Industry 4.

Module Cloud Computing

Session No. I

Version 1.0
 Industry 4.0

Material from the published or unpublished work of others which is referred to in the Class
Notes is credited to the author in question in the text. The Class Notes prepared is of 6,143
words in length. Research ethics issues have been considered and handled appropriately within
the Globsyn Business School guidelines and procedures.

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Table of Contents

1. Cloud Computing.................................................................................................... 7

1.1. What is a Cloud? ........................................................................................................ 7

1.2. What is Cloud Computing? ....................................................................................... 9

1.3. Popular Cloud Service Providers ............................................................................. 9

2. Characteristics of Cloud Computing .................................................................. 10

1.4. General Characteristics ............................................................................................10

1.4.1. Rapid Elasticity ....................................................................................................10

1.4.2. Economies of Scale - Cloudnomics......................................................................11

1.4.3. Pay-As-You-Go....................................................................................................11

1.5. Business Characteristics .........................................................................................11

1.5.1. Fixed Costs becomes Variable ............................................................................11

1.5.2. No Up-front Investment ........................................................................................11

1.5.3. Fine Grained Allocation ........................................................................................11

1.5.4. Capital Expenditure Converts Operational Expenditure .......................................11

1.5.5. The Business can be Flexible ..............................................................................11

1.5.6. Business Focus of Provider .................................................................................11

1.5.7. Costs are Associative ..........................................................................................12

1.6. Technical Characteristics.........................................................................................12

1.6.1. Multi-Tenancy and Resource Pooling ..................................................................12

1.6.2. Rapid Scalability ..................................................................................................12

1.6.3. Broad Network Access.........................................................................................12

1.6.4. Abstract and Undifferentiated Resources .............................................................13

3. Benefits and Challenges of Cloud Computing ................................................... 13

1.7. Advantages of Cloud Computing ............................................................................13

1.7.1. Lower Cost ..........................................................................................................14

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1.7.2. Competitive Edge ................................................................................................14

1.7.3. High Speed with Quick Deployment .....................................................................14

1.7.4. Easy Back-up and Restoration of Data ................................................................14

1.7.5. Software Integration is done Automatically ..........................................................14

1.7.6. Cloud is Reliable ..................................................................................................14

1.7.7. Flexibility ..............................................................................................................14

1.7.8. Unlimited Storage Capacity..................................................................................14

1.7.9. Enhanced Teamwork ...........................................................................................14

1.8. Disadvantages of Cloud Computing........................................................................15

1.8.1. Cloud is vulnerable to external threat Data Security & protection Cloud is
vulnerable to external attack ..............................................................................................15

1.8.2. Dependable on Internet Speed and Connectivity .................................................15

1.8.3. Cloud Outage Issue .............................................................................................15

1.8.4. Inter-operability / Issue in portability .....................................................................16

1.8.5. Limited Control.....................................................................................................16

1.8.6. Data transfer Bottlenecks .....................................................................................16

4. Cloud Service Models .......................................................................................... 16

1.9. Infrastructure as a Service Model (IaaS) .................................................................17

1.9.1. Advantages of IaaS..............................................................................................18

1.9.2. Disadvantages of IaaS .........................................................................................19

1.9.3. Why Should One Opt IaaS? .................................................................................19

1.10. Platform as a Service Model (PaaS).........................................................................20

1.10.1. Advantages of PaaS.........................................................................................21

1.10.2. Disadvantages of PaaS ....................................................................................21

1.10.3. Why Should One Opt PaaS? ............................................................................22

1.11. Software as a Service Model (SaaS) ........................................................................23

1.11.1. Advantages of SaaS.........................................................................................24

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1.11.2. Disadvantages of SaaS ....................................................................................24

1.11.3. Why Should One Opt SaaS? ............................................................................25

5. Service Management in Cloud Computing ......................................................... 25

1.12. What is Service Management?.................................................................................25

1.13. What is a Service Level Agreement? .......................................................................25

1.14. Different levels of SLA ..............................................................................................27

1.14.1. Customer-Level SLA ........................................................................................27

1.14.2. Service-based SLA...........................................................................................27

1.14.3. Multilevel SLA ..................................................................................................27

1.15. SLA Parameters ........................................................................................................28

1.16. SLAs in Cloud Computing ........................................................................................28

1.16.1. SLA Management Strategy ..............................................................................28

1.17. Service Level Objectives (SLO) ...............................................................................29

6. Economics of Cloud computing .......................................................................... 29

1.18. Calculation for Moving Data to the Cloud ...............................................................30

1.18.1. Total Cost of Ownership ...................................................................................30

1.18.2. Cost of the Current Data Centre .......................................................................30

1.18.3. Cost of Estimated Cloud Infrastructure .............................................................30

1.18.4. Cost of Cloud Migration Execution ...................................................................31

1.18.5. Additional Post Migration Cost..........................................................................31

7. References ............................................................................................................ 32

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List of Figures
Figure 1.1: Cloud Servers are hosted at Remote Locations ....................................................... 7
Figure 1.2: The Internet used to be represented by Cloud at one time ....................................... 8
Figure 1.3: Different Cloud Service Providers ............................................................................ 9
Figure 3.1: Cloud Computing Parameters .................................................................................13
Figure 3.2: Cloud Computing Disadvantages ............................................................................15
Figure 4.1: Three Cloud Computing Models with their functions ................................................17
Figure 4.2: Features and Advantages of IaaS Cloud .................................................................17
Figure 4.3: The Summary of Key Differences among the various Data Centres, On-premise and
Clouds ......................................................................................................................................20
Figure 4.4: The Workings of a SaaS Model ...............................................................................23
Figure 5.1: The Relationship of SLA between Client and Provider ............................................25
Figure 5.2: Example Ontology for a Cloud SLA .........................................................................26

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1. Cloud Computing
Figure 1.1: Cloud Servers are hosted at Remote Locations

Source: (Griffith, 2016)

Cloud Computing can be defined as the practise of using remote network of servers hosted on
the Internet to store, manage, process data, rather than using the local physical server for doing
the same.

Cloud Computing, in simplest terms, means storing and accessing data from the Internet
instead of one’s personal hard drive.

1.1. What is a Cloud?

In gone old days, Internet was referred to as the cloud, when cloud was just a metaphor for the
internet. Internet was described as a puffy, white cumulous cloud accepting connections from
the computers and doling out information to them. The concept has been vividly described in the
following diagram Figure 1.2.

Over the time, the meaning of “the Internet” has been shifted, it now includes the resources
available on the Internet as well as a means to access them.

The cloud, at present, can be termed as a coherent, large –scale publicly accessible collection
of compute, storage and network resources. These are allocated via web-service calls (a

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programmable interface accessible via HTTP requests), and are available for short – or long
term use in exchange for payment based on actual resources consumed.

Figure 1.2: The Internet used to be represented by Cloud at one time

Internet

Firewall

User Local Network

User Desktops Web Server
Desktops

Application Server Database Server

Source: (Barr, 2010)

Clouds are built and operated by specific vendors, so the names go as – “The Amazon Cloud”,
“The Google Cloud”, “Oracle Cloud Storage”, “Microsoft Azure” etc.

The cloud is a multi-user environment, operating on behalf of a large number of users

simultaneously.

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1.2. What is Cloud Computing?

Cloud Computing is an on-demand delivery of IT resources over the internet with pay-as-you-go
pricing. It is mainly the computer system resources, consisting of data storage and computing
power, without the active management by the user.

Cloud Computing is generally used to describe various data centres available to many users
over the internet. It relies on resource sharing to achieve coherence and economies of scale.
The service becomes consistent, logical and also the production cost comes down.

One does not have to buy, install or install physical data centres and servers, but can access
the technology services like computing power, storage and databases, as and when required
from a notable cloud provider.

1.3. Popular Cloud Service Providers

Figure 1.3: Different Cloud Service Providers

Source: (Javarevisited, 2017)

Cloud Computing Services are vendors which provide Information Technology (IT) as a service
over the Internet. Cloud computing is a term which is used for storing and accessing data over
the internet. It doesn't store any data on the hard disk of your PC. Cloud computing helps you to
access your data from a remote server.

Cloud computing services range from full applications and development platforms to servers,
storage, and virtual desktops. There are various types of cloud computing services are available
in the market. They are as follows:

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 Amazon Web Services (AWS)

 Google Cloud Platform
 Microsoft Azure.
 Google Cloud Platform.
 IBM Cloud Services.
 Adobe Creative Cloud.
 Kamatera.
 VMware.
 Rackspace.
 Cloudways

Cloud Computing is a service, which offers its customers to over the Internet. The management
of cloud Computing is done by the host itself, and they are the ones to come up with new
modifications, and continuously improve the service. The host provides ample amount of
storage with fast processing servers, through which data gets accessed very fast.

The major advantage of cloud computing is that the clients can concentrate on his own job, and
do not have to bother with the issues.

The user can access the cloud data from anywhere in the world just by the help of an internet
connection and by providing user id and password.

2. Characteristics of Cloud Computing

The characteristics of cloud computing can be differentiated into general, business and
technical characteristics and has been discussed as follows:
1.4. General Characteristics
The general characteristics of cloud computing is as follows:
1.4.1. Rapid Elasticity
The cloud capability can be elastically scaled up or down according to the resource usage on an
as-required basis. To the consumer, the capabilities for provisioning the cloud storage often
appears to be unlimited, and the elapsed time to increase or decrease usage is measured in
seconds or minutes. The property of the cloud thus can be appropriated in any quantity at any
time.

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1.4.2. Economies of Scale - Cloudnomics

The large cloud providers leverage a variety of techniques to excel and compete by exploiting
the economies of scale. They lay emphasis on the reliability at the software layer, while
focussing on reducing power and cooling costs via site selection and engineering. As the
provider supplies the infrastructure as a commodity, so it is best in their interest to drive down
the costs over time.

1.4.3. Pay-As-You-Go
Pay-as-you-go cloud computing (PayG Cloud Computing) is a payment method for cloud
computing that charges based on usage. The method allows the user to pay for the amount of
resources used and are needed. The major benefit for this kind of payment is that no resource
is wasted as the technical people allocates the resource in such a way to have an immediate
effect on resource consumption and the level of overall costs.

1.5. Business Characteristics

From the business point of view, the characteristics of cloud computing are as follows:
1.5.1. Fixed Costs becomes Variable
Clod computing allows the resource consumption to change in real time, thus with the PayG
method, there is no fixed cost for the resources used.

1.5.2. No Up-front Investment

As Cloud Computing is built with the goal of usage on-demand for resources, there is no need
to make a large up-front investment before the actual demand occurs.

1.5.3. Fine Grained Allocation

Cloud computing allows minimal usage amounts for both time and resources like the hours of
server usage and the total bytes of storage.

1.5.4. Capital Expenditure Converts Operational Expenditure

As the payment is based on the time and usage of the server, so there is no long-term fixed,
multi-year capital expenditure commitment for using a particular amount of server space.
Operational expenditures are made based on the actual use of the cloud-powered services and
the value changes in real time.

1.5.5. The Business can be Flexible

Since there is no long term commitment to resources, businesses can respond rapidly to the
changes in volume or type of businesses.

1.5.6. Business Focus of Provider

The cloud reflects the providers’ core competencies as the services they provide should be
reliable, applicable and cost effective.

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1.5.7. Costs are Associative

The flexible resource allocation model of the cloud opens the door to innovative thinking with
respect to the ways of segregating the large-scale problems.

1.6. Technical Characteristics

The technical characteristics of cloud computing can be listed down as follows:
1.6.1. Multi-Tenancy and Resource Pooling
Multi-tenancy is a feature where multiple customers can share the same application or the same
physical infrastructure at the same time while retaining privacy and security over their
information. Cloud computing architecture has got this multi-tenancy feature where it allows the
customers to share computing resources in a public or private cloud. Each tenant’s data is
isolated, private and is invisible to the other tenants. In the multi-tenant cloud system, users
have individualised space for storing their own projects and data.

The resource pooling feature allows multiple customers to get the service from same physical
resources. Thus, the cloud service providers’ resource poll must be large and flexible enough to
serve multiple client requirements and provide economy of scale. Cloud resource allocation also
should not impact the performances of critical manufacturing applications.

1.6.2. Rapid Scalability

With cloud computing scalability, there is less capital expenditure on the cloud customer side.
This is because as the cloud customer needs additional computing resources, they can simply
provision them as needed, and they are available right away. Scalability is more planned and
gradual. For instance, scalability means that manufacturing organizations are gradually planning
for more capacity and of course the cloud can handle that scaling up or scaling down.

Just-in-time (JIT) service is the notion of requiring cloud elasticity either to provision more
resources in the cloud or less. For example, if a manufacturing organization all of a sudden
needs more computing power to perform some kind of complex calculation, this would be cloud
elasticity that would be a just-in-time service. On the other hand, if the manufacturing
organization needs to provision human-machine interface (HMI) tags in the database for a
manufacturing project, that is not really just-in-time service, it is planned ahead of time. So it is
more on the scalability side than elasticity.

1.6.3. Broad Network Access

Cloud computing resources are available over the network and can be accessed by diverse
customer platforms. It other words, cloud services are available over a network—ideally high

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broadband communication link—such as the internet, or in the case of a private clouds it could
be a local area network (LAN).

Network bandwidth and latency are very important aspects of cloud computing and broad
network access, because they relate to the quality of service (QoS) on the network. This is
particularly important for serving time sensitive manufacturing applications.

1.6.4. Abstract and Undifferentiated Resources

The relevant details like the results and observable performance of the cloud gets the prime
attention, rather than the technical and hardware specification. The changes and upgradations
in the hardware sector must never affect the working of the cloud computing, and it becomes
the job of the provider to stay aloof from the issues. The customer also does not need to bother
or get personally acquainted with the intimate details of the dynamic cloud server resource.

3. Benefits and Challenges of Cloud Computing

A few of the advantages are already been discussed while listing out the various properties of
cloud computing We have already pointed out a few advantages of cloud computing while
discussing the various properties in the last section.

1.7. Advantages of Cloud Computing

Figure 3.1: Cloud Computing Parameters

The important benefits of Cloud Computing are as follows:

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1.7.1. Lower Cost

The biggest benefit of cloud computing is the cost savings, it helps to save substantial capital
costs, and does not need to any hardware investment on part of the client company. The
company also do not ned to hire any technical personnel to maintain the data centre hardware.
All the hardware issue, like buying, upgrading or managing the equipment all is done by the
cloud service provider.

1.7.2. Competitive Edge

Cloud computing offers a strategic edge over the competitors. It helps to access the latest
software and applications at any given time without the investment with time and money on
hardware or software installations.

1.7.3. High Speed with Quick Deployment

Cloud computing is beneficial for its super-fast deployment of application with just a few clicks.
This faster deployment allows an organisation to get the resources required for running and
making the system functional within a few minutes.

1.7.4. Easy Back-up and Restoration of Data

The backup and restoration of the stored data in the cloud is quite a much easier than the one
stored in the hard disks on-premise.

1.7.5. Software Integration is done Automatically

An organisation need not have to take additional efforts to integrate and customise the software
or application into the system as it has been done automatically in the cloud services.

1.7.6. Cloud is Reliable

The cloud computing is supposed to be the most reliable data centre and this make the cloud
computing so much successful in today’s IT. An organisation instantly gets updated with the
changes and its done irrespective of the country or region.

1.7.7. Flexibility
Cloud computing allows flexibility with the work environment and the employees who are
working on the premises as well as in remote location can easily access all the cloud services
their organisation has opted for. The only thing they require is the steady internet connection.

1.7.8. Unlimited Storage Capacity

The cloud services offer almost infinite storage capacity and at any time, one can instantly
expand the storage capacity with a nominal fee.

1.7.9. Enhanced Teamwork

The cloud computing platform allows the employees located at various geographical location to
collaborate in a highly convenient and secure manner.

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1.8. Disadvantages of Cloud Computing

Figure 3.2: Cloud Computing Disadvantages

Threat to
Data
Security

Data Dependable
Transfer on Internet
Bottlenecks Speed

Disadvantages of
Cloud Computing

Limited Cloud
Control Outage

Portability
Issue

How much beneficial a technology can be, it has its fair share of disadvantages also, and cloud
computing is not an exception to this rule also. Following are the common disadvantages seen
in cloud computing technology:

1.8.1. Cloud is vulnerable to external threat Data Security & protection Cloud is
vulnerable to external attack
All the data stored in the cloud is always online, and this poses a threat to data security and
protection. World’s best organisations face risk of security breach and cloud is not an exception.
Though cloud has got the advanced security measures, yet storing confidential data in the cloud
can be a risky affair.

1.8.2. Dependable on Internet Speed and Connectivity

Cloud Computing is completely dependent on the internet. So, the company or an individual
need to remain always connected to the fast internet connection with a good bandwidth to reap
the benefits of cloud computing optimally.

1.8.3. Cloud Outage Issue

One of the biggest potential downsides of using cloud services is the cloud outage when the
cloud services remain unavailable. This happens when the cloud services remain down due to
various reasons such as loss of power, low Internet connectivity, data centers going out of

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service for maintenance, etc. Temporary downtime in the cloud service also happens due to
natural disasters or a hacker attack.

1.8.4. Inter-operability / Issue in portability

If a company wish to migrate its data from one cloud to another, it may face some serious
challenges due to the differences between vendor platforms. Running and hosting the
applications from the current cloud platform may have some support issues, configuration
complexities and additional expenses in the other platform. The company may have the
probability of being vulnerable to security attacks due to compromises that have been made
during data migration.

1.8.5. Limited Control

Cloud services usually run on remote servers which are completely managed and owned by the
service providers, and it makes it difficult for the companies to have the level of control over
their back-end infrastructure.

1.8.6. Data transfer Bottlenecks

A network bottleneck refers to the situation where the data flow is limited by computer or
network resources. When the large amount of data is being transferred through the network, the
entire system gets slowed down by data transfer bottlenecks.

4. Cloud Service Models

The future of computing lies in the cloud computing, and each of the business need to adapt
itself to a particular model from the three available models of cloud computing. Cloud models
are of three types - SaaS (Software as a Service), IaaS (Infrastructure as a Service) and PaaS
(Platform as a Service). Each of the models has its own benefits, flexibility and efficiency to
serve and fulfil the various kinds of business requirements.

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Figure 4.1: Three Cloud Computing Models with their functions

Source: (Paranet, 2019)

As the three clouds have different functionalities, in short, IaaS model is to “host”, PaaS model
is used to “build” and SaaS cloud model is used to “consume” the software developed in the
Cloud.

1.9. Infrastructure as a Service Model (IaaS)

Figure 4.2: Features and Advantages of IaaS Cloud

Source: (Cloud Oye, 2019)

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It has already been discussed that IaaS cloud model is usually used to host the software, so it
becomes the virtual provision of computing resources of the cloud. IaaS cloud providers supply
the businesses an entire range of computing infrastructures such as storage, network hardware,
servers along with the maintenance and support services, just like they are present in an on-site
data centre. So, IaaS platform allows the customers to buy complete resources rather than
purchasing the server, software, and datacentre space or hardware equipment.

Organisations opt for the IaaS cloud computing services for their requirement without installing
or maintaining the complete hardware system in their premises. The leading IaaS providers in
the world are Amazon Web Services, Microsoft Azure, Google Compute Engine etc. (Fingnet,
2018)

IaaS Cloud is the most flexible one among all three, and it allows the businesses to have a
complete, scalable control over the management and the customisation of the infrastructure.
The business thus has a control on the operating system, storage, deployed applications, and
may also have limited control on select networking components like the host firewalls. The IaaS
Customers access all these resources over the Internet as an on-demand service.

1.9.1. Advantages of IaaS

Eliminates Capital Expenses

A cloud-based infrastructure eradicates the capital expense of deploying in-house hardware and
software. Also as IaaS is typically offered as a pay-as-you-go model, charges are based either
in time, or in the amount of virtual machine space that was used.

It is Flexible
IaaS is useful in supporting workloads that are temporary, may change unexpectedly, or are
experimental. Like all workloads, these loads need infrastructure to support them, however it is
expensive to commit to additional permanent in-house infrastructure for a temporary need.
Cloud-based infrastructure answers the need for flexibility.

Simple Deployment
It is much easier for your cloud provider to deploy your servers, processing, storage, and
networking in the IaaS model than it is for you to deploy these elements in-house, with no
previous no base to build off of. As a result, your uptime will increase as your systems will be
available for use more rapidly.

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Minimize Costs
Deploying an IaaS cloud model eliminates the need to deploy on premise hardware that
reduces the costs.

Enhanced Scalability
As the most flexible cloud computing model, IaaS allows you to scale the computing resources
up or down based on demand.

Simple Deployment
IaaS lets you easily deploy the servers, processing, storage, and networking to make it up and
running in no time.

1.9.2. Disadvantages of IaaS

Insight
Because your entire infrastructure is maintained and controlled by your IaaS provider, it is rare
that you will be provided with the details of its configuration and performance. In turn, this can
make systems management and monitoring more difficult for your company.

Variability of Resilience
The availability and performance of the workload is highly dependent upon the provider. If the
IaaS providers experience internal or external downtime, your workloads will also be affected.

Costly
IaaS models are typically much costlier than PaaS and SaaS models because they offer much
more support to your business than the other two cloud models. However, they can still be cost-
effective based on their utility to your business.

1.9.3. Why Should One Opt IaaS?

When it comes to IT hardware infrastructure, IaaS suits best among all the cloud models. IaaS
gives the complete control over the hardware infrastructure such as in managing and
customizing according to the company’s requirements.

Whether the organisation is a start-up or a large enterprise, IaaS gives access to computing
resources without the need to invest in them separately. However, the only downside with IaaS
is that it is much costlier than SaaS or PaaS cloud models.

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Figure 4.3: The Summary of Key Differences among the various Data Centres, On-premise and Clouds

Source: (BMC Blogs, 2019)

1.10. Platform as a Service Model (PaaS)

With this PaaS model, a third-party vendor provides the organisation with a platform upon which
the business can develop and run applications.

As the vendor hosts the cloud infrastructure which supports the platform, PaaS eliminates the
need to install in-house hardware or software. The business is not required to manage or control
the underlying cloud infrastructure, but would maintain control over the deployed applications
(unlike with SaaS).

Platform as a Service or PaaS is essentially a cloud base where one can develop, test and
organize the different applications for the organisation. Implementing PaaS simplifies the
process of enterprise software development. The virtual runtime environment provided by PaaS
gives a favourable space for developing and testing applications.

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The entire resources offered in the form of servers, storage and networking are manageable
either by the company or a platform provider. Google App Engine and AWS Elastic Beanstalk
are two typical examples of PaaS. PaaS is also subscription based that gives the company
flexible pricing options depending on its business requirements.

1.10.1. Advantages of PaaS

Rapid Time-to-Market
PaaS simplifies application management by eliminating the need to maintain and control the
underlying infrastructure. As a result, applications can be developed and deployed faster.

Cost Effective Development

A cloud-based platform provides the business with a base upon which to build the applications,
as opposed to building from scratch, thus dramatically reduces the associated costs.

Scalability
Cloud-based platforms offer reusable code which, of course, makes it easier to develop and
deploy applications, but also offers increased scalability.

Minimal Development Time

PaaS reduces the development time since the vendor provides all computing resources like
server-side components, which simplifies the process and improves the focus of the
development team.

Multiple Programming Language Support

PaaS offers support for multiple programming languages, which a software development
company can utilize to build applications for different projects.

Enhanced Collaboration
With PaaS, your business can benefit from having enhanced collaboration, which will help
integrate your team dispersed across various locations.

1.10.2. Disadvantages of PaaS

Vendor Lock-In
It is difficult to migrate many of the services provided by one PaaS product to a competing
product, thus making it hard to switch PaaS vendors. Downtime and additional expenses are
likely to occur when switching from one PaaS provider to another.

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Security & Compliance

In the PaaS model, the vendor will store most, or even all, of the application's data. As such, it is
imperative to assess the security measures of the provider. This, though, often proves difficult
as the vendor may be storing their databases via a third party, thus leaving you uninformed of
the safety of your data.

Lack of Compatibility
It is possible that your current infrastructure may not be compatible with a cloud platform. If
some elements cannot be cloud-enabled, you may have to switch from your current apps and
programs to cloud-compatible counterparts in order to fully integrate. Alternately, you may need
to leave these elements out of the cloud, and within your current infrastructure.

1.10.3. Why Should One Opt PaaS?

PaaS is the preferred option if your project involves multiple developers and vendors. With
PaaS, it is easy to create customized applications as it leases all the essential computing and
networking resources. Being a different model, PaaS simplifies the app development process
that minimizes your organizational costs.

Besides, it is flexible and delivers the necessary speed in the process, which will rapidly improve
your development times. A typical disadvantage with PaaS is that since it is built on virtualized
technology, you will have less control over the data processing. In addition, it is also less flexible
compared to the IaaS cloud model.

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1.11. Software as a Service Model (SaaS)

Figure 4.4: The Workings of a SaaS Model

Source: (House Of Bots, 2019)

The SaaS model allows the business to quickly access cloud-based web applications without
committing to installing new infrastructure. The applications run on the vendor's cloud, which
they, control and maintain. The applications are available for use with a paid licensed
subscription, or for free with limited access. SaaS does not require any installations or
downloads in the organisation’s existing infrastructure, thus eliminates the need to install,
maintain, and update applications on each of the system computers.

SaaS or Software as a Service is a model which gives quick access to cloud-based web
applications. The vendor controls the entire computing stack, which one can access using a
web browser. These applications run on the cloud and a client can use them by a paid licensed
subscription or for free with limited access.

SaaS does not require any installations or downloads in the company’s existing computing
infrastructure. This eliminates the need for installing applications on each of the computers with
the maintenance and support taken over by the vendor. Some known example of SaaS
includes Google G Suite, Microsoft Office 365, Dropbox etc.

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1.11.1. Advantages of SaaS

It is Affordable
On-premise hardware installation is not required for this model, which keeps the associated
costs quite low. Small-scale businesses might find this cloud platform quite appealing.

It can be Accessible from Everywhere

Cloud-based applications are accessible from anywhere that has got internet access.
Companies that require frequent collaboration from employees all around the world, find SaaS
platforms quite useful so that their employees can easily access the programs they need to
work on.

Ready-to-Use
With SaaS, the programs one need to run the system is already fully developed and ready to
use. The set-up time for SaaS programs is minimal as compared to the other two types of cloud-
based platforms.

Highly Affordable
The costs involved in the purchase, installation, maintenance and upgrades of computing
hardware is not required, so this SaaS platform is highly affordable.

Accessibility from all Corners

With SaaS, one can access the services from anywhere and everywhere using any device such
as smartphones, and eliminates the constraints set by on-premise in-house software.

1.11.2. Disadvantages of SaaS

No Control
With SaaS, the cloud vendor has control over the programs that the company is using and put
up in the cloud service. If an organisation does not feel comfortable releasing the control of the
critical business applications to another third party, then SaaS is not the best option for the
business.

Slower Speeds
Just like the general cloud services, Saas platform also depends on the internet availability and
speed. Relying upon internet access to function, SaaS applications may tend to be slower than
on-site client/server applications. However, these cloud programs are still typically quick, though
not instantaneous.

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Variable Functions & Features

Sometimes, a Saas Based Cloud platform may have limited functionalities and features as
compared to the on-site client/server counterparts. When the business needs only the features
offered by the Cloud-Services, then this disadvantage is nullified.

1.11.3. Why Should One Opt SaaS?

SaaS has its own disadvantages since it leaves the client no control over the hardware allotted
to you as only the vendor can manage the software. With SaaS, communication, transferring of
content and scheduling meetings is made easy.

SaaS is an ideal choice for small-scale businesses that do not have the necessary budget and
resources to deploy on premise hardware. Besides, the companies who require frequent
collaboration on their projects will find SaaS platforms quite useful.

5. Service Management in Cloud Computing

All the activities that an organisation does to plan, design, deliver, operate and control its IT and
Cloud services that it offers to its customers is known as Service Management.

1.12. What is Service Management?

Service management includes the operational aspects of the applications and services the
company offers to its customers. Once an application is into the production stage, it must be
managed by the company. All applications are monitored to ensure availability and performance
according to service level agreements (SLAs) or service level objectives (SLOs). Both service
level agreements and service level objectives are discussed in details below. (IBM, 2019)

1.13. What is a Service Level Agreement?

Figure 5.1: The Relationship of SLA between Client and Provider

Source: (Clairvoyant, 2019)

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The Service-level Agreement (SLA) defines the level of services expected from a supplier by the
client/customer. The agreement lays out the metrics by which a service is measured and also
determines the remedies or penalties to be imposed on the supplier when the agreed-upon
service level has not been achieved. SLAs are generally made between a company and its
external suppliers, but may be also between two departments within the same company.

SLAs form the integral part of any IT vendor contract. An SLA pulls together information on all of
the contracted services and their agreed-upon expected reliability into a single document.
Figure 5.2 shows the ontology of an example of a cloud-computing SLA.

Figure 5.2: Example Ontology for a Cloud SLA

Source: (Joshi, 2016)

As Service Level agreement clearly state metrics, responsibilities and expectations so, for any
kind of issues with the provided service, neither party can plead ignorance. The agreement
ensures both sides should have the same understanding of requirements.

Any important contract without an accompanying legal counsel approved SLA may tend to get
misinterpreted by the involved parties, so SLA protects both through the agreement.

SLA must be aligned to the technology or business objectives of the engagement for both the
parties, the supplier as well as the receiver. Misalignment can have an adverse impact on deal
pricing, quality of service delivery, and also customer experience.

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1.14. Different levels of SLA

SLAs are defined across different levels as:
 Customer-based SLA
 Service-based SLA
 Multi-level SLA

1.14.1. Customer-Level SLA

An agreement with an individual customer group, covering all the services they use. For
example, an SLA between a supplier (IT service provider) and the finance department of a large
organization for the services such as finance system, payroll system, billing system,
procurement/purchase system, etc.

1.14.2. Service-based SLA

An agreement for all customers using the services being delivered by the service provider. For
e.g. a mobile service provider offers a routine service to all the customers and offers certain
maintenance as a part of an offer with the universal charging.

An email system for the entire organization. There are chances of difficulties arising in this type
of SLA as level of the services being offered may vary for different customers (for example,
head office staff may use high-speed LAN connections while local offices may have to use a
lower speed leased line).

1.14.3. Multilevel SLA

The SLA is split into the different levels, each addressing different set of customers for the same
services, in the same SLA.

Corporate-level SLA: Covering all the generic service level management (often abbreviated as
SLM) issues appropriate to every customer throughout the organization. These issues are likely
to be less volatile and so updates (SLA reviews) are less frequently required.

Customer-level SLA: Covering all SLM issues relevant to the particular customer group,
regardless of the services being used.

Service-level SLA: Covering all SLM issue relevant to the specific services, in relation to this
specific customer group.

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1.15. SLA Parameters

It is always advisable to have an attorney review the agreement document before going into any
contract for either of the parties, especially before making a major agreement with the cloud
service provider. Every Service level agreement has some specific parameters as mentioned
below:
1. Availability of the Service (uptime)
2. Latency or the response time
3. Service components reliability
4. Each party accountability
5. Warranties

Service Level Agreements are based on usage models. Cloud Providers usually charge their
clients on pay-per-use model and deploy standards according to the SLA agreements.
(GeeksforGeeks, 2019)

1.16. SLAs in Cloud Computing

Service level Agreement is a bond of performance between the cloud service provider and its
client. Previously, all SLA s are negotiated between a client/consumer and the cloud service
provider. Nowadays, with the advent of giant cloud providers, standardized SLAs are followed
across all organisations, until a client becomes a large consumer itself of the cloud services.

The underlying benefit of cloud computing is shared resources, which is supported by the
shared infrastructure resources. SLAs span across the cloud and offered by service providers
as service-based agreements ad not client based agreements. Monitoring, measuring and
reporting of the cloud based service performances is determined by the experience of the end
users and their ability to consume resources.

As the organisations move their applications from their dedicated hardware to the cloud
services, they like to have the same or more demanding experience than the classical
installations.

1.16.1. SLA Management Strategy

This management strategy considers two well-differentiated phases: negotiating the contract
and monitoring its fulfilment in real time. (Wieder, et al., 2011)

The SLA management strategy can be defined as - A clearly documented, published and
appropriately socialized set of Visions, Missions, Objectives, Drivers, Justifications, Plans,

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Roadmaps (or Road Maps) and Methodologies that act as direction and guidance for the
delivery, operations and support of the professional discipline known as Service Level
Agreement (SLA) Management. (IF4IT, 2019)

1.17. Service Level Objectives (SLO)

As It workloads are moved from on-premise IT infrastructure to off-site Cloud data centres, it is
important to ensure that the service levels are consistent with the business requirement of the
organisations. The parameters and metrics defining the service levels of each element of the
cloud solution should meet requirements and must maintain high standards in performance,
security and compliance at an affordable cost structures. (Raza, 2018)

A service-level objective (SLO) is a key element of a service-level agreement (SLA) between a

service provider and a customer. SLOs are agreed upon as a means of measuring the
performance of the Service Provider and are outlined as a way of avoiding disputes between the
two parties based on misunderstanding.

SLO serves as a benchmark for indicators, parameters or metrics defined with specific service
level targets. The SLOs may also refer to the measurable characteristics of an SLA, such as
Quality of Service (QoS) aspects that are achievable, measurable, meaningful and acceptable
for both service providers and customers.

6. Economics of Cloud computing

Cloud Economics is a branch of knowledge which deals with principles, costs and benefits of
cloud computing. Economics deals with feasibility of the product or service and it is determined
when the revenue exceeds expenses, and makes a profitable product. The total cost of the
product takes into account all the expenses, including all fixed and variable expenses.

Cloud computing brings the benefits of extraordinary economies of scale for IT operations.
Cloud technology allows large data centres to standardized and pool computing resources,
resulting in highly efficient operations. Cloud automates and streamlines maintenance tasks and
offers exceptional agility to users. (V Skills Certified, 2019)

For IT firms and their management department, energy consumption and maintenance of data
centers based on enterprise budget is a prime factor that needs planning. So, IT managers are
always looking for the ways to increase the capacity and flexibility of computing and hardware
so as to lower costs and increase the return of assets (ROA). Last few years saw the shift from

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traditional enterprise data centres to virtualised cloud computing, that allows faster and efficient
deployment of data processing without increasing the data centre’s size, staff overhead or
energy consumption. Cloud computing has emerged a new structure of IT computing, and it is
bringing a change in the same manner as a cost and economic evaluations for IT.

Cloud computing economics depend on the following four customer population metrics:
1. Number of unique customer sets
2. Customer set duty cycles
3. Relative duty cycle displacements
4. Customer set loads

The above metrics allows the cloud-providers to use less IT resource and obtain maximum IT
resource. Proper balancing and handling of these resources can allow 30% of the IT resource
savings.

1.18. Calculation for Moving Data to the Cloud

The following factors gives a holistic approach for calculating the cost of cloud computing. Heres
the cloud economics come into action.

1.18.1. Total Cost of Ownership

To understand the cost of cloud solution, one needs to calculate the total cost of ownership
(TOC) for the on-premise data centre. The cost includes the total cost of equipment, cost of the
capital, and the project lifespan of the equipment. This also includes the installation and
maintenance cost.

1.18.2. Cost of the Current Data Centre

This is the first step to calculate the amount of time, money and infrastructure required in
running the current data centre. Once that is determined, it becomes easier to calculate the
amount of cloud space along with the cloud resources a company will consume as its
datacentre and compare between the two.

1.18.3. Cost of Estimated Cloud Infrastructure

Once the estimated cost of the current data centre is determined, the company has a fair idea
on how the estimated cost of cloud resources. Though the cloud total cost can be quite
complicated, yet it depends on the cloud provider to have a simple pricing structure depends on
the total usage by the company.

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1.18.4. Cost of Cloud Migration Execution

This is the cost incurred for executing the migration of the complete data from IT infrastructure
to the cloud. The cost is determined by the scope of the current IT infrastructure and how much
of the data one planned to move to the cloud. There is also some additional cost involved in
integrating and testing of apps with the consultation fees.

1.18.5. Additional Post Migration Cost

The cloud providers often like to have to a fixed monthly infrastructure fees to maintain and
improve the cloud environment. The post-migration costs include continued integration, testing
of apps, training, labour, security and compliance, administration, and others cost which need to
be forecasted to determine the actual post-migration budget. (VexxHost, 2019)

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7. References
Barr, J., 2010. Host your Website in the Cloud. 1 ed. Seattle: SitePoint Pty Ltd.

BMC Blogs, 2019. SaaS vs PaaS vs IaaS: What’s The Difference and How To Choose. [Online]
Available at: https://www.bmc.com/blogs/saas-vs-paas-vs-iaas-whats-the-difference-and-how-
to-choose/
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Clairvoyant, 2019. Airflow — Service Level Agreement (SLA). [Online]

Available at: https://blog.clairvoyantsoft.com/airflow-service-level-agreement-sla-2f3c91cd84cc
[Accessed 27 12 2019].

Cloud Oye, 2019. Significant Features and Advantages of Infrastructure as a Service (IaaS).
[Online]
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advantages-of-infrastructure-as-a-service-iaas
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Fingnet, 2018. Cloud Service Models Saas, IaaS, Paas – Choose the Right One for Your
Business. [Online]
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right-one-for-your-business
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GeeksforGeeks, 2019. Service level agreements in Cloud computing. [Online]

Available at: https://www.geeksforgeeks.org/service-level-agreements-in-cloud-computing/
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Griffith, E., 2016. What Is Cloud Computing?. [Online]

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House Of Bots, 2019. Software as a Service (SaaS) in the Middle East, SaaS Market Growth
Forecast. [Online]
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Middle-East-SaaS-Market-Growth-Forecast:-Ken-Research
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IBM, 2019. Service management for IT and cloud services. [Online]

Available at: https://www.ibm.com/cloud/garage/architectures/serviceManagementArchitecture
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IF4IT, 2019. The International Foundation for Information Technology. [Online]

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Javarevisited, 2017. Top 5 Cloud Service Providers and Companies, Java IT professionals
Should Know. [Online]
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Joshi, K. &. G. A. &. M. S. &. P. C. &. J. A. &. F. T., 2016. ALDA : Cognitive Assistant for Legal
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Paranet, 2019. The Three Cloud Computing Service Models. [Online]

Available at: https://www.paranet.com/blog/bid/128267/the-three-types-of-cloud-computing-
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Raza, M., 2018. What are Service Level Objectives? SLOs Explained. [Online]
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V Skills Certified, 2019. Cloud economics. [Online]

Available at: https://www.vskills.in/certification/tutorial/cloud-computing/cloud-economics/
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VexxHost, 2019. The Basics of cloud Economics. [Online]

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Wieder, P., Butler, J. M., Theilmann, W. & Yahyapour, R., 2011. Service Level Agreements for
Cloud Computing. 1st ed. New York: Springer Science & Business Media.

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