cloud computing -Strategic Case Study

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    Strategic turn to monetize

    cloud computingCase Study for Strategic Management

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    ABSTRACT

    Cloud computing has the potential to be the next major driver of business

    innovation, as it promises to enable new business models and services across almost

    all industries, especially telecommunications, healthcare and government. As well

    as it opens new customer segment to cloud provider. Cloud has the potential to

    become the next major driver of business innovation by enabling entirely new

    business models across a wide range of industries. The cloud computing market will

    include offerings sold as a service such as business processes, software, platform,

    and infrastructure. And many of these cloud services will be consumed through a

    pay-per-usage pricing model. The cloud market is appealing to new entrants notonly because of its size and growth, but also due to the business potential it brings

    to a company. Cloud providers benefit by accessing new customers and markets,

    improving their deployment times, potentially lower their costs and achieving new

    revenue streams.

    We have analyze cloud service provider strategies by evaluating their business

    models for cloud computing services/offerings, strategies operations and target

    customers.

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    WHAT IS CLOUDCOMPUTING

    Cloud computing i Int net ed computing, whereby shared

    resources, software, and information are provided to computers and

    other devices on demand.

    Cloud computing describes a new supplement, consumption, and delivery

    model for IT services based on the Internet

    The concept behind cloud computing is very simple: itlets you run your business

    computer applications over the Internet, without having to buy, install or manage

    your own servers. You can run your companys IT operations with nothing more

    than a browser and an Internet connection. Applications, operating systems, servers

    and network switches all are available from within the cloud.

    The benefits of adapting Cloud Computing for any business are great. Here

    are some of them.

    y Quickturnaround or deploymenttime to be up and runningy Increased availability of high-performance applications to small/medium-

    si ed businesses Applications like ERP, CRM or ecommerce applications

    which were out of reach for Small and Medium businesses are now

    available at a fraction of a cost.

    yReduced implementation and maintenance costs since you pay as you go !

    y Increased Storage on demand / Flexible and scalable infrastructuresy Greening ofthe data center/ Reduced Energy costsy Highly Automated - No longer do IT personnel need to worry about

    keeping software up to date.

    y GreaterMobility to your Workforce - Employees can access informationwhereverthey are, wheneverthey want.

    y Allows Businesses to Focus on their core competencyy Optimum Performance - The cloud adjusts to your companys performance

    needs, dynamically assigning capacity whenever and wherever you need

    them, and automatically adjusting to spikes in your business.

    y Security For many companies, the level of security and availability,disaster recovery and back-up provided by a software-as-a-service provider

    far exceeds that which they can provide themselves.

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    ___________________________________________________________ ___

    Element consider to form winning strategyfor cloud market

    To win in the cloud market requires an innovative business strategy and business

    model. The strategies reflect a rethinking of market fundamentals and truly envisionnew models to better serve customers.

    We will see a wide range of cloud business models emerge overthe next few years,

    and most ofthese will likely fail. Ofthe ones that survive, the profitability ofthe

    business models will vary greatly. A few winning business models will maintain

    healthy profit margins while others will find themselves relegated to much smaller,

    commodity-based profit margins

    There are three key components that define cloud business models:

    CUSTOMER FUNCTION: Cloud Delivered Services- what a company sell i.e.

    their product

    CUSTOMER GROUP: Target Markets- to whom it would be sell i.e. their

    customers

    TECHNOLOGY:Operations- how to create and deliver what one sell

    And to successfully implementation of business model a good strategy would be

    require. Strategy of all cloud vendors would be to create long-term value.

    ________________________________________CUSTOMER FUNCTION: Cloud Delivered Service

    The first component of a cloud provider strategy is to clearly outline the service that

    will be offered. Most cloud enabled solutions will have four layers in their

    solution stack:

    Content

    Process and applications

    Integration and middleware

    Infrastructure and devices

    Cloud provider mainly tries to outline competitive advantage for each layer. These

    layers divide the cloud marketinto following sub market:-

    Business-Process as a Service (BPaaS). Deliver an entire business process

    as a service via the Internet. Examples include payroll, printing and e-

    commerce from providers.

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    Software as a Service (SaaS). Deliver a standardi ed application running ona cloud infrastructure, with multi tenancy, accessible from various client

    devices through a thin client interface such as a Web browser (e.g., web-

    based email). Target customer would be ENDUSER

    Platform as a Service (PaaS). Build and deploy new internally developed

    applications onto cloud infrastructure, exposing services needed to build an

    effective application including billing and sign-on services used by

    APPLICATION DEVELOPER

    Infrastructure as a Service (IaaS). Obtain processing, storage networks, and

    other fundamental computing resources as a service where the consumer is

    able to deploy and run elements ofthe stack, such as operating systems, on

    the infrastructure service. Mainly for NETWORK ARCHITECTS

    Since A single company does not have to be the owner or operator of all four

    solution layers. Hence, a key part of developing a cloud strategy is to define

    which component(s) you will provide and which components will be provided

    by a business partner thats why partnership-based business models normally

    seen in cloud market.

    In addition to direct cloud services, there is a wide range of support cloud services

    and components typically offered by outside providers, such as consulting firms,

    but also delivered by cloud service providers themselves. These services includetraining and consulting For example, SalesForce.com offers training and consulting

    to complementits SaaS and PaaS offerings.

    _______________________________

    CUSTOMER FUNCTION-Target market

    There are many potential target markets for cloud adoption Most current cloud

    providers narrow down their respective markets to some combination of the

    following segments:

    Industry or Functional Verticals among Large Enterprises

    While currently focused more on internal cloud enablement some large enterprises

    will migrate toward adopting shared cloud verticals that reduce cost or riskin areas

    that are importantto the business, but are not key sources of differentiation, such as

    back office functions or regulatory compliance. For example, pharmaceutical

    companies could join forces via an industry vertical cloud focused on regulatory

    compliance to drive cost savings and efficiency.

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    SMBs

    Many workloads offer the least pain and most significant gain for the SMB

    segment. Cloud providers are targeting smaller customers who can benefit from

    clouds compelling economies of scale, and who are less hindered by large, existing

    IT capabilities. Financial services companies have strong relationships with their

    customers, and could use this delivery model for business services

    Emerging Markets

    With limited resources, customers in developing markets will respond to the lower

    up-front investment costs and ability to scale service consumption in times of

    growth. For example, automotive manufacturers could use cloud to reach

    dealerships in distant markets.

    Other Cloud Providers

    Cloud services serve as building blocks, where a provider sells one cloud service to

    another cloud providerto construct a larger service offering. IaaS providers often

    align with SaaS providers to jointly deliver a more comprehensive cloud services.

    Such as Red Hat sell their platform to Microsoft.

    Consumers

    Mobile devices, online email and other consumer services benefit from numerous

    new applications made available through cloud delivery models.

    The another choice for cloud provider that whether establish their market for a

    public cloud or provide a private cloud.

    Well demand is rising for public cloud services around HR benefits procurement, e-

    commerce, data warehousing and archiving.

    ___________________

    TECHNOLOGY-Operation

    The operations component of a cloud business modelincludes the development of

    key elements needed to deliver business services via the cloud. This includes

    business operations and financial reporting designed to be more agile by more

    quickly engaging customers, tailoring services to fit customer needs pricing for

    smaller units of a service, and establishing a viable financial model.

    The operating model of the business strategy defines the sourcing model,

    partnership strategy, and deployment plan forthe development ofthese capabilities.

    Many providers are pursuing strategic partnerships to round out their capabilities

    and achieve the operational requirements associated with rapid service delivery.

    Alliances and partnerships are often keys to success in the cloud ecosystem.

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    __________

    STRATEGY

    Service provider strategies focus towards address pricing models, go-to-market

    approaches, business intent and value propositions, in addition to defining servicesand customers.

    Current cloud providers are capitali ing on first-mover advantage. They are

    delivering services, learning from their mistakes, and capturing market share along

    the way. Some oftheir success has been at the expense of traditional players who

    have not ventured into the cloud marketplace.

    One of the defining aspects of cloud computing is pay-per-use pricing models.

    However, variations are possible within this basic tenet of cloud. For example,

    some providers priced base on their brand and reputation ratherthan purely basedon hourly usage rates.

    The challenge is determining how to measure this value and how to capture that

    value through pricing.

    Some cloud providers are offering cloud-based services directly to customers.

    Others are acting as enablers and integrators by providing their products and

    services as building blocks for other cloud service providers to then sellto their own

    customers.

    Another consideration for go to market strategy is targeting the right decision

    maker for the particular type of service delivered. Providers have tailor their

    offerings and value proposition based on the target buyer. Cloud providers are

    deploy new services to their customers in days .

    Well main focus is to differentiate their product.

    Let us consider cloud offering of few vendors to understand how different cloud

    vendor differentiate their product and targeted to whom, and what are their

    strategies to sustain in market forlong run and their competition.

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    1.Amazon

    Type ofCloud: Public Cloud

    Type of Service:IaaS

    Key Offerings:EC2 , S3, Simple DB and Map Reduce

    Specializes in IaaS. It offers through Amazon Web Services (AWS): AmazonElastic

    Compute Cloud(EC2), AmazonSimpleDB, AmazonCloudFront, AmazonSQS. It claims to

    have 82 billion objectsstoredin AmzonS3 (SimpleStorageService)

    As ondate theyare the onlyprovider to offereverything .

    Amzaon is the undisputed winner, without any much competition till now. We maycallit an early-bird advantage.

    2.Microsoft

    Type of Cloud: Private Cloud,Public

    Type of Service: SaaS,PaaS and IaaS

    Key Offering: Online Service, Windows Azure Platform and Windows Server

    Hyper-V,Office Window apps.

    Specializes in PaaS. It offers Azure, a Windows-as-a-service platform consisting

    of the operating system and developer services that can be used to build and

    enhance Web-hosted applications. Azure is available for VS 2008 viaWeb

    Platform Installer. Visual Studio 2010 Beta 2 has all the features we need to

    code, debug, and deploy our cloud service.

    Microsoft strategy has the right portfolio and articulates the right story to allthe

    entities in the ecosystem. Microsoft has always dominated is the operatingsystem. It started on the desktop, moved to the server, and now it is moving

    into the cloud

    Microsoft made a majorleap with the release ofOffice Web Apps, a cloud-based

    version ofits Office software. Web Apps lets users to upload documents from their

    computerto Microsofts cloud-based Docs.com, and allows accessibility from anymachine or device. Here the documents will also be stored in remote serverinstead

    of being stored only in personal computers, laptops or company server. Except for

    the security factor of sharing important files on the web, it will prove to be a good

    improvement.

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    __________________________________________________________________

    Microsoft charge price for the components of its Azure cloud computing platform,which is consumption-based computing costs are slightly lower than Amazon's

    costs, but, Amazon's Linux-based service undercuts Microsoft's Windows pricing.

    However, Amazon's Linux-based offering is $0.10 per computing hour, and it also

    charges slightly less for storage than Microsoft. There are many analyses going on

    around the web about how these pricing strategies will play out over time.

    ___________________________________________________________________

    3.Google

    Type of Cloud:Public CloudType of Service: Saas and PaaS

    Key Offerings: Google Apps and Google App Engine

    Specializes in PaaS & SaaS. As SaaSit offers Google Apps: a web-basedcommunication, collaboration & security apps which includes, Gmail, Google

    Calendar, Google Talk, Google Docs & Google Sites. 15 Sep 2009, Googleannounced that it will provide GovCloud, which will host Google Apps in aseparate data environment with enhanced encryption for meeting state andgovernment security standards.

    As PaaS it offers Google App Engine: a platform for developing and hosting webapplications in Google-managed data centers. Currently, the supportedprogramming languages are Python andJava (by extension otherJVM languagesare also supported).

    You build your application using Googles PaaS and Google handles deploying

    code to a cluster, monitoring, failover, and launching application instances asnecessary. Good news, Google App Engine is free, but only up t...

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