Faculty of Economics, University of Ljubljana

Information Technology Supervisor: Prof Dr. Tomaz Turk

Cloud Computing
Taiwo Korede Aladeojebi, 19511251 Introduction Information technology has come to be one of the most relied upon factor of production in organizations. Different organizations are adopting different kinds of information technology applications for competitive advantage, particularly in the current competitive business environment. Additionally, organizations are seeking ways of optimizing the use of information to optimize benefits. According to King (2008), since the introduction of IT, there have been different changes as well as developments. In the business world, information technology has enabled almost enterprise business applications. This refers to the situation where information technology applications are provided remotely by external service providers. This is one of the considerable changes that have taken place in the business world as far as information technology is concerned. Armbrust, et al. (2010) assert that various possibilities for organizations have arisen with the development and increase in use of computers and the internet. These developments have made business processes and applications simpler and less expensive. These have increased competencies in the business world by making it possible for professionals within the organization to concentrate on the core business functions. Smith (2009a) reveals that organizations are choosing to acquire computing as a service instead of a product. This is the rationale behind the development of cloud computing and its introduction into the world of business. This research seeks to bring an understanding of the different aspects of cloud computing. Background Information (History and Trends) The term cloud computing has been used as a metaphor for the internet. Cloud computing is founded on the symbol of the cloud, in the past it is used to represent the telephone network, and later to depict the internet symbolic representations of computer networks. This was utilized as a concept of the basic infrastructure that is represented. According to GodwinJones (2008), cloud computing did not come up as a well-thought-of plan. Rather, it emerged as a standard evolution of the general adoption of virtualization, service-oriented architecture, autonomic, and utility computing (Locke, 2008, p.167). Given the fact that it uses the fundamental idea of electric grid, the details are not revealed to the end user. The idea of cloud computing is traced back to the 1960s. This is the time when John McCarthy proposed that computation may someday be organized as a public utility (Smith,

Faculty of Economics, University of Ljubljana

Information Technology Supervisor: Prof Dr. Tomaz Turk

2009b, p.353). Almost all the present attributes of cloud computing, the sameness with the theory of electric grid, and the use of various models in implementing it, are well investigated in the title, The Challenge of the Computer Utility by Douglas Parkhill (Sobajic 1993). The term cloud originates from telephony. This is because organizations providing telecommunication services began to offer Virtual Private Network services. These companies switched traffic in order to balance use so as to use the whole bandwidth effectively. Werbach (2011) asserts that the diagram of cloud was utilized in representing the differentiation between the role of the service provider and that of the user. According to Godwin-Jones (2008), cloud computing shares attributes with various wellknown systems. One of these systems is autonomic computing. This is where computer systems or resources are utilized for self-management. Another system that cloud computing shares attributes with is the client-server model. This is any distributed system that distinguishes servers and clients. Another system with similar attributes is grid computers. Locke (2008, p.169) defines this as a form of distributed and parallel computing, whereby a 'super and virtual computer' is composed of a cluster of networked, loosely coupled computers acting in concert to perform very large tasks. Utility computing is another system defined by Locke (2008, p.169) as the packaging of computing resources, such as computation and storage, as a metered service similar to a traditional public utility, such as electricity. Service computing is another one, which is the provision of software-as-a-service. Other systems include mainframe computer systems and peer-to-peer. This is where there exists no central coordination of the connected computers. Cloud Computing This is a term that has become extraordinarily common in the business world today. Gruman (2008) defines the term as the provision of computing as a service rather than a product. In such situation, software, data, and shared resources are delivered to computer systems in the organization as a utility over a network. According to Smith (2009a), computation, information access, software, and storage media are made available for the organizational use in such a manner that the end-user does not have knowledge of the location or the structure of the system that is providing such services. The theory behind the development of cloud computing is borrowed from the one behind electric grid (Kyriazis, et al., 2010). In such systems, the users are provided with services without having to necessarily understand the component devices or even the systems that are required in providing these services. Due to this, the user does not have to train in, or be in control of, the infrastructure supporting cloud computing. According to Robinson (2010), the idea behind cloud computing is to fulfill the

Faculty of Economics, University of Ljubljana

Information Technology Supervisor: Prof Dr. Tomaz Turk

need for information technology in organizations more effectively. This means an increase in the capacity or increasing capabilities without the requirement of investing in new infrastructure, acquiring and training new employees, or acquiring licenses for additional software. Weil (2011) suggests that cloud computing is an innovative addition, delivery, and consumption system for IT services that are founded on internet protocols. It involves provisioning of ardently scalable and generally virtualized services. This concept can be viewed as a by-product and outcome of the ease-of-access to remote services that are provided to the user through the internet. According to Smith (2009a), this usually comes in the form of Web-based resources or applications that users can access or consume through Web browsers. This happens as though these services and applications are installed in PCs within the organization. Such services are offered by external providers through the internet that is accessible from Web browsers. The software and data belonging to the organization are stored on servers at remote sites. At times, legacy applications are offered via a screen-sharing technology. This is where the resources for computing are secured at remote data-center sites. Gruman (2008) defines legacy applications as the line-of-business applications that are currently accessible in slight client windows computing. Majority of cloud computing infrastructures are made of services that are offered through shared data center. They appear at a specified point of access in order to meet the needs of the organization. Deployment Models or Types of Cloud Computing There are different deployment models or types of cloud computing. This paper will discuss four of the commonly used models: public cloud, private cloud, community cloud, and hybrid cloud (Gruman 2008). Public Cloud According to Farber (2008), this is a model of cloud computing that presents the concept from a traditional perspective. In this model, delivery of IT resources is done dynamically to the public. Information resources and applications are delivered on a fine-grained and selfservice basis. Subscriptions are received by a third-party service provider for the services that are then provided via Web-based applications over the internet. This provider is usually off-the-site. E.g Amazon Elastic Compute Cloud (EC), IBM Blue Cloud, Sun Cloud, Google AppEngine, Windows Azure Service and recently iCloud from Apple.

Faculty of Economics, University of Ljubljana

Information Technology Supervisor: Prof Dr. Tomaz Turk

Private Cloud In a private cloud, the delivery of information technology services and applications is under the control of a single service provider. The management of the infrastructure through which these services and applications are provided can be internal or through the utilisation of a third-party service provider. Hosting can also either be internal or external. Farber (2008) says that one of the limitations of the private cloud model is that users are meant to buy, build, and manage the infrastructures by themselves. From this perspective, it can be argued that users do not get the actual benefits of cloud computing as far as lower up-front capital and hands-on management are concerned. Generally, this means that there is a lack of economic benefit behind the use of this model that is the rationale behind the implementation of cloud computing (Schofield, 2008). E.g Amazon EC2 Community Cloud In this model of cloud computing, as Gozzi (2010) suggests, the infrastructure through which the information technology services and applications are provided is used by different companies from a specific community. In community cloud computing, different concerns are shared by the community like security, effectiveness, performance, and jurisdiction. Just as in private cloud computing model, hosting and management of the infrastructure can be performed internally or externally. E.g government organization Hybrid Cloud In the hybrid type of cloud computing, there is usually an integration of two or more of the previously discussed models. The integrated model can be used by a single or more firms based on the types of models that are used in the hybrid. Any of the previously discussed three models, public, private and community, can be integrated and utilised in cloud computing based on the requirements of the company. The models used in the integration remain as individual entities and provide the benefits of multiple implementation models (Farber, 2008). Cloud computing can be visualised as a pyramid consisting of three sections: Cloud Application This is the apex of the cloud pyramid, where applications are run and interacted with via a web browser, hosted desktop or remote client. A hallmark of commercial cloud computing applications is that users never need to purchase expensive software licenses themselves. Instead, the cost is incorporated into the subscription fee. A cloud application eliminates the

Faculty of Economics, University of Ljubljana

Information Technology Supervisor: Prof Dr. Tomaz Turk

need to install and run the application on the customer's own computer, thus removing the burden of software maintenance, ongoing operation and support. Cloud Platform The middle layer of the cloud pyramid, which provides a computing platform or framework as a service. A cloud computing platform dynamically provides, configures, reconfigures and de-provides servers as needed to cope with increases or decreases in demand. This in reality is a distributed computing model, where many services pull together to deliver an application or infrastructure request. Cloud Infrastructure The foundation of the cloud pyramid is the delivery of IT infrastructure through virtualisation. Virtualisation allows the splitting of a single physical piece of hardware into independent, self governed environments, which can be scaled in terms of CPU, RAM, Disk and other elements. The infrastructure includes servers, networks and other hardware appliances delivered as either Infrastructure Web Services, farms or "cloud centres". These are then interlinked with others for resilience and additional capacity (think grid). Three Service (Delivery) Models Software as a Service (SaaS) Applications delivered as a service to end-users typically through a Web browser. There are hundreds of SaaS service offerings available today, ranging from horizontal enterprise applications to specialized applications for specific industries, and also consumer applications such as Web-based email. Oracle CRM On Demand is an example of a SaaS offering that provides both multi-tenant as well as singletenant options, depending on the customers preference. Oracle also offers enterprise-grade enabling technology to Independent Software Vendors (ISVs) to build their own SaaS offerings. Oracle calls this enabling technology the Oracle Platform for SaaS. Hundreds of ISVs have built their SaaS offering on top of the Oracle Platform for SaaS. Platform as a Service (PaaS) An application development and deployment platform delivered as a service to developers who use the platform to build, deploy and manage SaaS applications. The platform typically includes databases, middleware and development tools, all delivered as a service via the Internet. PaaS offerings are often specific to a programming language or APIs, such as Java or Python. A virtualized and clustered grid computing architecture is often the basis for PaaS offerings, because grid provides the necessary elastic scalability and resource pooling. Oracle offers a comprehensive PaaS product offering for

Faculty of Economics, University of Ljubljana

Information Technology Supervisor: Prof Dr. Tomaz Turk

public cloud service providers as well as enterprise customers to build their own public clouds. Oracle calls this the Oracle PaaS Platform (more on this later in this paper). Infrastructure as a Service (IaaS) Compute servers, storage, and networking hardware delivered as a service. This infrastructure hardware is often virtualized, so virtualization, management and operating system software are also part of IaaS as well. An example of IaaS is Amazons Elastic Compute Cloud (EC2) and Simple Storage Service (S3). Oracle does not offer IaaS cloud services, but Oracle provides hardware and software products to other IaaS providers to enable their public cloud services, and also offers the same technologies to enterprises for private use. Benefits of Cloud Computing Given the fact that the underlying infrastructure is hidden from the end user, this is in itself a substantial benefit to the organization. The need to train employees on the structures and infrastructures that provide services to the organization is eliminated through the implementation of cloud computing. The company is also saved the need to acquire or train information technology experts to manage computing systems. The skills that are necessary in the organization are related to the fundamental principles of cloud computing and how it is used. Additionally, once the initial training is carried out, there is no need for the company to keep on training the users even if the aspects of the underlying infrastructure changes (Bernstein, et al., 2009). Besides, the elimination of the need for training, with the obscured aspect of cloud computing, resistance to change, common with implementation of new technologies in an organization, is eliminated (Smith, 2009a). Despite of the initial cost of implementation, this is an economic benefit of cloud computing. Particularly for the private cloud computing model, cloud computing can be customized to the needs of the organization. This means that resources are configured and reconfigured to the specific needs of the organization. Additionally, the availability of the three models and the flexibility of use is a benefit to organizations (Smith, 2009a). This is because of the idea that with a conventional dedicated server stack managed internally or by a third-party service provider, the organization is in a position to get to select the server, networking, and storage needs, acquire them and utilize the specific configuration for three to five years. It is also possible to upgrade the memory without affecting the configuration. This enables the organization the flexibility of utilizing the services and applications at its own convenience. The concept includes any subscription-based or pay-per-use service, which increases information technologys prevailing capabilities (Gruman, 2008).

Faculty of Economics, University of Ljubljana

Information Technology Supervisor: Prof Dr. Tomaz Turk

Limitations of Cloud Computing The promise of cloud computing cannot be realized overnight since people, technology, and processes are necessary in supporting the move to cloud computing. The move to the use of cloud computing changes the way people operates as well as the skills and abilities required in the organization. The role of various personnel in the company changes thus affecting the work of the entire organization. Bernstein, et al. (2009) suggest that when there is no proper planning for the implementation of cloud computing, the effects on the organization can be destructive. Any organization that adopts cloud computing without the knowledge of the effects of the transformation can be caught by surprise in terms of performance and IT competencies. Regardless of the fact that cloud computing saves on cost in the long run, start-up cost could be a lot for the organization. Smith (2009a) suggests that it is general knowledge that any new strategy implemented in an organisation brings in new implications and changes how things are conventionally. Besides the cost of implementing the new strategy, a need for innovative ways emerges. The requirement for new skills and competencies in the organization is an additional cost for the organization. The issue of information security is another limitation of cloud computing, particularly with the use of public, community, and hybrid cloud-computing models. According to Zissis (2010), this is a crucial issue for many organizations because they tend to choose these models as opposed to private cloud computing because of the cost. In private cloud computing, the organization is likely to save remarkably little in terms of cost. The cost of management might be higher as compared to the other three cloud models. This increase in cost makes many companies shy away from private cloud computing. Why Companies Should Adopt Cloud Computing Cloud computing offers organizations a promise of flexibility in services for IT systems that put business at the center of the process. According to Camarinha-Matos and Afsarmanesh (2008), the main factors behind the need for organizations to implement cloud computing are the saving on cost, improved control of IT infrastructure, offering of innovative technology, and improved agility and flexibility in the organization. Because of the benefits offered by cloud computing, it is becoming extremely attractive to organizations seeking to optimize on productivity. Given the fact that with cloud computing it is possible for the employees within the organization to concentrate on the core business purposes, it is possible for the company to gain and maintain a competitive advantage.

Faculty of Economics, University of Ljubljana

Information Technology Supervisor: Prof Dr. Tomaz Turk

Recommendation on Small IT Businesses Regardless of the benefits offered, as suggested by Defelice (2010), the journey toward the implementation of cloud computing is not a straightforward one. It is therefore important for organizations seeking to implement cloud computing to realize that this move is not an information technology issue alone. It is an investment that requires the involvement of the entire organization (Defelice, 2010). Without proper considerations and planning, it is unwise for any organisation to implement cloud computing. This is because of the possible effects of such a move especially without sufficient planning. Because of the technical, human, and managerial IT competencies implications, care should be taken when deciding on using this technology for business. It is also necessary to prepare the employees and take them along in the journey. Training is particularly noteworthy in equipping the employees and managers with skills regarding the basic principles of cloud computing (Gruman, 2008). The training should be carried out by experts who are knowledgeable in the principles of cloud computing. Performing a campaign to inform all the stakeholders should be the initial step. Investment in cloud computing means investment in the development of information technology competencies in the organisation if the implementation has to be successful (Zissis, 2010). Conclusion Cloud computing is emerging as the way various companies are moving to maximize on production and obtain competitive advantage. The provision of computing as a service rather than a productthat is, where shared resources, software and data are delivered to computers and other systems as a utility over a networkis proving to be beneficial to organizations in many ways. The four main types of cloud computing implementation models available for companies to choose from allow a kind of flexibility that is tremendously beneficial. Additionally, each of the four models has its unique benefits that a company should consider before implementation. Regardless of the benefits of cloud computing, the negative implications that can result require care to be taken before deciding to invest in it. From this study, more research is necessary to address the issue of the general implications of cloud computing on the organization, its people, and operations.

Reference List

Faculty of Economics, University of Ljubljana

Information Technology Supervisor: Prof Dr. Tomaz Turk

Armbrust, M. et al., 2010. A view of cloud computing. Communication of the ACM, 53 (4), pp.50-58. Bernstein, D., Ludvigson, E., Sankar, K., Diamond, S. and Morrow, M., 2009. Blueprint for the Intercloud Protocols and Formats for Cloud Computing Interoperability. IEEE Computer Society. doi:10.1109/ICIW.2009.55. Camarinha-Matos, L.M. and Afsarmanesh, H., 2008. On reference models for collaborative networked organizations. International Journal Production Research, 46 (9), pp.2453-2469. Defelice, A., 2010. Cloud Computing: What Accountants Need to Know. Journal of Accountancy, 210. Farber, D., 2008. The new geek chic: Data centers. [online] Available at: <http://news.cnet.com/8301-13953_3-9977049-80.html> [Accessed 16 December 2011]. Godwin-Jones, R., 2008. Emerging Technologies of Elastic Clouds and Treebanks: New Opportunities for Content-Based and Data-Driven Language Learning, Language, Learning & Technology, 12. Gozzi, R., 2010. The Metaphor of Cloud Computing. A Review of General Semantics, 67 (2).

Gruman, G., 2008. What cloud computing really means. [online] Available at: <http://www.infoworld.com/d/cloud-computing/what-cloud-computing-really-means031> [Accessed 16 December 2011].

Faculty of Economics, University of Ljubljana

Information Technology Supervisor: Prof Dr. Tomaz Turk

King, R., 2008. Cloud Computing: Small Companies Take Flight. [online] Available at: <http://www.businessweek.com/technology/content/aug2008/tc2008083_619516.htm > [Accessed 22 December 2011]. Kyriazis, D., et al. 2010. A Real-time Service Oriented Infrastructure. International Conference on Real-Time and Embedded Systems (RTES 2010), Singapore. Locke, S., 2008. Enterprise Convergence in Our Lifetime. The Enterprise Newsletter, TEN42 September 16, 2008. Robinson, M.A., 2010. Work sampling: Methodological advances and new applications. Human Factors and Ergonomics in Manufacturing & Service Industries, 20 (1), pp.42-60. Schofield, J., 2008. Google angles for business users with platform as a service. London: Guardian. Smith, R., 2009a. Computing in the Cloud. Research Technology Management, 52 (2).

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Sobajic, D.J., 1993. Neural Network Computing for the Electric Power Industry: Proceedings of the 1992 Inns Summer Workshop, Mahwah, NJ: Lawrence Erlbaum Associates. Think Grid website

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Information Technology Supervisor: Prof Dr. Tomaz Turk

Weil, M., 2011. Managing Assets in the Cloud: Keeping Track of an Ever-Expanding Amount of Technology Assets Can Be a Daunting Task for an Understaffed District IT Department. Two Schools Turn to the Cloud for Assistance. T H E Journal (Technological Horizons in Education), 38 (1). Werbach, K., 2011. The Network Utility. Duke Law Journal, 60 (4). Zissis, D.L., 2010. Addressing cloud computing security issues. Future Generation Computer