Running head: CLOUD CULTURE 1. The Business Culture of Cloud Computing. Jesse A Score. Globe University

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1 Running head: CLOUD CULTURE 1 The Business Culture of Cloud Computing Jesse A Score Globe University Author Note This paper was prepared for CM320 Writing and Research, XG1.12FALL, taught by Instructor Ralph Pennel.

2 CLOUD CULTURE 2 The Business Culture of Cloud Computing The connection between business and technology is here to stay. Businesses generate and store data and process orders through software which all runs and exists on hardware. There is an inherent requirement that business owners or operators must have enough knowledge and the right skillset to properly manage the hardware and software required which can be seen as a huge investment (Bennett, 2012). A business might look to outsource the management of their required information technology infrastructure or perhaps, acquire it as a service through cloud computing. Cloud computing is a broad term used to describe any number of service models using outsourced virtualization delivered via the Internet (Aljabre, 2012). A business owner should research and investigate cloud computing if only to stay aware of recent developments that impact their environment. It may even be a viable option to help the business succeed. Cloud computing is like any other technology in that it changes and quickly, and new business models and approaches are being created alongside the new technology. Businesses looking to employ a flexible, dynamic business model are more likely to adopt cloud computing as an information technology (IT) solution due to its flexibility, versatility, and cost benefits. The idea behind cloud computing as an information utility is not new, but the number of services available are impressive: software-as-a-service, infrastructure-as-a-service and even platform-as-a-service (Bennett, 2012). Amazon Web Services is an example of a cloud computing service provider. First introduced in 2006, this service enabled businesses to acquire IT infrastructure services without the need to make the significant investment to build their own IT infrastructure (Amazon Web Services, 2012). This opened the door for new business models and approaches to IT software and hardware. It has been described as a new conceptual paradigm which combines into a single environment not only applications, architecture and business models, but a variety of professionals for performance of common business tasks in the

3 CLOUD CULTURE 3 Internet medium (Budrienė & Zalieckaitė, 2012). The emergence of cloud computing coincides partially with the emergence of Web 2.0. Web 2.0 is the use of Web technologies to provide to the end-user a high level of control at the client-side rather than server-side through applications and web gadgets (Bein, D., Bein, W., & Madiraju, 2009). Cloud computing and Web 2.0 are a result of the nature of the Internet in how it has become a distribution mechanism for various applications including , document processing and entertainment. In spite of these developed technologies, a business owner may not be inclined to review their delivery mechanism for their business applications or systems infrastructure due to entrenched precedents. However, it would be wise to examine the potential benefits. There are a variety of benefits to adopting cloud computing. First, there is a reduction in the cost of the initial investment. Organizations are not required to put up significant capital to acquire the necessary hardware and software to develop their own servers and databases. There are no longer maintenance tasks related to servers and storage (Yoo, 2011). Maintenance tasks include performing software updates to keep operating systems, applications, firewalls, antivirus and much more up-to-date. It involves testing and disaster recovery exercises. Maintenance also means basic tasks like keeping the server closet secure and clean. Replacing defective hardware is another example of the many tasks that can be deferred to a cloud computing service provider. With the transfer of responsibility, the capital expenses typically associated with proprietary IT systems and infrastructure are converted to operational expenses (Yoo, 2011). An organization simply pays for what services are performed as they are performed. This is similar to how a company would pay to have a vendor clean and maintain the HVAC systems in a building. The business only pays the vendor for the work they perform. They do not have to build an entire HVAC service team before they have the ability to clean their HVAC system. In

4 CLOUD CULTURE 4 this regard, small firms can now have access to resources that were previously obtainable only by large organizations with significant amounts of liquid capital. They only pay for the services used (Aljabre, 2012). In a style similar to many traditional utilities, like electricity, companies are billed based on actual usage and not necessarily theoretical usage. Cloud computing enables the dynamic provisioning of resources. Additional processor time is readily available when needed without the business having to purchase and configure additional servers or virtual machines in their own system. This property of cloud computing introduces inherent scalability as a benefit. The computer power on the server-side scales to the demand of the customer either up or down based on their needs at any given time or as outlined in their service level agreement. This enables companies to save on client-side computer power as well (Aljabre, 2012). Additionally, economies of scale can be sizeable as resources are shared and a higher utilization rate of hardware and software is achieved (Bennett, 2012). Another advantage of cloud computing comes in the form of increased collaboration and availability of information. Users can work together on single documents within the cloud and access them from any location with internet access, which permits users to remain productive (Yoo, 2011). All of these benefits impact the bottom line of a business. Overall, costs are reduced in terms of the overhead associated with managing IT systems which includes heating and cooling. It also can change the number of employees required for a company to hire (Aljabre, 2012). Ultimately all these benefits save money and help the company add value in other innovative ways. Additionally, the benefits are presented in a context in which it is presumed that there is a need for flexibility, mobility and adaptability, but there are also some concerns to be considered. It would not be fair to only consider the positive side of cloud computing when analyzing what sort of business is likely to adopt cloud computing. One does not need to look far to find

5 CLOUD CULTURE 5 complaints on cloud computing. Some individuals consider cloud computing to simply be a hyped up technology. In fact, Oracle CEO Larry Ellison asserts the hype is media driven and simply describes things that are already being done by many companies (Boulton, 2008). People accurately point out that Facebook and Google s Gmail have always been cloud applications (Pachner, 2010). According to a recent study by TATA Consultancy Services, United States organizations are slow to adopt cloud computing with 81% of business applications residing onsite as opposed to on the cloud ( Cloud computing slow to take off, 2012). The fact that 81% of surveyed business applications reside on-site might be more of an indication as to the fact that these organizations have already invested significant dollars on developing their own proprietary applications and systems. Change can be perceived as an unnecessary risk, and cloud computing service is still relatively new in business. Future surveys will help provide additional perspective on the rate of adoption for cloud computing services. Hyped up or not, there are other concerns to consider. For example, privacy and security are major concerns as data that previously did not have to leave the company s internal network must now be transported outside the company s firewall via the internet (Yoo, 2011). The data is stored on what is essentially a public server and questions have been raised as to whether data is still able to be considered proprietary or confidential if it is stored among other business data (Bein, D., Bein, W. & Madiraju, 2009). Finally, there is regulatory uncertainty facing the cloud computing industry (Yoo, 2011). There are new challenges and precedents that are likely to be set that may change the landscape of cloud computing. Quality of service guarantees, for example, raise concerns regarding network neutrality as prioritization of traffic and bandwidth allocation may occur to meet the high demands of clients. As such, it can be argued that public utility regulation should not be applied to cloud computing as the product being distributed or

6 CLOUD CULTURE 6 regulated varies too greatly and the market is still in a state of flux (Yoo, 2011). The issues relating to trust explain why established businesses are reluctant to adopt cloud computing. Reluctant or not, monitoring the trends in cloud computing can help a business owner in determining if the use of cloud computing makes sense for them. One observation is that cloud computing is impacting mobile applications and the availability of large amounts of historical data which leads to improved decision making. The term Big Data is a popular buzzword that refers to the large amount of data that is being used in business analytics. Research shows that the trend to rely on data to drive decision making results in productivity gains of 5 to 6 percent versus organizations that do not use data-driven decision making (Lohr, 2012). There is a greater focus on quality of service and security to help ease clients concerns as previously discussed. Additionally, global cloud exchanges are being developed which may further expand the availability of information systems around the world (Buyya, Yeo, Venugopal, Broberg, Brandic, 2008). These trends relate to the demand for services and are just a few of the many emerging trends in cloud computing. Different industries and business models have different needs which drive their demand. Monitoring trends in cloud computing can help a business owner remain informed of new tools and services used in their industry. Understanding the IT service demands of similar businesses is critical in a competitive and dynamic business environment. Having explored the ins and outs of cloud computing, it is time to examine its impact on business. Organizations will be able to invest into IT without having a need to acquire skilled IT workers. IT workers would be free to focus more on relationship building and other soft-skills as they would not necessarily need strong technical savvy for troubleshooting and administrative duties as those are performed by the cloud computing service provider. This demonstrates a shift

7 CLOUD CULTURE 7 in the desired employee skill-set and what types of skills may be in high demand for a business or where prospective IT employees would want to find themselves. The types of businesses that may adopt cloud computing are more likely to be small- to medium-sized. Large corporations with heavy investment into IT infrastructure and systems will not likely shift to cloud computing. It is hard to make a quick switch when you re heavily invested (Davis, 2009). Large corporations are generally more stable in their market. They may also be heavily diversified, and on occasion may even provide cloud-type services to their own customers. The decision to shift to cloud computing is also likely to be met with resistance when the scope of such a move is as large as one would assume for a major corporation. A smaller organization, however, will generally have a smaller footprint. They are likely to have a flatter hierarchy which reduces bureaucracy. They will be more likely to be able to work hands-on with cloud computing. Furthermore, a smaller organization is less likely to have enough employees or the skills necessary to manage a competitive IT environment. Small companies may also have less cash availability which makes the operational expense of cloud computing more appealing to an entrepreneur. Distributed organizations are also likely to adopt cloud computing. Mobile employees that work across a large geographical area can access data, applications and processing power from anywhere with Internet access. They work from a smartphone and can access a virtual PC via the cloud (Davis, 2009). Organizations that lack a single location or main headquarters would also likely adopt cloud computing. Their small footprint and dynamic nature meshes well with service-, infrastructure- and platform-as-a-service. Cloud computing mitigates the overhead that comes with implementing IT services for a business. It provides an opportunity to better manage budget by reducing capital expenses by shifting them to operational expenses. Large, well-established organizations are unlikely to adopt

8 CLOUD CULTURE 8 cloud computing as they will generally have a large investment into IT at this stage in their life and have greater access to resources to implement upgrades to stay current. Smaller, flexible and dynamic businesses without the existing significant investment are far more likely to adopt cloud computing. Emerging entrepreneurs will look to it as a starting point because of cloud computing s scalability and other benefits.

9 CLOUD CULTURE 9 References Aljabre, A. (2012). Cloud computing for increased business value. International Journal of Business & Social Science, 3(1), Retrieved from Business Source Complete database. Amazon Web Services (2012). About AWS? Retrieved from Bein, D., Bien, W., & Madiraju, P. (2009). The impact of cloud computing on web 2.0. Economy Informatics Journal. 9(1):5-12. Retrieved from Bennett, B. (2012). Cloud computing demystified. NZ Business, 26(8), Retrieved from Business Source Complete database. Boulton, C. (2008, September 29). Oracle CEO Larry Ellison spits on cloud computing hype. eweek. Retrieved from Larry-Ellison-Spits-on-Cloud-Computing-Hype/ Budrienė, D., & Zalieckaitė, L. (2012). Cloud computing application in small and medium-sized enterprises. Issues of Business & Law, 4, doi:10.520/ibl Buyya, R., Yeo, C. S., Venugopal, S., Brogerb, J., & Brandic, I. (2008, November 21). Cloud computing and emerging IT platforms: Vision, hype, and reality for delivering computing as the 5th utility, Future Generation Computer Systems, doi: /j.future Cloud computing slow to take off. (2012). Information Management Journal, 46(4), 14. Retrieved from Business Source Complete database. Davis, J. (2009). Business opportunities and threats in the technology cloud. Channel Insider, 1-2. Retrieved from Business Source Complete database.

10 CLOUD CULTURE 10 Lohr, S. (2012, February 11). The age of big data. The New York Times. Retrieved from Pachner, J. (2010, March 1). Cloud computing heavy with hype. Canadian Business, 83, Retrieved from ProQuest: Newsstand database. Yoo, C. (2011). Cloud computing: Architectural and policy implications. Review of Industrial Organization, 38(4), doi: /s