7.11 Cloud Computing Pros and Cons

Cloud computing is a service by which companies and individuals rent software, storage power and programs as needed over the Internet rather than purchase the hardware and software themselves. A rapidly-growing sector of the market, cloud computing is a natural extension of the client-server business model, and revenues of AWS (Amazon Web Services) alone are expected to reach $2.5 billion in 2014. {1}

An Idea Comes of Age

The growth of interest reflects several trends in computing. One is the high cost of software licenses in big companies, and their only intermittent use by employees. Another is the growing resistance to purchasing yet faster and more powerful computers: sales have not grown as expected. A third is the confidence in social media sites like Facebook to keep information confidential, in an easy- to-use format, moreover, and for free. Fourth is the popularity of Google Applications, where storage and a suite of programs are provided at fees that range from nothing for limited use to modest for extended use: some two million companies now take advantage of the service.

The most compelling reason, however, is the growth in technology. {2} Multiple cloud providers can respond to changing needs, standardized APIs prevent data lock-ins, encryption and firewalls ensure data security, faster back-up technologies avoid data transfer bottlenecks, flash memories cope with performance unpredictabilities, advanced debuggers have been developed for large systems, the need for scalable storage has been met by automatic scaling technologies, and a licensing model developed for pay-by-use and bulk sales. All costs have come down, and large datacenters can purchase hardware, bandwidth and power at heavy discounts, sometimes as high as 80%.


Given these trends, computer manufacturers like IBM, Dell and HP have been building large, scalable cloud computing centers that offer computing power, data storage and high speed Internet access. In turn, software companies like Google, VMWare, Rackspace, Salesforce and Microsoft have developed Internet-based modifications of their more popular products. Microsoft, for example, is moving from boxed software, or time-expiring software bundled with computers, to more 'pay-as-you-go' or 'pay-as-you-grow' models in product lines as Windows Live and Online Technology. Services vary considerably, however, from the Amazon model that provides nearly unlimited usage but poor scalability, to Google AppEngine and Salesforce, which are very scalable but restricted to predefined uses.

Another major player is Amazon, which has built its Web Services arm on the IT technology developed as a major retailer of books, consumer electronics, etc. No longer needed are powerful computing resources in-house, and all services can be accessed as needed through cheap notebook devices or even mobile phones. Companies can also reduce the cost of hiring and keeping highly-trained IT staff, knowing that security is maintained by state-of-the-art procedures: necessarily, as the viability of any cloud computing service depends on its performance and reputation. The downside is the growing dependence of companies on such services, which can suffer natural disasters like anything else, and which may hand over data under court and government directives more promptly than a company would wish to.


Banks have been attracted to the cost-savings implicit in cloud computing, but recognize that all security systems can be breached. Salesforce suffered a phishing attack in 2007, for example, and Google's European Gmail service briefly collapsed in 2009. Cloud computing companies work with third-parties, moreover, and clients often need to investigate the security reputations of those parties, particularly in the matter of passwords allocation and access. New technologies are being introduced, and these may have as-yet-undisclosed security bugs, either because they are not fully tested, or because they are being tweaked in novel ways. A more disturbing question is jurisdiction. Data secure in one country may not be so in another, and cloud computing clients often do not know where their data is actually stored. While the EU strictly protects privacy, America laws such as the US Patriot Act invest government and other agencies with virtually limitless powers of information access, with little protection or redress in the courts.

Companies are generally recommended to:

1. Ask about exception monitoring systems.
2. Be vigilant about updates and any sudden change in access privileges.
3. Inquire where data are kept and jurisdictions applying.
4. Seek an independent security audit of the host.
5. Inquire about third parties and their access to data.
6. Develop strict policies for password creation, protection and change.
7. Investigate availability guarantees and penalties.
8. Check that cloud provider will accommodate their own security policies.
9. Factor in costs of migration to (and from) cloud computing.
10. Investigate backup facilities and (often extra) charges.
11. Investigate the varying toll charges that can apply.


1. Why is cloud computing being so promoted?
2. What are its advantages to:
a. the small company just starting out, and
b. the global company with semi-independent subsidiaries?
3. Describe the problems that could arise with cloud computing services. 4. In making their choice of cloud computing services partner, what should companies investigate?

Sources and Further Reading

Need the references and resources for further study? Consider our affordable (US $ 4.95)  pdf ebook. It includes extensive (3,000) references, plus text, tables and illustrations you can copy, and is formatted to provide comfortable sequential reading on screens as small as 7 inches.

   Get your eBook here.