Cloud Computing and its Influence on the association of IT to Firm Value

Features of cloud computing

With suggestions that cloud computing could offer businesses with a lower investment-intensive but a more efficient alternative (Kambil, 2009), many studies have evaluated what constitutes cloud computing and how it differs from its predecessors such as clusters and grid computing. Armbrust, et al. for instance consider a cloud to be “the data center hardware and software” which when availed to the general public on a “pay-as-you-go” fashion constitutes a public cloud whereas a private cloud is the “internal data centers of a business or other organization, not made available to the general public” but large enough to offer business advantages similar to those of a public cloud (2010, p. 51). Such a description includes the aspects of SaaS and utility computing but do not incorporate small data centers in an organization, whether or not managed via virtualization (Ambrust, et al., 2010). Accordingly people/ organizations can either act either as providers or users of SaaS and/or utility computing (Ambrust, et al., 2010). In this relationship a cloud provider could offer its services to SaaS provider/cloud user who in turn offers services to SaaS user as demonstrated in figure 1 below.

According to this perspective, cloud computing offers various new aspects compared to its predecessors. First cloud computing eliminates the need for users to plan ahead for provisioning due to infinite resources that could be availed on demand thus eliminating the overloading problems that are associated with conventional hosting (Ambrust, et al., 2010). Secondly cloud computing allows providers to achieve costs efficiency by increasing hardware requirements only when the need arises and thirdly payment based on short-term basis e.g. hours of usage eliminates costs associated with underutilization at some periods of the month when the needs are subdued (Ambrust, et al., 2010).

Figure 1: Representation of Cloud computing Users and Providers



A more detailed delineation of cloud computing from other 21st century computing technologies is provided by Buyya et al. (2009). In the study cloud computing is demarcated from cluster and grid computing on a number of characteristics such as population, scalability, node operating system, ownership, interconnection speed and privacy (Buyya, et al., 2009). A basic observation of such characteristics is that cloud computing appears to combine the characteristics of both clusters and grid computing such as scalability, population and interconnection speeds (Buyya, et al., 2009). Apart from these combined capabilities, cloud computing offers other enhanced features not present in either of the two technologies – cluster and grid – by providing features such as; higher support for virtualization, dynamic services compatible with Web interfaces, and enhanced support for creating third party value-added services that leverage the strength of cloud computing storage and application services (Buyya, et al., 2009).

Weinhardt, et al. (2009) also present a comparison between grid computing and cloud computing on a number of criteria based on literature reviewed. While virtualization for instance is taken to be a critical component of cloud computing, in grid computing such is not a prominent feature (Weinhardt, et al., 2009). Similarly cloud computing is noted to allow application development “in the cloud” while such development in grid computing is noted to occur locally (Weinhardt, et al., 2009). On the business model aspect, whereas grid computing operates on a resource sharing perspective, cloud computing employs a pricing or utility model – pay for use (Weinhardt, et al., 2009).  Access to the resources also differs with that for grid computing being via grid middleware whereas that for cloud computing is through standard web protocols (Weinhardt, et al., 2009). Such perspectives advanced in Weinhardt, et al., (2009) reinforce some of the enhanced features of cloud computing noted by Buyya, et al. (2009). With these suggestions of cloud computing features, at least three characteristics can differentiate it from other computing advances – higher virtualization levels, scalability (immediate access of resources), and business models  based on pay-per-use utility computing (Durkee, 2010; Vaquero, et al., 2009). go to part 4 here.

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