Doing Business on Cloud
As the adoption of cloud solutions are on a steady increase across verticals and businesses of different sizes, the supply-chain and possibility of innovations have generated multitude of business opportunities. Demands from business users drive innovations on the side of providers. In this chapter, we shall analyze the background for the change in business processes, and ways to implement IT and migrate existing systems in this changing scenario. We shall also review different possible business models based on cloud computing. We shall make effort to cover various practical aspects or examples during our discussion.
Things Are Changing
There have been many changes in the way we do business in present times though we are oblivious of use of the technologies working behind it. Let us discuss some of the major changes that are directly related to cloud computing.
It is quite difficult to cover all areas that have seen influences of this computing paradigm; in fact, almost all have already. However, we shall discuss only some of the widespread impacts on business processes that rely heavily on collaboration and on online media, and the changes in the way SMEs (Small and Medium Enterprises) operate.
After creation, editing and sharing of online documents have been possible through cloud-based Apps, things have drastically changed the way we store data and collaborate with others. Though skeptics complain about security aspects, the ease of doing our jobs overshadowed such concerns. Currently, people collaborate at various levels using textual data, documents, audio and video; and use cloud Apps to manage their workflows with workforce spread across different geographical locations. Let us look at an example.
When you want a logo for your company to be created, you can post your requirements on a website for such specialized service. Different professionals around the globe participate in the bidding; and you get the best possible product at an appropriate price. The service provider who facilitates such infrastructure uses cloud computing to manage data and programs at an Internet scale.
In fact, we can go on providing such interesting examples. In each case, however, cloud computing works to materialize the computation requirements.
Let us look at the publishing industry. Gone are those days when you write a book, create music compositions, or produce a documentary film, and then wait for a publisher or a distributor to accept it. Different independent publishing tools are provided by various service providers on cloud which enable your creative product to materialize into a finished one and to be promoted in public domain. Google and Amazon among others have pioneered in such publishing effort. The number of books that are being published has increased by many folds in recent years; and the approach to publishing books and magazines have transformed greatly.
Moreover, the process of publishing news and articles has gone through a complete transformation in recent years. Freelance journalists and companies providing online news services make their content available for free subscription or with a minimal subscription fee, making the print newspapers almost obsolete as days go by. In fact, live streaming and offering valued content on Internet have created a strong proposition to integrate the two media. What is the common thing behind success of all these new business opportunities? It’s cloud computing.
Of course, these are not solitary happenings. Each industry is sensing the change in business processes and creating new business models through this new technology paradigm. However, the major beneficiaries are SMEs, where upfront investment in IT may be considered as a burden, yet challenges in business demands higher level of productivity and decision-making.
On the other hand, the number of SMEs is increasing rapidly across the globe; and they are responsible for a significant portion of business transactions, and above all, for sustainability of economy in general. These enterprises adopt cloud computing faster. In fact, new generation entrepreneurs in service industry use cloud computing to their advantage when they test their novel ideas in market while avoiding large expenses or seeking investments from others. A win-win situation.
As we see a change that is pervasive, let us review different aspects of successful cloud adoption in the following section.
Behind Successful Adoption of Cloud
Business is not a contemporary word. It is a part and parcel of the entire human history. As human society has evolved, the ways of doing business has also changed. Human has adopted new models that suit the interest groups, and also, that keep the economic momentum up. We can look at the adoption of cloud computing in business from the same perspective; in fact, our conviction is well founded when we recollect our discussion regarding the growth in cloud adoption (Chapter 3).
We can now understand that three major factors that influence successful adoption of new technologies, are overall cost, quality of service and business agility (figure: 5.1). The same is true for cloud computing. In fact, recollecting our previous discussion in Chapter 3, we can very well say that the adoption of cloud computing is not uniform across enterprises even within the same industry verticals. The path of adoption varies based on the state of IT in the enterprise and their business goals.
Business agility requires how an enterprise would respond to changes, and how IT, as the critical business enabler, adapts to such changes.
The above discussion is generic, and must be applied with measurable parameters in all practical purposes to achieve successful adoption. Moreover, additional criteria come into picture when we select different service levels and different deployment scenarios while adopting cloud implementation for your IT.
Selection of service model while adopting cloud is a business decision based on the core capability of the adopter. For example, a business running on cloud will choose SaaS over others as they prefer to quickly reap the benefit of going cloud. Similarly, selection of public versus private cloud depends on different criteria. IDC has prescribed five factors that greatly influence the decision to adopt public versus private clouds such as specific needs of application, service level guarantees, security/access/data ownership, total cost of hardware and total cost of software licenses (figure 5.2).
While we have a fair knowledge of the factors behind the successful adoption of cloud, we need to understand the scenarios in which it is adopted. This is the topic of the next section.
Cloud Adoption Scenarios
Cloud computing paradigm has its advantage in its usage. In fact, the real benefits have been incorporated into the paradigm itself. Apart from general advantages that we have seen during the earlier discussion, it is pertinent to view the possibility of usage in specific scenarios.
If we scan through different areas of usages, we shall find numerous ways for its successful adoption and gaining significant advantage. However, to make our study comprehensive and systematic, let us classify the available scenarios into five broad categories (figure 5.3).
Let us now understand these five different scenarios for adoption of cloud computing:
1. High-performance and Globe-scale Software Applications: When people require large-scale computing where performance or availability under high-traffic situation is critical, cloud solution is preferred. It is also pertinent to note that the choice of service model is a different thing to consider, and is not at all related to the parameters under consideration.
2. Departmental Applications: Even though standard applications take care of the major data management needs, people in various departments in an enterprise do use simple software tools like MS Office, Open Office or similar ones. They use these to create plans, discuss strategy, and create various reports, even with the data retrieved from central data repository of the company. In such situations, departments opt for software applications to be used on SaaS model as that can be launched without much involvement of IT department and availability is far better compared to the traditional solutions that we mentioned. Of course, a hybrid model of using traditional software along with cloud services may suit as the latter provides rich interface for exploiting available features for work needs while the former provides high availability and facilitates greater collaboration.
3. Short-term Projects or Campaigns: Organizations go on marketing campaigns or adopt a short-term collaboration for different project needs. In such cases, company does not want to invest upfront as the return on investment (ROI) is not known beforehand, at times. It may also be true that there is no scope of allowing a period of latency to initiate such activity. Both situations provide excellent cases to substantiate our previous preaching of reducing TCO and TTV, as discussed in Chapter 3; and cloud computing remains the best possible option here.
4. Extension to Legacy Systems: Companies have already invested their fortune into building their IT systems through past couple of decades. While these systems are still reliable and are capable of managing the mainstream tasks, user needs have increased through the years. While full migration to newer system and abandoning the older system are costly propositions, using extensions of these legacy systems on cloud enables greater availability of data, and better collaboration. It also helps us use enterprise data to make rightful decisions based on analytics, and adopt newer applications into the existing enterprise IT ecosystem.
5. Content Distribution and Social Networking: With newer possibilities of publishing, relationship management and marketing, content (both in form of text and rich media) is exploding in size. With self-publishing promoted by cloud providers like Amazon.com and Lulu.com apart from others, and popularity of social media like Facebook and YouTube among others, the creation and use of content have seen a sea change in recent times. These cloud systems provide federated ecosystems that facilitate building new apps and new revenue generation models among users. Apart from popular notion of individual affinity towards such clouds, business entities are also investing on linking their systems with these cloud systems for effective online promotions and for gathering competitive business intelligence.
Though we discussed some of the most important adoption scenarios, you will not be surprised if somebody comes up with another tomorrow. In fact, there are multitude usages that cloud computing has encouraged; and possibilities are many.
Factors Influencing Cloud Adoption
Talking about going cloud without knowing about different factors that influence the adoption would be a mistake. We need to understand the general issues that we would encounter during and after the process of migration, and should have reasonable solution planned beforehand.
Shifting our personal IT to cloud may not be difficult as this will mostly involve data porting while remaining items will be within the purview of decision-making of the individual. However, the situation is not so simple when we look at the enterprise systems. In such cases, we also need to understand and account for all relevant factors influencing a successful cloud adoption.
These issues are broadly classified into four categories as in figure 5.4. Let us discuss these towards a successful cloud adoption below:
1. Understanding the Business Case: It is quite normal that strategic and operational requirements in enterprises differ from one another across different verticals and even within the same vertical. Though it is not apparent when we look at these in broad terms, devils are in detail. As the part of the migration strategy, it is required that we understand what the exact needs are, which are not fulfilled with the existing IT framework, and which are the clear advantages that we get if we go cloud entirely or selectively.
2. Dependencies on Different Business Goals and Other IT Systems: Before making any decision for adopting cloud services for the entire IT or for partial use, we must evaluate the dependencies among the existing systems within the enterprise and also those operating immediately along the supply-chain. The issues of retaining the consistency while operating each subsystem after migration is crucial, and must be resolved beforehand.
3. Standard Compliance: This is a very important factor when we migrate to any newer system, and is more prominent when we use public cloud in part or fully for our solutions. We have cherished the discussion on requirements of standard compliance of Apps in the last chapter, and the sense of validity persists in case of adopting cloud solution (please note that the phrases such as solution and service are interchangeable here).
4. Technical Readiness of Enterprise: Skills of users, their access conditions, and the purpose of usage determine which solutions would be appropriate and the path we should take for achieving a successful adoption. While migrating to cloud environment, it is important to study the readiness of enterprise before making a move.
The above discussion provides broad guidelines for implementing IT by adopting cloud computing, either partially or fully. However, it is essential that we must have adequate planning and proper execution of the plan to achieve success. The entire process needs to be executed with diligence; and we shall talk about this in the next section.
Create Your Cloud Strategy
In general, the basic cloud IT strategy requires a well-defined path from planning to implementation and evaluation (figure 5.5).
The process starts with a plan to implement a new IT system or to migrate an existing one. As usual, architecture is important, and that needs to be taken care of. Based on architecture, the system implementation needs to be carried out. The new system must be sustainable for a reasonable period. This provides us scope to pursue innovations in different fronts. We need to evaluate the entire system, innovations, and their impact comprehensively. In case of migration, the revision to the existing architecture and its impact must be evaluated. This, in fact, completes a cycle and the same new cycle then repeats.
On the other hand, we must take into account the adoption scenario and the factors influencing a successful adoption in detail during the planning and execution.
Emergence of a Federated Business Ecosystem
If we look at the cloud ecosystem, we can notice different stakeholders responsible for playing different roles along the entire supply-chain. This chain usually span over multiple organizations having different core objectives, independent operations and management processes. However, they interact among one another drawing inspiration from the concept of Apps that we discussed in Chapter 4; and make a federated ecosystem.
For example, a service provider with IaaS will depend on developers, on one hand, to create new cloud toolkit or to upgrade the existing ones. On the other hand, the same provider will depend on other providers with PaaS to offer value-added services on the top of the available infrastructure. It may also be possible for the developers to subscribe to the infrastructure services to test and to deploy their Apps. It is a synergetic relationship.
The way the interactions between different stakeholders of a cloud ecosystem happen, we can visualize a federated conglomeration of different businesses and end-users.
Different Service Providers Coexist
We shall now review different types of Cloud Service Providers. In figure 5.6, a broad classification of different service providers associated with cloud computing ecosystems are presented.
Cloud Infrastructure Service Providers (CISP) are the ones who provide IaaS. These are major players in the industry who can invest significantly in creating large-scale infrastructure and maintaining it. The major players in this segment are Rackspace and Amazon, etc. Similarly, Cloud Platform Service Providers (CPSP) offer PaaS. They provide programming tools and facility for building and deploying applications faster and with ease. Google and Microsoft are two major players in this segment.
Next, Cloud Technology Providers (CTP) create and supply technology tools and products to different cloud service providers. Similarly, Cloud Solution Providers (CSP) provide different IT solutions based on infrastructure and platform services. SaaS providers are included in this category. Finally, Cloud-based Business Service Providers (CBSP) are the ones who provide various services that depend primarily on cloud technologies.
Let us now see in the next section how the transition of existing roles has taken place in this changed scenario.
Old Players with New Roles
With cloud computing gaining ground in different sectors, existing IT roles are receiving new demands. The responsibilities of these roles have also seen changes apart from just their names.
We can see major roles that have been visible these days (figure 5.7) such as Cloud Administrator (CA), cloud Developer (CD), Cloud Service Manager (CSM), Cloud App Architect (CAA), and Cloud User (CU).
Let us now discuss each of these roles played by IT professionals in detail below:
- Cloud Administrator (CA): The role of old System Administrator has seen changes during the course of time. With the GUI tools being available, some of the responsibilities are being passed to service managers. On the other hand, system administrators are being asked to perform complex task of managing the backend tools and subsystems. The earlier role had the responsibilities like managing the servers, networking, installing and managing storage arrays, load balancers, DSN, etc. These activities have been eased considerably due to the availability of APIs to manage these; and Administrators have migrated to the backend of cloud environment leaving earlier responsibilities to Cloud Service Managers (to be discussed later in this section). These require further specialized skills.
- Cloud Developer (CD): Developers have got a new role to play in creating new tools and frameworks for cloud environment. As the “self-service” motto is the key behind this computing paradigm, system automation demands greater skills and innovations in the technology development areas. These people many a time are called Cloud Toolkit Developers.
- Cloud Service Manager (CSM): As more and more organizations adopt cloud computing as their mainstay IT, professionals with knowledge of specific cloud systems are needed in large numbers. These professionals, CSMs, are responsible to provision, monitor and control cloud services on behalf of their clients or the stakeholders.
- Cloud App Architect (CAA): Every other day, we see new Apps flooding into Apps stores or market places. This is due to innovative applications of IT for different user expectations and requirements. CAA is an evolution of the traditional software architect, but with changed responsibility where the focus is more on using various services to create new innovative applications.
- Cloud User (CU): He/she is anybody who uses Apps on cloud. Though it is currently a separate role, but it may be merged with any IT user’s role as cloud adoption becomes ubiquitous.
We have now learnt about different roles within cloud ecosystem though you can find derivatives and many added ones in literatures; but the essence remains unaffected.
Perspective from Traditional IT Users
As we talk about doing business on cloud, things have changed compared to the traditional IT, and the work process associated with it thereby triggering migration to new tools and technologies. In this section we shall try to understand how it looks when traditional IT users venture into the cloud world – with an ambition to leverage this new paradigm for their own benefits.
Cloud system invariably demands ‘broad network access’, which means consistent internet connectivity (can be also private network connectivity, but let us go by general perception as nothing changes as far as our discussion goes) is required to access remote IT resources from our own devices. Through the technical review in Chapter 4, we now know that the best available way to access these cloud resources is through Apps.
Well, let us try to analyze a traditional IT environment, and look at the changes from the perspective of an IT user.
Previously, a remote IT resource could also be accessed over network, and there are software applications, which were being used to control and manage these resources. Nothing has changed really!
Next, if you have used any popular hosting environment, you must have been familiar with control panels like CPanel, Plesk, etc., which enable common users without much of system administration capability to access and manage the remote server resources. What do these cloud platforms do? The same thing. Of course, there has been a consistent effort to enhance the tools and to make those usable so that common users can leverage the benefits without added technical skills.
Two of the most important objectives of accessing remote server resources are to manage databases and to deploy user-facing software applications. Not much has changed from user perspective as there are tools from the same cloud provider or from 3rd parties to manage such activities. For example, popular tools like Rightscale or Scalr are used to manage different cloud infrastructures like Rackspace and Amazon among others. Well, they also make the same popular tools that are used to achieve database management; thus, ‘going cloud’ does not require a significant learning curve. Moreover, the tools like load-balancer and redundant DNS management appear here too except that they are encapsulated as Apps and are exposed with APIs to get managed through other Apps.
Basically, we see a smooth transition for traditional IT users as far as the tools and their management are concerned. However, we must not overlook the issues and factors that critically influence the migration of a traditional IT system to cloud; and we have already discussed this in detail earlier in this chapter.
Competition Turns into Collaboration – Industry Innovates
We have reached a point of time where the competition has been replaced with collaboration. Remember the discourse earlier in this chapter, and also in the last about federated nature of Apps and business, latter deriving the strength from the former.
Well, subscribing to 3rd party services to build your desired App faster, and doing content syndication to avail the contextual information as we like, are two most prominent ways of collaboration today. In fact, this change in our approach within the business purview has generated many opportunities for carrying out innovations as stakeholders of cloud ecosystem can now focus on their core skills better – industry innovates faster than before.
In the next chapter, we shall turn our attention from business and shall focus on the influence of cloud computing on human behavior and the collective behavior of individuals in society.