MY INDIVIDUAL PAPER DRAFT

EXECUTIVE SUMMARY

We all use cloud computing in our lives and one ubiquitous example is Facebook. Facebook incorporates cloud computing in a way that we share our information or resources with everyone else. We cannot live without cloud computing as with Facebook. According to Wikipedia, cloud computing is the delivery of computing as a service rather than a product, whereby shared resources and information are delivered to computers and other devices over a network. In short, we can now create a ‘cloud’ of resources that is accessible to all other users. Indeed cloud computing has revolutionized our social relationships in our generation where private information of our family and friends are just clicks away. We are now more interconnected than ever before. 

But social networking is not the only aspect of our society that has been changed drastically. The whole set-up of companies have also been standardized such that cloud computing is not only a commodity but also a tool to generate profits. As mentioned earlier, cloud computing consists of shared resources but has now gone one step further in providing applications and software to companies. The days are gone where companies have to depend on massive IT hardware and taxing resources. In modern times, companies just have to pay a monthly subscription for all these ‘cloud’ applications and software instead of the enormous costs of unreliable resources. However, this is also the game-changing reality that my paper seeks to cover. The accessibility to these ‘cloud’ applications has now been expanded to SMEs, hence diminishing the economic advantage that larger companies once had.

RATIONALE FOR CHOOSING THIS INNOVATION

Cloud computing has eliminated the traditional model of business and transformed it into a highly efficient and simplistic method. Businesses nowadays do not have to stop operations just because of glitches in their IT systems and the constant maintenance and upgrades, these are all eliminated with cloud computing. From a few users to close to a thousand in just a few months, you can see clearly the convenience and efficiency that employees enjoy over the old systems. This not only confines the effect to companies internally but on a global scale as well, employees can now discuss and work on projects with their international colleagues with ease. With so many savings in cost and time, it is no wonder that companies are flocking to cloud computing and claiming it as the next big thing.

The implications do not just stop there, in fact the innovations are infinite in the realm of cloud computing. Companies are employing strategies to use social networking sites to attract or inform consumers so as to help their sales. News corporations such as Business Week, Time are posting their news updates on Twitter to the convenience of their readers, several fashion brands like Louis Vuitton or Prada are posting their latest line of fashion to attract consumers. Companies are bringing the business closer to us and with the immense exposure we have to social networking sites daily, it is a matter of time before we let these advertising campaigns get to us. This is just one of the numerous innovations coming out from cloud computing, it is expected that this industry will reach billions in this coming decade showing the emphasis companies are placing.

Cloud computing is a game-changer in the sense that it is a platform where SMEs can have a realistic chance of competing with larger companies. When mentioned earlier that there is a new simplistic and efficient model of doing business, SMEs are no exception. Constant breakdowns and repairs to IT breakdowns have often placed a substantial strain on the resources for smaller firms as compared to larger ones. With cloud computing, this no longer poses a problem, as the software applications are now cheaper and more reliable. As compared to the past, the starting costs are considerably much depressed. This can introduce a new influx of competition into the economy, potentially challenging the market share of established firms.

EXECUTIVE SUMMARY

Cloud computing is like the rock which SMEs can use to defeat the Goliaths of the market. I aim to cover this ‘rock’ and how thanks to it, the competitiveness of SMEs has improved vastly. The historical, present and future perspectives of the implications of cloud computing on firms will all be elaborated as well. Through these various viewpoints, I hope to present the contrast and differences between before and after cloud computing came about and my take on them.

HISTORICAL PERSPECTIVE

Before cloud computing, businesses operate on two components, which were mainly business applications and data servers. This was the traditional model of business mentioned earlier. In this segment of my paper, I would highlight and elaborate on the shortcomings of these components. An example would be the high costs expended to constantly maintain and upgrade theses components. Sadly, companies had to make to do with it right until the introduction of cloud computing.

Data centers and servers are a common sight in companies in the past; they store and process all the information of transactions made, they are likened to the engine of cars. They are imperative to the smooth running of a company. But that is where the problem comes in. Data servers are not without its costs, it takes up a high portion of expenses, time and effort to maintain its running. For example, to prevent the overheating of the servers, coolants have to be installed and operating 24 hours everyday. These are exorbitant costs that companies have to pay which in turn result in a diminishing of potential profits. Data servers are highly unreliable too, one glitch in one of the servers may lead to the shutting down in several others too. All these glitches cannot be afforded in terms of efficiency and economic costs. The problem does not stop there, a team of IT experts have to be employed to be on standby for any kind of temporary breakdowns. And in most cases, glitches do take a long time to be remedied, which is a both complex and tedious process. In the first place, IT personnel have to do several tests just to make a diagnosis of the problem. Now, multiply this problem across several computers in a department and the answer is a shortage of manpower in the IT support. It does not help that there are no forms of incentives or deadlines for solving these glitches in the shortest period of time. Repercussions of these breakdowns are unthinkable where a potential huge amount of vital data could be lost.  Without this data, operations are held up and unable to proceed on. However, companies are aware of all these drawbacks but they also know that their survival depends on them.

Another integral cog of this engine of traditional businesses would be the diversity of business applications used by companies. Their functionality comes in the form of operating systems, which workers use to do and process their work.  There are various kinds of applications, like those for business to business (B2B) where orders and transactions can be made through a private system or for customers to place their orders and make enquiries. Applications are used to better organize work for workers and standardize the documents employed, an example of Microsoft office would come to mind. In short, for every specific task or operation, companies use up to one or two applications so you have a vague idea of how many one company have to purchase just to ensure completion. On top of that, one application does not come cheap, so totaling the costs of these business applications would come as a headache to companies. Another disadvantage would be the constant need to upgrade or update these applications. These software companies are constantly coming up with new versions that are both modified in the aspects of efficiency and convenience. With such improvements, companies are normally pressured into paying into getting them so as not to lose to fellow competitors since they are most probably using the same ones too. However, implementing these upgrades has its obstacles too. The first one would have to be the compatibility of the current hardware with the upgraded software. Companies would have to assess and determine whether their hardware such as computers and printers can function normally even with these new software. And if there is a case of incompatibility, the hardware may instead function slower or be less responsive, which is the total opposite of what companies had in mind. As you can see, it is a lengthy process where several assessments have to be made to ensure these new software can be fitted in smoothly without any disruptions and usually companies take extra caution so as to avoid losses. This whole transition is a dreaded process for both workers and company because it means a another period of adjustments and disruptions. Like data servers, time and capital are sacrifices companies make so as to maintain their competitiveness in the market.

From the two paragraphs above, we can see that the traditional business model is one of high expenditures and time consumption. But the reality is that not every company can endure all these costs and SMEs are the ones who suffered the most as a result of that. Large firms are already struggling with these costs despite having a specialized IT department dedicated to maintaining hardware and software. It is just not plausible for SMEs to invest this kind of capital to compete with them in this aspect. In such an ever-changing market, SMEs are already struggling to compete with larger companies for profits, with the addition of these software and maintenance costs, SMEs do not stand a chance of having a sizeable market share. This was the handicap suffered by SMEs but what choice do they have? That was until cloud computing came into the picture.

CURRENT SITUATION

Cloud computing has initiated a whole new model of business, one where the huge costs of servers and business applications are now a thing of the past and no longer hindered companies from advancing in their IT field. It is no surprise SMEs embrace cloud computing with such enthusiasm and excitement because it represents an opportunity to finally compete with large firms. Cloud computing is preferred by many due to its low cost, convenience, accessibility, diversity and the potential innovations. In this segment, these characteristics shall be assessed in terms of its benefits to companies.

With the old business applications, companies are most probably paying more for what they do not need which is a huge waste of resources because they are likely not to ever use these extra applications. But with cloud computing, this worry is non-existent. Cloud computing enables company to pay for the necessities, on top of that, there is an additional function of customization. This means that companies can now customize their applications, deleting certain redundant items and highlighting the ones they truly need. This means employees need a shorter time to adapt because they do not have to waste additional time to learn about applications that they might never use in their line of work. As mentioned earlier, old business applications need to be constantly updated to the latest versions so as to enhance performance. This is not the case with cloud applications because cloud applications are updated automatically. Companies no longer have to face any more potential delays, tests, costs and breakdowns and still can enjoy the various new functions of upgrades. This is music to the ears of Chief Information Officers of companies where resources are now freed up to be focused on other more important projects such as innovation. There will be one obstacle less to deter innovation for companies.

The costs associated with data servers and old business applications are normally extremely steep which takes up a significant portion of capital. But with cloud computing, companies can now enjoy significant savings. Businesses just have to pay a monthly subscription for each application used instead of the massive servers maintenance and upgrade costs. With cloud computing, you have no breakdowns, a simple installation method and no need for maintenance, which in short means technical help is not longer essential. Technical support team was like a requirement on a checklist of every company because they are the ones who have the knowledge and expertise to repair software and hardware. However, with all these problems eliminated, the value of a technical team does not seem so high anymore. In short, it is out with all the costly hardware and software and in with the new economical cloud computing.

With data servers, companies were all so fearful that their information and data would be lost in the event of a shutdown or glitch. The process to retrieve these information could be tedious and at times, impossible. On the other hand, cloud applications store their data in a common space, making use of the Internet. Security of data has now just gone up a notch and companies can rest easy knowing that no breakdown or glitches will result in any losses and there is a backup storage in the ‘cloud’. Cloud computing has enabled firms to store their information in the Internet, opening up a potentially abundant amount of storage space. This means that companies do not have to install extra servers just for any additional storage but just have to pay a slightly pricier charge for the cloud application, which in turn saves both space and cost. Another advantage of storing data in the ‘cloud’ is the improved accessibility to the information, simply put, all you need is a mobile internet browser device like a mobile phone to access all your information. Business transactions are no longer confined to just your office space but rather on the move whenever and wherever, making your work much more convenient especially if it is a matter of high importance or when you are overseas. This accessibility also signifies a boost in the transactions made with global partners. Overseas firms can access the data at a faster and more convenient rate, which smoothens the process of business discussion between firms. Cloud storage is one innovation that has revolutionized data storage, exploiting the web space to its fullest so as to meet the demands of firms.

The world of cloud computing is one filled with infinite possibilities. Starting utility cloud applications such as Google doc and Dropbox were meant for the storing and sharing of information between a group of users. But cloud applications developers are starting to develop and innovate different applications for other sectors, such an example would be sales. Sales applications rely on the information sharing function, where companies and consumers exchange opinions to further improve their products. This type of application falls under the category of CRM (customer relationship management). Companies can now use it to track and observe its consumers’ interests and decisions that may be beneficial to its decision-making process. Information updates about the latest line of products or promotions are delivered to consumers regularly so as to entice sales. On the other hand, companies also open up sharing portals for consumers to share their views on the overall performance of their products or services. This in turn allows companies to form results groups and survey data for targeted groups so as to help them in future modifications. In our time, information sharing is a activity that we are subconsciously doing everyday, from posting and reading comments about daily events on Twitter and Facebook to using Dropbox or Sugar sync to share photos, songs and videos with our friends. All these are possible with the advancements in technologies and more specifically cloud computing. Companies recognized this fad among people and are now thinking of more cloud applications to reach out and expand their market. Cloud developers see the demand arising from firms and are helping to fulfill these demands through their applications. Many have speculated and predicted that the market for cloud computing will reach a staggering 95 billion in this century, showing the immense potential and confidence shown by firms in this market.

But nothing is perfect and cloud computing is no exception. There are drawbacks to this revolutionary service and one major concern is the reliability. As mentioned earlier, data servers are prone to shutdown and glitches that may potentially lead to losses in information but in actual fact, cloud applications are not spared from them too. Cloud developers such as Amazon have experienced a few outages of their own. In April 2011, Amazon Sc2 experienced a four day long outage where services such as Hootsuite, Quora and Reddit have all experienced shutdowns for their websites. Other services such as Twitter, Google Apps and the Playstation network have all been through their fair share of outages as well and the list does not stop there. In these outages, a percentage of data was lost and may not be recovered, which has troubled several users. Companies need to realize that cloud computing is not omnipotent and have its defects. This is why some companies are hesitant to join the cloud computing trend because one outage affects not just one company due to its multi-tenancy function. Multi-tenancy is a software principle where a software is being used by multiple client organizations simultaneously, hence the effect on several victim firms. Cloud computing is a step forward in the field of ICT (information communication technology) but it is not totally reliable yet and it is up to cloud developers like Amazon to prove it to us.

Security is another cause of concern for cloud applications users. One notable case would be the hacking of the Playstation network earlier this year 2011. The hackers broke into the network and stole valuable information and causing a worldwide shut down in the network at the same time. The whole fiasco show the world how vulnerable and feasible it is to break into a ‘cloud’. As taken from a quote from the Time magazine, “As much as I think what the hackers did was downright criminal, the fact of the matter is they have done a marvelous job of showcasing Sony’s ignorance. “ If you add the multi-tenancy factor to this hacking incident, you will get a situation where hackers have access to multiple companies in this cloud application and that is a genuine cause for concern. It is no wonder some companies remain conservative and take a hybrid approach using both data servers and cloud computing. Like concerns for reliability, cloud developers need to strengthen their securities so as to reassure their clients.

I have discussed both sides of the argument for cloud computing and where it stands currently. Indeed cloud computing is the only way forward, it is so embedded in our society that it is now a way of life. Information sharing is the key to the progress of our societies and economy. Companies have acknowledged this truth and are slowly shifting their model of operations towards being web-based. Cloud developers such as Amazon, Microsoft and IBM are also aggressively coming out with new cloud applications to stay within this trend. The market can also expect a massive influx of new SMEs because with cloud computing, new firms enjoy a low start-up cost and a short preparation period. Cloud applications are so easy to install and operate such that new firms can start operations within days. Another beneficial factor is the diversity of applications. Small firms can now appeal to a larger group of consumers through various channels, increasing their clientele. Large corporations have to maintain their competitiveness in order not to lose their market share to these new firms. Competition can only be good for us consumers because we can enjoy the products of innovation derived from it. 

FUTURE PERSPECTIVE

Since cloud computing is the future of businesses, we should be expect to see many more revolutions, ones that can change lives and revamp traditional models. We are talking about a world where an office space may not be required anymore, which is made possible by the mobility of cloud computing. The predications are that in the foreseeable future, almost everyone will be living in the ‘cloud’, all our work personal information will be uploaded into the ‘cloud’.  We are talking about a soar in demand for cloud applications by both firms and consumers and how every cloud developer will try to tackle this exponential increase.

Living in the ‘cloud’ is an inevitable process, even in these current times, we are almost living our everyday lives in it already. Actions such as following your friends on Facebook, blogging about your life on Twitter and uploading personal photos on Flickr are all enabled by cloud computing. People who do not use cloud computing will be as rare as those who do not have a Facebook account. With such dependence on cloud computing, it will be a matter of time before all of our work will be done in the ‘cloud’. Cloud developers have taken an aggressive approach towards innovating new applications because there is where the demand is heading towards in the future. Firms will slowly eliminate the use of hardware and software and operate solely on applications on the net. Applications such as Google doc are already widely used and well-liked in firms these days. Other departments such as HR are slowly incorporating cloud applications in their work. Information of every employee will be stored in the company’s ‘cloud’, which makes the job of HR personnel easier in terms of online applications or the deliverance of messages to each employee. This is a golden opportunity for cloud developers to cash in on this transition process of firms by replacing their old hardware and software with the latest applications for their every need. Major firms such as IBM, Microsoft have taken this initiative in the form building cloud data centers so as to accommodate the immense influx of data from firms. The goal of IBM is to create a personal cloud environment for each firm so as to fully take control of their own computing resources as their needs change. This is also known as an “enterprise cloud”. The ideal situation is where a company can operate as efficient as an Internet. Cloud computing is opening up so many opportunities for cloud developers in a way that the winners are no longer the biggest firms, but rather the winning cloud application. SMEs can have confidence in their future because they now are able to operate as efficiently as larger firms too.

The standout point about cloud computing is its mobility feature. Cloud computing enables access to any application as long as you have an Internet browser device such as a mobile phone, tablet or laptop. Basically, you can complete your work on the go. If work is no longer desktop-bound, there may be no need for an office space anymore. You can work from a shopping mall, your house and even in a train. This means that in your travelling time, you can easily work and communicate with partners locally and globally, enhancing both convenience and efficiency. But people may be concerned about the lack of ideas arising from this mobility. In the past, ideas were generated from a meeting or brainstorming session in offices. But with offices being obsolete, there may not be any of such conglomerations of ideas. Personal inter-relationships between colleagues may gradually cease to exist, but this is one of drawbacks of cloud computing. All the information sharing with people we know are done with our fingers instead of our mouths and interaction. We are slowly losing our interaction skills, how we handle different situations with others. In the future, employees will discuss work from the screens of their devices and they may not even know who are on the other side. We may be working from the comfort of our homes but we are losing the personal touch found only in a workplace where for example colleagues celebrate the completion of a project. This drawback is undesirable to some but it cannot be avoided if we are to fully function on the ‘cloud’.  

The future of SMEs is one of good prospects, empowered by cloud computing, SMEs are no longer inhibited by inefficient, narrow technology. With a bigger market and a faster efficient model of business, there is no reason why SMEs cannot catch up to their bigger counterparts. The future innovations of cloud computing are also working to the advantage of SMEs. Unlike bigger firms, SMEs have a small number of employees where the lowest could be even below ten. SMEs can take advantage of the mobility of cloud computing by communicating and solving problems almost instantly through their iPad, iPhones and Blackberry. The decision makers can also better keep track of current events and transactions, helping in their judgement. This agility and flexibility is one that can differentiate them from larger firms. There are statistics showing that SMEs managers do prefer this mobile working method as it increases their efficiency.

CONCLUSION

In this paper, we have covered the situation before the introduction of cloud computing, how cloud computing was a game-changer for businesses and the future implications arising. Cloud computing improved costs, mobility and diversity of businesses greatly. SMEs pay for only what they need but enjoy even more benefits such as storage space and accessibility. Employees can access to applications through their mobile devices, allowing them to operate whenever they want. The diversity of cloud applications covers almost all of the needs of each department of a company and even more in the future. Many agreed that cloud computing is the new future for our society but advise firms to tread carefully as there are several concerns not ironed out yet. Outages to Amazon and Twitter are unacceptable if they want to gain the trust and confidence of businesses in their applications. Firms cannot afford the losses of precious data on a frequent basis.

Cloud computing is a platform which SMEs can fully exploit if they ever want to compete head on with larger firms. Although cloud computing is not perfect in many aspects yet, SMEs have to jump on the wagon now in fear of being left behind. The benefits for SMEs are plenty and several CIOs are pleased with these impacts. The concept of mobile working should also excite SMEs due to the fact that their employees can target different markets all at once. The convenience of modifying any mistakes in your applications within minutes is an added bonus too.  All in all, cloud computing is a game-changer for SMEs such that it has removed the need for hardware and software and is gradually shifting towards an era where companies can operate as efficiently as the Internet. This era is arriving and very soon, everything in your life will be at the touch of your fingertips and businesses will be operated from homes or basically anywhere.