Benefits And Challenges Of Cloud Computing For Organizations

Benefits and Challenges of Cloud Computing

Question:

Discuss about the Challenges Of Cloud Computing At BDG.

Cloud computing is a buzzword in the market of disruption where new technologies and new models of delivering technologies are emerging. Cloud is another new way of delivering computer services that refers to on-demand, self-service access to software on Internet infrastructure that permits users to access anything on the cloud from anywhere. There are numerous benefits offered by adoption of cloud computing but at the same time there are numerous challenges. It’s more than a decade that cloud service model has been introduced but still it is not adopted widely (Avram, 2014). The purpose of this report is to discuss about how the organizations can evaluate the benefits and challenges of cloud computing and decide for themselves. It will also talk about how adopting cloud solutions will help the BDG with respect to the issues faced by it currently followed by cloud risks and finally recommending appropriate CSPs (Cloud service providers) to them. It is expected that this report would help to overcome the dilemmas around the use of cloud computing.

No doubt, cloud adoption is the flavor of today but it comes with the benefits and challenges and as a result of which, it becomes highly difficulty for the organization to assess its feasibility to know whether the benefits of cloud computing outweighs its challenges (Passerini, Slawinski, Villa, & Sunderam, 2014). There are challenges like data security, compliance issues, privacy issues, data theft issues, building integrations between IAAS and SAAS if software does not provide infrastructural services, cost of data migration. The benefits are attractive pricing, high availability of servers, scalability and elasticity, high rerun on investment.  

• One approach is to evaluate the benefits and challenges of Cloud adoptions is to conduct a pilot project because even the organization estimates all sorts of costs; pilot will actually give the confidence (Mamaghani, 2014). As part of pilot, first part is to identify the challenges with current systems, then to evaluate the various CSPs in terms of their capability, consider data migration activities cost and build a pilot project with smaller data. 1 pilot project will give the BDG entire set of new activities and task introduced by the Cloud adoption and retired activities after cloud adoption like no efforts for maintaining Database employees and so on (Son, Lee, & Chang, 2014). BDG can then compare the cost and the benefits and continue the project if it finds more benefits as compared to challenges.
• Another approach is that organization should refers case studies from the similar industry and world leaders that are using cloud systems to evaluate their return on investment  (Al-Ghifaili, & Al-Mashari, 2014). This approach is similar to the approach of benchmarking in which the organizations learn from the system and processes of other organizations in the industry.
• Also, as per the research, Clouds computing models are highly economical as compared to the traditional on premise application because of the attractive pricing models offered by the Cloud Service providers (CSPs). For example, there are models like on-demand service, pay per use, metered by use and there is no upfront cost (Garg, Versteeg, & Buyya, 2013). All this add up to better rerun on investment (ROI).Below is the more detailed analysis:

 

Financial parameter	Cloud models	On-premise
Balance sheet	There is no entry in balance sheet because all payments are transactional.	Hardware is asset
Income statement	Capture expenses part	Depreciation asset part
Upfront risk	No upfront payment and benefits are matched as per cost structure	Upfront financial risk with unclear return
Expenditure	Operational expenses only	Operational and capital expense
Cash Flow	More cash flow friendly	Zero

Yes, Cloud computing is definitely a solution for the issues that are faced by the BDG. Currently, BDG is majorly having 4 issues with their existing systems and below are the reasons why cloud computing is perfect solution for these issues at BDG:

• Currently, BDG is having ERP systems which mean that it is having hardware, servers, networks, storage installed on its premise. First of all, there is high cost of maintaining infrastructure for the IT systems and ERP systems also needs to be upgraded to deal with larger number of transactions which will further increase the cost for BDG. Using Cloud computing, BDG need not to maintain the complete hardware and infrastructure at their own premises but they can use them from the various vendors and pay them based on the usage. This means that scaling up and down will become quite easy for the company (Kovatsch, Lanter, & Shelby, 2014). Also, For bringing down the cost of hardware, networks and servers, BDG can use Infrastructure as a service (IAAS) and for bringing down the software maintenance and upgrade costs, it can also go for Software as a service (SAA) where the service providers will take care of all the upgrades and the users can access the application using the browser without need of installing anything in their system.
• Another issue is that BDG is planning to add 10 more branches which will further increase the technology infrastructure costs. With the adoption of cloud computing, adding or decommissioning any branches will be quite easy (Manvi, & Shyam, 2014) and also does not incur much expense. It is because you do not need to pay upfront for buying the complete infrastructure for the new branches, you just need to increase the number of subscriptions of the cloud for the users at new sites. Thus, there will be huge cost savings as the cloud payment structure s quite flexible and organization can pay based on as you go model.
• 3^rd issue faced by BDG is related to the timely availability of donor’s data and location tracking and communication. This issue mostly occurs because of the downtime of the ERP system. Cloud companies stores data at multiple places and also maintain backups in multiple servers and thus able to afford 99.99% time of availability because when 1 instance or primary server is down for maintenance, then the other or secondary servers are available to serve the users (August, Niculescu, & Shin, 2014). Thus, cloud systems will improve the availability of data and provide timely access to donor’s data.
• Also, as current CRM systems are not integrated with social platforms, it makes difficult for the BDG to inspire young donors to donate blood. Today, both the cloud computing systems and social media platforms have become a buzz word in the society and both are views as a standalone technology but the reality is different. The sales and marketing team may be able to generate the leads from the social media but they also need to access the enterprise data to generate and provide appropriate quotes and lead time to the leads. Thus, Collaborated and integrated view will really add value for the organization. There are cloud products like SAP’s sales on demand and Chatter by salesforce vendor that integrate the enterprise data be it on premise or on cloud with the social media platforms (Tang, 2016). If BDG is able to integrate its CRM systems with the social media platforms, it becomes quite easy for an organization to recruit young people for donating blood.

Compliance risks: The main risk is that the BDG does not know the location where its data is stored when it is stored in clouds. It is because different CSPs (Cloud service providers) prefer to stores the data in different ways like data center or disk farm which may or may not be in your country. Also, even if the primary server/cloud is located in your country, there is possibility that its backup server is located in some other country. For example, Singapore is located at strategic location such that it is mostly safe from environment calamities and as a result of this many organizations and bank prefer to have 1 copy of their data back up in that country. But this issue with this data storage in different countries is that there are many government laws that prohibit the data of any organization from going out of the country. In Switzerland, all banks and financial firms have to keep data within the borders of the company and thus they prefer to have their in House servers to comply with the policy (Paquette, Jaeger, & Wilson, 2010).

Cloud Computing for BDG

Data Misuse by Vendor: Another important issue is of privacy. Cloud service providers will access to private data like customers, their profiles which can be used for marketing purpose and that too when Google provider also have products like Google AdWords and Google AdSense and their main business is to show customize advertisements to each person based on their profile (Shayan, Azarnik, Chuprat, Karamizadeh, & Alizadeh, 2014). Amazon can also use data for organizing its E-commerce strategy.

Data portability and removal risks: Once the data is put into the cloud, it will be difficult to remove it. Even it is deleted, recycle bin is maintained in the cloud and no one knows if there is anything called data shredder that will permanently remove the data from the cloud (Peng, Dutta, & Choudhary, 2013). Otherwise, when the contract ends, cloud vendor still have access to private data.

Other Security issues: Clouds are much more vulnerable to confidentiality attacks by intruders as compared to when the data is hosted within the organization and protected by its firewall. Other issues are Identity Access Management, Business continuity, operational integrity, data protection, disaster recovery and so on (Kim, Kim, Lee, & Lee, 2009).

Recommendations for dealing with risks: The ways various providers like Google stores the data and maintain its copies and backups across huge interconnected mesh of datacenters that it becomes impossible to know the location of data and thus puts organization on higher of risk of non-compliance. The recommendation to overcome this issue is that CSPs should be more transparent about where they are starting the data and clear clause in the contract that any financial penalty or any other due to non-compliance will be the responsibility of the Cloud service providers and not BDG (Bhardwaj, Jain, & Jain, 2010). BDG can also ask from CSPs about how they will ensure that the BDG’s data is not used for marketing purposes and if anything found suspicious or wrong, there will be penalty (Wei, & Blake, 2010). Also, BDG must ask the CSPs about what is its strategy about all these security issues like Business continuity, data protection and add relevant clauses in the contract.

There are numerous vendors like Microsoft, Oracle, Amazon Web services (AWS), IBM that offers cloud services however there is difference in services. AWS and Microsoft Azure focuses mainly on IAAS services i.e. storage, servers capabilities (Dilon, Wu, & Chang, 2010). Now, if the BDG wants to run its applications on the cloud, it needs to have SAAS. Now, if the current ERP BDG is using is having cloud capability, it can use that ERP at AWS. But the biggest risk in such cases is that AWS and Microsoft are incomplete clouds in a sense that they offer mainly storage services while BDG wants to run its applications also so if the go for 2 vendors one for SAAS and other for IAAS, there can be integration and compatibility issues that can delay the project and increase the costs (Luo, Jin, Song, & Dong, 2011). Oracle is one of the cloud vendor that has a complete stack and also has Oracle Fusion ERP. It is recommended that BDG should select Oracle that have complete suite of clouds i.e. IAAS, PAAS and SAAS and there is no need to build integrations (Subashini, & Kavitha, 2011).

Cloud Risks and Recommendations

Salesforce.com is a huge hit in the market because it does not push customers to move their existing systems like Oracle, SAP to cloud but instead it is a complete system in itself providing SAAS and IAAS services. Oracle and Salesforce are recommended vendors but salesforce.com only provides CRM capability. Thus, it is recommended that BDG should use both Oracle and Salesforce.com systems. Amazon and Microsoft Azure are more suitable for those organizations that are looking to build their own In-house custom application. It is recommended that the organization should select the vendor after a thorough discussion with internal and external stakeholders. It would ensure that the effort and time is not wasted to manage the change within the organization.

Conclusion and Recommendations

Like any other technology or delivery model, Cloud computing also has its pros and cons. On one side, it provides lot of benefits but there are also various risks associated with it. However, as far as issues at BDG are concerned, clouds computing will be a best choice. This is the age of cloud computing and cloud yet has to reach its full potential. Business leaders like Microsoft, Google, Oracle, Amazon, and IBM already have invested heavily and still working to make its implementation more risk free and compliant to laws. Also, IAAS provides storage and suitable for organizations who are looking to develop their own custom application. BDG already has ERP systems and if it goes for IAAS and storage for other party, there can be issues like integration and so on. Thus, Oracle vendor which has complete house stack is recommended.

References

Al-Ghofaili, A. A., & Al-Mashari, M. A. (2014, August). ERP system adoption traditional ERP systems vs. cloud-based ERP systems. In Innovative Computing Technology (INTECH), 2014 Fourth International Conference on(pp. 135-139). IEEE.

August, T., Niculescu, M. F., & Shin, H. (2014). Cloud implications on software network structure and security risks. Information Systems Research, 25(3), 489-510

Avram, M. G. (2014). Advantages and challenges of adopting cloud computing from an enterprise perspective. Procedia Technology, 12, 529-534.

Bhardwaj, S., Jain, L., & Jain, S. (2010). Cloud computing: A study of infrastructure as a service (IAAS). International Journal of engineering and information Technology, 2(1), 60-63.

Dillon, T., Wu, C., & Chang, E. (2010, April). Cloud computing: issues and challenges. In Advanced Information Networking and Applications (AINA), 2010 24th IEEE International Conference on (pp. 27-33). Ieee.

Garg, S. K., Versteeg, S., & Buyya, R. (2013). A framework for ranking of cloud computing services. Future Generation Computer Systems, 29(4), 1012-1023.

Selecting Appropriate Cloud Service Providers

Kim, W., Kim, S. D., Lee, E., & Lee, S. (2009, December). Adoption issues for cloud computing. In Proceedings of the 7th International Conference on Advances in Mobile Computing and Multimedia (pp. 2-5). ACM.

Kovatsch, M., Lanter, M., & Shelby, Z. (2014, October). Californium: Scalable cloud services for the internet of things with coap. In Internet of Things (IOT), 2014 International Conference on the (pp. 1-6). IEEE.

Luo, J. Z., Jin, J. H., Song, A. B., & Dong, F. (2011). Cloud computing: architecture and key technologies. Journal of China Institute of Communications, 32(7), 3-21.

Mamaghani, F. (2014). AN ANALYSIS OF COSTS, BENEFITS AND RISKS OF CLOUD COMPUTING. Journal of International Management Studies, 14(3).

Manvi, S. S., & Shyam, G. K. (2014). Resource management for Infrastructure as a Service (IaaS) in cloud computing: A survey. Journal of Network and Computer Applications, 41, 424-440.

Müller, S. D., Holm, S. R., & Søndergaard, J. (2015). Benefits of Cloud Computing: Literature Review in a Maturity Model Perspective. CAIS, 37, 42.

Pahl, C., Xiong, H., & Walshe, R. (2013, September). A comparison of on-premise to cloud migration approaches. In European Conference on Service-Oriented and Cloud Computing (pp. 212-226). Springer, Berlin, Heidelberg.

Paquette, S., Jaeger, P. T., & Wilson, S. C. (2010). Identifying the security risks associated with governmental use of cloud computing. Government information quarterly, 27(3), 245-253.

Passerini, T., Slawinski, J., Villa, U., & Sunderam, V. (2014, March). Experiences with cost and utility trade-offs on iaas clouds, grids, and on-premise resources. In Cloud Engineering (IC2E), 2014 IEEE International Conference on (pp. 391-396). IEEE.

Peng, G. C. A., Dutta, A., & Choudhary, A. (2013, October). Exploring critical risks associated with enterprise cloud computing. In International Conference on Cloud Computing (pp. 132-141). Springer, Cham.

Shayan, J., Azarnik, A., Chuprat, S., Karamizadeh, S., & Alizadeh, M. (2014). Identifying Benefits and risks associated with utilizing cloud computing. arXiv preprint arXiv:1401.5155.

Son, I., Lee, D., Lee, J. N., & Chang, Y. B. (2014). Market perception on cloud computing initiatives in organizations: An extended resource-based view. Information & Management, 51(6), 653-669.

Subashini, S., & Kavitha, V. (2011). A survey on security issues in service delivery models of cloud computing. Journal of network and computer applications, 34(1), 1-11.

Tang, A. (2016). Up in the Cloud: Data and Security Concerns in Cloud Computing. Chicago Policy Review (Online).

Wei, Y., & Blake, M. B. (2010). Service-oriented computing and cloud computing: Challenges and opportunities. IEEE Internet Computing, 14(6), 72-75.