1. What business benefits do cloud-computing services provide? What problems do they solve?
There are many benefits to cloud computing. Businesses of all sizes have the ability to take advantage of these and often find the costs within their individual budgets. Cloud computing environments are able to run on existing infrastructures, which makes the switch to cloud computing minimal from this aspect. Costs are incurred based on the amount of computing power they actually consume. (Laudon & Laudon, 2014) In addition this type of environment enables businesses to scale their needs on an as-needed basis, which helps to keep costs within budgets. Another benefit is the ability to respond quickly due to the portability of the application. With cloud computing businesses have the flexibility in how they utilize applications; this results in better turn around on information as employees have the ability to gain access to data and applications from anywhere.
Cloud computing can assist in solving problems such as reducing costs. Since there is no need for additional equipment budgeting dollars can be spent elsewhere. In addition, with much of the infrastructure in the cloud the need for additional IT employees is eliminated. There is no additional need for support and maintenance on hardware and software with cloud computing. Cloud computing solves many problems such as reducing costs, improving efficiencies, providing additional sources for customers, and providing remote access for employees.
Examples given in the case study included Zynga – a gaming platform offered on Facebook. When Zynga comes out with a new game, they have no knowledge of the amount of computing power they will need. They are better able to adjust this based on the popularity of any given game via cloud computing. The reliability of cloud computing for them equals revenue. Many other companies have benefited from cloud computing, it enables them to promote and sustain additional Internet traffic without crashing their internal systems.
2. What are the disadvantages of cloud computing?
There are some disadvantages as well. The responsibility of storage is in the hands of the provider. This presents potential security risks as users can upload and download information from cloud computing and potentially use it to perform illegal tasks. (I think of the Target issue in November, whereby thousands of consumer’s information was breached.) Since the software applications depend on the provider to manage and support there is also risk if the site were to go down. The customers are dependent on the provider to find and fix the problem in a timely manner. No business wants their system to be down for an indefinite amount of time especially those that seek to gain revenue. Businesses are also reliant on the provider performing the appropriate updates to systems. As with any information switch there is potential for errors to occur. I believe one such occurrence happened recently with an airline company. The rates were entered incorrectly, which cost the airline a lot of money. There is always potential for errors or “fat fingers” as it is known.
Overall the disadvantages are reliability and security.
3. How do the concepts of capacity planning, scalability, and TCO apply to this case? Apply these concepts to both Amazon and to subscribers of their services.
Capacity planning is the process of determining the production capacity needed by any given organization to meet the needs of the products being promoted. Scalability is the ability to process and handle a growing amount of need and the ability to accommodate this type of growth. The total cost of ownership (TCO) is a financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or system. (Laudon & Laudon, 2014)
The concepts of these apply to the case. Cloud computing uses planning, scalability, and TCO. Amazon is one of the biggest online retailers in the world (I think I personally help them to achieve this ranking), this means they need to provide hardware capacity planning and scalability not just for themselves, but for their subscribers as well. If they overestimate their needs they risk financial losses, and if they underestimate they run the risk of creating shortages for their own business needs as well as subscribers. As subscribers, if they run into non-availability too often they will lose faith in the ability of Amazon to manager their services and seek out other vendors – again causing potential losses to them as a company. Estimating the scalability for a large diverse consumer base without over or underestimating is difficult, but crucial for their continued success. Amazon has to take on the total TCO of its services, while at the same time ensuring it can maintain profitability. The services subscribers’ benefit from not having to be concerned with these issues and not bearing the brunt of TCO issues.
4. What kinds of businesses are most likely to benefit from using cloud computing? Why?
While all businesses can benefit from using cloud computing, it is perhaps more beneficial for those smaller businesses, especially from a budgetary aspect. For smaller businesses they don’t have pre-existing data that needs to be transferred and are able to start their operations directly on the cloud. The ability to scale their operations is another great advantage. As their business grows so can their computing abilities with minimal capital expenditure.
The cloud allows these smaller business owners to somewhat level the playing field with those larger companies who often maintain larger IT assets. It is a financially viable solution that doesn’t require large capital expenditures for servers, IT teams, and data system infrastructures. For these larger companies the cost savings are not as easily determined. Many already have “huge investments in complex proprietary systems supporting unique business processes, some of which have given them strategic advantages.” (Laudon & Laudon, 2014)