In the modern world, along with the strong development in information technology, computers are becoming vital part of our life. Computers are available everywhere and they served for various purposes such as working, studying, entertainment, looking for information, etc. It leads to the fact that the increase of connectivity and amount of data requires a solution for this situation. Therefore, there must be a bank of information that helps storing all kind of sources and guarantee that hosted data would exist long term.
Back to the past, people used traditional way to maintain the data but it was complex and often costs much. Besides, almost devices which include hardware and software are out of date. There must be also a whole team of specialist who can install, configure, test, run, secure, and update them regularly.
In 1990, the introduction of internet marked a tremendous growth of the information technology and the word “cloud” was born to represent for the internet. Mentioning the cloud computing, people think of a new innovation in technology that become a great help for information storage in general and business in specific. In other words, cloud computing is designed for obtaining network and supplying computer resources.
Now, cloud computing has received attention from not only each individual but also many organizations, entrepreneurs, etc. And it deserves such a great attention because of huge benefit from using it. Since then, cloud computing is widespread and applied in many fields such as library and information science, education, architecture and especially business. By far, cloud computing spread across the globe and become biggest turning point in this century.
2. Achievements of cloud computing expressed by statistic data.
According to the final report of International Data Corporation (IDC) in 2011, cloud computing brings significant benefits especially in business. Statistic data estimates that cloud computing would contribute up to â‚¬250 Billion to EU GDP in 2020 and 3.8 million jobs. Besides, the growth of cloud computing also reduces cost and expenditure. In fact, 78% of those who have been using cloud services said that indeed it is a cost saving. Not only the cost savings have been seen, but also people expect the more advantages have also been expected from cloud computing. The chart below illustrates more details about these facts:
Business seen and expected benefit (IDC Final Report, July 13th, 2012)
Cloud computing bring customers a large variety of benefits that can be gained by using it. The convenience of mobile working is undeniable; within Internet access you can use any cloud application by mobile devices. Furthermore, cloud computing enable you to start new business, new location and enhance the productivity easier and more rational. About the other benefit expected categories as: standard processes, capital expenditure (capex) for business and business volume, each of them presents for the promising of standard core process, reduce capital expenditure and increase revenues.
The development of cloud computing is the excellent potential for investing in business. Hence, understanding related fields of cloud computing and how to apply it in business would be an advantage. All of the standpoints would be presented as below.
Cloud Computing and its application
1. Definition of Cloud Computing
Actually, the term “cloud computing” has just been appeared recently. However, it is not the new trend of information technology; it has only synthesized all the directions of the development of information infrastructure in recent years. In 2006, Amazon impulse the research and implementation of cloud computing (ComputerWeekly.com, 2009). Soon after, with the participation of big corporations such as Google, Microsoft and IBM, cloud computing has had a very strong development which attracts a huge investment in researching of many scientists, universities and companies of information technology. Thus, a lot of definitions of cloud computing were released by experts. However, each research group defines cloud computing byits own understanding and approaches so that it is very difficult to give the most general definition. Here are some definitions of cloud computing:
“The cloud is IT as a Service, delivered by IT resources that are independent of location” (The 451 Group, 2008)
“Cloud computing is a style of computing where massively scalable IT-related capabilities are provided ‘as a service’ across the Internet to multiple external customers” (Gartner, 2008)
Cloud computing is basically a computing model which uses computer technology and develops based on the internet. In the cloud model, all customers’ requirements relating to information technology are provided in the form of services which allow users to access and use technological services from a provider on the cloud without purchasing the equipment or infrastructure as well as knowledge of that technology. The main task of cloud computing is to meet the users’ computing demands based on the internet. For example, Google App Engine service provides common online business service which can be accessed from a web browser, the rest of applications and data are stored in the server.
However, companies such as Gartner, The 451 Group and IDC are not companies that specialize in IT so these definitions focus mainly on explaining what cloud computing is on the view of commerce and based on their own experience.
According to scientific and technical perspective, there are also many different definitions, of which the definition of National Institute of Standards and Technology (NIST) is widespread in use; they define cloud computing as a model which has 5 essential characteristics (Grance, Mell, 2011):
Resource pooling: Cloud computing allows many users to share a common provider’s resource pool based on multi-tenant model. Cloud computing is based on virtualization technology so almost all resources is virtual resources which will be allocated dynamically in accordance with the changing demand of different customers. Therefore, the provider can serve more customers than the traditional static resource allocation.
Broad network access: With internet connection, customers can use and access the cloud applications from anywhere and anytime by using many types of devices such as smartphone, laptop, tablet.
Rapid elasticity: This is the most prominent and important characteristic of cloud computing. The system can scale up or down automatically depending on user’s demand by adding or reducing resources. This capability helps the service provider manage resources more efficiently, take full advantage of the excess resources and serve more customers. Moreover, the users can cut down the costs because they only pay for the resources actually used.
On-demand self-service: When customers have a computing demand such as increase or decrease storage space and server time, they only need to make a request on the provider’s website and the system will satisfy their needs automatically without any contact with the cloud vendor.
Measured service: Cloud service automatically controls and optimizes the use of resources such as storage space, bandwidth, etc. So the resources usage will be monitored and transparently report to both service provider and users.
2. Services model of Cloud Computing
Nowadays, many cloud computing’s suppliers provide different services for users and businesses. Hence, they have to understand thoroughly about the feature and function of each model in order to apply the best model to the company. There are 3 main services of cloud computing which are Software as a Service (SaaS), Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) (Stanoevska-Slabeva el al. 2010)
3 types of Cloud Services (http://technoster.com/cloud-computing-explained)
Software as a Service – SaaS: Before cloud computing is widely known in IT circles, SaaS has actually appeared for a long time, the most popular service is email such as Gmail, Yahoo mail, Hotmail. SaaS is a service model in which the supplier will provide its customers software as a completed service. Customers only need to choose a software application that matches their needs and run the application on the Cloud infrastructure. This service model frees users from the management of system, infrastructure and operation which will be managed and controlled by the host in order to ensure the application’s availability and stable operation. Currently, SaaS for businesses is strongly developed such as office applications of Microsoft Office 365 like internal email and communication, applications in Customer Relationship Management (CRM) of SalesForce, Amazon’s e-commerce applications.
Platform as a Service – PaaS: is a variant of SaaS, but this service model offers a platform as a service which means that a business can build their own application on the provider’s infrastructure and delivers to its customers via the host’s server. This business will not be completely free by bounds of design and technology. Some examples of PaaS are Force.com of SalesForce, Google App Engine, etc.
Infrastructure as a Service – IaaS: is a service model that will provide users basic computing resources such as storage space, server, network as well as tools to manage those resources. Customer can install the operating system, deploy the applications and also connect to other components such as firewalls and load balancers. Therefore, customers have to manage operating systems, storage, applications and connections between the components; service providers manage basic infrastructure below and is responsible for the operation and maintenance of the system. Besides, one of the most popular IaaS services that businesses and organizations often use is to rent a certain amount of resource for daily business operation and rent standby resource for unexpected demands. As a result, it is not necessary for businesses to invest large amount of upfront cost, they only need to pay the cost for the real demand. IaaS brings its customers economic efficiency, especially in the case of demand for computing and storage increased sharply in a short time, the investment in infrastructure and equipment will be wasteful; time of purchasing them will cause delay and affecting the operation of businesses.
Cloud computing provides its customers variety of models with different characteristics. Thus, the organizations can choose to use cloud computing to supplement their existing computing infrastructure (IaaS), test and develop applications (PaaS) or take advantage of existing applications (SaaS) to timely meet the needs of businesses, reduce investment and opportunity cost. On the view of management, cloud computing allows companies and firms to transfer IT outsourcing to the service provider in order to concentrate on the development of the core business.
3. Deployments Model of Cloud Computing
There are 3 types of clouds which can be used for different purposes (Masiyev, 2012):
Public cloud: In this cloud, all cloud services is widely provided by the suppliers for the customers widely through the internet. Different applications share the resource pool of computing, storage and network so the infrastructure is designed to ensure separating data between the clients. Public cloud focuses on serving a large number of customers so it is able to meet the flexible computing needs and provide lower costs to the customer. Therefore, public cloud’s customers include all types of individuals and businesses whom can benefit from easily approach to high-tech and high quality applications without any up-front cost. However, the whole data is located on cloud which is managed and controlled by the provider; this make customer, especially big companies feel unsafe for their important data when using cloud service.
Public cloud (http://www.janakiramm.net/blog/the-tenets-of-the-cloud)
Private cloud: in this type of cloud, all the platform and applications are set up for the use of only one organization or business. Private cloud can be operated by a third party and the infrastructure can be placed inside or outside the owner. Therefore, it helps businesses to maximize the ability to control all data, security and service quality. Besides, private cloud can be built and managed by the company’s IT department or they can hire a service provider to undertake this work. Thus, although the investment cost is high, this cloud allows business to control and manage its sensitive or critical data.
Public and Private cloud (http://blog.esds.co.in/while-using-public-cloud-services)
Hybrid cloud: As analyzed above, public cloud is easy to set up and use, low cost but not safe in contrast, private cloud is more secure but costly and difficult to set up. Therefore, if these 2 clouds can be combined together, the new model will take advantage of each type of cloud. That is the idea of Hybrid cloud. On one hand, the firm will outsource all insignificant business functions, data and use public cloud to handle these data; on the other hand, business will retain control of important information simultaneously (Private cloud).
What is Hybrid Cloud Hosting
Hybrid Cloud (http://www.moderndignity.com/what-is-hybrid-cloud-hosting)
Businesses can choose to deploy the application on the Public, Private or Hybrid Cloud depending on specific demands. Each type of cloud has its strengths and weaknesses so companies need to consider carefully before choosing or they can use more than 1 model to solve different issues. The need of temporary applications can be implemented on the Public cloud because it helps the firm avoid purchasing additional equipment for a temporary need. Similarly, the need of permanent applications should be implemented on Private or Hybrid Cloud.
4. Application of Cloud Computing
Based on the functions of cloud computing applications, they are divided in some of categories such as: processing pipelines; batch processing systems and web applications.
Processing pipelines: They include data are data-intensive and sometimes compute-intensive applications. For example: image processing (flickr.com), indexing, document processing, email and social network (Facebook, Twitter. Currently, they represent a fairly large segment of applications which are running on cloud.
Batch processing systems: The disadvantage of this type is that it cannot be available for long term. Consequently, it can cause severe problems. A non-exhaustive list of batch processing applications includes activities report, transaction and summaries of organizations, inventory management of big companies, billing and payroll process.
Web applications: Another important application is web access. Some categories of web sites only serve for temporary purposes (for example: website for event or conference.)
The stronger the cloud computing develop, the more creative of cloud applications prove. With such a huge benefit like that, cloud applications would become active helper of cloud computing.
Cloud Computing in Business
“Is cloud computing suitable for all types of businesses?” It depends on the scale of the companies and the nature of businesses. In fact, for the businesses in which data is a vital part such as storage system of a bank, they should build their own operating system and data center. However, Cloud computing is probably a best solution for small businesses because they do not have to invest in initial infrastructure and have a department for management and maintenance of operating system (such as the issue of replacing the storage devices or the problem of power consumption of the system). It cannot deny that outsourcing business system to the cloud will bring a lot of benefit to not only the companies but also its customers. However, there are still some concerns that businesses have to face with when they use cloud computing.
1. Benefit of using cloud computing
a. Cost saving
The most remarkable benefit of using cloud computing in businesses is economic efficiency. In fact, when a business set up its data and infrastructure on cloud especially public cloud, it is unnecessary to pay significant up-front cost for equipment, management and maintenance of IT system and manpower to operate system. They can rent fully-made applications and storage space from the providers (SaaS) or build their own applications on a platform (PaaS) as needed. Therefore, businesses only need to pay for what they really use (pay as you go) which can cut down the fixed costs. (Chan el al. 2012)
Nowadays, more and more companies realized the economic benefit of using cloud computing in their system and one of them is Sensata Technologies – a big supplier of electrical equipment and power solution with more than 9000 employees over the world. In order to improve the company’s operation, majority of employee’s e-mail was moved to the cloud by Information Technology department. This decision helps Sensata to reduce more than a half of cost in interaction tool which is approximately $500,000 after just 4 months. (Hodges, 2011)
Thanks to rapid elasticity of cloud computing, customer’s system can scale up or down flexibly depending on demands. Therefore, businesses are able to start with small scale of system with low demand and then develop to a larger scale with increasing demand (Marston, et al., 2010). For example, in order to launch a new marketing campaign, a business needs to have an own server for uploading information from the client within a month. This server will be redundant when the campaign finishes if a business buy a new server; but with the existing technology infrastructure, third party may grant or revoke this server easily. Furthermore, cloud computing allows employees to easily access company’s data from anywhere and anytime even when they are on holiday as long as they have internet connection.
With cloud computing, the firm will forward most of the responsibility for controlling system, infrastructure management, securityâ€¦ to the service provider, so that the companies can greatly reduce costs and time, they only need to concentrate on the core business and do not have to worry much about control and management of system.
c. Environmental benefit
Cloud service helps the firms reduce power consumption much more than using its own data center. Power saving can make the environment greener because the less power is consumed, the less carbon is emitted. Besides, using cloud service allows companies to save much area of land use for cumbersome database center. According to recent research about power consumption and carbon emission of using cloud computing (Accenture, 2011), more than 30 percent of power can be saved and about 32 percent of carbon emission may be avoided for the large companies when they move applications to the cloud; with small businesses, these numbers are even higher which are about 90 percent for each of them.
d. Improve performance
Cloud computing allows the firm to access almost immediately to the pool of data which leads to faster transactions in business. Moreover, it is easier for the organizations to work in collaboration with partners because they can share and access to the same data quickly on the cloud. On the other hand, the issue of storage space now can be solved with cloud computing, it is unnecessary for the employees to keep the data in their limited hard drive which might be corrupted or lost because of computer crash or virus.
e. Automatic update
A lot of companies spend few days or even couple of weeks on just upgrading their operating and security system which contains huge amount of data. However, with cloud computing, businesses do not need to update their software or system by themselves; it is all done by the cloud vendor regularly as soon as the latest update is available.
2. Challenging for Cloud computing
a. Security and privacy
The most frequently question about cloud computing is: “Is it safe to move all business’s data to the cloud?” Actually, when moving all data to the cloud, businesses lose somewhat of abilities of controlling their information; they have to lay their faith entirely on the cloud vendor to ensure the safety of that data. With some companies of which data is their lifeblood, it is very risky to put the control of those sensitive and critical data on the third-party hand, hacking or some kinds of attacks to the infrastructure may cause some adversely unexpected consequences such as data loss or corruption. Besides, privacy is also the big concern of using cloud computing. In fact, putting data on cloud can make organization’s data more vulnerable and it can be accessed by unauthorized people. Currently, a solution to solve this issue is that cloud users need to encrypt their data before uploading to the cloud and they have to decrypt it at the local computer when they want to use that data.
For instance, according to Bloomberg, in April 2011, more than 100 million customer’s accounts of Sony Corporation were compromised by hacker through Amazon cloud service; the Sony’s PlayStation Network and Qriocity service had to shut down in nearly one month due to the cyber-attack. Hackers rented a server of Amazon’s EC2 service as a platform to launch an attack to Japanese company and stole personal information and credit, debit card information of their customers. After an incident, share’s price of Amazon decreased 1.7 percent from $206.07to $202.56 in stock market, this decline of Sony is even more significantly, they lost nearly 23 percent of the share’ price in 2011. (Alpeyev, et al.,2011)
On the other hand, because of the ability to damage and spread very quickly, computer virus is one of the major risks of data security issues. The centralization of data on the cloud can reduce time and cost of virus removal, but the risk and impact of virus will not change or even turn more dangerous because of the reason that though whether in any model, the destructive purposes of the virus creator are not changed, viruses still have the objective of sabotage and fraud; the new variants of virus that adapt to the operating environment of cloud computing will promptly appear. Moreover, centralizing data on the cloud’s server also helps virus spread faster and sabotage stronger.
Another challenge of cloud computing is whether users can access and utilize their data and applications or not, there is a problem with the server system of the provider. With the businesses which need to access their data and files all the time for operation, this is such a serious issue which may cause some critical consequences such as delay in business. Therefore, companies should have a plan providing against all possible contingencies such as backup system if problem occurs.
c. Cloud provider lock-in
Today, cloud’s applications are being improved the ability of interaction between different platforms. However, when businesses build their application on a cloud infrastructure, it is very difficult to move that application to another cloud vendor in the future.
Furthermore, businesses become dependent on the technology and quality of service providers which can reduce their flexibility and creativity, they only have the right to do what the cloud vendor allows. In addition, the latest information is often not timely updated by the provider while companies want to keep pace with the latest innovations, so they may feel dissatisfied with that limitation.
d. Internet dependency
According to the definition of cloud computing, users must have internet connection to access the resource on cloud infrastructure, so the availability, speed, quality and performance of internet may significantly affect the business operation. Internet interruption may occur in the middle of transaction which means that action can be cancelled or delayed. Besides, without a high speed connection, it can take a lot of time to load huge amount of data through the internet
3. Future of cloud computing
In the recent report of Gartner (2012),it indicated that there is a stable increasing in public cloud service. It also proves the fact that cloud computing become useful and being used widespread. In 2010, public cloud services reached 75.6 billion Dollars. But it is estimated that in 2016 it would account for 206.6 billion dollars. So, during 2011 and 2016, it may contribute compound annual growth rate of17.7%.
Market size of public cloud services (Market Analysis and Statistic, Gartner2012)
In my opinion, cloud computing not only continues to have a strong impact on business with concrete targets including increasing revenues and decreasing cost. But cloud computing can also bring us many other chances in different fields.
a. Advertising services.
The combination of advertising services and cloud service can be more efficient. It has become a trend with many useful online tools. Now, the two main part of cloud advertising market are paid search and online display advertising. This form of advertise is easier and quicker which can grab people’s attention better. Businesses could save a lot of money for the cost of producing advertising products. Besides, it meets the demands of customers who do not want to spend much time to look for information in normal ways (magazines, leaflet, booklet…).All of them now always are available on Internet within few clicks.
b. E-commerce services.
Shopping online is quite popular and convenient. Actually, online retail is not considered as cloud service. But, the provision for retail online service from one to the other which can gain profit is a form of cloud service. Amazon is a typical example for the extraordinary successful of E-commerce. By doing E-Commerce, businesses can expand the wide range of customers and understand the taste of specific customer groups (through statistic numbers) which all lead to the great achievement in increasing profit.
Royal Mail Group is one of the biggest postal organizations in UK that is responsible for mail and parcel delivery and related businesses, about 70 million items are delivered by Royal Mail around UK every day. However, the rising numbers of competitors in this sector are putting more and more pressure on Royal Mail which forces them to have a rational strategy to compete with private companies, this challenge is even bigger for the information technology unit in the company who always need to upgrade the system to make it operate efficiently. In order to deal with this concern, in 2008, Royal Mail Group decided to replace the IBM Lotus Notes which is out-of-date and costs too much by a new economical service model, it is cloud computing. (Jaques, 2011)
2. Cloud computing in Royal Mail Group
Royal Mail spend only about 8 weeks to apply this new model named Microsoft Business Productivity Online Suite (BPOS) which is more flexible and scalable than the old one without paying a huge amount of money each year. More than 28 thousand accounts of employees are moved to the cloud proving them many useful tools of communication such as instant messages, audio and video conference which helps them work more efficiently. Server, storage space, application are now provided on demand by CSC and Microsoft so that they only pay as they use and can easily scale up or down their system in each period of time. For example, Christmas is always the peak time of Royal Mail which requires the company to operate at full capacity, so the cloud service allows the firm to expand their system in order to meet the demand and scale down in the off-peak time. The benefit of applying new cloud service is more impressive according to economical perspective. In fact, Royal Mail can save about 15 percent of only maintenance cost which is now the responsibility of service provider (Tabbitt, 2011). According to the head of infrastructure management of Royal Mail – Adrian Steel, the company may save approximately £1 million during the 4 years contract with CSC.
This dissertation has proved the significant role of cloud computing in businesses and its widespread development in near future. The appearance of cloud computing brings the solutions for businesses’ questions related to build a datacenter with low-cost, high benefit, security and sustainable.
Many years ago, it takes much time for business to develop and attract millions of customers. Nowadays, cloud computing make all dreams of using computer and Internet as a powerful tool becomes practical and realizable. The target of deliver services to millions customers through Internet with faster speed now can achieved for months. In both viewpoints of businesses and customers, they all received the benefit from cloud computing directly or indirectly. With different cloud computing services models and 3 types of cloud, they allow businesses consider and choose which model would be most suitable for businesses. Each of services models and cloud type has its own advantage and disadvantage traits. Therefore, understanding basic knowledge of them is quite necessary.
Businesses of different fields can apply cloud computing successfully such as newspaper like Washington Post, search engine like Google Web Search, online retail like Amazon or even movie companies like Pixar. By using cloud computing, businesses can get remarkable achievements which can be shown through rising revenues and good reputation. Besides, the interaction between businesses and customers would be more closed. It all serves for the sake of matching demands for both sides. Based on the statistic number, it is apparently that cloud computing promote the economic growth in general and in business in particular.
With the increasing quickly in the number of cloud computing users, there must be some necessary steps to consider the challenging and obstacles from cloud computing. Hence, we can know exactly what should we do to prevent them then give some recommendations which would be helpful for both sides: cloud providers and businesses.
For cloud providers’ perspective: Providers have to predict what could become risks from cloud computing. Therefore, providers would develop strategies that help enhance the cloud system. Besides, providers also have to pay attention at some main threads such as: availability, internet independency and other ethical issues.
For businesses’ perspective: Businesses should prepare carefully before making any decision that they should migrate to cloud computing or not. Evaluate the internal and external force and the current situation of business are also important. By doing that, they can know exactly what type of cloud that their structure need.
Cloud computing gives businesses long term benefit and makes the breakthrough in technology. It becomes most preferred choice for businesses and industries. Cloud computing would give us a new chance, new hope for the world that businesses will be full of success in particular, and a world that economic can develop for the interest of everyone.
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