Cloud Computing for Business

Omoniyi Temitope. O.

MSc Computing & Management

Session 2009/2010

MSc Project – COMP5200M

Student Number: 200509366

The candidate confirms that the work submitted is their own and the appropriate credit has been
given where reference has been made to the work of others.

I understand that failure to attribute material which is obtained from another source may be
considered as plagiarism.

(Signature of student)

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 Abstract

This project documents the current cloud computing market and its relationship to the business
world. In the literature the basics of cloud computing were collated such as the definition, its
architecture and models. The business enterprise requirements as well as the available cloud
solutions were studied, described and classified also using the qualitative research methodology. The
project revealed that cloud computing is still evolving however there are lots of advantages as against
the shortcomings and also there is a big room for improvement. The project serves as a good start to
getting a general view of cloud computing as it relates to business

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 Acknowledgments

I acknowledge all the earthen vessels which God has brought my way in my academic pursuit.

First and foremost, I appreciate the unending trust from my amiable parents Mr and Mrs Omoniyi;
for letting me purse a degree in computing as against my business background. My ever supporting
siblings ‘Gboyega, ‘Bunmi and ‘Akin you guys are great.

I appreciate the care taken by my learned supervisor, Dr Karim Djemame in reviewing my write-ups
and giving me suggestions accordingly thus bringing the best out of me. To my assessors Dr HHJ
Muller for his views during the progress meeting I say thank you.

My gratitude also goes to Mrs Toyin Agoro for her suggestion of case study on a developing country
and other scholars whose works were consulted and referenced in this project.

Lastly, to my friends, Yusuff Dupe, Opata Fred, Okafor Nonso, Nwude Ugo, Oludipe Oladipo,
Okunrinboye Wale, Moore Ayo, Adenuga Ayo, Agunsoye Tope, Osobu Funto and Umeh Ify, you all
kept me sane during the course of this project.

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 Table of Content

Abstract …………………………………………………………………………………………………………………………………………….II

Acknowledgement …………………………………………………………………………………………………………………………..III

Table of content ………………………………………………………………………………………………………………………………IV

List of Figures …………………………………………………………………………………………………………………………………VII

List of Tables ………………………………………………………………………………………………………………………………….VIII

1. Introduction………………………………………………………………………………………………………………………………1
1.1. Research Objectives…………………………………………………………………………………………………………… 1
1.2. Research Methodology ………………………………………………………………………………………………………1
1.3. Scope of the Study …………………………………………………………………………………………………………….1
1.4. Justification of the Study ……………………………………………………………………………………………………2
1.5. Sources of Literature Materials and Data ……………………………………………………………………………2
1.6. Outline of Chapters ……………………………………………………………………………………………………………2

2. Literature Review …………………………………………………………………………………………………………………….4

2.1. What is cloud computing ……………………………………………………………………………………………………4
2.2. Evolution of cloud computing ……………………………………………………………………………………………5
2.3. Why cloud …………………………………………………………………………………………………………………………7
2.4. Cloud architecture ………………………………………………………………………………………………………………8
2.4.1.Applications on cloud architecture ……………………………………………………………………………10
2.4.2.Common characteristics of a cloud application ………………………………………………………..11
2.5. Middleware …………………………………………………………………………………………………………………….11
2.6. Cloud Service Models ……………………………………………………………………………………………………..11
2.7. Deployment models ………………………………………………………………………………………………………..12

3. Business perspective of cloud computing ………………………………………………………………………………14

3.1. Standard IT Solutions ………………………………………………………………………………………………………14
3.1.1. Traditional Enterprise computing ………………………………………………………………………..14
3.1.2. Grid Computing ……………………………………………………………………………………………………15
3.1.3. Utility computing ………………………………………………………………………………………………….15

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 3.2. Business Enterprise Requirements ………………………………………………………………………………….15
3.3. Advantages and disadvantages of migrating to cloud ………………………………………………………17
3.3.1. Advantages of cloud computing …………………………………………………………………………..17
3.3.2. Disadvantages of cloud computing ………………………………………………………………………18
3.4. Use cases ………………………………………………………………………………………………………………………..19
3.4.1. End User to Cloud…………………………………………………………………………………………………19
3.4.2. Enterprise to Cloud to End User …………………………………………………………………………..20
3.4.3. Enterprise to Cloud ……………………………………………………………………………………………..20
3.4.4. Enterprise to Cloud to Enterprise ………………………………………………………………………..21
4. Cloud Solutions …………………………………………………………………………………………………………………………23
4.1. Difference between cloud service provider and cloud vendor……………………………………………23
4.2. Cloud Solutions and their proprietors …………………………………………………………………….…………23
4.2.1. IBM ………………………………………………………………………………………………………………………24
4.2.2. HP …………………………………………………………………………………………………………………………25
4.2.3. Amazon Web Service ……………………………………………………………………………………………25
4.2.4. Oracle …………………………………………………………………………………………………………………..26
4.2.5. Microsoft ………………………………………………………………………………………………………………27
4.2.6. Flexiant ………………………………………………………………………………………………………………..28
4.2.7. Sales Force ……………………………………………………………………………………………………………28
4.3. Service level agreements …………………………………………………………………………………………………29
4.4. Success Stories …………………………………………………………………………………………………………………30

5. Business Model ………………………………………………………………………………………………………………………32

5.1. Value chain from service provider to end user…………………………………………………………………32
5.2. Players in the Value Chain………………………………………………………………………………………………..32
5.3. Pricing Models…………………………………………………………………………………………………………………34
5.3.1. Subscription model……………………………………………………………………………………………….34
5.3.2. Usage-based pricing model……………………………………………………………………………………34
5.3.3. Free or Ad-supported model…………………………………………………………………………………34
5.3.4. Dynamic pricing……………………………………………………………………………………………………..34

6. Implication for a developing country: Case of Nigeria……………………………………………………………..35

6.1. Factors that drive cloud service adoption………………………………………………………………………..35
6.2. Challenges to cloud adoption ………………………………………………………………………………………….38

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 6.3. Conclusion ………………………………………………………………………………………………………………………39

7. Evaluation
7.1. Summary of work………………………………………………………………………………………………………………41
7.2. Justification of methodology…………………………………………………………………………………………….41
7.3. Findings and Recommendation………………………………………………………………………………………….41
7.4. Limitation of the project…………………………………………………………………………………………………….42
7.5. Suggestion for further study………………………………………………………………………………………………42

Bibliography…………………………………………………………………………………………………………………………………..44

Appendix A: Project Experience……………………………………………………………………………………………………… 47

Appendix B: Project Management …………………………………………………………………………………………………..48

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List of Figures

Figure 1 Evolution of Cloud Computing …………………………………………………………………………………………….6

Figure 2 Result showing trend in the last 12 months for cloud, grid and distributed computing ……….7

Figure 3 Result showing trend in the last 12 months for cloud, grid and distributed computing ……….7

Figure 4 Typical Cloud architecture …………………………………………………………………………………………………..9

Figure 5 Logical Cloud Computing Model ………………………………………………………………………………………….9

Figure 6 Four layer cloud architecture …………………………………………………………………………………………….10

Figure 7 Sample of an N-tier Architecture. Recreated from ……………………………………………………………………………10

Figure 8 illustrates the End user to cloud scenario ………………………………………………………………………….20

Figure 9 illustrates the Enterprise to Cloud to End User scenario ……………………………………………………20

Figure 10 illustrates the Enterprise to cloud scenario ……………………………………………………………………..21

Figure 11 illustrates the enterprise to cloud to enterprise scenario ………………………………………………..21

Figure 12 Linear Cloud computing value chain ………………………………………………………………………………..32

Figure 13 Internet Users in Nigeria …………………………………………………………………………………………………36

Figure 14 Fixed broadband internet subscribers in Nigeria ……………………………………………………………..36

Figure 15 Fixed broadband internet subscribers in Nigeria ……………………………………………………………..37

Figure 16 Electricity productions in Nigeria and United Kingdom in kilowatt hour (kWh) ………………..39

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List of Tables

Table 1: Microsoft IT solutions ………………………………………………………………………………………………………27

Table 2: Categorization of cloud services providers ……………………………………………………………………..29

Table 3: Data on Internet Users in Nigeria ……………………………………………………………………………………37

Table 4: Data on mobile cellular subscribers in Nigeria …………………………………………………………………37

Table 5: Data on Electricity production in Nigeria and United Kingdom in kilowatt hour (kWh) …..39

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 Chapter One:

INTRODUCTION

Cloud Computing for Business is aimed at providing a holistic view of how cloud computing relates to
the business world. This chapter is states the research objectives, methodology used in solving the
research problem, the scope of the project and the outline of the chapters.

1.1 Research Objectives:

The aim of this research is to explore the current cloud computing market with critical analysis of the
providers (what they offer) and the users (what they need). It is geared at being a reference point for
business enterprises willing to use the cloud in achieving its objectives and to the cloud service
provider who is also seeking to know what the needs of the users. Simply put the motivation behind
this research is to bridge the gap between the users and the providers, so it will be more of a holistic
view of cloud computing and its players.

The fact that it is a fairly recent trend with lots of research still to be done makes this project
worthwhile.

1.2 Research Methodology:

The methodology used in achieving the business objectives will be that which involves investigative
and descriptive analysis. Basically, it is more of a qualitative research, with data descriptively
analysed and related to the study.

For project planning and management the agile approach was used because the chapters are
interrelated and are relevant one another thus working on the Literature review also means
discovering the various business models, deployment model of cloud computing. This method gave
me a lot of flexibility and opportunity to make changes easily (See appendix B).

1.3 Scope of the Study:

The scope of this study is limited to the peripheral computing complexity as well as that of business;
this is to give the common reader a clear understanding of the issues discussed. The study also has a

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wider coverage thus it will be useful both in the developed world as well as developing countries,
with the special case study on Implication of cloud computing for a developing country.

1.4 Justification of the Study:

This study is of utmost importance due to the current state of Cloud computing and the issues that
affect its adoption, though Cloud computing is not a solution to all business IT needs. However, the
need to have a holistic view of how cloud computing affects business enterprises in comparison to
the traditional IT solutions is the main reason for this project.

1.5 Sources of Literature Materials and Data:

Literature materials are sourced from both online media (News, Blogs, White papers, working
papers) and books (Journal publications, Thesis, Textbooks etc.) many of which are recent due to the
lifespan of the concept of the term “cloud computing”. The data used are secondary in nature
obtained from sources such as The World Bank and International Telecommunication Union.

1.6 Outline of Chapters:

Literature review- This section will summarise the available relevant literature which are related to
Cloud computing from different scholars, definition of terms, history of cloud computing,
architecture, models, middleware, applications, infrastructure etc. The importance of this section is
that it will help form the base of this study.

Business perspective- This section seeks to answer questions on the importance of cloud computing
to business, such as why the move to cloud? What are the advantages and disadvantages of cloud
computing? What are the other IT solutions available today? What are the varieties of use cases of
cloud solutions? What are the requirements of business enterprises?

Cloud Solutions- This will feature the various cloud service providers and the solutions each of them
provide, their delivery models embraced by them and their deployment models will be discussed.

Business Model- This chapter seeks to reveal the available models of getting cloud services to the
final consumers. Is there a chance to create a more effective business model as well as the pricing
models?

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Implication for developing countries - This section will seek to shed light on the prospect of cloud

computing in the developing economy with Nigeria as a case study.

Evaluation - This chapter contains the findings and recommendations therein, justification for the

methodology used, the limitations of the study and finally suggestion for further studies.

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 Chapter Two:

LITERATURE REVIEW

2.1 What is Cloud computing?

There are numerous definitions suggested for cloud computing and I use the word suggested
because many see it as an evolving term which is yet to be standardized as a whole but most
scholars agree with (NIST 2009) which defined Cloud computing as ”a model for enabling convenient,
on-demand network access to a shared pool of configurable computing resources (e.g., networks,
servers, storage, applications, and services) that can be rapidly provisioned and released with
minimal management effort or service provider interaction. This cloud model promotes availability
and is composed of five essential characteristics, three service models, and four deployment models.”
The service and deployment models are detailed later in this chapter however here are the five
essential characteristics are stated by NIST:
1. On-demand self-service: Cloud services are called upon when needed and the provisioning
needs little or no human interaction as it is automated and easy to call upon by the cloud
users. A cloud service here is defined as “consumer and business products, services and
solutions that are delivered and consumed in real-time over the Internet” by (Gens 2008).
2. Broad network access: Cloud computing keys into the vision for ubiquitous computing as
capabilities are transmitted over the internet and can be assessed from various standardised
platforms such mobile phones, laptops etc.
3. Resource pooling: The cloud model has a multi-tenancy model such that many clients are
serviced simultaneously this enables the provider’s computing resources to be pooled
together in order to meet the clients’ requirements. The resources (physical and virtual) are
dynamically assigned and reassigned according to consumers demand, these resources need
not be located together as they are independent of one another but they all come together
to form the whole service. Examples of such resources are virtual machines, storage and
memory.
4. Rapid elasticity: Elasticity of the resources provided via cloud is rapid as it is built on the
utility model whereby consumers only pay for resources used up and the resources appear
to be unlimited as the consumers can easily scale up or down as their computing need
varies.
5. Measured Service: Also based on the utility computing model, cloud service has metering
capability at different level of abstraction according to the type of service e.g. storage,

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 number of machines, processing, and bandwidth. These resources are monitored,
controlled, and reported which aids accountability for both the provider and consumer of
the service.

However there are other definitions proposed by other authors in various research papers but
worthy of mention is that of (Vaquero, et al. 2009) which compiled 22 definitions of cloud computing
from different authors before providing an encompassing definition of the Cloud as “a large pool of
easily usable and accessible virtualized resources (such as hardware, development platforms and/or
services) these resources can be dynamically reconfigured to adjust to a variable load (scale),
allowing also for an optimum resource utilization. This pool of resources is typically exploited by a
pay-per-use model in which guarantees are offered by the Infrastructure Provider by means of
customized SLAs.” The definition simply shows everything cloud computing is all about, its features,
uses, pricing model and its can be said that there is no much differentiation between their
encompassing definition and that of the National Institute of Standards and Technology (NIST)
stated earlier. It is hoped that in the nearest future as the concept develops there will be a common
agreement on what cloud computing is.

2.2 Evolution of cloud computing

Cloud Computing is a relatively new term in the technology world and like every other relatively new
term or IT concept it has its history and chronology. Many argue that cloud computing is not
necessarily a new thing according to (Colaner 2010) “it is not new; the metaphor may be, but the
underlying technologies have been well-established for a long time”, Technologies such as the Grid
systems, internet, any IT outsourcing -- network infrastructure, security monitoring, remote hosting -
- are all forms of cloud computing. Others such as (Schneier 2009) even believe it is a modern
version of the timesharing model from the 1960s when computers were expensive and hard to
maintain which was eventually killed by the rise of the personal computer.

This shows that the history of cloud computing dates back to the origin of computing itself and its
evolution, from the super-computers to the era of cluster computing, where computers were
brought together to form a single larger computer to create a sense of super computer, it was aimed
at harnessing greater processing power (Rittinghouse and Ransome 2010). Clustering later led to the
concept of Grid computing in the early 1990’s and this was thought to be the future of computing
because of its cost effectiveness, ability to solve problems with enormous amount of computing
power, and because it proved that the computing resources can be pulled together to achieve a
common objective, according to (Leyden 2009) Cloud Computing found its origin in the success of

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server virtualization and the possibilities to run IT more efficiently through server consolidation. The
trend later moved to utility computing as the name implies it is simply the consumption of
computing services as a utility whereby charges are placed on actual consumption rather than a flat
rate; these entire concepts have evolved to make what we today call Cloud Computing.

Figure 1: Evolution of Cloud Computing

Cloud computing has most of its properties interrelated to earlier technologies as it will be seen in its
models, architecture etc., which are discussed later in this chapter, this also shows that cloud
computing is an evolving technology as against a one off technology discovery, it is a result of
previous research and improvement in computing.

The motivation behind cloud computing is pretty obvious as the IT world seek to find ways to
provide cheaper and more sophisticated computing; cheaper computing because the cost on IT has
shifted from the scale of expensive hardware like the mainframes to issues such as energy
consumption, office space, need for collaboration, ubiquitous computing etc.

A note on the trends in usage of the term cloud computing in relation to some other computing
terms which cloud evolved from such as grid computing and distributed computing from Google
searches shows Cloud Computing as a relatively new term introduced within the past four years (see
figure 3) and the term has been rising even over the past 12 months (see Figure 2). There has also
been a decline in search terms “Grid, Utility and Distributed computing” which are technologies
upon which cloud is built using virtualization. This decline can be attributed to fact that lots of
research has been carried out on them and cloud computing is viewed as a step further or an
advancement in the field.

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Figure 2: Result showing trend in the last 12 months for cloud, grid and distributed compu ting (Google 2010)

Figure 3: Result showing trend in the last 7 years for cloud, grid and distributed computing (Google 2010)

The question that comes to bear is basically why cloud? and not the existing standardised IT
solutions currently in the market, the next section seeks to answer this question and in chapter two
the present solutions will be highlighted as well as the advantages and disadvantages of cloud
computing.

2.3 Why cloud?

Cloud computing is gaining ground in the computing world for many reasons, one being the need to
cut IT cost. Cloud computing provides an on demand service model and a pay per use pricing model
whereby a consumer only pays for what is used based on a set service level agreement. The cost
effective feature cut across not just the pricing model but other known cost such as cost of IT
maintenance, salaries of IT personnel, and huge cost of investing in software licensing (Myerson
2009), another incentive for cloud computing is that it may be more environmentally friendly;
centralization of data centres, low emission, wireless transmissions, low energy consumption etc.,
makes for a safe ecosystem which seems to top priority in the computing field presently as it is being
pushed by the founder of Microsoft Bill Gate (TED 2010).

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What makes cloud computing different from existing technologies is basically the fact that it
incorporates a whole lot of technologies such as Grid Computing, utility computing etc., while it
shares a lot of characteristics with the existing technology such as scalability, virtualisation, and on
demand service there are still a lot of differences.

In comparison with grid computing differences can be spotted on factors such as standardization
whereby Grid is highly standardized cloud in its infancy state is not, payment model in Grid is quite
rigid while cloud offers flexibility. To Build and Manage a Grid you may incur huge capital and
operational expenses. Cloud computing however is not always suitable to all IT consumer needs, it
has numerous issues associated with it just like every new trend, there is still a lot of research to be
done (Djemame 2010).

2.4 Cloud architecture

Architecture is simply the structure and organization of an activity aimed at achieving a specific
purpose in a system; it is the composition of separately specified components which forms the
system.
There are numerous definitions for cloud architecture, according to (Varia 2010) “Cloud
Architectures are designs of software applications that use Internet-accessible on demand services”
this definition buttresses some known systems architectures such as web services, service oriented
architectures, web application frameworks etc., nevertheless the definition misses on some
important facts of a cloud computing architecture which includes its multi-tenancy property as well
as its distributed systems properties which relates to autonomic system computing and grid
computing accordingly.
The above definition is limited to what cloud computing properties are and can be said to be closer
to cloud applications, the real cloud architecture should be the structure upon which the
applications will work, to this end many authors have proposed different description of cloud
architecture with different layers and labels, a widely-adopted cloud architecture framework is
provided by NIST, it is a simple model comprised of three layers of cloud capabilities ‘‘as a Service’’
(See figure 4) namely infrastructure, platform and software as a service. Many other authors built on
this typical architecture framework for example (Eric and Roberto 2010) in proposing a cloud
computing logical architecture believes it is made up of the typical layers which they represented as
application, platform and infrastructure virtualization accordingly (see Figure 5). What differentiates
their model is the inclusion of Service oriented architecture (SOA)/service virtualization layer which
is believed to be the key to cloud computing because of the service nature of the concept of cloud,
the inclusion of Governance Virtualization which is simply the management of the cloud and it is

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thought to be in its infancy as lots of research needs to be carried out to get a good standard for
virtualisation.

Cloud Architecture
IaaS
PaaS

SaaS

Figure 4: Typical Cloud architecture

SOA/Service Virtualization
Application Virtualization
Governance Virtualization

Data Virtualization

Platform Virtualization

Application Hosting Virtualization

Infrastructure Virtualization

Network Virtualization

Figure 5: Logical Cloud Computing Model

Also (Foster, et al. 2008) defined four layers of cloud architecture (see figure 6) namely Application,
Platform, Unified resources and Fabric. The Fabric layer is the base of the architecture and contains
raw hardware resources. The unified resources layer serves has the base of the resources which are
later integrated to the upper layer of the architecture. The platform layer is dependent on the
unified resource layer and it makes use of specialised tools to aid development and deployment of
applications, this is considered to be the middleware e.g. a web hosting environment. The final layer
is the application layer which simply contains the applications developed on the platform layer; it is
on this layer that such applications run in the clouds.

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 Application

Platform

Unified Resources

Fabric

Figure 6: Four layer cloud architecture

The two cloud architecture views above and other proposed definitions take clues from the typical
client-server architecture (see figure 7) with inclusion of web server on the presentation layer
making it more suitable for a cloud architecture description of service over the internet, It deviates
from the typical 2-tier and 3-tier architecture, it is a N-tier system architecture which links different
systems with added connectivity through the internet (Gustavo, et al. 2004).

Client

Web Browser

Presentation layer
Web Server

HTML Filter

Middleware
Application logic layer

Resource management layer

Figure 7: Sample of an N-tier Architecture. Recreated from Gustavo, et al 2004

2.4.1 Applications on Cloud Architecture

Applications built on Cloud Architectures are on-demand in nature, whenever the application is
accessed it draws the necessary resources on-demand, performs the specific task for which it is

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called, and then leaves the unwanted resources which often organize themselves at the completion
of the task while the application is in the task it scales up or down elastically based on resource
needs.

2.4.2 Common characteristic of a Cloud Application

When designing a cloud architecture application some characteristics are expected as standards
(Varia 2010) pointed out some of these common characteristics of cloud applications:
1. Independent Scalability: This simply states that every component of the application
implements a service interface, which will be responsible for its own scalability. The sum of
the part thus adds to the overall scalability of the application.
2. Loose Coupling: Applications on the cloud are built in a way that tight dependencies are
discouraged between components, so that in the event of an error to one component the
system should still be working according to its specification. This aids better management
and high-availability.
3. Parallelization: The ability to distribute the tasks on multiple machines and effective
coalition of results obtained in parallel helps achieve efficiency.

2.5 Middleware:

Middleware in any IT infrastructure does the role of enabling and managing the interaction between
applications across diverse computing platforms, “It is the architectural solution to the problem of
integrating a collection of servers and applications under a common service interface” (Gustavo, et
al. 2004). On a general note Middleware is used to abstract the differences between heterogeneous
systems and expose a uniform interface (Ajith and Michael 2009).

Characteristics of Cloud Middleware according to (WSO2 2010) include its various management roles
such as web services, data, Identity and security management, easy interoperability etc.

Examples include Oracle Fusion Middleware, IBM Altocumulus and WS02 Cloud Middleware.

2.6 Cloud Service Models:

The service model is used to categorise the various offering of cloud solutions according to the level
of the architecture where it is been offered, there are 3 major models of cloud service classification
namely Software as a service (SaaS), Platform as a service (PaaS) and Infrastructure as a service
(IaaS) however there are other variants such as Data as a service (DaaS), Hardware as a service

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(HaaS) etc., but for the purpose of this research work I will be sticking to the 3 major service models
proposed by (NIST 2009).

Software as a Service (SaaS). Consumers get access to specialized software suites hosted on

a cloud infrastructure. The applications are accessible from various client devices through a
thin client interface such as a web browser (e.g., web-based email). The consumer does not
manage or control the underlying cloud infrastructure with the possible exception of limited
user-specific application configuration settings.
Examples include SAP Business ByDesign and the SalesForce.com Customer Relationship
Management (CRM) solution.
Platform as a Service (PaaS). The capability provided to the consumer is to deploy onto the

cloud infrastructure applications created or acquired using programming languages and

tools supported by the provider, the platform also guarantees load balancing and scaling in a
transparent manner to the cloud consumer. The consumer has control over the deployed
applications and possibly application hosting environment configurations.
Examples include Google AppEngine and Facebook Application Programming Interfaces (API)
Infrastructure as a Service (IaaS). The capability provided to the consumer is to provision

processing, storage, networks, and other fundamental computing resources where the
consumer is able to deploy and run arbitrary software, which can include operating systems
and applications. The raw computing resources are exposed to the consumers’ even though
the consumer does not manage or control the underlying cloud infrastructure but has
control over operating systems, storage, deployed applications etc.
Example: Amazon EC2

2.7 Cloud Deployment Model:

Deployment model of cloud solutions simply means how the services are made available to cloud
consumers, there are basically three main deployment model of cloud computing namely public,
private, and hybrid clouds according to (Ahronovitz, et al. 2009).

Public Cloud: Public cloud services are offered to clients from a third party service provider

via the Internet. Unlike what public goods are known to be in economics i.e. free, it is not
always free when it comes to cloud, but when consumers are charged it is fairly inexpensive.
A public cloud also does not mean that a user’s data or activity is publically visible there is
still the bit of ensuring the privacy of the users; public cloud vendors provide an access
control mechanism for their users. The benefits of using this deployment model from the
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 business perspective are that it is easy and inexpensive to set-up because bulk of the
hardware, application and bandwidth costs are covered by the provider while the consumer
only pays for what is used thus no wasted resources and it is highly elastic.

Private Cloud: Private cloud services also known as corporate or internal cloud is elastic and

service based like the public cloud. The difference between them being that in private cloud,
services are hosted and offered to a limited number of people behind a firewall, thus “data
and processes are managed within the organization without the restrictions of network
bandwidth, security exposures and legal requirements” (NIST 2009) that comes with public
cloud service. The strength of the private cloud offering is that both the provider and the
user have greater control of the cloud infrastructure, thus increasing security.

Hybrid Cloud: A hybrid cloud is a combination or integration of both private and public cloud

into an organisations business process. In this model consumers manage some of their
resources in-house these resources are often business-critical services and any other IT need
deemed not fit for the public cloud such as company’s critical data etc., all non-business
critical information and processing are typically outsourced to the public cloud. The hybrid
cloud allows the user to take advantage of improved security and control offered by private
cloud as well as the scalability and inexpensive services offered by the public cloud.

While the above named three models of deployment are the common and widely cited (NIST 2009)
suggested an addition to these models and it is called “Community clouds”

Community Clouds: Community clouds are geared towards meeting the needs of a set of
related stakeholders who share common interests or requirements (Eric and Roberto 2010).
A community cloud may be private or maybe a hybrid that integrates the respective private
clouds of the members, its main aim is to ensure they share and collaborate across their
clouds by exposing data or resources into the community cloud.

The next chapter will be exploring the business perspective to cloud computing, it seeks to answer
questions of the importance of cloud computing to business, such as advantages and disadvantages
of migrating to cloud computing, What are the cost implications? What are the other alternatives?
Or current IT solutions available in the market before cloud.

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 Chapter Three:

BUSINESS PERSPECTIVE OF CLOUD COMPUTING

This chapter is dedicated to issues that relate business enterprises with cloud computing, this is
necessary as the need for cheap IT services is driving business owners to embrace the cloud
phenomenon amongst other reasons and Cloud computing being a fairly new introduction as one of
the options available to the business owners. The chapter is structured to show the current standard
IT solutions available in the market, advantages and disadvantages of migrating to the cloud, success
stories and finally use case scenarios.

3.1 Standard IT Solutions

Prior to cloud computing, there was an array of IT solutions for business enterprises to choose from,
these options come in the form establishing in-house IT solutions, whereby a business enterprise has
all its IT needs deployed, managed internally and traditional IT outsourcing whereby a business
enterprise places its IT responsibilities in the care of an IT business solution provider, who manages
this infrastructure and resources on behalf of the business, the solutions also come in the form of
collaboration between organisations.
There are various solutions available on these platforms in-house, outsourcing, and collaboration,
this section is aimed at presenting some of these solutions such as Grid Computing, Enterprise
Computing and Utility Computing.

3.1.1 Traditional Enterprise computing

Enterprise computing is a general term used in selling business IT solutions; it entails a lot of services
and products. According to (Peterindia n.d.) “An enterprise solution identifies common problem
domains within a business and provides a shared infrastructure as a solution for those identified
problems”, there are solutions on problems of software, hardware, and processes etc. example of
software solution can be the licenced software or bespoke software built specifically for an
organisation to address it specific need, for storage solutions a company can have its own in-house
datacentre setup by one of the enterprise solution providers.

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The advantage of enterprise computing is that the services and products are offered as whole
packages thus the services are integrated which aids smooth running of businesses which in turn
increases efficiency and turnaround time.

3.1.2 Grid Computing

Grid computing was developed as a way to share computing resources; this has evolved as a way to
harness inexpensive servers in a datacentre to solve a variety of business problems.
In comparison with cloud computing differences can be spotted on factors such as standardization
whereby Grid is highly standardized cloud in its infancy state is not, payment model in Grid is quite
rigid while cloud offers flexibility. Building and managing a Grid leads to huge capital and operational
expenses. Traditionally, grids have lacked the automation, agility and simplicity characterized by
cloud computing.
According to (Anthony, Toby and Robert 2010) some of the reason why grid computing is attractive
includes
• It is cost-effective for what it is built to do i.e. huge science researches
• Important in solving problems that need a great amount of computing power.
• The resources of several computers can be shared cooperatively and independently.
This falls under the collaborative form of IT solution available, it is common with educational
institutions and used for scientific researches often, this is because of the huge computing resources
needed in carrying out solutions to problems.

3.1.3 Utility computing:

The concept of utility computing is a model of providing computing service which has its root from
“domestic sense of utility” where utility is measured and the consumer simply pays for what is being
used. In utility computing the computer processing power is seen as a utility that clients can pay for
only as needed, resources such as applications, infrastructure and storage are packaged and sold as
a metered service and users only pay for that which they consume. In many respects, this is the
closest term to cloud computing, with cloud computing being a broader concept that relates to the
underlying architecture in which the services are designed.

3.2 Business Enterprises Requirement:

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Business requirements differ and the choice of which IT solution to go for depends majorly on them.
The major determinant of these requirements is simply the type of business a company is into as this
is what will dictate the best solutions to fit the requirements of the business. For example a Finance
corporation such as a bank would favour an In-house enterprise solution which features strong
firewalls to help increase its security due to the sensitivity of the business processes, the need for an
online real time system would also mean they require special SLA which will ensure there are always
up and running as any slight fault will affect reputation of the company and might lead to huge
financial loss.

The business processes within the firm also determines the solutions to be adopted, processes such
as email management, platform of service delivery, customer service relationship etc., most times it
is these processes that are suited for cloud computing because they are well positioned to utilise the
properties and advantages of the cloud such as scalability and its pay per use pricing model because
the frequency of use these business processes fluctuate.

While the industry which a company operates in and the business processes which goes on within it
are determinants of what IT solutions to go for, the advantages of the various IT solutions also
reveals the needs of business enterprises such as need for

Need for increased Agility/Scalability: The ability to scale up or down is a huge requirement

especially for a company with a fluctuating customer base. A good example of this
requirement is illustrated in the story of Animoto when in mid-April year 2008; the company
had nearly 750,000 people sign up within a space of three days. To meet this demand using
traditional IT solutions would, “the company would have needed to multiply its server
capacity nearly 100-fold” thus increasing the young company’s expenditure and coupled
with the fact that they lacked the skills to manage such servers, the services of a cloud
service provider in RightScale helped them manage this surge they “simply added capacity
on Amazon, at the cost of about 10 cents a server per hour” and later dropped the capacity
immediately their need reduced. Source (Fitzgerald 2008).
Short time to market: Business enterprises seek ways of getting ahead of their competitors,
having the edge in all ways one of which is the need to hit the market with innovative
products within the shortest period of time.
Cost consideration: this is also an important requirement by business enterprises when
considering IT solutions, (Macquarie Telecom 2009) observed that with respect to cloud
computing this requirement is satisfied because from cost is converted from “one-off large
and lumpy hardware capital purchases to operational expenses which are spread to match

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 the consumption of the service”. This however depends again on the nature of the business
if it needs to always vary its needs because it would not be an advantage for a company with
fixed customer size which is likely to change.

Other requirements could come in the form of services needed by the business enterprises such as
database, storage, software service etc. The fact about business enterprise requirements is that
they vary and a company needs to find out its needs and match it to the services provided by the
various IT firms.

3.3 Advantages and disadvantages of migrating to cloud

There are numerous benefits accrued for migrating to the cloud as against staying with the
traditional IT management firms ranging from reduction in cost to increased business agility,
however cloud computing does not solve all a company’s IT problems as a matter of fact it is not
suitable for some companies to migrate to the cloud. Below are the advantages of migrating to cloud
and disadvantages.

3.3.1 Advantages of Cloud computing:

Scalability: Cloud services are highly elastic with the ability to scale up or downsize in the course of
its use. This prevents idleness of resources which sums up to increased efficiency on the part of the
business enterprise.

Operational benefits: there are a host of operational benefits which a company gains by migrating
to the cloud, ‘operational benefits’ as a term means gains which are related to the day to day
running of the company. There is increased

flexibility and mobility which implies the possibility of accessing cloud services from

anywhere and on various platforms, this leads to efficiency in getting things done.
Collaboration is improved because of these properties, as it allows many users access and
work together on files and share information as necessary.
IT staff can be utilised in better ways without worrying about maintenance issues that are
common place with huge in-house IT infrastructures.
Self service provisioning enables a do-it-yourself approach to IT and this is backed up by

simple interfaces which give the power of choice to even the commonest of staff.

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 Better utilization of assets such as office space and furniture can be achieved.

Reduced cost: This is arguably the main motivation for moving into the cloud. Cloud computing
provides an on-demand service model and a pay per use pricing model whereby a consumer only
pays for what is used based on a set service level agreement. The cost effective feature cut across
not just the pricing model but other known cost such as cost of IT maintenance, salaries of IT
personnel, and huge cost of investing in software licensing (Myerson 2009). Authors such as (Eric
and Roberto 2010) believe cloud computing simply convert fixed costs to variable cost thus giving
the business the choice of varying its computing need with respect to its sales/revenue thereof.

Reduced time to market: Time to market is the duration between when an application is being built
and when it finally launches to be used by the intended user. Prior to the advent of cloud computing
companies were really concerned with the huge time to market duration this is because most ideas
are better executed within the shortest frame of time rather than longer periods especially when a
lag could spell doom for the company. With cloud computing, companies can get their IT resources
up and running within a short frame of time by scaling all the hierarchy of procurement, installation,
maintenance, updates etc.

Eco-Friendly: cloud computing is environmentally friendly because it reduces the energy consumed
since its adoption reduces the quantity of hardware components which a business enterprise needs
to manage thus the bulk of the hardware component is moved to the cloud provider which often has
centralised infrastructures such as data centres.

3.3.2 Disadvantages of Cloud computing:

Cloud computing however is not always suitable it has numerous issues associated with it just like
every new technology trend; there is still a lot of research to be done. (Armbrust et al 2009)
Identified obstacles to the advancement of cloud computing however these are opportunities in
disguise for research purposes. Top of the list was availability of service even though some SaaS such
as Google apps have set a good standard in this respect but many organisations are still wary of
using the cloud especially when the clients business is a critical one whereby huge sums of money
can be lost due to a downtime. Other issues identified are:

Security: trust issues with sensitive data and the security issues surrounding having such data in the
cloud especially when those data determine the fate of the company.

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Data transfer issues: Cloud services depends on the internet and thus it is a 2-way traffic speed of
uploading on the part of the service provider and the speed of downloading on the users side, thus
data transfer bottlenecks occurs especially when it involves huge data sizes.

Licensing issues: Utilization of software on cloud platforms are also backed by various complex
licenses, it is hoped that as the concept evolves the issues will be extinct.

Data loss: the cloud services are targets for attacks and thus opened to being infested with bugs and
viruses. This could lead to data loss which might be very disastrous to the cloud users and often
times such losses cannot be valued in monetary terms.

Compatibility issues: Integrating cloud services with existing in-house IT could be a bit of problem
especially when it involves Legacy systems. Also migrating from one cloud service provider to
another could be hectic as there is currently no agreement on the standardization of cloud
computing’s external interface (Ling, et al. 2009) thus customers might be locked to a provider.

3.4 Use cases

The aim of this section is to highlight the common use cases of cloud computing available in the
literature, however this is not an exhaustive list.

3.4.1 End User to Cloud

In this use case, an end user accesses data, information or applications in the cloud. An end user is
defined as the final consumer of the cloud service upon which the services consumed are/cannot be
transferred again. Popular applications here include social networking sites such as hi5, Facebook,
twitter, LinkedIn etc., email hosting sites such as Google’s gmail, Microsoft’s live/Hotmail and
Photo/video editing applications such as Snapfish.com, animoto.com etc.

The user has no idea how the underlying architecture works. If they can get to the Internet, they can
get to their data. (Ahronovitz, et al. 2009).

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 PUBLIC
CLOUD
INT
ERN
ET

Figure 8: illustrates the End user to cloud scenario

3.4.2 Enterprise to Cloud to End User

In this use case, an enterprise uses the cloud to respond to the end user request this is done by
delivering data and services via cloud. The end user relates with the enterprise, which accesses the
cloud to retrieve data and/or work on it, sending the results to the end user. The end user can be
either an employee of the enterprise or an external customer.

PUBLIC
CLOUD
IN
INT
ER
TE
NET RN
ET

ENTERPRISE

Figure 9: illustrates the Enterprise to Cloud to End User scenario

3.4.3 Enterprise to Cloud

This scenario is one in which an enterprise uses cloud services for its internal processes. According to
(Ahronovitz, et al. 2009) “this might be the most common use case in the early stages of cloud
computing because it gives the enterprise the most control”.

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The enterprise uses cloud services to supplement the resources it needs: For example, using
applications in the cloud (SaaS) for certain enterprise functions (email, customer relations
management, storage etc.), using virtual machines, database etc. all accessed via cloud.

PUBLIC
CLOUD
IN
TE
RN
ET

ENTERPRISE

Figure 10: illustrates the Enterprise to cloud scenario

3.4.4 Enterprise to Cloud to Enterprise

In this use case, the interaction between two enterprises is highlighted as it is done using the same
cloud. The attention here is the role of hosting resources in the cloud so that applications from the
enterprises can interoperate and work together. The supply chain executed in the cloud is a good
example for this use case because it involves the interaction between the buyer and seller.

ENTERPRISE

INTERNET
PUBLIC
CLOUD
INTE
RNE
T

ENTERPRISE

Figure 11: illustrates the enterprise to cloud to enterprise scenario

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This chapter has provided insights into the requirements of business enterprises, the standard IT
solutions as well as the advantages and disadvantages of cloud computing and finally the common
use cases of cloud services even though this is not an exhaustive list of the various scenarios, there
are others such as the private cloud whereby the cloud services are built within the organisation and
hybrid cloud where the user combines both private cloud and public cloud. Having looked at all
these the next will focus on the available cloud solutions.

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 Chapter Four:

CLOUD SOLUTIONS

This chapter focuses on the cloud solutions available in the market as well as the profile of its
providers their respective delivery and deployment models. The later part of the chapter will feature
service level agreements and what it entails as well as how they are formulated.

4.1 Differentiation between cloud service provider and cloud vendor

These are two terms which are often used interchangeably in the literature thus creating an illusion
that they mean the same thing however there is a thin line between the two terms.

A cloud service provider is that which provides various cloud solutions on a service base and such
services are consumed directly by the users, thus they provide infrastructure, platform, software etc.
as a service, as seen in the use cases a SaaS provider can be dependent on a PaaS etc. thus making it
act as both a consumer of service and a provider of one. The bottom line is the emphasis on service
being what is provided and consumed.

A cloud vendor does much more than provision of services in the cloud, its product is the cloud
itself, they deal with infrastructures that makes it possible to scale services exponentially and flex
resources quickly in reaction to variable demand it is all encompassing they could build private
clouds on premises for a company; they could maintain such clouds for the company which is a
service etc. the bottom line here being the cloud as a product.

4.2 Cloud solutions and their proprietors

There are numerous IT firms providing one form of cloud service or the other to the end users but
for the purpose of this research seven (7) for this providers will be profiled, four of them being the
traditional software/hardware companies (IBM, Microsoft, Oracle and HP) who are offering cloud
services coupled with their traditional offerings, while the other three companies (Amazon web
service, Flexiant and Salesforce) are those that were established because of the advent of cloud
computing or utility computing. This will give a balanced view of the provider and would help see the
providers’ competence and strength in providing the solutions.

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4.2.1 IBM:

IBM has been a top player in computing basically with the hardware industry and their interest in
the cloud market should not be much of a surprise because the cloud phenomenal surpasses just the
software market but the whole IT world. IBM has various cloud options ranging from building private
clouds, provision of cloud services through IBM cloud, or creation of a hybrid cloud that includes
both, thus they provide cloud services in public, private, and hybrid cloud models.

However they do more than just the provision of services on these models being a company with
established technology record and experience at all levels it applies its industry-specific consulting
expertise in offering these services with extensive research on security in the clouds, migration to
the cloud, best pilot projects for the cloud etc. According to (Eric & Roberto, 2010) IBM is seen as an
enabler of cloud computing providing technologies for IaaS to thrive they called them integrated
vendors. The official IBM (http://www.ibm.com/ibm/cloud/) cloud computing website categorises it
cloud service roles into 3 main categories

IBM Smart Business Services: This is the SaaS category whereby they provide an array of software
services which helps make complex business processes look simple. These services are offered on
the private and public clouds.

IBM Smart Business Systems: This is the PaaS category; here service delivery platforms are
integrated to include hardware, storage, networking and virtualization.

Cloud Consulting: Here IBM helps in evaluation and readiness assessment, with strategies of
adoption of cloud technology and its implementation.

IBM is also involved in some partnerships within the industry e.g. with SAP- whereby SAP uses the
cloud to migrate SAP applications live across remote IBM POWER6 systems as well as with Amazon-
here Amazon Web Services is used to deliver IBM’s software to clients and developers (Anthony,
Toby, & Robert, 2010).

There is no denying that IBM is uniquely placed to join forces with clients and enable them to reap
the benefits of cloud computing.

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4.2.2 Hewlett-Packard (HP):

HP unlike IBM is well known in the both software and hardware arena however in the cloud
computing realm they are only active in on service platform which is the software as a service SaaS
and they pride themselves as one of the largest providers today.

HP’s SaaS is delivered through the Internet; it accelerates usage and adoption of HP software
products through best practices and continuous mentoring. With its SaaS solutions, IT complexity
can be reduced, IT organization can be refocused on business initiatives, and capital expenditures
shifted to investments in innovation. HP Cloud Assure is the comprehensive solution which combines
both HP software and services

HP pulls on its nine years of Software as a Service (SaaS) expertise and advanced service-level
performance to provide a consulting service offering under the guise of Cloud Assure which helps
clients confidently take advantage of the speed, scalability, flexibility and cost effectiveness of cloud
services. This solution delivers four of the attributes believed to be important to reliable cloud
computing—security, performance, availability and cost control (HP 2009) and the services focus on
service management, testing services and BTO for cloud infrastructure services.

4.2.3 Amazon Web Services:

This is the name given to all of Amazon’s web-based technology services which all falls under the
concept of cloud computing, some of the services are namely,

Amazon Elastic Cloud Compute (Amazon EC2)

Amazon Simple Storage Service (Amazon S3)

Amazon Simple Queue Service (Amazon SQS)

Amazon Elastic MapReduce

Amazon CloudFront

Amazon SimpleDB

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For the purpose of this project the Amazon Elastic Compute Cloud (EC2) which is the heart of the
Amazon cloud (Reese 2009) and Amazon Simple Storage Service (S3) which is also an important part
of their cloud portfolio will be profiled.

Amazon EC2 provides resizable compute capacity in the cloud i.e. via web service. It is basically
designed for developers to make web-scale computing easier. It puts the developer in charge with
complete control of his computing resources. It allows for quick scaling of the users computing
capacity, it also follows the pay per use pricing model. AmazonEC2 assist developers with the tools
to build fault tolerant applications thereby preventing them from common failure scenarios (Amazon
2009).

Amazon S3 as the name implies is storage offering on the Internet with endless possibilities, any
amount of data date can be stored and retrieved from as little as 1 byte to 5 gigabytes of data for
each object while the user can store unlimited objects, this can be accessed at any time, from
anywhere on the web. According to (Amazon 2009) “It gives any developer access to the same highly
scalable, reliable, secure, fast, inexpensive infrastructure that Amazon uses to run its own global
network of web sites”. The service is backed up by the Amazon service level agreement which
guarantees 99.95% uptime thus boosting the assurance users get when using this service.

4.2.4 Oracle:

Oracle can be said to be the jack of all trade as it offers technology that enables organizations to
build private clouds, leverage public clouds and provide cloud services to others. (Sun 2009) Stated
its goal to be the successful combination of systems and software to build a cloud, delivering all the
components that enterprises, developers, and end users need to build cloud environments, through
its own or partners’ offerings.

The strength of Oracle in cloud computing cannot be overemphasised considering the fact that they
had a pioneering role in making Grid computing relevant to the enterprises, its competitive edge is in
its strategy which is its open source philosophy and Java principles, this gives room for easy
interoperability and distribution of applications across multiple cloud infrastructure components
(Sun 2009).

Oracle competes on two of the three service models i.e. SaaS and PaaS models;

Oracle platform for SaaS is the name given to the SaaS model and this is built upon the Grid
computing technology and it’s an enabling technology offered to Independent Software Vendors to

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build their own SaaS offerings (Demarest and Wang 2010) The Oracle CRM on Demand is also
offered with predictable monthly expense because of its subscription-based pricing this offer
includes Oracle software, support, hosting, and application management, it is easy-to-use and just
like every Customer Relation Management software it aid sales, marketing, service, and contact-
center operations etc.

Oracle offers the Oracle PaaS platform as its platform as a service, this is also built on the Oracle grid
computing technology Oracle does not offer IaaS but it provides both hardware and software
products to enable other IaaS providers as well as to enterprises for private use (Demarest and
Wang 2010).

*SUN microsystems was acquired in January 2010 by Oracle (2 months before the start of this project)

4.2.5 Microsoft:

Like most of the big players in the cloud market Microsoft also offers cloud services on the three
main service models. Building on it strength in the market as the leader in operating system with its
windows brand which hence makes for a host of compatible software and applications, Microsoft
cloud services are simply Microsoft as a utility, same applications and platforms the users already
know. “A good portion of Microsoft’s cloud offerings are cloud variants of products that people
already use, so cloud versions aren’t that difficult to use” (Anthony, Toby, & Robert, 2010).

On-Premises Cloud Services

-Microsoft Exchange Server Communication -Microsoft Exchange Online (SaaS)
-Microsoft Sharepoint Server Collaboration -Microsoft Sharepoint Online (SaaS)
-Microsoft Dynamics CRM Business Apps -Microsoft Dynamics CRM Online (SaaS)
-Microsoft SQL Server Storage -Microsoft SQL Azure (PaaS)
-Active Directory Identity -Active Directory/Live ID (IaaS)
Table 1: Microsoft IT solutions (c) Microsoft 2009

Windows Azure:

This is operating system provided as a cloud service that serves as the development, hosting and
service management environment for the Azure services platform. Windows Azure can be used to

Build web applications

Build customised packaged line-of-business applications

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 Build corporate departmental applications

Merge various data sources in the Cloud and enable secure and easy access

4.2.6 Flexiant:

Flexiant is a software and services company with a heritage for hosting which dates back to the year
1997 and they are one of the more experienced vendors in the cloud hosting business. The company
offers two cloud products/solutions namely Flexiscale and Extility.

FlexiScale: launched in 2007 it is Europe's first cloud platform; this is the public cloud of the
company. It offers users virtual dedicated servers on pay-as-you-go pricing plan using the Extility
technology. It gives users easy access to creating and/or deleting servers within minutes.

Extility: This is a utility computing platform, allowing hosting providers to offer their customers
virtual dedicated servers through a self-service portal. It offers flexibility to the customers by giving
then control over choice of operating systems and images as well as allowing self-provision of their
servers through a web-based portal.

4.2.7 Salesforce:

Salesforce.com was founded in 1999 by former Oracle executive Marc Benioff, the pioneer of the
concept of delivering enterprise applications via a simple web site (Rittinghouse and Ransome 2010).
It made its name with the success of its flagship Salesforce.com automation application which is an
enterprise customer relationship management (CRM) system that enables sales people to track their
prospects and leads (Reese 2009), this multitenant application has preceded the definition of cloud
computing by a few years. However salesforce.com has grown from the SaaS provider to also a
provider of PaaS under Force.com which is a companion application development environment, an
on demand cloud platform.

With this it is much simpler for businesses or end users to build any type of cloud application for
various uses. Force.com represents a comprehensive suite of development and deployment
technologies all available to partners on demand, through their browser (Anthony, Toby and Robert
2010).

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Service Provider Products Pricing Model Platform SLA

IBM Smart Business (service and System) Subscription SaaS, IaaS Yes
(Custom)
HP Cloud Assure Pay-per-use, SaaS, IaaS Yes

Amazon Web Elastic Compute Cloud EC2), Simple Storage Pay-per-use SaaS Yes
Services Service (S3), CloudFront (Standard)

Oracle Oracle On Demand, Subscription and Pay- PaaS, SaaS Yes

per-use (Custom)
Microsoft Widows Azure, CRM, web apps Subscription based SaaS, PaaS, Yes
IaaS
Flexiant FlexiScale and Extility Pay-as-you-go PaaS, Yes

Salesforce CRM, Force.com Platform, AppExchange Monthly Subscription SaaS, PaaS Yes
(Custom)

Table 2: Categorization of cloud services providers

4.3 Service Level Agreement:

Service level agreement (SLA) is the term used to represent a document which spells out the
relationship between two parties (sla-zone 2007) and as the name implies it is simply targeted at the
agreed level of service from the provider to the consumer of such services. In cloud computing such
details to be agreed upon could be in terms of metrics agreed upon, and penalties violating the
expectations, respectively (Buyyaa, et al. 2009), other details could be on methods of tracking and
reporting service performance as well as problem, technique of problem management, legal issues
and method of disputes resolution, duties of customers and responsibilities and policy on
termination etc.

When a company buys any service from a cloud service provider, such company can either accept a
standard Service Level Agreement (SLA) from the provider or negotiate such an agreement. Most
public cloud providers offer the standard non-negotiable SLA, thus providing the same level of
service to all their clients (Hurwitz, Bloor and Kaufman 2010) and (Ahronovitz, et al. 2009) both
agree that mission critical business enterprises should never go for such standard SLAs as this could
have a negative impact on their business mission if the loopholes in standard SLA are not negotiated
and closed.

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4.4 Success Stories:

There are lots of success stories about cloud computing, this section describes two of such stories
whereby cloud computing has been adopted with positive results and changes achieved. The stories
reflect the various concepts reviewed in the project thus far, such as the service platforms, model of
delivery, advantages of cloud computing etc.

CSP:
salesforce.com

Client: Papa Murphy’s Take ‘N’ Bake Pizza, Food Industry

Former process/challenge: The Company lacked a good franchise management system, it

basically made use of Microsoft Excel spread sheets and email made to run its business-tracking
and updating its record was not an easy task with this process, thus the need for a good
management system that will give a centralised view of the business to the management with
great emphasis on quick implementation due to the quick rate of the company’s growth.

Solutions: Web-based forms built on Force.com are used by the directors to report on the state
of business in stores. A mobile application accessible via the BlackBerry devices and Salesforce
CRM's mobile access was built and rolled out within 3 weeks to 30 users through the Salesforce
CRM's mobile access with 95% success. The mobile access also works online and offline thus
improving availability. The salesforce “Force.com connect” aids integration with standard IT
solutions such as Microsoft Outlook which keeps customer communications in constant
synchronisation.

Products: Salesforce CRM Enterprise Edition, Force.com Connect and Force.com Mobile
Application.

Highlights/result: Speedy deployment, easy integration, easy user interface, multiple access
platforms, high customization.

Deployment Model: Public cloud

Service Model: Software as a service-SaaS

Source: http://www.salesforce.com/customers/distribution-retail/papamurphys.jsp

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 CSP:
Oracle

Client: Auto Windscreens, Automotive Industry

Former process/challenge: There was a need for to lower the company’s capital expenditure
and reduce the operating costs while maintaining a near perfect 100% uptime for its business-
critical systems. Emphasis was also placed on getting an IT company which could provide
sustainability and enhance productivity, thus the choice of Oracle.

Solutions: Oracle solutions helped Increase business efficiency by correcting the old manual,
error-prone processes. The choice of solution was the SaaS “Oracle On Demand” which allowed
for a scalable, flexible and cost-effective system. Scalability helped ensure the system is only
employed when needed in proportion with the growing business size. The monthly per user
pricing model also helped the company in budget planning. The solution was efficient because
the uptime after system stabilization exceeded the agreed service level availability of 99.9%. The
choice of Oracle also gave the company an edge in adding other solutions to the stack, talk
about integration.

Products: Oracle On Demand, Oracle iPayment

Highlights/result: Scalable service, reduced response time, Predictable monthly cost

Deployment Model: Public cloud

Service Model: Software as a service-SaaS

Source: http://www.oracle.com/customers/snapshots/auto-windscreens-on-demand-
snapshot.pdf

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 Chapter Five:

BUSINESS MODEL

Cloud computing has changed a lot of the business processes and model of operation for enterprises
as illustrated in the success stories however this chapter is dedicated to revealing and describing the
available business models of getting cloud services to the final consumers.

5.1 Value chain from service provider to end user:

The value chain according to (Bridgefield n.d.) is “set of activities within a supply chain that actively
add value to the end product”, thus it is the series of activities or processes that leads to value
creation, value in this context is the final service provided to consumers/end users of the cloud
services.

The traditional linear value chain for IT services (Figure 12), flows from consultancy (which helps
identify IT needs of the business enterprise), to design of the system required, and later
implementation, operations, maintenance of the application and support for the service provided,
according to (Jaekel and Luhn 2009) this value chain is changing as a result of cloud computing this is
because of the pricing model and provision of services at different layers such as SaaS, IaaS and PaaS
which cloud computing is characterised with, thus the traditional value chain is broken at some point
with cloud providers providing services at any of the service levels/layers i.e. a cloud provider can
provide service at IaaS, PaaS or SaaS without necessarily following the value chain.

Figure 12: Linear Cloud computing value chain; adopted from (Jaekel and Luhn 2009).

Prior to cloud computing the linear value chain was followed strictly and took a whole lot of time for
business enterprises to get going because each stage of the value chain was accomplished before
the other can be commenced. Support

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5.2 Players in the Value Chain:

According to (Leimeister, et al. 2009) there are six actors in the cloud value chain:

Customers: These can be individuals, enterprise or IT staff; it represents those that buy services
through the various channels of distribution

Service providers: These are the developers and operators of services that offer value to the
customer; their role includes development of applications which are deployed onto cloud platforms
and access hardware and infrastructure of the infrastructure providers. They are also known as
content providers. They operate at the SaaS layer in the cloud architecture.

Infrastructure providers: They are responsible for supplying scalable hardware (computing and
storage services) upon which the service providers offer their services, hence they provide the
needed technical backbone for all the applications within the cloud to run. This is the IaaS layer in
the cloud architecture.

Platform provider: They provide the deployment environment for cloud applications. It is described
as a kind of catalogue which aids the offerings of different service provider; this is the PaaS layer in
the cloud architecture.

Aggregate services providers (brokers): Their role is that of combining different pre-existing services
or parts of these services to form new services and offer them to customers. They serve as
customers (to the service provider) and as service providers (to the customer/end user).

Consultants: Their role involves supporting customers for the selection, comparison and
implementation of the various services available in the market to help them achieve their business
goals.

All actors have inter-related roles in the value chain and a company can be active in more roles not
necessarily one.

Other authors such as (Buyyaa, et al. 2009) have their own model of a real real-world
exchanges/value chain with even more players, such as the banking system which ensures that
financial transactions pertaining to agreements between cloud providers and users are carried out. It
also featured a market directory which allows participants to locate providers or consumers with the
right offers. Brokers in this model also perform same task as in (Leimeister, et al. 2009) “Aggregate
services providers” they facilitate between consumers and providers by purchasing capacity from

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the provider and selling these to the consumers making profit from the difference between buying
and selling. The providers have an admission-control mechanism which gives them the control to
select the auctions to participate in or the brokers to negotiate with.

Their model placed a lot of emphasis on the interaction between the providers, brokers and the
customers and it adopted the auctioning business model whereby the consumers bid to get a
service, SLA’s also have a great deal of importance in the model. Limitation of this model according
to the authors is the relative age of the cloud concept which makes enterprises weary of shifting
from the traditional controlled IT environments as there will be more regulatory proposition which is
bound to either redefine the value chain or make it even better.

5.3 Pricing Models:

There are three popular pricing model presently used by Cloud Service provider (KPMG LLP 2009)
listed them as

5.3.1 Subscription model: This model involves the users paying a specific amount for services on
periodic bases e.g. monthly, yearly, quarterly etc. (Weinhardt, et al. 2009) believes this model
involves signing of a contract and last for longer period of time, while the former is true it does not
always depend on long terms but it varies.

5.3.2 Usage-based pricing model: this is also known as Pay-per-use pricing model; here the user
pays a fixed price for a used unit which is measured in various ways depending on the service being
accessed e.g. per Gigabit for storage services, or by CPU-hour for basic computing usage etc. This is
the most popular of the pricing models.

5.3.3 Free or Ad-supported model: Services are offered to end users free of charge but they are
funded by advertising by putting up various monetizing model.

There is one other less popular pricing model

5.3.4 Dynamic pricing: This is also known as variable pricing; it depends on the force of demand
and supply, (Weinhardt, et al. 2009) “it is typically used for calculating the price of differentiated and
high value items” as well as high volume/unit services this could be done through the means of
Negotiation/bargain or auction. For example, if a storage service of 60GB cost £1 per day a user can
bargain to use 240GB of space for say £2.50p as against the price of £4 if the pay per use model is
used.

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 Chapter Six:

Implication for a developing country: Case of Nigeria

Undoubtedly cloud computing brings with it a lot of advantages and shortcomings as discussed in
chapter three, however this chapter is dedicated to exploring ways in which cloud computing can be
adopted and put to work in developing countries, specifically using Nigeria as a case study. The
chapter is divided into three sections; Cloud enablers or factors that drive cloud computing,
challenges to its adoption and implication for development.

The importance of this chapter to this project is that it highlights the business opportunities which
are available in developing countries and it is addressed to the cloud service providers or business
enterprises, having looked at what the concept of cloud computing is about, the business models,
advantages and disadvantages etc. a chapter which reveals an opportunity is only befitting to
encourage the adoption of cloud computing.

6.1 Factors that drive cloud service adoption:

Cloud computing has been defined as computing offered as a service over the internet and some
authors such as (Bridget 2010) even believes the "cloud" is the Internet thus the dependence of
cloud computing on high-performance (fast and reliable) Internet connections is evident.

In Nigeria there has been an increase in the number of internet users according to (World bank
2010) “internet users are people with access to the worldwide network”, Data collected and
illustrated in figure13 below, shows a steady increase in this users with close to 140 per cent
increase in users from year 2007 to 2008, there are many reasons for this increase but that is out of
scope of this research work, however a notable reason which can be related to this project is the
increase in the platform through which end users can connect to the web one of which is through
Mobile Technology, according to (Wyld 2009) much of the increase in internet users has been
caused by a rise in the use of wireless tools as against or in addition to traditional personal
computers.

Figure 15 and table 4 shows the number of mobile cellular subscription in Nigeria over a period of 10
years with close to 50 people subscribed to a mobile service provider out of every 100, this shows
that it is growing even faster than the internet users per 100 people which stands at 16 users out of

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e6very 100 individuals as at year 2008. The increase in mobile technology has also brought with it
increase in the number of people accessing the web through this platform, a report by (Opera
Software 2009) titled “State of the Mobile Web, April 2009” the CEO Jon S. von Tetzchner noted that
the usage of its mobile web browser “Opera Mini” in Nigeria surged by 2,353% from April 2008 to
April 2009 therefore pushing past Poland to take the 9th spot on the world ranking as well as the 2nd
spot on the usage ranking in Africa just behind South Africa.

Figure 13: Internet Users in Nigeria

Figure 14: Fixed broadband internet subscribers in Nigeria

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Series Name 2000 2001 2002 2003 2004 2005 2006 2007 2008

Fixed broadband .. 0 0 0 0 500 .. 53,594 67,776

Internet subscribers
Internet users ‘000 80 115 420 750 1,769 5,000 8,000 10,000 23,982.2

Internet users (per 100 0 0 0 1 1 4 6 7 16

people)
Table 3: Data on Internet Users in Nigeria

Figure 15: Fixed broadband internet subscribers in Nigeria

Series Name 2000 2001 2002 2003 2004 2005 2006 2007 2008
Mobile cellular 30 266.4 1,569.05 3,149.5 9,147.2 18,587 32,322.2 40,395.6 62,988.5
subscriptions
‘000
Mobile cellular 0 0 1 2 7 13 22 27 42
subscriptions
(per 100 people)

Table 4: Data on mobile cellular subscribers in Nigeria

Thus the drivers of cloud computing are already present in the Nigerian market, however it would be
important to discuss the threats to the successful adoption of Cloud computing.

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6.2 Challenges to Cloud Computing Adoption:

Cloud computing needs more than a fast and reliable internet connection to be successful in a
developing country like Nigeria such as steady power (electricity), IT governance etc.

Internet Speed/Availability: From the analysis in the previous section it is evident that there is an
increase in the number of overall internet users but a look at the number of the fixed broadband
subscribers is still very low and in its thousands at 67,776 and not even 1 in every 100 people, (World
bank 2010) defined the Fixed broadband subscribers as “users of the Internet who subscribe to paid
high-speed access to the public Internet” i.e. at least 256 kilobits per second in one or both
directions. This is a huge challenge because the availability of cloud services is key to its adoption by
business enterprises and poor internet connection as well as slow connections will do more harm to
the concept, (Onuora 2010) suggested two solutions to this problem,

1. Cloud providers should buy, build or lease a better network, which is quite simple just
get the best amongst the internet service providers (ISP) out there in the market.
2. Use a Modified hosted solution whereby the software and hardware will be hosted on
the client’s data centre. These sounds more like a private cloud solution and the cloud
provider taking the support and maintenance role in the traditional IT solution.

Infrastructure concerns: The major infrastructure problem that will hinder cloud computing is that of
power/electricity (Adenikinju 2003) carried out a survey where Electricity was ranked as the most-
sever infrastructure problem in Nigeria. As at the end of year 2007 Nigeria generates a mere
22,978,000,000 that is 0.058 percentage of what United Kingdom produced in the same year (see
Figure16 and Table 5). Policies have been formulated and regulatory cabinets shuffled to get the
power sector up and running but little has been achieved. This could be viewed as an opportunity for
SMEs to embrace cloud computing as it will cut the operational cost of generating their own power
but from the cloud providers perspective this will lead to a huge increase in providing IT solutions,
and this cost might be frowned upon.

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Figure 16: Electricity production in Nigeria and United Kingdom in kilowatt hour (kWh)

Country 2000 2001 2002 2003 2004 2005 2006 2007

Name
Nigeria 14,727,00 15,463,00 19,716,00 20,183,00 24,209,00 23,539,00 23,110,00 22,978,00
0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000
United 374,375,0 382,367,0 384,596,0 395,473,0 391,218,0 395,386,0 394,002,0 392,284,0
Kingdom 00,000 00,000 00,000 00,000 00,000 00,000 00,000 00,000
Table 5: Data on Electricity production in Nigeria and United Kingdom in kilowatt hour (kWh)

6.3 Conclusion:

Having looked at the drivers of cloud computing as well as the factors that can hinder its adoption, it
is fair to say challenges are business opportunities in disguise, the framework is already available in
the form of platform and means of accessing cloud services.

The government of developing countries should strive to fix the challenges of infrastructure and
corporate governance as this will help reduce the cost of doing business both for the provider and
the consumer of cloud services as detailed in (Omoniyi 2008), thus attracting Foreign Direct
Investment.

The Cloud service providers have a host of opportunities as an investment in Nigeria will be a green
field investment, Netapp a company from the United State of America is already pioneering the
drive for cloud computing in Nigeria with the launch of its cloud services (Gegere 2010), as discussed

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earlier many small and medium scale enterprises will be willing to buy the idea as its advantages
outweighs the limitations.

The business enterprises have a wider outreach by using cloud services to deliver solutions to their
customer with the increase in mobile phone users the platform has widened; this surely will boost
sales of their services and attract customers who predominantly fancy accessing various web
services on their mobile, it also gives the business enterprises opportunities of coming up with
innovative products, see (Aker and Mbiti 2010) for full details on how Mobile phones can aid
economic development in Africa. The other advantages of cloud computing will also benefit the
business enterprises such as increased efficiency through collaboration aided by cloud services and
ability to hit the market within the shortest period of time.

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 Chapter Seven:

Evaluation

7.1 Summary of work:

The research was targeted at Identifying the requirements by clients (Business Enterprises),
providing details on the types of service provided by at least three top cloud solution providers and
finally an analysis of the available business model being used in getting the service to the clients.
These were the minimum requirement of the research and it has fulfilled these requirements, the
literatures were reviewed to give a basic understanding of cloud computing, it evolution, models of
deployment and its architecture, this was followed by the case for and against cloud computing with
notes on the standard IT solutions. The chapter on Cloud solutions was dedicated to profiling some
cloud service providers and categorising them accordingly, this was followed by the business model
and pricing model. Below are my findings and recommendation.

7.2 Justification of methodology:

The qualitative research methodology was used in this project because it is aimed at helping
organisations make accurate decisions on their choice of IT solutions which cannot be solely based
on the data and figures put up by these solution providers, the descriptive nature of the project
touched the bases of these decisions, for example a description of the available pricing models,
cloud architecture, business model etc. will help give more understanding to the reader. Thus the
project comes in handy as a guide to business enterprises. However it contains a bit of quantitative
method of research in the sixth chapter where the data was represented graphically and thus
analysed accordingly, but it is pure a qualitative based research.

7.3 Findings and Recommendation:

The advantages and disadvantages of cloud computing revealed that just like every new IT

phenomenon cloud computing still needs a lot of fixing and not suitable for all business
enterprises, however striking a balance between the advantages and the disadvantages will
help in making a decision of moving to cloud or not. E.g. what is the value gained by

Page | 41
 adopting a cloud solution which reduces time to market in comparison with the value that
would have been accrued if the traditional IT solution which takes longer was adopted? Such
questions will help determine the choice of IT solution to go for.
The pricing model seems to be pretty standardized as all the cloud providers profiled had
pretty much the same model (pay per use and the subscription models) thus the dynamic
pricing is not popular. Business enterprises can suggest this pricing model to cloud solution
provider at the service level agreement stage this is important especially when the company
expects a constant upward movement in their IT needs.
The adoption of Cloud computing in Developing countries is possible and would aid
development by enabling start-up firms get to market easily, providing more platforms of
service delivery for the business enterprises, as well as attracting foreign direct investment
(FDI) with the huge market potentials this will help attract the cloud vendors and solution
providers.

7.4 Limitation of the study:

The shortage of literatures on Cloud Computing was one of the major challenges I encountered
during the course of the research, other challenges include:

Working with the CloudSim tool was a challenge because of my little experience with

programming and total lack of knowledge of java programming language, while the
successful experiments would have helped me create and study scenarios of resource
leasing thus providing information on performance when host and client numbers are
varied, it does not take anything away from the project as it met it minimum objective.
There are over 250 cloud solution providers thus my choice of the seven profiled in this work

might not be considered as a fair size however the absence of data on the market share of
each of the cloud solution provider was not available as at the time of this project write up
thus my choice of both traditional IT solution providers and typical cloud solution provider.
The choice of Nigeria as a case study is not a total representation of developing countries
but this should not be a through limitation as there are lessons to be learnt from the case
study.

7.5 Suggestion for further study:

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Cloud computing is an evolving concept thus there are lots of research opportunities, this research
took a general overview of how cloud computing relates to business, a good start for further studies
would be to focus on specifics of the concept of cloud such as the long term effect of a pay per use
model or finding ways to strengthen the business models under topics such as:

Justification for cloud computing: a long term cost analysis

Cloud Computing Business Model: Finding new ways of doing business

Aspects of security, standardization, reliability, service level agreements etc. are research hotspots
as there are a lot of improvement opportunities there as well.

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Appendix A: Project Experience

Writing this project was an uphill task (seems all research works are) but also an enlightening one,
thus it brought with it some positives as well as negatives.

The choice of a project topic was not easy reason being that the School of Computing structured the
modules for the program such that only one computing module was taught in the first semester and
since all projects in the school must be computing inclined, I found my choices being limited.
However the support of my supervisor who went as far as helping me with literature materials to aid
my understanding of the topic eased the anxiety of working on the topic.

The available literature relating to this topic was also limited due to the newness of the topic “Cloud
Computing”, thus the variety of the literature sources from blogs, newspapers, and white papers etc.
as against traditional textbooks.

The research period totally took away my social life as I found myself drowning in intense research
and never conscious of the sales happening in town. Inasmuch as research works need a hundred
per cent focus, the variety the social aspect of life adds to the experience should never be
undermined.

On a positive note, I gained fulfilment writing this project because it was an opportunity to
contribute to a concept which is still in its infancy, I am glad I also included the chapter on applying
cloud computing to developing countries as I feel this gives the project a global relevance.

Lessons Learnt/Advise to prospective researchers:

I learnt that a thorough review of the literature goes a long way in determining the success of any
project as it affects planning because knowing what to write about and how ones research differs
from that of other authors is highly dependent on the literature reviews, thus it helps chart the
course of how the researchers idea is presented.

Variety is the spice of life, when working on a project it is very important to have a balanced lifestyle
as this even helps shed a lot of worries thereby keeping the mind in good shape to work on the
project without interferences.