Economic Implications of Cloud Computing Paper Example

Introduction

Cloud computing is online-centered computing which provides organizations with an opportunity to access a network or a pool of computing resources (Chou, 2015). The third parties own and maintain these computing resources using the internet. The technology is not only cost-effective, but also efficient. Since it also increases the flexibility and agility of organizations, cloud technology continues to be accepted by businesses as a way to save millions in costs of operation.

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Basic Capabilities of the Cloud

Although it seems new, cloud computing is an outcome of long-term technological evolution. The concept has developed from older technologies such as distributed computing and timesharing; except that it now computes efficiency and maximizes cost by leveraging a pool of computing resources leverages. The National Institute for Standards in Technologies or NIST defines the features of cloud computing as pay-per-use, rapid elasticity, resource pooling, ubiquitous network access, and on-demand self-service (Mell & Grance, 2011).

In addition, NIST has identified the delivery models of cloud technology as infrastructure as a service, platform as a service, and software as a service. Finally, they have identified its deployment models to include hybrid cloud, public cloud, and private cloud. Cloud computing does not require procurement of software or hardware in advance because it allows the users to only pay for the resources they leverage based on their needs.

Advantages and Disadvantages of Cloud Computing

Cloud computing is advantageous compared to traditional data hosting because first, it is doing away with the need to spend huge amounts of money on purchasing software and hardware for traditional data and applications hosting. Also, it saves its users the cost of constructing a data center where the software and hardware are housed. Besides, organizations using cloud technology can leverage remote systems on the internet based on their demands. Thus, the technology enables them to take care of demand elasticity. Moreover, such organizations only pay for the resources that they use. Lastly, when using cloud technology, an organization can scale its systems up and scale them back again as it needs.

The disadvantage of cloud computing is that its leveraged costs and pay on demand features make it pervasive to IT. Secondly, it is disrupting the IT systems of organizations through its newly emerging capabilities such as big data analytics and machine learning. That means that many enterprises now have to invest in massive data and application migration projects.

Economic Implications of Cloud Computing

The Cost of the Current IT Model vs. Cloud Computing

Initially, various organizations collected data by using Paper and Pencil Interviewing (PAPI). Different countries have also been conducting their elections by using the manual systems of voting where the voters drop their ballot papers into the ballot boxes. However, today, there are online voting service providers like BallotOnline that use Unique Identification Number and electronic transmission of data to help the voters avoid traveling and help countries find the candidates who are not engaging in the voting process (Chou, 2015). The method is electronic, and it is integrated with the use of biometric technology to facilitate easy identification. BallotOnline has noted that many countries are migrating to online voting system. These technologies require big data analytics as well as data and application hosting. That means the company needs to expand its operations in several countries to take advantage of the rising global demand.

BallotOnline still uses the traditional servers which come as whole units consisting of the applications, the storage, the operating system, and the hardware. Besides, it keeps a different server for each function. For instance, the file server is different from the SQL server, the Exchange server, etc. The problem with the company's current IT system is that whenever something goes wrong with any of the servers, the system administrator has to add new ones. The increasing customer base will result in such eventualities as overtaxing of Exchange server or filling up of the File server. At the same time, the company needs to put up multiple servers to ensure that the system service remains efficient in case of hardware failure. Making servers faults tolerant requires employing clusters of servers. However, clusters are also limited in that they cannot support all applications. Hence when the customer base increases, maintaining the company's servers will be not only cumbersome but also costly. Accordingly, for BallotOnline to accommodate more countries into its current IT system, it would be necessary to invest heavily in expanding its infrastructure.

The cost of acquiring the new market will be lower for BallotOnline if it replaces its current IT system with the cloud computing technology. Cloud computing is the driver of corporate efficiency, and if BallotOnline-manages to implement it effectively, it will be in a better position to transform the voting process as a new set of model and technology (Shawish & Salama, 2014). The technology is able to transform how the company stores data, processes and makes use of computing power for the sake of improving its services.

Economically, first, it would save the company the cost of building a new data center space and procuring more data hardware and software. Cloud technology will provide exceptional levels of configurability for BallotOnline. Since its primary concern is implementing a voting process that makes use of technology, cloud computing is in a better position to provide BallotOnline with efficient services which are configured dynamically in line with its needs as well as globally scaled and single unified architecture. Third party providers of cloud computing such as Amazon Web Services, Microsoft Azure, and Google Cloud will provide cost merits and economies of scales to the company.

On-Premises vs. AWS Budget

Cloud Computing model will have less financial requirements than its current an on-premise model. While the budget for the traditional on-premise computing model involves both operating expense allocations and capital, the cloud computing model shifts the cost to operating expense. BallotOnline's server specifications for the current year are as follows: The company has 400 application servers, each comprising of Linux Operating System, 32 GB RAM, four cores, 2 CPU. It also has 400 database servers with MySQL DB, Linux OS, 64 GB RAM, eight cores, and 4 CPUs. With a current revenue of $100.8 million, the company's budget for IT is $10.8 million. Therefore, the IT budget is 10% of the revenue.

According to the Amazon Web Services Total Cost of Ownership (TCO) Calculator, moving the company infrastructure to AWS cloud will save the company 30% of its IT expenditure each year. If the company were to maintain its current customer base, it would save up to $ 5, 014, 907 in the next three financial years. Thus, its It budget for the next three years would reduce to $27.4 million instead of $32.4 million, which it projects now.

References

BallotOnline's IT Budget and Infrastructure Summary. (2018). Retrieved from https://content.umuc.edu/file/c91e7ce0-9040-442d-b244-0b511f07cbad/3/BallotOnlinesITBudget.html

Chou, D. C. (2015).Cloud computing: A value creation model. Computer Standards & Interfaces, 38, 72-77.

Mell, P., & Grance, T. (2011). Special Publication 800-145: The NIST definition of cloud computing. National Institute of Standards and Technology. Retrieved from https://csrc.nist.gov/publications/detail/sp/800-145/final

Shawish, A., &Salama, M. (2014).Cloud computing: paradigms and technologies. In Inter-cooperative collective intelligence: Techniques and applications (pp. 39-67). Springer, Berlin, Heidelberg.