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FACULTY OF SCIENCE AND TECHNOLOGY

DEPARTMENT OF COMPUTER SCIENCE AND INFORMATION

SYSTEMS

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MODULE ADVANCED DATA COMMUNICATIONS & COMPUTER

NETWORKS

MODULE CODE HCS412

TITLE GROUP PRESENTATION ON CLOUD COMPUTING

What is Cloud Computing?

 Cloud Computing is a general term used to describe a new class of network based
computing that takes place over the Internet, basically a step on from Utility Computing.
 This is a collection/group of integrated and networked hardware, software and Internet
infrastructure (called a platform).

 Using the Internet for communication and transport provides hardware, software and
networking services to clients.

 These platforms hide the complexity and details of the underlying infrastructure from
users and applications by providing very simple graphical interface or API (Applications
Programming Interface).

Cisco Definition of Cloud Computing

Cisco defines cloud computing as follows:
 IT resources and services that are abstracted from the underlying infrastructure
and provided “on-demand” and “at scale” in a multitenant environment.
 The Cisco definition of cloud computing is general; however, three key attributes of the
definition include:
 “On-demand” means that resources can be provisioned immediately when needed,
released when no longer
 Required, and billed only when used.
 “At-scale” means the service provides the illusion of infinite resource availability in order
to meet whatever
 Demands are made of it.
 “Multitenant environment” means that the resources are provided to many consumers
from a single
 Implementation, saving the provider significant costs.
 In the Cisco point of view, all three attributes are required to be considered as a cloud
service. One interesting point
 To note is that the physical location of resources (On-premise or off-premise) is not a part
of the definition.
Cloud computing is the delivery of computing as a service rather than a product, whereby
shared resources, software, and information are provided to computers and other devices as
a utility (like the electricity grid) over a network (typically the Internet).[1]

Cloud computing provides computation, software applications, data access ,data management
and storage resources without requiring cloud users to know the location and other details of the
computing infrastructure.
Cloud computing, an internet based computing where software, shared resources and
information are served to devices such as computers, electricity grid. In this details about how
the work is getting done is hidden from its users. It describes a new consumption, delivery and
supplement model for IT services. It is kind of by-product that provide access to remote sites
accessible through internet. Practically applications area of cloud computing not limited. It is
latest technology in market.

Example of cloud computing:

A very simple example is Yahoo mail and Gmail, both are using cloud computing. When you
send or receive email, you never need any application software installed in your computer. You
just need an internet connection to send your emails.
 The operating cost of cloud computing is much cheaper than having a company’s own
personal IT infrastructure and managed team
 Security and privacy is the only concern in cloud environments, because all your files,
emails, database are hosted in a third party servers in their premise

Importance of Cloud Computing

 Cloud Computing means a remote server that is accessed through the internet which
helps in business applications and functionality add-ins along with the usage of computer
software.
 The cloud of services and applications in the internet modem is available from the
computer.
 Cloud computing helps in logging in to the computer applications you desire.
 With Cloud Computing, one can enjoy web services, sales force or office automation
programs, even blog sites, spam filtering, data storage services one simply logs into your
choice of computer applications.
 This piece of technology prevents wastages in finance, because it saves money that we
spend on other cable services for which we will need to pay monthly annual
subscriptions.
 The business people are assisted with better tracking activities and stop any further
technological disasters such as the loss of data loss, computer viruses and system crashes.
 The business details saved in a virtual server helps in sharing huge amounts of data
between various business offices.
 It is a Web-based application which can be used easily by any person who is traveling
without having facilities and servers to connect back to the office through any kind of
virtual private network (VPN). Thus it can cease your frustration by saving a lot of your
time.
  It is difficult to keep a watch over every device and application in the basis of 7 x 24 x
365, therefore cloud computing provides their valuable services in case of emergency
situations to reach the company and monitor the procedures.
 Services are never interrupted as it has the best monitoring applications.
 Cloud computing assesses you faster and quicker to technology solutions and thus
reducing the business risks.
 Since the hosting company usually deals with various business opportunities it offers
exciting technology solutions and these programs will surely enhance your business in an
appealing way.

Types of cloud computing

Considering the installation of network infrastructure a cloud environment can be broadly

categorized into three types- public cloud, private cloud and hybrid cloud.
Public cloud- this is the most popular type of cloud system and is considered as a main-stream
cloud system by cloud computing experts. In public cloud system a third party data center
provide both disk space and computing power for all the application software. Amazon web and
Google apps is the two most popular public cloud computing service providers.
Private cloud- unlike public cloud, you need to set up your own data center and also bear all the
installation & maintenance cost, and have complete control of all your data. This system
provides more security and privacy, but it is more expensive cloud solution to public cloud.
Hybrid cloud
Hybrid cloud is a composition of two or more clouds (private, community or public) that remain
unique entities but are bound together, offering the benefits of multiple deployment models

Cloud computing architecture

When someone talks about the cloud computing system, it is very helpful to divide this system
into two sections, one is front end and other is backend. They are connected with each other via a
network and mostly internet is used for fulfilling the requirement. The front side is the interface
for the user and the back end is the cloud section for the whole system.
When connecting to each other through a network, usually the Internet. The front end is the side
of the computer user, or client, sees. The back end is the "cloud" section of the system.

Front end
Front end is a technical term which refers to the interface though which a user can use some kind
of services. The front end of the cloud computing system comprises the client’s device (or it may
be computer network) and some applications are needed for accessing the cloud computing
system. All the cloud computing systems do not give the same interface to users. Web services
like electronic mail programs control some existing web browsers such as Firefox, Microsoft’s
internet explorer or safari. Other type of systems have some unique application which provides
the network access to its clients.

Back end
Back end refers to the some physical peripherals. In cloud computing back end is cloud itself
which may encompass various computer machines, data storage systems, servers. Group of these
clouds make a whole cloud computing system. Theoretically, any cloud computing system can
include practically any type of computer machine program that can be imagined by a human
being such as from video games to data processing, software development to entertainment.
Usually, every application would have its individual dedicated server for services.
A central server is established which is used for administering the whole system. It is also used
for monitoring client’s demand as well as traffic to ensure that everything of the system runs
without any problem. There are some set of rules, generally called protocols which are followed
by this server and it uses a very special type of software known termed as middleware.
Middleware allow computers that are connected on network to make communication with each
other.
If any cloud computing service provider has many customers, then there’s likely to be very high
demand for huge storage space. Many companies that are service providers need hundreds of
storage device with digital in nature. Cloud computing systems require minimum twice the units
of storage devices, system needs to keep all the information of its clients. That is because devices
like, computers often break down. The cloud computing system must have a copy of all the data
of its client’s.

Merits & Demerits of Cloud Computing

MERITS:

1. Scalability

 Scalability is a key aspect of cloud computing. The ability of the platform to expand and
contract automatically based on capacity needs (elasticity), and the charging model
associated with this, are key elements that distinguish cloud computing from other forms
of hosting.
 Cloud computing provides resources on-demand for many of the typical scaling points
that an organization needs including servers, storage and networking. The on-demand
nature of cloud computing means that as your demand grows (or contracts) you can more
easily match your capacity (and costs) to your demand.

2. Cost Saving
 The use of cloud computing matches cash flow to system benefits more appropriately
than the traditional model. In addition, most organizations’ data centres are often
oversized when they are built and typically will run at a utilization rate of less than 60%.
 It is also reckoned that over the four year life of a server, the combined facility, capital
and operational expense will be up to four times greater than the cost of the server itself.
 One of the key advantages offered by cloud computing is that you can pay on a
consumption basis e.g. per hour, per gigabyte etc. This has a huge impact on the
economics.

3. Business Agility
 One of the understated advantages of cloud computing is that it enables an organization
to be more agile. The speed at which new computing capacity can be requisitioned is a
vital element of cloud computing.
  Adding additional storage, network bandwidth, memory, computing power etc can be
done rapidly and often instantaneously.
 Most cloud providers employ infrastructure software that can easily add, move, or change
an application with very little, if any, intervention by cloud provider personnel. This
dynamic, elastic nature of cloud computing is what gives it a big advantage over an in-
house data centre.
 Cloud computing allows organizations to react more quickly to market conditions and to
scale up and down as needed.
 New applications can be quickly released with lower up-front costs.
 The flexibility offered by cloud computing enables innovative ideas to be rapidly tried
and tested without the need to divert existing IT staff from their daily routine.

4. Built-in Disaster Recovery & Back-up Sites

 With cloud computing, the burden of managing technology is placed on the technology
provider. It is their responsibility to provide built-in data protection, fault tolerance, self-
healing and disaster recovery.
 Typical disaster recovery costs are estimated at twice the cost of the infrastructure. With
a cloud-based model, true disaster recovery is estimated to cost little more than one times
the costs, a significant saving.
 Additionally, because cloud service providers replicate their data, even the loss of one or
two data centres will not result in lost data.
 Cloud computing provides a high level of redundancy at a price point traditional
managed solutions cannot match.

5. Device & Location Independence

 Cloud computing is already enabling greater device independence, greater portability,

and greater opportunities for interconnection and collaboration.
 With applications and data located in the cloud it becomes much easier to enable users to
access systems regardless of their location or what device they are using.
 Tele-workers can be quickly brought online, remote offices can be quickly connected,
temporary teams can be easily set up on site, and mobile access can be easily enabled.
 With the growing use of smart phones, netbooks and other hand-held devices there is also
an increasing need for data access on the go.
 The success of devices such as the iPhone and its App store is also opening up a whole
new world of mobile applications. Connecting these types of applications to data stores
will be significantly easier through the cloud.
 Location-based applications will reach their potential through cloud computing. Many
smart phones are now location-aware (using inbuilt GPS facilities) and we will
increasingly see applications that take advantage of this capability.
 Cloud computing will facilitate innovation in many areas. Much of it will be driven by
the ease with which different devices can connect to cloud-based applications.

6. It is Greener (Environment-friendly)
 Most internal data centres are oversized and don’t run at anything like full capacity. Most
servers run significantly below capacity (real world estimates of server utilization in data
 centres range from 5% to 20%) yet they still consume close to the same amount of power
and require the same amount of cooling as a full capacity machine (granted that
Virtualization is changing this in some cases).
 A typical data centre consumes up to 100 times more power than an equivalent sized
office building. The carbon footprint of a typical data centre is therefore a significant
concern for many organizations.
 In a cloud computing environment resources are shared across applications (and even
customers) resulting in greater use of the resources for a similar energy cost.
 For corporations spread over different time zones the computing power lying idle at one
geographic location (during off-work hours) could be harnessed at a location in a
different time zone. This reduces not only the power consumption but also the amount of
physical hardware required.
 With cloud computing virtual offices can be quickly set up. Employees can easily work
from home. Travelling salespeople can have all their data available in any location
without needing to visit the office.

DE-MERITS

1. Security
 Putting your business-critical data in the hands of an external provider is risky for an
organization
 There is a school of thought that says that holding your data in the cloud is not much
more insecure than having it on internal servers connected to the Internet. The recent case
in the UK of a hacker who hacked his way into the US Government network shows that
supposedly secure networks are just as likely to be breached.
2. Data Location & Privacy
 Data in a cloud computing environment has to exist on physical servers somewhere in the
world and the physical location of those servers is important under many nations’ laws.
This is especially important for companies that do business across national boundaries, as
different privacy and data management laws apply in different countries.
 For example, the European Union places strict limits on what data can be stored on its
citizens and for how long. Many banking regulators also require customers' financial data
to stay in their home country. Many compliance regulations require that data not be
intermixed with other data, such as on shared servers or databases.

3. Internet Dependency, Performance & Latency

 A concern for many organizations is that cloud computing relies on the availability,
quality and performance of their internet connection. Dependency on an internet
connection raises some key questions: What happens if we lose our internet connection?
How long can we run our business?
 Organizations considering investing in cloud computing will certainly have to factor in
costs for improving the network infrastructure required to run applications in the cloud.
 At the software level, applications will have to be architected for the cloud in order to
achieve maximum performance.
 Latency (the time taken, or delay, for a packet of data to get from one designated point to
another) will undoubtedly be an issue for certain applications. Trading applications that
 require near-zero latency will probably be run in-house for many years to come. One of
the key problems with putting these applications in the cloud is that latency on the
Internet is highly variable and unpredictable.

4. Availability & Service Levels

 One of the most common concerns regarding cloud computing is the potential for down-
time if the system isn't available for use. This is a critical issue for line-of-business apps,
since every minute of downtime is a minute that some important business function can't
be performed. Every minute of down-time can not only affect revenue but can also cause
reputation damage.

5. Current Enterprise Applications Can't Be Migrated Easily

 Moving an existing application to a cloud platform is not as easy as it might first appear.
Different cloud providers impose different application architectures which are invariably
dissimilar to architectures of enterprise applications.
 In reality most organizations that adopt cloud computing will end up doing it with new
applications. Existing applications will probably continue to run on-premise for some
time. That’s not to say that these applications can’t be converted but that the costs of
conversion will often outweigh the benefits.
 Whilst the lack of a convenient migration path for existing applications might hinder
cloud computing adoption, in the longer term it is not going to be a permanent barrier for
larger audience.

6. Cloud Computing works online and is absolutely dependent on network connections, which
brings in many drawbacks such as, if network connection is slow or not available then work, will
jeopardize.

7. Data sharing is an advantage but also is disadvantage as it creates security and legal issues. It
is still not clear whether legal rights for data remains with the user or with the host of server and
owner of this System.

8. Many experts assert that Cloud Computing is expensive and it is superficial that Cloud
Computing can be inexpensive, as user will have to pay on monthly for data storage and updates.

Characteristics of Cloud Computing

On demand self services - computer services such as email, applications, and network or server
service can be provided without requiring human interaction with each service provider. Cloud
service providers providing on demand self services include Amazon Web Services (AWS),
Microsoft, Google, IBM and Salesforce.com. New York Times and NASDAQ are examples of
companies using AWS (NIST). Gartner describes this characteristic as service based.

Broad network access - Cloud Capabilities are available over the network and accessed through
standard mechanisms that promote use by heterogeneous thin or thick client platforms such as
mobile phones, laptops and PDAs.

Resource pooling - The provider’s computing resources are pooled together to serve multiple
consumers using multiple-tenant model, with different physical and virtual resources
dynamically assigned and reassigned according to consumer demand. The resources include
among others storage, processing, memory, network bandwidth, virtual machines and email
services. The pooling together of the resource builds economies of scale.

Rapid elasticity - Cloud services can be rapidly and elastically provisioned, in some cases
automatically, to quickly scale out and rapidly released to quickly scale in. To the consumer, the
capabilities available for provisioning often appear to be unlimited and can be purchased in any
quantity at any time.

Measured service - Cloud computing resource usage can be measured, controlled, and reported
providing transparency for both the provider and consumer of the utilized service. Cloud
computing services use a metering capability which enables to control and optimize resource use.
This implies that just like airtime, electricity or municipality, water IT services are charged per
usage metrics – pay per use. The more you utilize the higher the bill. Just as utility companies
sell power to subscribers, and telephone companies sell voice and data services, IT services such
as network security management, data center hosting or even departmental billing can now be
easily delivered as a contractual service.

Multi Tenacity - is the sixth characteristics of cloud computing advocated by the Cloud Security
Alliance. It refers to the need for policy-driven enforcement, segmentation, isolation,
governance, service levels, and chargeback/billing models for different consumer constituencies.
Consumers might utilize a public cloud provider’s service offerings or actually be from the same
organization, such as different business units rather than distinct organizational entities, but
would still share infrastructure.
Characteristics of Cloud Services
Convenient, on-demand access - This implies application availability, basically an assurance
that the cloud-based service is accessible when the customer needs it. It also implies that
applications designed with easy access in mind. For applications developed in-house, ensuring
on-demand access requires toolsets that support application quality throughout the application
lifecycle. It also requires tools capable of monitoring and managing application availability from
the user perspective.

Shared resource pool - For either public or private clouds to deliver economies of scale, a
shared resource pool is critical. The idea is that different customers will have different resource
requirements at different times. A shared resource pool-particularly when combined with the
next capability (rapid provisioning and release)-means that customers experiencing peak
resource requirements have access to pooled resources because other customers are running at
non-peak levels.

Rapid provisioning and release of resources - These are critical capabilities, and
methodologies for release are equally important— if not more important—than for acquisition.
Rapid provisioning presupposes the use of products capable of provisioning applications on
demand based on-preexisting models and templates. Products that support and enforce the
governance of provisioning and release functions are also critical.

Minimal service provider interaction - The average corporate user requesting access to an
internally-hosted platform or service interacts one or more times with IT. However, when the
same user seeks access to a cloud service, he or she expects to access the service directly,
without an intermediary contact.

Minimal management effort - Public and private clouds, of course, require different levels of
management effort, but the responsibilities of IT organizations are similar in both cases.

Implications of Cloud Computing 

Computing Power - Although Cloud Computing vendors advertise their "clouds" as having
infinite compute power, this is not the case.  Most vendors who sell Cloud Computing solutions
will have very slim margins and are likely to commission new compute power within their data
centres on a just-in-time basis.  Thus large increments in customer demand may not be
instantaneously met.  This is especially true if the vendor doesn't have the capital budget
provision to commission, build and bring into service data centres in plenty of time to serve its
customers needs.
Memory - There will be physical limitations within the vendor's computing infrastructure that
will limit the amount of RAM that is accessible from a particular set of processors (given that
you are sharing their facilities with many other customers).  To this end, computing applications
which are very memory intensive are probably not best suited to migration into the Cloud.

Storage - Despite many Cloud Computing vendors selling the promise of unlimited, instantly-
available storage, access speeds will be limited by your Internet connection: therefore bandwidth
is a major consideration when using applications that use a lot of data.  Some companies offer a
service to upload data (and potentially applications, although this is more troublesome) via a
portable hard disc that is shipped directly to them (wherever in the world they may be) but you
should consider the security of that information while it is in transit.

Operating System/Environment - Most vendors are running particular tailored varieties of the
Linux platform (since this provides them with the cheapest running costs).  Whilst this does
ensure compatibility with their infrastructure -- it does mean that you will need the source code
to your application so that you can compile it in the cloud and have it run from there.  It is worth
noting that some vendors do offer Windows as the operating system, but this increases costs and
may shift the maintenance over to you.

Connectivity to Other Applications or Systems - It is highly likely that the system that you are
considering moving to the Cloud will need to communicate with at least one other application.
In order to facilitate this you need to decide whether the other applications that are needed are
also moved to the cloud, or whether they access them over the Internet.  

In deciding which path to take, you will need to consider how much data is moved from one
system to the others, as well as how "chatty" an application is.  Applications which use short
bursts typically perform poorly as the latency across cannot be guaranteed and is often poor.  
Performance Criticality - How much do your end-users depend on the performance of this
application and if that performance varies, what's the impact?  What class of application are you
migrating kind of application are you thinking about moving to the Cloud?  Is it a development
environment that users are using where performance is less critical than a CRM system which is
being used in a call centre to answer customer's calls?

Backup Requirements - Assuming that the application(s) and associated data that you put in the
Cloud are worth something to you, you almost certainly wish to ensure that if there is either a
hardware, software or human error, that application and its data can be recovered.  Ensuring that
your applications and data are properly backed up (on a schedule that fits with your pattern of
usage) and is restorable is very important.  Equally you may wish to use backups explicitly such
as the case where you are running testing an application and wish to rewind the entire system
back to a known position before each testing phase starts.

Availability Requirements (from a Business Perspective) - In addition to the performance of the

application considered above, it is important to determine the level of service provided by the
Cloud vendor; this needs to match your business requirements.  For example, for development
and test uses of Cloud Computing having the system available during office hours may be
sufficient, however if the system is used by your globally-distributed workforce, then there is
little tolerance for downtime. 

Large enterprises - For large enterprises the concerns about moving data and applications into
the Cloud will probably be a step too far even if it does make financial sense.  For those groups it
probably makes sense to create a private cloud.  That is, a service which has the attributes of a
Cloud (flexible pre-provisioned compute environment) that has a service catalogue which can be
offered back to other departments within both IT and the business.This approach permits IT to
keep a control of costs and for the business to receive a service that is perceived as more flexible
yet is leveraging the existing IT asset base more effectively.

Small/Medium enterprises - Cloud Computing has much to offer small and medium enterprises.
It permits them to run applications that are traditionally too complex or expensive (either because
of prohibitive licensing costs or impractical hardware requirements).  It reduces the need for long
startup times for implementing new services and capabilities as well as the ongoing need for
operator training.

Security Concerns of Cloud Computing

While cost and ease of use are two great benefits of cloud computing, there are significant
security concerns
that need to be addressed when considering moving critical applications and sensitive data to
public and shared cloud environments. To address these concerns, the cloud provider must
develop sufficient controls to provide the same or a greater level of security than the organization
would have if the cloud were not used. Listed here are ten items to review when considering
cloud computing.
1. Where’s the data?
Different countries have different requirements and controls placed on access. Because
Your data is in the cloud, you may not realize that the data must reside in a physical location.
Your cloud provider should agree in writing to provide the level of security required for your
customers.
2. Who has access?
Access control is a key concern, because insider attacks are a huge risk. A potential
hacker is someone who has been entrusted with approved access to the cloud. If anyone doubts
this, consider that in early 2009 an insider was accused of planting a logic bomb on Fanny Mae
servers that, if launched, would have caused massive damage. Anyone considering using the
cloud needs to look at who is managing their data and what types of controls are applied to these
individuals.
3. What are your regulatory requirements?
Organizations operating in the US, Canada, or the European Union have many regulatory
requirements that they must abide by (e.g., ISO 27002, Safe Harbor, ITIL, and COBIT). You
must ensure that your cloud provider is able to meet these requirements and is willing to
undergo certification, accreditation, and review.
4. Do you have the right to audit?
This particular item is no small matter; the cloud provider should agree in writing to the terms of
audit.
5. What type of training does the provider offer their employees?
This is actually a rather important item, because people will always be the weakest link in
security. Knowing how your provider trains their employees is an important item to review.
6. What type of data classification system does the provider use?
Questions you should be concerned with here include: Is the data classified? How is your data
separated from other users? Encryption should also be discussed. Is it being used while the data
is at rest and in transit? You will also want to know what type of encryption is being used. As an
example, there is a big difference between WEP and WPA2.
7. What are the service level agreement (SLA) terms?
The SLA serves as a contracted level of guaranteed service between the cloud provider and the
customer that specifies what level of services will be provided.
8. What is the long-term viability of the provider?
How long has the cloud provider been in business and what is their track record. If they go out of
business, what happens to your data? Will your data be returned, and if so, in what format? As an
example, in 2007, online storage service MediaMax went out of business following a system
administration error that deleted active customer data. The failed company left behind unhappy
users and focused concerns on the reliability of cloud computing.
9. What happens if there is a security breach?
If a security incident occurs, what support will you receive from the cloud provider? While many
providers promote their services as being unhackable, cloudbased services are an attractive target
to hackers.
10. What is the disaster recovery/business continuity plan (DR/BCP)?
While you may not know the physical location of your services, it is physically located
somewhere. All physical locations face threats such as fire, storms, natural disasters, and loss of
power. In case of any of these events, how will the cloud provider respond, and what guarantee
of continued services are they promising? As an example, in February 2009, Nokia’s Contacts
On Ovi servers crashed. The last reliable backup that Nokia could recover was dated January
23rd, meaning anything synced and stored by users between January 23rd and February 9th was
lost completely.

Political Concerns

Cloud computing depends largely on global politics to survive. If for example the
telecommunications companies in the States got their way and went away with the current
internet standard of network neutrality completely. Having data throttled and information filtered
goes against the basic concept of cloud computing and global knowledge. You can't have a
working cloud of information and services to draw from and build on if someone or something is
constantly manipulating the data held within it, or worse, blocking it from your view to achieve a
hidden agenda.

Politics are affecting the scalability of the internet, the availability of internet access, the free
flow of information and the cloud based global economy on a daily basis. We already know that
the concept works – it was instrumental in crunching the massive amounts of data needed to
complete the gene mapping Humane Genome Project. That project has netted answers to the
question of where hundreds of diseases and traits come from, and would not have been possible
in such a short time without the computer sharing allowed by cloud computing and available
internet.

Other project depend on cloud computing overcoming politics to be successful as well. What
good is One Laptop Per Child bringing laptops to remote areas of poor countries (including our
own) if there is no internet cloud of information, applications and services for the computers to
access? How will it help these countries overcome hardship if they get cut off from the flow of
information and the global economy because a bureaucrat in a suit thousands of miles and
several time zones away is closing access to a data port to keep citizens in his country in the dark
about political maneuvering?

Cloud computing is a vague concept, but an important one. It is vital to the growth and flow of
the economy for future generations. The only way to fight the negative effect of international
politics on the availability and growth of cloud computing is to attack it one issue at a time. Take
a moment wherever you are to find out what your country or state is doing to promote network
neutrality and a free and unbiased internet, and work behind the scenes to keep that cloud afloat
for the future economies of the world.
Business model concerns
1.The creation of a new generation of products and services. The economics of cloud
computing lets innovative companies create products that either weren’t possible before or are
significantly less expensive than the competition (or just more profitable.) This part of cloud
computing is an arms race and there are short windows of opportunity since competitors can
often put the economic advantages of cloud computing into their product formulations fairly
quickly once they see that it works for you. Where it gets interesting is that many business ideas
that required prohibitive amounts of computing power, scale, or radically new business models
(the aforementioned open supply chains and Global SOA) but couldn’t be implemented due to
existing technical limitations or cost-effectiveness, can now be realized. Every improvement in
storage, processing power, or technology enables innovations that weren’t possible before (high
speed Internet, for instance, made products like YouTube possible) and cloud computing makes
these opportunities unusually accessible. Smart companies will take notice.
2.A new lightweight form of real-time partnerships and outsourcing with IT suppliers.
Companies that did traditional outsourcing of their IT services a few years ago already know
what this feels like; a large part of what used to be in-house is now being done somewhere else
and changing anything is hard. But unlike traditional outsourcing of IT, cloud computing will
provide agility and control that traditional outsource cannot match for the most part. Don’t like
your cloud vendor? Unless you negotiated a long-term contract, you can often switch far easier
than changing IT outsourcers. In fact, many cloud computing relationships consist of nothing
more than a cancel-at-the-end-of-the-month commitment and corporate invoice. For many
companies, this will actually be improvement over what they have now and give them choices
they perhaps never had when everything required internal execution or to go through the
outsourcing supplier relationship.
3.A new awareness and leverage of the greater Internet and Web 2.0 in particular. Most
companies are still notoriously critical of Web technologies as “not serious” computing. But the
Web has grown up considerably in the Web 2.0 era and the challenges in scale, performance, and
satisfying fickle audiences of millions has created technologies, solutions, and architectures that
can address them in powerful yet economic ways that many enterprise systems are finding hard
to match. When cloud computing is adopted by an organization, they will find themselves
thrown into the pool with the rest of the online world in many ways, whether this is the
employment of social tools, SaaS, non-relational databases or a host of other technologies in
their new cloud. And in the end, this will serve them very well and allow many companies to
acquire the skills and perspectives required to compete effectively in the 21st century.
4.A reconciliation of traditional SOA with the cloud and other emerging IT models. A great
post this week from our very own Joe McKendrick illustrates how SOA is evolving because of
the cloud. The advent of cloud technologies will have to be dealt with and somehow
encompassed by SOA initiatives that are already looking at their current toolset of heavyweight
approaches and technologies with an eye towards seeking an onramp to change and
improvement. Web-Oriented Architecture fits very well with cloud technologies which are
heavily Web-based and it’s a natural, lightweight way of building SOA at virtually every level of
the organization. For many organizations, the cloud will likely be the straw that broke the back
of traditional SOA and move it to a place where it will meet new business and technical
requirements, faster rates of changes, and new business conditions.
 5.The rise of new industry leaders and IT vendors. While we’re seeing many of the top players
in computing use their existing strengths to create successful cloud computing offerings, there
were also be a new generation of companies that businesses generally aren’t used to dealing with
as suppliers. Amazon and Google are two firms that generally aren’t regarded as deeply
experienced in the enterprise, and there are many others. While it doesn’t seem that we’ll see
many entirely new players compete with the big firms, it’s certainly not out of the question (and
given the opportunity, likely from an investment standpoint) that we’ll see some very well-
funded new cloud startups that lack the baggage of existing leaders (thereby moving very
quickly) and bring a new sensibility (radical openness and transparency, new technologies, and
Web-focus) that’s often needed with cloud computing. We may see perhaps even before the
downturn ends. Either way, the industry landscape will be remade by cloud computing as it is
one of the very few new IT developments that will be very broadly adopted in the next several
years.
6.More self-service IT from the business-side. Many cloud solutions, particularly as they relate
to SaaS, will require increasingly less and less involvement from the IT department. Business
users will be able to adopt many future cloud computing solutions entirely using self-service.
This also heralds, as McKendrick indicates, that many of these scenarios will be much smaller
and more numerous, tapping into the The Long Tail of IT demand.
7.More tolerance for innovation and experimentation from businesses. With fewer technical
and economic barriers to creating new ways to improve the business (LOB, marketing, sales,
customer service, IT, horizontal services), cloud computing will enable prototyping and market
validation of new approaches much faster and less expensively that before. While legal,
branding, and compliance will often struggle to keep up the pace with the rest of the
organization, there will be gradual thawing of the glacial pace of change as business possibilities
become, well, more possible in the cloud computing world. This won’t fix the often broken
innovation mechanisms in businesses, but then again, cloud computing is so accessible that many
new internal entrepreneurs (see previous point) will use the tools to create new solutions anyway.
8.The slow-moving, dinosaur firms will have trouble keeping up more nimble adopters and
fast-followers. Not adopting cloud computing doesn’t spell the immediate demise of traditional
companies that aren’t good at making technology and cultural transitions (and make no mistake,
cloud computing is a big cultural change), but it will pile onto other recent advancements and
make it even harder to compete in the modern business environment. In the end, those too slow
to adopt the benefits while managing the risk are likely going to face serious and growing
economic and business disadvantage.

Staff expertise concerns

The complex and fast-changing nature of solutions for infrastructure, platform, and software
cloud computing can be overwhelming. Cloud computing environments can involve new
software development languages and application programming interfaces; new approaches to
storage; and an array of paradigm shifts in system administration, security, operations, and
maintenance. Similarly, comprehensive virtualization and consolidation initiatives require
expertise across the entire IT stack to avoid pitfalls and stay on-track. Building and maintaining
the staff and expertise in-house for these new initiatives can be difficult and costly.

Economic concerns
Cost saving
Cloud computing is often referred to as a technology. However, it is actually a significant shift in
the business and economic models for provisioning and consuming information technology (IT)
that can lead to a significant cost savings. This cost savings can only be realized through the use
of significant pooling of these “configurable computing resources” or resource pooling.
According to NIST, this capability is an essential characteristic of cloud computing. Resource
pooling is the ability of a cloud to serve multiple customers using a multi-tenant model with
different physical and virtual resources dynamically assigned and reassigned according to
demand.

Job creation
With the introduction of cloud computing other processes will no longer viable
Business creation
Better quality and more versatile service. With improved services and processes the chances of
getting new business opportunities are very high. Cloud computing improves efficiency and this
directly impacts the overall performance of the organisation and hence attract more customers.