The Future Prospects Of Cloud Computing

Cloud computing involves delivering hosted services over the Internet. These services are divided into three types: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS). The name was inspired by the cloud symbol that’s often used to represent the Internet in flow charts and diagrams.

Cloud computing is used to describe both a platform and type of application. A cloud computing platform provisions, configures, reconfigures, and deprovisions servers as needed. Servers in the cloud can be physical or virtual machines.

Cloud computing also describes applications that are accessible through the Internet. Anyone with a suitable Internet connection and a standard browser can access a cloud application.

Characteristics of Cloud

Figure 1: Cloud Structure

Dynamic computing infrastructure

Cloud computing demands a dynamic computing infrastructure. The foundation for the dynamic structure is a scalable, standardized, and secure physical infrastructure. There should be redundant levels to ensure high levels of availability, but mostly to extend as usage growth demands it, without requiring architectural rework. It must also be virtualized. These services require easy provisioning and de-provisioning via software automation.

IT service-centric approach

Cloud computing is IT service-centric. This is in contrast to system- or server- centric models. In most of the cases, users of the cloud would prefer to easily access a dedicated instance of an application or service. Service Centric approach enables user adoption and business agility, reducing costs or driving revenue.

Self-service based usage model

This model must provide an easy to use user interface that enables users to manage the service delivery lifecycle. The advantage of self service from the users’ perspective is empowerment and independence that yields significant business agility. One benefit often overlooked from the service provider’s perspective is that the more self service that can be delegated to users, the less administrative involvement is necessary. This saves both time and money.

Minimally or self-managed platform

In order for a service provider to efficiently provide a cloud for its clients, they must leverage a technology platform that is self managed. A provisioning engine for deploying services, recovering resources for high levels of reuse, mechanisms for scheduling and reserving resource capacity, and capabilities for configuring, managing, and reporting to ensure resources can be allocated, tools for controlling access to resources and policies.

2.5. Consumption-based billing

Cloud computing is usage-driven and consumers pay for only the resources they use and therefore are charged or billed on a consumption-based model. Cloud computing must provide mechanisms to capture usage information that enables integration with billing systems. The value from a user’s perspective is the ability for them to pay only for the resources they use, helping them keep their costs down. From provider’s perspective, it allows them to track usage for charge back and billing purposes.

Types of Clouds

Figure 2: Cloud Types

Public cloud

Public cloud also referred to as external cloud describes cloud computing in the conventional sense. Here the resources are dynamically provisioned over the Internet, through web applications or web services, from an off-site third-party provider who shares resources and bills on a utility computing basis.

Community cloud

A community cloud can be established where many organizations have similar type of requirements and seek to share the infrastructure so as to realize some of the benefits of cloud computing. This option is comparatively expensive but offers a higher level of privacy, security and/or policy compliance. Example of community cloud includes Google’s “Gov Cloud”.

Hybrid cloud

A hybrid cloud consisting of multiple internal and/or external providers is most common for enterprises. By combining numerous cloud services, users are able to ease and facilitate the transition to public cloud services. Another perspective on deploying a web application in the cloud is using Hybrid Hosting, where the hosting is a mix between Cloud Hosting for the web server, and Managed dedicated server for the database server.

Private cloud

For private cloud, implementing the cloud is controlled completely by the enterprise. They are hence also referred to as internal clouds. Private clouds are implemented in the company’s data center and managed by internal resources. A private cloud maintains all corporate data in resources under the control of the legal umbrella of the organization.

Architecture of Cloud Computing

The architecture of cloud computing is rooted in hardware and software infrastructures that enable scaling and virtualization. Many data centers deploy these capabilities today.

Figure 3: Cloud Architecture

Virtualized Infrastructure

Virtualization ensures that applications or business services are not directly dependent on the underlying hardware infrastructure such as storage, servers, or networks. This allows business services to move dynamically in a very efficient manner, based upon predefined policies.

Virtualized Applications

This component helps the application to decouple itself from the underlying operating system, storage, hardware, and network to enable flexibility in deployment. Virtualized Application servers can take advantage of grid computing along with SOA and ensures scalability to meet the business requirements.

Development tools

Development tools can facilitate cloud’s distributed computing capabilities. These tools not only facilitate service orchestration but also enable business processes to be developed that can leverage the parallel processing capabilities. The development tools must support dynamic provisioning.

Enterprise Management

Enterprise management provides the top-down, end-to-end management of the virtualized infrastructure. The enterprise management layer handles the full lifecycle of virtualized resources.

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Security and Identity Management

Clouds must make use of a security infrastructure and unified identity to enable flexible provisioning. As clouds provision resources external to the enterprise’s legal boundaries, it becomes absolutely necessary to implement an Information Asset Management system to provide the requisite controls to meet compliance requirements.

Current Benefits of Cloud Computing

Decoupling and separation of business from infrastructure

Elastic nature of the infrastructure to rapidly allocate and de-allocate massively scalable resources on a demand basis

Reduced costs due to operational efficiencies

Cloud makes it possible to launch Web 2.0 applications

scale up applications as much as needed when needed

supports traditional Javaâ„¢ and Linux, Apache, MySQL, PHP (LAMP) stack-based applications as well as new architectures such as MapReduce and the Google File System, which provide a means to scale applications across thousands of servers instantly

Business Problem

The main issues related to cloud computing in current situation revolves around:

How does cloud computing alter the business model of ITeS?

What are the economic and technical aspects of cloud implementation?

How cloud computing will affect business?

What are the potential drivers and barriers in cloud computing?

Cloud computing can help users avoid capital expenditure (CapEx) on hardware, software, and services when they pay a provider only for what they use. Consumption is billed similar to a utility (like electricity) or subscription (like a newspaper) basis with little or no upfront cost. Another advantage of this time sharing style approach is low barrier to entry, shared infrastructure and costs, low management overhead, and immediate access to a broad range of applications. Users can generally terminate the contract at any time and the services are often covered by SLAs with financial penalties. Other factors impacting the scale of any cost savings include the efficiency of a company’s data center as compared to the cloud vendor’s, the company’s existing operating costs, and the type of functionality being hosted in the cloud.

Existing Scenario

The Existing Cloud Computing Adoption Model

The existing cloud computing adoption by enterprise is modelled on Capability Maturity Model (CMM). The Cloud Computing Adoption Model proposes five steps:

Level 1: Virtualization as the Cloud adoption employs application virtualization technology for shared server infrastructure and seamless portability.

Level 2: Cloud Experimentation since Virtualization occurs internally or externally, based on Amazon Elastic Compute Cloud (EC2) to compute capacity and as a result of the reference architecture.

Level 3: Cloud Foundations occurring due to procedures, policies, Governance, controls, and best practices begin to form around the deployment and development of cloud applications. These efforts always focus on non-mission critical, internal applications.

Level 4: Cloud Advancement. Government foundations allow organizations to scale up the volume of cloud applications through broad-based deployments in the cloud.

Level 5: Cloud Actualization as the Applications are distributed based on proximity to user, cloud capacity, cost.

This Model outlines the readiness criteria, expected returns, risk factors, strategic goals, key investment requirements for graduating to the next step.

Cloud Computing Alters ITeS Business Models

The conventional value chain for IT services, extending from design, development, maintenance and support of IT infrastructures to the maintenance of the application and ITC landscape, is changing as a result of cloud computing concepts. The existing ITeS Business model as shown below is altered due to the impact of cloud computing and is explained below:

Figure 4: ITeS Business Model


Core Capabilities: The core capabilities required to deliver cloud services to the customers can be classified into 3 segments. These are:

Service management and provisioning: This segment consists of Operations management, Service Provisioning, SLA management, Utilization Monitoring, Backup, Data Management.

Security and Data Privacy: This segment consists of Authentication and Authorization, Data Network Security, Data Privacy, Auditing and Accounting

Data Center Facilities: Under this part comes the Routers/Firewalls, LAN/WAN, Internet Access, Hosting Centers.

Partners: If companies want SAAS to live up to its potential in a community-focused business model-centralizing communication, collaboration and business synchronicity across multiple, diverse companies-they need to augment technology implementation with a fresh approach to partner management.

Key Processes: Cloud Services currently offers various services like Test and Development, Internet application Hosting, Disaster Recovery, File Storage, On-demand Storage, utility Computing, SaaS Applications, Log processing, Batch Computing, Jobs, Application Development.


Value Proposition: There are certain compelling benefits that the customers receive from Cloud Computing. These are:

Reduce Cost: Reduction in total cost of ownership by optimally using the hardware and

Software licenses

Agility: The infrastructure can be provisioned quickly

Global Scale: Massively scalable engines allow building highly scalable services for consumers


Customer Segments: The main target segment for the cloud services are the big enterprises, medium enterprises, small enterprises, independent software vendors, developers, etc.

Customer Requirements: The main things that the customers require from cloud service providers are easy to use console, reliability, security, flexibility, low cost, green IT, etc.


Cost Structure: Cloud computing builds on established trends for driving the cost out of the delivery of services while increasing the speed and agility with which services are deployed. The cost of these environments is minimal because they can coexist on the same servers as production environments because they use few resources.

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Revenue: Cloud computing enables a shift in IT provision from direct purchase and payment for services to provision of services which are free at point of use and where revenue is derived from advertising. The largest component of the overall cloud services market is cloud-based advertising.

Profit: Thus with reduction of cost in a great extent and a shift of revenue model to the advertisements, the profit for the Cloud Services is expected to be quite bright.

The maturity model structure helps to classify and compare Cloud computing offerings

Figure 5: Cloud Computing Maturity Model

For Software as a Service (SaaS), there are business models based on pure SaaS solutions, with independent architectures. The Internet browser plays a key part and becomes part of the SaaS applications and acts as the user interface. A SaaS provider manages an application in their proprietary data center and makes it available to multiple users over the Web. Oracle CRM On Demand,, and Netsuite are some of the well known SaaS examples

For Platform as a Service (PaaS), the largest variant involves extensive middleware components. This platform comprises of infrastructure software, and typically includes a database, middleware and development tools. Creation of full-service platform solutions means that independent software vendors (ISVs) and IT departments of system integrators can develop and deliver applications online using third-party infrastructure services. For example, Google AppEngine is a PaaS offering where developers write in Python or Java. EngineYard is Ruby on Rails.

Infrastructure as a Service (IaaS) business model comprises three different types: public, private and hybrid cloud models. It is the evolution of conventional hosting that doesn’t need any commitment and at the same time ensures the users to the provision of resources on demand. Amazon Web Services Elastic Compute Cloud (EC2) and Secure Storage Service (S3) are examples of IaaS offerings

Economic Aspects of Cloud Implementation

Due to recessionary impact as the demand for cost optimisation rises high, cloud computing is emerging as an option for large and small players, seemingly to the benefit of consulting companies in that domain. Cloud computing offers virtualized resources as a service over the internet, incorporating infrastructure, software and platform as services, without a user having to bear large costs by way of acquiring expensive assets in any of the three. It reduces capex into opex and enables computing at a fraction of the investment required to buy all the hardware and software.

Technical Aspects of Cloud Implementation

The three most important technical aspects of the cloud – three items of the Cloud: 1) “infinite computing resources” 2) “elimination of an up-front commitment” and 3) “pay for use of computing resources on a short-term basis as needed. The other important aspects are discusses below –

Server Compute Capacity – The most important reason for leveraging cloud capabilities is to quickly gain access to hundreds or thousands of computers for compute capacity as and when required. Use of the cloud can be up to 90% faster than using servers in data centers. It is ideal for seasonal business load and traffic spikes.

Storage Capacity – There is so much structured and unstructured data on Enterprise storage servers that managing it requires a major cost. As building compute capacity in the Enterprise has become expensive, so has the building of storage capacity. The use of cloud computing for storage capacity can be ideal, especially for spikes in usage.

Network Access – Cloud computing services are generally accessed and delivered through and over the web. Compared to a traditional model, the use of a public network rather than a private network is a big change. The inherent routing delivery advantages of TCP-IP that gets messages to their destination even when multiple paths are down can be applied through cloud computing.

Multiple Locations – A cloud provider with multiple locations for delivery, fail-over and back-up. The technical capabilities enables load to be easily transferred from one location to another.

Easy to use – Cloud computing can be used as programming and technical conventions are similar enough to those of conventional computing, and leading cloud computing platforms have open API’s.

How Cloud Computing will Change business

New generation of products and services

Cloud computing allows innovative companies offer products that are significantly less costly due to reduced capex and new business models

Lightweight form of real-time partnerships and outsourcing with IT suppliers

Cloud computing will provide agility and control that traditional outsourcing providers cannot match for the most part.

Awareness and leverage of the greater Internet applications and Web 2.0 in particular

A reconciliation of traditional SOA with the cloud and other emerging IT models

Web-Oriented Architecture fits very well with cloud technologies which are heavily Web-based and it’s a natural way of building SOA at every level of the organization.

Rise of new industry leaders and IT vendors

Well-funded new cloud startups will bring new technologies, new sensibility (radical openness and transparency, and Web-focus) that’s often needed with cloud computing

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More self-service IT from the business-side

SaaS will require increasingly less and less involvement from the IT department.

More tolerance for innovation and experimentation

With lesser and lesser economic and technological barriers creating new ways to improve the business, cloud computing will enable prototyping and market validation of new approaches much faster

Drivers & Barriers of Cloud Computing

Customer Perspective: Drivers


Faster, simpler, cheaper to use cloud apps

No upfront capital required for servers and storage

No ongoing operational expenses for running datacenter

Applications can be accessed from anywhere, anytime

Customer Perspective: Barriers

Data Security

Many customers don’t wish to trust their data to “the cloud”

Data must be locally retained for regulatory reasons


The cloud can be many milliseconds away

Not suitable for real-time applications

Application Availability

Cannot switch from existing legacy applications

Equivalent cloud applications do not exist

Vendor Perspective: Drivers


Easier for application vendors to reach new customers

Lowest cost way of delivering and supporting applications

Ability to use commodity server and storage hardware

Ability to drive down data center operational cots

Vendor Perspective: Barriers

Service Level Agreements

What if something goes wrong?

What is the true cost of providing SLAs?

Business Models

SaaS/PaaS models are challenging

Much lower upfront revenue

Customer Lock-in

Customers want open/standard APIs

Need to continuously add value

Risks & Security Issues in Cloud Computing

Currently many companies are considering moving applications to the cloud but still there is doubt about the security of third party services.

There are following risks security issues involved with cloud computing:

No ownership of Hardware

Companies who want to audit the providers and do their own testing need to consider the fact that they don’t own the hardware. Conducting a penetration test requires the permission of the cloud-service provider .Otherwise; the client is illegally hacking into the providers’ systems. While some SLAs such as Amazon’s specify that testing of their software running on the provider’s systems can be done but getting explicit permission is key.

Need of Strong policies and user education

Cloud computing provides companies numerous benefits, to allow access to data from anywhere and removing maintenance headaches from the IT staff, but the phishing attacks that hit workers at home could threaten the company. Thus there is need for training the employees for the proper use of benefits especially to non technical users

Risk related to machine instances

There is always a risk during the use of virtual machine from a provider; companies should never trust the system. Companies should create their own images for internal use, and protect themselves legally from potentially malicious third-party developers.

Privileged user access

Sensitive data processing brings with it an inherent risk, because outsourcing services bypass the “physical, logical and personnel controls” IT shops exert over in-house programs. So it is advisable to fetch as much information as you can about the people who manage your data.

Regulatory compliance

Customers are finally responsible for the integrity and security of own data, even if it is held by a service provider. Traditional service providers are subjected to external audits and security certifications. Cloud computing providers who do not undergo this scrutiny are indicating that clients can only use them for the most trivial functions.

Risk related to Data location

Data can be located at any location and one might not even know where it will be stored like the name of the country also. So it may not be clear, whether the provider is obeying the local privacy requirements.

Risks with Encryption Schemes

Data in the cloud is in a shared environment along with data from other customers. Encryption is effective but isn’t panacea. It is important to find out what can be done to segregate data at rest .The cloud provider should provide proof that encryption standards were designed and validated by experienced specialists.

Recovery Risk

On the one hand user does not know the location of data while on the other hand he doesn’t know what will happen to his data and service in case of a disaster. Any absence of disaster recovery or offering that does not replicate the data across multiple sites is potentially vulnerable to a complete failure.

Recommendations & Future Prospects

Lower costs of market entry

Application deployment, faster payback on development costs, and superior return on investment will drive cloud-based platform adoption for both entrepreneurial and enterprise developers.

Internal Clouds

Most IT organizations will opt for internal clouds. These are “cloudy” environments that are implemented within a company’s own data centers. The case for this perspective is that before IT orgs reach out to external cloud providers, they’ll want to get better use out of the equipment they already have.

Providers that Understand their target audience

Ride the new wave of Virtualization solutions

Migrations, business process automations, BPM,consultancies

Chose to be an IaaS

Appropriate visibility, analytics, OS, storage, DR, compute power, security, on demand billing,

Fully integrated Platform as a Service

IaaS, ERP, Databases, XML files, flat files, web services, API availability, DNS

Niche specialists -Mobile or VoIP platforms

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