Impact Of Cloud Computing On Enterprise

Published Date: 02 Nov 2017

"Impact of Cloud computing on Enterprise Architecture for SME’s in Ireland"

Introduction:

To provide a response to companies that are willing to adopt the idea of cloud computing, but are not as sure as there is little certainty given about its impact on organisation’s architecture. The research will bring the impact of Cloud computing on the architecture of an enterprise and thereby on project’s success. Cloud computing biggest challenges in today’s time is to market the positive aspects of its implementation. The study will validate if biggest unspoken area of cloud’s implementation will result in the successful impact on organisation’s architecture.

Currently, many organizations are interested in using cloud computing capabilities, but they do not know where to expect changes when choosing for the cloud computing concept (Joint, 2009). In practice, there are two distinct groups: one group tries to use cloud computing, and the other group is so discouraged by the stories in the media about security and availability that they ignore the phenomenon. This is also a conclusion found by a research done by Avanade: "the study presumes that the scepticism is due to unfamiliarity" (Avanade, 2009).

When it is clearer for organizations what the impact of cloud computing is, and how this could be tackled, organizations could make a more informed choice about using cloud computing for certain functionality (Heffner, 2010).

It is important to highlight cloud computing impact on an enterprise perspective because cloud computing is not simply about a technological improvement of data centres but a fundamental change in how IT is provisioned and used. (Creeger, M. 2009)

To provide an answer to companies that play with the idea of using cloud computing, but are discouraged by the feeling that there is little knowledge available about the impact. This study will assess the impact of Cloud computing on the architecture of an enterprise, which then assures the coherence of a function within an organizations design and construction. One of the big promises of cloud computing next to cost and time to market is the implementation result which will be better(Joint, 2009), due to a clearer view and a shorter time to market. To research if this promise is true the results of the implementation’s success are also investigated.

Enterprises need to consider the benefits, risks and the effects of cloud computing on their organizations and usage-practices in order to make decisions about its adoption and use. In the enterprise, the "adoption of cloud computing is as much dependent on the maturity of organizational and cultural (including legislative) processes as the technology, per se". (Fellows, W. 2008)

Literature Review:

Cloud Computing

Cloud computing has sparked a huge amount of interest in the IT industry. The market research and analysis firm IDC suggests that the market for cloud computing services was $16bn in 2008 and will rise to $42bn/year by 2012. (Gleeson, E. 2009)

Cloud computing is a big hype nowadays. It gives companies the power to react quickly to a growing demand of computing power, this creates agility for them. This is done by combining technologies such as virtualization, which makes it possible to separate application and platform logic from hardware, so that an application can run on different types of hardware without adapting to the application/platform. This makes it possible to deploy an environment very quickly. Next to virtualization, internet technology is responsible for a big part of the success since it makes it possible to use the service from anywhere and for any device. Because cloud providers have huge data centers that they can spread their hardware among the different customers so called multitendency, this results in an optimum hardware usage which is called economies of scale. Because of this they can charge the customers only for the actual usage, this is called pay per use.

Although regarding the exact definition of Cloud Computing there are many opinions, below are the definitions of the NIST (National Institute of Standards and Technology) and the results from the research of Hand on cloud definitions.

Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is composed of five essential characteristics, three service models, and four deployment models. (NIST, 2009)

Cloud Computing, in which not just our data but even our software resides within the Cloud, and we access everything not only through our PCs but also Cloud-friendly devices, such as smart phones, PDAs... the mega computer enabled by virtualization and cloud computing...This is utility computing powered by massive utility data centers. (Hand, 2007)

Cloud computing is currently in the interest, it is in the top quadrant of the Gartner hype cycle (Gartner, 2009) with regards to application architecture (see figure 1). As many organizations look to Gartner regarding trends, it is expected that Cloud computing will make its appearance in more organizations. However expectations are probably too high.

Figure 1 Hype Cycle for Application Architecture, 2009 (Gartner, 2009)

As mentioned in the NIST definition cloud computing consists of five characteristics, these characteristics are pay per use, scalability, use of internet technology, self service, multi tendency.

Pay per use – Cloud services are shared among different users therefore economies of scale can be applied. This results in an payment model which makes it possible for users to pay for the real use e.g. Based on CPU usage)(Armbrust, et al., 2009)

Scalability – The usage of the cloud services can differ from time to time, to provide a stable availability it should be possible to scale up the resources so it is also available in peak times, and scale down in low usage time. This characteristic is realized through the use of virtualization technology (Buyya, Yeo, Venugopal, Broberg, & Brandic, 2009)

Use of internet technology - The services are offered to different platforms such as windows, apple, PDA and available from every location. To realize this a standardized internet protocol is used to offer the services, this doesn’t demand special software for a service on the clients device. (Weiss, 2007)

Self-service – computing services can be acquired and used at anytime without the need for human interaction with cloud service providers. Computing services include processing power, storage, virtual machines, user access (Sriram & Khajeh-Hosseini, 2010)

Multi tendency – They realize a cost effective model in combination with the scalability characteristic a provider must provide its services to multiple customers (MotahariNezhad, Stephenson, & Singhal, 2009).

Service models

There are three different levels of services models. It starts from the lowest service model which is called Infrastructure as a Service (IAAS) and builds up via Platform as a Service (PAAS) to Software as a Service (SAAS). Each level adds extra functionality and abstraction of the technical details of the services which are offered.

Infrastructure as a Service (IaaS): is the lowest layer where users use computing resources such as databases, CPU power, memory and storage from an IaaS provider and use the resources to deploy and run their applications. In contrast to the PaaS model, the IaaS model allows users to access the underlying infrastructure through the use of virtual machines which automatically can scale up and down. IaaS gives users more flexibility than PaaS as it allows the user to deploy any software stack on top of the operating system. However, this flexibility comes with a cost and users are responsible for updating and patching the operating system at the IaaS level. Amazon Web Services’ EC2 and S3 are popular IaaS examples (Murphy, Abraham, Fenn, & Goasguen, 2009)

Platform as a Service (PaaS): is the layer where applications are developed using a set of programming languages and tools that are supported and provided by the PaaS provider. PaaS provides developers with a high level of abstraction that allows them to focus on developing their applications. Developers can provide their customers with a custom developed application without the hassle of defining and maintaining the infrastructure. Just like the SaaS model, users do not have control or access to the underlying infrastructure being used to host their applications at the PaaS level. Google App Engine and Microsoft Azure are popular PaaS examples (Boniface, et al., 2009)

Software as a Service (SaaS): is a cloud computing layer where users simply make use of a web browser to access software that others have developed, maintain and offer as a service over the web. At the SaaS level, users do not have control or access to the underlying platform and infrastructure that is being used to host the software. Salesforce’s Customer Relationship Management and Google Gmail are popular examples that use the SaaS model of cloud computing (Armbrust, et al., 2009).

Deployment Models

The three different service models can be deployed for a customer in various ways varying from the public internet to a private data center. The Figure 6 shows the different deployment strategies (Joint, 2009) which are detailed in the following paragraphs.

Figure 2: deployment models (Brown, 2009)

Public is a deployment strategy which uses the publicly available internet to deliver the services to the users. A great advantage of this deployment type is that the services are available from any internet connection; a down side however is the security. The cloud services like Gmail and Azure are services provided trough the public cloud (Armbrust, et al., 2009

A public cloud deployment strategy can be compared with the traditional in-house hosting of a service; however it uses the technologies on which cloud computing is based such as virtualization to provide advantages to the organization (Armbrust, et al., 2009)

A community cloud is a bit like a private cloud however the cloud is shared among a community of organizations. This is done to divide the costs and risks of running a own cloud. These clouds can be found in shared service centers which service multiple organizations (Buyya, 2009).

A hybrid cloud is a cloud computing environment in which an organization provides and manages some resources in-house and has others provided externally. For example, an organization might use a public cloud service, such as Amazon's Elastic Compute Cloud (EC2) for general computing but store customer data within its own data center (Cole, 2009)

SME’s:

The SME’s abbreviation is used by the European Commission, World Bank the United Nations and the World Trade Organization (WTO).The SME’s outnumbers large companies by a greater edge.

SME’s in European Commission

The current definition of what constitutes a micro, small and medium sized enterprise (SME) was adopted by the European Commission in 2003.

The main factors determining whether a company is an SME are:

number of employees and

Either turnover or balance sheet total.

These ceilings apply to the figures for individual firms only. A firm which is part of larger grouping may need to include employee/turnover/balance sheet data from that grouping too.

Cloud computing can provide cost efficiencies to the SMEs , whose exploitation in all industries is directly related to the diffusion of what Lanvin and Passman (2008) call e-business skills in the managerial environment ability to explore new opportunities in cloud computing, provided by the ICT and to establish new business, Liebenau (2010) has been studying the relationship between the character of the cloud and the organizational, financial and managerial changes that businesses need to make to take advantage of what is on offer.

He has focused on different kinds of ICT budget issues, noticing that for many functions the cloud cost can be much lower reducing the entry barriers for small and medium firms and providing companies new opportunities for experimentation, prototyping, and small containing risks.

There has been an increase in research activity analyze many element of SMEs and their adoption of cloud computing (korchak and Rodman 2001. According to Zhu et al 2004, organization size is inversely proportional to the cloud value derived, therefore suggesting that SMEs can get more benefit from adopting cloud computing than the larger organizations.

However, it still seems that many SMEs are not able to achieve the required level of cloud computing. (Chau, 2004).

Enterprise Architecture:

Next to cloud computing enterprise architecture is a field of expertise which is getting more and more important because enterprises are getting more complex and have to deal with complicated legislation and rules which require being flexible (Zachman, 1987).

Enterprise architecture is an expertise area which organizes and designs an enterprise is such a manner that it is aligned with the business strategy.

The Architecture (of a system) is the fundamental organization of that system embodied in its components, their relationships to each other, and to the environment, and the principles guiding its design and evolution. (IEEE, 2000)

According to the definition the architecture of a system (not only IT systems, an organization can be a system too) is organized using enterprise architecture. The architecture is responsible for all the components within a system and the relationship between them. This means that enterprise architecture organizes the business which is supported by all related components and vice versa. In general a layered model is used to describe the enterprise architecture. In the figure below the most used layers are shown. Each enterprise architecture framework describes the fulfillment of the layers in detail, but in essence it can be plotted in the layers shown below (IEEE, 2000).

The goal of an EA project is to define and implement the strategies that will guide the enterprise in its evolution. These strategies are actually both the plans to be realized by the enterprise and the patterns stating how the enterprise operates (Mintzberg & al., 1998)

An enterprise model represents the resources found in the enterprise and in its environment, together with the processes in which they participate. The model represents only the entities of the enterprise and of its environment that are relevant for the project. The enterprise model is structured in organizational levels (Miller, 1995). In

EA, an organizational level is a part of the enterprise model that describes the enterprise from the viewpoint of one or more specialists. Traditionally EA methodologies consider three organizational levels. The business level represents the company, in its market. It is generally analyzed in terms of products or services, and revenue. The operation level represents that the company is composed of people and systems (e.g. warehouse or IT application). The operation level is generally analyzed in terms of business processes and operating expenditure. The technology level represents the technical infrastructure composing the systems (e.g. machinery in the warehouse or software components in the IT application).

Figure 7 Enterprise architecture layers

Cloud computing will affect the authority of the IT department within universities; however, this also applies to IT departments in enterprise. The IT department gained its authority in the early days of computing when they had the majority of the programming skills and control of mainframes within an organization. As the use of IT expanded within organizations, system administrators and developers were forced to learn new skills as their role was no longer just about keeping the technology running. (Fellows, W. 2008)

Research Questions:

What will be the changing role for the central IT department within organizations?

Will their role change?

Will the complexity of IT systems and the lack of customized support from cloud providers and online support forums mean that organizations will still need central IT to provide and support most of their systems?

How would compliance departments react to the migration of applications and data to cloud service providers?

They might not have the same level of access to a cloud as they currently do to their internal systems, so how would they have to change their working practices?

Will it mean that moving to a cloud based system will be resisted by support personnel and system administrators who might either be worried about losing their jobs, or about no longer having complete control over a system?

Would system administrators be happy to give up some of their control over systems and rely on cloud service providers for the support of end users?

Would end users care about this?

Proposed Methodology:

What Strategies (consider each layer of the Research Onion) will you employ to answer the research questions asked? Why do these strategies lend themselves to what you want to do?

Research Philosophy:

In order to achieve the right level of success in any research endeavour, it is necessary that the right philosophy be adopted. Research philosophy relates to the development of knowledge and the nature of that knowledge (Saunders, 1959).

The appropriate research philosophy for the research will be Interpretivism with positivism.

Bryman & Bell (2007) suggest that an Interpretivism understanding must be based on the experiences of those works within the organization.

This type of philosophy is chosen as in this case, direct experience, of persons working with an organization, comprises of acceptable knowledge in the field of study and will advocate theoretical point of view. 

However, even in the complex business situation, there is likelihood that certain formula of success where Positivism plays a role. Positivism means that research philosophy which has adopted the philosophical stance of the natural scientist, so that results have lot of generalization.

Research Approach:

Within the scope of the present research, it is clear that little quantifiable data is available in terms of determining the results to the research question framed.

As a result, inductive reasoning will be required to draw conclusions regarding the areas of research.

An inductive approach has therefore been decided upon, focusing on the gathering of suitable data from relevant sources before framing a conclusion.

Research Strategy:

The right research strategy for this research will be ethnography.

This is due to the reason that ethnography is considered to be very appropriate if the researcher wishes to gain insights about a particular context and interpret it from the perspective(s) of those involved.

Research Choice:

Multi Method

Proposed Sampling Method and why this method? What is your actual sample and your sampling frame?

Sampling:

The sampling frame is made up of the lists of elements from which a sample may be drawn from.

It is also known as the working population, Saunders et al (2007).

The sampling frame in present research is the middle management managers of the 2 SME’s who have adopted cloud for their business process in Ireland.

Non probability search.

What are the data collection tools and why are these tools chosen and how will they be used?

Data Collection:

The primary data for this research will be collected by interview.

This research strategy is an exploratory. It best suits the qualitative nature of this study.

Tull and Hawkins (1990) explained that the two main types of exploratory research are focus groups and in-dept interviews.

Providing a questionnaire in this research is not considered suitable since there is no way to refer back to the respondent for clarifications in the given period of time.

Getting a focus group together is logistically not possible, given the constraints of time and distance.

The interview method is the only suitable method in the given scenario.

Data Analysis: what quantitative / qualitative analysis do you expect to do?

Data Analysis:

The data analysis and findings will base on answers given by the interviewers.

Here the qualitative and quantitative data collected is analyzed by using different techniques and with the help of software on personal computer Saunders et al (2007).

Editing Data collected during the research process is edited for consistency, omissions legibility, and comparability. This way data is made ready for coding (William 2003).

Coding This is last process before which data collected is ready to be used. Indexing is major activity and can be done manually or through software, Collin Fisher et al (2004)

Plan

What practical efforts will be required to obtain / access primary data?

Limitations in the research process

This study has a number of limitations, which from an optimistic point of view may provide the basis for interesting future research.

Firstly, only a few of the respondents will have adequate time to spare for the interviews. Time constraint will be a key factor that will limit the amount of information which each respondent would give.

This study will be conducted on managers of SME’s in Ireland. Due to the sensitive nature of the topic, the respondents may not reveal their exact situation in the organizations.

Most of the respondents may be non fluent-English speaking natives so there can be a language barrier. The interviews will be recorded using a tape recorder and at the stage accessing the interviews there can be some difficulties as a result of the respondent’s accents.

Identify any personal biases that might interfere with the research or the process of researching your topic

Ethical implications

‘The appropriateness of your behaviour in relation to the rights of those who become the subject of or are affected by your work’ Saunders et al. (2009)

Universalism – this stance takes the view that ethical precepts should never be broken. Infractions of ethical principles are wrong in a moral sense and are damaging to social research (Erikson,1967; Dingwall, 1980;Bulmer,1982).

In planning any research, the need to think about and determine how to gain access to the required data is critical. As rightly noted by Suaders, Lewis and Thornhill (2007) the ‘ability to obtain both primary and secondary data will depend on you gaining access to an appropriate source or sources’. For this research, access to existing contacts will be negotiated by targeting managers for SME’s in Ireland adopter Cloud for their business process and explaining to them the reason for the research, why we need the data and how we intend to obtain the data i.e. through interviews.

Ethical issues will be addressed by guaranteeing strict anonymity of interviewees and confidentially of any information provided. To establish our credibility, a draft letter highlighting that I am a student of the Dublin Business School, including our names, contacts and an email address for our supervisor will be provided in case they wish to confirm the identity. In the interviews, the respondents will be asked for permission to record the interview to facilitate analysis. A draft copy of the letter is included in the appendices.

Time Allocation:

What is the rationale for your time allocation (cross-sectional research versus longitudinal research)?

Time Horizon:

Cross sectional : in which data are gathered just once, perhaps over a period of days or weeks or months or years, in order to answer a research question

The focus for this research will be on SME’s organisations adopted cloud and the changes in the enterprise will only be considered for the period they will operate on cloud.

Allocate a period of time to each of the following –

Activity -

Start Date -

Finish Date -

Searching for secondary data

Reading secondary data

Creating data collection instruments

Administrating data collection instruments

Analyzing primary data

Writing the early drafts

Analyzing comments on drafts by supervisor

Revisions of drafts

Printing and binding

Note that activities may overlap. How much may it cost to conduct your primary research?