Benefits and values of cloud computing for business enterprises

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The benefits and values of cloud computing to business enterprises

Introduction to the literature review section

The scope of the current chapter is that of assessing the values and benefits of cloud computing to enterprises. The literature review section is constructed through the gradual and sustained consultation of various specialized sources in the available literature. The sources to be used at this stage are all reputable, coming from all articles, journals and books, each of these sources revealing their own advantages and disadvantages.

The books and textbooks for instance possess the advantage of discussing a topic in increased detail, but the shortage of possibly being outdated. This limitation is relative and this relativity is due to the nature of the topic studied. For instance, in a historical study, the books used would have an increased relevance, regardless of the time in which they were written. Nevertheless, in the context of research in the field of technology, this limitation is severe due to the rapid pace of technologic development and the need to consult relevant and new data.

Then, the journals to be used have the advantage of discussing specific issues as these relate to the topic of cloud computing, but their disadvantage is that they might address niche subjects, of a relative relevance to the current topic. Additionally, they could be written in a highly technical manner, which reduces the access to information of the novice technology specialist.

Finally, the literature review section would also integrate data from articles, with a primary advantage that they discuss the most recent aspects of cloud computing in the enterprise context, in a quick and efficient manner. However, since they are seldom peer reviewed, they might be influenced by the bias and subjectivity of the writer. In order to address this limitation, emphasis would be placed on the selection of reputable, reliable and objective sources of information.

Aside from the nature of the sources to be integrated throughout the chapter, emphasis at this stage is also placed on the organization of the literature review section. In this order of ideas, the current chapter would be structured based on the nature of the information presented. In this specific order of ideas, the integrant parties of the current chapter include:

Definitions of cloud computing

Characteristics of cloud computing

Benefits of cloud computing to business enterprises.

2. Definitions of cloud computing

Cloud computing is a relatively novel concept, recurrent in the technological realm, but with applications in various aspects. The notion generically refers to usage of technology more as a service, rather than an actual product. The users would consume technology in an efficient manner, similar to the usage of a commodity, and would gain access to various resources, through a network system. Still, while this understanding of cloud computing is rather rudimentary, a universally accepted definition of the term has yet to be developed. In such a setting, as Dough Terry at ACM Communications Journal notes, cloud computing "means different things to different people."

In order to support a superior understanding of the concept, the current section focuses on the provision of several definitions, as they appear in the specialized literature. In this order of ideas, Ryan Ko approaches the definition of cloud computing from the standpoint of the consumers, who become able to simply utilize the required technologies, without other technological considerations. In this line of thoughts, a first definition of cloud computing is represented by the following:

(1) "Fundamentally, cloud computing is a concept that aims to enable end-users to easily create and use software without a need to worry about the technical implementations and nitty-gritties such as the software's physical hosting location, hardware specifications, efficiency of data processing, and so forth" (Ko, 2010).

Hui Du and Yu Cong however approach the definition of cloud computing through the lenses of the services provided with the aid of the cloud. In this order of ideas, they state that cloud computing is comprised on the provision of either one, two or all three of these types of services: storage of data, infrastructure / platform services and software applications.

(2) "The computing resources provided in cloud computing fall into three broad categories of service: data storage, infrastructure/platform, and application software. Data storage is about storing and managing the volume of business data and valuable personal data for companies. In the infrastructure/platform category, cloud computing providers offer the use of computer hardware with system software, which involves operating systems, security, and network systems. […] For application software, cloud computing allows companies to run a variety of software applications using cloud services without managing their own applications" (Du and Cong, 2010).

As Du and Cong point out, the usage of cloud computing is highly relevant in the organizational context, where it can store data, use it and manipulate it. In the infrastructure and platform phase, it is often possible for the cloud computing providers to also offer hardware support to their customers; they can install the hardware, configure the system, and maintain the IT infrastructure. Last, in the application phase of the cloud computing services, economic agents become able to use a variety of services which they do not possess nor maintain. Some of these services could include software for business operations, sales applications, human resource applications and so on.

Other definitions of the concept are presented below:

(3) "Cloud computing is maintaining data, applications and programs on a remote server that can be accessed through many devices, such as desktop computers, netbooks or smartphones. Proponents often describe it as the ultimate on-demand or as-needed computing service" (Salow, Meier and Goodwin, 2011).

(4) "Cloud computing is a model for enabling ubiquitous, 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. This cloud model is composed of five essential characteristics, three service models, and four deployment models" (Mell and Grance).

(5) "A model for delivering information technology services in which resources are retrieved from the internet through web-based tools and applications, rather than a direct connection to a server. Data and software packages are stored in servers. However, cloud computing structure allows access to information as long as an electronic device has access to the web. This type of system allows employees to work remotely" (Investopedia, 2012).

3. Characteristics of cloud computing

Cloud computing is already present in the life of technology users, even when these are not entirely aware of this. Specifically, the cloud computing platform is being currently used and implemented in electronic mail or social websites, where the users can create accounts, store and transmit information without having to learn the code and program the application. Then, aside from the individual users, small size companies can also access the features of cloud computing to avoid personal servers and simply use the services of specialized tertiary parties.

"For example, end-users no longer need to learn a new language or worry about the program's memory requirements to create a Facebook or MySpace application. A small- to medium-sized enterprise no longer needs to own and maintain actual physical servers to host Web applications but are instead able to lease virtual private servers (VPS) for a monthly subscription fee. With cloud computing, end-users and businesses can simply store and work on data in a "cloud," which is a virtual environment that embodies data centers, services, applications, and the hardworking folks at the IT companies" (Ko, 2010).

In other words, the first two characteristics of cloud computing is that it is widely spread and that it can also be used in both individual as well as professional contexts. Another important feature of cloud computing is represented by the fact that it abstracts the service from the product. This very feature of cloud computing creates points of difference and distinguishes it from other approaches to computing, such as grid computing or utility computing.

"This is done by virtualizing the products (for example, the complex network of computers, servers, and applications that are used in the back end) so that computing is now accessible to anyone with a computing need of any size. By accessible, we mean that it is easy for a non-technical person to use this software and even create his or her own" (Ko, 2010).

The abstractization of the service from the product revolves around the ability of cloud computing to serve the need for a computing product through the delivery of a computing service. In other words, it virtualizes the product to ensure the satisfaction of a wide palette of customer needs, be these needs small individual ones, or large organizational ones. Additionally, it does this through a user friendly mechanism, meaning as such that computing becomes available to people without a technological background. In other words then, another feature of cloud computing is that of increasing the access to computing for a wider category of consumers.

Another aspect of cloud computing is represented by the nature of the relationship between the provider of computing services and the user of computing services. In this order of ideas, the relationship is one of company -- customer, and it materializes in the usage of computing services, the provision of the computing services -- as well as the adjacent support services --, and culminates with the user paying for the services they have utilized.

"The contracts and payment models of cloud services are the major differences of cloud computing to the classic rented servers. The use of cloud services usually pays depending on used resources, i.e. CPU-hours, data volume or storage" (Fouquet, Niedermayer and Carle, 2009).

The definition provided by Hui Du and Yu Cong has revealed that cloud computing can offer three specific types of services -- data storage, infrastructure / platform and software applications. And many cloud computing system provide all three categories of services, as these are co-dependent and the purveyor would be unable to provide software services without a pre-existent platform (Du and Cong, 2010). In such a setting then, the next feature of cloud computing is that it is complex and reliant on internal relationships between its components.

Last, the final characteristic to be addressed at this stage is represented by the risks posed by cloud computing, assessed through the lenses of the economic agent choosing to utilize cloud computing. In this line of thought, some aspects that need to be taken into consideration by the business enterprise include the following:

The costs involved with the cloud computing mechanisms, including the hardware and software costs, licenses and maintenance costs

The bandwidth available at the provider of cloud computing services

The resources required by the business enterprise in the operation of cloud computing; its availability and access to these resources

The integration and monitoring of the applications

The provision of training and the means in which the training programs would be provided

The timeline for the migration and the implementation of cloud computing (Olsaker, 2011).

Aside from these risks, Michael Miller (2009) at Inform IT points out that there also exist some specific disadvantages of cloud computing. One of these shortages is represented by the constant dependency on a powerful internet connection, followed by the possibility of slow operational speed, the limitation of the features or the possibility of the data stored to be either compromised or lost. The Cloud Computer Techie also reveals that while in the long-term, cloud computing would be cost effective, its initiation is costly for the company. Additionally, the flexibility of operating on cloud computer is decreased.

4. Benefits of cloud computing to business enterprises

As it has been deduced from the previous sections, the concept of cloud computing is rather wide and complex, with applications in numerous fields. The popularity of cloud computing is pegged to the numerous advantages it generates, but also due to intense marketing promotion and a technological involvement. Nevertheless, aside from the "marketing hype and technological redefinition, the potential benefits are clear" (Terry).

Dough Terry at the ACM Communications Journal takes a generic stand in revealing the benefits of cloud computing to enterprises. In this order of ideas, he argues that economic agents are able to centralize and store all important data in a cloud, which then allows easy access to all parties requiring the respective information. In such a setting, the enterprise becomes able to create efficiencies in terms of its usage of software applications and hardware devices. Also, efficiencies can be created at the level of resource utilization and cost reduction. These efficiencies in turn create a context in which the economic agents can better focus on the needs and wants of the customer base.

"Large datacenters permit resource sharing across hosted applications and lead to economies of scale at both the hardware and software level. Software services can obtain seemingly infinite scalability and incremental growth to meet customers' elastic demands. The pay-as-you-go model and rapid provisioning can result in more efficient resource utilization and reduced costs" (Terry)

Kim-Kwang Raymond Choo (2010) also believes that cloud computing generates a series of advantages for the economic agents, especially the small size enterprises, which have restricted resources to invest in the IT departments. In such a setting, the business enterprises become better able to concentrate on their core operations and can also create economies of scale.

"Cloud computing provides a scalable online environment which facilitates the ability to handle an increased volume of work without impacting on the performance of the system. Cloud computing also offers significant computing capability and economy of scale that might not otherwise be affordable to businesses, especially small and medium enterprises (SMEs) that may not have the financial and human resources to invest in IT infrastructure" (Choo, 2010)

At a more specific level, Choo points out that there are some particular means in which the usage of cloud computing generates positive impacts upon the economic agent. These include:

The business enterprises can use technology and pay for what they use, in a highly efficient economic model that allows them to better control their costs. Due to this applicability, the economic agents are better able to focus on their core operations and generate additional gains by being able to focus on their own customers, and consume fewer resources with the management of Information Technology.

Another advantage is represented by the fact that cloud computing providers the business enterprises with the ability to store data on the servers of the computing provider. This means that the company will no longer have to spend its resources and efforts on creating its own servers. Operational complexity is as such decreased, and also decreases are registered with operational expenditures.

Then, the usage of cloud computing by economic agents also allows them to become customers in a highly competitive market. In other words, the business enterprises are themselves customers to the computing companies and they can choose from these service providers those that best serve their specific needs; this often means that companies can change service providers and move to the one that offers the most cost effective alternative.

Aside from the cost related aspects of using cloud computing, Choo also points out that the business enterprises can also enjoy the benefit of decreased time and effort consumed to install and maintain the hardware infrastructure, as well as the software applications.

Last, Choo believes that cloud computing improves the satisfaction of the customers by increasing the response time of the company. In other words, cloud computing allows "for the rapid provisioning and use of services to clients by optimizing their IT infrastructure" (Choo, 2010).

Gregory Wishusen takes a different approach to the usage of cloud computing by business enterprises in the meaning that he addresses the technological advantages pegged to this utilization. Wishusen also recognizes the economic benefits, presenting in particular the possibility of creating economies of scale but his immediate focus falls on the technological advantages of using cloud computing.

From his standpoint then, cloud computing is believed to be able to generate information security benefits. This statement is generally conflicting with that in other sources, where it is indicated that data security could be decreased as a result of cloud computing usage (Miller, 2009).

Nevertheless, Gregory Wishusen firmly believes that cloud computing can generate information security advantages, through the four distinctive attributes of cloud computing: virtualization and automation, broad network access, potential for scale economies and the use of self-service technologies. The generation of advantages through these dimensions is described below:

a) Virtualization and automation

The utilization of virtualization and automation has the potential to generate the implementation of secure configurations at the level of the virtual machine images. In other words, more than the traditional computing systems, cloud computing allows users to quickly replicate secure data and as such ensure confidentiality and quick operations with data and processes. This finding has been supported by players in both public and well as private fields.

"Department of Defense (DoD) officials responsible for one cloud computing program states that virtualization allows a cloud computing provider to rapidly replicate secure configurations for cloud-based virtual servers, rather than manually applying secure configurations to physical servers, which could be required in a traditional environment that has not employed virtualization techniques. Private sector representatives also stated that virtualization can allow faster deployment of secure server configurations, security upgrades, and patches for security vulnerabilities than a traditional computing infrastructure can" (Wilshusen, 2010).

b) Broad network access

At the level of the security advantages created by the broad network access, these are mainly revealed through the ability of the cloud to store high data volumes, which are easily accessible via an internet connection. This feature makes it possible for the economic agents to not store their data on internal, removable media, which could expose it to higher risks. Additionally, at an internal level, the company might use the intranet, whereas in the cloud system, it would use the internet. This separation of the technologic media would "reduce exposure of sensitive data on the agency's internal network" (Wilshusen, 2010).

c) Economies of scale and distributed infrastructure

Then, at the level of the scale economies and the distributed infrastructure, these refer to the fact that the cloud provider has scale advantages and can as such provide technology services superior in quality to those that would be created in-house by the bushiness enterprise. For instance, the cloud computing system would have an increased ability to store back-up data, at a decreased cost. Then, the cloud provider would have superior mechanisms of ensuring data protection and security than the business enterprise itself. Also, "the large scale and mitigation techniques that cloud providers offer may also reduce vulnerability to denial of service attacks" (Wilshusen, 2010).

5. Chapter summary

The current literature review has focused on the assessment of the available literature in order to address three specific issues -- the definition of the concept of cloud computing, the characteristics of cloud computing and the benefits of cloud computing for business enterprises.

In terms of defining cloud computing, such an endeavor is highly intricate and the approaches of various literary sources differ. Nevertheless, at a generic level, it is remembered that cloud computing is a mechanism by which individuals and companies come to utilize technology in a decentralized manner, more so as a utility and pay for the technology in a directly proportionate manner with their consumption of technology.

At the level of the characteristics of cloud computing, these are also numerous and equally important. On a first note, it is accepted that cloud computing is already being used by the community, in some instances without even being recognized. Then, cloud computing can also be utilized by organized groups, such as small size companies to generate a wide array of organizational benefits.

A third characteristic of cloud computing is that it relies on the abstractization of the services from products, meaning that it serves the need for a computing product through the delivery of a computing service. This computing service is highly accessible to the entire community, meaning as such that another trait of cloud computing is that of making computing more available to the population.

Aside from these traits, cloud computing is also characterized by increased internal complexities, the remuneration for the services utilized or the risks it raises and the disadvantages it creates for the economic agents.

Finally, at the level of the benefits cloud computing can generate for business enterprises, these are also numerous and complex. This section was the largest in volume in the overall chapter and it is also the most important one. Several sources were consulted and the information was structured based on the source of provenience. The stands of the researchers varied in the meaning that some pointed out to specific benefits, others to more generic benefits; the approaches were different at times and the angle of analysis would also vary. Nevertheless, at its core, the information retrieved was convergent in the meaning that all sources indicated similar benefits of using cloud computing.

Specifically, the most popular and recurrent benefits included the ability of the business enterprises to reduce operational costs as a result of no longer requiring to invest in the development and maintenance of their IT departments. As a result of this, they would become better able to benefit from the advantages of the scale economies, to focus on their core operations and to better generate the satisfaction of their own customers. Other advantages include the ability to operate in a more financially and environmentally responsible manner, to increase data protection or to use the computing services in a flexible manner, due to the advantage of scalability. For business enterprises, major benefits are derived from the fact that cloud computing increases the efficiency of resource utilization, improves the relationship with the various categories of stakeholders -- employees, business partners, customers and so on -- and it supports the generation of additional competitive advantages.

Overall then, cloud computing emerges as a suitable business opportunity for small size enterprises, which can enjoy major benefits from the reduction of their efforts and costs with IT operations. Nevertheless, in order to maximize these benefits, it is necessary for them to accept the limitations generated by cloud computing (Ward). Additionally, it is necessary for the cloud computing model to be adapted to the particular needs of each economic agent, in order to maximize the gains and minimize the shortages.

"To summarize, there are many benefits to embracing cloud computing and the managed shared service model. For every benefit, there are also likely to be caveats. No on-size-fits all solution exists today (vendor hype excluded), just as no two organizations are alike" (McDonald, 2010).

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