University of the East - Manila

College of Business Administration

In Partial Fulfillment of the Requirements for the subject

Cloud Computing

Submitted by:
Balico, Kathleen Claire
Cruz, Jhon Clyde L.
Dimaunahan, Katherine Marie
Endaya, Christine
Tan, Wendy Louise B.

Submitted to:
Prof. Lindley Jan P. Mesina

August 2020
A. Introduction and Nature

In this contemporary world, the business industry continues to adapt to changes brought by the

unending evolution of technologies in order to expand globally, bring ease and convenience and

cater the needs of their customers all over the world.

the Internet, computing resources have become cheaper, more powerful and more ubiquitously

available than ever before. As a consequence, IT service providers are faced with challenges of

expanding the structures and infrastructures with small expenditure in a short span of time in order

to provide rising demands from their customers. To address these business challenges, cloud

computing architecture was developed (Jouini et al.,2012).

Cloud computing is the on-demand delivery of IT resources such as compute, databases,

and storage via the Internet with pay-as-you-go pricing. Instead of buying, owning, and maintaining

physical data centers and servers, one can access technology services, such as computing power,

storage, and databases, on an as-needed basis from a cloud provider like Amazon Web Services

(What is cloud computing, 2019). In this technology, end users avail themselves of computing

resources and services as a public utility, rather than a privately run small scale computing facility.

In the same way that we use electricity as a public utility (rather than build our own generators),

and that we use water as a public utility (rather than dig our own well), and that we use phone

service as a public utility (rather than build and operate our own cell tower), we want to use

computing services as a public utility. Such a service would be available to individuals and

organizations, large and small, and would operate on the same pattern as other public utilities,

namely:

● Subscribers sign up for service from a service provider, on a contractual basis.

● The service provider delivers services of data processing, data access and data storage

to subscribers.

● The service provider offers warranties on the quality of services delivered.

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It offers the usual advantages of public utilities, in terms of efficiency (higher usage rates

of servers), economies of scale (time sharing of computing resources), capacity (virtually unlimited

computing power, bounded only by provider assets rather than by individual user assets),

convenience (no need for users to be computer-savvy, no need for tech support), dependability

(provided by highly trained provider staff), service quality (virtually unlimited data storage capacity,

protected against damage and loss). Like traditional computing environments, cloud computing

brings risks like loss of security and loss of control. Indeed, by trusting its critical data to a service

provider, a user (whether it is an individual or an organization) takes risks with the availability,

confidentiality and integrity of this data. In addition to that, the aim of Cloud computing is to deliver

its applications and services to users through the internet and therefore it is prone to various kinds

of external and internal security risks such as denial-of-service (DoS) and distributed denial-of-

service (DDoS) attacks that affect especially the subscriber’ data (Jouini

et al.,2012).

As cloud computing has grown in popularity, several different models and deployment

strategies have emerged to help meet specific needs of different users. Each type of cloud service,

and deployment method, provides different levels of control, flexibility, and management. There

are three main models for cloud computing. Each model represents a different part of the cloud

computing stack.

● Infrastructure as a Service, sometimes abbreviated as IaaS, contains the basic building

blocks for cloud IT and typically provides access to networking features, computers (virtual

or on dedicated hardware), and data storage space. Infrastructure as a Service provides

you with the highest level of flexibility and management control over your IT resources and

is most similar to existing IT resources that many IT departments and developers are

familiar with today.

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 ● Platforms as a service remove the need for organizations to manage the underlying

infrastructure (usually hardware and operating systems) and allow you to focus on the

deployment and management of your applications. This helps you be more efficient as you

don’t need to worry about resource procurement, capacity planning, software

maintenance, patching, or any of the other undifferentiated heavy lifting involved in running

your application.

● Software as a Service provides you with a completed product that is run and managed by

the service provider. In most cases, people referring to Software as a Service are referring

to end-user applications. With a SaaS offering you do not have to think about how the

service is maintained or how the underlying infrastructure is managed; you only need to

think about how you will use that particular piece of software. A common example of a

SaaS application is web-based email where you can send and receive email without having

to manage feature additions to the email product or maintaining the servers and operating

systems that the email program is running on.

Understanding the differences between Infrastructure as a Service, Platform as a Service,

and Software as a Service, as well as what deployment strategies one would use, can be helpful

in deciding what set of services is right for one’s needs. (What is cloud computing, 2019)

B. Impact to Business Organization

Cloud Computing provides an interactive and user-friendly platform where the customers

can access their required services over the web, it is like using web applications.

In today’s competitive world cloud computing has played a vital role for the business, they

have found cloud computing as an innovative technology which lets them stay competitive among

other organizations in the market. Cloud computing has proved that it can provide the resources

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which the traditional IT solution model couldn’t provide. The cloud service providers should place

the safety of cloud computing services in the first place and take good safety measures.

Ease of use and convenience

Small business employees often work outside the actual office location and hence

having easy access to their data using their mobile devices. This need for employees to have

access from remote locations as well as the increasing number of online transactions

necessitates a cloud computing solution. Accounting and finance work has been outsourced

to the cloud, leaving more time for small business executives squander on strategic work and

initiatives. (Devasena, 2014)

The users of the cloud can access the services of the cloud anytime anywhere from a

variety of devices. Whenever they have the working internet connection, they can login and

use the services. This benefit of cloud computing provides a flexible work culture to the

employees and they can perform their duties from anywhere without the need to be physically

present at the business headquarter. (Dar, 2018)

● Cost reduction

Due to the subscription model, there is a huge cost savings for small firms. The access

cost for small firms utilizing business analytics and intelligence, which needs lots of computing

power consumption, has been lowered. Due to the per user revenue model, small businesses

could afford enterprise applications like CRM (Customer Relationship Management) or SCM

(Supply Chain Management) tool. Computing power is nowadays considered as an article of

trade, due to the entry of various players, providing it at an inexpensive cost. Small businesses

and startups can now afford applications such as ERP (Enterprise Resource Planning), CRM

(Customer Relationship Management), SFA (Sales Force Automation) and SCM (Supply

Chain Management) due to economical subscription fees. Immediate access to hardware and

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software resources is available with no upfront capital investments resulting in faster time to

market, with IT become an operational expense.

Because of the detailed advantages, there are usually significant cost savings

recognized from cloud computing. Cloud computing is usually a pay for service model. In other

words, a company pays the cloud provider only for the level of services it actually uses. The

scalability of the cloud means that the company no longer needs to maintain an IT system

large enough for the peak demand periods. Cloud computing also allows a company to reduce

its investment in IT hardware and the personnel needed to support IT hardware. This

eliminates the financial risk, because the user company avoids making a significant up front

financial investment in technology related resources that may have uncertain returns.

● Reliability

Since the cloud is available round the clock, it is more reliable. Employees can even

call up the cloud center instead of depending on the in-house IT staff. Data redundancy is built-

in by cloud storage solutions so that the files are always obtainable, even in times of network

downtime, power failures, etc.. As the services of cloud is available all the time and can be

accessed anywhere. Also, the backup and recovery management make this

technology more reliable.

● Security and privacy

Organizations talking about cloud security are actually more concerned about having

their own control than any other serious issue. Cloud security is good, as risks get minimized

due to authentication and encryption. Security is heightened by, for example, monitoring

activities, tracking transactions providing selective access to users, and utilizing strong

password. Installation of security patches can be avoided in this manner days and months are

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saved. Improved security is possible due to economies of scale as well as affordability of

excellent security experts. Even if data security is the main issue for SMBs, they still utilize

public clouds, because a public cloud provides standard services at reasonable cost.

Sharing and collaboration

With the proliferation of social media and smartphones or mobile devices, startups and

small companies have improved collaboration within their companies. Cloud file storage allows

various SMBs stakeholders to share information and data via emails, shared web-links,

IM-instant messengers, store and retrieve information with each other. Google Apps, box and

Jive are very good examples of sharing content and collaboration among stakeholders. Large

data are being shared and collaboration with other CSE (Computational Science and

Engineering) research groups is enabled. Collaboration becomes easier with instant

messaging and video conferencing, enabled via the cloud. Document sharing and editing of

the same document by several people at the same time (via Google Docs) and collaboration

(via Skype, Google chat) is compelling for users to adopt cloud computing. (Devasena., 2014)

Cloud computing improves communication and collaboration among employees by

having access to instant messaging, conferencing and video conferencing options. They can

jointly work on documents and projects ensuring higher cohesion and team work. This is

possible because of data centralization and updating of cloud servers in real time.

● Unlimited scalability

This is the major benefit of cloud technology as the client has the flexibility to scale up

or scale down as per the needs of the organization. The companies do not need to worry about

the future demands as they can easily acquire the additional services anytime. Also, if a

business grows over time, the cloud can scale effortlessly to meet the increased demand over

time.

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 As a company grows, it can easily purchase new capacity from the cloud provider. It

need not buy servers or new data storage, as the cloud provider already has the capacity. This

scalability is also a tremendous advantage for spikes in business activity. If a company has a

large increase in business volume during certain seasons, it can easily scale up the capacity

purchased from the cloud provider. When the seasonal volume declines, it then easily scales

down the services it buys from the cloud provider.

● Flexibility

Cloud computing provides a lot of flexibility to its clients. There is an easy testing and

deployment of the services over cloud. The customers are free to decide which services they

need and pay for accordingly. The cloud services can better meet the changing business

demands by providing various services. If any application provided by the cloud is not getting

our job done, we have the flexibility to switch to another cloud.

● Increased storage

Some cloud providers offer the Storage as service to its customers. Companies can

store a lot more data on the cloud than their local devices. If business grows and demands

more storage, companies effortlessly scale up and get more storage from the cloud provider.

Once the software and data are stored in the cloud, it can be accessed by multiple

devices from many different locations. This gives the company much more flexibility for those

who use or enter the accounting data. It also makes it easier for users to start up new

computing capabilities.

● Easier upgrade

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It is the responsibility of the cloud providers to upgrade the infrastructure and services

for their customers. The new business trends and solutions are made available to the clients

by cloud providers to compete in the business market by adopting latest technologies. The

cloud providers maintain the system by doing different software and security updates.

Disaster recovery

Companies using cloud services need not to frame the complex disaster or failure

recovery plans as the service providers take care of such issues and put the clients out of the

trouble in a fast manner.

Challenges on Cloud Computing

A company must recognize the risks associated with cloud computing. When examined

from its simplest perspective, cloud computing is the outsourcing of IT infrastructure, data, and

software to a third party. Although the advantages are noteworthy, control of the company’s data

and software is transferred to the third party cloud provider. The user company must trust that the

provider will keep the data secure and confidential. Similarly, the user must also trust that the

provider will not have interruptions in service breakdowns.

The business organization adopting cloud technology will undergo a lot of changes in the

internal working, mission, funding and staff etc. As the business is moving to the cloud, there will

be new challenges for administration and the operational staff. There will be new security and

privacy challenges as the data is stored on a remote server. The employee of the company should

be happy and confident of the new technology to explore the advantages and overcome the issues.

The overall organizational setup will change and the employees at different levels should welcome

this positive impact to achieve the new business heights.

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 Before migrating to cloud, the business organization also needs to keep in mind the

different legal and regulatory issues. These laws ensure the commitment and responsibility of both

clients and tenants. In few countries of the Europe, Government regulations cannot allow the

personal data of customers or other sensitive information to be physically store outside country.

The need to build exclusive centers may not be feasible for the cloud providers and may prove a

big challenge for them. If sensitive data is not protected and some leakage occurs, then the defined

laws and regulations will decide who is responsible for the fault and how to compensate. (Dar,

2108)

C. Cloud Computing Management

Cloud Management is the process of maintaining oversight and administrative control of

cloud computing products and services, whether deployed in public, private, or hybrid cloud

environments. The practice of cloud management combines different software products and

technologies together to provide a cohesive management strategy and process. Information

Technology organizations are increasingly choosing to reduce their up-front investments in IT

infrastructure by deploying their applications into cloud environments. These environments offer

on-demand availability of data storage and computing power that organizations need to handle

high volumes of data and fluctuating or growing demand for application access and services.

(Sumo Logic, 2019)

Before we delve into the Cloud Computing Management Tasks, it is necessary to understand the

three common deployment models for cloud computing services:

A. Public Cloud - services are rendered by third-party providers over a network open for public use

where the purchaser share the same hardware, software, and network devices with other clients

of the same provider. In a public cloud, the cloud from a third-party provider will be the one

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assuming the costs and the maintenance of the whole infrastructure. As a client who is paying

for this service, the client have no responsibilities over the management of the cloud – its only

role is to store data, and pay for the services provided .Out of all cloud deployment models,

public clouds are the most appealing in terms of investment, as there is no need to invest in

expensive IT resources. Some of the companies that provide public cloud services include

Amazon Web

Services (AWS), Oracle, Microsoft, and Google.

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B. Private Cloud – It refers to a cloud deployment model operated exclusively for a single

organization, whether it is physically located at the company’s on-site data center, or is

managed and hosted by a third-party provider. In this cloud deployment, resources are not

shared with other organizations, but this also means that the company using it is entirely

responsible for its management, maintenance, and regular updates – which can also get

significantly more expensive than public ones. Because this cloud deployment model is only

accessible by a single company, there are less security concerns as all data is protected behind

a firewall. Some thirdparty providers of private clouds include Microsoft, Apache, and

OpenStack.

C. Hybrid Cloud - It is a combination of private and public cloud deployment models that are bound

together to provide the benefits of both infrastructures to the company using them. By using

this, organizations are capable of moving data and applications between private and public

clouds depending on their purposes. Some hybrid cloud providers include Microsoft, Amazon

Web Services, VMware, Google and RackSpace. (Cloud Worldwide Services, 2018)

Cloud Computing Management is accountable to supervise resources and their

performance. These resources include several aspects of cloud computing such as load

balancing, performance, storage, backups, capacity and deployment .The management is

essential to access full functionality of resources in the cloud. (Tutorials Point, 2014)

Cloud Management Tasks

The following are cloud provider’s tasks to ensure efficient use of cloud resources:

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 ● Audit System Backups

It is required to audit the backups timely to ensure restoring of randomly selected files of

different users. It can be performed by the company, from on-site computers to the disks that

reside within the cloud. It can also be accomplished by the cloud provider. If the cloud provider

has encrypted the data, it is important to know who has access to that data and if the backup is

taken at different locations then the user must know the details of those locations. (Tutorials Point,

2014)

● Data Flow of the System

The managers are responsible to develop a diagram describing a detailed process flow.

This process flow illustrates the movement of data belonging to an organization throughout the
cloud solution. It also provides in-depth information and help in understanding the system that will
help to identify shortcomings, inefficiencies, and mistakes.

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 Vendor Lock-In Awareness and Solutions

The Vendor Lock-in problem in cloud computing is the situation where customers are

dependent on a single cloud provider technology implementation and cannot easily move in the

future to a different vendor without substantial costs, legal constraints or technical

incompatibilities. (Journal of cloud computing, 2016)

For this reason, the managers must know the procedure to exit from services of a

particular cloud provider. The procedures must be defined to enable the cloud managers to export

data of an organization from their system to another cloud provider.

● Knowing Provider’s Security Procedures

The managers should know the security plans of the provider for the following services:

a. Multitenant use - a single instance of the software and its supporting infrastructure

serves multiple customers. (Data Insider, 2020)

b. E-commerce processing- is the process of buying and selling of products or services,

making money transfers, and transferring data over an electronic medium (Internet).

(Shiprocket,2018)

c. Employee screening includes reference and credit checks, background checks, and

physical/drug testing. (Cambridge Dictionary, 2020)

d. Encryption policy define when encryption should or shouldn't be used and the encryption

technologies or algorithms that are acceptable. (Littlejohn Shinder, Michael Cross, The

Scene of the Cybercrime 2nd edition, 2018)

● Monitoring Capacity Planning and Scaling Capabilities

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 The managers must know the capacity planning in order to ensure whether the cloud

provider is meeting the future capacity requirement for his business or not. As for the scaling

capabilities, it must also be regulated in order to ensure services can be scaled up or down the

cost of process as per the user's needs. (Tutorials Point,2014)

● Monitor Audit Log Use

From a security point of view, the purpose of a log is to act as a red flag when something

bad is happening. Reviewing logs regularly could help identify malicious attacks on your system.

In order to identify errors in the system, managers must audit the logs on a regular basis. (Tutorials

Point, 2014)

● Solution Testing and Validation

Validation refers to the process of checking that a software system meets specifications

and that it fulfills its intended purpose. Properly capturing validation documentation is key for

deploying cloud-based solutions. (Pharmaceutical Commerce, 2017)

The cloud provider offers a solution, it is essential to test it in order to ensure that it gives

the correct result and it is error-free. This is necessary for a system to be robust and reliable.

(Tutorials Point, 2014)

D. Risks and Controls

Cloud Computing can provide many benefits and opportunities, but they may all come with

risks. Mosher (2011) states that the nature of Cloud Computing as an outsourcing arrangement

increases risks as it permits residing and processing of corporate data to devices and

organizations outside of the corporate environment.

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Risks that may occur with cloud computing are the following:

● Security Risks

1. Access Control – When an organization decides to adopt the cloud technology, they are

migrating business sensitive information to the cloud servers and then there is less control

over the data. The organization allows external service providers to take control over the

data which then allows the service provider’s personnel to have access to that data and thus

may risk the data’s privacy. Many cloud computing service providers are also receiving cloud

computing services from other service providers as subcontractors. Thus, subcontractors are

also having access to the organization’s data which also increases data privacy risks. The

organization may require their service provider to provide the identities of its subcontractors

and to have a vendor management program in order to monitor the subcontractors'

compliance with the agreed service requirements.

2. Data ownership – Risks of the service provider to claim the ownership and right to use and

publish the data of the organization is not impossible to occur. The organization may

contractually bind the service provider to provisions regarding the limitation of use of the

data, ownership, and return and deletion of the data.

3. Attacks – Cloud services being open to the internet through web portals and providing

access to their customers make them vulnerable to attacks. Attackers would like an access

to an environment rich of sensitive data, and being a cloud service provider makes them a

gateway for attackers to access them, thus makes them a target of external attackers and

putting organization’s data at higher risks of being compromised. The organization shall

ensure that their service provider has the best security practices and secured data

architecture and is being tested regularly for penetration vulnerability and appropriate

remedies are being done for any issues identified.

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● Availability Risks – In cloud computing services, customers highly relies on the

performance of service providers, but service degradation and outage occurs from time

to time. If the service provider’s servers are down, the customer’s access to it is also

down. It may cause concerns regarding real-time data access. The organization may

ensure that their service provider have real-time monitoring policies and other necessary

processes

in place and may require them to give notifications whenever an issue occurs (Durcevic,

2019).

● Service Provisioning Risks

1. Service Change – Service providers may change their offered services, discontinue their

services or close at any time and it may put the organization at risk of losing access to the

data and or to the service. The organization shall require the service provider contractually

to provide notice of change in service for a specified period of time. They may also identify

an alternative service or service provider that they can use on an event of a service change

and they shall maintain an internal copy of the organization’s data for emergency purposes.

2. Cost Changes – Over time, costs for cloud services will change and may make the

service less effective cost wise. The organization may include provisions regarding cost

changes on the service contract and analyze the cost-benefit relationship of having the

service every contract renewal.

3. Portability – Service providers usually use different standard languages for their

respective platforms, which makes it difficult to transfer data from one cloud to another and

from one service provider to another which forces organizations to stay with their service

provider even their needs are not being met.

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 ● Regulatory Compliance Risks – Some industries such as healthcare, banking, and

government are under data security regulations. The said industries handle sensitive

information of their customers, and those information are needed to be protected. Using a

cloud computing service, protection of those information and compliance to data security

regulations is being relied to external service providers. The organization may still be liable

whenever incompliance to regulations and data breach occur (Calyptix, 2016). The

organization should discuss regulations they are operating under with their service

provider and include provisions regarding the regulations to their service contract and

monitor the service provider’s compliance to those regulations.

In each of these risk areas, a company places its trust in the third‐party provider to have

proper IT controls. A company must carefully examine and review cloud providers before entering

into a cloud computing service agreement. A provider must be trustworthy, reliable, and large

enough to scale up operations if necessary. User companies must continually monitor and assess

whether the cloud provider is appropriately meeting their needs.

E. Outlook

In today’s changing technological environment, the demand of users also changes. Cloud

computing is among one of the emerging global trends in technology, academic communities and

businesses. It is one of the things that business organizations nowadays consider when it comes

to their IT services and systems. In the early stages of the IT infrastructure evolution, consumers

had to purchase software and computing power as products, but today, it has been easier

because of cloud computing which reconceptualizes software and computing power which are

purchased as services on a pay-as-you-go basis (Yoo, 2011). He also mentioned that cloud

computing possesses considerable promise as a transformative technology that can change the

very nature of computing. As it continuously evolves and develops, the incorporation of different

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techniques to improve the availability, reliability and resiliency of services deployed in cloud

infrastructures is essential to support the future of cloud computing (Moreno-Vozmediano et al.,

2013).

Cloud computing will grow significantly as innovative technology solutions are

continuously being developed using machine learning and artificial intelligence. From an interview

of Founder and CEO of Sustainabody, Marcus Vlahovic, he stated that “Cloud computing is

bridging us to a world of unlimited connectivity.” And that after a decade or so, he said that “people

won’t be talking about routers and individual networks, everything will be the network.” (The future

of cloud computing will blow your mind - Exclusive interviews, 2019). The future of cloud

computing opens a wide range of possibilities and opportunities. This includes jobs, services,

platforms, applications, and much more (Future of cloud computing, 2012).

Gaddam (2020) mentioned that around 45% of the world’s population have access on

cloud computing over the past years. With this revolution in information technology, there will be

key impacts on businesses, workforces, and societies. Gaddam further elaborated that

businesses today are most likely involved in cloud computing. And so, cloud data centers are

projected to process 94% of business workloads by 2021. This transition affects all areas of

business from frontline employees to executives and everyone else in between. Other future

impacts on business organizations include improved communication, secure collaboration and

optimized customer experience. For the backbone of every business which is the workforce, cloud

computing would greatly have future impact on empowering IT professionals. This would also

empower all employees to work on alternative devices without fear of losing data and creates a

flexible workflow. In addition, cloud computing offers small and medium-sized enterprises many

advantages, such as usage-based payment option, improved scalability and flexibility, and easier

installation and upgrade process. This provides small businesses a level playing field where these

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organizations can also get access to same IT infrastructure as those accessible to big

organizations only (Goodburn and Hill, 2010; as cited by Kumar et al., 2017).

A shift from on-premise to cloud affects entirely the accounting system of an organization,

from the role of accounting employees, through to the content of financial reporting standards.

According to a research conducted by FloQast, there are positive impact on accounting

professionals’ work and careers offered by the cloud. They reported increased work efficiency

because of automation, flexibility to work from any location, having less paper to manage, and

requiring less training as software has become easier to use. The study also mentioned that cloud

technology has offered accountants broader career options and also provided other benefits such

as reduced errors, having better controls, more time for strategic work, and improving the ability

to do data mining and analytics (“Cloud Technology Advances the Accounting Profession, A

Survey of Accounting and Finance Professionals”, 2018). Nevertheless, all accounting work that

is processed and completed on the cloud increases business growth and meet the needs of

rapidly changing markets.

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