Cloud computing is regarded as the jargon of the moment in the technology industry, while leading technology vendors such as Google, IBM, Microsoft and yahoo are deploying their strategy in this field. This essay would provide insights into the IT industry through the impaction of cloud computing on e-business application model. As a result, suggestions would be made for large corporations and small business according to the analysis.
The essence of cloud computing would drive the IT industry to another end. In the era of PC, industry competition mainly lies on the capacity of hardware. That is to say, a CPU provider is constantly trying to provide quicker but more expensive equipments. However, with the emerging of cloud computing, it would not stand for the business trend in IT industry any more. The principle of could computing is to pool computing resources – processing, storage, massaging, database and etc together as an integrated unit – a cloud. The development of high-speed internet access and almost limitless online storage suppliers then enables users to access and share the resource of ‘cloud’ from a remote device. Through the technology advance provided by cloud computing, instead of relying on expensive equipments, users with a simple PC could also fulfill their CPU-sensitive business requirements, while its impaction on the business side is even more resounding.
The web is becoming an interface, that’s the fundamental shift of a new cycle of technology innovation. A vivid example of cloud power in the web market comes from Animoto. Its service is to enable web users to upload images and music onto the server and then generates customized web-based video presentations for them. This technology makes Animoto soon becoming a hot web service provider. However, as a small business, the co-funders of Animoto have neither money nor sufficient business intelligence to meet this huge demand. Instead, they worked with Rightsclae – a cloud service provider to design their application for Amazon’s cloud. The result is that Animoto not only strengthened its service capacity but lowered its bill.
In order to build a thorough understanding of cloud computing’s impaction on IT industry, in this section, author would study cloud computing through the eBusiness Application model. It is constituted by four main sections – Administrator & Operations, Finance & Control, Customer relationship management and supply chain management, while Business intelligence and Enterprise Resource Planning located at the center of this model.
First of all, considering finance & control, cloud computing shows evident advantages, especially on the cost of servers. Except the price advantage, another important character of cloud is scaling. In the Animoto’s case, the co-funders of Animoto don’t have the large capital to set up servers for their web service. Instead of making huge investment on service, they chose cloud, which could provide a dynamic service unit. The scale of cloud would automatically change according to the demand, and Animoto’s payment on this service is also decided by how much resources they actually used. This highlight of cloud computing would help companies like Animoto to void risk- taking in the unpredictable IT industry. On the other side, it also contributes to employees’ equipment cost. Instead of purchasing PC with high processing capacity, employee would fulfill their tasks through a PC with default set-up and using the service in ‘cloud’.
Secondly, by using cloud computing, companies also reduce the cost on administration and operations. The redundancy of resource in different PCs makes it time-consuming to maintain. On the other side, although it is possible to set up hierarchy and access level within the local network, it also requires extra expense and maintenance. In the contrast, living in cloud not only reduces redundancy of data but also enables an easier hierarchy management.
Thirdly, impaction of cloud computing can be also found in the terms of customer relationship management and supply chain management. In the company Agnitio author works with, while an IT solution for customer is finished, it always costs extra work to delivering the accomplishments to them. The problem lies on the different network between Agnitio and the target company. And due the security consideration, it’s also not wise to share the network of Agnitio with clients. However, by using a cloud, Agnitio could build a clear access hierarchy and share the cloud with customer – It enables simultaneity.
Traditionally, in the aim of providing business solution to the aforementioned four sections, BI and ERP are introduced to corporations. Nevertheless, with the development of new web platforms, corporations are looking for more innovative solutions that provide greater flexibility and customization and less expensive than the previous generations. What’s more, suffering from the global recession, more companies realized that they should invest on cloud computing, Software as a service concept rather than the large, expensive, integrated business solution. One of the most ideal BI solutions of the new generation is to taking advantages of RIAs and Clouding Computing. Through the interface provided by RIAs, Saas vendors could deliver their service to remote customers. On the other side, the concept of Saas includes two sections, on-demand applications and Paas, which the attribute of scaling and the ability of cross-platform service provided by cloud computing could well fulfilled.
So standing at the other side of ERP, would the cloud computing be a substitute of ERP? The answer is although could computing shows evident advantages, it still depends on the character of corporations.
For small business which has less investment budget in this field and less BI to arrange the correlation between their business and the IT solution, cloud computing could be a great tool for startup and IT deployment. It is extendable, which allows the company to constantly rescale the size of ‘cloud’. And the characters of on-demand application and Paas would create large extent of flexibility for them. In instance, Amazon EC2 allows customers to create an Amazon Machine Image (AMI) on its ‘cloud’, which contains all the applications, libraries, and data. Then customers could use relative Saas provided by Amazon to process their digital assets – such as Amazon s3, Amazon simple DB and Amazon SQS. Companies like Animoto are the success examples in this field.
But in the terms of large corporation and companies already have their own network, cloud computing would still not be their new IT solution. As one of the fundamental framework of a large corporation, the existing ERP solution has already been built up. Companies have put huge investment on the development and customization, and also including the stuff training cost. The switching cost for them is much too high. Considering the characters provided by cloud computing, those companies are clear with the service they want to use and there is few scaling situation for them. What’s more, the potential problems such as reliability, security caused by cloud computing also reduce the attraction to them. In a ward, it is not feasible for them to abandon the ERP they have used for years and spend energy to set up a new system again in the multi-layered company structure.
