CASE STUDY SESSION ORGANIZATIONS

Look to the Cloud

If you want to see where computing is taking place, owning information technology, this isn’t always the
look to the cloud. Cloud computing is now the case. For large companies, paying a public cloud pro-
­fastest-growing form of computing. According to vider a monthly service fee for 10,000 or more em-
Cisco Systems, 94 percent of all computing workloads ployees may actually be more expensive than hav-
will run in some form of cloud environment by 2021. ing the company maintain its own IT infrastructure
This includes both public and private cloud plat- and staff. Companies also worry about unexpected
forms. Dedicated servers will be a distinct minority. “runaway costs” from using a pay-per-use model.
Cloud computing has become an affordable and Integrating cloud services with existing IT infrastruc-
sensible option for companies of all sizes, ranging tures, errors, mismanagement, or unusually high
from tiny Internet startups to established companies volumes of web traffic will run up the bill for cloud
like Netflix and FedEx. For example, Amazon Web service users.
Services (AWS) provides subscribing companies with A major barrier to widespread cloud adoption has
flexible computing power and data storage as well as been concerns about cloud reliability and security.
data management, messaging, payment, and other Problems with Amazon Web Services’ Direct Connect
services that can be used together or individually, service took down several large customers on the
as the business requires. Anyone with an Internet morning of March 2, 2018, including enterprise
connection and a little bit of money can harness the software tool provider Atalassian, Capital One, and
same computing systems that Amazon itself uses to Amazon’s own Alexa personal assistant. (AWS Direct
run its retail business. If customers provide specifica- Connect is used by hybrid cloud customers to set up
tions on the amount of server space, bandwidth, stor- a secure connection between AWS infrastructure and
age, and any other services they require, AWS can the customer’s on-premises infrastructure.) Amazon’s
automatically allocate those resources. You don’t pay S3 cloud storage service experienced a four-hour
a monthly or yearly fee to use Amazon’s computing outage February 28, 2017, shutting down thousands
resources—instead, you pay for exactly what you of websites across the Internet. There were also
use. Economies of scale keep costs astonishingly low, significant Amazon cloud outages in the preceding
and AWS has been able to keep reducing prices. To five years. As cloud computing continues to mature
remain competitive, other cloud computing vendors and the major cloud infrastructure providers gain
have had to follow suit. more experience, cloud service and reliability have
Cloud computing also appeals to many businesses steadily improved. Experts recommend that compa-
because the cloud services provider will handle all nies for whom an outage would be a major risk con-
of the maintenance and upkeep of their IT infra- sider using another computing service as a backup.
structures, allowing these businesses to spend more In February 2016 Netflix completed a d­ ecade-long
time on higher-value work. Start-up companies and project to shut down its own data centers and use
smaller companies are finding that they no longer Amazon’s cloud exclusively to run its business.
need to build their own data center. With cloud infra- Management liked not having to guess months before-
structures like Amazon’s readily available, they have hand what the firm’s hardware, storage, and network-
access to technical capability that was formerly avail- ing needs would be. AWS would provide whatever
able to only much larger businesses. Hi-Media is the Netflix needed at the moment. Netflix also maintains
Internet publisher of the Fotolog photo blogging web- a content-delivery network through Internet service
site. Hi-Media rebuilt the site and moved it to AWS providers and other third parties to speed up the de-
where it can easily scale computing capacity to meet livery of movies and web traffic between Netflix and
the demands of Fotolog’s 32 million global users who its customers. Netflix competes with Amazon in the
have collectively posted 1 billion photos and 10 bil- video-streaming business, and it wanted to retain con-
lion comments. trol of its own content delivery network.
Although cloud computing has been touted as a Dropbox, on the other hand, did the opposite.
cheap and more flexible alternative to buying and The online file hosting company saved nearly
$75 million in infrastructure costs over two years functions on private servers. Worries about reliabil-
following a cloud data migration off AWS. Dropbox ity, security, and risks of change have made it diffi-
had been an early AWS success story, but it had cult for them to move critical computing tasks to the
never run all of its systems on AWS. Dropbox had public cloud.
originally split its architecture to host metadata that Honda UK implemented the hybrid cloud model
provides information about other data in private to enable its IT infrastructure to handle sudden
data centers and to host file content on the AWS spikes in usage of its websites. The company had
Simple Storage Service (S3). Dropbox subsequently experienced sudden web server crashes due to band-
built systems better suited to its needs, which so far width limitations. Honda UK had initially moved
has produced big savings following its cloud data to a private cloud model, which was used during
migration off AWS. However, that transition was the launch of the Accord Tourer model to handle
costly. The company spent more than $53 million heavy user demand for its website. Honda UK then
for custom architectures in three colocation facili- started using the public cloud during the launch of
ties to accommodate exabytes of storage. Dropbox the Honda CR-Z. Honda UK had to pay for the cloud
stores the remaining 10 percent of user data on service only when the company used it. The pay-as-
AWS, in part to localize data in the United States and you-go model helped keep costs in check while en-
Europe, and it uses Amazon’s public cloud to help suring optimum scalability.
deliver its services. Experts believe that Dropbox’s
experience with AWS is not representative of most
companies. Dropbox’s strategy to build one of the
largest data stores in the world depended on owning Sources: Trevor Jones, “Dropbox Is Likely an Outlier with its Suc-
cessful Cloud Data Migration off AWS,” searchaws.com, February
its computing resources. 28, 2018; Andy Patrizio, “Cisco Says Almost All Workloads Will Be
Many large companies are moving more of their Cloud-Based Within 3 Years,” Network World, February 5, 2018; Tom
computing to the cloud but are unable to migrate Krazit, “Widespread Outage at Amazon Web Services’ U.S. East
Region Takes down Alexa, Atlassian Developer Tools,” GeekWire,
completely. Legacy systems are the most difficult to March 2, 2018; DasGupta, “A Case Study: How Hybrid Clouds
switch over. Most midsized and large companies will Should Be Done,” Cloudwards.net, January 21, 2018; Robert McMil-
gravitate toward a hybrid approach. The top cloud lan, “Amazon Grapples with Outage at AWS Cloud Service,” Wall
Street Journal, March 1, 2017; “AWS Case Study: Hi-Media,” www.
providers themselves—Amazon, Google, Microsoft,
aws.amazon.com, accessed May 14, 2017; and Kelly Bit, “The $10
and IBM—use their own public cloud services for Hedge Fund Supercomputer That’s Sweeping Wall Street,” Bloom-
some purposes, but they continue to keep certain berg Business Week, May 20, 2015.

CASE STUDY QUESTIONS

1. What business benefits do cloud computing 3. What kinds of businesses are most likely to benefit
­services provide? What problems do they solve? from using cloud computing? Why?
2. What are the disadvantages of cloud computing?