Business Value of Cloud Computing Essay

Custom Student Mr. Teacher ENG 1001-04 10 January 2017

Business Value of Cloud Computing

The significant development of information technology over past few years has led to the increasing demand of resources, extra bandwidth and computational power. Small and medium business companies with their limited budget are finding themselves in the middle of balancing between its client/employee needs and maintaining efficient work environment. In today’s economy the answer for the above problem is ‘Cloud Computing’. Cloud computing offers software and hardware resources and in some cases human services over a distributed environment that can be shared and utilized on demand through internet.

Business owners can use these resources as per their requirement even if that is for few hours a day or few days a month and have to pay only for that actual use. Thus this relatively new concept is becoming highly popular among IT organizations because of its flexibility and cost effectiveness. It is highly scalable and also can span quickly according to the requirements of individual organization yet still sharing the same resources. Classification of Cloud services:

The broad concept of Cloud computing can be classified into the following categories:

1)Software as a Service (SaaS): In this classification traditional or custom made software applications can be served over the internet rather than purchasing the licensed version individually. For example companies like which provide CRM software to various business owners, Google Apps (word processors, spreadsheet applications) etc which are commonly used. All these are relatively cheaper than purchasing licensed versions and installing them in the internal infrastructure. Here the provider is responsible for updating the product and troubleshoot in case of any issues.

2)Platform as a Service (PaaS): This service includes providing the entire framework and all necessary products to support an entire Software development life cycle (SDLC). Starting with Analysis going all the way through design, coding, testing and deployment of the end product. The leading providers of this service are Microsoft Azure platform, Google App Engine. A classic example is SharePoint application from Microsoft where users from different location can collaborate to develop a common application that can be customized and shared individually according to the requirement of each client.

3)Infrastructure as a Service (IaaS): This classification focuses on renting storage equipments (servers and high end networking devices) as well as processing devices (CPUs) to clients who don’t wish to invest in buying dedicated devices as per their requirement. Companies are billed for these resources as per their actual use and can save lots of money. IaaS providers include Amazon S3 serving storage needs, EC2 for computation services and SQS for networking needs. The provider’s infrastructure is pre-setup and can scale up and down according the each client’s needs based on real-time situations. These resources can cater occasional peaks in the situations where there is sudden increase in data or can scale down when the data flow is less.

Another small classification that can also be mentioned is of offering Peoples’ skills as a service, e.g. Programmers with knowledge of Cloud services can be provided per hour basis which can help organization in developing the application as well as integrating in the existing cloud services rented by the organization. This scales down cost of hiring a programmer and also benefitting by using his/her services to merge the application with the infrastructure. (Motahari-Nezhad, Stephenson, Singhal, 2009) Werner Vogels, CTO of has quoted “ if you run your services inside the company, utilization becomes an issue.

It amortizes your cost over number of cycles. If you run services outside, on a public service, it is no longer an issue for you”. (Mache, 2009, p.55) This could be supplemented by Guy Rosen, CEO of Vircado. A starter firm in cloud computing, according to him Cloud computing can benefit a organization in many ways:

1)The company does not have to pay anything upfront, instead they are billed only for the services they use. This is a huge advantage of small organizations which have budget constraints and cannot afford large payments initially. Even in the annual balance sheet there would be no assets to declare, that could be a huge relief to accounting department. 2)Secondly if you don’t own huge infrastructure, the cost of maintaining it also comes down. There could be marginal savings in electricity which can be a significant factor in budgetory expense. 3)If the company recieves cloud services, they don’t have to worry about recruiting and maintaining IT personnel, they can concentrate on their core business goals without worrying about constructing server rooms, purchasing expensive software and maintainence contracts. (Rosen, 2010)

Companies don’t have to worry about traffic or bandwidth, they even don’t have to worry about advertising on the internet by developing their web application inhouse. They can take help of SaaS and once deployed in the cloud they can wait till the time customers start hitting the webpage. Till then all the resources are not optimally utilized thus they have to pay only for that actual utilization. In a recent survey by Guy Rosen, he used market analytics vendor Quantcast to get the list of companies using cloud and their service provider. The results are displayed below in graphical format:

Figure1. Adapted from “The business of Clouds” by G. Rosen, 2010, Crossroads 16(3), p 26.

As per the graphic, Amazon EC2 is highest provider of cloud services hosting amongst sample of 500k. With more and more companies using cloud computing and the providers constantly adding services, businesses can save lot of money while the management can concentrate on achieving core goals.

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