Cloud Computing : Definition & Impact on the Business
Juvénal CHOKOGOUE MConsultant on Applied Data-Processing
Methods for Decision Help-Making
• CO-DE-0001
• [06/21/2013]
• The New Challenge of Business…• What this module Stands for ?• Who is this module for ?• Before battle begins • The New Corporate Business Structure : From
Hierarchical Model to Network Model • Cloud Computing : A Business Strategy based on Agility• Key Technologies used in Cloud Computing• Differences between IaaS, PaaS and SaaS• Implication of the transition to Cloud Computing• What Should I remember ?• Some Cloud Providers• Bibliography & Resources• About me
Module Overview
The New Economic Challenge…Today’s businesses face rapidly changing conditions, new technology, new
competitive forces and new consumer trends. As we look at the horizon, we see dramatic change standing out : Volatility is here to stay.
Scaling operations up and down as conditions changes and ability to pivot quickly and address new threats or opportunities are what make companies successful in today’s economy.
Today’s market volatility is increasing. Products have life cycles measured in months or a couple of years at most. Technology and consumer preferences are rapidly evolving. New fashions and new products and whole product categories pop up without warning, drastically altering traditional customer buying patterns. Not only is product demand hard to estimate, but so too are the costs of everything from raw materials to labor and transportation. The real-time global economy of the twenty-first century is a very different world from that of the last century.
Today, responsiveness and flexibility are key words for success. But to effectively implement flexibility and responsiveness into their business, organization's strategies MUST find a way to shift sunk costs into variable costs. In that way, as operating costs rise as business activity rises, and costs will also drop as activity drops and costs won’t rise at all if expected activity levels don’t materialize or a new product doesn’t take off.
So, let’s find a way to build a computing model flexible enough to support this new business environment volatility.
What this module Stands for ?This module is an interactive White Paper which intend to explain the meaning of “Cloud Computing”, the definition of the concept and the key technologies that cloud computing is built on. The module will show you today’s organization constraints and factors that can motivate successful adoption of Cloud Computing in an organization strategy.
It will present some implications of transition to Cloud Computing in the way that today’s businesses are driven.
At the end, the module will provide the impact of Cloud Computing in the IT work and any professional work.
We expect that, by the end of the module, you will have understood at least what the Cloud Computing is, where it does fit, and what can be its implications in your organization or in your professional life.
So, Keep Reading…
Who is this module for ?This module has been built for every one, from professionals to students who want to have a clear idea about the concept of Cloud Computing, its implications in today’s business and more importantly, its consequences in the labor.
So, if you are an IT professional, this module will be very useful to you, because it presents to you core technologies of Cloud Computing and drastic changes brought by the it in your profession.
If you are a decision maker, you will be thankful to this module, because it presents specifically to you business models that you can adapt to your company to face new markets threats and a set of new technologies that comprehension can help you to build a more robust strategy for your business.
If you are an Information Worker or a business analyst, this module will help you to understand the strange word that “Cloud Computing” is, how you can take advantage of Cloud Computing to improve your daily work and most importantly it will help you to prepare yourself to the future consequences of adoption of Cloud Computing by your company.
If you are a student or interested, you will benefit all the advantages listed above and will gain a good understanding of “Cloud Computing”.
Before battle begins information provided here is for informational purposes only and represents my current
point of view as of the date of this presentation. Due to changing conditions of market, information provided here can be modify or obsolete, it should not be interpreted to be a commitment and I cannot guarantee the accuracy of any information provided after date of this presentation.
Contents of websites provided here can be modify or change, or the website itself can be unavailable after the publication of this presentation. So I can not MAKES warranties, express, implied or statutory, as to the information in this presentation.
Product names related here are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.
Feel free to share this module with anyone you know, from your colleagues to your friends, but in this case, don’t forget to mention the name of the author .
You can use and change the content of this module at your own but I will not be responsible of it content in this case.
This module is not for sale, If you intend to use it to your own, please, don’t commercialize it !
The New Corporate Business Structure : From Hierarchical Model to Network Model
“Supply creates its own demand, one can not have overproduction”. You surely remember this sentence from Jean Baptiste SAY. JB SAY said that in the eighteenth century; At that time product demand was reasonably predictable and stable; so companies had just to allocate labor and capital to optimize production and Return On Investment (ROI). In that context, ability to lower transaction costs, product cost and gain efficiencies from economies Of scale were enough to be successful.
Since it was possible to make reasonably reliable predictions of customer demand and prices for labor and raw materials, companies gather themselves into huge and vertically integrated conglomerates. In that way, they were able to make large capital investments in plant and equipment to achieve economies of scale and meet demand for their products at the lowest per-unit costs, and thus earn the greatest profits.
They paid for these investments and their resulting high fixed costs through increases in productivity that enabled them to produce greater and greater amounts of standard goods and services at lower and lower costs.
Naturally, this leads to tendency to organize themselves as hierarchical pyramids where most people are powerless workpeople who just follow orders while the important decisions are made by a small group of powerful executives at the top of the pyramid.
But that, that was Before !
Decision-MakerControl
Business Units
Ord
ers
Info
rmati
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In Centrally controlled hierarchies, People at the top of corporate hierarchies are overwhelmed by the sheer volume of decisions they have to make; they are too faraway from the scene of the action to really understand what’s happening; and by the time decisions are made the actions are usuallytoo little and too late
Centrally controlled hierarchies move SLOWLY because only a few people know what the strategy is and everybody else waits for permission to act
The Hierarchical Pyramid Model
But Today, businesses face rapidly changing conditions, new technology, new competitive forces and new consumer trends. Market volatility is increasing. Scaling operations up and down as conditions changes and ability to pivot quickly and address new threats or opportunities are what make companies successful in today’s economy.
Today Products have life cycles measured in months or a couple of years at most. Technology and consumer preferences are rapidly evolving. Not only Product demand is hard to estimate, but so too are the costs of everything from raw materials to labor and transportation. The real-time global economy of the twenty-first century is a very different world from that of the last century.
Today, responsiveness and flexibility are key words for success. Companies need to be agile and they can no longer follow the traditional hierarchical model where there is such a high fixed costs and a decision-making bottleneck at the top of the organization. They need something more agile, something that can help them turn fixed costs into variable cost. Like this, as operating costs rise as business activity rises, and costs will also drop as activity drops and costs won’t rise at all if expected activity levels don’t materialize or a new product doesn’t take off.
Now instead of a small group of executives telling everybody else what to do, people should have authority to figure out for themselves what to do. People should be motivated to coordinate, cooperate, and collaborate with each other by a financial incentive system that rewards them for their common successes instead of rewarding each manager for their individual successes.
The evolution of corporate organization structures like this is driven by the convergence of economic necessities with technological capabilities :That is where “Cloud Computing” comes in to play !
Coordination
Business Unit 2
Business Unit 1
Business Unit 4
Business Unit 5
Business Unit 3
New Unit 2
Coordination requires everybody to know what the strategy is and have authority to act. Business units
become new coordinators to support expansion into new market
In a responsive organization, Enterprise Coordinator says WHAT. Business Units are free to choose HOW
The Network Model : A Model of Responsive Organization
New Unit 1
Cloud Computing : A Business Strategy based on Agility
In volatile time like today, Business models with high fixed costs are much riskier than they used to be. Reactiveness generate efficiency; a better strategy is to shift fixed costs into variable costs. A responsive model gives flexibility to adapt to changes as quickly as they happen.
A lot of companies have high fixed operating costs because of IT investments in computers, business application systems, data centers and staff needed to run the technology and systems. Or investment in IT cannot be easily reconfigured to adapt to changes. Ironically, these IT systems are a critical factor in any company’s ability to be agile and responsive.
Recent studies shows that about 70 to 80 % of company IT budgets goes to the operation and maintenance of existing systems and data centers. So in many organizations, there isn’t much money available to design and develop new systems.
Given this situation, consider this axis of reflections:
“What if companies could outsource their IT Infrastructure with all ongoing costs to a highly specialized provider ? If companies cannot have to worry anymore about all of the financial and operational overhead associated with building and operating their own data centers, would they then be able to focus more on what they do as a business? “
Companies have today the big opportunity to reduce IT Costs by reducing unused IT Infrastructure capacity through what is called CLOUD COMPUTING.
In effect, some companies (providers) are now offering their computing power and software applications on a Pay-as-you-go basis. With this opportunity, companies can now power their business operations with a “flexible and Scalable Computing Platform “ !
What is Cloud Computing Anyway !?There is numerous definitions about Cloud Computing and Vendors are constantly framing cloud from an IT perspective, and fighting over confusing cloud definitions, leaving business leaders unclear of the corporate or competitive importance. But here are some definitions :
- IDC (International Data Corporation) : “Consumers and business products, services and solutions delivered and consumed in real time over the internet”.
- IBM : “Cloud computing is a pay-per-use consumption and delivery model that enables real-time delivery of configurable computing resources (for example, networks, servers, storage, applications, services). Typically, these are highly scalable resources delivered over the Internet to multiple companies, which pay only for what they use.”
- Microsoft : “An approach to computing that’s about internet scale and connecting to a variety of devices and endpoints”
- Jeff KAPLAN : ‘‘ . . . a broad array of web-based services aimed at allowing users to obtain a wide range of functional capabilities on a ‘pay-as-you-go’ basis that previously required tremendous hardware/software investments and professional skills to acquire.’’
In a Cloud Computing architecture, one or more companies provide online Computing resources (Services) to another companies that the latter pay on a “pay-as-you-go” basis.
The Cloud computing has three widely agreed particular characteristics :
1) Practically unlimited computing resources: Resources like computing power, data storage space, networks, servers are available on demand as needed.
2) No long-term commitments: Computing resources are immediately available and they may be used as long as needed and then retired because they are acquired on a month-to-month or even a minute-to-minute basis.
3) Pay-as-you-go cost structure: Because there are no long-term commitments, the cost of cloud computing resources is a variable cost, not a fixed cost; cost fluctuates depending on the amount of usage.
What is Cloud Computing Anyway !?
Cloud Computing Patterns
tCom
put
e
Inactivity
Period
t
t
t
On and OffOn & off workloads (e.g. batch job)Over provisioned capacity is wasted Time to market can be cumbersome
Unpredictable BurstingUnexpected/unplanned peak in demand Sudden spike impacts performance Can’t over provision for extreme cases
Com
put
e
Growing FastSuccessful services needs to grow/scale Keeping up w/ growth is big IT challenge Cannot provision hardware fast enough
Com
put
e
Predictable BurstingServices with micro seasonality trends Peaks due to periodic increased demand IT complexity and wasted capacity
Com
put
e
Key Technologies used in Cloud ComputingSince the Cloud Computing is still evolving, there is a lot of confusion and
definitions in the industry when talking of it. But It is important you realize that as a concept, the term “Cloud Computing” is just a metaphor for computing resources that companies and users access without the need to know exactly where that hardware and software are physically located.
The Cloud Computing is set up of three components layers :
₋ SaaS (Software-as-a-Service) : whereby a software provider delivers and hosts an application, without the need for the customer to house and maintain the application in its own data center.
₋ PaaS (Platform-as-a-Service) : which is a development environment where a developer can create and develop applications on a provider’s computing environment, thereby eliminating the need to find company-owned infrastructure for the development.
₋ IaaS (Infrastructure-as-a-Service) : which allows companies to essentially rent data center environment without the need and worry to create and maintain the same data center footprint in their own company.
It is important to note that these 3 types of services /Layers may exist independently of one another or combined with one another. SaaS offerings needn’t be developed upon PaaS offerings although solutions built on PaaS offerings are often delivered as SaaS. PaaS offerings also needn’t expose IaaS and there’s more to PaaS than just running platforms on IaaS.
Software-as-a-Service
consume
SaaSPlatform-as-a-Service
build
PaaSInfrastructure-as-a-
Service
host
IaaS
Key Technologies used in Cloud Computing
Man
ag
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y v
en
dor
Storage
Servers
Networking
O/S
Virtualization
Applications
Data
SaaS
Man
ag
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y v
en
dor
You m
anag
e
Storage
Servers
Networking
O/S
Virtualization
Applications
Data
PaaS
Storage
Servers
Networking
O/S
Virtualization
Data
Applications
Man
ag
ed b
y v
en
dor
You m
anag
e
IaaS
Differences and relationship between IaaS, PaaS, and SaaS.Here’s another way to look at the cloud services taxonomy and how this taxonomy maps to the components in an IT infrastructure.
Differences between IaaS, PaaS and SaaS
Implication of the transition to Cloud ComputingIn his controversy 2003 Harvard Business Review article titled, ‘‘IT Doesn’t
Matter ”, Nicholas Carr states that “the IT function, which in the past has focused on IT as a business input, wasn’t really directly influencing what you were selling anyway.” That is to say that, the traditional IT functions such as starting data centers & Servers, maintaining legacy application systems, network administration... do not provide any competitive advantage; So companies are finding ways to shift most of traditional IT activities out of corporate IT. Here are some implications of that fact into IT function and overall business:
DELL states that, with the adoption of the cloud, “everyone becomes a knowledge worker”. As a matter of fact, the Cloud offers necessary automation and control to workers to essential applications and data. Therefore, we will create more knowledge and foster greater collaboration than ever imagined. Knowledge, a highly prized asset and competitive differentiator for business, will not longer be limited only to a subset of workers, but for every worker.
because of all kinds of economic opportunities driven by the Cloud Computing and due to the fact that Cloud frees IT Staff of traditional functions, IT will be used to pursue more strategic tasks and higher priority outcomes, therefore the value of IT Workers will come from their ability to proactively deliver the information systems that their business units need to achieve their profit objectives
More over, Since IT operations are no longer competitive differentiators, it is very probable that companies will delegate traditional IT work to a smaller group of Cloud Service providers that specialize in getting it done better than the in-house team largely because the providers can deliver higher levels of service at lower costs than if companies continue to operate them internally.
So, only IT Workers who know how to apply the core set of IT Techniques to directly add value to business will are probably those who will stay in company. A key finding from a 2012 Economist Intelligence Unit study found, “Almost six in ten (57%) of executives surveyed expect their IT function to change significantly over the next three years; 12% predict a ‘complete overhaul” “.
As a result of fact, company’s Staff will be largely setup of only specialized Business Process people whose work add value directly to company’s product. Note that, due to the level of expertise require to handle Cloud computing technologies, Cloud service providers will need IT workers with very high level of master in order to provide their services efficiently. But as Rick Pittard states: “People focused on building and operating data centers often don’t realize how much things have changed in the last few years.’’So, it is very probable that, with adoption of the Cloud Computing, people, who setup the workforce of the market should be : either a Specialized and Highly focused Business Process people, or a Highly-Specialized IT master. So, be careful not to be of those who : ‘‘have always done it in this way.’’, because companies need today to be responsive !
In conclusion, Leasing capacity from IT service providers will probably increasingly become a more attractive financial option to most organizations and it is very probable that with the progressive adoption of the Cloud Computing, companies will outsource more and more of their basic IT operations. This will in turn enable them to shift of their time and attention to find ways to use IT to deliver much more concentrated competitive advantage than ever before. So, “IT profession as we have known it for the last several decades is dying !”
• For Business Professionals & Decision-Makers :₋ The new economic market obligate companies to be Agile. Business Agility
is the ability to make continuous incremental changes and adjustments in operating procedures so that the company can respond as new business conditions arise.
₋ Companies that understand how to optimize their IT Costs will achieve more agile business model.
₋ Cloud Computing is a Business Strategy based on agility and responsiveness.
₋ Technology is an enabler of change, not the cause of it. You must see it as a platform that supports organization’s business Process. That is to say that the Cloud Computing will be benefit for your organization only if it is well-aligned with Business Process and Organization objectives.
• For IT Professionals :₋ Business Agility calls for IT Agility₋ Cloud Computing is not only a technology, it is a part of an overarching
responsive business strategy.₋ Cloud Computing is set up of three layers : Iaas, Paas and SaaS₋ With adoption of cloud, IT will be used to deliver much more concentrated
competitive advantage than ever before.
What Should I remember ?
Some Cloud Providers
- Microsoft with its AZURE platform, Office Web Apps, SkyDrive, AZURE HDInsight- AMAZON with its Amazon Web Services, Amazon Elastic Compute Cloud (Amazon
EC2)- Google with its Google Drive, Google Compute Engine, Google Big Query, Google
Prediction API- Yahoo- IBM- Dell- Orange Business Services- Salesforce.com : we don’t present anymore these pioneer of Marketing based
Cloud.- Predixion, with its Predixion Insight, a Cloud-based Analytics.- Citrix- VMWARE- Intel
Here are some cloud providers I personally know. There are some others.
Unit of Compute Defined
Variable instance sizes to handle complex workloads of any size
Small1 x 1.6Ghz
(moderate IO) 1.75 GB memory
225 GB storage(instance storage)
Medium2 x 1.6Ghz
(high IO)3.5 GB memory 490 GB storage
(instance storage)
Small$0.12
Per service hour
Medium$0.24
Per service hour
X-Large$0.96
Per service hour
Large $0.48
Per service hour
Large 4 x 1.6Ghz
(high IO) 7.0 GB memory1000 GB storage
(instance storage)
X-Large8 x 1.6Ghz
(high IO)14 GB memory
2040 GB (instance storage)
$0.02
Per service hour
Extra Small
Extra Small1 x 1.0Ghz
(low IO) 768 MB memory
20 GB storage(instance storage)
A Cloud Provider’s Rate : Microsoft Windows AZURE
Bibliography & ResourcesMatthew Mikell, DELL Cloud Evangelist, “Cloud impacts and outcomes for business leaders: Ten ways business will change”http://resources.idgenterprise.com/original/AST-0090232_cloud-impacts-outcomes-for-business-leaders.pdfSaul J. Berman, Lynn Kesterson-Townes, Anthony Marshall, Rohini Srivathsa, IBM Institute for Business Value, “The power of cloud : Driving Business model innovation “http://resources.idgenterprise.com/original/AST-0063512_ibm_powerofcloud.pdf http://ibm.com/cloudBrousell, Lauren. “Survey: CIOs are putting the cloud first.” CIO.com. June 14, 2011. http://www.cio.com/article/684338/Survey_CIOs_Are_Putting_the_Cloud_FirstMichael Hugos, DerekHulitzky, “Business in the Cloud : WHAT EVERY BUSINESS NEED TO KNOW ABOUT THE CLOUD COMPUTING”, John Wiley & Sons, Inc., ISBN 978 0 470 61623 9Jeff Kaplan, ‘‘Simplifying the Term ‘Cloud Computing’’’ Datamation.com Blog, June 25, 2009, http://itmanagement.earthweb.com/netsys/article.php/3826921/Simplifying the Term Cloud Computing.htmhttp://WindowsAzure.comhttp://www.microsoft.com/windowsazure/International Data Corporation (IDC), September 2009The itmWEB Site , IT Budget Allocations Benchmarks, www.itmweb.com/blbenchall.htmNicholas Carr, The Big Switch (New York: W.W. Norton & Company, 2009)
About Me• I am a freelance/Consultant specialized on data Processing methods, methodologies and
technologies which allow organisations managers to make day-to-day decisions for their business.
• I analyse IT Technology and its impact on the Business leading and then I find the right IT Technology which can fit to the business. I am all about allowing organisations to capture data which business process needs to complete successfully, transform it into information and help managers to make better decisions.
• I develop reliable, scalable and robust solutions in tools information workers are already familiar to; this to reduce time spend on learning and increase performance.
Store Data
Transform data
into informati
on
Analyze informati
on
Publish for your
team
Make actionabl
e decisions
Acquire data
Tools you’re already familiar
with
Data
Information Knowledge Actionable
plans Performance
This schemas describes my methodology to provide solutions that transform data into performance
ContactMail : [email protected] : +23798546599
Thank you for attending, I sincerely hope this module will
be helpful for you !
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