for operation and maintenance of the server. Cloud computing service acts as a process outsourcing business will only focus on its professional production of goods and reduce the complexity in the structure. With an advantage of being very easy to use, cloud computing does not require personnel training to work with it, also streamlines process and requires fewer people and less time to get the work done.

Risks bearing while applying the Technology into the work

The benefit of Cloud computing is huge and cannot be denied that it helps company achieve considerable results for businesses, however, there are still several unavoidable drawbacks when it comes to Cloud computing for businesses.

Legal and ethical issues are inevitable. One great area affects company is violation of privacy, security issues and compliance risks. Many company has perceived the benefit of Cloud computing but they are still hesitant to put secure data onto Cloud. "This is a fundamental issue for any enterprise that considers using the cloud.", said Harding (2011). Companies depend on a common cloud service or platform which is a multi-tenanted cloud system, resource is shared and used by multiple organisations. Therefore, network privacy has many threats and being vulnerable to outsider attacks. In an article in Growingbusines.co.uk about Security issues and points to consider when cloud hosting, James Devonport Wood, CEO of Facebook marketing service Pagehub believes by putting large quantity of data together onto the cloud, under security of one storage consequence hacker find it much easier to access and steal information. In the same article, Greg Rusu, general manager of cloud hosting provider Zunicore, in the other hand, supposes that companies should concern and be aware of what data and information they put onto the cloud, it is their responsible to keep customers' information and private information in secure places, others in the cloud or secure hardware to avoid being hacked and lose all classified information. A straightforward example is thieves hacked into the Sony PlayStation’s data storage in the cloud, resulted security breach and personal data of millions worldwide users' credit card were stolen in 2011. BBC news reported that Sony admitted all the PlayStation Network users' details including name, log-in details, and security answers used to change passwords which were located in their private cloud storage, had been obtained and credit card details with payment-card data, purchase history, billing addresses may also be stolen. Sony's poorly secured system not only caused 77 millions of people to fear their banking details had been stolen and might lose their money but also made Sony's shares dropped by 4%, faced the company to crisis.

Relying totally on network connectivity and using remote servers is also a big issue to company. They are unable to repair or maintain the cloud when it has problems or if they wanted to because they are dependent on the storage providers. This may take a while for company to get the providers' attention over the others users even if the providers have dedicated teams to deal clients' problems. Cloud computing relies on the internet naturally, imagine when the internet is down, or there is electricity problem, company fail to access into the internet to recover the information they needed for the next trade, the consequence is company may lose a big client or business contract, it also means that companies need to work with a trustworthy IT consulting firm and demonstrate ways to systematize bandwidth levels that would be adequate to meet their IT requirements. Subsequently, being dependent on others, being able to fix the problem on time and lack of supporting accesses bring businesses dilemmas if they could not access to their database which is hanged onto the cloud. Furthermore, there is possibility that storage provider could close up shop making it hard for the company to retrieve its data. Plus, there might be problem in getting peripheral devices such as printer or scanner to work with cloud because they require software to be installed.

Most cloud services are commercialized to bring exciting savings to customers, and provide more severe standard IT configurations. Therefore, the determination of the details of the entire infrastructure in-house as well as intermediate is not always cloud computing can do. For services and internal applications, this could be a problem should be considered first when a company intends to bring applications to external cloud services. When considering a business plan to use cloud computing, organizations need careful analysis of service level agreements with suppliers future, as well as the legal aspects and the cycle of handling and storage information. The auditors often encounter the problem related to the law when they cannot access the data on the company, leading to a lack of uniformity in the internal.

Thus, businesses need to consider themselves are they ready with the cloud and all of its problems when they decide to adapt the Cloud Computing Techniques into the business environments. This disruptive change that is challenging today's organizations to take advantage of Cloud-based services, is proving a difficult pill to swallow for many organizations

Adapting the Cloud Computing Techniques into the business environments

Like it or not, the pressure to become part of the private, public or hybrid cloud still exists. Yet, to small organisations that do not have the ability to adapt would find it difficult to develop because we live in a new world, and today is the future of cloud computing. To minimise the start-up cost, small or medium sized organisations are advised to choose Public Cloud services with multi-application, which requires a very low initial investment costs, reduces cost of buying software

According to "2013 Trends to Watch: Cloud computing" report of analyst firm Ovum Software (Lachal, 2013), as a consequence of enterprises looking to diminish costs and enhance innovation, cloud computing would prolong to grow in further future.

Cloud model selection, basic technology, consulting and implementation partners are critical factors for effectiveness and competitiveness of enterprises, including considerations for the user and development of cloud computing. Planning to implement cloud services internally with the ingenious combination of the structure of the server, network, software and virtualized storage layer design is worth considering of building a strategic IT team. The cloud service environment-oriented development has strict security management systems, monitoring and effective warning to the level of high availability. Another important element of cloud technology is self-service manner. It would also help businesses avoid internal conflict between IT team and finance department costs cutting ideas through self-service agreements between suppliers and users.

As Cloud computing is an available on demand service, it offer users an easy to use and multi-functional application. In the world of cloud computing, the demand for enterprise data sources will be easy to search and select from the list of services of the IT department, for the shopping basket and click to pay on a monthly basis. Invoices are made each month will help users check their data used. Self-service method of cloud computing to help chief information technology officer (CIO) the ability to reduce the strain on your IT department. Although successful in well-controlled, self-service model, if not designed properly can lead to intractable problems, the procurement of tools that increase the data source limitation and lessen infrastructure. Again, it makes company reducing administrative overhead maintaining and setting-up cost. Improved automation (IT staff less concerned about software updates).

Bernard Golden, author of the column "5 Cloud computing trends that will be big in 2013" (2012) in CIO.com, believes that this year, 2013, would open a new age of cloud computing. In his column, he says that enterprises would realise what cloud computing really is and continue adopt and implement internal cloud as a "default choice of developers" and people would stop worrying about cloud security and actually start using cloud service as a common default business tools, yet knowing about price war between the cloud vendors when cloud computing gets more and more attention of all sized companies. Enterprises would learn that the capabilities of cloud computing are the benchmark that software engineers look forward to because of its speed and limitless storage. Plus, enterprises using private cloud should start thinking about how to integrate end-to-end computerization and take possession of process roadblock, make it easier to integrate.

In 2012 CIO.com reported that, Gartner, the world's leading advisory company and information technology research published a market research forecast by 2014, because of the recognition of the benefits that the cloud model brings back to the companies, the annual IT enterprises spend on setting up cloud service with third-party assistance would reach USD 100 billion (Moore, CIO.com, 2012). One year later, in 2013, Networkworld.com reports that Gartner analysts Ruggero Contu, Eric Ahlm and Lawrence Pingree predict by 2015, 10% of overall IT security organisation capability would be located into the cloud, data security and remote liability assessment would be improved, the result would be being less threaten by hacker because there would be more data-loss prevention, authentication available as technologies support cloud computing development. Yet, the over trend of acceleration of change in cloud-based security would threat the long-established business affiliation between IT security providers and their value-added resellers, and "a high level of merger and acquisition activity related to cloud-security and established players is predicted to be seen throughout 2013" (Messmer, Networkworld.com, 2013). Gartner's 2013 forecast report presumes the virtual firewall market would be deploy as a virtual switch on a hypervisor which would be a key accelerator to the virtual switch market growth if the virtual providers put more effort to improve and apply their technology into their service, also to reduce the physical security appliance.

Accordingly, columnist Bernard Golden and Gartner anticipates point out some interesting development of the cloud. Cloud computing would keep growing increasingly, organisation would keep moving into the cloud in the near future. Also, there would not be a problem for data protection but there would be some change in the relationship between its supplier and the customers.

Conclusion

The improvement of technology offers enhancements for the business management, in term of reducing cost while improving the efficiency of the work. And the Cloud Computing is one of these fabulous technologies. Hence, the answer to the question "Is cloud computing the future for businesses?" is "Yes, it is".

With the Cloud technology equipped at the organization, the cost for licensing, installing and maintaining significantly reduces due to the centralization of the software used, reduction of the hardware required, and shortening of the IT personnel needed (while relying on the service provider to do their job). In addition, the employees now had more options to work with, in both working location and terminal devices to connect to the Cloud, which increase the flexibility and mobility of the work, and ultimately can lead to the increasing in work effectiveness.

However, there were several factors that might cause serious troubles for the whole system that the management always need to address while deploying the Cloud service at the organization. Since the Cloud’s working environment is based on the network (either Intranet or Internet), a slow connection is the most obvious hindrance to the quality of services. Furthermore, the network nature of the Cloud make it less secured than the traditional computing system, since the chance of the company being attacked over the open network (e.g. the Internet) will be higher.

With all the pros and cons like that, the Cloud Computing is just like a Pandora’s Box, might either bring prosperity or misfortune to the business. How to use it effectively and efficiency is depend on the wisdom of the company management.