3. Evolution of Cloud Computing Market
Source: http://www.forbescustom.com/Images/Telecom_CloudComp_2.jpg
4. Cloud Computing – when and why?
• Response to manage complex technologies
• Enabling virtualization technology
• Scalabilty challenge
• Cost presure
5. Cloud computing hype cycle
Source: Mitchell Smith, D. (2012): Hype Cycle for Cloud Computing, Gartner Group
6. 2013 Global CIO Top 10 Technologies
Mark P. McDonald, M.P. (2013): New Priorities, Technologies and Leaders Shaping the Future of IT
February 21, 2013
8. What is Cloud Computing
• Cloud computing presents a significant turning point
in IT service and facilities provision:
– deployment, development, management, maintenance,
and billing
• Ubiquitous, on demand available, dynamically
scalable, virtualized IT services and facilities
– provided to the user based on minimum of provider`s
intervention
Source: Mell, P., Grance, T. (2011a). The NIST Definition of Cloud Computing.
Recommendations of the National Institute of Standards and Technology
9. Cloud computing characteristics
• On-demand self-service
– computing capabilities (e.g. server time and network
storage) provided as needed
– automatically without requiring human interaction
• Broad network access
– capabilities are available over the network
– accessed through standard mechanisms
– use by heterogeneous thin or thick client platforms (e.g.,
mobile phones, tablets, laptops, and workstations).
Source: Mell, P., Grance, T. (2011a). The NIST Definition of Cloud Computing.
Recommendations of the National Institute of Standards and Technology
10. Cloud computing characteristics
• Resource pooling
– computing resources are pooled to serve multiple
consumers using a multi-tenant model
– with different physical and virtual resources
– dynamically assigned and reassigned according to
consumer demand
– examples of resources include storage, processing,
memory, and network bandwidth
Source: Mell, P., Grance, T. (2011a). The NIST Definition of Cloud Computing.
Recommendations of the National Institute of Standards and Technology
11. Cloud computing characteristics
• Rapid elasticity
– capabilities can be elastically provisioned and released, in
some cases automatically, to scale rapid changes in
demand
• Measured service
– resource usage can be monitored, controlled, and
reported, providing transparency for both the provider and
consumer of the utilized service (e.g., storage, processing,
bandwidth, and active user accounts)
Source: Mell, P., Grance, T. (2011a). The NIST Definition of Cloud Computing.
Recommendations of the National Institute of Standards and Technology
12. Cloud computing benefits
Source:
http://www.cloudtweaks.com/web/content//cloud_9.jpg
• Business agility
– shorten IT projects,
– deliver results faster,
– cheaper, with more quality
• Better use of resources
• Reduced spending (pay per use)
• Use of latest technologies
• Standardization
• Less operatoinal issues - improved flexibility, accesability
• Streamline processes
• Less in-house IT staff
And beyond: New, innovative business models design
13. Cloud computing service models
• Software as a service (SaaS)
– End users use provider’s applications running on a cloud
infrastructure
• Platform as a service (PaaS)
– Application developers deploy onto the cloud infrastructure
consumer-created or acquired applications created using
programming
• Infrastructure as a service
(IaaS)
– Network architects use
processing, storage, networks,
and other
fundamental computing
resources
Image source:
http://2.bp.blogspot.com/-0nVb1IUFLNU/T2wmeFSDvdI/AAAAAAAAAGc/ejuDfBV1-7Q/s1600/delivery_models.png
14. Value for different types of users
Image credit: saasblogs.com
Source: http://shuttlecloud.com/blog/?Author=Ryan%20Kulp
15. Deployment models
https://devcentral.f5.com/weblogs/images/devcentral_f5_com/weblogs/macvittie/WindowsLive
• Private cloud
– The cloud infrastructure is
provisioned for exclusive use by
a single organization
Writer/PrivateCloudWillPushPublicCloudtoMaturit_44CF/image_6.png
– It may be owned, managed, and
operated by the organization,
a third party, or combination of them
– It may exist on or off premises.
• Public cloud
– The cloud infrastructure is provisioned for open use by the
general public.
– It may be owned, managed, and operated by a business,
Image Source:
academic, or government organization, or some combination
of them.
– It exists on the premises of the cloud provider.
Source: Mell, P., Grance, T. (2011a). The NIST Definition of Cloud Computing.
Recommendations of the National Institute of Standards and Technology
16. Deployment models
• Hybrid cloud
– The cloud infrastructure is a composition of two or more distinct cloud
infrastructures (private, community, or public)
• remain unique entities, are bound together by standardized or proprietary
technology that enables data and application portability
• Community cloud
– The cloud infrastructure is provisioned for exclusive use by a specific
community of consumers from organizations that have shared
concerns (e.g., mission, security requirements, policy, and compliance
considerations).
– It may be owned, managed, and operated by one or more of the
organizations in the community, a third party, or some combination of
them
– It may exist on or off premises.
Source: Mell, P., Grance, T. (2011a). The NIST Definition of Cloud Computing.
Recommendations of the National Institute of Standards and Technology
18. Where are we?
• Consumer
– Everybody uses it, but we may not know it!
Image source: David Fletcher (2013): The Lighter Side Of The Cloud – The Cloud Conclusion
(http://www.cloudtweaks.com/2013/01/the-lighter-side-of-the-cloud-the-cloud-conclusion/)
20. Cloud Computing - Provider
• Software as a service (SaaS)
– Traditional applications: Email, ERP, Collaboration
– Innovative applications: Social media
• Platform as a service (PaaS)
– Provide ecosystem for partners developing new services
• Google Apps
• iTunes
• Infrastructure as a service (IaaS)
– Virtualization infrastructure
– Data storage infrastructure
21. Cloud Computing - Enterprise
• Cloud computing becomes a strategic focus of
many organizations
– Business potential
– Rapid development of IT
• Agility
• Innovation support
• More efficient IT governance
• Cost savings
• Security, trust concerns
Image source: https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcQy-
pAQo5KGH1M34cPPyrlSMcyzNwT8G_LA8rWQPeQmMyovFwIiXA
22. Current state
• Cloud computing deployment vary by
different industries (Gartner group 2012):
– most widely spread in hi-tech industry
– financial industry adopted PaaS and IaaS in a
means of private cloud
– government institutions most often use SaaS in a
means of public cloud.
23. Current state in Slovenia
• Cloud computing market in Slovenia has reached a value of
11,95 million $ (private and public cloud) in 2010 (IDC
consulting, 2010)
– private cloud market has reached over 7 million $.
• Public cloud market value in Slovenia in 2010:
– Romania 65% value of Slovenian market
– Bolgaria 9% value of Slovenian market
– Slovakia 118% of Slovenian market
– Czech 314% of Slovenian market
– Russia 230% of Slovenian market
• Higher adoption of public cloud in production companies
• Higher adoption of private cloud in financial sector and
trading copmpanies
24. Future predictions
• Gartner group predicts, that in 2015 the total
market value of cloud computing will reach $
176.8 billion.
– a) Software solutions and services: $ 21.3 billion,
– b) Platform as a Service: $ 2.4 billion,
– c) Infrastructure as a Service: $ 19.59 billion.
26. Considerations for
cloud computing adoption
Business advantage
Other factors
Ease of development
Time to deployment
Quality of cloud services
Cost advantages
Security concerns
Source: Anderson, E.; Britz, B. (2012): High-Tech Tuesday Webinar: Cloud or Fog: Clearing the Air Around Cloud Services, Gartner Group (September 2012)
27. Cloud computing challenges
• Cloud computing is here, advantages are defined,
good examples identified
• Predicted further developments and wider future
adoption
• Adoption in Slovenia is not that fast as foreseen
• To achieve full advantages of cloud computing it
is necessary to understand aspects of all players
in the market:
– Providers
– Users
28. Cloud computing challenges
• Majority of research is focused to technological
issues of adoption
• The need to investigate business perspective of
adoption
– European Commission tends to accept the strategy for
cloud computing development (legal, technological
and commercial aspects)
• The need to offer approprate business models for
cloud computing
– to achieve and support wider adoption
29. Cloud computing challenges
• Cloud computing providers are trying to
create a competitive advantage with new
business models in the market.
• By cloud computing adoption organizations
tend to maximize the added value of its usage.
• It is necessary to clearly define business
models and the most important factors that
impact cloud computing adoption.
31. Business model definition
• The popularity of "business models" started to
increase at the end of the 90s.
• Business model can be defined as logic of
organization that reflects its business strategy.
• Business models are not static.
– They need to be adjusted, depending on the needs of
users, technology, market and regulatory factors.
32. Cloud computing research framework
Business models factors
Product Innovation
Users Infrastructure
management
Point of view Impact
Cloud computing
adoption
Customer
Providers relationship
management
Finances
Figure 1: Cloud computing research framework – factors affecting cloud computing
adoption (adapted from Osterwalder, 2004)
33. Product innovation
• Product innovation covers all aspects related to the
offering of the company:
– services and the manner in which company differentiates
itself from its competitors.
– the ability to offer value to a customer demands with a
range of specific capabilities.
• It is composed of the:
– value proposition,
– target customer segments,
– capabilities.
• These elements need to be assured in order to
deliver the value to the customers
34. Customer relationship management
• CRM helps companies to define:
– target customers
– strategies of customer data collection, its
management and use for CR improvements
– creation of desired offer of products and services
– customer loyalty
35. Infrastructure management
• Infrastructure management describes the
value system configuration
– necessary to deliver the company offering
– to establish and maintain customer relationship.
• It is composed of the:
– activity configuration
– in-house resources and assets
– company’s partner network
36. Finances
• Finances defines revenue model and costs
structure.
• Logic of revenue generation is an indicator of
business results and organizational success
• Different pricing models:
– fixed
– dynamic
– based on market conditions
37. Cloud computing research framework
• The research framework presents:
combination of:
– Osterwalder´s (2004) business model definitions
– business model elements identified in the 5th FP
project E-Factors: A Thematic Network and E-
Business Models (E-Factors Consortium, 2003)
– other identified factors from prior research in the
investigated field
• including interviews with cloud computing providers
and users
38. Cloud computing research framework
Source: Adopted by Osterwalder 2004, E-Factors 2003, interviews 2012
44. Research methodology
• Three main research hypotheses were
introduced, investigating the influence of
business model factors on cloud computing
adoption
• Beside main hypothesis, we wanted to identify
potential differences in opinion, based on
company role
– Users with/users without experiences
– Users/providers, …
• Introduced research framework was further
developed to individual factor´s level
45. Research limitations
• Business model factors were investigated for
three cloud computingy service types: SaaS, PaaS,
Iaas
• Invited CEOs and CIOs / companies in Slovenia
– Users (300 micro enterprises, 300 small enterprises,
300 medium enterprises, 300 large enterprises)
– Providers (300)
• 80 companies responded
– 60 users
– 20 providers
46. Results 1/3
• The most important business model factors
for cloud computing adoption (Linkert scale)
Business model factor Cloud computing service type
Trust building mechanisms:
System security
Service quality All
Service and system availability
Service recovery procedures
48. Results 2/3
• The most important business model factors
for cloud adoption (Linkert scale)
Business model factor Cloud computing service type
Service value for customer:
Economic value / cost savings
Service usability
Service flexibility
Customer support services
Provider´s capability: SaaS
Knowledge and experiences
Trust building mechanisms:
User authentication
In case of changing the provider
52. Results 3/3
• The least important business model factors for
cloud adoption (Linkert scale)
Business model factor Cloud computing service type
Service value for customer:
Service trademark
Marketing: All
Publications
Service billing:
Based on market value
Based on target customers PaaS & IaaS
Marketing:
Use of partners’ marketing channels
57. Recommendations for
cloud computing providers
• Rethink about your business model:
– Service value for customers:
• economic value (cost savings)
• service usability
• service flexiblitiy
• service trademark
• customer support service
– Provider's intangible assets
• knowledge and experiences
58. Recommendations for
cloud computing providers
– Trust building mechanisms (the most important
group):
• user authentication
• system security
• service quality
• service and system availability
• service recovery
• provider shift trust building mechanisms
– Prefered revenue model
• pay per use
• pay per service
59. Recommedations for enterprise to
prepare for cloud computing
• Rethink the IT value proposition
– Competitive need for business agiity
– Fast deployment of capabilities enabling business
aility
• Re-architect existing platforms
– The cloud model involves reducing the scope of core
enterprise platforms to essential enterprise-wide end-
to-end processes and shared data
– Focus on designing interfaces between more
minimalist enterprise platforms and external cloud
services
60. Recommedations for organization to
prepare for cloud computing
• Redesign your IT governance
– Effective adoption of cloud services will depend
on the ability of IT and business leaders to decide
on adoption strategy
• which capabilities should be local and which should be
global.
– centralized governance models may change
toward more distributed models
• which may extend to include vendors.
Source: MIT Sloan: CISR Research Briefing (2012)
61. Recommedations for organization to
prepare for cloud computing
• Reallocate IT budget
– From capital expenditure to operational expenditure
(cloud computing)
• Refocus on user needs and preferences
– Platforms and solutions must go beyond supporting
(or enforcing) standardized enterprise processes (ERP)
– Corporate computing platforms must empower
employees personal working styles.
• High usability expectations and device preferences
• Beyond standardization of enterprise processes (ERP)
Source: MIT Sloan: CISR Research Briefing (2012)
62. Recommedations for organization to
prepare for cloud computing
• Redevelop the IT organization
– IT people no longer design, build, and run—they
now broker, orchestrate, and exploit.
Source: MIT Sloan: CISR Research Briefing (2012)
63. And more …
Awareness of advantages Develop adoption strategy Choose the provider
& threats
Look to the future – stay alert Take advantages Implement
Links to original image sources available at http://pinterest.com/andrejapucihar/cloud-computing/
64. Questions and Answers
Kristina Bogataj
Kristina.Bogataj@fov.uni-mb.si
Andreja Pucihar
Andreja.Pucihar@fov.uni-mb.si
