Cloud Computing

Introduction

• an organization’s IT infrastructure consists of IT components—hardware, software, networks, and databases—and IT services—developing information systems, managing security and risk, and managing data.
• The organization’s IT infrastructure is the foundation for all of the information systems that the organization uses.

Evolution of infrastructure

• These stages are as follows:
• • Stand-alone mainframes. Organizations initially used mainframe computers in their engineering
• and accounting departments. The mainframe was typically housed in a secure area and only MIS personnel had access to it.

Mainframe and dumb terminals.

• Forcing users to go to wherever the mainframe was located was time-consuming and inefficient.
• As a result, firms began placing so-called dumb terminals—essentially electronic typewriters with little processing power—in user departments.
• This arrangement enabled users to input computer programs into the mainframe from their departments, a process called remote job entry.

Stand-alone personal computers.

• In the late 1970s, the fi rst personal computers appeared.
• The IBM PC’s debut in 1981 legitimized the entire personal computer market.
• Users began bringing personal computers to the workplace to improve their productivity—for example, by using spreadsheet and word processing applications.
• These computers were not initially supported by the firm’s MIS department.

• However, as the number of personal computers increased dramatically, organizations decided to support personal computers, and they established policies as to which personal computers and software they would support.

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Local area networks (client/server computing).

• When personal computers are networked, individual productivity is substantially increased.
• For this reason, organizations began to connect personal computers into local area networks (LANs) and then connect these LANs to the mainframe, a type of processing known as client/server computing.

Enterprise computing.

• In the early 1990s, organizations began to use networking standards to integrate different kinds of networks throughout the firm, thereby creating enterprise computing.
• As the Internet became widespread after 1995, organizations began using the TCP/IP networking protocol to integrate different types of networks.

• All types of hardware were networked, from mainframes to personal computers to smartphones.
• Software applications and data could now flow seamlessly throughout the enterprise and between and among organizations.

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Cloud computing and mobile computing.

• Today, organizations and individuals can use the power of cloud computing.
• As you will see in this Technology Guide, cloud computing provides access to a shared pool of computing resources, including computers, storage, applications, and services, over a network, typically the Internet.

• Keep in mind that the computing resources in each stage can be cumulative.
• For instance, most large firms still use mainframe computers (in addition to all the other types of computing resources) as large servers to manage operations that involve millions of transactions per day.

• the evolution of IT infrastructures, the world is experiencing a digital and mobile transformation, with more information becoming available more quickly from more sources than ever before.
• As a result, businesspeople need IT-enabled services to help them handle this transformation and envision new opportunities.

• To appreciate the transformation effects of cloud computing, you first need to understand traditional IT departments in organizations and the problems they face.
• Today, most companies own IT infrastructure (their software, hardware, networks, and data management) and maintain them “on premise” in their data centers.
• On-premise software, then, is the traditional model of the IT function in organizations.

• Traditional IT departments spend huge amounts on both IT infrastructure and the expert staffs they need to build and maintain complex IT systems.
• These expenses include software licenses, hardware, and staff training and salaries.

• Despite all of this spending, however, organizations typically do not use their infrastructure to its full capacity.
• The majority of these expenses are typically applied to maintaining the existing IT infrastructure, with the remainder being allocated to developing new systems.
• In addition, companies are being buried under vast amounts of data

• Traditional IT departments are struggling to capture, store, manage, and analyze all of these data.
• As a result of these problems, traditional IT infrastructures can actually inhibit an organization’s ability to respond quickly and appropriately to today’s rapidly changing business environments.

• Large organizations can afford comprehensive enterprise software and top IT talent. These companies
• can buy or build software and install these systems in their data centers. They can enable
• their applications to be used on different devices—desktops, laptops, tablets, and smartphones—and
• make them accessible to employees regardless of their location. These companies can also make
• their applications available to people outside the organization, such as consultants, contractors,

• suppliers, customers, and other business partners. These capabilities, however, come with huge
• costs. In addition, the companies’ IT departments are often overtaxed and unable to execute all of
• these functions effectively. This problem is even more acute for smaller organizations, which typically
• do not have the resources required to execute these functions.
• cloud computing can help organizations manage the
• problems that traditional IT departments face.

What Is Cloud Computing?

Cloud Computing Characteristics

• Cloud Computing Provides On-Demand Self-Service.
• A customer can access needed computing resources automatically.
• Cloud Computing Encompasses the Characteristics of Grid Computing.
• Grid computing pools various hardware and software components to create a single IT environment with shared resources.
• Grid computing shares the processing resources of many geographically dispersed computers across a network.

• Cloud Computing Encompasses the Characteristics of Utility Computing.
• In utility computing, a service provider makes computing resources and infrastructure management available to a customer as needed.
• The provider then charges the customer for its specific usage rather than a fl at rate. Utility computing enables companies to efficiently meet fluctuating demands for computing power by lowering the costs of owning the hardware infrastructure.

• Cloud Computing Utilizes Broad Network Access.
• The cloud provider’s computing resources are available over a network, accessed with a Web browser, and they are configured so they can be used with any computing device.
• Cloud Computing Pools Computing Resources. The provider’s computing resources are available to serve multiple customers.
• These resources are dynamically assigned and reassigned according to customer demand.

• Cloud Computing Often Occurs on Virtualized Servers.
• Cloud computing providers have placed hundreds or thousands of networked servers inside massive data centers called server farms (see Figure TG 3.1).
• Recall that a server is a computer that supports networks, thus enabling users to share files, software, and other network devices.
• Server farms require massive amounts of electrical power, air-conditioning, backup generators, and security.

• They also need to be located fairly closely to fiber-optic communications links (seeFigure TG 3.2).
• Going further, Gartner estimates that typical utilization rates on servers are very low, generally from 5 to 10 percent.
• That is, most of the time, organizations are using only a small percentage of their total computing capacity.

• Server virtualization uses software-based partitions to create multiple virtual servers— called virtual machines—on a single physical server.
• The major benefit of this system is that each server no longer has to be dedicated to a particular task.
• Instead, multiple applications can run on a single physical server, with each application running within its own software environment.

• As a result, virtualization enables companies to increase server utilization.
• In addition, companies realize cost savings in two areas.
• First, they do not have to buy additional servers to meet peak demand. Second, they reduce their utility costs because they are using less energy.

• The following example illustrates the benefi ts of virtualization for MaximumASP.
• FIGURE TG 3.1 A server farm. Notice the ventilation in the racks and ceiling.

• MaximumASP is a Web-hosting company based in Louisville, Kentucky. Its 35 employees host more than 48,000 domains for customers located in more than 60 countries.
• MaximumASP prides itself on its innovative offerings and its outstanding customer service. Unfortunately, the company’s rapid expansion resulted in a proliferation of servers that required increasing amounts of resources to manage.

• This situation adversely affected the company’s bottom line.
• Furthermore, servers, the company pulled staff away from researching new services, which diminished the company’s agility and innovation.
• MaximumASP added hundreds of new servers every year, each of which took roughly 4 hours to deploy.
• The company spent so much time deploying new servers that it could not respond as quickly to its customers’ needs or its competitors’ moves as it had in the past.

• MaximumASP also wanted to reduce the rising costs of physical servers as well as the related real estate and power costs.
• The company was spending thousands of dollars every year on new hardware, software licenses, and electrical power.
• Finally, the firm was concerned that if it continued to deploy more servers, it would outgrow its Louisville data center and have to build another one.

• To resolve these problems, MaximumASP decided to implement Microsoft’s server virtualization
• technology. Thus far, the results have been outstanding. The company was able to
• operate between fi ve and ten virtual machines on each physical server, which generated a savings
• of $350,000 in hardware costs alone.

• In addition, the technology enabled MaximumASP to utilize its data center fl oor space much more efficiently, thereby sparing the firm the cost of building a new data center. Furthermore, average server utilization increased dramatically from 5 percent to 65 percent

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• With cloud computing, setting up and maintaining an IT infrastructure need no longer be a challenge for an organization.
• Businesses do not have to scramble to meet the evolving needs of developing applications. In addition, cloud computing reduces up-front capital expenses and operational costs, and it enables businesses to better utilize their infrastructure and to share it from one project to the next.

• In general, then, cloud computing eases the difficult tasks of procuring, configuring, and maintaining hardware and software environments.
• In addition, it allows enterprises to get their applications up and running faster, with easier manageability and less maintenance.
• It also enables IT to adjust IT resources (such as servers, storage, and networking) more rapidly to meet fluctuating and unpredictable business demand.

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• Businesses are increasingly employing cloud computing for important and innovative work.
• The next example illustrates how Amazon has successfully “moved music into the cloud.”
• Eg.
• Amazon, whose online music store competes with Apple’s (www.apple.com/icloud), has “moved music into its cloud” to solve two problems.

• The first problem is that music libraries have typically been scattered.
• In March 2011, Amazon released a package of software and services that solved both of these problems. The fundamental idea behind the new package is that your music collection will reside in the cloud.

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Different Types of Clouds

• Public Cloud
• Public clouds are shared, easily accessible, multicustomer IT infrastructures that are available nonexclusively to any entity in the general public (individuals, groups, and/or organizations).
• Public cloud vendors provide applications, storage, and other computing resources as services over the Internet.
• These services may be free or offered on a pay-per-usage model.

Private Cloud

• Private clouds (also known as internal clouds or corporate clouds) are IT infrastructures that can be accessed only by a single entity or by an exclusive group of related entities that share the same purpose and requirements, such as all of the business units within a single organization.

• Private clouds provide IT activities and applications as a service over an intranet within an enterprise. Enterprises adopt private clouds to ensure system and data security.
• For this reason these systems are implemented behind the corporate fi rewall.

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Hybrid Cloud

• Hybrid clouds are composed of public and private clouds that remain unique entities but are nevertheless bound together, thereby offering users the benefits of multiple deployment models.
• Hybrid clouds deliver services based on security requirements, the mission-critical nature of applications, and other company-established policies.

• For example, customers may need to keep some of their data in a private cloud for security and privacy reasons while storing other, less-sensitive data in a public cloud because it is less expensive.

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Cloud Computing Services

• Cloud computing services are based on three models: infrastructure-as-a-service (IaaS), platform- as-a-service (PaaS), and software-as-a-service (SaaS).
• These models represent the three types of computing generally required by consumers: infrastructure to run software and store data (IaaS), platforms to develop applications (PaaS), and software applications to process their data (SaaS). Figure TG 3.4 illustrates the differences between the three models.

Infrastructure as a Service (IaaS)

• With the infrastructure-as-a-service (IaaS) model, cloud computing providers offer remotely accessible servers, networks, and storage capacity.
• They supply these resources on demand from their large pools of such resources, which are located in their data centers.

• IaaS customers are often technology companies with IT expertise.
• They want access to computing power, but they do not want to be responsible for installing or maintaining it.
• Companies use the infrastructure to run software or simply to store data.

• To deploy their applications, IaaS users install their operating system and their application
• software on the cloud computing provider’s computers. They can deploy any software
• on this infrastructure, including different operating systems, applications, and development
• platforms.

• Each user is responsible for maintaining their operating system and application software.
• Cloud providers typically bill IaaS services on a utility computing basis—that is, the cost reflects the amount of resources the user consumes.

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• Amazon is a well-known IaaS provider. The company sells the spare capacity of its vast IT infrastructure to its customers in a cloud environment.
• These services include its Simple Storage Service (S3) for storing customers’ data and its Elastic Compute Cloud (EC2) service for operating their customers’ applications.
• Customers pay only for the amount of storage and computing they use.

Platform as a Service (PaaS)

• In the platform-as-a-service (PaaS) model, customers rent servers, operating systems, storage, a database, software development technologies such as Java and .NET, and network capacity over the Internet.
• The PaaS model allows the customer both to run existing applications and to develop and test new applications.

• PaaS offers customers several advantages, which include the following:
• • Application developers can develop and run their software solutions on a cloud platform
• without the cost and complexity of buying and managing the underlying hardware and
• software layers.
• • Underlying computing and storage resources automatically scale to match application
• demand.
• • Operating system features can be upgraded frequently.

• • Geographically distributed development teams can work together on software development
• projects.
• • PaaS services can be provided by diverse sources located throughout the world.
• • Initial and ongoing costs can be reduced by the use of infrastructure services from a single vendor rather than maintaining multiple hardware facilities that often perform duplicate functions or suffer from incompatibility problems.

• As an example of an entity that employed PaaS to improve its performance, consider the city
• of Miami (www.miamigov.com). Miami has created a service that monitors nonemergency 311
• requests. City offi cials and local residents can access a Web site that pulls up a map of the city
• with pins in every spot that is tied to a 311 complaint.

• Before cloud computing became available, the city would have needed three months to develop the concept, buy new hardwar(including backups in case of a hurricane), hire a team to install the necessary software, and then build the application.
• In contrast, by utilizing cloud computing, Miami created a working prototype within 8 days, and it deployed the application shortly thereafter.

Software as a Service (SaaS)

• With the software-as-a-service (SaaS) delivery model, cloud computing vendors provide software that is specific to their customers’ requirements.
• SaaS is the most widely utilized service model, and it provides a broad range of software applications.
• SaaS providers typically charge their customers a monthly or yearly subscription fee.

• This process eliminates the need to install and run the application on the user’s computers, thereby simplifying maintenance and support.
• What differentiates SaaS applications from other applications is its ability to scale.
• As a result, applications can run on as many servers as is necessary to meet changing demands.
• This process is transparent to the user.

• To understand how SaaS operates, consider the case of Flextronics (www.fl extronics.com),
• the Singapore-based manufacturer of such devices as Research in Motion’s BlackBerry handsets
• and Microsoft’s motion-sensing Kinect add-on for the Xbox 360 gaming console. Flextronics
• utilizes SaaS from Workday (www.workday.com), an outside provider, for some of its human
• resources management function.

• Workday handles Flextronics’s human resources processes from tracking employee compensation and benefits to hiring for open positions.
• By outsourcing to Workday rather than handling HR computing in-house with on-premise IT infrastructure, Flextronics was able to save $100 million in 3 years.

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The Benefi ts of Cloud Computing

• Benefi t 1: Making Individuals More Productive
• Benefi t 2: Facilitating Collaboration
• Benefi t 3: Mining Insights from Data
• Benefi t 4: Reduce Costs
• Benefi t 5: Expand the Scope of Business Operations
• Benefi t 6: Respond Quickly to Market Changes
• Benefi t 7: Customize Products and Services

Concerns and Risks with Cloud Computing

• Concern 1: Legacy IT Systems
• These systems cannot easily be transferred to the cloud because they must fi rst be untangled
• and simplifi ed.
• Concern 2: Reliability
• Many skeptics contend that cloud computing is not as reliable as a well-managed, on-premise
• IT infrastructure. The cloud’s reliability was called into question in April 2011 when large parts
• of Amazon’s Web Services infrastructure went down for as long as three days

• Concern 3: Privacy
• Privacy advocates have criticized cloud computing for posing a major threat to privacy because the
• providers control, and thus lawfully or unlawfully monitor, the data and communication stored
• between the user and the host company
• Concern 4: Security

• Concern 5: The Regulatory and Legal Environment
• There are numerous legal and regulatory barriers to cloud computing, many of which involve
• data access and transport. For example, the European Union prohibits consumers’ data from
• being transferred to nonmember countries without the consumers’ prior consent and approval.