Businesses have significantly gained from cloud computing technologies, including services such as cloud storage, file sharing and collaboration, email, “Green IT”, efficiency and productivity, web applications, document management, offsite backups, and IT scalability and business expansion. Small and medium businesses have enjoyed benefits related to productivity, cost savings, general organization and structure and a platform to venture into more locations. On the other hand, large businesses have taken advantage of the financial power to distribute their computing resources between on-premise data centers and the public cloud. Traditionally, businesses were required to invest heavily in IT infrastructure and specialists to drive their daily operations, but cloud computing has come as a solution to eliminate huge IT capital expenditure and expertise.
Cloud computing can be traced back to the 1950s when thin clients were developed to access a single mainframe computer, which acted as the server. In the 1960’s ARPANET was launched from where today’s internet was formed. Later on the web saw great advancements from Web 1.0 and upon successful launching of Web 2.0 in 2009 much of the cloud computing capabilities were brought to life. Today’s cloud computing can be deployed in 3 major models private cloud, public cloud or hybrid cloud. However, the future of data centers will see enhancements inclined towards “Green IT”, server optimization and efficiency, introduction of flash memory for caching and quick access to critical data, security and artificial intelligence.
Beside cons such as security threats, vendor-lock in, over-dependence on the internet connection, and outages and downtime, cloud computing is a critical computing solution across the corporate world. It is the tool to watch in business transformation today and in the future.
Cloud computing has emerged as a critical attribute towards establishing a competitive platform through superior performance in the day-to-day business processes. These days, it appears like everything revolves around the cloud: servers, services and applications are being migrated to the cloud in addition to data storage and other computing elements (Dutta, Guo & Choudhary, 2013).
Cloud computing refers to provision of IT infrastructure (hardware and software) as a service on-demand basis and in a greatly elastic and multitenant or shared environment. Server and storage virtualization are the two major approaches used to achieve the required abstraction of the principal computing infrastructure, which eventually creates a cloud. Personnel involved in the deployment of cloud computing projects need to consider the relationship between business needs and cloud infrastructure models (Babar & Chauhan, 2011). Typically, there are three fundamental cloud infrastructure models, namely: private, public and hybrid (a combination of public and private clouds) clouds to choose from (Stieninger & Nedbal, 2014).
The ultimate decision to migrate to the cloud is typically triggered by the need to initiate a change or adjust to a situation or incident. However, for maximum or tangible benefits, the right decision must always be sought. What are the reasons for a worthwhile decision for a business to move to the cloud today? The following are the reasons as to why businesses today should consider moving to the cloud (Alali & Chia-Lun, 2012; Molen, 2012):
- Most IT equipment are associated with an approaching end of life: servers and other critical IT equipment may be getting old or have been pushed to their limit necessitating remediation. Today, the corporate world is experiencing a high rate IT evolution that has placed businesses in a situation that demands either replacement of old IT equipment with new ones or migration to the cloud. Failure to take action places a business at the risk of unexpected crashes and downtime that would disrupt business processes. Investing in new equipment is one of the options, but moving to the cloud is the better option since it eliminates the need to purchase new hardware and thus enables cost saving. With cloud computing, a business can avoid damaging downtime or disruption caused by crashing of critical IT equipment such as a server, while decreasing costs effectively. In addition, most cloud service providers offer hardware upgrading as part of their cloud computing packages, therefore eliminating risks associated with looming end of life.
- To run energy-efficient IT as a way of addressing environmental challenges: when business migrate their servers and applications to the cloud, they reduce energy usage and carbon footprint by approximately 30%. The number of damaged hardware which constitute electronic waste is also considerably reduced because the aggregate number of IT equipment used is relatively less with cloud computing. There are a number of factors that enable the cloud to be energy-efficient and highly carbon neutral, including dynamic provisioning to reduce wasted IT resources, appropriate server utilization, data center designs that have reduced power loss.
- To kick-start the operations of a start-up business or boost cash flow for an existing business: generally, start-ups relentlessly pursue cost saving exploits, and cloud computing is an ideal option. Start-ups are provided with a platform to start operating without huge IT investments and to deploy their IT infrastructure faster. Cost savings realized may be redirected towards other areas, for example sales and marketing to boost the bottom line of a business. Typically, cloud services are subscription-oriented implying there is little or no need for substantial capital expenditure. In addition, it is possible to predict continuous cloud subscription costs which enable a business to devise appropriate cost-reduction mechanisms.
- To address seasonal changes in the market that may affect the communication network capacity: seasonal fluctuations in the demand for goods and services affect business’s IT capability to efficiently handle the market changes. The high demand for products during holiday seasons such as the Christmas strains network capacity, but it is followed by low-demand for products in January. Movements to and from the cloud are achieved through subscribing and unsubscribing from cloud services, therefore allowing for affordable, efficient and effective scaling up or down to address seasonal fluctuations. On-demand IT services provides businesses with an opportunity to control their IT infrastructure as needed. As such, the cloud system provides a better approach to investment protection.
- To support the operations of an increasingly growing business: it is good news for a business to gain growth with time, but it demands technological requirements to keep pace with business growth and sustain it. Cloud computing provides the flexibility and seamlessness required in the IT system to handle a business that is growing. Cloud computing provides a solution to easily and efficiently add systems functionality, branches, clients, vendors, partners and employees as needed. As a matter of fact, it may be extra expensive in terms to time, human resources and costs to build an internal IT infrastructure compared to outsourcing equivalent or even superior IT services from cloud providers. Cloud computing allows a business to focus on continuous and sustainable growth and increased profits without worrying about the state of its IT systems as they are taken care of by contracted cloud providers. Expanding to new locations simply requires a business to have a reliable internet connection to help access cloud services, thus mitigating risks and costs related to considerable expansion of internal IT infrastructure.
- To search for sustainable competitiveness: the cloud matters a lot to businesses because its strategic significance is notable in delivering efficiency and even far more. The cloud helps businesses gain competitiveness through better decisions, business reinvention and greater collaboration. Increased efficiency in service delivery is a recipe for greater levels of customer satisfaction and eventually profitability, growth and competitiveness. Forward-thinking businesses have used the cloud to redefine their strategies with the cloud to grow faster than rivals. Cloud computing has helped businesses boost their capability to exploit their IT systems in establishing a solid analytics platform as well as integration with third-party applications such as social media sites for advertising. The cloud is a pacesetter in the way it offers better, smarter and more connection to applications, data and services than never before. Therefore, businesses are set to gain a competitive edge with proper deployment of the cloud by allowing stakeholders to access IT resources anytime anywhere – whether within or off business premises, and using almost any computing device.
- Reducing the time and energy spent by IT staff on managing desktop and server devices, thus freeing up time for other strategic projects. To support remotely working staff: some workers execute their duties away from their office desk, either from their homes or on the move. Others travel regularly and their input in the day-to-day business processes is greatly needed. For these remote access to business IT hardware and software, the cloud has emerged as an efficient and secure solution. With a mobile device such as a laptop, smartphone or tablet and internet connection, staffs can successfully conduct their personal duties and work on collaborative projects with team members that may be hundreds of miles away. Therefore, the cloud is an integral element of giving access to a pool of IT resources to people located in different locations.
Therefore, it is worthwhile to consider moving IT resources to the cloud since it is evident that it positively impacts on the performance of businesses. This thesis covers considerations and perspectives with respect to migrating business IT infrastructure to the cloud by discussing how the cloud came to be today, public, private and hybrid clouds, the future of data centers, and cases of small, medium and large businesses to assess the pros, cons and cost estimates and allow for a smart and well thought out decision in the implementation of cloud computing.
Cloud computing seems like it is a relatively new technology, but it is a creation of several distributed technologies. Success in server, storage and network virtualization across IT equipment in a unified data center laid the foundation for today’s cloud. Auto scaling and dynamic provisioning were critical techniques to the emergence of corporate clouds. By then, it was referred to as utility computing and Amazon was the only company that was using cloud computing to manage its internal IT resources. Amazon developed an API that was used by many customers and developers to implement and operate IT resources in the cloud. In 2006, Amazon created the Amazon Web Service (AWS) and Elastic Compute World (EC2) to offer cloud computing services to its customers based on utility computing – computation, storage, human intelligence and networking. The cloud architecture has been significantly improved in efficiency and other features such as power efficiency and auto-provisioning have been added over time. Therefore, Amazon is phenomenal in development of the cloud (Nikos & Gillam, 2010).
Virtualization technology also emerged as a key factor towards the growth of cloud computing. Development of the concept of virtual machines by IBM in 1970s allowed many unique computers to run in a single processing environment. Each virtual machine would have its processor, memory and other computing components. Network solutions were later added as it emerged that it was possible to add more virtual components without the need to increase hardware equipment. Provisioning was born to appropriately shift traffic and balance the load and bandwidth on the network for better services (Smoot & Tan, 2012).
Cloud computing evolved from utility and grid computing and the overall pursuit to deliver IT through globally interconnected devices in the 1960s. The whole idea can be traced back to the work of J.C.R. Licklider in 1969 when Advanced Research Projects Agency Network (ARPANET) initiative was brought to life. Licklider’s vision was to interconnect everyone in the world and provide access to applications and data from anywhere anytime. According to Smoot & Tan (2012), the vision for a globally interconnected network sounds almost like what is today’s cloud computing. Delivery of computing in form of a public utility in a manner analogous to service bureaus and electricity grid contributed to cloud computing. In the 1990s, the internet was advanced to provide high-speed bandwidth, which enabled consumers to access more cloud services than ever before. Advancements in internet capabilities widened the reach and scope of cloud computing and almost everything could now be delivered on the cloud.
The emergence of Web 2.0 technologies propelled the cloud to the masses globally (Alali & Chia-Lun, 2012). Since the official commercial use of the internet, the web saw tremendous growth with respect to infrastructure and application areas, especially in the 1990s. As a result, a naming approach was assumed to mark different stages in the evolution and is iterated into Web 1.0, Web 2.0 and Web 3.0 and much more is expected in future advancements. Web 2.0 is the key standard that triggered a breakthrough in use of the World Wide Web (www) in the provision of cloud-based application, data and services in 2009. Web 2.0 provided the capability to devise sites that performed better than traditional static sites. Sites based on Web 2.0 provided the dynamism required to allows users to actively interact with them. With Web 2.0, users could now generate content in a virtual environment as opposed to Web 1.0 sites where users were passive viewers of content. Web 2.0 propelled the web to be a host to millions of hosted services, social networking sites, music and video sharing sites, mashups, embedded advertisement posts, and web-based applications. These are instances of Web 2.0 applications that provide a collaborative or shared platform, a key enabler of provision of cloud-based applications and services. The emergence of Salesforce.com, which has been greatly enhanced with use of Web 2.0 technologies is a major milestone in the history of cloud computing because it pioneered delivery of enterprise applications and services through a mere website. Salesforce.com opened up the way for mainstream software companies to continually use the web for application delivery. “Killer” apps from technology leaders Google, Apple and Microsoft have also greatly contributed to cloud computing (Molen, 2012). These companies provide efficient and reliable software and services that users find easy to subscribe into and consume, resulting into a whole set of online applications and services which are widely accepted.
However, we cannot ignore that mainframes allowed users access to a single computer via dumb terminals, which are called thin clients today. This enabled cut costs because one mainframe could serve many users over shared access. Dedicated and inflexible point-to-point physical connections were replaced by virtual private network links to provide shared link access to physical and virtual infrastructure. Computing became affordable with the boom in personal computers in the 80s and 90s pioneered by IBM, Compaq, Dell and Apple. In addition, Microsoft pushed its Windows operating system to the world of PCs. Increased software interoperability has also enabled connected computing than ever before. Today, cloud computing sits on the solid internet backbone and is an integral element in IT solutions for personal and business applications through three major service models, including Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS). IaaS offers computing resources – servers, storage, networking and data center facility on the basis of pay-per-use. PaaS offers a cloud-oriented platform with all requirements for supporting the entire lifecycle of designing and building of web-based applications, eliminating the complexity, time and cost incurred in the purchase and management of the core underlying hardware and software as well as hosting and provisioning (Nikos & Gillam, 2010).
Cloud computing is deployed in different ways based on a number of factors, including security and privacy requirements, location where cloud services are to be hosted, the degree to which resources need to be shared and customization capabilities. Typically, there are three cloud deployment models, namely the public cloud, private and hybrid cloud.
According to Budrienė & Zalieckaitė (2012), public clouds are offered by dedicated third-party vendors to users on a subscription basis in order to use the IT resources they provide. However, the ownership and operation of public clouds entirely rests with the cloud vendor. Therefore, the public cloud model does not require users to buy hardware, software, supporting infrastructure or any future infrastructure needs. Virtual machines, servers, storage systems, applications and data from all subscribers coexist on the same cloud network environment. Public cloud environments offer have many benefits, among them is their characteristic large size than the business-owned private clouds, thus they can allow businesses to scale up or down to meet different requirements for computing resources. In addition, public clouds shift computing environment risks like security or privacy breaches, technical support in case of failure and disaster recovery from the subscriber to the cloud vendor. The major pitfall in the adoption of the public cloud model is that subscribers have absolutely no direct control of their IT resources running on the cloud, thus it poses serious threats with respect to security, privacy and confidentiality breaches. However, as a best practice, consumers and public cloud vendors should sign Service Level Agreements (SLAs) to ensure that computing resources hosted in the cloud are protected from security and privacy risks as well as disaster recovery to uphold high levels of uptime.
Private clouds are owned and run by individual businesses, whereby a company plans, develops and manage its own virtual resources in a manner that meets the demand of various departments and locations of presence. It is a viable cloud-based solution that overcomes security and privacy risks presented by the multi-tenancy public cloud environment. Budrienė & Zalieckaitė (2012) notes that private clouds are exclusively created and used by a specific business, thus provides the best control over the security, confidentiality, privacy and integrity of IT resources and associated services. Therefore, the major aim of building a private cloud is provide a business with more control over computing resources as well as an end-to-end visibility into cloud operations. Otherwise, such capabilities would not be achievable if a third-party cloud vendor was tasked with hosting some or all company’s IT resources. Typically, private clouds run behind the firewall of a business and never on the internet facing side, thus only authenticated internal people can access and use the cloud resources. As such, private clouds are best cloud model in upholding availability, manageability, resiliency, security, and privacy.
A hybrid cloud combines the public and private cloud deployment models. Therefore, businesses that adopt the hybrid cloud model run a private cloud as well as contract some cloud services from a third party. It introduces complexities related to determining the IT resources to host on the private cloud and the ones to distribute to public clouds as well in its general execution. Budrienė & Zalieckaitė (2012) proposes a rule of thumb that business critical and sensitive computing resources should be internally run on the private cloud and then distribute the others to the public clouds as necessary. The hybrid cloud model offers an effective and efficient infrastructure for the stakeholder population on the private cloud while others are redirected to the public clouds. Less sensitive applications and services such as customer registration, general queries and FAQs should be hosted on the public cloud while private cloud should host more sensitive ones such as order tracking and payment. Such distribution of IT resources between the private and public clouds plays a key role in upholding security and privacy.
Figure 1 shows the three cloud computing service models – public, private and hybrid clouds.
Figure 1: Cloud computing service models – public, private and hybrid clouds (Budrienė & Zalieckaitė, 2012)
Today, the world is alert with increasingly deteriorating climate changes and environmental degradation, and “greener” IT alternative has been identified as one of the potential remediation approaches. Data centers and environmental sustainability are inseparable if at all we mind about the future generations (Nikos & Gillam, 2010). It makes sense that consolidating business IT resources into private, public and hybrid infrastructures run by data center and cloud specialists would considerably reduce adverse environmental impacts while unlocking new efficiencies. The following are the key elements that will be continually implemented and bolstered in data centers to effectively reduce their environmental footprint (Molen, 2012):
- Dynamic provisioning: enables proper allocation of IT infrastructure – servers, storage and networking in a manner that meets specific application demands. Dynamic provisioning adjusts capacity accordingly to match demand fluctuations over time through automated and intelligent demand and load predictions. As such data centers must reduce potential inefficiencies which may arise from over-allocation of IT resources.
- Enhanced data center efficiency: data center designs must be optimized to be more power-efficient in the areas of routine powering and cooling IT equipment, lighting and small-scale non-IT uses, while allowing IT equipment to run optimally. The way physical facilities are constructed and IT equipment are implemented and managed greatly impact on the actual energy use. Economies of scale and innovative techniques can considerably enhance power usage efficiency. Innovative approaches such as optimized power supply, tapping atmospheric air for cooling purposes, and modular designs can enhance power efficiency in data centers. Economies of scale is achieved by consolidating IT power and bolstering access to flexible capacity to consolidate IT efficiency.
- High server utilization to power consumption ratio: data centers should run at high and stable utilization rates while consuming relatively low power in a manner that simulates high server performance gains but with relatively low power consumption rise. Virtualization is a key enabler of improved server utilization in data centers as it allows many virtual servers to run on one physical server. Virtualization enables scaling virtual IT resources to suit application demands instead of using the entire physical equipment for a task resulting to better utilization. For example, an increase in server utilization rate will definitely result in an increase in power consumption, but it should be relatively less as shown in Figure 2.
Figure 2: Server utilization rate and energy consumption (Nikos & Gillam, 2010)
Apart from energy efficiency, environmental preservation and enhanced data center utilization, the world is increasingly experiencing data explosion reaching approximately 35 zettabytes. Data centers must be built in a way that will efficiently and effectively host the growing data needs. Networking should also be enhanced to address the communication needs for this big world’s data. On-demand data centers is a technology that has emerged to creatively and quickly deploy data centers on-need basis, for example, packing a data center and implementing it on demand to reduce construction cost and time. Data security and privacy will continue to be a critical issue that is expected to be boosted in data centers in an attempt to create public clouds with equivalent security threshold as that of on-premise data centers. Srinivasan (2013 ) argues cloud security remains a serious threat since only large-scale data centers run by multinational firms like Google and Amazon are secure and energy-efficient, representing approximately 5%. What about innovating affordable and easy to implement techniques to suit the smaller players in cloud computing? What about deploying data centers in locations such as under the sea for water cooling? Such initiatives are expected to be fully brought to life in future.
The flash memory has been widely used in interfaces such as the DIMM sockets in DRAM memory to provide some degree of non-volatile memory. The future will see servers use of non-volatile memory such as STTRAM to replace the processor’s internal cache memory and provide instant-on capacity without need for refreshes. The shift from volatile to non-volatile architectures will enable enhance energy efficiency of data centers. Caching exploits to speed up access to business critical data will also be boosted through use of SSDs in data centers. In addition, data centers are like the brain of businesses as they host much of company’s applications and data. As such, aspects of artificial intelligence and neural networks for machine learning will be built into data centers for automated aptimization purposes (Molen, 2012).
This section explores three different sized businesses (small business, medium business and large business) moving their IT systems to the cloud, including email, POS, database, file storage, web and application servers to assess the pros, cons and estimate cost that apply to each case. Stieninger & Nedbal (2014) argues that moving IT resources to the cloud seems to be accompanied by immense benefits, but it definitely has a number of drawbacks. Therefore, it is important to consider the entire picture – both the pros and the cons to identify the options that provide the best results as well as mitigate against potential risks.
Small businesses are typically constrained by funds to invest in capital IT equipment, and the cloud is a cost-effective option to run application servers and software, database, email as well as store data. Cloud-hosted application severs enable large-scale computing power while reducing internal IT requirements, physical storage and IT specialists, providing significant savings. The public cloud model under IaaS has emerged as a vital tool for small businesses as they lack massive capital to invest in on-premise data centers that require considerably high capital expenditure. With IaaS, small businesses neither need to buy hardware, networking and storage equipment nor maintain them. The cloud provides a pay-as-you-go platform, thus small businesses can control their cloud usage to cut on unnecessary costs. SaaS is also important for small businesses to eliminate the need for expensive equipment for on-premise software hosting. Common applications may include software, email and database (Kepes, 2012).
In the area of ‘Green IT’, small businesses perform the best since they have less IT requirements, and it is possible to migrate virtually all their IT infrastructure to the cloud (Nikos & Gillam, 2010). Consequently, energy use, electronic waste and carbon footprint is significantly low.
Today, computing is inclined towards ubiquity – anytime, anywhere computing, allowing users to conveniently, reliably and remotely access their files and applications at anytime, from any location, and on any device. Personal files such as emails or group files may be hosted on the cloud for easy access as opposed to being stuck on PCs. With ubiquity, cloud computing has eased collaboration as team members can access files and work from one master document hosted on the cloud. Security is implemented through permission and access controls on files (Nikos & Gillam, 2010).
Cloud computing reduces security risk because it backs up data in an off-site location, decreasing the chances of cyber-security attacks such as hackers and malware propagation. Security is likely to be better in the cloud provider’s network particularly if the provider is compliant with key industry security standards such as ISO framework (Srinivasan, 2013). In addition, loss of a PC does not affect the availability of data residing in the cloud. The cloud backups play an integral role in restoration of applications and files, thus upholding high level of information assurance and business continuity.
It is also worth noting that cloud computing for businesses improves efficiency. Cloud computing provides a way for saving time in the construction of an IT infrastructure and eliminate hassles related to the daily management of computing resources. The cloud has enabled small businesses to concentrate on the essential business operations as the IT resources are provided as a service by cloud providers. With cloud computing and more specifically web services, small businesses are enabled to easily integrate with social networking platforms such as Twitter, LinkedIn, Facebook, Flickr, Focus.com and Google+ which offers unique means of advertisement to reach out to potential customers, employees and partners (Budrienė & Zalieckaitė, 2012).
Every Small business has expansion plans by increasing products, services, or venturing into new locations. In addition, the business environment is subject to change from a myriad of factors such as legislation and economic crisis. Cloud computing enables a business to efficiently and effectively evolve its IT infrastructure to meet evolving demands. Cloud computing provides access to application servers across the globe, offering small businesses an opportunity to expand their reach and boosting agility with least operational cost. SmartNet North America is an example of a company that used the cloud successfully to reach surveyors, engineers and construction specialists across the world, while its employees are also widely spread since they only need bandwidth to access company resources from anywhere contributing to expansion (Pariseau, 2014).
Small business often depend on consumer-grade and dial-up internet services, which may introduce bandwidth challenges in the course of accessing required IT resources from the cloud. Unstable internet connection introduces problems when accessing cloud services. In addition, the cloud may add significant costs as small businesses outsource faster internet services to overcome the bandwidth issue (Budrienė & Zalieckaitė, 2012).
According to Budrienė & Zalieckaitė (2012), the cyberspace is under attack and small businesses on the cloud face dire security and privacy challenges on daily basis. Data-stealing malware such as Zeus are rife on the web, introducing security risks such as personal data loss and infringement to intellectual property. Email scams are also rampant online, which tricks users into clicking on malicious links or opening attachments to trigger malware downloads or steal data. Consequently, security and privacy breaches attract financial penalties, reputation damage and hindrances to optimal business performance.
The case for small businesses is further constrained by the fact that unlike medium and large businesses, their devices may not have the required security threshold in terms of authentication and encryption. In addition, small businesses are under tight budgets to invest in internal security software and prevent email and web-based malware threats from reaching the business (Budrienė & Zalieckaitė, 2012). As such, most remote access sessions for small businesses are prone to security and privacy attacks.
Being on the cloud provides a connection to social networking environment that offers an advertisement platform as well as a pool of important insights to derive business value. However, cybercriminals have identified social sites as a place to launch rogue popup applications and malicious links to steal data or execute malware attacks. Therefore, despite the business sense made by social sites, they present serious security threats.
File storage outside the internal network, and probably beyond national and/or regional boundaries may break local or state data protection laws and regulations (Budrienė & Zalieckaitė, 2012). Lastly, there may be unexpected outage due to some form of failure on the cloud provider’s end causing unwanted business interruptions.
Kepes (2012) estimates the cost of a 4GB RAM, single core Linux-based cloud application server at $122.64 per month. However, a Windows-based equivalent server goes at approximately $160.00 per month. A 1GB cloud MySQL database costs about $60.64 per month. For file storage, 500GB space cost $61.25. Due to budget constraints in small businesses, free cloud services may be a better option for the email (using platforms such as Gmail) and POS (for example, using VendHQ which is a reliable cloud-based POS system). VendHQ for small businesses is offered free for up to 10 users which provide a better POS solution (Vend Limited, 2014). For web services, the least price is $100 for businesses running on Amazon with AWS-based pricing. Amazon and Rackspace are among the leaders in renting cloud services, and they are certainly affordable for small businesses from the figures shown here. However, factors such as implementation, configuration and support which apply to application software and databases are additional cost factors (Marks, 2012). The sense behind this is that the cost of acquiring a server is independent of the implementation and such factors. In addition, if the factor of the number of users is introduced the cloud cost significantly increases; for example, a 10 user MySQL database may result into 6 times the specified cost. Therefore, the estimate cost for email, POS, database, file storage, web services and 2 application servers is at least 541.89 per month, but due to factors identified here the figure is typically more than this.
Cloud computing is analogous to outsourcing computing, networking, storage and associated services. Therefore, it is a vital resource for medium businesses to enable them focus on their core functional areas, where much of their expertise rests. Cloud computing eliminates the need to invest hugely on resources such as time, labor and money in building, running and maintaining data centers. The cloud is a bankable and sustainable solution to running on-premise data centers (Nikos & Gillam, 2010).
Medium business are likely to enjoy the benefits of PaaS as opposed to small businesses, because the larger the business the more likely it develops in-house software applications to support different business lines, locations or new products. Cloud computing offers medium businesses access to PaaS, where applications may be developed and tested without the need to purchase additional hardware or software. This way, medium businesses can deliver applications affordably, more efficient and much faster (Kepes, 2012).
These two points are a clear indication that cloud computing does not require huge infrastructure, leading to cost savings. Such savings may be directed towards other business areas such as advertisement and marketing to drive growth, profitability and competitiveness.
The virtual nature of cloud computing allows medium businesses to expand, because scalability is easily achieved with minimal physical infrastructure. As soon as a business kicks off an expansion program, may it be setting up new branches around the globe or sending employees far away to reach a target audience, cloud computing makes it extremely easier (Babar & Chauhan, 2011). After all, there is no need to set up set up IT infrastructure in every new location of operation since internet connection is enough to allow access to business computing resources provided as a service.
Backup and on-demand recovery: cloud providers provide flexible and reliable data backup and recovery solutions to medium businesses. In its simplest form, cloud computing is a form of backup since data is not stored in on-premise PCs. It allows medium businesses to store their data away from their local machines for disaster recovery and business continuity purposes in the event that a security incident arises. Cloud computing offers redundancy and resiliency to implement automatic failover between different hardware (Babar & Chauhan, 2012).
The cloud has a huge and easy to scale storage capacity (Budrienė & Zalieckaitė, 2012). This eliminates the worry associated with running short of storage by providing a virtually unlimited storage space. At the same time, cloud computing spares medium businesses hardware upgrades and updates, further decreasing the IT cost.
Cloud computing facilitates location independence and computing device diversity (Budrienė & Zalieckaitė, 2012). As such, the cloud can be accessed through a myriad of computing devices as long as they have the internet access feature. PCs, smartphones, tablets, laptops and intelligent wearable devices can access cloud services. Consequently, medium business can effectively adopt the Bring Your Own Device (BYOD) practices, allowing staffs to use their personal devices on their workplaces. BYOD increases workforce productivity, flexibility, efficiency and convenience because employees can execute their duties away from their desks.
The multi-tenancy nature of the public cloud environment triggers inconsistency issues. An increase in the number of consumers may reach a level that the vendor infrastructure cannot handle. Cloud providers may declare that performance is guaranteed, but an unexpected burst in client requests or network failure may disrupt normal business operations. Outages, downtime and such frustrations may make cloud investments appear unworthy for banking on. Again, the cloud and its mean of access are highly dependent on internet connection, thus any connectivity or communication network issues can render the entire cloud useless (Dutta et al., 2013).
Cloud computing face security challenges. Cybercriminals have continually devised tools and techniques to exploit security weakness they may come across in the cloud, increasing cases of data loss from hacking, social engineering and phishing. Denial-of-Service is another security attack that can lead losses and reputation damages in the event that a business’s IT resources running from the cloud are affected (Srinivasan, 2013). Therefore, is the cloud truly dependable for continuous business operations?
Vendor lock-in is a major con with respect to the public cloud model since businesses implicitly depend on the cloud provider (Stieninger & Nedbal, 2014). This way, it is quite difficult to move from one cloud vendor to another upon rolling with one. It is a painful challenge to shift huge data between cloud providers. In addition, it is generally difficult to implement compliance with relevant data protection laws and regulations because consumers have limited control over the underlying applications that run business data. Public cloud consumers have limited control and visibility into the underlying hardware and software, further placing almost all cloud control under the vendors. Therefore, it is important to always thoroughly asses what a provider is offering to ensure the best vendor option is picked. This way, it will be possible to arrive at the cloud provider offering the best services, and minimize reasons for shifting to another provider.
A medium business may demand similar or a little more cloud requirements compared to small businesses. The estimate cost of an 8GB RAM, duo core Linux-based cloud application server at $202.64 per month and a Windows-based equivalent at $251.58 per month. For the database, a 2GB MySQL database costs about $121.64 per month. Medium businesses require approximately 1000GB storage for files costing $90.00 (Kepes, 2012). Similar to small businesses, free email service providers like Gmail would be a perfect solution. For medium businesses, VendHQ POS costs $69 (Vend Limited, 2014). For web services, medium businesses can fit under medium utilization Amazon option costing $222.54 (Amazon, 2014). The overall cost is approximately $957.4 per month on the lower end as the number of users per service constitutes an additional cost factor.
Large businesses have the financial capacity to run a hybrid cloud model, with business critical and sensitive computing resources hosted on the on-premise data centers that are well equipped while less sensitive ones are distributed across appropriate public clouds. Then, these businesses can focus more on their core business as the cloud environment is managed by specialists (Molen, 2012). The BYOD practice may also suit large businesses to allow employees use their personal devices on the job, thus increasing convenience, efficiency and productivity. After all, applications and data reside in the cloud.
In addition, large businesses are best suit to adopt all the cloud service models – SaaS, PaaS and IaaS (Molen, 2012). For example, they can use the PaaS to develop and deploy software applications quickly to instantly meet various business needs. On the other hand, large businesses can leverage the elastic functionality of IaaS to grow their computing infrastructure at the pace of demands. Expensive software such as cloud-based SAP may also be outsourced under SaaS without the need to invest in additional hardware or software infrastructure.
Large businesses have the capacity to apply cloud vendor’s Application programming interfaces (APIs) in a bid to automate their operational tasks. Most small-to-medium businesses would be resource-constrained to exploit such public cloud capabilities. APIs are important for automation of monitoring, scaling and provisioning; therefore they are the basis for everything that pertains to building required functionality within a cloud vendor’s environment. As a result, large businesses are offered the capacity to unlock more efficiencies and performance in the cloud (Molen, 2012). For example, a business can provision more storage or computation to address increasing demands.
Cloud computing allows large businesses to expand their global presence and establish themselves across the world. For example, with IBM’s SoftLayer, cloud-based data centers and associated Points of Presence (POP) can be located worldwide and connect the data centers via high-speed fiber to provide a coordinated global infrastructure. Multinational companies such as Toyota are able to coordinate their global operations via such cloud computing capabilities and have potential to expand even further (Stieninger & Nedbal, 2014).
The following are the key cons of cloud computing with respect to large businesses (Alali & Chia-Lun, 2012):
- The public cloud or internet connection may suffer outages and disrupt normal business operations. Possible downtime may result to poor business productivity, financial losses or damaged reputation.
- Security and privacy risks are posed by the cyberspace and multi-tenant public clouds.
- Despite initial cost savings, SaaS have a lower Total Cost of Ownership (TCO) in the initial years because there are no huge capital investments for licensing or support. Later, the monthly charges may surpass the cost savings.
- Inflexibility issues: moving computing resources to a public cloud vendor amounts to locking a business into a proprietary environment with little or no capability to shift to another vendor due huge data that may need to be transferred.
- Poor support for applications and services hosted on public clouds and developed by third-party vendors, leaving only FAQs and online forums as the only means of support.
- Latency issues when connection to remote cloud services due to traffic bursts.
- Incompatibility issues due to the wide variety of devices expected to access the cloud.
Amazon (2014) categorizes large companies under its Option 1 pricing, with web services and database servers termed as on-demand and heavy utilization services at a cost of $609.92 per month. For email, large organizations may be well suit by Google Apps for work goes at $10 per month per user (Google, 2015). VendHQ POS costs $199.00 per month for large businesses (Vend Limited, 2014). A 16GB RAM, 4-8 core application servers approximately costs $502.64 per month. For file storage, $168.00 may be incurred by large businesses (Kepes, 2012). The average cost for these cloud services is approximately $1600.00.
Cloud computing has emerged as a critical business success enabler since 1950s when a single mainframe computer would serve many thin clients, thus saving on costs. Businesses, regardless of size or type have moved their IT resources to the cloud to leverage the benefits it comes with. So, should businesses bank on the cloud benefits and venture into the cloud? It is necessary to consider at the pros, cons and estimated costs to determine the readiness for moving to the cloud. This way, a business will be in a position to decide whether it is right or wrong to adopt cloud computing at any specific time. It is apparent that despite the obvious necessity to consider moving to the cloud and avoid missing out of its benefits, cloud computing pros and cons must be well understood prior to rushing off to the perceived benefit. Cloud computing promises an efficient, faster and affordable means of operating businesses, if the cons can be adequately managed.
Cloud computing provides valuable benefits to businesses, whether small, medium or large. These benefits include: a pay-as-you-go platform that enables a business to control what it consumes, minimal or zero initial costs of IT infrastructure, high elasticity allowing for easy scaling of computing resources, ubiquitous access to IT resources, energy efficiency and environmental protection, improved employee and business efficiency, and competitiveness. However, threats to data security and privacy and cloud outages are the major cons with cloud computing, implying that the cloud is an important resource for businesses if such cons are remedied. As such, with a reliable cloud service provider that is completely accredited and regulated by independent global cloud standards organizations to an acceptable degree, cloud computing is one of the most vital enablers of business success. Such certified cloud providers guarantee consumers that their IT resources are protected by up to date security systems and standards preventing data loss. There is an up-to-date back-up to restore from in the event of data loss from a PC, thus there is no need to worry as all the applications and data are securely stored in accredited cloud vendors’ data centers. Such backups play an integral role in upholding information assurance and business continuity.
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