Economics of Cloud Computing

Salesforce.com was formed fifteen years ago with the vision of revolutionizing the entire concept of CRM in the cloud computing system. It leads to the development of a new philanthropic model for all the others to follow, and it was only achieved by the wholehearted dedication and sincerity of its employee force, which have over the years formed a pillar of strength for the company. The stakeholders and the customers have all shown their immense support in the system, and it is because of their faith in the system, today it is known as the leading enterprise in the cloud-computing ecosystem. Industries and companies can now get connected to their consumers in a whole new way by the use of the latest innovations in mobile technology, cloud

This research paper tackles the issues that faces Cloud Computing today and gives the experts and industry’s point of view on the matter. The aspects explored are the significant industry questions that have risen about the use of Cloud Computing, business value, organization impact, adaptability, limitations, initial cost of implementation, and the severe business security risks

Salesforce.com (NYSE:CRM) is the world leader in Customer Relationship Management (CRM) software specifically designed for small and medium businesses, enterprises and government organizations. Salesforce.com was the first enterprise software company to break the $1B barrier of CRM sales on the cloud computing platform (Salesforce Investor Relations). It is also the first company to successfully orchestrate complex product and services strategies entirely on the Internet. This company's ability to orchestrate connectivity, cloud integration, enterprise storage and enterprise-wide applications is revolutionizing the economics of cloud computing today (Hedgebeth, 49). The strategic direction of the company is to expand quickly off of its sales base of applications, into customer service and support (Salesforce Investor Relations). As research studies from Gartner have shown, the majority of software sales in CRM today are in Customer Service and Support (34%) followed by Sales (26%) and Marketing (20%) (Salesforce Investor Relations). Salesforce.com reported $3B in revenue for their latest fiscal year and a $270M loss. Salesforce.com's success in enterprise CRM against entrenched competitors including Oracle and SAP is noteworthy, as both of these competitors rely on an on-premises application delivery model. The on-premises model is significantly more time-consuming to implement and often requires companies to

A significant paradigm shift is represented by public cloud computing from conventional norms of an organizational data center to a de-parameterized infrastructure which opens gates for potential adversaries to use. Cloud computing should be approached carefully with any emerging information technology area with due consideration to the sensitivity of data. A good planning helps and ensures that the computing environment is secure to the most possible extant and is in compliance with all relevant policies of an organization and makes sure the privacy is maintained.

Technology continues to influence the direction taken by business entities in an apparent attempt to gain competitive advantage over the rest of its direct competitors. One of the innovations that best embodies the desire to gain an advantage over direct competitors is through the use of cloud computing to improve efficiency and effectiveness in customer satisfaction. Cloud computing essentially involves using a network stemming from remote servers on the internet to process and disseminate data. Cloud computing uses remote network servers instead of a personal computer or a local server and it use also includes managing and storing data for a variety of purposes that a business chooses to engage in at its pleasure (Armbrust 55). Although

Reordering the economics of software, cloud computing is alleviating many of the capital expenses (CAPEX), inflexibility of previous-generation software platforms, and inability of on-premise applications to be customized on an ongoing basis to evolving customer needs. These are the three top factors of many that are driving the adoption of cloud computing technologies in enterprises today. Implicit in the entire series of critical success factors that are forcing the migration of on-premise to cloud computing platforms is the greater agility and speed the latter platform offers. Line-of-business executives today are increasingly defining the priorities of IT departments, often also defining budgeting cycles as well. Their primary concern is ability able to quickly get up and running on a new enterprise application, integrating its workflows into existing legacy and 3rd party systems, databases and applications, while also getting the performance gains of the new software (Bentley, 2008). Due to these factors cloud computing is evolving rapidly, changing the economics of enterprise software especially. Large-scale systems are most often purchased using Capital Expense (CAPEX) budgeting processes that often take several months ot over a year to complete. Often CAPEX-based spending on enterprise software also requires the board of directors for a company to authorize spending large amounts on new

Distributed computing has turned into a massive market. In a 2016 report, investigators at Gartner anticipated that the move to the cloud will influence more than $1 trillion in IT spending throughout the following five years. "Cloud-first strategies are the foundation for staying noteworthy in a snappy paced world," said Ed Anderson, investigate VP at Gartner. "The market for cloud organizations has created to such an extent, to the point that it is as of now an extraordinary level of total IT spending, making another period of new organizations and 'considered in the cloud' providers." In their hurry to take part in this tremendous market, sellers have rushed to tout cloud triumphs. Their locales are stacked with logical examinations

As the phenomenon of consumerization continues to become more pervasive across enterprises, CIOs must think differently about the technologies they use and how those technologies enhance the end-user experience, while also balancing the supportability and security of the IT environment. Technologies must not hinder employee productivity, and yet must protect enterprise data and the firm’s intellectual property. Consumerization has also forced CIOs to make significant changes in policies, security, and infrastructure. Additionally, CIOs must consider the end-user’s use of the technology, and consider their need to access data and applications while in the field. With this in mind, CIOs are turning to cloud and virtualization technologies to provide the ultimate in flexibility and choice, while maintaining security.

Over the course of recent years we as people have seen that progression has its premises on the fact that faster access to innovation ignites greater production. We look at the Web as sort of the epicenter of advancement. For some reason there is something in the Web that is being pushed and revolutionized. The Cloud so happens to go through modernization frequently. Rapid innovation powered by the Cloud has an edge over traditional technology changes. Which is that it is easier for employees (let’s say at a hospital) to adjust to constant manageable advances instead of bulky, troublesome loads of changes. It much more benefits employees, and in outcome the patients/customer, for the changes or advancements be made in a steady and ongoing pace. Cloud computing allows changes to be easier on the staff. However, on the other hand it does require for the workers to get familiarized again with the cycle every time businesses upgrade their software. Companies all around the world shift more and more towards cloud computing and engage in its advancements. They notice how much simpler and easier their business can be with the use of it. For instance in the past, individuals would run programs and applications from a downloaded software on a PC physically or by server, while cloud computing permits the user access to the same sorts of utilizations through the web.

Whether it’s called Cloud Computing or On-demand Computing, Software as a Service, or the Internet as Platform, the common element is a shift in the geography of computation. When you create a spreadsheet with the Google Docs service, major components of the software reside on unseen computers, whereabouts unknown, possibly scattered across continents. This affects all levels of the computational ecosystem, from casual user to software developer, IT manager, even hardware manufacturer. Recently, a lot of vendors have started talking about “cloud computing” in their marketing materials. Citing a research published by Merrill Lynch entitled “The Cloud Wars: $100+ billion at stake,” Merrill Lynch has estimated a $160- billion addressable market opportunity, including $95- billion in business and productivity applications, and another $65-billion in online advertising for Cloud Computing. But the main question is whether the users are ready to give up using services on their local machines and shift to the Cloud since shifting to cloud computing has both advantages and disadvantages for all possible users; nevertheless, they may have different level of importance for different users

Salesforce.com was formed fifteen years ago with the vision of revolutionizing the entire concept of CRM, in the cloud computing system. It lead to the development of a new philanthropic model for all others to follow, and it was only achieved by the wholehearted dedication and sincerity of its employee force as such, who have over the years formed a pillar of strength for the company. The stakeholders and the customers have all shown their immense support in the system, and it is because of their faith in the system, that today it is known as the leading enterprise in the cloud-computing ecosystem. Industries and consumers all across can now get connected to their consumers in a whole new way by the use of the

Traditionally, it can suck up far too much of your business’ time and effort. This doesn 't add value, and takes the fun out of being in business. Cloud software can save your company time and money. Think about when you use internet banking. Every time you access this data, you’re using the cloud. The cloud is a platform to make data and software accessible online anytime, anywhere, from any device. Your hard drive is no longer the central hub. You can use cloud-based software from any device with an internet connection

The world is moving from manufacturing to more service-oriented day after a day. According to a survey of the U.S. economy conducted in 2010, 15% of the U.S. economy is driven by manufacturing, 5% in agriculture and other areas, and the remaining 80% is related to the service industry (Hwang & Dongarra 2013). Also, based on IDC, International Data Corporation, the cloud service market reached $17.4 billion globally in 2009 and is predicted to grow to more than $45 billion by the end of 2015. Cloud Computing can be explained as the delivery of computing resources over the Internet and is generally categorized under three layer: IaaS- Infrastructure as a Service, PaaS- Platform as a Service, and SaaS- Software as a Service (McKay, 2011).

The federal "Cloud First" policy outlines requirements for organizations to look at cloud solutions before investing money in information technology upgrades. Through implementation of cloud systems, organizations can improve utilization rates and increase the efficiency of information systems expenditures. This allows organizations to reduce overall spending on information systems or allows them to increase capabilities for the same expenditure. These cloud services will also improve the ability to quickly scale operations to meet demand and offer greater flexibility to add, remove, or modify capabilities. These are the three benefits of cloud services: efficiency, agility, and innovation (Table 1). Moving to cloud based services is changing the focus of information technology investment from assets to services.

The adoption of cloud computing services has been rapidly increasing over the past few years as business organizations continue to understand the superior benefits of the cloud based information system such as improvement in data accessibility, data analysis and manipulation, and streamlining of business processes (Zhygalova 2013). These benefits over the traditional system enables quicker and enhanced decision making for business organizations. Taylor et al. (2010) observes that according to Coda Research, companies will shift up to 20% of their IT spending to cloud services by 2015.