Chapter 3 Effects of IT on Strategy and Competition

Chapter 6The CloudJason C. H. Chen, Ph.D.Professor of MISSchool of Business AdministrationGonzaga UniversitySpokane, WA 99258chen@gonzaga.edu1Dr. Chen, Management Information Systems 1Study QuestionsQ1: Why is the cloud the future for most organizations?Q2: What network technology supports the cloud?Q3: How does the cloud work?Q4: How do organizations use the cloud?Q5: How can AllRoad Parts use the cloud?Q6: How can organizations use cloud services securely?Q7: 2025?2Dr. Chen, Management Information Systems Q1: Why Is the Cloud the Future for Most Organizations?The CloudElastic leasing of pooled computer resources via InternetElasticLeased computing resources, dynamically increased/decreased, programmatically, organizations only pay for resources actually usedFlexibility for unpredictable demand while limiting financial risks3Dr. Chen, Management Information Systems 3PooledCloud resources pooled Many organizations share same physical hardware through virtualizationBenefit from economies of scaleAverage cost of production decreases as size of operation increasesMajor cloud vendors operate enormous data centers (Web farms)4On markets the consumers usually _____" the goods or information they demand for their needs, while the offerers or suppliers _____" them toward the consumers.Dr. Chen, Management Information Systems

Cloud Computing ServicesDr. Chen, Management Information Systems 5Three main Categories of Cloud Computing Services__________ as a service (SaaS) is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. It is sometimes referred to as "on-demand software_________ as a service (PaaS) is a category of cloud computing services that provides a platform allowing customers to develop, run, and manage web applications without the complexity of building and maintaining the infrastructure typically associated with developing and launching an app_____________ as a Service (IaaS) is a form of cloud computing that provides virtualized computing resources over the Internet.6Dr. Chen, Management Information Systems Q4: How Do Organizations Use the Cloud?Three Fundamental Cloud Types

7Fig 6-16 Three Fundamental Cloud TypesDr. Chen, Management Information Systems Why Now?Time-sharing vendors sold slices of computer time on a use-fee basis since 1960sCloud-based hosting advantages Cheap processors, essentially free data communication and data storageInstantaneous creation of new virtual machine environmentsInternet-based standards enable cloud-hosting vendors to provide flexible, standardized processing capabilities8Dr. Chen, Management Information Systems When Does the Cloud Not Make Sense?When law or standard industry practice require physical control or possession of the data.Financial institution might be legally required to maintain physical control over its data.9Dr. Chen, Management Information Systems

http://www.salesforce.com/cloudcomputing/?fromSearch=true103m17sDr. Chen, Management Information Systems SIDITA gives a BRIEF overview (prior to video)

-- CLOUD" is used as a metaphor for the Internet. Major cloud service providers include Microsoft, Salesforce, Amazon, and Google.

-- Frequently takes the form of web-based tools or applications that users can access and use through a web browser as if it were a program installed locally on their own computer. (SaaS) Common business applications often include data stored on external servers (IaaS). A key element of cloud computing is customization and the creation of a user-defined experience (PaaS).

SHOW VIDEO http://www.youtube.com/watch?v=ae_DKNwK_ms&feature=related

10Topics in NetworksThree popular networksLANLocal Area NetworkMANMetropolitan Area NetworkWANWide Area NetworkInternetWAN is the focus for this chapterDr. Chen, Management Information Systems Q2: What Network Technology Supports the Cloud?

12Dr. Chen, Management Information Systems Computer network - a collection of computers that communicate with one another over transmission lines or wirelessly.12LAN ProtocolIEEE 802.3Wired LAN10/100/1000 Mbps EthernetIEEE 802.11Wireless LAN802.11nUp to 600 MbpsBluetooth

802.11ac - speeds up to 1.3 GbpsBluetooth For transmitting data short distancesConnect computer, keyboard, mouse, printer, smartphones, automobile entertainment systems13Dr. Chen, Management Information Systems 1314

SSH File Transfer Protocol (also Secure File Transfer Protocol, or SFTP) is a network protocol that provides file access, file transfer, and file management over any reliable data stream. It was designed by the Internet Engineering Task Force (IETF) as an extension of the Secure Shell protocol (SSH) version 2.0 to provide secure file transfer capabilitiesFileZilla: Protocols Supporting File Transmission (FTP)Dr. Chen, Management Information Systems Simple Mail Transfer Protocol (SMTP) is an Internet standard for electronic mail (email) transmission.

14Abbreviations Used for Communications and Computer Memory Speeds Communications equipment, k = 1,000, not 1,024 as for computer memoryM = 1,000,000, not 1,024 1,024; G = 1,000,000,000, not 1,024 1,024 1,024. Thus, 100 Mbps =100,000,000 bits per secondCommunications speeds expressed in bits; however, computer memory sizes expressed in _____ 15Dr. Chen, Management Information Systems 15Fig 6 (extra): Local Area Network (LAN)What are the components of a LAN?

A media access control (MAC) address (physical addresses) serves as a unique identifier for each NIC (Network Interface Card) on a LAN.A switch is a special-purpose computer that receives and transmits messages to computers in the LAN.Media access control (MAC) address serves as a unique identifier for each NIC on a LAN.MAC and IP addresses will be discussed in the next section.Dr. Chen, Management Information Systems IEEE 802.11 wireless protocol uses wireless NICs (WNIC) to connect devices to networks similar to how wired NICs operate.Figure depicts a combination of NICs and WNICs on a LAN.Access points (AP) use 802.3 protocol to communicate with a switch and 802.11 protocol to send and receive wireless traffic.Wireless Connections:What Are the Components of a LAN?

LAN with Wireless17Dr. Chen, Management Information Systems Connecting personal computers to an ISP requires that digital signals coming out of the computer are converted to analog signals. Analog signals coming into a personal computer must be converted to digital signals.

Comparison of digital and analog signals.

Connecting to the Internet

Fig 6-Extra Analog Versus Digital Signals18digital signal (0/1)analog signal (wavy)Dr. Chen, Management Information Systems What are the alternatives for a WAN?How Does the Cloud Work?Fig 6-Extra Personal Computer Internet Access and Fig 6-7 Using the Internet for a Hotel Reservation

Modems are used to convert the signals back and forth as shown in the figure below.

19

digital signalanalog signalThe cloud resides in the Internet

You are in SpokaneDr. Chen, Management Information Systems MAC addressesPhysical addressesEach NIC (Network Interface Controller) card given an address by manufacturerAddress only shared within network or segmentIP addresses________ addressesWritten as series of dotted decimals192.68.2.28Not permanently associated with hardware deviceCan be reassigned as necessaryAssignment controlled by ICANN (Internet Corporation for Assigned Names and Numbers)

Network Addresses: MAC and IP20Dr. Chen, Management Information Systems 20Public IP Addresses and Domain NamesIPv4Four decimal dotted notation ==> 165.193.123.253URL - ________ _______ ______User-friendly document Web addressInternet address using a protocol, such as http:// or ftp://Domain nameWorldwide-unique name affiliated with a public IP addressURL: http://www.example.net/home.htmlTop-level domain name: netSecond-level domain name: exampleHost name: www21Dr. Chen, Management Information Systems Most common IP addresses format is IPv4.ICANN administers system for assigning names to IP addresses. Domain name a worldwide-unique name affiliated with a public IP address. Affiliation of domain names with IP addresses is dynamic. Owner of domain name can change affiliated IP addresses at its discretion.URL consists of a protocol (like http:// or ftp://) followed by a domain name or public IP address.21What Is Service-Oriented Architecture (SOA)?Web serviceEncapsulated software service provided anywhere over the InternetNo department needs knowledge of who works in another department, or how it accomplishes its work.Each department free to change personnel task assignments, change processes for performing its servicesService description documents how to use service, and publishes description using Web Service Description Language (WSDL)Used by SAP, Oracle ERP22The cloud would be impossible without a design philosophy of ________.Dr. Chen, Management Information Systems 22SOA Analogy: Approval Request Interactions Among Three Departments

CheckCustomerCredit ApproveCustomerCredit VerifyInventoryAmount AllocateInventory ReleaseAllocatedInventory23Using SOA principles, each department would formally define the services that it provides.For the Credit Department:For the Inventory Department:Each department formally states data it expects to receive with request and data it promises to return in response.Every interaction is done exactly same wayFig 6-12 Approval Request Interactions Among Three DepartmentsDr. Chen, Management Information Systems 23What Processing Occurs on a Typical Web Server?Almost all e-commerce applications use the three-tier architecture, which is an arrangement of user computers and servers into three categories, or tiers (see Fig. 6-10).User tier: consists of computers, phones, and other devices that have browsers that request and process web pages.(Web)Server tier:consists of computers that run Web servers and process application programs.Database tier:consists of computers that run a DBMS that processes requests to retrieve and store data.Dr. Chen, Management Information Systems 24SOA Principles Applied to Three-tier ArchitectureServicesObtainPartDataObtainPartImagesObtainPartQuantityOnHandOrderPart

JavaScript written to invoke these services correctly.

25Fig 6-13 SOA Principles Applied to Three-Tier ArchitectureUser TierWhat is the main advantage?Dr. Chen, Management Information Systems Commerce server application formally defines services browsers can request, data they must provide with the request, and data each will receive in response to request.Organization must agree on standard ways of formatting and processing service requests and data.25Q6: How Can Organizations Use Cloud Services Securely?Fig. 6-20 Remote Access Using VPN: Actual Connections

26Virtual Private Networks (VPNs) create the appearance of private point-to-point connections by using tunnels to create virtual, private pathways over the Internet.Figure below shows connections a VPN uses.The cloud resides in the InternetDr. Chen, Management Information Systems VPN uses public Internet to create appearance of a private connection on secure network.26Fig 6-Extra: WAN Using VPNWhy Do Organizations Use Virtual Private Networks?

This figure shows how a WAN uses three different VPN tunnels to connect geographically separated users. 27 Secure but costly !!!The cloud resides in the InternetDr. Chen, Management Information Systems

Using Web Services InternallyWhat is the difference between this and the next one?28Fig 6-19 Web Services Principles Applied to Inventory ApplicationsDr. Chen, Management Information Systems Web services inventory application at AllRoad Parts.This is not a cloud.28Private Cloud for Inventory and Other Applications

29Dr. Chen, Management Information Systems 29Private Cloud for Inventory and Other Applications

30User TierDr. Chen, Management Information Systems 30Q7: 2025Cloud services faster, more secure, easier to use, cheaperFewer organizations set up own computing infrastructureMore pooling of servers across organizationsMore economies of scale achieved by cloud vendorsIndividuals, small businesses, large organizations readily obtain elastic resources at very low costEverything will be connected to everything else, with most data stored in the cloudLarge server farms employing few employees reduces number of small companies that install and maintain in-house email exchanges and other servers, and jobs.31Dr. Chen, Management Information Systems Absent some unknown factor such as a federal tax on Internet traffic.Individuals on iCloud or Google Grid, to small groups using Office 365, to Small companies like AllRoad Parts using PaaS, to huge organizations using IaaS.

31Q7: 2025 (cont'd)Cheap, elastic cloud services enable new small startupEnable organizations to develop more information systems, cheaply, quickly, and increase demand for employees who know how to use and manage information systemsNew categories of workMobile systems will be standard More remote action systemsTelediagnosisTelesurgeryTelelaw enforcementDrones and other military equipment Live remote digital broadcasting

32Dr. Chen, Management Information Systems Individuals on the iCloud or Google Grid, to small groups using Office 365, to Small companies like AllRoad Parts using PaaS, to huge organizations like NASDAQ OMS (Case Study 6) using IaaS

32END of CHAPTER 133Dr. Chen, Management Information Systems