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CLOUD COMPUTING IN BUSINESSES 2
Abstract
Cloud computing is simply internet based computing. It is a modern concept that is the
opposite of traditional computing where people would download files and programs on a
physical computer located in their building. Cloud computing has numerous strategic importance
to businesses. Cloud computing beats in-house computing regarding convenience, cost reduction,
flexibility, security, privacy and collaboration among other elements. If well utilized it enables
businesses to cut down on costs and operate more efficiently making them more competitive.
CLOUD COMPUTING IN BUSINESSES 3
Cloud computing is one of the newest concepts in the world of computing. It represented
a major improvement in the way information technology is used. With computers becoming
more powerful and the unit cost of computers falling rapidly more and more organizations are
style of computing whereby highly flexible Information Technology capabilities are provided to
multiple customers (Smith, 2009). Cloud computing drastically reduces the upfront computing
costs that deter many organizations from deploying some cutting edge computer services thus
analyzed from a cost perspective. Most organizations have come to realize that they utilize only a
remain highly underutilized. A recent study conducted on how a sample of six large corporations
utilize their servers found out that all the firms utilize less than 30% of the available server
computing power. Desktop computers on these firms had a 5% utilization rate. Another striking
finding of this study is that they incurred significantly high costs in maintaining the same
underutilized computing resources (Marston, Li, Bandyopadhyay, Ghalsasi & Zhang, 2011).
Service and maintenance costs were taking a heavy financial toll on the already strained financial
resources. At a time when most organizations are barely making their financial ends meet and are
facing cut throat competition, cutting down on these and other computing costs are worth
consideration.
CLOUD COMPUTING IN BUSINESSES 4
spending on the establishment of technological infrastructure. Davasena (2014) states that Cloud
computing gives businesses the privilege to save and access computing services with minimal
upfront charges. Firms can forego the enormous costs associated with the establishment of some
computing services such as servers and data management systems. Cloud computing offers easy
access to most computing services with affordable pay as you go weekly, monthly, quarterly or
yearly packages depending on consumer preference. This is a major cost saver for organizations
and specifically small organizations that might find initial infrastructural establishment costs to
be too high. Large businesses that have huge computing demands can also benefit immensely
from such cloud-based arrangements. They can delegate the costly computing services to cloud
computing entities and retain critical services that need to be executed from within the
organization.
Businesses can also incur significant cost cuts by avoiding licensing fees, software costs,
hardware costs, maintenance costs and other overhead costs. According to Smith (2009) with
cloud computing quality costs are also absent. These costs pass on to vendors of cloud
computing. Since cloud computing services are available on demand, firms also enjoy
convenience costs associated with the breakdown of in-house systems. Costly delays as a result
of software and hardware upgrades can be easily foregone with cloud computing. Businesses
that opt to go green also enjoy power related cost reductions (Davasena, 2014). When businesses
pool resources together into a cloud consolidated environment, they lower their energy use.
With cloud computing servers and other computing infrastructure are off the business
premises and out of sight. Software upgrades and maintenance is a responsibility of the vendor.
CLOUD COMPUTING IN BUSINESSES 5
Businesses operate at peace and without worries of possible maintenance and upgrade issues.
Chen, Ta-Tao & Kazuo (2010) state cloud computing offers businesses peace so that all energy
is focused on growth. Businesses that opt for cloud computing also save a lot on space.
Information technology infrastructure can consume a lot of office space. Cloud computing is a
A recent article published in the Operations and Research Applications Journal states that
a group of SMEs that had sought the services of Amazon Web Services experience upto to 70%
reduction in computing costs. Within a three year period, AWS services had reduced the costs of
its services a couple of times (Davasena, 2014). This made these services more accessible by
even the smallest SMEs. Even startup SMEs could now afford crucial services such as
Customer Relationship Management (CRM), Supply Chain Management (SCM), Sales Force
Automation(SFA) and Enterprise Resource Planning(ERP). With the entry of more and more
vendors into the industry, these costs are expected to continue decreasing making them more and
more affordable by businesses. The services stated above are of great strategic importance,
especially to small businesses. With access to these crucial services, small firms can integrate
innovation and control in their daily operations and thus enhance their competitiveness.
Cloud computing offers businesses the benefit of economies of scale. Cloud computing
enables businesses to benefit from economies of scale by increasing output with less
infrastructure and a fewer number of employees. Businesses that opt for cloud computing save
on personnel costs (Marston, Li, Bandyopadhyay, Ghalsasi & Zhang, 2011). There is, for
example, no need to have IT staff to ensure that software stays up to date or that servers are
CLOUD COMPUTING IN BUSINESSES 6
working correctly. Less infrastructure and a fewer number of employees lower the per unit cost
of production. Businesses can take advantage of cloud computing to scale down their staff to the
level where the least number of staff offers the greatest output. For example, software developers
can be reduced from ten to only two through the outsourcing of software development to the
cloud. The two software developers who remain are supposed to monitor software
implementation and do other tasks that cannot be outsourced to the cloud. Businesses thus enjoy
economies of scale when they opt for cloud computing. Economies of scale is a strategic weapon
Cloud computing has advanced rapidly since its inception to become a resource that can
accommodate millions of users at a time. Multiple users can use cloud computing resources at
the same time from different locations (Smith, 2009). Businesses stand to benefit from this since
employees do not need to wait for slots to use computing resources, especially during peak
season when the demand for computing resources soars. Cloud computing, therefore, helps to
speed up business operations guaranteeing timely production. Businesses that opt for in-house
computing solutions are prone to delays especially when workloads increase abruptly. In-house
computers can get overwhelmed due to extensive use in these times. Staff from various
departments might be forced to take turns in sharing the available computing power leading to
delays. Cloud computing has the ability to accommodate such demands to guarantee speed
consistencies.
Cloud computing also has the advantage of scalability and speed. Cloud computing
services are mostly offered by reputable companies such as Oracle which are always ahead
CLOUD COMPUTING IN BUSINESSES 7
regarding innovation. They strive to offer fast, convenient and up to date computing services.
Cloud computing offers business firms fast and up to date computing. Businesses that opt for
cloud computing can also easily scale up and down depending on demand. According to Smith
(2009), one of the major reasons for underutilization of computer resources is fluctuations in
workloads.
When businesses encounter increasing workloads, they invest heavily and scale up their
computing abilities. When the workloads decline a lot of infrastructure and computing power
remains unutilized beating the logic of the scaling-up investment. Delays are often experienced
2009). Cloud computing saves businesses from all these inconveniences by making re-scaling as
easy as the click of a button. When workloads reduce, and less computing power is needed
Businesses that go for cloud computing can easily acquire customized software
infrastructure from vendors. Davasena (2014) states that cloud vendors can customize the
software to adjust it to the needs and goals of business. Normal businesses that do not do cloud
computing pay a higher price for such customization for it at times calls for alterations in
existing hardware. Ease of customization stimulates innovation and overall growth in businesses
Cloud computing also offers a lot of flexibility to businesses. Businesses can, for
example, opt to subscribe to or out of a service anytime they feel like. If a cloud vendor does not
offer quality services a business can easily switch to another vendor at a minimal cost. Jackson
CLOUD COMPUTING IN BUSINESSES 8
(2011) states that vendors also offer a wide variety of services in various packages to businesses.
There is a wide variety of vendors and services to choose from, and this ensures that quality is
always enhanced. When a given cloud service does not meet the goals of a business, it can be
easily terminated or replaced. This ensures that businesses get the best value for their money and
Businesses also have numerous control choices when they utilize cloud computing. They
can determine the nature of service they will use. There is the option of selecting from Software
as a Service (Saas), Infrastructure as a Service (Iaas) and Platform as a service (Paas). Cloud
computing also offers businesses a prebuilt tools menu to enable them effectively utilize the
selected service (Davasena, 2014). With all this guidance it is easy for businesses to get the best
Cloud computing eliminates the geographical barriers that confine people to offices and
regions(Smith,2009). It enables employees to work from home similarly to how they would in
the office. Using devices such as smartphones and tablets employees can easily access crucial
data and work at any hour of the day. Businesses such as oil exploration that require a large
number of employees to work remotely at some point reap immensely from this advantage of
cloud computing. Oil explorers in the remotest part of Alaska can be able to access crucial data
through cloud computing systems. Business expatriates sent to other countries can conveniently
reducing their work burdens. Most finance and accounting work can be delegated or outsourced
CLOUD COMPUTING IN BUSINESSES 9
to cloud computing (Jackson, 2011). After outsourcing these services, the managers are left with
ample time to deal with decision making and other crucial services. They get more time to
supervise subordinates and ensure that operations are progressing as expected. The same
convenience can extend to all levels of the business. Work such as software development and
database administration can be outsourced to the cloud reducing the workloads for the concerned
employees. This enhances quality by increasing the available time for these employees to
The cloud is accessible round the clock and less susceptible to breakdowns. It is,
therefore, more reliable than in-house computing. In cases of failure, the affected staff just needs
to contact the cloud center support instead of depending on in-house staff. Networked backup
systems shield organizations from data loss in cases of breakdown. Cloud computing services
suffer less from breakdowns due to the high levels of advancement. In cases of errors or failures,
error codes are sent to the administrators, and automatic debugging is done remotely (Atkins,
2013). In businesses that opt for in-house computing, some types of failures and faults are too
complex for in-house staff. More experienced help has to be sought from outside the business. In
case the help takes too long the business suffers major losses.
Most cloud services are built to make data available even at periods of network
downtime. This inbuilt data redundancy mechanism saves businesses from costly downtimes at
the times of events such as power line failures. Courtesy of this built in redundancy Netflix was
able to stay online in the year 2011 when AWS experienced a major failure. Due to the same
Gmail boasts of a 99.9 uptime which is incredible (Davasena, 2014). Large businesses with tons
CLOUD COMPUTING IN BUSINESSES 10
of data benefit the most from this built-in redundancy configuration of cloud computing. In cases
of failure, all operations in these large businesses are at risk of complete halting. However, the
Cloud computing offers businesses with better security and privacy. Due to the well laid
out encryption and authentication protocols in cloud computing businesses face almost zero
security risks. Passwords, transaction tracking systems, API keys, security patches, selective
access and other monitoring activities in cloud computing gives users peace of mind in terms of
security (Dimitrov & Osman, 2014). In this era of computer advancement where hackers and
cyber criminals have sophisticated skills and techniques, businesses take security and privacy
with utmost seriousness. Cloud computing offers businesses an opportunity to enhance their
security through virtual private clouds. In these private clouds, the businesses can put in place
strong passwords and take advantage of other features for ultimate security.
Cloud computing also reduces the use of removable devices such as flash drives and
portable hard drives. Removable storage devices have been a favorite tool for data theft and other
types of security breaches in organizations. These devices can easily be stolen or misplaced, and
crucial data stolen. When everything is saved in the cloud, the use of such devices is minimized.
Cloud computing also brings a wide range of security solutions to businesses at affordable rates.
Dimitrov & Osman(2014) state that a combination of all these security features makes the cloud
Cloud computing makes sharing and collaboration easier for businesses. Sharing and
collaboration is a necessary strategic weapon for it allows staff from different departments and
businesses to interact and share ideas. With the mass adoption of smartphones and social
networking staying connected has become easier (Surajbali, Bauer, Bar & Alexakis, 2013).
There is a better connection between staff and employees within and without a company. Cloud
services such as Google Drive, Box, Jive, and Instant messengers messages and information can
be easily retrieved and shared among a large number of people within a short time. Various
stakeholders can easily share and interact with each other through video conferencing supported
in the cloud. Through Google Docs, a common cloud-based Google App, for example, one
An executive team from an oil exploration company can for example easily and
communication systems. They can offer technical and professional advice and instruction in real
time to increase the chances of success. Military security operations can also be easily controlled
using satellite-based cloud supported imaging systems. Commanders can coordinate these
operations from different locations and have a real-time view of what is happening on the
ground.
Increased collaboration between stakeholders calls for better file control. According to
Surajbali, Bauer, Bar & Alexakis(2013), cloud computing guarantees better file control by
ensuring that all files including confidential business files are centrally stored. Before the advent
of the cloud employees would send large volumes of documents as email attachments. There was
a lot of back and forth exchange of documents at the time. Often there would be mix up that
would lead to documents getting into the wrong hands. Conflicts were also common in
CLOUD COMPUTING IN BUSINESSES 12
collaborations involving people at different time zones. Delays in sending files were common in
these cases where different times zones were involved. However, with cloud computing when
files are centrally stored and easily accessible by people at different time zones such conflicts
have been minimized. Cloud computing has therefore greatly enhanced collaboration.
In conclusion, cloud computing has gained a lot of momentum in the recent decade due to
its perceived benefits. These benefits that range from cost savings to enhanced collaboration
offer businesses a lot of competitive advantage. With cloud computing businesses have less to
worry about for they can affordably choose from a wide range of computer services. Cloud
computing is more preferable than in-house computing due to these benefits that are of great
strategic importance to businesses. Businesses in the contemporary world should strive to fully
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Dimitrov, M., & Osman, I. (2014). The Impact of Cloud Computing on Organizations in Regard
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Jackson, K. (2011). The Economic Benefits of Cloud Computing. Forbes.com. Retrieved 6 July
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Marston, S., Li, Z., Bandyopadhyay, S., Ghalsasi, A., & Zhang, J. (2011). Cloud computing
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Surajbali, B., Bauer, M., Bar, H., & Alexakis, S. (2013). A CloudBased Approach for
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