Cloud Computing for Business

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1 Cloud Computing for Business Omoniyi Temitope. O. MSc Computing & Management Session 2009/2010 MSc Project COMP5200M Student Number: The candidate confirms that the work submitted is their own and the appropriate credit has been given where reference has been made to the work of others. I understand that failure to attribute material which is obtained from another source may be considered as plagiarism. (Signature of student) Page I

2 Abstract This project documents the current cloud computing market and its relationship to the business world. In the literature the basics of cloud computing were collated such as the definition, its architecture and models. The business enterprise requirements as well as the available cloud solutions were studied, described and classified. A case study on cloud computing in a developing country was detailed as well using the qualitative research methodology. The project revealed that cloud computing is still evolving however there are lots of advantages as against the shortcomings and also there is a big room for improvement. The project serves as a good start to getting a general view of cloud computing as it relates to business Page II

3 Acknowledgments I acknowledge all the earthen vessels which God has brought my way in my academic pursuit. First and foremost, I appreciate the unending trust from my amiable parents Mr and Mrs Omoniyi; for letting me purse a degree in computing as against my business background. My ever supporting siblings Gboyega, Bunmi and Akin you guys are great. I appreciate the care taken by my learned supervisor, Dr Karim Djemame in reviewing my write-ups and giving me suggestions accordingly thus bringing the best out of me. To my assessors Dr HHJ Muller for his views during the progress meeting I say thank you. My gratitude also goes to Mrs Toyin Agoro for her suggestion of case study on a developing country and other scholars whose works were consulted and referenced in this project. Lastly, to my friends, Yusuff Dupe, Opata Fred, Okafor Nonso, Nwude Ugo, Oludipe Oladipo, Okunrinboye Wale, Moore Ayo, Adenuga Ayo, Agunsoye Tope, Osobu Funto and Umeh Ify, you all kept me sane during the course of this project. Page III

4 Table of Content Abstract.II Acknowledgement..III Table of content IV List of Figures VII List of Tables.VIII 1. Introduction Research Objectives Research Methodology Scope of the Study Justification of the Study Sources of Literature Materials and Data Outline of Chapters 2 2. Literature Review What is cloud computing Evolution of cloud computing Why cloud Cloud architecture Applications on cloud architecture Common characteristics of a cloud application Middleware Cloud Service Models Deployment models Business perspective of cloud computing Standard IT Solutions Traditional Enterprise computing Grid Computing Utility computing.15 Page IV

5 3.2. Business Enterprise Requirements Advantages and disadvantages of migrating to cloud Advantages of cloud computing Disadvantages of cloud computing Use cases End User to Cloud Enterprise to Cloud to End User Enterprise to Cloud Enterprise to Cloud to Enterprise Cloud Solutions Difference between cloud service provider and cloud vendor Cloud Solutions and their proprietors IBM HP Amazon Web Service Oracle Microsoft Flexiant Sales Force Service level agreements Success Stories Business Model Value chain from service provider to end user Players in the Value Chain Pricing Models Subscription model Usage-based pricing model Free or Ad-supported model Dynamic pricing Implication for a developing country: Case of Nigeria Factors that drive cloud service adoption Challenges to cloud adoption.38 Page V

6 6.3. Conclusion Evaluation 7.1. Summary of work Justification of methodology Findings and Recommendation Limitation of the project Suggestion for further study 42 Bibliography..44 Appendix A: Project Experience 47 Appendix B: Project Management..48 Page VI

7 List of Figures Figure 1 Evolution of Cloud Computing.6 Figure 2 Result showing trend in the last 12 months for cloud, grid and distributed computing.7 Figure 3 Result showing trend in the last 12 months for cloud, grid and distributed computing.7 Figure 4 Typical Cloud architecture..9 Figure 5 Logical Cloud Computing Model.9 Figure 6 Four layer cloud architecture.10 Figure 7 Sample of an N-tier Architecture. Recreated from 10 Figure 8 illustrates the End user to cloud scenario.20 Figure 9 illustrates the Enterprise to Cloud to End User scenario 20 Figure 10 illustrates the Enterprise to cloud scenario..21 Figure 11 illustrates the enterprise to cloud to enterprise scenario..21 Figure 12 Linear Cloud computing value chain..32 Figure 13 Internet Users in Nigeria 36 Figure 14 Fixed broadband internet subscribers in Nigeria..36 Figure 15 Fixed broadband internet subscribers in Nigeria..37 Figure 16 Electricity productions in Nigeria and United Kingdom in kilowatt hour (kwh)..39 Page VII

8 List of Tables Table 1: Microsoft IT solutions 27 Table 2: Categorization of cloud services providers..29 Table 3: Data on Internet Users in Nigeria 37 Table 4: Data on mobile cellular subscribers in Nigeria 37 Table 5: Data on Electricity production in Nigeria and United Kingdom in kilowatt hour (kwh)..39 Page VIII

9 Chapter One: INTRODUCTION Cloud Computing for Business is aimed at providing a holistic view of how cloud computing relates to the business world. This chapter is states the research objectives, methodology used in solving the research problem, the scope of the project and the outline of the chapters. 1.1 Research Objectives: The aim of this research is to explore the current cloud computing market with critical analysis of the providers (what they offer) and the users (what they need). It is geared at being a reference point for business enterprises willing to use the cloud in achieving its objectives and to the cloud service provider who is also seeking to know what the needs of the users. Simply put the motivation behind this research is to bridge the gap between the users and the providers, so it will be more of a holistic view of cloud computing and its players. The fact that it is a fairly recent trend with lots of research still to be done makes this project worthwhile. 1.2 Research Methodology: The methodology used in achieving the business objectives will be that which involves investigative and descriptive analysis. Basically, it is more of a qualitative research, with data descriptively analysed and related to the study. For project planning and management the agile approach was used because the chapters are interrelated and are relevant one another thus working on the Literature review also means discovering the various business models, deployment model of cloud computing. This method gave me a lot of flexibility and opportunity to make changes easily (See appendix B). 1.3 Scope of the Study: The scope of this study is limited to the peripheral computing complexity as well as that of business; this is to give the common reader a clear understanding of the issues discussed. The study also has a Page 1

10 wider coverage thus it will be useful both in the developed world as well as developing countries, with the special case study on Implication of cloud computing for a developing country. 1.4 Justification of the Study: This study is of utmost importance due to the current state of Cloud computing and the issues that affect its adoption, though Cloud computing is not a solution to all business IT needs. However, the need to have a holistic view of how cloud computing affects business enterprises in comparison to the traditional IT solutions is the main reason for this project. 1.5 Sources of Literature Materials and Data: Literature materials are sourced from both online media (News, Blogs, White papers, working papers) and books (Journal publications, Thesis, Textbooks etc.) many of which are recent due to the lifespan of the concept of the term cloud computing. The data used are secondary in nature obtained from sources such as The World Bank and International Telecommunication Union. 1.6 Outline of Chapters: Literature review- This section will summarise the available relevant literature which are related to Cloud computing from different scholars, definition of terms, history of cloud computing, architecture, models, middleware, applications, infrastructure etc. The importance of this section is that it will help form the base of this study. Business perspective- This section seeks to answer questions on the importance of cloud computing to business, such as why the move to cloud? What are the advantages and disadvantages of cloud computing? What are the other IT solutions available today? What are the varieties of use cases of cloud solutions? What are the requirements of business enterprises? Cloud Solutions- This will feature the various cloud service providers and the solutions each of them provide, their delivery models embraced by them and their deployment models will be discussed. Business Model- This chapter seeks to reveal the available models of getting cloud services to the final consumers. Is there a chance to create a more effective business model as well as the pricing models? Page 2

11 Implication for developing countries - This section will seek to shed light on the prospect of cloud computing in the developing economy with Nigeria as a case study. Evaluation This chapter contains the findings and recommendations therein, justification for the methodology used, the limitations of the study and finally suggestion for further studies. Page 3

12 Chapter Two: LITERATURE REVIEW 2.1 What is Cloud computing? There are numerous definitions suggested for cloud computing and I use the word suggested because many see it as an evolving term which is yet to be standardized as a whole but most scholars agree with (NIST 2009) which defined Cloud computing as 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. This cloud model promotes availability and is composed of five essential characteristics, three service models, and four deployment models. The service and deployment models are detailed later in this chapter however here are the five essential characteristics are stated by NIST: 1. On-demand self-service: Cloud services are called upon when needed and the provisioning needs little or no human interaction as it is automated and easy to call upon by the cloud users. A cloud service here is defined as consumer and business products, services and solutions that are delivered and consumed in real-time over the Internet by (Gens 2008). 2. Broad network access: Cloud computing keys into the vision for ubiquitous computing as capabilities are transmitted over the internet and can be assessed from various standardised platforms such mobile phones, laptops etc. 3. Resource pooling: The cloud model has a multi-tenancy model such that many clients are serviced simultaneously this enables the provider s computing resources to be pooled together in order to meet the clients requirements. The resources (physical and virtual) are dynamically assigned and reassigned according to consumers demand, these resources need not be located together as they are independent of one another but they all come together to form the whole service. Examples of such resources are virtual machines, storage and memory. 4. Rapid elasticity: Elasticity of the resources provided via cloud is rapid as it is built on the utility model whereby consumers only pay for resources used up and the resources appear to be unlimited as the consumers can easily scale up or down as their computing need varies. 5. Measured Service: Also based on the utility computing model, cloud service has metering capability at different level of abstraction according to the type of service e.g. storage, Page 4

13 number of machines, processing, and bandwidth. These resources are monitored, controlled, and reported which aids accountability for both the provider and consumer of the service. However there are other definitions proposed by other authors in various research papers but worthy of mention is that of (Vaquero, et al. 2009) which compiled 22 definitions of cloud computing from different authors before providing an encompassing definition of the Cloud as a large pool of easily usable and accessible virtualized resources (such as hardware, development platforms and/or services) these resources can be dynamically reconfigured to adjust to a variable load (scale), allowing also for an optimum resource utilization. This pool of resources is typically exploited by a pay-per-use model in which guarantees are offered by the Infrastructure Provider by means of customized SLAs. The definition simply shows everything cloud computing is all about, its features, uses, pricing model and its can be said that there is no much differentiation between their encompassing definition and that of the National Institute of Standards and Technology (NIST) stated earlier. It is hoped that in the nearest future as the concept develops there will be a common agreement on what cloud computing is. 2.2 Evolution of cloud computing Cloud Computing is a relatively new term in the technology world and like every other relatively new term or IT concept it has its history and chronology. Many argue that cloud computing is not necessarily a new thing according to (Colaner 2010) it is not new; the metaphor may be, but the underlying technologies have been well-established for a long time, Technologies such as the Grid systems, internet, any IT outsourcing -- network infrastructure, security monitoring, remote hosting - - are all forms of cloud computing. Others such as (Schneier 2009) even believe it is a modern version of the timesharing model from the 1960s when computers were expensive and hard to maintain which was eventually killed by the rise of the personal computer. This shows that the history of cloud computing dates back to the origin of computing itself and its evolution, from the super-computers to the era of cluster computing, where computers were brought together to form a single larger computer to create a sense of super computer, it was aimed at harnessing greater processing power (Rittinghouse and Ransome 2010). Clustering later led to the concept of Grid computing in the early 1990 s and this was thought to be the future of computing because of its cost effectiveness, ability to solve problems with enormous amount of computing power, and because it proved that the computing resources can be pulled together to achieve a common objective, according to (Leyden 2009) Cloud Computing found its origin in the success of Page 5

14 server virtualization and the possibilities to run IT more efficiently through server consolidation. The trend later moved to utility computing as the name implies it is simply the consumption of computing services as a utility whereby charges are placed on actual consumption rather than a flat rate; these entire concepts have evolved to make what we today call Cloud Computing. Figure 1: Evolution of Cloud Computing Cloud computing has most of its properties interrelated to earlier technologies as it will be seen in its models, architecture etc., which are discussed later in this chapter, this also shows that cloud computing is an evolving technology as against a one off technology discovery, it is a result of previous research and improvement in computing. The motivation behind cloud computing is pretty obvious as the IT world seek to find ways to provide cheaper and more sophisticated computing; cheaper computing because the cost on IT has shifted from the scale of expensive hardware like the mainframes to issues such as energy consumption, office space, need for collaboration, ubiquitous computing etc. A note on the trends in usage of the term cloud computing in relation to some other computing terms which cloud evolved from such as grid computing and distributed computing from Google searches shows Cloud Computing as a relatively new term introduced within the past four years (see figure 3) and the term has been rising even over the past 12 months (see Figure 2). There has also been a decline in search terms Grid, Utility and Distributed computing which are technologies upon which cloud is built using virtualization. This decline can be attributed to fact that lots of research has been carried out on them and cloud computing is viewed as a step further or an advancement in the field. Page 6

15 Figure 2: Result showing trend in the last 12 months for cloud, grid and distributed computing (Google 2010) Figure 3: Result showing trend in the last 7 years for cloud, grid and distributed computing (Google 2010) The question that comes to bear is basically why cloud? and not the existing standardised IT solutions currently in the market, the next section seeks to answer this question and in chapter two the present solutions will be highlighted as well as the advantages and disadvantages of cloud computing. 2.3 Why cloud? Cloud computing is gaining ground in the computing world for many reasons, one being the need to cut IT cost. Cloud computing provides an on demand service model and a pay per use pricing model whereby a consumer only pays for what is used based on a set service level agreement. The cost effective feature cut across not just the pricing model but other known cost such as cost of IT maintenance, salaries of IT personnel, and huge cost of investing in software licensing (Myerson 2009), another incentive for cloud computing is that it may be more environmentally friendly; centralization of data centres, low emission, wireless transmissions, low energy consumption etc., makes for a safe ecosystem which seems to top priority in the computing field presently as it is being pushed by the founder of Microsoft Bill Gate (TED 2010). Page 7

16 What makes cloud computing different from existing technologies is basically the fact that it incorporates a whole lot of technologies such as Grid Computing, utility computing etc., while it shares a lot of characteristics with the existing technology such as scalability, virtualisation, and on demand service there are still a lot of differences. In comparison with grid computing differences can be spotted on factors such as standardization whereby Grid is highly standardized cloud in its infancy state is not, payment model in Grid is quite rigid while cloud offers flexibility. To Build and Manage a Grid you may incur huge capital and operational expenses. Cloud computing however is not always suitable to all IT consumer needs, it has numerous issues associated with it just like every new trend, there is still a lot of research to be done (Djemame 2010). 2.4 Cloud architecture Architecture is simply the structure and organization of an activity aimed at achieving a specific purpose in a system; it is the composition of separately specified components which forms the system. There are numerous definitions for cloud architecture, according to (Varia 2010) Cloud Architectures are designs of software applications that use Internet-accessible on demand services this definition buttresses some known systems architectures such as web services, service oriented architectures, web application frameworks etc., nevertheless the definition misses on some important facts of a cloud computing architecture which includes its multi-tenancy property as well as its distributed systems properties which relates to autonomic system computing and grid computing accordingly. The above definition is limited to what cloud computing properties are and can be said to be closer to cloud applications, the real cloud architecture should be the structure upon which the applications will work, to this end many authors have proposed different description of cloud architecture with different layers and labels, a widely-adopted cloud architecture framework is provided by NIST, it is a simple model comprised of three layers of cloud capabilities as a Service (See figure 4) namely infrastructure, platform and software as a service. Many other authors built on this typical architecture framework for example (Eric and Roberto 2010) in proposing a cloud computing logical architecture believes it is made up of the typical layers which they represented as application, platform and infrastructure virtualization accordingly (see Figure 5). What differentiates their model is the inclusion of Service oriented architecture (SOA)/service virtualization layer which is believed to be the key to cloud computing because of the service nature of the concept of cloud, the inclusion of Governance Virtualization which is simply the management of the cloud and it is Page 8

17 Governance Virtualization SOA/Service Virtualization thought to be in its infancy as lots of research needs to be carried out to get a good standard for virtualisation. Cloud Architecture IaaS PaaS SaaS Figure 4: Typical Cloud architecture Application Virtualization Data Virtualization Platform Virtualization Application Hosting Virtualization Infrastructure Virtualization Network Virtualization Figure 5: Logical Cloud Computing Model Also (Foster, et al. 2008) defined four layers of cloud architecture (see figure 6) namely Application, Platform, Unified resources and Fabric. The Fabric layer is the base of the architecture and contains raw hardware resources. The unified resources layer serves has the base of the resources which are later integrated to the upper layer of the architecture. The platform layer is dependent on the unified resource layer and it makes use of specialised tools to aid development and deployment of applications, this is considered to be the middleware e.g. a web hosting environment. The final layer is the application layer which simply contains the applications developed on the platform layer; it is on this layer that such applications run in the clouds. Page 9

18 Application Platform Unified Resources Fabric Figure 6: Four layer cloud architecture The two cloud architecture views above and other proposed definitions take clues from the typical client-server architecture (see figure 7) with inclusion of web server on the presentation layer making it more suitable for a cloud architecture description of service over the internet, It deviates from the typical 2-tier and 3-tier architecture, it is a N-tier system architecture which links different systems with added connectivity through the internet (Gustavo, et al. 2004). Client Web Browser Web Server Presentation layer HTML Filter Application logic layer Middleware Resource management layer Figure 7: Sample of an N-tier Architecture. Recreated from Gustavo, et al Applications on Cloud Architecture Applications built on Cloud Architectures are on-demand in nature, whenever the application is accessed it draws the necessary resources on-demand, performs the specific task for which it is Page 10

19 called, and then leaves the unwanted resources which often organize themselves at the completion of the task while the application is in the task it scales up or down elastically based on resource needs Common characteristic of a Cloud Application When designing a cloud architecture application some characteristics are expected as standards (Varia 2010) pointed out some of these common characteristics of cloud applications: 1. Independent Scalability: This simply states that every component of the application implements a service interface, which will be responsible for its own scalability. The sum of the part thus adds to the overall scalability of the application. 2. Loose Coupling: Applications on the cloud are built in a way that tight dependencies are discouraged between components, so that in the event of an error to one component the system should still be working according to its specification. This aids better management and high-availability. 3. Parallelization: The ability to distribute the tasks on multiple machines and effective coalition of results obtained in parallel helps achieve efficiency. 2.5 Middleware: Middleware in any IT infrastructure does the role of enabling and managing the interaction between applications across diverse computing platforms, It is the architectural solution to the problem of integrating a collection of servers and applications under a common service interface (Gustavo, et al. 2004). On a general note Middleware is used to abstract the differences between heterogeneous systems and expose a uniform interface (Ajith and Michael 2009). Characteristics of Cloud Middleware according to (WSO2 2010) include its various management roles such as web services, data, Identity and security management, easy interoperability etc. Examples include Oracle Fusion Middleware, IBM Altocumulus and WS02 Cloud Middleware. 2.6 Cloud Service Models: The service model is used to categorise the various offering of cloud solutions according to the level of the architecture where it is been offered, there are 3 major models of cloud service classification namely Software as a service (SaaS), Platform as a service (PaaS) and Infrastructure as a service (IaaS) however there are other variants such as Data as a service (DaaS), Hardware as a service Page 11

20 (HaaS) etc., but for the purpose of this research work I will be sticking to the 3 major service models proposed by (NIST 2009). Software as a Service (SaaS). Consumers get access to specialized software suites hosted on a cloud infrastructure. The applications are accessible from various client devices through a thin client interface such as a web browser (e.g., web-based ). The consumer does not manage or control the underlying cloud infrastructure with the possible exception of limited user-specific application configuration settings. Examples include SAP Business ByDesign and the SalesForce.com Customer Relationship Management (CRM) solution. Platform as a Service (PaaS). The capability provided to the consumer is to deploy onto the cloud infrastructure applications created or acquired using programming languages and tools supported by the provider, the platform also guarantees load balancing and scaling in a transparent manner to the cloud consumer. The consumer has control over the deployed applications and possibly application hosting environment configurations. Examples include Google AppEngine and Facebook Application Programming Interfaces (API) Infrastructure as a Service (IaaS). The capability provided to the consumer is to provision processing, storage, networks, and other fundamental computing resources where the consumer is able to deploy and run arbitrary software, which can include operating systems and applications. The raw computing resources are exposed to the consumers even though the consumer does not manage or control the underlying cloud infrastructure but has control over operating systems, storage, deployed applications etc. Example: Amazon EC2 2.7 Cloud Deployment Model: Deployment model of cloud solutions simply means how the services are made available to cloud consumers, there are basically three main deployment model of cloud computing namely public, private, and hybrid clouds according to (Ahronovitz, et al. 2009). Public Cloud: Public cloud services are offered to clients from a third party service provider via the Internet. Unlike what public goods are known to be in economics i.e. free, it is not always free when it comes to cloud, but when consumers are charged it is fairly inexpensive. A public cloud also does not mean that a user s data or activity is publically visible there is still the bit of ensuring the privacy of the users; public cloud vendors provide an access control mechanism for their users. The benefits of using this deployment model from the Page 12

21 business perspective are that it is easy and inexpensive to set-up because bulk of the hardware, application and bandwidth costs are covered by the provider while the consumer only pays for what is used thus no wasted resources and it is highly elastic. Private Cloud: Private cloud services also known as corporate or internal cloud is elastic and service based like the public cloud. The difference between them being that in private cloud, services are hosted and offered to a limited number of people behind a firewall, thus data and processes are managed within the organization without the restrictions of network bandwidth, security exposures and legal requirements (NIST 2009) that comes with public cloud service. The strength of the private cloud offering is that both the provider and the user have greater control of the cloud infrastructure, thus increasing security. Hybrid Cloud: A hybrid cloud is a combination or integration of both private and public cloud into an organisations business process. In this model consumers manage some of their resources in-house these resources are often business-critical services and any other IT need deemed not fit for the public cloud such as company s critical data etc., all non-business critical information and processing are typically outsourced to the public cloud. The hybrid cloud allows the user to take advantage of improved security and control offered by private cloud as well as the scalability and inexpensive services offered by the public cloud. While the above named three models of deployment are the common and widely cited (NIST 2009) suggested an addition to these models and it is called Community clouds Community Clouds: Community clouds are geared towards meeting the needs of a set of related stakeholders who share common interests or requirements (Eric and Roberto 2010). A community cloud may be private or maybe a hybrid that integrates the respective private clouds of the members, its main aim is to ensure they share and collaborate across their clouds by exposing data or resources into the community cloud. The next chapter will be exploring the business perspective to cloud computing, it seeks to answer questions of the importance of cloud computing to business, such as advantages and disadvantages of migrating to cloud computing, What are the cost implications? What are the other alternatives? Or current IT solutions available in the market before cloud. Page 13

22 Chapter Three: BUSINESS PERSPECTIVE OF CLOUD COMPUTING This chapter is dedicated to issues that relate business enterprises with cloud computing, this is necessary as the need for cheap IT services is driving business owners to embrace the cloud phenomenon amongst other reasons and Cloud computing being a fairly new introduction as one of the options available to the business owners. The chapter is structured to show the current standard IT solutions available in the market, advantages and disadvantages of migrating to the cloud, success stories and finally use case scenarios. 3.1 Standard IT Solutions Prior to cloud computing, there was an array of IT solutions for business enterprises to choose from, these options come in the form establishing in-house IT solutions, whereby a business enterprise has all its IT needs deployed, managed internally and traditional IT outsourcing whereby a business enterprise places its IT responsibilities in the care of an IT business solution provider, who manages this infrastructure and resources on behalf of the business, the solutions also come in the form of collaboration between organisations. There are various solutions available on these platforms in-house, outsourcing, and collaboration, this section is aimed at presenting some of these solutions such as Grid Computing, Enterprise Computing and Utility Computing Traditional Enterprise computing Enterprise computing is a general term used in selling business IT solutions; it entails a lot of services and products. According to (Peterindia n.d.) An enterprise solution identifies common problem domains within a business and provides a shared infrastructure as a solution for those identified problems, there are solutions on problems of software, hardware, and processes etc. example of software solution can be the licenced software or bespoke software built specifically for an organisation to address it specific need, for storage solutions a company can have its own in-house datacentre setup by one of the enterprise solution providers. Page 14

23 The advantage of enterprise computing is that the services and products are offered as whole packages thus the services are integrated which aids smooth running of businesses which in turn increases efficiency and turnaround time Grid Computing Grid computing was developed as a way to share computing resources; this has evolved as a way to harness inexpensive servers in a datacentre to solve a variety of business problems. In comparison with cloud computing differences can be spotted on factors such as standardization whereby Grid is highly standardized cloud in its infancy state is not, payment model in Grid is quite rigid while cloud offers flexibility. Building and managing a Grid leads to huge capital and operational expenses. Traditionally, grids have lacked the automation, agility and simplicity characterized by cloud computing. According to (Anthony, Toby and Robert 2010) some of the reason why grid computing is attractive includes It is cost-effective for what it is built to do i.e. huge science researches Important in solving problems that need a great amount of computing power. The resources of several computers can be shared cooperatively and independently. This falls under the collaborative form of IT solution available, it is common with educational institutions and used for scientific researches often, this is because of the huge computing resources needed in carrying out solutions to problems Utility computing: The concept of utility computing is a model of providing computing service which has its root from domestic sense of utility where utility is measured and the consumer simply pays for what is being used. In utility computing the computer processing power is seen as a utility that clients can pay for only as needed, resources such as applications, infrastructure and storage are packaged and sold as a metered service and users only pay for that which they consume. In many respects, this is the closest term to cloud computing, with cloud computing being a broader concept that relates to the underlying architecture in which the services are designed. 3.2 Business Enterprises Requirement: Page 15

24 Business requirements differ and the choice of which IT solution to go for depends majorly on them. The major determinant of these requirements is simply the type of business a company is into as this is what will dictate the best solutions to fit the requirements of the business. For example a Finance corporation such as a bank would favour an In-house enterprise solution which features strong firewalls to help increase its security due to the sensitivity of the business processes, the need for an online real time system would also mean they require special SLA which will ensure there are always up and running as any slight fault will affect reputation of the company and might lead to huge financial loss. The business processes within the firm also determines the solutions to be adopted, processes such as management, platform of service delivery, customer service relationship etc., most times it is these processes that are suited for cloud computing because they are well positioned to utilise the properties and advantages of the cloud such as scalability and its pay per use pricing model because the frequency of use these business processes fluctuate. While the industry which a company operates in and the business processes which goes on within it are determinants of what IT solutions to go for, the advantages of the various IT solutions also reveals the needs of business enterprises such as need for Need for increased Agility/Scalability: The ability to scale up or down is a huge requirement especially for a company with a fluctuating customer base. A good example of this requirement is illustrated in the story of Animoto when in mid-april year 2008; the company had nearly 750,000 people sign up within a space of three days. To meet this demand using traditional IT solutions would, the company would have needed to multiply its server capacity nearly 100-fold thus increasing the young company s expenditure and coupled with the fact that they lacked the skills to manage such servers, the services of a cloud service provider in RightScale helped them manage this surge they simply added capacity on Amazon, at the cost of about 10 cents a server per hour and later dropped the capacity immediately their need reduced. Source (Fitzgerald 2008). Short time to market: Business enterprises seek ways of getting ahead of their competitors, having the edge in all ways one of which is the need to hit the market with innovative products within the shortest period of time. Cost consideration: this is also an important requirement by business enterprises when considering IT solutions, (Macquarie Telecom 2009) observed that with respect to cloud computing this requirement is satisfied because from cost is converted from one-off large and lumpy hardware capital purchases to operational expenses which are spread to match Page 16

25 the consumption of the service. This however depends again on the nature of the business if it needs to always vary its needs because it would not be an advantage for a company with fixed customer size which is likely to change. Other requirements could come in the form of services needed by the business enterprises such as database, storage, software service etc. The fact about business enterprise requirements is that they vary and a company needs to find out its needs and match it to the services provided by the various IT firms. 3.3 Advantages and disadvantages of migrating to cloud There are numerous benefits accrued for migrating to the cloud as against staying with the traditional IT management firms ranging from reduction in cost to increased business agility, however cloud computing does not solve all a company s IT problems as a matter of fact it is not suitable for some companies to migrate to the cloud. Below are the advantages of migrating to cloud and disadvantages Advantages of Cloud computing: Scalability: Cloud services are highly elastic with the ability to scale up or downsize in the course of its use. This prevents idleness of resources which sums up to increased efficiency on the part of the business enterprise. Operational benefits: there are a host of operational benefits which a company gains by migrating to the cloud, operational benefits as a term means gains which are related to the day to day running of the company. There is increased flexibility and mobility which implies the possibility of accessing cloud services from anywhere and on various platforms, this leads to efficiency in getting things done. Collaboration is improved because of these properties, as it allows many users access and work together on files and share information as necessary. IT staff can be utilised in better ways without worrying about maintenance issues that are common place with huge in-house IT infrastructures. Self service provisioning enables a do-it-yourself approach to IT and this is backed up by simple interfaces which give the power of choice to even the commonest of staff. Page 17

26 Better utilization of assets such as office space and furniture can be achieved. Reduced cost: This is arguably the main motivation for moving into the cloud. Cloud computing provides an on-demand service model and a pay per use pricing model whereby a consumer only pays for what is used based on a set service level agreement. The cost effective feature cut across not just the pricing model but other known cost such as cost of IT maintenance, salaries of IT personnel, and huge cost of investing in software licensing (Myerson 2009). Authors such as (Eric and Roberto 2010) believe cloud computing simply convert fixed costs to variable cost thus giving the business the choice of varying its computing need with respect to its sales/revenue thereof. Reduced time to market: Time to market is the duration between when an application is being built and when it finally launches to be used by the intended user. Prior to the advent of cloud computing companies were really concerned with the huge time to market duration this is because most ideas are better executed within the shortest frame of time rather than longer periods especially when a lag could spell doom for the company. With cloud computing, companies can get their IT resources up and running within a short frame of time by scaling all the hierarchy of procurement, installation, maintenance, updates etc. Eco-Friendly: cloud computing is environmentally friendly because it reduces the energy consumed since its adoption reduces the quantity of hardware components which a business enterprise needs to manage thus the bulk of the hardware component is moved to the cloud provider which often has centralised infrastructures such as data centres Disadvantages of Cloud computing: Cloud computing however is not always suitable it has numerous issues associated with it just like every new technology trend; there is still a lot of research to be done. (Armbrust et al 2009) Identified obstacles to the advancement of cloud computing however these are opportunities in disguise for research purposes. Top of the list was availability of service even though some SaaS such as Google apps have set a good standard in this respect but many organisations are still wary of using the cloud especially when the clients business is a critical one whereby huge sums of money can be lost due to a downtime. Other issues identified are: Security: trust issues with sensitive data and the security issues surrounding having such data in the cloud especially when those data determine the fate of the company. Page 18

27 Data transfer issues: Cloud services depends on the internet and thus it is a 2-way traffic speed of uploading on the part of the service provider and the speed of downloading on the users side, thus data transfer bottlenecks occurs especially when it involves huge data sizes. Licensing issues: Utilization of software on cloud platforms are also backed by various complex licenses, it is hoped that as the concept evolves the issues will be extinct. Data loss: the cloud services are targets for attacks and thus opened to being infested with bugs and viruses. This could lead to data loss which might be very disastrous to the cloud users and often times such losses cannot be valued in monetary terms. Compatibility issues: Integrating cloud services with existing in-house IT could be a bit of problem especially when it involves Legacy systems. Also migrating from one cloud service provider to another could be hectic as there is currently no agreement on the standardization of cloud computing s external interface (Ling, et al. 2009) thus customers might be locked to a provider. 3.4 Use cases The aim of this section is to highlight the common use cases of cloud computing available in the literature, however this is not an exhaustive list End User to Cloud In this use case, an end user accesses data, information or applications in the cloud. An end user is defined as the final consumer of the cloud service upon which the services consumed are/cannot be transferred again. Popular applications here include social networking sites such as hi5, Facebook, twitter, LinkedIn etc., hosting sites such as Google s gmail, Microsoft s live/hotmail and Photo/video editing applications such as Snapfish.com, animoto.com etc. The user has no idea how the underlying architecture works. If they can get to the Internet, they can get to their data. (Ahronovitz, et al. 2009). Page 19

28 PUBLIC CLOUD INT ERN ET Figure 8: illustrates the End user to cloud scenario Enterprise to Cloud to End User In this use case, an enterprise uses the cloud to respond to the end user request this is done by delivering data and services via cloud. The end user relates with the enterprise, which accesses the cloud to retrieve data and/or work on it, sending the results to the end user. The end user can be either an employee of the enterprise or an external customer. INT ER NET PUBLIC CLOUD IN TE RN ET ENTERPRISE Figure 9: illustrates the Enterprise to Cloud to End User scenario Enterprise to Cloud This scenario is one in which an enterprise uses cloud services for its internal processes. According to (Ahronovitz, et al. 2009) this might be the most common use case in the early stages of cloud computing because it gives the enterprise the most control. Page 20

29 The enterprise uses cloud services to supplement the resources it needs: For example, using applications in the cloud (SaaS) for certain enterprise functions ( , customer relations management, storage etc.), using virtual machines, database etc. all accessed via cloud. PUBLIC CLOUD IN TE RN ET ENTERPRISE Figure 10: illustrates the Enterprise to cloud scenario Enterprise to Cloud to Enterprise In this use case, the interaction between two enterprises is highlighted as it is done using the same cloud. The attention here is the role of hosting resources in the cloud so that applications from the enterprises can interoperate and work together. The supply chain executed in the cloud is a good example for this use case because it involves the interaction between the buyer and seller. ENTERPRISE PUBLIC CLOUD INTE RNE T INTERNET ENTERPRISE Figure 11: illustrates the enterprise to cloud to enterprise scenario Page 21

30 This chapter has provided insights into the requirements of business enterprises, the standard IT solutions as well as the advantages and disadvantages of cloud computing and finally the common use cases of cloud services even though this is not an exhaustive list of the various scenarios, there are others such as the private cloud whereby the cloud services are built within the organisation and hybrid cloud where the user combines both private cloud and public cloud. Having looked at all these the next will focus on the available cloud solutions. Page 22

31 Chapter Four: CLOUD SOLUTIONS This chapter focuses on the cloud solutions available in the market as well as the profile of its providers their respective delivery and deployment models. The later part of the chapter will feature service level agreements and what it entails as well as how they are formulated. 4.1 Differentiation between cloud service provider and cloud vendor These are two terms which are often used interchangeably in the literature thus creating an illusion that they mean the same thing however there is a thin line between the two terms. A cloud service provider is that which provides various cloud solutions on a service base and such services are consumed directly by the users, thus they provide infrastructure, platform, software etc. as a service, as seen in the use cases a SaaS provider can be dependent on a PaaS etc. thus making it act as both a consumer of service and a provider of one. The bottom line is the emphasis on service being what is provided and consumed. A cloud vendor does much more than provision of services in the cloud, its product is the cloud itself, they deal with infrastructures that makes it possible to scale services exponentially and flex resources quickly in reaction to variable demand it is all encompassing they could build private clouds on premises for a company; they could maintain such clouds for the company which is a service etc. the bottom line here being the cloud as a product. 4.2 Cloud solutions and their proprietors There are numerous IT firms providing one form of cloud service or the other to the end users but for the purpose of this research seven (7) for this providers will be profiled, four of them being the traditional software/hardware companies (IBM, Microsoft, Oracle and HP) who are offering cloud services coupled with their traditional offerings, while the other three companies (Amazon web service, Flexiant and Salesforce) are those that were established because of the advent of cloud computing or utility computing. This will give a balanced view of the provider and would help see the providers competence and strength in providing the solutions. Page 23

32 4.2.1 IBM: IBM has been a top player in computing basically with the hardware industry and their interest in the cloud market should not be much of a surprise because the cloud phenomenal surpasses just the software market but the whole IT world. IBM has various cloud options ranging from building private clouds, provision of cloud services through IBM cloud, or creation of a hybrid cloud that includes both, thus they provide cloud services in public, private, and hybrid cloud models. However they do more than just the provision of services on these models being a company with established technology record and experience at all levels it applies its industry-specific consulting expertise in offering these services with extensive research on security in the clouds, migration to the cloud, best pilot projects for the cloud etc. According to (Eric & Roberto, 2010) IBM is seen as an enabler of cloud computing providing technologies for IaaS to thrive they called them integrated vendors. The official IBM (http://www.ibm.com/ibm/cloud/) cloud computing website categorises it cloud service roles into 3 main categories IBM Smart Business Services: This is the SaaS category whereby they provide an array of software services which helps make complex business processes look simple. These services are offered on the private and public clouds. IBM Smart Business Systems: This is the PaaS category; here service delivery platforms are integrated to include hardware, storage, networking and virtualization. Cloud Consulting: Here IBM helps in evaluation and readiness assessment, with strategies of adoption of cloud technology and its implementation. IBM is also involved in some partnerships within the industry e.g. with SAP- whereby SAP uses the cloud to migrate SAP applications live across remote IBM POWER6 systems as well as with Amazonhere Amazon Web Services is used to deliver IBM s software to clients and developers (Anthony, Toby, & Robert, 2010). There is no denying that IBM is uniquely placed to join forces with clients and enable them to reap the benefits of cloud computing. Page 24

33 4.2.2 Hewlett-Packard (HP): HP unlike IBM is well known in the both software and hardware arena however in the cloud computing realm they are only active in on service platform which is the software as a service SaaS and they pride themselves as one of the largest providers today. HP s SaaS is delivered through the Internet; it accelerates usage and adoption of HP software products through best practices and continuous mentoring. With its SaaS solutions, IT complexity can be reduced, IT organization can be refocused on business initiatives, and capital expenditures shifted to investments in innovation. HP Cloud Assure is the comprehensive solution which combines both HP software and services HP pulls on its nine years of Software as a Service (SaaS) expertise and advanced service-level performance to provide a consulting service offering under the guise of Cloud Assure which helps clients confidently take advantage of the speed, scalability, flexibility and cost effectiveness of cloud services. This solution delivers four of the attributes believed to be important to reliable cloud computing security, performance, availability and cost control (HP 2009) and the services focus on service management, testing services and BTO for cloud infrastructure services Amazon Web Services: This is the name given to all of Amazon s web-based technology services which all falls under the concept of cloud computing, some of the services are namely, Amazon Elastic Cloud Compute (Amazon EC2) Amazon Simple Storage Service (Amazon S3) Amazon Simple Queue Service (Amazon SQS) Amazon Elastic MapReduce Amazon CloudFront Amazon SimpleDB Page 25

34 For the purpose of this project the Amazon Elastic Compute Cloud (EC2) which is the heart of the Amazon cloud (Reese 2009) and Amazon Simple Storage Service (S3) which is also an important part of their cloud portfolio will be profiled. Amazon EC2 provides resizable compute capacity in the cloud i.e. via web service. It is basically designed for developers to make web-scale computing easier. It puts the developer in charge with complete control of his computing resources. It allows for quick scaling of the users computing capacity, it also follows the pay per use pricing model. AmazonEC2 assist developers with the tools to build fault tolerant applications thereby preventing them from common failure scenarios (Amazon 2009). Amazon S3 as the name implies is storage offering on the Internet with endless possibilities, any amount of data date can be stored and retrieved from as little as 1 byte to 5 gigabytes of data for each object while the user can store unlimited objects, this can be accessed at any time, from anywhere on the web. According to (Amazon 2009) It gives any developer access to the same highly scalable, reliable, secure, fast, inexpensive infrastructure that Amazon uses to run its own global network of web sites. The service is backed up by the Amazon service level agreement which guarantees 99.95% uptime thus boosting the assurance users get when using this service Oracle: Oracle can be said to be the jack of all trade as it offers technology that enables organizations to build private clouds, leverage public clouds and provide cloud services to others. (Sun 2009) Stated its goal to be the successful combination of systems and software to build a cloud, delivering all the components that enterprises, developers, and end users need to build cloud environments, through its own or partners offerings. The strength of Oracle in cloud computing cannot be overemphasised considering the fact that they had a pioneering role in making Grid computing relevant to the enterprises, its competitive edge is in its strategy which is its open source philosophy and Java principles, this gives room for easy interoperability and distribution of applications across multiple cloud infrastructure components (Sun 2009). Oracle competes on two of the three service models i.e. SaaS and PaaS models; Oracle platform for SaaS is the name given to the SaaS model and this is built upon the Grid computing technology and it s an enabling technology offered to Independent Software Vendors to Page 26

35 build their own SaaS offerings (Demarest and Wang 2010) The Oracle CRM on Demand is also offered with predictable monthly expense because of its subscription-based pricing this offer includes Oracle software, support, hosting, and application management, it is easy-to-use and just like every Customer Relation Management software it aid sales, marketing, service, and contactcenter operations etc. Oracle offers the Oracle PaaS platform as its platform as a service, this is also built on the Oracle grid computing technology Oracle does not offer IaaS but it provides both hardware and software products to enable other IaaS providers as well as to enterprises for private use (Demarest and Wang 2010). *SUN microsystems was acquired in January 2010 by Oracle (2 months before the start of this project) Microsoft: Like most of the big players in the cloud market Microsoft also offers cloud services on the three main service models. Building on it strength in the market as the leader in operating system with its windows brand which hence makes for a host of compatible software and applications, Microsoft cloud services are simply Microsoft as a utility, same applications and platforms the users already know. A good portion of Microsoft s cloud offerings are cloud variants of products that people already use, so cloud versions aren t that difficult to use (Anthony, Toby, & Robert, 2010). On-Premises Cloud Services -Microsoft Exchange Server Communication -Microsoft Exchange Online (SaaS) -Microsoft Sharepoint Server Collaboration -Microsoft Sharepoint Online (SaaS) -Microsoft Dynamics CRM Business Apps -Microsoft Dynamics CRM Online (SaaS) -Microsoft SQL Server Storage -Microsoft SQL Azure (PaaS) -Active Directory Identity -Active Directory/Live ID (IaaS) Table 1: Microsoft IT solutions (c) Microsoft 2009 Windows Azure: This is operating system provided as a cloud service that serves as the development, hosting and service management environment for the Azure services platform. Windows Azure can be used to Build web applications Build customised packaged line-of-business applications Page 27

36 Build corporate departmental applications Merge various data sources in the Cloud and enable secure and easy access Flexiant: Flexiant is a software and services company with a heritage for hosting which dates back to the year 1997 and they are one of the more experienced vendors in the cloud hosting business. The company offers two cloud products/solutions namely Flexiscale and Extility. FlexiScale: launched in 2007 it is Europe's first cloud platform; this is the public cloud of the company. It offers users virtual dedicated servers on pay-as-you-go pricing plan using the Extility technology. It gives users easy access to creating and/or deleting servers within minutes. Extility: This is a utility computing platform, allowing hosting providers to offer their customers virtual dedicated servers through a self-service portal. It offers flexibility to the customers by giving then control over choice of operating systems and images as well as allowing self-provision of their servers through a web-based portal Salesforce: Salesforce.com was founded in 1999 by former Oracle executive Marc Benioff, the pioneer of the concept of delivering enterprise applications via a simple web site (Rittinghouse and Ransome 2010). It made its name with the success of its flagship Salesforce.com automation application which is an enterprise customer relationship management (CRM) system that enables sales people to track their prospects and leads (Reese 2009), this multitenant application has preceded the definition of cloud computing by a few years. However salesforce.com has grown from the SaaS provider to also a provider of PaaS under Force.com which is a companion application development environment, an on demand cloud platform. With this it is much simpler for businesses or end users to build any type of cloud application for various uses. Force.com represents a comprehensive suite of development and deployment technologies all available to partners on demand, through their browser (Anthony, Toby and Robert 2010). Page 28

37 Service Provider Products Pricing Model Platform SLA IBM Smart Business (service and System) Subscription SaaS, IaaS Yes HP Cloud Assure Pay-per-use, SaaS, IaaS Yes (Custom) Amazon Web Elastic Compute Cloud EC2), Simple Storage Pay-per-use SaaS Yes Services Service (S3), CloudFront (Standard) Oracle Oracle On Demand, Subscription and Payper-use PaaS, SaaS Yes (Custom) Microsoft Widows Azure, CRM, web apps Subscription based SaaS, PaaS, Yes IaaS Flexiant FlexiScale and Extility Pay-as-you-go PaaS, Yes Salesforce CRM, Force.com Platform, AppExchange Monthly Subscription SaaS, PaaS Yes (Custom) Table 2: Categorization of cloud services providers 4.3 Service Level Agreement: Service level agreement (SLA) is the term used to represent a document which spells out the relationship between two parties (sla-zone 2007) and as the name implies it is simply targeted at the agreed level of service from the provider to the consumer of such services. In cloud computing such details to be agreed upon could be in terms of metrics agreed upon, and penalties violating the expectations, respectively (Buyyaa, et al. 2009), other details could be on methods of tracking and reporting service performance as well as problem, technique of problem management, legal issues and method of disputes resolution, duties of customers and responsibilities and policy on termination etc. When a company buys any service from a cloud service provider, such company can either accept a standard Service Level Agreement (SLA) from the provider or negotiate such an agreement. Most public cloud providers offer the standard non-negotiable SLA, thus providing the same level of service to all their clients (Hurwitz, Bloor and Kaufman 2010) and (Ahronovitz, et al. 2009) both agree that mission critical business enterprises should never go for such standard SLAs as this could have a negative impact on their business mission if the loopholes in standard SLA are not negotiated and closed. Page 29

38 4.4 Success Stories: There are lots of success stories about cloud computing, this section describes two of such stories whereby cloud computing has been adopted with positive results and changes achieved. The stories reflect the various concepts reviewed in the project thus far, such as the service platforms, model of delivery, advantages of cloud computing etc. CSP: salesforce.com Client: Papa Murphy s Take N Bake Pizza, Food Industry Former process/challenge: The Company lacked a good franchise management system, it basically made use of Microsoft Excel spread sheets and made to run its business-tracking and updating its record was not an easy task with this process, thus the need for a good management system that will give a centralised view of the business to the management with great emphasis on quick implementation due to the quick rate of the company s growth. Solutions: Web-based forms built on Force.com are used by the directors to report on the state of business in stores. A mobile application accessible via the BlackBerry devices and Salesforce CRM's mobile access was built and rolled out within 3 weeks to 30 users through the Salesforce CRM's mobile access with 95% success. The mobile access also works online and offline thus improving availability. The salesforce Force.com connect aids integration with standard IT solutions such as Microsoft Outlook which keeps customer communications in constant synchronisation. Products: Salesforce CRM Enterprise Edition, Force.com Connect and Force.com Mobile Application. Highlights/result: Speedy deployment, easy integration, easy user interface, multiple access platforms, high customization. Deployment Model: Public cloud Service Model: Software as a service-saas Source: Page 30

39 CSP: Oracle Client: Auto Windscreens, Automotive Industry Former process/challenge: There was a need for to lower the company s capital expenditure and reduce the operating costs while maintaining a near perfect 100% uptime for its businesscritical systems. Emphasis was also placed on getting an IT company which could provide sustainability and enhance productivity, thus the choice of Oracle. Solutions: Oracle solutions helped Increase business efficiency by correcting the old manual, error-prone processes. The choice of solution was the SaaS Oracle On Demand which allowed for a scalable, flexible and cost-effective system. Scalability helped ensure the system is only employed when needed in proportion with the growing business size. The monthly per user pricing model also helped the company in budget planning. The solution was efficient because the uptime after system stabilization exceeded the agreed service level availability of 99.9%. The choice of Oracle also gave the company an edge in adding other solutions to the stack, talk about integration. Products: Oracle On Demand, Oracle ipayment Highlights/result: Scalable service, reduced response time, Predictable monthly cost Deployment Model: Public cloud Service Model: Software as a service-saas Source: Page 31

40 Chapter Five: BUSINESS MODEL Cloud computing has changed a lot of the business processes and model of operation for enterprises as illustrated in the success stories however this chapter is dedicated to revealing and describing the available business models of getting cloud services to the final consumers. 5.1 Value chain from service provider to end user: The value chain according to (Bridgefield n.d.) is set of activities within a supply chain that actively add value to the end product, thus it is the series of activities or processes that leads to value creation, value in this context is the final service provided to consumers/end users of the cloud services. The traditional linear value chain for IT services (Figure 12), flows from consultancy (which helps identify IT needs of the business enterprise), to design of the system required, and later implementation, operations, maintenance of the application and support for the service provided, according to (Jaekel and Luhn 2009) this value chain is changing as a result of cloud computing this is because of the pricing model and provision of services at different layers such as SaaS, IaaS and PaaS which cloud computing is characterised with, thus the traditional value chain is broken at some point with cloud providers providing services at any of the service levels/layers i.e. a cloud provider can provide service at IaaS, PaaS or SaaS without necessarily following the value chain. Figure 12: Linear Cloud computing value chain; adopted from (Jaekel and Luhn 2009). Prior to cloud computing the linear value chain was followed strictly and took a whole lot of time for business enterprises to get going because each stage of the value chain was accomplished before the other can be commenced. Support Page 32

41 5.2 Players in the Value Chain: According to (Leimeister, et al. 2009) there are six actors in the cloud value chain: Customers: These can be individuals, enterprise or IT staff; it represents those that buy services through the various channels of distribution Service providers: These are the developers and operators of services that offer value to the customer; their role includes development of applications which are deployed onto cloud platforms and access hardware and infrastructure of the infrastructure providers. They are also known as content providers. They operate at the SaaS layer in the cloud architecture. Infrastructure providers: They are responsible for supplying scalable hardware (computing and storage services) upon which the service providers offer their services, hence they provide the needed technical backbone for all the applications within the cloud to run. This is the IaaS layer in the cloud architecture. Platform provider: They provide the deployment environment for cloud applications. It is described as a kind of catalogue which aids the offerings of different service provider; this is the PaaS layer in the cloud architecture. Aggregate services providers (brokers): Their role is that of combining different pre-existing services or parts of these services to form new services and offer them to customers. They serve as customers (to the service provider) and as service providers (to the customer/end user). Consultants: Their role involves supporting customers for the selection, comparison and implementation of the various services available in the market to help them achieve their business goals. All actors have inter-related roles in the value chain and a company can be active in more roles not necessarily one. Other authors such as (Buyyaa, et al. 2009) have their own model of a real real-world exchanges/value chain with even more players, such as the banking system which ensures that financial transactions pertaining to agreements between cloud providers and users are carried out. It also featured a market directory which allows participants to locate providers or consumers with the right offers. Brokers in this model also perform same task as in (Leimeister, et al. 2009) Aggregate services providers they facilitate between consumers and providers by purchasing capacity from Page 33

42 the provider and selling these to the consumers making profit from the difference between buying and selling. The providers have an admission-control mechanism which gives them the control to select the auctions to participate in or the brokers to negotiate with. Their model placed a lot of emphasis on the interaction between the providers, brokers and the customers and it adopted the auctioning business model whereby the consumers bid to get a service, SLA s also have a great deal of importance in the model. Limitation of this model according to the authors is the relative age of the cloud concept which makes enterprises weary of shifting from the traditional controlled IT environments as there will be more regulatory proposition which is bound to either redefine the value chain or make it even better. 5.3 Pricing Models: There are three popular pricing model presently used by Cloud Service provider (KPMG LLP 2009) listed them as Subscription model: This model involves the users paying a specific amount for services on periodic bases e.g. monthly, yearly, quarterly etc. (Weinhardt, et al. 2009) believes this model involves signing of a contract and last for longer period of time, while the former is true it does not always depend on long terms but it varies Usage-based pricing model: this is also known as Pay-per-use pricing model; here the user pays a fixed price for a used unit which is measured in various ways depending on the service being accessed e.g. per Gigabit for storage services, or by CPU-hour for basic computing usage etc. This is the most popular of the pricing models Free or Ad-supported model: Services are offered to end users free of charge but they are funded by advertising by putting up various monetizing model. There is one other less popular pricing model Dynamic pricing: This is also known as variable pricing; it depends on the force of demand and supply, (Weinhardt, et al. 2009) it is typically used for calculating the price of differentiated and high value items as well as high volume/unit services this could be done through the means of Negotiation/bargain or auction. For example, if a storage service of 60GB cost 1 per day a user can bargain to use 240GB of space for say 2.50p as against the price of 4 if the pay per use model is used. Page 34

43 Chapter Six: Implication for a developing country: Case of Nigeria Undoubtedly cloud computing brings with it a lot of advantages and shortcomings as discussed in chapter three, however this chapter is dedicated to exploring ways in which cloud computing can be adopted and put to work in developing countries, specifically using Nigeria as a case study. The chapter is divided into three sections; Cloud enablers or factors that drive cloud computing, challenges to its adoption and implication for development. The importance of this chapter to this project is that it highlights the business opportunities which are available in developing countries and it is addressed to the cloud service providers or business enterprises, having looked at what the concept of cloud computing is about, the business models, advantages and disadvantages etc. a chapter which reveals an opportunity is only befitting to encourage the adoption of cloud computing. 6.1 Factors that drive cloud service adoption: Cloud computing has been defined as computing offered as a service over the internet and some authors such as (Bridget 2010) even believes the "cloud" is the Internet thus the dependence of cloud computing on high-performance (fast and reliable) Internet connections is evident. In Nigeria there has been an increase in the number of internet users according to (World bank 2010) internet users are people with access to the worldwide network, Data collected and illustrated in figure13 below, shows a steady increase in this users with close to 140 per cent increase in users from year 2007 to 2008, there are many reasons for this increase but that is out of scope of this research work, however a notable reason which can be related to this project is the increase in the platform through which end users can connect to the web one of which is through Mobile Technology, according to (Wyld 2009) much of the increase in internet users has been caused by a rise in the use of wireless tools as against or in addition to traditional personal computers. Figure 15 and table 4 shows the number of mobile cellular subscription in Nigeria over a period of 10 years with close to 50 people subscribed to a mobile service provider out of every 100, this shows that it is growing even faster than the internet users per 100 people which stands at 16 users out of Page 35

44 e6very 100 individuals as at year The increase in mobile technology has also brought with it increase in the number of people accessing the web through this platform, a report by (Opera Software 2009) titled State of the Mobile Web, April 2009 the CEO Jon S. von Tetzchner noted that the usage of its mobile web browser Opera Mini in Nigeria surged by 2,353% from April 2008 to April 2009 therefore pushing past Poland to take the 9 th spot on the world ranking as well as the 2 nd spot on the usage ranking in Africa just behind South Africa. Figure 13: Internet Users in Nigeria Figure 14: Fixed broadband internet subscribers in Nigeria Page 36

45 Series Name Fixed broadband ,594 67,776 Internet subscribers Internet users ,769 5,000 8,000 10,000 23,982.2 Internet users (per people) Table 3: Data on Internet Users in Nigeria Figure 15: Fixed broadband internet subscribers in Nigeria Series Name Mobile cellular subscriptions 000 Mobile cellular subscriptions (per 100 people) , , , ,587 32, , , Table 4: Data on mobile cellular subscribers in Nigeria Thus the drivers of cloud computing are already present in the Nigerian market, however it would be important to discuss the threats to the successful adoption of Cloud computing. Page 37

46 6.2 Challenges to Cloud Computing Adoption: Cloud computing needs more than a fast and reliable internet connection to be successful in a developing country like Nigeria such as steady power (electricity), IT governance etc. Internet Speed/Availability: From the analysis in the previous section it is evident that there is an increase in the number of overall internet users but a look at the number of the fixed broadband subscribers is still very low and in its thousands at 67,776 and not even 1 in every 100 people, (World bank 2010) defined the Fixed broadband subscribers as users of the Internet who subscribe to paid high-speed access to the public Internet i.e. at least 256 kilobits per second in one or both directions. This is a huge challenge because the availability of cloud services is key to its adoption by business enterprises and poor internet connection as well as slow connections will do more harm to the concept, (Onuora 2010) suggested two solutions to this problem, 1. Cloud providers should buy, build or lease a better network, which is quite simple just get the best amongst the internet service providers (ISP) out there in the market. 2. Use a Modified hosted solution whereby the software and hardware will be hosted on the client s data centre. These sounds more like a private cloud solution and the cloud provider taking the support and maintenance role in the traditional IT solution. Infrastructure concerns: The major infrastructure problem that will hinder cloud computing is that of power/electricity (Adenikinju 2003) carried out a survey where Electricity was ranked as the mostsever infrastructure problem in Nigeria. As at the end of year 2007 Nigeria generates a mere 22,978,000,000 that is percentage of what United Kingdom produced in the same year (see Figure16 and Table 5). Policies have been formulated and regulatory cabinets shuffled to get the power sector up and running but little has been achieved. This could be viewed as an opportunity for SMEs to embrace cloud computing as it will cut the operational cost of generating their own power but from the cloud providers perspective this will lead to a huge increase in providing IT solutions, and this cost might be frowned upon. Page 38

47 Figure 16: Electricity production in Nigeria and United Kingdom in kilowatt hour (kwh) Country Name Nigeria 14,727,00 0,000 15,463,00 0,000 19,716,00 0,000 20,183,00 0,000 24,209,00 0,000 23,539,00 0,000 23,110,00 0,000 22,978,00 0,000 United Kingdom 374,375,0 00, ,367,0 00, ,596,0 00, ,473,0 00, ,218,0 00, ,386,0 00, ,002,0 00, ,284,0 00,000 Table 5: Data on Electricity production in Nigeria and United Kingdom in kilowatt hour (kwh) 6.3 Conclusion: Having looked at the drivers of cloud computing as well as the factors that can hinder its adoption, it is fair to say challenges are business opportunities in disguise, the framework is already available in the form of platform and means of accessing cloud services. The government of developing countries should strive to fix the challenges of infrastructure and corporate governance as this will help reduce the cost of doing business both for the provider and the consumer of cloud services as detailed in (Omoniyi 2008), thus attracting Foreign Direct Investment. The Cloud service providers have a host of opportunities as an investment in Nigeria will be a green field investment, Netapp a company from the United State of America is already pioneering the drive for cloud computing in Nigeria with the launch of its cloud services (Gegere 2010), as discussed Page 39

48 earlier many small and medium scale enterprises will be willing to buy the idea as its advantages outweighs the limitations. The business enterprises have a wider outreach by using cloud services to deliver solutions to their customer with the increase in mobile phone users the platform has widened; this surely will boost sales of their services and attract customers who predominantly fancy accessing various web services on their mobile, it also gives the business enterprises opportunities of coming up with innovative products, see (Aker and Mbiti 2010) for full details on how Mobile phones can aid economic development in Africa. The other advantages of cloud computing will also benefit the business enterprises such as increased efficiency through collaboration aided by cloud services and ability to hit the market within the shortest period of time. Page 40

49 Chapter Seven: Evaluation 7.1 Summary of work: The research was targeted at Identifying the requirements by clients (Business Enterprises), providing details on the types of service provided by at least three top cloud solution providers and finally an analysis of the available business model being used in getting the service to the clients. These were the minimum requirement of the research and it has fulfilled these requirements, the literatures were reviewed to give a basic understanding of cloud computing, it evolution, models of deployment and its architecture, this was followed by the case for and against cloud computing with notes on the standard IT solutions. The chapter on Cloud solutions was dedicated to profiling some cloud service providers and categorising them accordingly, this was followed by the business model and pricing model. Below are my findings and recommendation. 7.2 Justification of methodology: The qualitative research methodology was used in this project because it is aimed at helping organisations make accurate decisions on their choice of IT solutions which cannot be solely based on the data and figures put up by these solution providers, the descriptive nature of the project touched the bases of these decisions, for example a description of the available pricing models, cloud architecture, business model etc. will help give more understanding to the reader. Thus the project comes in handy as a guide to business enterprises. However it contains a bit of quantitative method of research in the sixth chapter where the data was represented graphically and thus analysed accordingly, but it is pure a qualitative based research. 7.3 Findings and Recommendation: The advantages and disadvantages of cloud computing revealed that just like every new IT phenomenon cloud computing still needs a lot of fixing and not suitable for all business enterprises, however striking a balance between the advantages and the disadvantages will help in making a decision of moving to cloud or not. E.g. what is the value gained by Page 41

50 adopting a cloud solution which reduces time to market in comparison with the value that would have been accrued if the traditional IT solution which takes longer was adopted? Such questions will help determine the choice of IT solution to go for. The pricing model seems to be pretty standardized as all the cloud providers profiled had pretty much the same model (pay per use and the subscription models) thus the dynamic pricing is not popular. Business enterprises can suggest this pricing model to cloud solution provider at the service level agreement stage this is important especially when the company expects a constant upward movement in their IT needs. The adoption of Cloud computing in Developing countries is possible and would aid development by enabling start-up firms get to market easily, providing more platforms of service delivery for the business enterprises, as well as attracting foreign direct investment (FDI) with the huge market potentials this will help attract the cloud vendors and solution providers. 7.4 Limitation of the study: The shortage of literatures on Cloud Computing was one of the major challenges I encountered during the course of the research, other challenges include: Working with the CloudSim tool was a challenge because of my little experience with programming and total lack of knowledge of java programming language, while the successful experiments would have helped me create and study scenarios of resource leasing thus providing information on performance when host and client numbers are varied, it does not take anything away from the project as it met it minimum objective. There are over 250 cloud solution providers thus my choice of the seven profiled in this work might not be considered as a fair size however the absence of data on the market share of each of the cloud solution provider was not available as at the time of this project write up thus my choice of both traditional IT solution providers and typical cloud solution provider. The choice of Nigeria as a case study is not a total representation of developing countries but this should not be a through limitation as there are lessons to be learnt from the case study. 7.5 Suggestion for further study: Page 42

51 Cloud computing is an evolving concept thus there are lots of research opportunities, this research took a general overview of how cloud computing relates to business, a good start for further studies would be to focus on specifics of the concept of cloud such as the long term effect of a pay per use model or finding ways to strengthen the business models under topics such as: Justification for cloud computing: a long term cost analysis Cloud Computing Business Model: Finding new ways of doing business Aspects of security, standardization, reliability, service level agreements etc. are research hotspots as there are a lot of improvement opportunities there as well. Page 43

52 Bibliography Adenikinju, Adeola. "Electric infrastructure failures in Nigeria: a survey-based analysis of the costs and adjustment responses." Energy Policy, 2003: Ahronovitz, Miha, Amrhein Dustin, Anderson Patrick, de Andrade Andrew, and Armstrong Joe. Cloud Computing Use Cases. White paper, Cloud Computing Use Case Discussion Group, Ajith, Ranabahu, and Maximilien Michael. "A Best Practice Model for Cloud Middleware Systems." (accessed April 2010, 14). Aker, Jenny C, and Isaac Mbiti. Mobile Phones and Economic Development in Africa. Working Paper, Washington: Center for Global development, Amazon. Amazon Elastic Compute Cloud (Amazon EC2) (accessed August 20, 2010). Anthony, Velte, Velte Toby, and Robert Elsenpeter. Cloud Computing- A practical Approach. New York: McGraw-Hill, Armbrust et al, Michael. Above the Clouds: A Berkeley View of Cloud Computing. UC Berkeley RAD System Lab, Bridgefield, Group. Bridgefield Group ERP/Supply chain Glossary. n.d. (accessed August 24, 2010). Bridget, Carey. Firms Embrace Cloud Computing HPC-Firms-Embrace-Cloud-Computing aspx (accessed August 24, 2010). Buyyaa, Rajkumar, Yeoa Chee, Venugopala Srikumar, Broberg James, and Brandic Ivona. "Cloud computing and emerging IT platforms: Vision, hype, and reality for delivering computing as the 5th utility." Future Generation Computer Systems, 2009: Colaner, Seth. "New in the cloud." Web Bits, 2010: Demarest, George, and Rex Wang. Oracle Cloud Computing. Redwood: Oracle Corporation, Djemame, Karim. "Cloud Computing." E-Systems Lecture Note, Leeds, Eric, Marks, and Lozano Roberto. Executive's guide to cloud computing. New Jersey: John Wiley & Sons, Inc., Fitzgerald, Michael. "http://blog.animoto.com/." From the guys at animoto. May 25, (accessed September 1, 2010). Page 44

53 Foster, Ian, Zhao Yong, Raicu Ioan, and Lu Shiyong. "Cloud Computing and Grid Computing 360- Degree Compared." Gegere, Ejiro. Cloud computing the next big thing. News, Lagos: NEXT, Gens, Frank. "Defining Cloud Services and Cloud Computing." IDC exchange. September 23, (accessed September 1, 2010). Google, Trends. Google Trends ng&ctab=0&geo=all&date=all&sort=0 (accessed April 2010). Gustavo, Alonso, Casati Fabio, Kuno Harumi, and Machiraju Vijay. Web Services: Concept, Architectures and Applications. Berlin: Springer, HP. HP Cloud Assure service. Hewlett-Packard Development Company, Hurwitz, Judith, Robin Bloor, and Marcia Kaufman. Clud Computing for Dummies. Hoboken: Wiley Publishing, Inc., Jaekel, Michael, and Achim Luhn. Cloud Computing Business Models, Value Creation Dynamics and Advantages for Customers. White Paper, Siemens AG, KPMG LLP. Executive Considerations When Building and Managing a Successful Cloud Service. Market Analysis, KPMG LLP, Leimeister, Stefanie, Markus Böhm, Helmut Krcmar, and Christoph Riedl. The Business Perspective of Cloud Computing: Actors, Roles and Value Networks. Paper, Germany: Technische Universität München (TUM), Leyden, Tom. Sys-con Media. October 22, (accessed March 5, 2010). Ling, Qian, Luo Zhiguo, Du Yujian, and Guo Leitao. "Cloud Computing: An Overview." CloudCom. Beijing: Springer, Macquarie Telecom. "The Business Perspective on Cloud Computing." White Paper, Sydney, Microsoft. Cloud Services. US: Microsoft, Myerson, Judith M. "Cloud computing versus grid computing." IBM developer works. IBM, March 03, NIST. "Computer Security Resource Centre." July 10, (accessed April 29, 2010). Omoniyi, Temitope. The Impact of Foreign Direct Investment (FDI) on the Nigerian Economy. Bsc Thesis, Ota: Unpublished, Page 45

54 Onuora, Amobi. "Technology solutions for Nigeria, Part 1 Software As A Service (SAAS)." The Nigerian Inquirer. May 27, (accessed August 24, 2010). Opera Software. "State of the Mobile Web, April 2009." Opera.com. April (accessed August 24, 2010). Peterindia. Enterprise Computing. n.d. (accessed 08 17, 2010). Reese, George. Cloud Application Architectures: Building applications and Infrastructure in the cloud. Sebastopol: O'REILLY, Rittinghouse, John, and James Ransome. Cloud Computing: Implementation, Management, and Security. Boca Raton: CRC Press, Schneier, Bruce. "www.schneier.com." June 4, (accessed April 25, 2010). sla-zone. The Service Level Agreement Zone (accessed August 25, 2010). Stonecypher, Lamar. "Cloud Computing." Bright Hub. April 7, (accessed April 18, 2010). Sun. Take your business to a higher level. Sun Microsystems Inc., TED. Bill Gates on energy: Innovating to zero! Feburary (accessed March 12, 2010). Vaquero, L. M., L. Rodero-Merino, J. Caceres, and M. Lindner. "A Break in the Clouds: Towards a Cloud Definition." ACM SIGCOMM Computer Communication Review, 2009: Varia, Jinesh. Cloud Architectures (accessed June 14, 2010). Weinhardt, Christof, et al. "Cloud Computing A Classification, Business Models, and Research Directions." Business & Information Systems Engineering (BISE), 2009: World bank. "Data The World Bank." The World Bank (accessed August 24, 2010). WSO2. Enterprise Middleware (accessed September 1, 2010). Wyld, David C. "The Utility of Cloud Computing as a new Pricing-and Consumption-Model for Information Technology." International Journal of Database Management Systems, Page 46

55 Appendix A: Project Experience Writing this project was an uphill task (seems all research works are) but also an enlightening one, thus it brought with it some positives as well as negatives. The choice of a project topic was not easy reason being that the School of Computing structured the modules for the program such that only one computing module was taught in the first semester and since all projects in the school must be computing inclined, I found my choices being limited. However the support of my supervisor who went as far as helping me with literature materials to aid my understanding of the topic eased the anxiety of working on the topic. The available literature relating to this topic was also limited due to the newness of the topic Cloud Computing, thus the variety of the literature sources from blogs, newspapers, and white papers etc. as against traditional textbooks. The research period totally took away my social life as I found myself drowning in intense research and never conscious of the sales happening in town. Inasmuch as research works need a hundred per cent focus, the variety the social aspect of life adds to the experience should never be undermined. On a positive note, I gained fulfilment writing this project because it was an opportunity to contribute to a concept which is still in its infancy, I am glad I also included the chapter on applying cloud computing to developing countries as I feel this gives the project a global relevance. Lessons Learnt/Advise to prospective researchers: I learnt that a thorough review of the literature goes a long way in determining the success of any project as it affects planning because knowing what to write about and how ones research differs from that of other authors is highly dependent on the literature reviews, thus it helps chart the course of how the researchers idea is presented. Variety is the spice of life, when working on a project it is very important to have a balanced lifestyle as this even helps shed a lot of worries thereby keeping the mind in good shape to work on the project without interferences. Page 47

56 Appendix B Project Management: Changes: He original Gantt chart was not detailed enough as it only contains the work packages in the form of chapters and foreseeable breaks. The revised chart featured specific milestones and contents of each chapter while the final Gantt chart reflects the actual project plan achieved. Original Gantt Chart. Page 48

57 Revised Gantt chart Page 49

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