This document provides an overview of cloud computing. It defines cloud computing as a model that enables on-demand access to configurable computing resources via the internet. The document outlines the key characteristics of cloud computing including on-demand self-service, broad network access, resource pooling, rapid elasticity, and measured service. It also describes the different types of cloud services, categories including IaaS, PaaS and SaaS, and types of clouds such as public, private and hybrid clouds. Finally, it discusses some of the key advantages and shortcomings of cloud computing.

1. BBIM510 - Business Innovation
in Digital Economies
Cloud computing
Lecturer: Arjun Shivraj

2. Cloud computing
Created by Sam Johnston using OminGroup's OmniGraffle and
Inkscape (includes Computer.svg by Sasa Stefanovic)

3. Defining the cloud
• “Cloud computing is 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.” (The
US National Institute of Standards and Technologies)
• Cloud computing is mainly a new mean of delivering IT
resources, enabling organisations to leverage their
innovation and competitive advantage, at the same time
that they cut costs and gain agility for the business.

5. Characteristics
National Institute of Standards and Technology: Defining Cloud Computing (2011)

6. Characteristics
• On-demand self-service. A consumer can unilaterally provision computing
capabilities, such as server time and network storage, as needed automatically
without requiring human interaction with each service provider.
• Broad network access. Capabilities are available over the network and accessed
through standard mechanisms that promote use by heterogeneous thin or thick client
platforms (e.g., mobile phones, tablets, laptops, and workstations).
• Resource pooling. The provider's computing resources are pooled to serve multiple
consumers using a multi-tenant model, with different physical and virtual resources
dynamically assigned and reassigned according to consumer demand.
• Rapid elasticity. Capabilities can be elastically provisioned and released, in some
cases automatically, to scale rapidly outward and inward commensurate with
demand. To the consumer, the capabilities available for provisioning often appear
unlimited and can be appropriated in any quantity at any time.
• Measured service. Cloud systems automatically control and optimize resource use
by leveraging a metering capability at some level of abstraction appropriate to the
type of service (e.g., storage, processing, bandwidth, and active user accounts).
Resource usage can be monitored, controlled, and reported, providing transparency
for both the provider and consumer of the utilized service.
National Institute of Standards and Technology: Defining Cloud Computing (2011)

7. Thin client (1990s)

8. Thin client (2014)

9. Cloud services
• Information aggregation
• Supply Chain Services
• Financial, accounting and insurance services
• eRetail
• Document management
• Government services
• Services integration
• CRM and social CRM
• Service management and brokerage
• ID management
• Business intelligence and analytics
• Personalisation
• Social media platforms

10. Examples on cloud services
• Search tools: Google, Yahoo! Technorati (http://technorati.com/)
• Create and Shared documents, collaborate (Google Documents, Microsoft Office
365, Dropbox, Wiki tools, IBM LotusLive)
• Share calendars (major suppliers)
• Email management: today around 4%, but to be 50% by 2020 (Gartner, report
September 2011): Google, Microsoft
• Project management (Microsoft Office 365 Share Point; Manymoon, Basecamp)
(learn: Project in a Box); http://www.attask.com/
• VOIP (Skype) (peer-to-peer architecture)
• CRM Salesforce: http://www.salesforce.com/uk/?ir=1; and Sage
http://www.sage.com/ourbusiness/newsroom/newsfromourregionalbusinesses/view/1667
• Business Process Management (IBM Blueworks Live)
• Cloud service security (major vendors)
• iCloud: storage of documents, photos and songs in the cloud; access to apps in
different devices (other companies are doing this in the cloud, start-ups, but working
with open platforms thus any sort of programme or file could be saved in ‘personal’
clouds; better because it does not lock the user in particular vendors).
• Content management: http://box.net/
• Business intelligence: http://www.cloudera.com/
• Platforms: Data base and business intelligence: Azure
http://www.microsoft.com/windowsazure/; EC2 (Amazon: http://aws.amazon.com/ec2/
) and Force.com (http://www.force.com/).

11. Cloud categories
• Infrastructure as a service (IaaS): Network, computing and
storage resources. The consumer does not control the
infrastructure, but operating systems, storage, applications and
network components (such as firewalls). Example: virtual machines
at Google and Amazon.
• Platform as a service (PaaS): Development environment, offering
programme languages (e.g. Java; Force.com platform which
supports the development of applications related to Sales-force.
com) and tools for the development of applications.
• Software as a Service (SaaS): applications used by individuals and
organizations (social media, ERP, SCM, CRM, Analytics, Business
Intelligence etc.).

12. Cloud categories

13. Making sense of Cloud Computing
Infrastructure as a Service
• http://www.youtube.com/watch?v=MAkrsxpREF8 (it is a
good video, but observe it is produced by a vendor)

14. SalesForce CRM
Software/service as a Service
• http://www.youtube.com/watch?v=r6hxqg3PgRQ
(vendor’s video)

15. Cloud types

16. Cloud types
• Public cloud: Public clouds are intended to be used by multiple parties at
once and are designed to provide maximum value for money through a
standardised and hi-scale approach. Many public clouds operate
internationally for scale or geographic resilience, but this gives rise to some
concerns for some businesses over where their data is being stored at any
given time.
• Private cloud: Private clouds are intended to be restricted to a single
customer or trusted community. These are popular among organisations
looking to access the benefits of cloud computing but retain higher control
and flexibility of configuration compared with a public cloud. Private clouds
can be run inside a company data centre or hosted by a third party. This is
an ideal solution where data sovereignty is a key issue.
• Hybrid cloud: A hybrid cloud, as the name infers, is a cloud capability that
joins either on-premise infrastructure to private or public clouds, or clouds to
each other, to provide a customer with a bespoke environment to meet their
specific operational needs.
http://www.guardian.co.uk/cloud-technology/cloud-computing-terms-jargon-buster

17. Public cloud vs. Conventional
Data Center
Armbrust et al. (2010: 53)

18. Data Centres
• A datacentre is a facility used to store
computer systems and servers which
store data and help in telecommunications
• Type of Data Centres
– Tier 1 –
Non- redundant distribution – Uptime 99.671
– Tier 2
Redundant Site infrastructure – Uptime
99.741%

19. • Tier 3
Multiple independent distribution paths
serving the IT equipment
Dual powered and fully compatible with
topology of site’s architecture
Uptime – 99.982%
• Tier 4
– All the cooling equipment dual powered,
including chillers and heating equipment
– Uptime – 99.995%

20. Fostering competitiveness and
business innovation • Increase operational efficiency, create new business models, and
establish whole new businesses.
• Having a service infrastructure in the cloud means organisations
need less resources to innovate and start up new projects.
• Instead of investing upfront on hardware, and human resources,
companies may build their business platform using mainly cloud
resources, relying on the capacity of the cloud to offer scalability
and flexibility (pay-as-you-use).
• Companies may combine different tools as they need, as far as the
communication between platforms is possible.
• Companies may broaden their portfolio of products and services as
they may answer more quickly to the market reaction (less time in
market research).

21. Support for innovation agenda

22. Key advantages 1
– Costs is main driver
– Capital (fix cost versus variable costs) (pay-as you-go
model, e.g. utility computing): reduce the barrier to
entry in new markets, and reduce the risk of
innovating
– Agility (save time!)
• Ex.: NYT converted 11 million articles to PDF in 24
hours for less than $ 300 using Amazon cloud,
meanwhile it would need 7 weeks using own
resources (Sun Microsystems 2009).
– Access (local, mobile and remote access): network
effects (all benefits of being connected to
standardised networks, communicating and
collaborating with more companies and professionals)

23. Key advantages 2
– Usability
– Scalability (elasticity)
– Flexibility
– Security (state-of-art encryption of file systems;
resources to pay for redundant systems)
– Collaboration and networking
– Training and learning
– Focus on business side not on IT
– Convergence of technologies, platforms and services

24. Key shortcomings 1
• Technical problems
– Bandwidth (latency x real time): service depends on good and
reliable network connection
– Efficiency and reliability of service provider: outage and
discontinuity of services
– Risk management (mitigation) and business continuity
(contingency plans): disaster/recovery of data
– Communication standards, interoperability and integration
– Security: Hacker attacks to cloud providers
– Cloud sprawl (unmanage spread of public cloud services, which
may lead to increasing costs, security issues and loss of control)
– Auditability
– New skills and capabilities

25. Key shortcomings 2
• Contractual problems
– Metering (hidden and unexpected costs) (testbed
providers may help providing platforms for
experimentation of large projects)
– Data ownership, transferability/portability (lock-in
positions)
– Service Level Agreement (SLA): verify level of
security offered by provider; verify where data is
stored and where the backup is stored; verify the level
of liability (competition is improving the quality of the
SLA and the levels of liability but this is still a risky
area)

26. Key shortcomings 3
• Legal problems
– Privacy
– Compliance and liabilities (legal constraints for offshoring of
data): the Data Protection Act in the UK covers data sovereignty;
the European Union’s Data Privacy Directive is valid in Europe,
including UK; in the US, the Patriotic Act is the relevant legal
framework.
• Managerial problems
– Trust and reputation: credibility of suppliers; it is difficult to
evaluate the quality of suppliers, especially when they are new
providers (look for those with ISO 27000 series)
– Company executives may wish keep control of budget (cloud
shift power in organisations)

27. Contract ambiguity is a big concern
• Just over half (52 per cent) of end user organisations currently using the
Cloud claim to have negotiated the legal terms of their contract with their
Cloud Service Provider.
• A third (32 per cent) stated that their CSP can impose changes to their
contract by posting a new version online. This figure rose to 50 per cent
amongst resellers.
• Just under half – 46 per cent – of end user contracts are renewed
automatically. This becomes a greater percentage the smaller the
organisation. The larger the organisation or indeed if it is in the public
sector, the greater the chance these are reviewed.
• End users are looking for far greater assurances in their contracts with
CSPs than traditional service level agreements. This is more often about
data and its location, security and ultimate ownership. When contracting for
a Cloud Service almost eight in ten cloud users are looking beyond an SLA
for comfort in the service to be provided.
(Source: DMH Stallard, 2011)

28. The perception of risks

29. Coping with disaster
• Disaster recovery planning: Devises plans
for restoration of disrupted services
• Business continuity planning: Focuses on
restoring business operations after disaster
– Both types of plans needed to identify firm’s most
critical systems and business processes
• Business impact analysis to determine impact of an
outage
• Management must determine
– Maximum time systems can be down
– Which systems must be restored first

30. Relevant aspects for innovation
• It is a combination of an IT infrastructure, which provides
new forms of operations, with business process
innovation (the way we do things in the organisation) and
with market innovation (the sort of products and services
the company is able to offer to the market).
• In this environment, collaboration becomes much more
important and throughout the value chain, as well the
speed of change.
• Important antecedents: the capacity the sector has of
accepting innovation; adopters attributes and role in the
industry; organisation readiness for innovation; how easy
is the innovation to assimilate; quality of the organisation
implementation process; legacy of previous IT
investments; institutional and cultural aspects.

31. Amazon Webstore
• http://www.youtube.com/watch?v=1Esdw2cQFKI

32. Case: accounting
• http://www.youtube.com/watch?v=G6E1WkMgo50
(observe it is also a vendor video)

33. Video on cloud computing
• Nicholas Carr Big Switch
– http://www.youtube.com/watch?v=Tt91barP0GE&feature=results_main
• Nicholas Carr: Building a bridge to the cloud - Uptime Institute
Symposium Speaker Series (2012)
– http://www.youtube.com/watch?v=uoEP4qT4wDM
Full video:
– http://www.youtube.com/watch?v=lZf39fMl8OY

34. Vendors videos on cloud computing
– Microsoft: http://www.youtube.com/watch?v=I-jmkkYiQac
– Intel: http://www.youtube.com/watch?v=c7pVTNqtdqg&feature=related
– IBM: http://www.youtube.com/watch?v=2Bbr4LBv1QI

35. References
• http://www.cloudtweaks.com/2011/07/top-110-cloud-computing-enablers-gaining-mind-share-in-
2q-2011/
• Armbrust, M. et. al (2010). A view of cloud computing. Communications of ACM, 53(4): pp.50-58.
• Campbell-Kelly, M. (2009). Historical Reflections: The rise, fall and resurrection of Software as a
Service. Communications of ACM, 52(5): 28-30.
• Laudon, K.C. and Laudon, J.P. (2010, 2012). Management Information Systems, New Jersey,
Prentice-Hall.
• LSE Report (2011). Cloud and the Future of Business: From Costs to Innovation. Document
elaborated by the London School of Economics and Accenture.
http://www2.lse.ac.uk/management/news-and-events/news/outsourcingunit-cloud.aspx
• Mulholland, A., Pyke, J., Fingar, P. (2010). Enterprise Cloud Computing: A Strategy Guide for
Business and Technology Leaders. Tampa, Florida: Meghan-Kiffer Press.
• Fingar, P. (2009). Dot.Cloud. The 21st Century Business Platform. Meghan-Kiffer Press.
• Cloud Circle (2011). 1st Industry Trends Report. http://www.thecloudcircle.com/video/1st-cloud-circle-
industry-trends-report
• Carr, N. (2009). The Big Switch. London, New York: W.W. Norton & Company.
• Guardian, 17th October 2011. Special report on Cloud Computing. First link:
http://www.guardian.co.uk/cloud-technology/clud-computing-business-facebook-uk-economy
• DMH Stallard (2011). Contracting Cloud Services: A Guide to Best Practice. Cloud UK Paper 3.
Whitepaper Cloud Industry Forum.
http://www.dmhstallard.com/cms/document/CIF_Paper_Three.pdf
• Source: Gawer, A., 2009. Platform dynamics and strategies: from products to services. In A.
Gawer, ed. Platform, Markets and Innovation. Cheltenham: Edward Elgar, pp. 45-76.

36. Next seminar

37. Next seminar
• Please refer to last week’s “Lecture and
Seminar 6: E-Commerce and Mobile
Platforms” Presentation Slides
• You should by now have formed groups
and working on the paper and the
Business Models Canvas for your
presentation of the analysis of
eCommerce Business Models as
instructed