Section 5. Cloud computing — a SWOT analysis
5.1. Strengths
We covered much of the key benefits earlier in Section 2, and we will therefore keep the discussion in this section restricted to ideas that were not explored there. The ability to scale up services at a very short notice obviates the need for underutilized servers in anticipation of peak demand. When an organization has unanticipated usagespikes in computing above its internally installed capacity, it has the ability to request more computing resources on the fly. Cloud computing offers organizations the ability to effectively use timedistributed computing resources. One example is that of an internet photo website Smugmug. The company has relatively stable computing workloads throughout the year; however during the months of December and January the required resources spike to five times the usual workload. Cloud computing allows the company to meet the excess requirements during the two months without incurring the costs of hosting a traditional infrastructure for the rest of the year.In 2000, over 45% of capital equipment budget was spent on IT,however on average only 6% of the server capacity is utilized.
Assuming a 3-year lifespan of a server, the infrastructure and energy costs alone exceed the purchase price of a server. Cloud computing eads to reduced infrastructure costs and energy savings as well reduced upgrades and maintenance costs. Economies of scale for
datacenters cost savings can lead to a 5- to 7-time reduction in the total cost of computing [3].One of the components of maintenance costs is the management of technology, which is potentially made much simpler by using a cloud computing service. Preset configuration of servers and virtual machines can be put in place with appropriate applications, security,
and data. (With so much of personal computing moving to virtual servers or to the cloud, it is perhaps no wonder that the market for enterprise servers is expected to double by 2013 [8].) This allows for a more secure environment with the company having better control of
the resources on their network. Cloud computing services allow an organization to control when, where, and how employees have access to the organization's computer systems, all managed over a simple web-based interface (for example, Amazon Web Services (AWS) can
be managed easily through the AWS Management Console). Employees like the arrangement too, since they are able to make full use of the company's computer systems using less powerful devices such as a smartphone or a netbook.
5.2. Weaknesses
There are many issues that need to be resolved before cloud computing can be accepted as a viable choice in business computing. As pointed out in the previous section, organizations will be justifiably wary of the loss of physical control of the data that is put on the cloud. Hitherto, providers have been unable to guarantee the location of a company's information on specified set of servers in a specified location. However, cloud computing service providers are rapidly adopting measures to handle this issue. For example, Amazon Web Services recently announced the Amazon Virtual Private Cloud that allows a business to connect its existing infrastructure to a set of isolated AWS compute resources via a VPN connection. To satisfy the European Union data regulations, AWS now allows for companies to deploy its SimpleDB structured storage physically within the EU region. The Government Cloud product from Google that we alluded to earlier is also a response to allay concerns from government entities over the location of their data. Large organizations will also be wary of entrusting mission-critical applications to a cloud computing paradigm where providers cannot commit to the high quality of service and availability guarantees that
are demanded in such environments. For example, Amazon Web Services Service Level Agreement (SLA) currently commits to an annual uptime percentage of 99.95% over the trailing 365 days, which might be enough for most small- and medium-sized organizations,but will be deemed insufficient for mission-critical applications for
large organizations. Even though many in-house IT services often fail to live up to such uptime standards, such failures are not held up for media scrutiny, unlike the much-publicized failures of prominent cloud computing service providers.
5.3. Opportunities
One of the significant opportunities of cloud computing lies in its potential to help developing countries reap the benefits of information technology without the significant upfront investments that have stymied past efforts. In fact, cloud computing might do to computing in developing countries what mobile phones did to communications —allow the governments and local firms to benefit from the effective use of information technology. A recent survey by the Forrester Group indicates that SaaS is a priority for 74% of Chinese firms, with 29% planning to pilot SaaS projects in the next 12 months. In contrast, the survey found that a majority of European or American firms is interested but have no plans to pursue SaaS [47]. An impressive example of the power of cloud computing in developing countries comes from Ethiopia, where the government has commissioned the cloud computing provider FullArmor to remotely manage 250,000 laptops with teachers throughout the country. The laptops will contain sensitive teacher and student data, and information like syllabi and class material will be managed centrally. In order to prevent security breaches, if a laptop drifts outside a virtual “fence”, its contents can be remotely ‘wiped’ (i.e. made unusable) through cloud-based interfaces. Much like developing countries, small businesses represent another huge opportunity for cloud computing. All of a sudden, small businesses can exploit high-end applications like ERP software or business analytics that were hitherto unavailable to them. While it can be argued that some of the more involved features of such applications might not be available on their cloud-based counterparts, such omissions will matter very little for their intended customers
[49]. Mashups represent another opportunity in cloud computing. In web development, a mashup is a web page or application that combines data or functionality from two or more external sources to create a new service in originally unintended ways. An example of a
mashup is the use of cartographic data to add location information to real estate data, thereby creating a new and distinct Web service that was not originally provided by either source. The new type of mashup that we are beginning to see combines different cloud computing services and integrates them into a single service or application. Amazon's GrepTheWeb is a good example for cloud computing service compositions within the domain of a single provider. In an age where businesses are looking to burnish their ‘green’
credentials, cloud computing appeals to large IT infrastructures that want to reduce their carbon footprint. According to a Forrester survey, over 41 percent of people in the IT departments believe energy efficiency and equipment recycling are important factors that need to be considered. In the same survey, 65 percent believed reduction of energy related operating costs as the driving factor for implementing Green IT [18]. Moving to the cloud will allow organizations to not only reduce their IT infrastructure, but, since it is much cheaper to
transport computing services than energy, it will also represent a smarter use of energy.
In his much-heralded book, The Innovator's Dilemma, Clayton Christensen pointed to disruptive technologies as innovations that upset the existing order of things in a particular industry [12]. Such disruptive technologies are usually lower-functionality innovations that appeal to customers who are not served by the current industry, but which quickly leapfrog the market incumbents in terms of functionality, innovation and price to upend the latter. Cloud computing today shows all the characteristics of a disruptive technology. We believe that many of the innovative services that will be developed on the cloud – such as the education applications being developed for Ethiopian schools – will soon make many cloud
computing applications functionally richer than their in-house counterparts.
5.4. Threats
One of the biggest threats to cloud computing is the possibility of backlash from entrenched incumbents. While we believe that many forward-looking organizations will see cloud computing as an opportunity to migrate to better computing practices that open up
exciting opportunities for the in-house IT staff, there will probably be many other IT departments will view it as a threat to their corporate IT culture (in terms of data security, IT audit policies, etc.) or just in terms of job security. Although small businesses have been quick to adapt and even welcome cloud computing, larger corporate customers have voiced a plethora of concerns about handing over their operations to another company. Another legitimate concern has centered on cloud providers going bankrupt, especially in a shrinking
economy. Yet another concern is security — in an ongoing survey conducted by the research firm IDC, almost 75 percent of IT executives and CIOs report that security is their primary concern, followed by performance and reliability [56]. The cloud computing industry
continues to make rapid strides in all these areas, but it will still be interesting to see how all these threats play out over the next few years in this nascent industry.
Several concerns have centered on the lack of standards. The cloud has been described as “a trap” by GNU creator and Free Software Foundation founder Richard Stallman — one where companies like Google will force customers into locked, proprietary systems that will
gradually cost more and more over time. It is therefore encourag