Strategic business challenges in cloud

International Journal on Cloud Computing: Services and Architecture (IJCCSA), Vol. 5, No. 4, August 2015
DOI : 10.5121/ijccsa.2015.5402 21
STRATEGIC BUSINESS CHALLENGES IN CLOUD
SYSTEMS
Dr. T. G. K. Vasista
Deanship of e-Transactions and Communications, King Saud University, Riyadh, KSA
ABSTRACT
For the past few years, the evolution of cloud computing has been potentially becoming one of the major
advances in the history of computing. But is cloud computing the saviour of business? Does it signal the
demise of the corporate IT functionality entirely? However, if cloud computing has to achieve its potential,
there is a need to have a clear understanding of various issues involved, both from the perspectives of the
providers and the consumers related to the technology, management and business aspects. Objective of this
research is to explore the strategic business, management and technical challenges existing in cloud
systems. It is believed that adopting a methodology and suggesting a corresponding architectural
framework would serve as a potential comprehensive conceptual tool, which shows path for mitigating
challenges and hence effort are put in bringing in by mentioning a suitable methodology and its brief
description. It concludes that International Business Machine Common Cloud Management Platform is one
way to realize the combined features of various models such as Hub & Spoke Model as a quality of
Governance model; Gen-Spec Research Methodology design for semantic and quality research studies into
one in the form of Reference Architecture. However in order to realize the full potential of the Customer-
Respond-Adapt-Sense-Provider (conceptual) methodology for dealing with semantics, it is important to
consider Internet of Things Architecture Reference Model where in the resources are translated into
Services.
KEYWORDS
Cloud Business Challenges; Cloud Business Estimates; Cloud Computing; Cloud Deployment Models;
IBM CCMP; Realizing CRASP methodology.
1. INTRODUCTION
For the past few years, the evolution of cloud computing has been potentially becoming one of
the major advances in the history of computing. However, if cloud computing has to achieve its
potential, there needs to have a clear understanding of the various issues involved, both from the
perspectives of the providers and the consumers of the technology. While a lot of research is
currently taking place in the technology itself, there is an equally urgent need for understanding
the business and management related issues surrounding cloud computing and its probable
mitigating solutions. Stakeholders in cloud computing include not only customers and providers
but also enablers and regulators [1].
A cloud computing strategy is about enabling business agility. Cloud computing can improve
flexibility, scalability and cost management. Businesses that are best able to realize the potential
will be able to establish a cohesive business strategy as cloud computing can transform the
organisation towards enterprise oriented functioning strategy with cost savings, optimized

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business processes [2] and improved controls and offers to develop new revenue streams, mission
critical service offerings and superior brand recognition [3].
2. OBJECTIVE
The Objective of this research effort is to explore the strategic business, management and
technical challenges existing in cloud systems. It is believed that adopting a methodology and
architectural framework would serve as a potential comprehensive conceptual tool, which shows
path for mitigating challenges and hence effort are put in bringing in by mentioning a suitable
methodology and its brief description.
3. CLOUD DEFINITION AND CLASSIFICATION
Cloud computing is an evolving paradigm. The NIST definition characterizes important aspects
of cloud and is intended to serve as a means for broad comparisons of cloud services and
deployment strategies. The services and deployment models defined from a simple taxonomy that
is not intended to prescribe or constrain any particular deployment, services delivery or business
operation. NIST defined cloud computing as a model for enabling ubiquitous, convenient, on-
demand network access to shared pool of configurable computing resources (e.g., networks,
servers, storage, applications and services) that can be rapidly provisioned and released with
minimal management effort or service provider interaction. This cloud model is composed of five
essential characteristics viz. (i) On-demand self-service (ii) Broad network access (iii) Resource
Pooling (iv) Rapid elasticity (v) Measured Service; three service models viz. (i) Software as a
Service (ii) Platform as a Service and (iii) Infrastructure as a Service; and four deployment
models viz. (i) Private cloud (ii) Community cloud (iii) Public cloud (iv) Hybrid cloud [4].
Gartner defines cloud computing as “a style of computing where massively scalable IT-enabled
capabilities are delivered ‘as a service’ to external customers using Internet technologies”. A
simple common-sense definition of cloud computing could be said as “anything but my assets”;
“anything but a PC”; “anything but a main frame” and as a movement of assets from bought and
implemented on-site to hosted, owned and provided by someone else has merit [5].
4. CLOUD BUSINESS SERVICE MODEL PERSPECTIVES
Adopting Cloud business model depicts a phenomenon of thinking on the decision making
towards owning an asset versus renting it.
Figure 1. A paradigm shift in conducting IT based business services [6]
Own it All Lease It Managed Hosting Cloud Computing
Lowest Cost
Reduce agility
Slowest Provisioning
Times
No elasticity
Higher Cost
Improved Agility
Slow Provisioning Times
6+ months time scale
Little to no elasticity
Higher Cost
Improved Agility
24-hour
provisioning
Monthly timescales
Minimal elasticity
Higher cost for static
Lower cost for
transient
Highest Agility
Immediate
Provisioning
High elasticity

23
A business is a capital asset, though it is more heterogeneous than land and real estate. A business
is durable and reproducible. It takes time to build. It has features to which a capital accumulation
model is applicable. Economically speaking, while supply view talks in terms of capital
investments, the demand view talks in terms of derivatives and adjustments and then there is a
difference between the adjustment of the technological asset and that of real estate assets. One
advantage with Cloud business model could be that the new discovery of knowledge can open up
new information or further development possibilities so that the demand for the original asset
value can keep increasing [7].
While SOA has been widely adopted, several organisations have yet to fully understand how it
can be fully leveraged to truly bridge the gap between business and IT. From a business
perspective, the focus has always been on maximizing value for the organisation. To accomplish
this, the organisation relies on IT to strategically automate business operations [8]. Cloud
computing as a business model describes a broad movement to treat IT services as a commodity
with the ability to dynamically increase or decrease the capacity to match the usage needs [49].
Cloud computing presents a compelling business model by leveraging share infrastructure and
economies of scale. It allows users to control the computing services they access, while sharing
the investment in the underlying IT resources among consumers [9]. Cloud service models try to
classify ‘anything’ that provider offer as a service (XaaS), where X means an arbitrary service
(e.g. infrastructure, platform, software, storage…). A cloud service model represents a layered
high-level abstraction of the main classes of services provided by the cloud computing model,
and how these layers are connected to each other [10].
Cloud computing employs a service-driven business model. Cloud offer services that can
be grouped into three categories: Software as a Service (SaaS), Platform as a Service
(PaaS) and Infrastructure as a Service (IaaS). The definitions posted by [11] through
techtarget.com web site are believed to provide value based knowledge content and are
given here:
4.1. Software as a Service
Software as a Service (SaaS) is a software distribution model in which applications are hosted by
vendor or service provider and made available to customers over a network, typically the Internet
on demand. SaaS technologies support Web Services and Service Oriented Architecture and
Ajax. SaaS is closely related to the Application Service Provider (ASP) and on demand
computing software delivery models. While the ASP model follows the hosted application
management model where a provider hosts commercially available software for customers and
deliver it over the web, the Software On Demand model follow the software distribution model
where provider gives customers network-based access to a single copy of an application created
specifically for SaaS distribution. Customers get the advantage of getting freed from software
administration, automatic and updates, patch management, version compatibility, global
accessibility [11]. Examples of SaaS providers include Salesforce.com, Rackspace and SAP
Business By Design [12].
4.2. Platform as a Service
Platform as a service (PaaS) is a cloud computing model that delivers applications over the
Internet. In PaaS mode, a cloud delivers hardware and software tools (such as operating system
support and software development frameworks) – usually those needed for application
development making it available to its users in the form of a service. A PaaS provider hosts the
hardware and software on its own infrastructure. As a result, PaaS frees users from having to
install in-house hardware and software to develop or run a new application [11]. Examples of

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PaaS providers include Google App Engine, Microsoft Windows Azure and Force.com [12],
VMware, CloudFoundary [6].
4.3. Infrastructure as a Service
Infrastructure as a Service (IaaS) is a form of cloud computing that provides virtualized
computing resources over the Internet. In IaaS model, a third-party provider hosts hardware,
software servers, storage and other infrastructure components on behalf of its users [11]. The
cloud owner is also called IaaS provider [12]. IaaS providers also host users’ applications and
handle tasks including system maintenance, backup and resilience planning. IaaS model offers
highly scalable resources that can be adjusted on-demand. This makes IaaS well-suited for
temporary or experimental or workloads. IaaS environments are characterized by automating
administrative tasks, dynamic scaling, desktop virtualization and policy-based services. This
model promotes and works on pay per use @hourly, weekly or monthly basis or it could be based
on amount of virtual machine space used by the customers. The users’ workload gets affected as a
cascaded result when IaaS provider experiences the downtime [11]. Examples of IaaS providers
include Amazon EC2, GoGrid and Flexiscale [12].
5. CLOUD BUSINESS SERVICE DEPLOYMENT MODELS
Four deployment models viz. Public cloud, private cloud, hybrid cloud [50] and community clod
are listed by NIST [15]. Some of the corresponding commercial products are also mentioned here
[51].
Table 1. Examples for the NIST Service and Deployment Models Matrix [6] [51]
5.1. Public Cloud
A cloud service provider makes applications and storage resources available to the generic public
over the Internet on a pay-as-you-go basis [15]. The benefit of offering public cloud is for the
purpose of eliminating the initial capital investment on infrastructure and shifting the risks
associated with it to infrastructure providers. Lack of fine-grained control over data, network and
security settings are some of the lacunas, which hampers the effectiveness in many business
scenarios [12]. A growing number of companies are providing public cloud computing services
such as Amazon, Google, Microsoft, Rackspace and GoGrid. These cloud providers offer a
variety of option in pricing, performance and feature set [16]. For example, the Amazon Elastic
Compute Cloud (EC2) allows users to rent virtual resources to run their own applications. EC2
SaaS PaaS Iaas
Public Cloud Salesforce.com,
QuickBooks Online,
Office 365
Google AppEngine, Microsfot
Azure, VMWare Cloud
Foundry.com
Amazon Ec2, Rackspace
Private Cloud Apprenda, Stackato VMware, Hyper-V,
OpenStack, CloudStack
Hybrid Cloud Custom Cloud Foundry Custom, Rackspace
Community
Cloud
NYSE Capital Markets
Community Platform
NYSE Capital Markets
Community Platform

25
runs within Amazon’s network infrastructure and data centers. It allows customers to pay only for
what they use with no minimum fee [15].
5.2. Private Cloud
A cloud infrastructure is operated solely for a single organisation’s internal use by itself or run
through outsourcing manner operating by third party [17]. Private Cloud refers to internal
datacenters of a business or other organisation, not made available to general public [18]. A
Private cloud offers the highest degree of control over performance, reliability and security [12].
But then up-front capital cost matters here. For example, Microft Azure enables customers to
build the foundation for a private cloud infrastructure using Window Server and System Centre
family of products with dynamic data centre tool kit [15].
5.3. Community Cloud
The cloud infrastructure is provisioned for exclusive use by a specific community of consumers
from organisations that have shared concern. It may be owned, managed and operated by one or
more of the organisations in the community, a third party or some combination of them and might
exist on or off premises [4]. For example, the Google GovCloud provides the Los Angeles City
Council with segregated data environment to store its applications and data that are accessible
only to the city agencies [15].
5.4. Hybrid Cloud
The cloud infrastructure comprises two or more clouds among private, public or community [15].
For example, In India, by building a hybrid cloud bridge between Eucalyptus (Private Cloud) and
Amazon Web Services (Public Cloud), customers gain the flexibility where to run workloads
ensuring reliability, scalability, high availability of citizen centric e-Governance services [19].
6. CHALLENGES IN CLOUD COMPUTING
Some of the business, technical and management challenges are discussed as below:
6.1. Business Challenges
IT departments face several business challenges today, which include the following:
High capital and operating expenditures and overhead caused by resource needs; low
responsiveness to business needs due to complex IT operations; complex configuration
difficulties; inefficient resource use in dedicated physical infrastructures, resource pool
customization; resource scaling; longer deployment times; difficulty in integrating elements of
cloud with other operating elements in the data centre that might demand higher operating
expenses [20].
6.2. Technical Challenges
IT departments face several business challenges today, which include the following:
Data Lock-in; resource exhaustion; Unpredictability of performance; Data transfer; Bottlenecks;
Bugs in large-scale distributed cloud systems [15].

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6.3. Management Challenges
A survey conducted by Accenture identified the following challenges [21] [15]:
Table 2. Cloud Management Challenges.
Sl. No. Management
Challenge
Challenge Description Mitigating Solution
1. Trust in data
security and
data privacy
Safeguarding data (i.e. data security) and
privacy as the top most challenge
Using domestic cloud
facilities; adopting new
security applications such
as encrypted file systems
and data-loss prevention
software; employing
hybrid clouds so that key
data is hosted and
managed internally and by
improving data
governance.
2. Managing the
contract
relationship
Customizing the compliance based cloud
standards to the specific needs to the client
might involve indirect breaches. Then
managing compensation to such breaches
of service level agreement becomes a
challenge. It could reflect as service
liability to the provider. As a result of
inadequate understanding of client’s
enterprise level requirements, cloud
service providers show uncertainty in
service compliance, which matches client
requirements
Use the collaborated
efforts of multiple cloud
providers for achieving
enterprise solutions;
engaging a service
integrator to perform
cloud service management
and contractual functions.
3. Technology
and
Institutional
Lock in
The usual practice of cloud business
vendors is to create a lock-in in terms of
providing specific branded technologies
and branded management consultancy
offers in order to encounter the business
competitors and to avoid the customer
switching play.
However offering
specialist services and
service integration
capabilities can help meet
these challenges
4. Organizational
inertia/Cultural
Resistance.
Command and control over business
services kind of culture might create an
organisational inertia and cultural
resistance and hence become service
delivery bottlenecks in terms of time,
which might lead the cloud customer to
feel impatience and experience unsatisfied
services with respect to breaching service
level agreements.
Adopting transparency,
explicit declaration &
evidence based formal
communication during
cloud service transaction
in addition to proper
planning, contracting and
management service, and
clarity in service level
agreement specifications
(through providing
suitable examples beside
every relevant
polymorphic terminology
used in service level
agreement)
5. Command and
Control
Strategy
On one side command and control strategy
helps to achieve the desired outcomes, it
might give an opportunity to develop and
evolve the strategic level breaching
attitudes against the compliance to the
enterprise standards thus reflects Loss of
governance.

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7. CLOUD BUSINESS TAXONOMY AS A METHODOLOGY PERSPECTIVE
Marxist-Leninist philosophy is the methodological foundation of all sciences, including medicine.
Doctors of all specialties can be provided with a unique universal outlook and scientific
methodology of knowledge. Knowing foundations of dialectic materialism is important for a
generic doctor by taking guidance from the general laws of the development of nature and
society, without which a doctor inevitably follows the path of prejudice that is often subjective
and superficial concepts concerning individual phenomenon with which the doctor comes in
contact in practical and scientific activity. It means, the conclusions for various problems studied
and deductions based on the results of an extensive experiment or practical observation may bear
a metaphysical or idealistic nature. So, the mission of any science including medicine should not
be limited by the description of facts or their constancy alone. Knowledge consists of not of facts
but of the results which stem from them. Dialectic materialism is a unique reliable weapon in
deriving the perception of truth, scientific worker and doctors can systematize, develop and
understand the regular bond between the individual facts and then correlated them. Through
knowledge, a skilful utilization of the laws and categories of materialistic dialectics and their
disclosure in the process of studying concrete science are of great importance on the activity of a
doctor. It helps doctor to lie on the correct path for searches and investigations and also on the
uniquely correct conclusions and deductions based on observations [22].
Taxonomy is an important phenomenon, which can be treated to be used as a methodology in
providing a solution approach. A fundamental problem in many disciplines is the translation of
classification of objects in a domain of interest into taxonomy. Developing taxonomy however is
a complex process [23].
Zach defined Business Taxonomy as the “controlled vocabularies used to describe or characterize
explicit concepts of information for the purpose of capture, manage and present” [24]. Taxonomy
can thus best be described as a hierarchy created according to data internal to the items in that
hierarchy [25]. The significance of having or defining taxonomy is not just for the sake of
classification but also for the purpose facilitating the find-ability. Taxonomy is expected to reflect
the key characteristics of Usability, reusability, intuitive and natural (e.g. the reflected output and
manifested results of Google Search Engine) [24]. It is a tree that reflects the kind-of pattern.
For example, earlier methods of performing research included visiting library, searching the racks
based on the keywords maintained through index cards, which are arranged either based on
alphabetical manner or based on library accession number for the purpose of obtaining the desired
content from the journal or books sources. Following this traditional process used to consume
approximately 15% to 35% of the time for searching the information and 40% of the corporate
users reported that they can find the information they need to do their jobs on their intranets [26].
The web has now become the primary source of information for many people. The web and
especially major web search engines are essentially tools in the quest to locate online information
for many people. Over 80% of web searchers use web search engines to locate online information
or services [27].
It is evident that Google kind of search engines are used for the purpose of retrieving a high
proportion of relevant, precise, good quality result set oriented and unique documents [28]. The
library data bases do not allow to type long search phrases however might fetch the better quality
relevant content from the cluster of relevant journal from relevant databases. But then
subscription amount to such library research databases matter right? The preference of using
Google kind of search engines over library databases is not only from the subscription based
restriction point of view but also from the view point of capability of fetching the relevant content

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based on typing the long search phrases [29]. It is evident from the research conducted by [30],
why online search based research is highly significant for fetching the user-centric solutions for
scholarly research as compared to do traditional way searching for them by physically accessing
the library premises. This survey revealed the factors for users’ preferences as: convenience
(84%); easier to use (87%); faster (90%); cost effective (71%) and reliable (63%) than traditional
library access based searching. Bughin et al. (2011) [31] reported how internet technologies
provide better search value benefits and its comparable economic value across few countries.
Thus electronic resources save time in looking up for information and retrieving information
based on providing relevant keyword search. So the summary finding of positive and negative
sides of using such electronic resources among student community is mentioned in [32]
document. ICT resource do not only save time in searching process of the content but also allow
reduction in learning time [33].
Thus the even the Ph. D oriented academic researches which were planned to consume 5 years is
now reduced to 3 years. But with the Google kind of Search Engines, web information
dissemination and access has become easy and hence most of the universities across the world are
mentioning that their Ph. D programs can be completed by scheduling them to be with a
minimum duration of completion to as low as two years (e.g. University of Lincoln; Ph. D.
programs in Singapore; Trinity College, Dublin; University of Southampton etc.).
Taxonomy consists of three fundamental different parts: (i) Representation, which consists of
nominal, reproducible statements; (ii) Ordering, which is a logical, verifiable science and (iii)
Nomenclature, which is largely guided by practical application [34].
So, the normal Google search engines can now be enhanced with semantic search capabilities for
fetching the context-driven result set based on the long keyword phrases given.
“Enterprise information access technologies are maturing and now offer better indexing,
querying, presentation and drill-down of results. However, the real value of information access
technologies is the upfront and ongoing efforts needed to establish effective taxonomies, to index
and to classify content of all kinds in order to provide meaningful results [48]. By itself, the
search function has limited value” [35]. The dynamic summaries feature of such semantic
interface engines enhance search results by highlighting the evidence found during the
classification process- that is – the preferred term, synonyms and related topics are highlighted in
the search results [35, p. 12].
The recent manifestation and realization of such web based activities have been available in the
form of web services to the user. Web services provide a new model of the web in which sites
exchange dynamic information on demand. This kind of change is especially important for the e-
business community, because it provides an opportunity to conduct business in a faster way and
more efficiently. Indeed, the opportunity to manage supply chains dynamically to achieve the
greatest advantage on the market is expected to create great value addition and increased
productivity. However achieving automatic management of supply chain opens new challenges
viz. (i) web services should locate other services that provide a solution to their problem (ii)
services should interoperate to compose complex services [36]. Given, the dynamic environment
in e-businesses, the power of being able to find webs services on the fly to create business
processes is highly desirable. A key step in achieving this capability is the automated discovery of
web services [47]. Though UDDI can enable to provide the dynamic capability of automated
discovery of web services, however lack of semantics in the discovery process less effective even
though the UDDI based interface can be used for keyword and taxonomy based searching. The
key to semantic discovery of web services is to have semantics in the description itself and then
using semantic matching algorithms to find the required services. Ontologies have been identified

29
as the basis for semantic annotations that can be used for discovery [37]. It means while the use
of taxonomy focuses on the controlled vocabulary that refers to its structural arrangement, the
term knowledge base relates to both structure and data; then the term ontology is related to
controlled vocabulary, relationships, process and methodology [38]. Thus structures, processes,
relationships, methodology, data and interface constitute to contribute in fetching the mostly
desired semantic information.
8. CONCLUSION
Thus Hub & Spoke Model as a quality of Governance model [39]; Gen-Spec Research
Methodology design for semantic and quality research studies [40] are then becoming prospective
frameworks, which are having potential to explain the phenomenon of dialectic materialism
concept, where dialectic materialism can be treated as a representation of object from which a
number of dialects of objects can be instantiated (as forms based on taxonomy) for reflecting
expressions with their corresponding specific bounded values.
For example CRASP management methodology developed by [41] in passing is based on the
basic premise of strategic sense-and-respond paradigm can also be made applicable to real-world
security with a modified view by including both customer perspective and provider perspective to
the generic business model suggested by [42]. The objective of adopting CRASP methodology is
to offer the satisfying features such as security, suability, flexibility (adaptability) and cost
efficiency [43]. Underlying the trend toward this sense-and-respond technology is the identity of
giving IT systems a deeper understanding of the semantics [44].
IBM CCMP (Common Cloud Management Platform) is one way to realize the combined features
of all the above mentioned models into one in the form of Reference Architecture (i.e. CCMP
RA). CCMP RA is a cross-IBM effort for an RA enabling cloud economics by optimizing
resource and labour utilization, and delivering the foundational cloud management infrastructure
for both private and public clouds [2] and in specific it could refer to IBM Reference Architecture
for Business Management [45].
However in order to realize the full potential of the CRASP (conceptual) methodology [41] which
includes the concept of dealing with semantics, it is important to consider IoT Architecture
Reference Model where in the resources are translated into Services. Resources are software
components that provide some functionality (it could associate with sensors and actuators).
Services provide the link between the IoT aspects of a system and other, non-IoT specific parts of
an information system, like e.g. various enterprise systems; IoT related services and non-IoT
services can be orchestrated together in order to form a complete system [46].
ACKNOWLEDGEMENTS
The author would like to thank everyone at King Saud University, Riyadh, KSA.
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AUTHORS
Dr. TGK Vasista is currently working as Faculty of e-Transactions and Communications
at King Saud University, Riyadh, KSA. He obtained a Doctorate in Information
Technology, Commonwealth of Dominica, a Post-Graduate Diploma in E-Governance
from University of Mysore, India, a Master of Business Admonition (e-Business) from
Wevac University, USA, and Master of Engineering in Computer Aided Design from
University of Roorkee (Now called IIT-Roorkee), India. He has former experiences in
Research in the fields of e-Business and e-Governance in Saudi Arabia, as a senior
Lecturer/Asst. Professor in academic field in the area of Systems and IT, E-Business
and E-Governance in India and Libya and as programmer analyst in the IT industry in India and USA.

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