Impact of Cloud Computing on Business
Submitted By
Ritesh Vijay Kadam
UNDER THE GUIDANCE OF
Prof. Ganesh Bhagwat (NMITD)
A PROJECT SUBMITTED IN PARTIAL FULFILMENT OF
MMS TO
VIDYALANKAR INSTITUTE OF TECHNOLOGY
Wadala (East), Mumbai 400 037
May 2023
Impact of Cloud Computing on Business
Submitted By
Ritesh Vijay Kadam
UNDER THE GUIDANCE OF
Prof. Ganesh Bhagwat (NMITD)
A PROJECT SUBMITTED IN PARTIAL FULFILMENT OF
MMS TO
VIDYALANKAR INSTITUTE OF TECHNOLOGY
Wadala (East), Mumbai 400 037
May 2023
Signature of Faculty Guide
Head of Department
DECLARATION
This is to declare that the study presented by me to Vidyalankar Institute of Technology, in
completion of the master’s in management studies (MMS) under the “Impact of Cloud
Computing on Business” has been accomplished under the guidance of Prof.
Ritesh Vijay Kadam
ACKNOWLEDGEMENT
My project on “Impact of Cloud Computing on Business” has been a great learning
experience. I was exposed to the different areas of research in finance and gained valuable
experience, which I will always recall with a sense of satisfaction and pride.
This is to acknowledge Prof. under whose guidance I have been able to successfully
complete this project and effectively come to a very successful conclusion.
A greater share of inputs and data from made this project report possible to its rightful
accuracy.
To all my colleagues who have helped me either directly or indirectly, I am grateful for their
valuable inputs. This project would not have been possible without their help.
Ritesh Vijay Kadam
Table of Contents
Abstract ...................................................................................................................................... 6
Introduction ................................................................................................................................ 6
Problem Definition..................................................................................................................... 8
Objectives .................................................................................................................................. 9
Scope of the study ...................................................................................................................... 9
Limitations of the study ........................................................................................................... 10
History of cloud computing ..................................................................................................... 11
Systematic Literature Review .................................................................................................. 12
Methodology ............................................................................................................................ 36
Surveys (Interview /Questionnaires Base) and Case Studies .................................................. 37
Findings & Recommendations ................................................................................................. 39
Conclusion ............................................................................................................................... 40
References ................................................................................................................................ 41
Abstract
This dissertation analyses the kind of impacts cloud computing can have on
different classifications of businesses, focused more on small and large businesses.
Cloud computing is an emerging technology, which is not yet fully accepted by
businesses. It is discussed what aspects of this technology can have positive impacts and
which aspects can have a negative impact on businesses. Research is done with the help
of systematic literature reviews, case studies and surveys. All positive and negative
impacts are analysed and discussed in detail. It is also discussed after investigation
results, why cloud computing technology evolved, what kind of issues it aims to cater,
and what the expectations of business owners are. It is concluded that cloud computing
can offer more benefits to small businesses than it can to large enterprises, which is why
small businesses are more likely to shift compared to large enterprises. It is further
discussed why large enterprises would not be willing to shift, and what can be done to
eliminate their fears about cloud computing.
Introduction
Business Question: To what extents will the adoption of cloud computing offer benefits
and to what extents will it introduce risks to different kinds of businesses?
This report contains results of my research about the kind of impacts and
security issues cloud computing can have on small and large businesses.
Cloud Computing is an evolving IT technology, which is said to be ‘key to the
future of IT’. It is a concept that encloses multiple computing features. The basic concept
is to provide computing facilities like, platform, applications, memory, data storage or
infrastructure over the internet. As such that, there will be no need of software
installations, memory, or software upgrades on local machines. All such upgrading can be
done on a single server which will be accessible by multiple clients, even from different
locations. It makes the client to be able to get access to his data and all applications from
any part of the world using Internet.
There are numerous companies offering cloud services in the market currently,
out of which some names are very known and established one’s, for example, IBM,
Google, Microsoft, etc., and there are even more businesses who are using cloud services.
But cloud computing technology has still not become accepted enough, as it should be due
to certain security issues and privacy of data. A big portion of the target market of cloud
computing is businesses, others being individual users. Businesses, of almost every kind,
having an IT department can get affected from cloud computing technology. There are
many doubts that business owners have in mind about embracing this new technology,
which are not yet cleared, which is why it has not yet reached its peak of acceptance in the
market. My research work is about finding out the kind advantages and disadvantages
cloud computing can provide in a business and also the security ‘fears’ that the business
owners have. I have researched about what categories of businesses can get positively
affected and which can be negatively affected. The method of research that I have
followed is mainly literature review along with surveys and case studies. With the help of
different sorts of literature available about cloud computing, I learned about the concepts
of this technology, the reasons why it has evolved, what sorts of issues does it aims to
solve and its pros and cons. The first part of my literature review was to acquire a
complete desired knowledge about this technology. The questions that I aimed to answer
by the end of this section of my research were:
What is cloud computing? What are the different categories of this technology that
can be tailored according to different kinds of businesses? How is it different from
existing technologies? What are the security issues?
After gaining complete required knowledge of this technology, as the second section of
my literature review, I aimed to answer questions like:
Why has cloud computing come in the picture?
What was the need for developing this technology?
What problems has it aimed to solve?
By reviewing literature for this section of my research, I understood the reason why cloud
computing has evolved in the market now, and what solutions does it aims to provide.
Finally, my literature review topic was to figure out the pros and cons of cloud
computing in businesses. Businesses can be categorised in many different classifications,
for example, IT, non-IT, small, medium sized, large, virtual, non-virtual, and many more.
Due to limited time and resources, I kept my research focused towards small and large
businesses only. I chose to research about the impact of this technology on small and large
businesses because, all businesses, despite their nature of core business objective, can be
broadly categorized as small or large.
After completing my literature review, I chose the method of Case studies,
Surveys and Questionnaires for my research for getting further results. I believe that
knowledge achieved by doing literature review has the possibility of being too theoretical.
Therefore, to get practical and real market answers for my research question, I chose to
study real case studies, stating personal experiences about cloud computing. The results I
achieved from performing case study analysis, seemed to be biased towards the favour of
cloud computing, as mostly were provided by businesses offering cloud services.
Therefore, I conducted my own survey from different business owners. My survey was
aimed to gather their views about embracing this new technology in their business by
using the help of questionnaires to complete my survey.
Finally, my report states the conclusion of my research, answering the main
business question:
To what extents will the adoption of cloud computing offer benefits and to
what extents will it introduce risks to different kinds of businesses?
Problem Definition
Enterprises today are required to build and maintain an IT department as part of
their business activities, no matter what the core business objective is. Any business, for
example, telecommunication industry, food business, financial, education industry,
entertainment business and numerous other categories require an IT department. There
could be various objectives of having an IT department in businesses, for example,
maintaining databases for the purpose of preserving organizational history and records,
developing solutions for providing efficient computations, speeding up organizational
processes, developing websites for promotional purposes, and many more.
IT can become a big nuisance at times for businesses not having IT as their core
competency or business objective. Additional budgets, resources and staff members are
required to cope up with an in-house IT Dept. To avoid this problem, the concept of
outsourcing evolved. This concept enables business owners to outsource the development
of IT solutions required by their business, and purchase completely developed solutions
without going through the hassle of development. This concept did release business
owners some effort, but there are still many IT operations that need to be operated in
house to use computing facilities, for example, software licensing, operational challenges
etc.
Cloud computing evolved as a solution to this problem for business owners. It
provides a facility to outsource the entire IT department and purchase complete computing
services from an external source. This technology has its own benefits and drawbacks as
well. It is a technology that is not widely accepted now. Therefore, my research work is
aimed at finding out the kind of positive and negative impacts that cloud computing can
have on enterprises.
Objectives
The objectives of my research are as follows:
➢ The first part of my research is focused about finding out the kind of services cloud
computing can provide to businesses. To what level can cloud services be tailored to
fit specific businesses?
➢ The second part of my research focuses on the advent of cloud computing. Why has
cloud computing evolved now? What are the aims of this technology? What kind of
problems does it aim to cater? How is it different from existing technologies?
➢ The third part of my research focuses on the advantages and disadvantages of cloud
computing. What aspects of cloud computing can impact businesses positively and
what aspects can affect businesses negatively? I also focus on the aspects of this
technology which can affect different businesses in a different way.
Scope of the study
The scope of this study aims to investigate the impacts of cloud computing on various
aspects of organizations and individuals. Cloud computing has revolutionized the way
businesses operate by providing scalable and flexible computing resources, storage,
and services over the internet. This research will delve into the multifaceted effects of
cloud computing across different domains.
Firstly, the study will explore the economic implications of cloud computing. It will
analyze the cost-effectiveness and financial benefits associated with adopting cloudbased solutions, such as reduced infrastructure investments, operational expenses, and
increased scalability. Additionally, the research will assess the impact on job markets,
including the creation of new roles and potential job displacements.
Secondly, the study will investigate the effects of cloud computing on data security
and privacy. It will examine the concerns and challenges related to storing sensitive
information in cloud environments, as well as the measures and technologies
employed to ensure data protection.
Furthermore, the research will explore the impact of cloud computing on productivity
and collaboration. It will analyze how cloud-based tools and platforms enhance
communication, teamwork, and innovation within organizations, allowing for
streamlined workflows and improved efficiency.
Lastly, the study will assess the environmental implications of cloud computing. It
will investigate the potential for energy savings, reduced carbon footprint, and
sustainable practices associated with the utilization of shared cloud resources.
By examining these various dimensions, this study aims to provide valuable insights
into the broad-ranging impacts of cloud computing, enabling organizations and
individuals to make informed decisions regarding its adoption and implementation.
Limitations of the study
While this study endeavours to explore the impacts of cloud computing, it is
important to acknowledge certain limitations that may affect the generalizability and
reliability of the findings.
Firstly, the research may face limitations regarding data availability and access.
Cloud computing is a rapidly evolving field, and obtaining comprehensive and up-todate data on its impacts across different industries and regions can be challenging.
The study's scope may be limited by the availability of relevant and reliable
information.
Secondly, the research may encounter difficulties in capturing the diverse range
of perspectives and experiences related to cloud computing. The impacts of cloud
computing can vary significantly depending on factors such as organizational size,
sector, and geographical location. It may be challenging to gather a representative
sample that adequately encompasses this diversity.
Furthermore, the study may be constrained by time and resource limitations.
Conducting an in-depth analysis of all potential impacts of cloud computing within
the given scope may be challenging within the constraints of the research timeline and
available resources. As a result, some aspects may receive less attention or depth of
analysis.
Lastly, the study's findings may be influenced by inherent biases and subjective
interpretations. Researchers' preconceptions and prior knowledge can unintentionally
shape the analysis and conclusions. Efforts will be made to minimize biases, but it is
important to acknowledge that they may exist and influence the outcomes.
Despite these limitations, this study aims to provide valuable insights into the impacts
of cloud computing. Awareness of these limitations will enhance the interpretation of
the findings and contribute to a more comprehensive understanding of the topic.
History of cloud computing
With the increasing market demand for changes, organizations are required to
constantly introduce innovations in their businesses to cope up with the market and
maintain a competitive advantage against their competitors.
When a company or enterprise plans to enhance its operations, or introduce new
services or products, changes in every department are required to be made. By changes, I
mean increasing human resource, developing new plans, managing time, adapting new
technology/process and a lot more. Out of all the changes required to be done, the
maximum time is required by the IT department in most cases.
The IT department requires the maximum time because; new solutions need to be
developed through the process of planning, designing, coding, and testing, new solution’s
integration with the old system is required and hardware and software upgrading is
required. Developing new solutions and integrating with old one’s takes most of the time
in majority cases. Because of this, IT departments have become the most evident point of
latency when an organization requires advancement. To solve such problems, the concept
of introducing IT resources as services came into being. By using IT resources as services,
organizations are not bound to rely completely on their IT departments for providing
services. Another benefit of this concept is that data and computing facilities are hosted by
a single source and can be accessed by multiple clients.
This concept was developed long before and has been implemented in businesses
in different forms. According to a report on ‘The Future of Cloud Computing’ by Lutz
Schubert, the concept of cloud computing dates to the 90’s in the form of telecom clouds.
In the telecom infrastructure, the user was kept unaware of the channels transferring its
data. Cloud computing is said to be an emerging field and according to a study which
states that, the market for cloud computing was $16 billion in 2008, and will increase to
$42 billion per annum by 2012.
Another concept from the 90’s, which is said to be the basis of cloud computing
architecture, is the client-server model. This model introduced the concept of storing files
on a single server and giving its access to multiple clients at the same time over a network.
More existing technologies with a similar concept as cloud computing as
concluded by my research is:
o Autonomic computing
o Client server model
o Grid computing
o Utility computing
o Peer to peer
All these concepts are discussed in detail further in the report, so that an
understanding of cloud computing technology can be developed, based on what existing
technologies it comprises of.
Systematic Literature Review
The dissertation that I am presenting is purely research based. To begin with my
research, I read literature from different sources (Research papers, journals, Forums) to
understand the methods of research, and in what way could I perform them. Out of the
many forms of research identified, literature review is the most thorough and accurate
one. Therefore, to understand what a systematic literature review is and how it is
conducted, I read a couple of research papers written on how to conduct systematic
literature review. I followed approach defined by the author Barbara Kitchenham in the
research paper titled ‘Procedures for Performing Systematic Reviews’ to conduct my
research.
Barbara Kitchenham defines stages to conduct systematic literature reviews. The
paper states that a literature review is supposed to have 3 stages, which are Planning,
Conducting and Reporting. Each stage is described in further detail in the paper, which is
followed in this dissertation. Before beginning with the actual research work, as defined
by the guidelines provided, the purpose of the research should be identified. The research
paper identifies 3 main reasons for conducting literature reviews. As my research is
separated in stages, all 3 reasons specified are catered as different stages of my research.
As the first stage of my research, I defined the research question that needs to be
answered. The research question specified was, ‘To what extents will the adoption of
cloud computing offer benefits and to what extents will it introduce risks to different
kinds of businesses?’ To answer this question, I divided my research work into stages.
The purpose of the first stage was to gather all relevant information about the topic to
position my research question or build the scene for answering my question. This stage is
reported as the fourth chapter of this dissertation, which reports all information gathered
about the topic ‘Cloud Computing’, along with all its attributed and related information
that will be necessary, for e.g., Deployment types and services it can offer.
The purpose of the second stage of my research was to identify the need for
answering my business question. It was aimed at researching about the main reason why
cloud computing evolved, and how it is different from what already exists. This part of
my research identified the need for conducting further research over the topic. This stage
is reported as the fifth chapter of my report.
The third part of my research was aimed to identify, analyse and interpret
accordingly, all relevant literature available for answering the actual business question.
This part answered questions like the advantages and disadvantages cloud computing can
provide in businesses. To further support this stage of my research, I conducted surveys
as well. This stage is reported as the sixth and seventh chapter of my report. I order to
conduct the systematic literature review; I decided a search strategy so that my research
does not stay biased over the advantages of cloud computing, as positive aspects are
published more than negative aspects usually. Majority of search done is through online
resources. Search terms were specified, by breaking down the main research question
into smaller stages, and synonyms were used to gather more results. In order to get to
more search results, I used terms defined by literature that I went through to search. The
search terms are stated occasionally in the report wherever felt necessary. I selected the
literature based on their sources. I went through blogs provided by different IT
consulting companies and literature provided by cloud service providers as well, but
relied more on literature provided in research papers published by universities or
organizations which are not affected by cloud computing in any way. Another criterion
that I used for choosing literature was the publishing date. In my dissertation, majority of
the literature referenced was published a maximum of 5 years earlier from date. I
analysed contradicting data provided by different resources by further review of the
topic or by the reliability of the source providing data. Data extraction was done through
personal notes made frequently, which were joined later while reporting.
In this section of my report, I have discussed my literature review results about
the pros and cons of cloud architecture when implemented in a business. I have kept my
research unbiased towards either its pros or cons. In order to conduct the literature
review, I have chosen literature published by sources which neither benefit nor detriment
by the adoption of cloud computing, for example, articles published by newspapers,
university published research papers and have occasionally used papers published by IT
consulting firms. My reason for choosing such literature was to keep my research results
unbiased and get a complete vision about cloud computing from a third person’s
perspective.
To reach a conclusion about whether cloud computing is the solution for
businesses or not and more importantly, what kind of businesses will get more affected
than others, it is important to understand all its aspects. Like every other technology,
cloud computing has numerous positive and many negative aspects alongside as well.
But, as every business has a different objective, and different preferences, it can be said
that the same aspect of technology could provide great advantage to one business while
make no difference to the other and vice versa. For example, a small business may find
the pay-per-use model of cloud architecture very cost efficient, while a large enterprise,
which owns huge IT infrastructure and unused resources might find this equally cost
efficient to in house management. Same is the case with outsourcing organization’s
database. A virtual organization may find this feature extremely appropriate according to
its requirements, while an organization dealing with confidential data might look upon
this feature as a risk. Therefore, the pros and cons of cloud computing cannot be stated as
black and white rules for providing advantage or disadvantage to a business. The search
terms I used for listing down the advantages and disadvantages of cloud computing, were
simply the ‘Advantages and Disadvantages of Cloud Computing’. While, to understand
each aspect separately, I searched for all the subdivisions of this section of my report
separately. I research about papers and articles written with the objective of discussing
those specific aspects of cloud computing.
The main problem I encountered while searching for literature was that that
mostly papers and articles provided about the advantages and disadvantages of cloud
computing were published by cloud service providers. I was not willing to use
information from them as they would be biased towards its benefits. It was difficult for
me to find literature published by sources which provided an unbiased view.
I have discussed in this section of my report the pros and cons of clouds, which
might or might not affect every category of business in the same way. It is stated along
with the discussion of every aspect, what kind of businesses will get more affected and
which category will have less affect.
a. Positive impacts of Cloud Computing into businesses.
i. Economic Benefit
By adopting cloud computing, companies can save huge amounts of money
which otherwise has to be spent on IT departments while using in-house solutions. It
saves money mainly because organizations do not have to develop an in-house
infrastructure to support their IT needs. Other than this, the payment model used by
cloud computing is purely usage based, called the pay-peruse model, and organizations
can scale up or scale down the number of services they use at will within minutes
without going through any complexity. It is further explained in detail how each aspect
helps organizations save money.
The pay-per-use model, also known as the usage, based pricing model used in
cloud architectures, means that the user must pay only for the amount used. This is the
key feature of cloud computing, which provides great economic value to businesses.
Usually, large enterprises own excessive IT resources, which are not always used,
but are maintained for peak times and emergencies. The excessive IT resources stay idle
at most times, while are fully or almost fully utilized at the peak usage times. According
to a survey, the average utilization of IT resources in large enterprises is 5-20% at nonpeak times. The peak times for any enterprise are approximately 2 to 3 months per year.
Therefore, most of the IT resources owned by large enterprises are underutilized for most
time of the year. Large enterprises chose to own underutilized assets mainly because they
do not want difficulty to occur when the company demand increases and secondly
because they have enough capital to afford it.
If, companies pay only for the number of resources used, they can save a huge
amount of capital. A large amount of money is spent every year on the maintenance of
unused IT resources. For example, if a company requires 500 servers at noon and only
100 servers at midnight every day, which makes an average usage of 300 servers per day.
The company is using (300*24) 7200 server hours per day. But, because extra resources
need to be maintained throughout for peak usage timings, the company will have to pay
equivalent to (500*24) 12000 server hours per day. The company has is paying for 1.7
times more than what is being used.
By using the pay-per-use model, if the company must pay any amount less than
1.7 times of what is being used in this case, it will still save capital. Pay-per-use model
can also be implemented if the usages of resources are distributed over time nonuniformly.
Large enterprises usually hold underutilized resources which stay idle at most
times. But the case is totally opposite for small enterprises. As obvious by the above
discussion, they cannot afford to own and manage underutilized IT resources throughout
the year which will only be of use for a couple of months in the whole year. Therefore,
small organizations usually own resources that are fully or almost fully utilized at nonpeak timings, and just about cater the needs of peak times. Such use of IT resources is
referred to as overutilization.
When a company needs to scale up its IT resources, it must go through
complexities of purchasing, installing and integrating them with existing systems. This
process might take weeks or in some cases months. Moreover, when a company
purchases extra resources to cater peak times, those resources are of no use once the peak
time has passed. Demand for services varies with time in almost every organization. This
problem also arises, when an organization does not know its demand for IT resources in
advance of starting a new project.
The rapid elasticity model of cloud computing helps solve all such problems
faced by businesses. Resources are provided on demand by cloud providers [44]. The
demand can be increased or decreased within minutes. Business owners do not have to
worry about purchasing or integrating added resources to existing ones.
Cloud providers offer this service of scaling up and down on demand within
minimum possible time by their multi tenancy architecture. All resources owned by
cloud providers are shared by multiple users. Therefore, unused resources of one client
can be leased off to another client, without any complexities of purchasing, deploying,
and integrating them. This service makes organizations save time, and the nuisance of
scaling up or scaling down resources. Another economic benefit that organizations will
enjoy when using IT services through clouds is the cost elimination/reduction of IT
department development, maintenance, and upgrades.
Large enterprises or organizations which have an established IT department need
to spend a huge amount of their company’s budget on the constant maintenance of IT.
Cloud computing will help them save this cost and rather invest on the core business
objective. But SMB’s will benefit from this more. When a new business plans to hit the
market, huge initial investments are required to set up the business. By using IT services
through clouds, SMB’s can begin without developing an in-house IT infrastructure.
ii. Managerial and Environmental Benefit
As discussed previously, cloud computing offers businesses to use IT services
through an external provider, which reduces the managerial tasks for the organization.
For example, if a company is purchasing database services for its company, it will only
have to manage relations with the service provider and communicate their requirements
to them. The client organization will not be concerned about creating the database,
managing hardware and software involved in building databases, managing human
resource involved and the constant maintenance of databases. All such issues will be
managed by the service provider. Cloud computing technology also provides ease for
new businesses planning to dive in the market. Enterprises have a frequent concern about
databases, which is regular data backup and data recovery. Databases are not only
storage mediums for historical data in enterprises but play a very important role in every
future decision-making process. An organization’s database is its biggest asset. Cloud
computing architecture outsources the client’s databases, and they are managed at
separate physical locations. The same company’s data might be scattered at multiple
physical locations, which means that all data is not stored at a single location.Storing
complete data at a single physical location can be risky because, in case a disaster occurs
at a location, complete data will be lost. While, if data is divided and stored at multiple
locations, parts of data will still be safe. It makes it possible for business owners to keep
the business processes functioning, even if a disaster has occurred. Cloud providers are
also responsible for creating regular backups for databases, which are stored separately.
Therefore, instant data recovery can be done in case the data gets affected. Business
owners do not have to spend on creating backups and recovery management tools in case
of cloud architecture.
Cloud architecture also provides the service of scaling up and scaling down of
services on demand within minutes as discussed above. Business owners do not have to
be concerned about purchasing extra IT resources when the demand increases and
maintaining them while they are not being used.
When an organization’s managerial responsibilities reduce because of adopting
cloud architecture, as discussed above, the organization can focus on its core business
objective more. The human resource required for managing the IT department and the
budget required for the IT can be spent on and used to manage other business processes
which will benefit the core competency of the business.
Up till now I have discussed the benefits of cloud computing which are enjoyed
by individual clients, but if things are looked upon from a bigger scale, cloud architecture
benefits the environment as well. With the use of cloud architecture, less physical
infrastructure is used overall. Cloud providers own infrastructure that is used by multiple
clients through multi-tenancy, which means that the same applications and infrastructure
is used by multiple organizations. Thus, separate resources for each organization are not
required. By using this architecture, the same demand for organizations is fulfilled by
reduced number of resources, and not all infrastructure and applications are used at their
full capacity. This efficiency gain of resources reduces power consumption. It also saves
all the energy involved in developing, distributing, and disposing of equipment and
applications. Therefore, it can be said that, if looked upon from a broader perspective,
cloud computing benefits the overall environment as well along with benefiting
individual businesses.
b. Negative Impacts of Cloud Computing into Businesses
Cloud computing is a technology that has not matured to its fullest as yet, which
is why there are many loopholes that organizations see and thus feel reluctant to migrate
to cloud computing.
According to expert analysis, every new technology which is in the phase of
acceptance by the market goes through complexities, which are solved as the technology
matures. Doubts related to cloud computing, that business owners fear are much like the
one’s associated with the concept of virtualization. But, as the technology matured, the
issues were solved as well.
Initially it was difficult for business owners to use an external email service for
their businesses. The reason for this was availability and security issues, but, as email
service providers increased their security management and made availability more
reliable, the business owners developed trust and the technology is now widely accepted.
For example, Google has gained the trust of its users through the service it
provides to such a level that ‘google.com’ is considered the dial tone of internet now. If a
user tries to open ‘google.com’, and it does not open, the user will perceive that the
internet is not working, rather assuming that ‘Google’ servers are down. The major
disadvantages of cloud computing, understood through literature review are discussed in
the report further. The search terms used for finding literature were ‘Disadvantages,
Risks and Negative Impacts of Cloud computing’. The literature was short listed based
on its source reliability and publishing date.
i. Dependency issues
Accessing IT services through clouds makes cloud customers dependant in
multiple ways. They cannot make decisions freely about their own applications and data,
which is possible while using in-house solutions. This is because, IT services are owned
and managed by a third party and accessibility of those services is dependent on an
external provider and the internet.
Therefore, all individuals/companies involved must be consulted or at least informed
in every decision making. Many authors discuss that one of the most important fears of
business owners while planning to opt for cloud computing is always the availability of
their data and processes. An organization is responsible for its own data and processes,
even when they are managed by a service provider. Availability of data at any time is not
an issue to be worried about when the data is managed in-house, because all databases
are managed by the same organization and can be made accessible on will at any time.
The cloud customer organization becomes completely dependent on its service provider
in case of using cloud architecture. If the service provider closes or goes out of business,
complete data of any organization depending on it could become inaccessible for
unknown period. As explained in an article published by CA Technologies: one of the
largest software corporations in the world; IT infrastructure can be moved easily between
service providers, but it is very difficult for software’s or applications to be ported.
Loosing data and applications developed could be as difficult for a business, as if it had
to start all over again from scratch.
This risk of cloud computing can affect both, small and large businesses but, in
different ways. It cannot be said which could get affected more and which less, as
different authors have different viewpoints to share. According to Gregor Petri, large
businesses are organized and established enough to maintain regular backups; therefore,
it will not matter for them if their service provider loses data. The backup systems can
retrieve entire data without any loss of information.
While according to another author Micheal Armbrust, large enterprises will be
less likely to shift to cloud computing, because their data and processes are too precious
to be lost. While small business can risk their data on the price of cost reduction. This is
why they will be more likely to make the shift.
Another fear of cloud users is the theft of data. Customers of cloud computing are
normally not aware of the physical location of their data [54]. They are also unaware of
the security measures and encryption techniques that the service providers are taking to
keep their data safe. This creates fears for the customer organization, because of which,
they prefer using inhouse solutions. Any organization using IT services through an
external source expects it to be extremely reliable and keep them aware of all the security
measures taken, which cannot be done in case of cloud computing.
Lastly, another dependency issue that cloud users fear is, excessive dependency
on the internet. When an organization shifts its entire IT department to a public cloud, it
means that all its day-to-day processes and activities are dependent on the availability of
the internet. While accessing and operating IT services over internet, it is extremely
important to have high-speed and high bandwidth internet connection. For large
enterprises, if internet availability goes down for even a few days, the consequences can
be extremely damaging. Like developed countries, internet availability is not as efficient
throughout the world. Therefore, shifting to cloud computing seems a bad idea,
especially in the countries where internet availability is not very reliable and fast enough.
According to a few authors, because of internet dependency, cloud computing can never
substitute in-house systems.
ii. Security, Privacy and Legal Issues
As discussed in a paper published about ‘Moving to the Cloud’, security and
privacy issues are the biggest concern of businesses who are considering shifting to
cloud computing. As discussed earlier in the report, cloud computing outsources a
company’s data and processes. They are managed by a third party (cloud provider), and
the customer company loses control over its own data once it shifts to the cloud. Every
organization has its own privacy and security policies, which are managed by the
company itself, therefore, companies feel secure about their data and processes. But,
when all IT operations of a company are shifted to clouds, the customer company
becomes unaware of the security and privacy policies followed in order to keep their data
secure. The authority for managing security policies shifts to the cloud providers.
Another main reason which increases the security and privacy concerns of
organizations planning shifting to clouds is the multi-tenancy architecture. Same
applications and physical data locations might be shared by multiple businesses using the
same cloud providing company.
An author Salvatore D’Agostino discusses that using cloud services does not
change any security policies, but it increases the number of people who can view an
organizations data. Security and privacy issues related to cloud computing are not new
concepts introduced by this technology, but, they have always been there with using any
kind of web services. Cloud Computing shares these issues with the web services
because all services provided by cloud computing are accessible over the web. Security
and privacy issues are a bigger concern for cloud customers in case of using public
clouds. Private clouds are internally managed; therefore, such issues are not of worry.
Another problem arises with the geographically dispersed servers used by cloud
architecture. The globally dispersed data centres of cloud providers introduce legal
issues. For example, it is possible that a company using cloud services has all its data and
applications operated in a separate country. Different countries have different rules and
policies for data protection, and it might create issues for the cloud users. Data protection
policies might be contradictory and cloud users will have to go through government’s
jurisdictions to get access to their own data.
Another issue could be the integration of an organization’s data, which might be
physically located in different countries with different policies of data handling. Location
of data is a very important factor, and it determines which rules it will have to obey.
According to research, Security, Privacy and Legal issues are said to be the most
important factors, which keep businesses restricted from shifting to cloud computing. An
author: Jager discusses that with the use of cloud computing, the authority and power of
governments and organizations will take priority over resources. Thus, it is in the hand of
governments to encourage the use of cloud computing by changing policies and
collaborating with each other.
7.1. Defining cloud computing?
To begin with answering my business question; ‘To what extents will the
adoption of cloud computing offer benefits and to what extents will it introduce risks
to different kinds of businesses?’, it is important to understand the basic concepts of
cloud computing. To discuss these basic concepts, I have begun my report by stating
the conclusions of my research about the concept of cloud computing. What is it?
Where did it begin from? What constitutes the technology? What are its
characteristics?
I begin with discussing what is the concept behind cloud computing? I researched
about explanations stated by different authors (university publications, books on cloud
computing and research papers about different aspects of clouds). I found a variation
of definitions, which was because, every paper had a different business question to
answer and the concept of cloud computing was defined in every paper, accordingly,
focusing on the aspects the author felt important to support the corresponding
business question.
I went through a variety of literature and have concluded a complete explanation of
the fundamental concepts of cloud computing.
a. What is cloud computing?
Any company in the business world today is bound to have an IT department in order
to cope up with the market. Beside from all the benefits, it gets costly and exhausting
for any company to manage its IT department along with the company’s main
objectives. This is because, IT is not their priority and the IT departments require a
team of skilled professionals, hardware infrastructure and software licenses. All this
adds up to become a huge part of the organization’s budget which often is neglected
in cases where it is not a priority.
To eliminate all such problems and yet get benefited by IT solutions, the cloud
computing technology was introduced. It is a technology that provides a platform for
services, infrastructure, and storage services to be provided over a network (internet).
It is referred to as ‘cloud computing’, because it provides all computational services
over the internet, and the term ‘cloud’ has been used as a metaphor for the internet
since many years.
Cloud Computing is an evolving IT technology, ‘Cloud computing is the key to the
future of IT’. It is a concept that umbrellas multiple computing features. The basic
concept is to provide computing facilities like, applications, memory, working
platforms or infrastructure over the internet. Such that, there should be no
need of software installations, memory, or software upgrades on local machines. All
such upgrading can be done on a single server which will be accessible by multiple
clients. It will make the use of computers much easier.
With the adoption of cloud computing, individual software license purchases will not
be required for every individual machine. Hardware infrastructure, and IT teams or
departments in every individual company will not be required. All these services will
be provided over the internet on demand, according to current requirement of the
company. This shall enable the IT departments in organizations to focus more on
developing new and more effective and efficient solutions rather than spending time
on managing servers and infrastructure of the company.
Cloud Computing can help organizations reduce or sometimes eliminate their IT
operations, like hardware/software licensing, solutions development, data
maintenance and upgrading challenges. This technology can be understood as a
mature form of several existing technologies like, client-server models, grid
computing and utility computing.
Services provided over the cloud are supported by hosting providers. To access
services, clients are required to register with a cloud service provider. These services
are provided over standard internet protocols like ‘http’ and ‘xml’.
Entire software and hardware management is done by the hosting provider, and the
client does not need to know about any regarding information. The client can use
software applications, hardware requirements (e.g. CPU performance speed), or
memory according to its requirement.
Main characteristics of cloud computing technology are as follows:
• On demand self-service:
Any individual or organization can access and use services provided by the cloud
without having big computer and server architecture.
• Ubiquitous network access:
Everything over the cloud will be machine and operating system independent and will
be accessible almost everywhere, in terms of geographical location.
• Location independent resource pooling:
The client does not need to have information about the physical location of the
services being used. The provider is responsible for serving the clients through a
multi-tenant model. It does not matter for the client which locations are the services
located.
• Rapid elasticity:
Clients can alter the number of services at will at any time. Services used can be
reduced or increased according to the usage.
• Pay per use:
Clients are charged for only the services that they use. Increasing or decreasing
services on demand will alter the number of charges as well.
To implement clouds, there are various deployment-architectures defined. Clouds can
be used for multiple purposes; therefore, different architectures for implementation
are defined:
• Private clouds
• Private clouds
• Public clouds
• Community clouds
• Hybrid clouds
Mainly, the deployment-architectures are defined into two major categories for
enterprises.
Firstly, clouds that operate within a company’s network, and secondly, clouds that
operate outside a single company’s network. These architectures are defined in detail
further in the report to understand the kinds of clouds enterprises can implement
according to their requirements.
7.2 Comparison with other related technologies
As stated above, there are a few existing technologies that have a similar concept
to cloud computing. Rather it would be better to say that cloud computing is a
superset and a mature form of these existing technologies. It incorporates all these
existing technologies, but, has a wider vision. Explanations of these technologies are
stated below to understand what technical components cloud computing comprises. I
did research about the existing technologies that cloud computing comprises of to
understand its technological aspects. It helped me understand what components of
cloud computing have already been implemented and tested practically, and also the
advantages and disadvantages of them. Studying about cloud computing related
technologies also helped me understand, how cloud computing is different from what
has already been developed.
i. Autonomic computing
Autonomic computing is a computing model which manages its operations itself
through the concepts of Artificial intelligence. Its main goal is to create systems that
are self-operated. This concept was started by IBM in 2001. According to a definition
on ‘Autonomic Computing’, IBM set 8 conditions for a system to be autonomic which
are:
• An autonomic system should recognize changes in the computing environment it
operates in and configure itself automatically
• An autonomic system should alter its performance to achieve maximum efficiency
automatically
• An autonomic system should fix its own problems
• An autonomic system should detect, analyse, and remove any risks automatically
and maintain system security
• An autonomic system should adapt itself accordingly to its locality
• An autonomic system should automatically form communication with its
neighbouring machines
• An autonomic system should rely on open standards
• An autonomic system should keep its operations invisible from the users
Concepts of autonomic computing form a part of cloud computing, but as discussed
earlier, cloud computing is more ambitious. The major similarity between the two
technologies is that back-end processes are kept hidden from the end user. The end
user is kept unaware of the processes being used by its machine and their source.
ii. Client-server model
A client-server model is a computing model based on more than one machine, often
used by organizations and not for personal use. One workstation act as the server and
the rest workstations in the workplace are referred as clients. The server hosts
different services like, disk drives, printers, or network traffic as a single source,
while the clients access these services through the server. Each computer in this
model is either a client or a server.
File storage is done on the server computer, and the clients request communication
with the client to access files. Processing power is also provided by the server in some
cases. All workstations within a workplace communicate over a local network.
The concept of cloud computing and the client server model is very similar to each
other. The differences are that a client server model is a locally operated model while
the concept of cloud computing is to provide services globally to a wider variety of
clients. Secondly, client server models offer CPU performance, networking facilities
and file storage as services, while cloud computing offers much more services than
that, which are explained in more detail further in the report.
iii. Grid computing
Grid computing is a concept which was introduced in the early 1990’s. The concept of
grid computing is to coordinate multiple computers together, such that they all work
for a single task at the same time. It incorporates the computational power of multiple
machines to achieve a single goal. Grid computing architectures are normally used for
huge projects which require huge computational power or involve huge amounts of
data.
By dividing a single task between multiple computers, the strength of many
computers is added up for achieving a single task, thus huge tasks and computations
can be performed easily. Grid computing is constructed on middleware (software to
connect different applications). The computers connected through a grid are usually
placed on scattered geographical locations.
Cloud computing and grid computing are both technologies used to increase
utilization of the available IT resources. The difference between them is that in grid
computing, a system distributes tasks to different computers and those computers
return the tasks after computation back to the system. While In cloud computing, a
system accesses services through a network to complete its tasks.
iv. Utility Computing
Utility computing is a service providing model, which has a very similar concept to
cloud computing. There is a single service provider, which provides computing
services to clients as needed and the clients pay according to the amount they have
used. The term ‘pay-per-use’ is also used to explain utility computing, which means
that the user only pays for the number of resources used rather than paying a fixed
amount.
Cloud computing is different from utility computing because, in case of utility
computing the user is aware of the source of the services it is using. While, in cloud
computing, there are multiple sources for services and the user is unaware of the
source.
Other than this, utility computing provides direct access to the services because of less
complex architectures. While, in case of cloud computing, the services are provided
much indirectly as they have more complex architectures and do not rely on a single
source. Rather than stating both as two different technologies, it would be better to
say that they both work in collaboration. Utility computing is a necessity to build a
reliable cloud.
v. Peer to peer
Peer to peer (P2P) architecture is much like the client server model described above.
In client server models, some machines are dedicated as servers while some as clients.
While, in P2P architecture, all computers connected to the local network act as both,
clients and servers. All machines can provide and access facilities from different
computers on the same network.
The differences between P2P and cloud computing are the same as the differences
between client-server model and cloud computing.
7.3 Difference between different cloud deployment
To implement clouds, various deployment models or patterns of implementation and
usage is defined. There are two primary classifications of deployment models, which
are public and private. While the rest deployment models mix and match their
characteristics. According to a definition by Dustin Amrhein (2011), deployment
models are ‘concepts for the encapsulation of installations, configuration, and
integration activities. All models fulfil the basic characteristics of cloud computing,
which are, round the clock availability, elasticity/scalability, and service-oriented
architecture. Whereas these models differ from each other in terms of their varying
scope and access of services to clients.
i. Public Cloud
‘Public cloud’ is the model which encapsulates all features of cloud computing, thus,
is said to be the mainstream of cloud computing. In public cloud deployment models,
services are made available for public, which means that they are accessible by the
public. Services are provided over normal internet, thus, are available outside the
domain of the service provider.
ii. Private cloud
A ‘Private cloud’ model is created for and operated by a single organization. All
services provided in a private cloud are on a private network for a single organization
and cannot be accessed outside of this domain. Usually, organizations are required to
build and manage their own clouds. The purpose of private cloud model is to maintain
a company’s privacy, security and authority over its data and operations.
iii. Hybrid cloud
‘Hybrid cloud’ model is the combination of public and private clouds. It is used by
organizations which require accessing some services through a public cloud while
some over a private cloud. Its infrastructure is a combination of multiple clouds
(public and private) bound to function together.
iv. Community cloud
A ‘Community cloud’ model is like ‘Private cloud’ model, but more enhanced in
terms of access of services. Services provided over this model are accessible by
multiple organizations of the same nature, but not to the public. Multiple
organizations which require the same kind of services share a common cloud, while
the privacy and security of organizations is still maintained.
Different deployment models are suitable for different kinds of enterprises according
to their requirements. Some organizations may find private clouds more suitable
according to their requirements while for some, public clouds might be the answer.
Reading about different cloud deployment types helped me understand, what are the
different models of deployment that cloud computing can offer, which can be tailored
to some extent according to the requirements of the client. I understood that because
cloud computing offers different deployment models; it can be useful for different
kinds of businesses, as it is not designed for a single purpose.
7.4. What services can a cloud provide in an enterprise?
Cloud computing models have numerous components which work together in a
collaborative manner to provide multiple kinds of services. These services are
discussed below along with the benefit they can provide in an organization:
v. Storage as a service: Storage space or disks storing data are located at a separate
physical location but are dedicated for the use of a specific customer.
vi. Database as a service: All services provided by a database are hosted remotely.
vii. Information as a service: Interfaces providing access to information stored at a
different locations are provided.
viii. Process as a service: A service which facilitates customers using resources from
different sources, to integrate the resources and operate as if they were located
together.
ix. Application as a service (Software as a Service): Software applications or IT
solutions are provided over the internet.
x. Platform as a service: A platform for application/software development is provided
over the internet.
xi. Integration as a service: It provides the facility to integrate applications used
through clouds.
xii. Security as a service: Security services for internal systems are provided over the
internet.
xiii. Management/Governance as a service: It provides customers the ability to
operate services accessed through multiple clouds.
xiv. Testing as a service: It provides customers the ability to test cloud systems and
services provided over the clouds.
xv. Infrastructure as a service: it provides a service to systems so that they become
able to access services operated remotely.
7.5 What solution can cloud computing aim to provide? Why has this technology
Evolved?
In this chapter of my report, I discuss the advent of cloud computing, why did the idea
bloom now? Why are businesses adopting it? What business value are businesses
looking for? And what are the challenges that small/medium sized businesses and
large enterprises face to adopt cloud computing?
To answer my business question ‘To what extents will the adoption of cloud
computing offer benefits and to what extents will it introduce risks to different kinds
of businesses?’, I need to understand the main reason why businesses want to adopt
clouds. By this portion of my research, I aim to understand what business owners
think they might achieve by the adoption of cloud computing. Further in my report, I
will discuss whether these expectations of business owners are achieved or not.
a. Why cloud computing now?
As discussed earlier in the report, cloud computing offers a great deal of benefits to
enterprises. It helps them reduce costs and avail IT services without any hassle of
managing IT departments and huge infrastructures. The ‘pay-per-use’ characteristic of
cloud computing makes an enterprise save the cost of spending on maintaining heavy
software and hardware infrastructure for their peak usage times. According to a few
research and predictions with the help of surveys, cloud computing is said to evolve
greatly in the coming years. According to an analysis about cloud computing by the
European Network and Information Security Agency; ‘the worldwide forecast for
cloud services in 2009 was in the order of $17.4 billion, while the estimation for 2013
amounts to $44.2 billion’.
But the question is that if cloud computing is a combination of existing technologies
(Autonomic computing, Client-server model, Grid computing, Utility computing and
Peer-to-peer) which have been implemented and tested in enterprises before, then why
has the concept of cloud computing emerged now? Why wasn’t it introduced earlier?
Factors for the emerging of cloud computing are discussed below:
• Every new technology or process that is introduced in this world goes through
phases of evolvement and acceptance. Any new technology evolves from existing
concepts, and after a new technology is introduced, it takes time for people to
understand and adapt it. Changes are made at small level before a technology is
accepted for large businesses. Same is the case with cloud computing. An example by
Jim Cooke (2010) explains this process in an interesting way as:
‘Farming, for example, was once practiced by many independent, self-employed
farmers who worked the land they owned. If they produced an excess, they sold the
excess. Over time, economies of scale enabled by new technologies made the smallfarm model less efficient and productive than large farms, which could produce larger
quantities of food less expensively. As prices dropped, demand grew and so did largefarm productivity, reducing margins further and making small farms even less viable.
Many small farms consolidated into larger farms, and small farmers went to work for
agricultural corporations.
• Other than this, cloud computing implementation is dependent on many other IT
technologies. Without which, cloud computing cannot function at its best. These
include storing huge amounts of data inexpensively, transferring data over long
distances without time constraint and virtualization. These technologies have been
matured overtime which is why the concept of cloud computing was not floated
earlier.
• Another major reason is the culture of accepting file storage and using other IT
services outside an organization’s firewall. Earlier, organizations did not rely on using
services from a third party which is not a part of the same enterprise. But, as the IT
world has evolved, privacy and security issues have been made more reliable. Thus,
using services outside an organization’s domain has become acceptable.
• Another catalyst as discussed by Jim Cooke (2010), is the economic recession.
Because of the economic recession, all enterprises were forced to review their entire
business units in order to cut down any excess cost. This situation turned out to be an
opportunity for cloud computing as it offers services that can reduce costs in an
organization.
b. What is the main reason for cloud adoption in business?
As discussed earlier, there are many characteristics of cloud computing, which can
benefit enterprises. But, as every other technology, this has its own drawbacks as
well. It provides different kinds of benefits and risks to different categories of
businesses. In this section, the main reason for the adoption of cloud computing in
businesses is discussed, keeping in view its advantages and disadvantages.
To create a good business case for any new technology, its business value is
considered.
The major questions to answer are what value can the new technology provide to the
enterprise?
What economic benefit will be achieved? Businesses, after all are all about making
wealth. Therefore, any new technology that can provide an economic benefit to the
company is welcomed with open arms. As stated in an article by Jim Cooke (2010):
‘Technology is not the primary impetus to shift from traditional, data centre-based IT.
The shift is due to the economics of using the cloud versus the physical data centre.’
Jim Cooke further states that technology has just provided a medium, but providing
economic value is the main reason for adopting clouds in businesses.
This view of thought is backed by David Linthicum (2009), by stating that in order to
make a good business case for cloud computing to be adopted by an enterprise, its
cost reduction and capital saving aspects should be discussed. But it is not as straight
forward as it seems to be. Cloud computing technology sure does reduce cost in an
enterprise but, there are many other aspects that are normally ignored [23]. Such
aspects include the cost of migrating current system to clouds, cost of integrating
current system with clouds, etc. For small and medium sized businesses, these costs
might overtake the number of profits generated. But, for large enterprises,
the case is opposite. A different viewpoint is stated by Hamid Motahari et. Al and Ali
Hosseini et. Al.
It discusses that the main reason for businesses adopting cloud computing is the
outsourcing of IT. Currently, every company is bound to maintain an IT department to
maintain its IT operations. Companies, in this case, are unable to give their full
potential towards their core functionality. This might be affordable for large
enterprises but is unaffordable for small or medium sized businesses. Therefore, the
outsourcing of IT is one of the main reasons for small and medium sized businesses to
shift to cloud computing. Supporting the above stated reason for cloud computing
adoption, electricity can be taken as an example. Earlier, when electricity was not
very common, every enterprise had to maintain individual grid stations to cater their
needs. While, when the forms of electricity production matured, organizations started
to purchase electricity on demand from third parties.
This made organizations focus more on their core functionality, rather than spending
time and resources on non-core functions.
Same is the case with cloud computing. As IT has matured, there is no need for every
organization to maintain its own IT department when there is an option of
outsourcing, which can help reduce operational costs and save capital as well.
c. What kind of business value can IT Provide; how does cloud computing offer
this value?
Whenever an enterprise decides to adopt a new technology, it expects the technology
to increase the efficiency of the organization’s daily operations, provide more
effective solutions to satisfy the customer, and lower the costs, or in simple words
good business value. Therefore, it is important to understand what business value
cloud computing can offer to businesses. I have researched about the kind of business
value businesses look for and how can cloud computing offer this, to get a clear idea
of why enterprises would want to adopt clouds.
All enterprises have a specific business objective that they focus on. Supporting
departments and sub sections are created in enterprises to maintain and support its
main business objective. By supporting departments, I mean to refer to departments
like, the HR department, Finance department, IT department, Marketing department
and a lot more. All these departments are made to support the organization’s core
objective. They do not play a part in the actual business objective directly. They are
developed to support and provide good business value to the enterprise.
Business value is the determining value of businesses. According to a definition:
‘Business value is the present value of all expected future benefits to be derived from
the business.’
They are intangible assets that an organization possesses. Any sort of benefit provided
to an organization is termed as its business value. The benefit can be monetary or nonmonetary.
Monetary benefits that an enterprise can get include, operational cost reductions,
preserving capital and making profits [28], as derived from an explanation on defining
the kind of value, cloud computing can provide to businesses. Other than this, the
non-monetary benefits that an enterprise can get include increased customer
satisfaction and gaining competitive advantage mainly.
Focusing on the IT department of a company is a very essential part to attain good
business value. According to David S. Sword, some organizations believe that the role
of an IT department is to develop and deploy the correct solution only, and that it does
not play a part in achieving the core business objective. But there is a lot of business
value that IT can bring to any kind of business through providing effective and
efficient solutions.
‘Avanade’ is a company that provides Microsoft technology services to businesses. It
conducted a survey in January 2009 about what business owners think of cloud
computing. The survey was conducted over 500 different kinds of businesses and over
17 different countries. The survey results stated that 3/4th of the organizations
interviewed believed that ‘cloud computing is a real technology option’, and half of
them believed that ‘technology is an efficient way to reduce costs. The survey results
also stated that, 65% of the organizations interviewed believed that ‘cloud computing
helped them focus more on their businesses’, and 70% believed that ‘cloud computing
would improve their organization’s flexibility’.
Another survey was conducted by the BCG group, a consulting firm and advisor on
business strategies in November 2009. The survey was conducted over 30 different
kinds of companies.
Its results stated that most of the organizations do not view cloud computing only as a
way reduce costs and manage operations, but they view it as a technology that could
improve the entire IT environment and the company’s business processes. They
believe that cloud computing can provide good business value to an enterprise along
with simplifying its IT operations.
Analysing the above survey results, it can be concluded that cloud computing is
believed to offer good business value to enterprises, and it can prove to be beneficial
in many ways.
d. Is cloud computing more suitable for small or large businesses?
Organizations or businesses are broadly defined in two major categories generally,
which have different needs and get affected by new technologies in a different way.
These categories are ‘large businesses’ and ‘small/medium sized businesses’
(SMB’s). The business needs for both are separate; therefore, new technologies have
separate impacts on both. To narrow down my research for the categories of
businesses, cloud computing can affect, I researched about these different categories
of businesses. The aim of my research was to figure out; to what extent can cloud
computing affect large businesses and in comparison, to that, to what extent it can
affect SMB’s? I intended to investigate, which kind of businesses can cloud
computing prove more suitable for?
To carry out my research, I searched for ‘Effects of cloud computing on large
enterprises’, and ‘Effects of cloud computing on small/medium sized enterprises’. As
a result of my research, I came across articles by different reliable newspapers and
consulting companies, which had stated the effects of cloud computing on these
different categories of businesses. I found out different viewpoints by different
companies’ articles. I did a comparison of different viewpoints which is presented
further in my report. Cloud computing is said to be a technology that is in its early
adoption phase currently. According to research, cloud computing will become a huge
industry in the following years to come, with most companies shifting their IT
operations over clouds, either public or private.
According to Ali Khajeh Hosseini, ‘The market for cloud computing services was $16
billion in 2008 and will rise to $42 billion per year by 2012’. Another author, Stephan
Ried states in a report; ‘It estimates a move from $40.7 billion spent on the global
market for cloud computing in 2011 to more than $241 billion in 2020. The public
cloud, which is under considerable scrutiny for security risks, will account for more
than 66 percent of the total in 2020.’
As stated, the market for cloud computing will increase in the years to come. Some
businesses will be early adopters while some will wait for the technology to get stable
and matured before they adopt it. The early adopters will be the businesses which can
benefit from clouds to a greater extent and can manage to tackle the risks it
introduces. While the late adopters will be the ones who can well manage their
business without clouds and can only afford to change their existing systems once
they are sure about the new technology.
According to Jim Cooke as stated in a research paper, cloud computing technology is
more suitable for small/medium sized businesses (SMB’s) . The reason for this is that
cloud computing can offer a great deal of IT services to companies at affordable costs.
SMB’s can benefit greatly by this, because it will be much more costly for them to
develop and maintain equally competent in-house solutions when compared to cloud
computing. The author further states that, cloud computing architecture is less suitable
for large enterprises. Large enterprises usually own IT assets which are underutilized
most of the time, with an exception of peak timings. If those assets can be used
without any increase in the human resource, it is less likely that the company would
be willing to invest in embracing clouds.
Supporting this viewpoint, another author, Hamid Motahari states in a research paper
that cloud computing is mainly targeted for SMB’s and not large enterprises. The
reasons stated for this are the cost saving benefits that clouds provide. It is more
suitable for SMBs to use the payper- use model, as they only have to use IT services
occasionally or for limited use. Using cloud computing architecture in such case can
save huge amount of an organization’s capital.
Supporting what is stated in the research papers, a survey conducted by Wall Street
Journal (Largest American international newspaper in terms of circulation), states the
increase in cloud computing adoption by SMBs in 2010 and 2011. According to the
reviews given by business owners in the survey, it can be concluded that the main
reason for the adoption of cloud computing in SMB’s is the reduction of operational
costs.
According to a Law practitioner, their firm (considered a SMB) must spend $10, 000 $12, 000 per year for software licensing which is used just a couple of times per year.
While, if they purchase the software through a cloud provider, they will have to pay
only $4, 000 - $5, 000 per year according to their usage.
Another major reason specified by the survey is that companies do not have to make
huge investments to make their systems and databases available over a network for
the purpose of easy access. By adopting cloud computing architecture, access of
organizational data and processing software’s will be available through remote
servers. This will enable business owners to access information from any physical
location at any time.
On the other hand, cloud computing is very important in large enterprises as well but
has different impacts than it has on SMB’s. Large enterprises usually hold a suitably
big IT infrastructure inside their company. Therefore, it is less likely for large
enterprises to shift to cloud architecture completely. Secondly, security risks mean a
lot more to large enterprises than they do to SMB’s, which will make large enterprises
less keen to adopt cloud technology.
Instead of adopting an entirely cloud based system, a private cloud or the hybrid
model of cloud computing is said to be more useful for large enterprises. Private
clouds maintain an organization’s privacy and are not managed by a third party. They
are internally operated by the company who uses it. Large enterprises are mostly
divided into smaller business units, which usually own separate IT infrastructure. By
implementing a private cloud, all different business units of a company can share the
same IT infrastructure. Unused resources of one business unit can be utilized by
another business unit in this case. This architecture will make the most use of
the company’s IT infrastructure, thus, reducing costs. A hybrid model can also be
implemented depending on the business requirement, which offers some services to
be shifted over public clouds while some can be operated by internal/private clouds,
depending on the business needs. According to Sumner Lemon in an article, it is more
suitable for large enterprises to shift infrastructure workloads like desktop
applications and communication services over public clouds while keep databases and
application-oriented services internally operated over private clouds.
Cloud computing architecture benefits both categories (Large and SMB’s) of
businesses. SMB’s can benefit from this technology by fully embracing and shifting
all business process and services over clouds. While large enterprises can benefit from
it by partially adopting according to their business requirements.
Methodology
For the research study, there are two major data sources: secondary and primary.
Primary and secondary source were employed to gather data for this research project.
Before performing main research, one of the chief laws of data gathering is to deplete
all secondary data sources. Secondary data has the advantage of already existing and
being readily accessible. Secondary data is very adaptable and may be utilized for a
variety of reasons. To gather secondary data, the researcher first looked through
publications in the literature that were connected to the study goals. Any publications
relating to the study subject were rigorously searched in key journals and sessions. In
addition, a scan for the key terms was conducted in peer-reviewed publications. This
search led to papers in other journals that were relevant to the topic. A survey was
done utilizing a questionnaire to undertake an empirical inquiry. The items that would
have been comprised in survey were chosen initially. The survey was then performed
for gathering data, which was then gathered and analyzed to discover answers to the
study goals. The questionnaire was created using literature to elicit topics relevant to
the study's goals. To fine-tune the questionnaire, it was also done before in pilot
research. A sample consisted of four persons, including co-workers and an industry
guide, participated in the pilot research to see how effectively the questionnaire was
structured and comprehended. Some items were rephrased to increase clarity
depending on the research study and participant input.
Before starting to research about my business question, I developed a timeline for
my project and divided tasks into subcategories and assigned deadlines for their
completion. I sub divided my research question into sub sections and developed a
breakdown of questions that I need to research about to achieve a conclusion to my
main business question. The breakdown of my research work that I developed is
reflected in the contents page, which provides a summarized form of what I have
produced. The detailed plan that I developed can be seen in Appendix 1. Breaking
down my research question helped me a lot in developing a project management plan
for my work keeping in view the provided time. Initially I assigned 2 weeks for each
section of my report (referred to the table of contents and Appendix 1), but the plan
had to be revised multiple times once I started off. The reason for revising my project
management plan was the pace of work, which became quicker as I went further with
my project. When I begin with my research, I had less knowledge about the
terminologies used in the context of cloud computing (e.g. Cloud deployment types,
Kinds of cloud services, etc.). I had to learn about each one of them as I progressed.
Therefore, it took me more time in order to complete my initial chapter of the report.
But, as I progressed further, it was easier for me to understand literature published
about cloud computing, as I was now more familiar with all the terminologies and
concepts related to cloud computing. I had in my initial plan to conduct surveys from
different companies and use the results in stating my conclusion. To achieve this, I
planned and developed contact with business owners well in time, so that while the
time I get feedback on my survey questions, I can simultaneously work on conducting
literature review for some of my research questions.
Surveys (Interview /Questionnaires Base) and Case Studies
a. Views and Experiences of Companies (Businesses) who aim to adopt / have already
adopted cloud computing.
My goal for this section of the report is to search for and compile the experiences
of some cloud users. I aimed to search for small and large businesses which have already
adopted cloud computing, fully or partially, and read literature about their experiences
about using this new technology and their perceived advantages and disadvantages.
I tried searching for such companies with the help of search terms like,
‘Companies using cloud computing/services’, ‘Businesses based on cloud architecture’,
etc., but was unable to achieve any desired results. The results displayed were about the
companies providing cloud services to other businesses. Therefore, I planned to change
my search strategy in order to get to my desired results. I searched for established cloud
providing companies, with the hope that They can provide me with the case studies I am
searching for. My initial aim was to list down the most promising and reliable cloud
service providing companies. I planned to read about them and then search for the kind
of customers they cater, which could help me find real customer case studies.
During my search for cloud service providers, I learned about the companies
which are already in the business of cloud computing. My research about these
companies helped me understand the kind of services they offer, which they believe will
be more useful for cloud customers and which services will not be equally attractive. I
also understood the market response and business owners’ interest in cloud computing
since cloud services have started to initiate. I searched for cloud providing companies
with the search terms, ‘Cloud providing companies’.
By the results, I learned that there are numerous companies offering these
services or are in the process of planning to launch. To short list the list of companies to
search about, I changed my search terms to, ‘Top 5 companies providing cloud
computing’. I found different results by different blogs shared by companies providing
articles about technology. According to a few results, example published in 2009, the top
5 leading companies listed for cloud computing were Microsoft, Amazon, Google,
Salesforce, and IBM. While according to other resources, example published in 2010, the
top 5 companies listed were Microsoft, Amazon, Google, Salesforce, and Rackspace. I
chose between the two different sources, based on their publishing date primarily. I did
this because information provided in an article published more recently is considered
more reliable usually.
The top 5 leading companies in the world of cloud computing according to my
research are listed below along with the services they provide:
1. Microsoft:
The cloud service offered by Microsoft is named Azure, which was launched in 2009.
Microsoft Azure offers PaaS and complete Windows as a service. Microsoft is a new
player in offering complete windows as a service; therefore, there are many complexities
that need to be solved.
2. Amazon:
The cloud service offered by Amazon is named Elastic Cloud Compute, which was
launched in 2006. Elastic Cloud Compute offers IaaS mainly. Amazon is the innovator in
the cloud computing technology. It was one of the first companies to launch this service.
3. Google:
The cloud service offered by Google is named Google Apps, which was launched in
2008.Google Apps offer SaaS and PaaS mainly. Google is considered a very important
player in the cloud computing market because it is common knowledge that no one
knows internet better than Google.
4. Salesforce:
The cloud service offered by Salesforce.com is named Force.com. Force.com offers SaaS
and PaaS mainly.
5. Rackspace:
The cloud service offered by Rackspace is named Mooso, which was launched in 2006.
Mosso offers IaaS and PaaS mainly. Rackspace is a very trusted name in offering hosted
data centre services. Information gathered by an article published by ‘NETWORK
world’; an American based IT publication, providing weekly news for networking
specialists. Changing my search strategy to searching and reading about cloud providing
companies did get me to my desired results. The above sated cloud providing companies
make available case studies of their customers for the purpose of providing information
aimed for research work. The case studies state experiences and views of cloud
computing customers about this technology. I have reviewed some of the case studies
and analysed their experiences to answer my main research question.
Findings & Recommendations
According to the findings, the Cloud's usefulness fulfils the needs of today's
business. The workload might decrease or expand extremely quickly as a result of the
volatile changing environments, posing a barrier for the enterprise's ability to scale up
or down quickly. Furthermore, capabilities that were previously only accessible to the
technological behemoths and were too expensive for small businesses may become
accessible to them. Cloud Technologies doesn’t work well for economic institutions
with delicate data that they do not want to share with third-party providers.
Cloud computing is becoming more popular, and there are a few early adopters.
Companies may now create infrastructure in weeks or months rather than the 20 years
it used to take. The most reliable solutions from a variety of manufacturers are in the
early stages of development, but they will undoubtedly gain traction in a short amount
of time. Perhaps the future years will reveal if Cloud computing is one of the most
promising new advancements of all time or just a hyped fad.
Conclusion
As defined by the literature review results, cloud computing offers a great deal of
monetary benefits in businesses. The case study results, and the survey results also
agreed over the monetary benefits cloud computing provides. It offers operational cost
reduction and saves a lot of capital which is wasted in case of in-house solutions. The
literature review results do bring in view the negative impacts of cloud computing as
well, but they were better understood by the survey results. I concluded by my survey
results that, privacy and security issues of cloud computing are the biggest reason
which are keeping businesses away from adopting clouds. As, it is a technology in its
early stages, it is not very well established, which is why, business owners fear the
privacy and security of their data and operations while considering making the shift.
Organizations, especially large enterprises can afford to compromise on their budgets
but cannot compromise on organizational privacy. It is more likely for SMBs to make
the shift than it is for large enterprises. The reason being, that large enterprises
normally own underutilized assets, therefore they do not have to worry about upsizing
or downsizing or even for extra costs. While businesses which have smaller
infrastructures are more likely to shift, because the benefits offered by cloud
computing are more advantageous for them. Cloud architecture gives them the facility
of upsizing and downsizing on demand and saves costs. Saving costs is a more
essential aspect to worry about in SMBs, as usually they are already struggling with
budgets. But SMB’s holding confidential data would not be as willing as the rest even
after considering its benefits. But, once the cloud computing technology has matured,
and its security measures gain reputation, large enterprises and organizations holding
confidential data are also likely to shift to cloud computing.
References
1. Impacts of cloud computing in small and larger enterprises by Deekshant Jeerakun
2. Evolution & Effect of Cloud Computing on the Industry by Ankur Bhat