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Cloud Computing

Economics of Innovation Processes Groupwork
by

Manon Thomas

on 15 December 2014

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Transcript of Cloud Computing

SaaS
is a model of software deployment where an
application
is hosted as a
Web-based
service provided to customers across the Internet.

It alleviates the burden of
software maintenance/support
Usually

multi tenant
environment
Usually billed based on

usage
Highly
scalable
architecture


Examples:
Google Apps, iCloud, Dropbox, Prezi

Economics of Innovation Processes
CLOUD COMPUTING
Gianluca Toffoletto, Antonino La Manna, Manon Thomas
WHAT IS CLOUD COMPUTING
Cloud Computing*:
“an emerging
IT
development, deployment and delivery
model
, enabling service users to have
ubiquitous
, convenient and
on-demand network access
to a shared pool of
configurable computing resources

(e.g., networks, servers, storage, applications, and services), that can be
rapidly provisioned
and released with
minimal management
effort or service-provider interaction. Cloud computing enables cloud services.”

Cloud Services:
Products and solutions
that are delivered and consumed on demand (utilizing IT Resources & capabilities of Platform) at any time, through any access network (fixed & mobile) using any connected devices and cloud computing technologies.

*: National Institute of Standards and Technology
(NIST)
definition (2011)
PRODUCTS
Types of Cloud Computing services:
Saas (Software as a service)
Paas (Platform as a service)
Iaas (Infrastructure as a service)

Deployment Models:
Public cloud
Private cloud
Community cloud
Hybrid cloud

Saas
Paas
PaaS
provides all of the
facilities/tools
required to support the complete life cycle of
building
and delivering

web applications
and services entirely from the Internet.

Platform tools

may include programming languages and tools for application, interface and database development, storage and testing.
Multi tenant
environments
Highly
scalable
multi tier architecture
User has
no control over the underlying cloud infrastructure
(but has it over the deployed applications and their hosting environment configurations)

Examples:
Google App Engine, Microsoft Windows Azure

IaaS
IaaS
is the delivery of
technology infrastructure
as an on demand scalable service.

The capabilities provided include provision processing, intra-cloud network connectivity services (e.g. VLAN, firewall…) and other

fundamental computing resources
of the cloud where the user is able to deploy and run arbitrary application.
No control over the resources
of the underlying cloud infrastructure (but control over OS, deployed apps and often networking components)
Usually
billed based on usage
Usually
multi tenant
virtualized environment

Examples:
Amazon Web Services, Google Compute Engine

CLOUD ECOSYSTEM ACTORS
Cloud Service User (CSU)
A person or organization (Corporations, Universities, Governmental/Public Institutions…) that consumes delivered cloud services

A CSU can include
intermediate users
that deliver cloud services provided by cloud services provider to actual users of the cloud service, i.e end users

End users can be persons, machines or applications

Cloud Service Provider (CSP)
An organization that provides and maintains delivered cloud services
1. Salesforce.com
2. Amazon
3. Microsoft
4. Oracle
5. Google
6. SAP
7. SoftLayer (IBM)
8. Terremark
9. Rackspace
10. NetSuite
A person or organization that provides support to the buildind of the service of a Cloud Service Provider

Cloud Service Partner (CSN)
Application developer
Harware provider
Sofware provider
Equipment provider
System integrator

PERSPECTIVES OF DEVELOPMENT
PERSPECTIVES FOR CLOUD COMPUTING
In order to face the future challenges, these are the
main key concerns
on which which Cloud computing firms have to be focused:

Resource management
Multi-tenancy
Fault tolerance and reliability
Scalability of code and data
Resource management
Some form of
automated management
is required to reduce the overhead for the administrator to cater for:
diversity;
scale.
And this relates not only to the machines, but also to the communication network and to handling the data.

This concern can be divided in four sub-concerns:
Efficient handling of an increasing amount of more and more heterogeneous resources;
Interoperability and portability between the resources employed;
Efficient handling of an increasing amount of information and communication;
Efficient handling and processing of large quantities of data.
Multi-Tenancy
A
tenant
is a group of users sharing the same view on the software they use.

Multi-tenancy raises three main concerns:
Consistency of shared data becomes highly complicated with the number of concurrent users and the degree of interactivity;
The data of an individual tenant needs to be kept secure and private;
Usage information needs to be isolated as well.
Fault tolerance and Reliability
The pure hardware mean time between failure (
MTBF
) of a modern server is even as low as a week.
With the growing number of nodes it will increase dramatically.
It is necessary a mean to ensure reliability , otherwise a typical future server provided application would thus
fail too frequently
for proper usage.

Scalability
TYPES OF INNOVATION
CHARACTERISTICS OF
CLOUD COMPUTING
TECHNOLOGICAL
TRAJECTORY
On-demand self-service
Consumers must be able to obtain cloud services – at the infrastructure, platform, or application level –
whenever they want
, without requiring significant assistance
Broad Network Access
Cloud computing resources are accessible
over the network
, supporting heterogeneous client platforms such as mobile devices and workstations
Resource Pooling
Resource
: Any kinds of resources to be shared to compose cloud services,
including computing power, storage, network, database, and applications.

The CSP's computing resources are pooled to serve multiple users using a
multi-tenant model, with different physical and virtual resources that are
dynamically assigned and reassigned according to user demand.
Rapid elasticity
Capabilities can be elastically provisioned and released, in some cases automatically, to scale rapidly outward and inward commensurate with demand.

To the CSU, the capabilities available for provisioning often appear to be unlimited and can be purchased in any quantity at any time.
Measured service
Resource usage are monitored, measured, and billed transparently based on utilization.

In short, pay for use.
INDUSTRY STRUCTURE
Porter’s Five Forces Analysis
Threat of new entrants 
Bargaining power of suppliers 
Bargaining powers of buyers 
Threat of substitutes 
Competitive rivalry 

Threat of New Entrants
Bargaining power of suppliers 
Bargaining powers of buyers 
SaaS
market:
High
level because of
low switching cost
and availability of many choices.

PaaS
market:
Low
level due to lack of interoperability standards and usage of proprietary development language lead to a
lock-in
which leads to
high switching cost
for buyers.

IaaS
market:
Iaas is considered to be a
commodity
.
Low product differentiation
and
high
bargaining power of buyers.
Creating
brand loyalty
is only way to stay competitive in this market (Amazon).

Threat of substitutes
Low
threat of substitutes because the cloud computing itself is in the growth phase.


This could change rapidly if the cloud is seen to be not as
secure
as traditional networking infrastructure. 

Competitive rivalry
Even in the same service area (Saas, Paas, Iaas) the competition tends to stay
high
among big companies (like
Amazon
and
Google
) because of
low product differentiation
.  

Companies that provide 
Saas
solutions tend to face an
high
level of competition since the
cost to compete
is relatively low.
 
Due to
large economies of scale
in the
IaaS
segment the result will likely  be an industry with a few large companies (
low
competition
).

Different intensity for the different types of products within the cloud:

SaaS
market,
high
level:
Low initial investment
Low time to market
Low exit barrier

PaaS
market,
medium
level:
Presence of industry giants (e.g., Google and Amazon)
High barrier to entry (can be reduced with differentiation and innovation)

IaaS
market,
low
level:
Very high initial investment
High risk
Presence of industry giants

The only

essential

supplier across all segments is
electricity.
If
Utility companies
were to raise the prices it could affect the industry.


1950
1970
1990
In the 1950s
The introduction of the main frame computers took two problems:

- it was
too expensive
for a company to buy one for every employee

- the typical user did not need to access
the storage capacity
and
the processing power
that one mainframe had.

The solution was to provide
shared access
to a single resource
In the 1970s
The concept of
Virtual Machine
became popular.

It was common to use virtualisation softwares.

Thanks to them, it became possible to execute one or more operative system
simultaneously
in an isolated environment.

In the 1990s
Telecommunication companies generally offerd single
dedicated point-to-point data connections
.

In this period they started offering
virtualized private network connections
.

They offered:
- same services at a lower cost;
- shared access to the same physical infrastructure.


NEW CHALLENGES FOR CLOUD COMPUTING
Scale
Heterogeneity
Mobility
In the modern and globalized economy, with the creation of modern technologies, Cloud providers and developers have experienced a growing demand for:

online availability;

accessibility to data;

mobile office working environment;

Providers have to face the problem connection losses.
Energy Constraints
Connected with the demand of Mobility.

It is necessary to ensure longer operation times.

The Energy Constraints apply to all the modern IT infrastructures.
The cloud computing could be considered both
sustaining
and
disruptive

Might be evaluated as
sustaining
because it is built upon an existing applied data center technology, adding automation, self-service and elasticity

Cloud computing has also been a
disruptive technology
in the business world, displacing many resources that would conventionally have been located in-house or provided as a traditionally hosted service.




Based on
existing
and
known
IT domains:

distributed computing
web-based utility computing
load management
Essentialy a
unique combination
of these technologies
Future
R&D
will have to focus mostly on
Data management and handling
Resource awareness
Multy-tenency impact
Programmability
Network Management
Legislation and Policies
Huge amount and variety of
hardware and software
required to run business application. A lot of
resources
are needed to install, configure, test, run, secure, and update them.


Cloud computing allows to
outsource
hardware and software



It works like a
utility
: Pay-per-use, automatic upgrades, and easy scaling up or down possibility within the
shared infrastructure
Public cloud

(off-site and remote)

The infrastructure is made
available to the general public
Resources are dynamically provisioned on an
on-demand
, self-service basis over the Internet
Owned by a
third-party provider
who bills on a utility computing basis
Private cloud

The infrastructure is

operated

solely for an organization

It may be managed by the
organization

or a

third party


It may exists
on
premise or
off

premise (in-site\off-site).

Hybrid cloud


some portion of computing resources on-site
(on premise)
and off-site
(public cloud)
By integrating public cloud services, users can leverage cloud solutions for
specific
functions that are
too costly to maintain on-premise
such as:
virtual server disaster recovery
backup
test/development environments
Community cloud

It is formed when
several organizations
with
similar

requirements
and concerns (like mission, policy, security requirements and compliance considerations) share
common infrastructure
Costs are spread
over fewer users than a public cloud but more than a single tenant
Google data center, The Dalles (Oregon)
Curiosity: the term "cloud-computing" has been coined in 1996 at Compaq as a metaphor for the Internet
Suppliers of
hardware
are numerous and generally
do not have strong bargaining power
with respect to the giants of the cloud industry. 
The real innovations are the new
business and cost models

that can be developed
thanks to the opportunities
offered by cloud computing
The quest for an overdeveloped sector
What challenges a Cloud should be able to handle in the future?
Nowadays the IT environment has to face:

An increase in the number of resources on all levels of the IT infrastructure;
An increase in the number of users and requests.

That is why:

Mechanisms for automated management of large scale infrastructures are in growing demand;
Outsourcing to compensate management deficiencies.
The range of types of
devices
and
resources
is significantly increasing.

This divergence is
impossible to handle
for an average IT infrastructure provider.

Outsourcing
can be just a temporary solution.
An increasing number of new companies enter the Cloud computing market.

They claim to offer innovations in terms of products, service and features.

It is generally accepted that this sector have reached a peak of
maximum expectation
.
Is it really possible to state that this sector doesn't have any further possibilities of development?
In the IT environment, scalability seems to have two usages:
It is the ability of a computer application or product to continue to function well when is
changed is size
;
the ability of taking the
full advantage
of the rescaling.

Clayton M. Christensen defined two types of Innovations:


Sustaining
, that extend existing technologies, improving them incrementally.





Disruptive
, that represent an entirely new technology solution that bring a twist in an existing market.



Industry in its beginning stage:
Competition level will increase as new companies enter the market
Challenges & Perspectives
THE EVOLUTION OF CLOUD COMPUTING
Full transcript