In Sync: Cloud Computing Solution and SME Industry IT Requirement
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International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459, ISO 9001:2008 Certified Journal, Volume 2, Issue 12, December 2012)
In Sync: Cloud Computing Solution and SME Industry IT
Requirement
Harinder Kaur
Assistant Professor, University College of Engineering, Punjabi University, Patiala - 147001
Abstract— Cloud Computing is a computational service B. Cost to Serve
that provide user based access to computational resources. It
It measures the total cost incurred by an organization to
has helped to convert a product based IT infrastructure
requirement of an organisation to a service based approach. serve its customer in a market with adequate level of
For SME industries with limited IT budgets and growing satisfaction to sustain organization in long run. In
requirements for efficiency and quick customer response rate, conjugation with the concept of shareholders return, higher
the cloud computing will serve as an ideal platform for is cost to serve, higher will be the investment required and
computational and data handling requirements. The paper lower will be the returns for shareholders. This not only
presents a qualitative view of how investment decision can be discourages investors to invest money on a business in long
made by the organisations based on parameters impacting run but also serves as window to competition to serve same
investment decision making in IT Infrastructure from SME serve with lower cost to serve and hence enhance perceived
industry perspective.
value for the customers.
Keywords— Cloud Computing, SME, Qualitative research, The business of information technology is the most
Cloud Computing Features and Limitations dynamic of all types of industries. As per Sebastin Morris,
marginal cost of serving an additional software is very low
I. INTRODUCTION as compared to traditional industry types [3]. This leads to
a quick dissemination of software platforms and shorter
Since the evolution of market driven economy, all product shelf life of only few weeks in its original shape
organizations involved are more or less driven by similar and form. The regular updates and patches act as
basic needs of performance: mandatory requirement for up-to date performance of any
A. Customer Service software. These factors actually act as a detrimental from
In a free market economy, customer is the king with investment perspective for SME industry as described in
choice to choose from where the perceived value is highest. paper „Scope of Cloud computing for SME in India‟, the
More customer value the product or service, higher are the gap between requirement vs. ERP package features [4],
chances of survivability of an organizations in the market. since ERP packages are bundled with multiple features and
serve as of-the-shelf solution for almost all industries with
B. Shareholders Returns their given set-of-features. For SMEs limited requirement
Primary reason for existence of any business is to serve these features are not useful and associated cost for an ER
interest of its investors. The higher are the returns offered package acts as detrimental for adoption of ERP tools by
by a business, more likely is the long term investment by Small and Medium Enterprises (SME‟s) [4]. However, as
them in its growth. we look at Indian business scenario, there are two
Both the above concepts lead to two critical but compelling factors acting as market forces for availability
generally divergent areas of business focus: of a more SME friendly solutions:
About 95% of total Indian business establishments
A. Agility of Service
fall under SME category [5]
How quick is the business to meet evolving and growing India‟s internet user base stands at 19.67 million
needs of its customer. Higher is the response rate more will subscribers registering an annual growth rate of
be the value perceived and more likely is the customer 21.56% (Trai Annual Report, 2011)
satisfaction from the service or product consumed or used.
424International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459, ISO 9001:2008 Certified Journal, Volume 2, Issue 12, December 2012)
Hybrid Cloud: A hybrid cloud is essentially a
combination of at least two clouds, where the clouds
included are a mixture of public, private, or community.
An SME can derive maximum value by using a Public
cloud based system.
B. Types of Cloud Computing
They also describe three types of cloud service
providers:
Software as a Service (SaaS): SaaS provider give user
based access for resources and applications. This help to
almost eliminate software cost and licensing cost and
Fig 1: Indian Internet Growth Trend (Data Source: Trai Annual greatly reduces hardware cost for the organization.
Report, 2011) However, the entire database of an organization in owned
and held by the service provider and user have minimal
As observed the growth rate of broadband subscribers
control over cloud.
showcase an increasing trend moving from 57% in June
2010 to 60% in Mar 2011. With this expected growth rate, Platform as a Service: A PaaS system goes a level above
it will form the major subscriber base in future for internet the Software as a Service setup. Its a development platform
users in India. Along with this Small and Medium that allows its user to create application that can be
Enterprises have sufficient amount of Budget allocations commercially used by the cloud users.
for buying bandwidth and paying for its usage [4]. Infrastructure as a Service: In an IaaS agreement, all
computational resources of an organization are managed by
II. CLOUD COMPUTING a cloud service provider and are used by organizations
United States Computer Emergency Readiness team employees only. All cost related to computational resources
defines Cloud Computing as „Cloud computing is a are eliminated by the organization and user based
subscription-based service where you can obtain networked subscription fee is paid.
storage space and computer resources.‟ (Huth and James From an SME perspective due to their limited
Cebula, 2011). requirements and small size SaaS brings maximum value to
Cloud Computing is a service were the user can organization.
subscribe with a fee to use the resources for computational C. Main Features
purposes. It‟s a paradigm shift that bridges the gap between
Agility of Service and Cost to serve. As per the study Cost: It converts major capital expenditure into
Cloud based ERP system like „SAP Business ByDesign‟ operational expenditure for an organization i.e. through
saves about Rs. 37000 per user per year for SMEs [4]. cloud computing users can pay for using the software and
computational resources available from the host on per user
A. Types of Cloud Computing fee basis. This saves major expenses in terms of
In their paper on cloud computing, (Alexa Huth and Hardware Purchase
James Cebula, 2011) mention the following categories of Hardware Maintenance cost
cloud computing based on need: Software Cost
Public Cloud: A public cloud can be accessed by any System Up-gradation Cost
subscriber with an internet connection and access to the Data storage cost
cloud space. Licensing Cost
Private Cloud: A private cloud is established for a Easy of Usage: How user friendly is cloud computing to
specific group or organization and limits access to just that SME organizations? Any product or service that requires
group. higher effort from customers from any of the following acts
Community Cloud: A community cloud is shared among against value perceived by a customer.
two or more organizations that have similar cloud Boot Time: Time it takes from the point of switching on
requirements. a computer system till its ready for usage for a person. A
typical 3 year old office system with Windows XP can take
a boot time of upto 2 minutes and 45 seconds [7].
425International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459, ISO 9001:2008 Certified Journal, Volume 2, Issue 12, December 2012)
However, in cloud based system, since all software are This saves a major cost head of providing more and
uploaded at the host server, can deliver a boot time of only more hardware space to store data for business purposes.
7 seconds, thus effectively wiping out wait time and greatly Implementation: Cloud computing require no
enhancing user experience for the customers. implementation set-up at user site with only requirement of
Software Updating: All software available today on internet access and a user interface. This almost eliminates
windows platform and hosted on user PCs carry a limited the Go-Live time for infrastructure set-up at client site and
self life with regular updates required on almost weekly provides instant availability of user based computational
basis. This reduces the usability and impacts performance resources.
of host PCs. However, with cloud computing all updates All these factors tilt the scale strongly in favor of cloud
are managed and upgraded at the host server by the service computational resources utilization by SME industry in
provider thus ensuring uptime of upto 99.99% (For GoGrid India. With a growth rate of 35% per annum (Assocham,
service provider). 2009) and with more than 60% of SMEs (Assocham, 2009)
Mobility: Cloud computing acts as a virtual machine that moving toward technology platforms for bringing business
the user can access with user ID and password key from efficiencies and quick customer response time to address
anywhere in the world through an internet connection. This dynamic business requirements, creates a compelling
greatly enhances the mobility of business and provides business case and win-win situation to both cloud service
24X7 accesses to information to the user. This removes the providers and SME industry.
constraint and dependability on local PCs and hardware
D. Cloud Limitations:
resources confined to user work place.
However Cloud computing comes with its own set of
Scalability: Number of users subscribing to cloud
issues that may impact an organization and its business.
services can be managed by an SME thus greatly
Major limitations are discussed below:
improving both operational expenses and capital expenses
of the organization. With the increase in users more Ids can Data Security: With almost entire information data base
be brought and with decrease in users the IDs can be residing outside the control of an organization, it risks in
surrendered. This saves cost to provide more hardware, losing its database or leakage of data base to other
software, licensing, training to the employees and saves on organization. An organization using cloud services will
under-utilized resources in-case of reduction in requirement have to run on trust of the service provider in terms of data
of ERP system users. security available. This being a major concern is an area of
development new research is focused in this direction. E.g.
Storage Space: Through a virtual environment the
new way of Data Encryption Standard is defined based on
storage space requirement for an organization can be
Key Generation Center (KGC) (Indla and Kumar, 2012).
managed on demand basis.
426International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459, ISO 9001:2008 Certified Journal, Volume 2, Issue 12, December 2012)
Figure 2: Cloud Computing Ecosystem (Image Courtesy: Future of Cloud Computing - Opportunities for European Cloud Computing beyond 2010 by
European Commission Information Society and Media)
Lock-in: Once an organization has adopted for a given Network Limits: Data transfer is highly dependent upon
service provider, an organizations entire data infrastructure, media of transfer, since it defines the speed and capability
set-up and working will happen as per system design of data volumes for transfer and analysis. This results in
provided by the service provider. Migration of data and inevitable delay in data accessibility and information
workability of reports will be severely limited in case processing.
service provider is switched over. In long run this can carry Of the seven limitations stated by Hoffmann in its paper
negative cost impact where user is handicapped by the „The Limits of Public Clouds for Business Applications‟,
system provided by the host and will have to utilize its from SME industry perspective data security and service
services at all quoted costs. Uptime are the only major concern and generally is limited
Uptime Guarantees: Host server uptime is controlled to proprietary datasets and trade secrets for data security.
and managed by the service provider. Its highly dependent Lock-in with a service provider, Network limits, scalable
on maintenance and system architect developed by the host. storage issues are expected to carry only limited impact due
Any user organization will have to trust on the market to smaller data handling and analytical requirements for the
reputation of the host on uptime in the absence of any industry.
service Level Agreements (SLAs) on user uptime. In IT terms SME is a user based industry with limited
role in evolution or designing of an ERP system so it does
Performance Instability: As per Houfmann in „The
not have much impact on Innovation of ERP systems
Limits of Public Clouds for Business Applications‟,
Performance of major cloud platforms is subject to
variations and an area of research [9].
427International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459, ISO 9001:2008 Certified Journal, Volume 2, Issue 12, December 2012)
III. FACTOR ANALYSIS 8 Storage Space - +
The study is a qualitative model to understand impact of
9 Implementation - +
various parameters impacting SMEs decision for cloud
computing and identify overall benefit availability to them
10 Security ++ -, -
from it.
A. Key Definitions 11 Lock-in - -
Parameter: These are critical areas that drive a business
decision for investment in a particular technology. 12 Uptime + -, -
Guarantee
Traditional Approach: Company or organization owned
data resources were entire data base is hosted on local 13 Performance ++ -
servers or PCs. Instability
Cloud Computing: Through which all services are
accessed by an organization on SaaS basis. 14 Network Limits ++ -
B. Scoring Method:
Net Impact -, -, -, - ++
Subject Knowledge based scoring involving IT
department faculty from University College of Engineering
(UCOE), Patiala. As we see in the analysis, Traditional approach carries 4
Positive Impact (+): Parameter has a moderately negatives as compared to 2 positive for cloud computing on
positive impact on investment decision by the business. decision making for investment in cloud computing by
Strong Positive Impact (+, +): Parameter has a SME industry. Over all, its 6 point in favor of Cloud
moderately positive impact on investment decision by the computing to be adopted by SME industry. This gap will
business. ensure to bring in technology shift and at affordable cost
Negative Impact (-): Parameter has a moderately the way SME industry conducts its business. These benefits
negative impact on investment decision by the business. will not only make Indian SME Industry globally
competitive but the improved information flow will also
Strong Negative Impact (-, -): Parameter has a bridge gap between consumers aspirations and industries
moderately negative impact on investment decision by the response rate to meet these aspirations.
business.
TABLE 1 IV. CONCLUSION
S. No. Parameter Traditional Cloud With the advent of cloud computing the SME businesses
Approach Computation now have access to latest ERP systems accessible through
SaaS media on user fee basis. This not only brings the
1 Boot Time - ++ benefit of technology at the door steps of SME industry but
also helps them to carry lower investment cost on IT
2 Internet ++ -, - infrastructure.
Connectivity As showcased through qualitative analysis its 6 point in
favor of cloud computing for SME organizations to invest
3 Capital Expenses -, - ++ in Cloud Computing infrastructure. Though there are
concerns for the data security and Uptime Guarantee that
4 Operational -, - - are currently detrimental in cloud computing business but
Expenses with strong R&D focus it and business practices
development these issues are expected to be ironed out and
5 Software -, - ++ cloud computing will evolve as preferred media of
Updating computation for SME industry.
6 Mobility -, - ++
7 Scalability - ++
428International Journal of Emerging Technology and Advanced Engineering
Website: www.ijetae.com (ISSN 2250-2459, ISO 9001:2008 Certified Journal, Volume 2, Issue 12, December 2012)
REFERENCES [6 ] Dr. A.P.Pandey & Shivesh, “Indian SMEs and Their Uniqueness in
the Country”
[1 ] Alexa Huth and James Cebula, “The Basics of Cloud Computing”
[7 ] http://www.popularmechanics.com/technology/how-
[2 ] Yamini Indla, M. Sampath Kumar November 2012, “ Extended to/software/4306154
Group Key Transfer Protocol for Authentication Using DES based
on Secret Sharing in Cloud” [8 ] http://www.channelinsider.com/c/a/Cloud-Computing/Google-
Chrome-OS-to-Boot-PC-Within-7-Seconds-215142/
[3 ] Sebastian Morris, ”Competition, Regulation and Strategy: The
Information Technology Industry” [9 ] Paul Hoffmann, “The Limits of Public Clouds for Business
Applications”
[4 ] Monika Sharma, Ashwani Mehra, Haresh Jola, Anand Kumar
Dr.Madhvendra Misra, Ms.Vijayshri Tiwari, “Scope of cloud [10 ] Trai Annual Report, 2011
computing for SMEs in India” [11 ] Future of Cloud Computing - Opportunities for European Cloud
[5 ] http://pharmexcil.org/uploadfile/ufiles/FicciConferenceCloud31jul20 Computing beyond 2010 by European Commission Information
12.pdf Society and Media
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