IMPLICATIONS OF CLOUD COMPUTING IN IT ORGANIZATIONS

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IMPLICATIONS OF CLOUD COMPUTING

IN IT ORGANIZATIONS

Harish Vepuri

Moshin Rahman

MASTER THESIS 2011

INFORMATICS

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Harish Vepuri

Moshin Rahman

Detta examensarbete är utfört vid Tekniska Högskolan i Jönköping inom ämnesområdet informatik. Arbetet är ett led i masterutbildningen med inriktning informationsteknik och management. Författarna svarar själva för framförda åsikter, slutsatser och resultat.

Handledare: Banafsheh Khademhossinieh Examinator: Vladimir Tarasov

Omfattning: 30 hp (D-nivå) Datum:

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Abstract

Information technology (IT) in the recent decades has showcased immense evolution. This evolution has impacted not only the technological sector of the society but also the socio-political and economic sectors. One such archetype that has gained popular momentum in the recent years is cloud computing. Still in its developmental stages, cloud computing is the latest offspring of computing services and has invariably challenged the traditional aspects of computing services across the IT Organizations in the world. Thus, adopted by a number of developed as well as developing countries, cloud computing has played a crucial role in decreasing the overall cost pertinent to hardware, software and other services in organizations. However, issues such as data security and confidentiality, data availability, legal issues and unintelligent Service Level Agreements (SLAs) have questioned the reliability and credibility of cloud computing. This has resulted in lack of potential investments from major companies.

The main aim of this research is to provide concrete reasons for the actively implementing cloud computing in IT Organizations. Qualitative approach and exploratory design are extensively used for data collection and analysis. Primary data is collected based on the views and opinions of IT experts and secondary data is collected from literary sources which invariably supports the primary data and maintains the credibility of the research.

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Acknowledgements

We must thank many people, without whom this project would not see its completion.

We are really thankful to our supervisor Banafsheh Khademhosseinieh for bestowing us with the great opportunity, to analyze and procure in-depth information pertinent to Cloud Computing.

We humbly thank our teacher Mr. Vladimir Tarasov, for his immense patience and support, and for accommodating us with this project.

Finally, we owe this accomplishment to our families for their ceaseless love and encouragement, and trying to understand our work, even though stationed thousands miles away.

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Key words

Cloud Computing, IaaS, SaaS, PaaS, Public Cloud, Private Cloud, Hybrid Cloud, Pay-as-you Use, Benefits, and Risks.

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List of Figures and Tables

FIGURE 1: GROWTH OF CLOUD AND GRID COMPUTING SINCE 2005 (PATEL ET AL., 2011) ... 10 FIGURE 2 : NON-EXHAUSTIVE VIEW ON THE MAIN ASPECTS

FORMING A CLOUD SYSTEM ("EUROPEAN COMMUNITIES”, 2010) . 12 FIGURE 3: DIFFERENT TYPES OF VIRTUALIZATION (PETRI, 2010) ... 18 FIGURE 4: DIFFERENT TYPES OF CLOUD DEPLOYMENT (ACUTESYS,

2011) ... 20 FIGURE 5: COMPANIES THAT CURRENTLY DEPLOY PUBLIC CLOUD

(KNOWLEDGEBLUE, 2011) ... 21 FIGURE 6: COMPANIES THAT CURRENTLY DEPLOY PRIVATE CLOUDS

(KNOWLEDGE BLUE, 2011) ... 22 FIGURE 7: COMPANIES THAT CURRENTLY DEPLOY HYBRID CLOUDS

(OPEN NEBULA, 2011) ... 23 FIGURE 8: TYPICAL STRUCTURE CLOUD COMPUTING SYSTEM

(STRICKLAND, 2011) ... 26

FIGURE 9: DIFFERENT LAYERS OF CLOUD COMPUTING (WOLFF, 2009) ... 27 FIGURE 10: THE FRAMEWORK USED FOR THIS RESEARCH ... 28 FIGURE 11: RISK POINTS IN THE CLOUD COMPUTING

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TABLE 1: KEY DEFINITIONS OF CLOUD COMPUTING ... 7 TABLE 2: TIME PLAN FOR THIS STUDY ... 8 TABLE 3: COMPANIES THAT DEPLOY SAAS, IAAS AND PAAS CLOUD

PLATFORM SERVICES ... 25 TABLE 4: DETAILS OF THE INTERVIEWS CONDUCTED TO COLLECT

PRIMARY DATA... 53 TABLE 5: OPINIONS ABOUT BENEFITS OF CLOUD COMPUTING IN

TERMS OF SCALABILITY ... 54

TABLE 6: OPINIONS ABOUT BENEFITS OF CLOUD COMPUTING IN

TERMS OF ACCESSIBILITY ... 55

TABLE 7: OPINIONS ABOUT THE BEST TYPE OF CLOUD ... 55 TABLE 8: OPINIONS ABOUT COST EFFECTIVENESS OF IMPLEMENTING

CLOUD COMPUTING... 56

TABLE 9: OPINIONS ABOUT BENEFITS OF CLOUD FOR SMALL

BUSINESSES ... 56

TABLE 10: OPINIONS ABOUT SECURITY AND CONFIDENTIALITY ISSUES

IN CLOUD... 57

TABLE 11: OPINIONS ABOUT LEGAL RISKS, DATA SEGREGATION AND

RELIABILITY RISKS IN CLOUD ... 58

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1 Introduction

This chapter provides background information about cloud computing and outlines the scope for this study. It also postulates the main aim and research objectives, the limitations, thesis outline and key definitions of cloud computing.

1.1 Background

Cloud computing is the recent product of Information Technology (IT), with a huge potential to integrate the best features of software and hardware components. Regarded as the most beneficial IT innovation, cloud computing currently is set out to transform the IT and IT enabled services across the globe. According to the National Institute of Standards and Technology (NIST),

Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a 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 (Mell&Grance, 2011).

Five components of cloud can be extracted from the above definition. Cloud computing is an:

• On-demand self-service, which is provided to individuals on demand, with an easy set up process.

• Ubiquitous network access, which functions in the presence of internet-enabled devices.

• Location independent resource pooling, which does not require dedicated infrastructure to allocate resources.

• Rapid elasticity, a characteristic component that enables the end users’ to increase or decrease the capacity at will.

• Pay per use, which charges the end users’ a nominal fee based on their usage. The characteristic components of the cloud have enabled the delivery of services through the amalgamation of hardware and software systems through decanters. The services have been considered as Software as a Service (SaaS), and the decanter hardware and software that is used is regarded as a Cloud (Armbrust, 2009).

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However, cloud computing has systematically showcased tremendous benefits, and the benefits of cloud can be distinctly categorized as economic, architectural and strategic. Pay-as-you go, pay-as-you go without any capital expenditure are the economic benefits of cloud. Simple abstract environment for development and usage is the architectural benefit of cloud, and focus on core business due to third party ownership is the strategic benefit of cloud computing (Ghalimi, 2010). The economic, architectural and strategic elements of the cloud provide flexible on-demand storage service at lower costs, enable the easier development of new services, and link the disparate services while increasing performance and scalability (Coombe, 2009).

Currently, cloud computing is adopted by Small and Medium Businesses (SMBs) Selective large enterprises, U.S. government and certain developing countries across the globe. Largely cloud services are currently being utilized by SMBs, followed by certain large enterprises. The potential savings of cloud computing has attracted the attention of President Obama, who has lead the United States government towards adopting cloud services. Developing nations such as sub-Saharan Africa are strongly poised to adopt cloud. Countries such as China, India, Vietnam, and Brazil are all set to reap the benefits of cloud with the support of companies such as IBM, Microsoft etc. (Graham, 2011). Despite the high benefits, cloud is often criticized due to data segregation, confidentiality and availability, and software licensing (ENISA, 2009 &iDefense, 2009). The data in cloud computing is stored and maintained by a third party. This affects the confidentiality of data. Data is not specifically segregated in cloud computing, and is dependent on the availability of network. Network failures affect the reliability and quality of the service. Ultimately, unverified Service Level Agreements (SLAs) with the cloud providers could affect the smooth functioning of the organization (Chandran&Angepat, 2010). Relevant research strategies have been adopted by eminent organizations across the world, with respect to technical and non-technical aspects of cloud computing. Technical topics pertinent to scale and elastic scalability, trust, security and privacy, data handling, programming models and resource control, and systems development and management have been successfully stipulated. Non-technical topics pertinent to economic and legalistic issues are in the research pipeline. The research outcomes are expected to benefit the telecommunication and business organizations, all over the world (“European Communities”, 2010).

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1.2 Motivation

The background information has provided motivation for this research. It is a commonly accepted fact that, anything new in the market faces criticism and hesitation. Statistics indicate that only a handful companies employ cloud computing. There exists scope for research in identifying the actual causes for hesitation; while ample benefits exist in cloud computing.

Although cloud computing research is still in its developmental stages, several prominent papers by various researchers have managed to produce both technical and non-technical details about the cloud. Consequently, this study has collectively organized the various definitions, technical terms, and various details such as characteristics, cloud deployment services and types, cloud mechanism in a simple yet intricate manner. Secondly, this study shall progress into exploring the benefits, the risks and future enhancements required in the field of cloud computing for its successful adoption. This is achieved from the collective symposium of literary sources and views of IT associates.

Furthermore, an intricate study of cloud computing, shall primarily clarify the meaning of cloud and its mechanisms. Secondly, it shall support the higher management of IT organizations to incorporate analytical that shape the logical and strategic investment decisions. Thirdly, it shall allow developers and providers to build appropriate products that are of real value. Finally, it enables the IT industry to organize and develop benchmarks and standards in order to promote the concept of cloud computing across the organizations (McKinsey & Company, 2009).

1.3 Purpose & Research Questions

The main purpose of this research work is to assert the importance of cloud computing as the dominant feature in next generation in IT organizations. Thus, the main outcome of the study is to provide concrete reasons for adopting cloud computing in organizations.

This study shall target the IT Companies and IT professionals that use cloud computing.

Subsequently, the following research questions can be outlined.

 What are the benefits and advantages of cloud computing to IT organizations?

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1.4 Delimitations

There are delimitations both within and outside the study which needs to be outlined, in order to maintain the credibility of the research and showcase the prospect for further study.

Cloud computing faces intense criticism due to the lack of prominent security features. Although, it is possible to focus on the security risks, justice would not be made to this study if issues pertinent to security risks and means to overcome it is highlighted, since security risks requires a separate study of its own. Thus, the current research shall not focus on the security associated with cloud computing. This is the primary delimitation within this study.

Nevertheless, other benefits and risks will be focused on, which will eventually outline the future prediction of cloud computing, across the globe.

Although, various organizations apart from the IT organizations, across the globe are currently employing cloud computing, this research has limited its study towards the IT Organizations. This is in fact, the secondary delimitation within this study.

It is a well-established fact that, cloud computing is still in the introductory phase of application and use. Moreover, there are only few big IT organizations that are currently using and providing Clouds in the current technical market. Thus, identifying and gaining access to many IT organizations unfortunately has served as a barrier for this study. This is invariably the delimitation outside this study. However, four IT organizations have been identified and relevant data has been collected in order to maintain research credibility.

1.5 Thesis outline

The rest of the thesis is structured as follows:

The second chapter provides a literary review of the research conducted in cloud computing.

The third chapter focuses on the methodology of research used for this thesis. It supplies the theoretical framework, the research study and design used in this study. In addition, it sketches the different methods and tools, used for data collection and analysis and delineates the credibility of research.

The fourth chapter provides the results extracted from primary and secondary study. This chapter subsequently incorporates the objectives of the research. The last chapter postulates the conclusions and consequent inferences educed from the results of the study.

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1.6 Key Definitions

Before understanding the intricacies involved in cloud computing, a quick glance at the key definitions of cloud computing shall provide fundamental basis for understanding and ensure the non-repetition of terms in the subsequent chapters. The table 1 shall respectively encompass the key definitions.

Terminology Definition

Cloud Computing A computing Cloud is a set of network enabled services,

providing scalable, QoS guaranteed, normally personalized, inexpensive computing platforms on demand, which could be accessed in a simple and pervasive way (Wang et.al, 2010).

Clusters Cluster is a group of servers and other resources but act like

a single system and enable high availability and, in some cases, load balancing and parallel processing. Homogenous in term of hardware and operating system (Techtarget, 2011).

Grids Grid computing is a model of distributed computing that

uses geographically and administratively disparate resources. In grid computing, individual users can access computers and data transparently, without having to consider location, operating system, account administration, and other details. In grid computing, the details are abstracted, and the resources are virtualized (Cummings & Huskamp, 2005).

Infrastructure as a Service

Infrastructure as a Service (IaaS) involves outsourcing the equipment used to support operations, including storage, hardware, servers and networking components (Techtarget, 2010).

Software as a

Service

Software as a Service (SaaS) is a software distribution model in which applications are hosted by a vendor or service provider and made available to customers over a

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third party and may exist on premise or off premise. They are providing more security (Mell & Grance, 2011).

Public Cloud The cloud infrastructure is made available to the general

public or a large industry group and is owned by an organization selling cloud services. Clouds through which users can access services from anywhere in the world ( Mell& Grance, 2011).

Hybrid Cloud The cloud infrastructure is a composition of two or more

clouds (private, community, or public) that remain unique entities but are bound together by standardized or proprietary technology that enables data and application portability (Mell& Grance, 2011).

Security Security is the protection of information assets through the

use of technology, processes, and training (Techtarget, 2011).

Data Center A data center is a centralized repository, either physical or

virtual, for the storage, management, and dissemination of data and information organized around a particular body of knowledge or pertaining to a particular business (Techtarget, 2011).

Virtualization Virtualization is the creation of a virtual (rather than actual)

version of something, such as an operating system, a server, a storage device or network resources (Techtarget, 2011).

Grid Computing Grid computing is a combination of computer resources

from multiple administrative domains to reach common goal (Máhr, 2011).

Web 2.0 Web 2.0 is a set of economic, social, and technology trends

that collectively form the basis for the next generation of the Internet—a more mature, distinctive medium characterized by user participation, openness, and network effects (O’Reilly, 2008).

Service

Organization or

Provider

Within the context of cloud computing, the service organization or provider is the business that delivers a cloud computing application “as a service” for a monthly fee (AICPA, 2011).

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Agreement (SLA): the level of service, responsibilities, priorities, and

guarantees regarding timing, availability, performance, and other aspects of the service

(AICPA, 2011). Table 1: Key definitions of cloud computing

1.7 Time Plan

The time plan of the work is explained below in table 2.

Month

Date

Key activity Task

March 15th Mar Literature review Finding relevant documents and understanding of Cloud Computing from different researchers point of view.

April 5th Apr Identification of

benefits and risks in cloud computing

Identifying the major benefits in cloud computing for IT organizations. Risks in Cloud computing that are facing by IT organizations

By 28th Apr Challenges and future enhancements of Cloud Computing. May 9th May Report writing start

August 1st Aug Describing the organizational

benefits in cloud computing

Guidelines to overcome the risks

Identification of risks in the organizations aspect.

Explaining the future enhancements to

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computing October 5th Oct Refinement of

Preliminary results

Enhancements to Overcome the risks in order to make cloud use of next generation.

Refinement of cloud services, legal issues and Reliability. November 16th Nov Halfway

presentation

Presenting

preliminary results and Report.

By 25th Nov Validation of the preliminary results Formulation of interview questions December 5th Dec Arrangement of interviews 10th Dec Analysis of interviews

19th Dec Final Presentation Presenting Final results

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2 Theoretical Background

This chapter outlines the intricacies involved in cloud computing. It begins with the historical evolution of IT and computing, specifies the different types of computing services and progresses towards cloud computing. With respect to cloud computing, this chapter provides varied definitions of cloud computing, supplies the characteristics of cloud and presents the different cloud deployment models. Ultimately it elaborates on the mechanism of cloud computing and sketches the current trends of cloud in today's market.

2.1 Evolution of IT and Computing

Human civilization has symbolically ameliorated itself, from the age of stone to the age of Information and Technology (IT).

Technically, IT can be defined as “the use of manmade tools for the collection,

generation, communication, recording, re-management and exploitation of information. It includes those applications and commodities, by which information is transferred, recorded, edited, stored, manipulated or disseminated” (Anyakoha, 1991). IT that we see and use today is the result of

constant ramifications in the field of research and development, which have sublimely reformed communication, sharing and exchange of information, resources and data. The history of IT serves as a conviction for this aspect; for, IT has evolved from its simplest algorithmic logic to the complex software and hardware network and synthesis.

The logical symposium of algebraic functions has served as a fundamental tool for the software and hardware processes (Mitchell, 1998). Further research to employ automated problem solving techniques with the help of algorithms proved beneficial, for Charles Babbage’s proficient attempt resulted in the simulation of analytical engine to compute small calculations (Moschovitis et al. 1999).

Future research and development on the analytical engine, resulted in the birth of a novel device called computer, which has invariably reform the technological world today. World War II marked intense inventions and discoveries in the field of technology, and the convergence of digital technologies and data accumulation methodologies intensified the growth of computing technologies (Edwards, 1996). Following the World War II, commercialization of computing devices, reformed not only the technological

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The knowledge management systems, financial and human resource IT planning packages, computer-mediated-communications have replaced traditional organizational systems. Many empirical studies indicate that “IT is

valuable, offering an extensive menu of potential benefits ranging from flexibility and quality improvement to cost reduction and productivity enhancement” (Melville, 2004).

The combination of IT resources and managerial deployment of IT has created a competitive advantage to organizations (Melville, 2004). Resultantly, organizations all over the world have impeccably reaped potential benefits from IT applications and solutions across their various sectors. Thus, it can be claimed that IT has become customary not only for technological enhancement, but also for the efficient functioning of an organization. And, the historical augmentation of IT has produced multifarious paradisiacal computing services, which have invariably become part and parcel of everyday life.

2.2 Computing Services

“Computing services need to be highly reliable, scalable, and autonomic to

support ubiquitous access, dynamic discovery and compensability. In particular, consumers can determine the required service level through Quality of Service (QoS) parameters and Service Level Agreements (SLAs)” (Buyya et

al. 2009).Among the varied computing services, three paradisiacal technologies namely Cluster Computing, Grid Computing, and Cloud Computing have revolutionized the IT industry (Buyya et al. 2009). Figure 1 highlights the growth of grid and cloud computing since 2005.

Figure 1: Growth of cloud and grid computing since 2005 (Patel et al., 2011) 2.2.1 Cluster Computing

“A cluster, is a type of parallel and distributed system, which consists of a collection of inter-connected stand-alone computers working together as a single integrated computing resource” (Buyya et al. 2009).

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Although cluster computing gained slow momentum, the potential advantages of cluster are “low-entry costs to access supercomputing-level performance,

the ability to track technologies, incrementally upgradeable system, open source development platforms, and vendor independence” (Yeo et al. 2006).

Today, cluster applications are vivid in the field of research and development of science, engineering, commerce and industry applications (Yeo et al. 2006).

2.2.2 Grid Computing

A Grid on the other hand, “is a type of parallel and distributed system that

enables the sharing, selection, and aggregation of geographically distributed `autonomous' resources dynamically at runtime depending on their availability, capability, performance, cost, and users' quality-of-service requirements”

(Buyya et al. 2009).

Inspired from the electric Grid concept of the 20th century, grid computing perpetuates the sharing, selection, and aggregation resources such as supercomputers, storage systems, data sources, and specialized devices owned by different organizations that are widely distributed. Grid is used for solving voluminous resource-intensive problems pertinent to science, engineering, and commerce (Buyya et al. 2009).These technologies have been adequately tried and tested by various organizations, across the globe, depending on their respective business needs and requirements. Consequently, these technologies are seeing visible enhancements based on the fundamental criticisms and fierce competition existent in the current socio-technical market.

2.2.3 Cloud Computing

Among the three technologies, cloud computing has witnessed drastic evolution in last few years, with respect to its development and application. Thus, research and development in cloud computing are scaling in a positive direction, due to the growing demand for cloud computing. Figure 2 provides a non-exhaustive view on the main aspects forming a cloud system.

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Figure 2: Non-exhaustive view on the main aspects forming a cloud system ("European Communities”, 2010)

Cloud computing is au courant in the advanced field of IT. Cognizant to this, the literary and scholarly articles for cloud computing is still in the preliminary stages. Subsequently, the availability of literary resources with respect to cloud computing is less in comparison with other technological aspects such as Web 2.0 etc. In addition, most of the articles, peer-reviewed or journal articles in the databases focus on defining and explaining the architecture, and debating the benefits and risks associated with cloud computing.

Zhang et al (2010), introduce computing, the basic principle and style associated with it, and adumbrate the current development in the field cloud computing. Similarly, Spinola (2009) presents an interesting view regarding the varied concepts of cloud computing. Primarily Spinola defines cloud computing, and proceeds to cover the benefits and risks of cloud. Ultimately, she highlights the real-world cloud computing applications and provides a step-by-step structure for implanting the cloud. And, Armbrust et al (2009) define the structure of cloud computing, outline the variety of factors that influence the cloud service providers, highlight the economics of cloud adoption and growth, and highlight the potential benefits and risks of cloud computing. Zhang et al (2010) introduce cloud computing as an extension of grid computing, distributed computing, and parallel computing. Armbrust et al (2009) argue that the emergence of new technology trends such as Web 2.0 and business models, and new application opportunities such as mobile interactive applications, parallel batch processing, rise of analytics and earthbound applications, has resulted in the emergence of new technology called cloud computing.

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Similarly, Zhang et al (2010) highlight factors such as rapid development of grid computing and high quality of storage and data transportation, equipped by the Web 2.0 and virtualization, as the perpetual causes for cloud computing development. Prominent features such as virtualization, distribution and dynamic expandability are pointed by Zhang et al (2010). Virtualization is claimed as the most important factor among the three and its importance is subsequently highlighted. Factors such as IT resource, software, hardware, operating system and net storage are virtualized and managed in the cloud computing platform. Thus, forsaking physical platform, virtualization carries all sorts of applications at various levels embedded within the cloud system. Distribution is the physical node used by the computer. And expandability is the dynamicity of the cloud to break the physical barrier and carry out logical applications in the virtual environment (Zhang et al, 2010). Zhang et al (2010), also illustrate the characteristics of cloud computing with respect to its style and claim, large scale user availability, virtualization, reliability, versatility, extendibility, on demand service, cost-effectiveness, as the potential benefits of cloud computing.

Zhang et al (2010) focus on the principle of cloud computing and define it as a virtual pool of computing resources. They elaborate on the actual workings of cloud computing and asserts the presence of mandatory application environments, that enables the users to access and store data in a dynamic manner. Moreover, Zhang et al. (2010), identify the different cloud computing styles. They introduce SaaS, utility computing, network service, PaaS, Management service provider, commercial service platform and integrating internet. They define SaaS as a type of cloud computing that transfer programs to its end users through a browser. Utility computing is defined as a service offered by cloud computing through its characteristic features such as virtualization, memory and data center pool. Network service is defined as a service closely linked with SaaS, which provides the developers the necessary platform to develop applications for the cloud (Zhang et al, 2010).

PaaS is a developing platform, that gives the end-users’ an opportunity to develop their own applications and transfer it to the other users across the cloud platform. MSP is an application designed especially for the IT organizations to scan mail viruses and monitor programs. Commercial service platform provides the necessary interface for the end-users and service provider to interact with one another. Finally, ‘integrating internet’ is a type of cloud deployment that integrates all the similar service providers, that provides open choices for the end users’ to select and opt the required service (Zhang et al, 2010).

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Spinola (2009) explains the three delivery models of cloud namely, Cloud Software as a Service (SaaS), where software hosted by the cloud vendors are rented to the end users; Cloud Platform as a Service (PaaS), where infrastructure and programming tools supplied by the vendors are rented to the customers, which allows the customers to create their own applications; and Cloud Infrastructure as a Service (IaaS), where storage, networking and other fundamental computing resources for all purposes, are rented to the end users. Armbrust et al (2009) outline the different modes such as public cloud and private cloud as cloud deployment services. The major difference between the two modes is the availability of services to end users. When a cloud is available as pay-as-you-go to the public it is referred to as private cloud. It is sols as utility computing in the market. Contrastingly, private clouds are specifically assigned to business organizations and are not made to go public. Armbrust et al (2009) outline a variety of factors that influence the cloud service providers. They explain that, high returns on investment, leverage existing investment, competitive market, defending a franchise, maintaining customer relationships, and platform for communication. Thus, distinct vendors for computation, storage and networking are available in the market today. Zhang et al (2010) outline the development in the field of cloud computing by highlighting the companies that currently utilize cloud computing in an extensive manner. Spinola (2009) reflects on the real world applications of cloud and names Coca-Cola, Nasdaq, Animoto, Times, Mogulus as some of the companies that currently benefit and utilize cloud applications actively. Primarily Spinola (2009) claims that cloud computing without a strategy can become a threat, and with a strategy is a huge opportunity.

Zhang et al (2010) compare cloud computing with traditional computing model and claim its independence with respect to the data center. They also emphasize the simplicity of cloud computing management and its ability to supply and store data simultaneously. Thus, highlighting the infinite storage space offered by cloud computing, the authors stress on the benefits of deploying cloud computing in organizations.

Spiniola (2009) highlights the benefits of cloud in three categories- delivery of service, reduction of cost and IT department transformation. Cloud computing does not require upfront capital investment. And, the biggest benefits of cloud are the options of paying as per individual usage and feasibility to terminate contracts at will. Immediate access to hardware resources, shared data centers, easy maintenance and upgrade, and easy agility to deploy solutions nullifies the existence of mundane IT department.

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Armbrust et al. (2009) highlight the opportunities of cloud as use multiple cloud providers; use elasticity to prevent Distributed Denial of Service (DDOS), standardize Application Program Interfaces (APIs); compatible Semantic Web (SW) to enable surge computing, deploy encryption, Virtual Local Area Networks (VLANs), firewalls; geographical data storage, fedexing disks; data backup/archival; higher BW switches, improved Virtual machine (VM) support; flash memory; gang schedule VMs, invent scalable store, invent debugger that relies on distributed VMs, invent auto-scalar that relies on ml; snapshots for conservation, offer reputation-guarding services like those for email, pay-for-use licenses; bulk use sales.

With respect to the economics of cloud adoption and growth, Armbrust et al (2009) claim that cloud computing enables trade off decisions more fluid due to the elasticity feature of the cloud. In addition, they claim that hardware resource costs such as computing and storage are comparatively low in cloud computing. And, while adopting cloud computing, the organizations need to conduct appropriate analysis with respect to the demand and utility and operational costs. Spinola (2009) outlines the risks of cloud as potential challenges for the active deployment of services. Issues pertinent to data security, confidentiality, data segregation, SLAs and licensing and legal systems have questioned the credibility of cloud computing.

Armbrust et al (2009) highlight the risks of cloud in areas pertinent to availability of Service, data lock-in, data confidentiality and auditability, data transfer bottlenecks, performance unpredictability, scalable storage, bugs in large-scale distributed systems, scaling quickly, reputation fate sharing and software licensing. The first three obstacles are in the technical adoption of cloud, the next five are with respect to the technical growth and the last two obstacles are in regards to the policies and business obstacles of cloud adoption. Zhang et al. (2010) showcase the potential risks of the cloud and highlight the areas that require consideration and research in the future.

Armbrust et al (2009) provide solutions to overcome the obstacles in the potential deployment of the cloud. Concluding on the presence of positive growth opportunities for cloud, Armbrust et al (2009) finally proclaim that developers in the future need to identify and understand the potential risks of cloud, and develop appropriate solutions in areas pertinent to the applications, infrastructure and hardware systems of the cloud. These developments according to them would primarily depend on the change in technology, economic development, and virtualization level.

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Ultimately, Spinola (2009) provides four steps to implement cloud computing. The first step according to her is to determine the good and the bad candidates for the cloud based on the criticality of mission and the core competencies of the organizations that subscribe to the cloud. The second step of cloud computing is the preparation of IT portfolio for the cloud based on the existing and new assets or applications of organizations. The third step is to ask key questions pertinent to data confidentiality, security and access. The last step is to test, deploy, monitor and measure the returns on investing in cloud computing.

2.3 Definitions of Cloud Computing

The recent McKinsey report has outlined 22 definitions of cloud computing (McKinsey & Company, 2009). Although, a singular definition cannot be outlined with respect to cloud computing, an array of definitions from various experts can be supplied, in order to understand the term ‘cloud computing.’ Wang et.al (2010) define a computing Cloud, as “a set of network enabled

services, providing scalable, QoS guaranteed, normally personalized, inexpensive computing platforms on demand, which could be accessed in a simple and pervasive way”.

Gartner (2008) defines cloud computing as, “style of computing where

massively scalable IT-enabled capabilities are delivered ‘as a service’ to external customers using Internet technologies”.

Altman and Rana (2010) define cloud computing as, “an IT deployment model,

based on virtualization, where resources, in terms of infrastructure, applications and data are deployed via the internet as a distributed service by one or several service providers”.

McKinsey & Company (2009) explain clouds as, “hardware-based services

offering compute, network and storage capacity where, hardware management is highly abstracted from the buyer, buyers incur infrastructure costs as variable Operational Excellence (OPEX) and infrastructure capacity is highly elastic (up or down)”.

The above definitions although worded in a different manner elucidate the characteristic components of cloud computing. It can be comprehended that each of the above definitions define cloud computing on the basis of components such as, networking facility and infrastructure costs, features such as scalability, virtualization, and deployment on the basis of demand and usage. The definition by Wang et al (2010) can be used to understand cloud computing in an easy manner. It can be understood that, cloud computing is set of computers and network devices that are remotely connected across the world, comprising of an end user, who can access and download the required data by indefinite virtue of virtualization, providing instant computer power.

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2.4 Characteristics of Cloud

Cloud computing is characterized by potentially beneficial characteristics. Copious research studies conducted by proficient candidates have outlined several characteristic features. For instance, as mentioned before, the NIST definition of cloud computing provides five countenances of cloud. They can be listed as, on-demand self-service, broad network access, resource pooling, rapid elasticity and measured service (Mell and Grance 2009).

The McKinsey report outlines dynamic elasticity / scalability, simultaneous accessibility, virtualization and pay-per-use as the characteristic features of cloud computing (McKinsey & Company, 2009). Iyer and Henderson (2010) provide basic endeavors such as controlled interface, Location and sourcing independence, simultaneous accessibility, virtualization, reliability and dynamic elasticity as the characteristic features of cloud computing.

This research has extracted three common characteristic features namely virtualization, elasticity and reliability for the better understanding of cloud endeavors.

2.4.1 Virtualization

Virtualization is one of the primary features of cloud computing, which perpetuates the functioning of the cloud. It makes the cloud as virtual machines (VMs) due to the abstraction of physical resources. These VMs can be instantly generated, stored, migrated and / or terminated, which invariably makes the cloud computing elastic and reliable resource.

The actual functionality of virtualization makes it a mature technology and hypervisor technology is a classic example for the same (Simalango, Kang & Oh, 2010). “The hypervisor technology, for example, is widely used as an open

source software such as Xen and KVM or proprietary software such as VMWaree SXi and Oracle Virtual Box.” Moreover, an organization can choose

appropriate virtualization option, depending on its physical infrastructure and

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Figure 3: Different types of virtualization (Petri, 2010)

Figure 3 highlights the various types of virtualization such as network, storage, server, desktop and application exist in the market today.

Application virtualization ensures the smooth functioning of the cloud, making sure that the applications do not conflict with each other. Server Virtualization works on the fundamental principle of clouds and allocates certain space to the end users, based on their demand and availability of space in the shared infrastructure. Vendors such as VMware, Citrix with Xen in the UNIX and Windows environment, and also Microsoft have stepped forward to contribute in this area (Petri, 2010).

Network Virtualization is the virtualization of networks such as Wide Area Networks (WANs), which have always been owned and managed by organizations at high capital and maintenance costs. The pay-per-use services on the basis of demand offered by the cloud vendors are the characteristic feature of virtualized cloud networks. Virtualization of networks and sharing the use of the existing infrastructure of networks with other organizations has tremendously reduced the costs for organizations across the world (Petri, 2010).

Storage Virtualization is the storage of data on virtualized networks which is shared and accessed by the end users’ demand and requirement. “Sites such as

Flicker, Slide share and Twitter now use storage virtualization services as well…. Apple’s Mobile Me service and Microsoft’s equivalent, Skydive, offer a single disk in the cloud for consumers” (Petri, 2010).

Desktop Virtualization has become highly popular due to the efforts Citrix. This is a typical cloud sharing platform, where the end users’ desktop uses software that is installed in the virtual machine located in remote servers (Petri, 2010).

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Thus, focusing on the different components of the IT infrastructure that organizations across the world allocate huge budgets, virtualization has served as a blessing. However, issues such as overhead scalability and effective allocation and distribution in virtualization technology has questioned the active adoption of virtualization, which is discussed in the later sections of this research (Simalango, Kang & Oh, 2010).

2.4.2 Elasticity

Elasticity or scalability in cloud computing is defined as the “ability to scale

resources both up and down as needed” (Cloud Computing, 2009). The cloud

environment to the end user offers the provision to purchase as much or as little computing power, depending on their needs. Thus, as a characteristic feature of cloud computing, the elasticity features in cloud computing allows the rapid provision and scaling of all size of workloads (Cloud Computing, 2009 & Morgan Stanley, 2011).

Elasticity is considered as a fundamental component of the cloud systems and allows the cloud infrastructure to adapt to the changing non-functional requirements such as the amount and size of data supported by an application, number of concurrent users etc. (European Communities, 2010). The rapidity of cloud elasticity has potential advantages. It allows the quick scale out and scale in of computing resources in order to support consumer’s systems. It also measures, monitors, controls and reports the resource usage (Jamil & Zaki, 2011).

Subsequently, two different types of elasticity, horizontal and vertical can be outlined. Horizontal scalability refers to the “amount of instances to satisfy

e.g. changing amount of requests, and vertical scalability refers to the size of the instances themselves” (European Communities, 2010).

2.4.3 Reliability

Another characteristic feature of cloud computing is reliability, which has served as a crucial factor for the exploitation of cloud computing systems.

“Reliability denotes the capability to ensure constant operation of the system without disruption, i.e. no loss of data, no code reset during execution”

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With the simultaneous access feature of cloud computing, reliability of cloud computing services highly depends on the availability of different resources, which are distributed across the cloud systems. In order to maintain elasticity and load balancing, of the cloud resources, data / services are constantly replicated and distributed across the cloud systems (European Communities, 2010).

2.5 Cloud Deployment

Cloud computing can be deployed and serviced in three different ways, constituting three variant types of cloud deployment namely, public, private and hybrid, and three distinct services namely, IaaS, PaaS and SaaS. Figure 4 highlights the different types of cloud deployment available in the market today.

Figure 4:Different types of cloud deployment (Acutesys, 2011) 2.5.1 Deployment Types

Cloud computing can be deployed in three different types namely, public, private and hybrid. The following sections shall elaborate on the same.

2.5.1.1 Public Cloud

Public clouds are clouds that are accessible and available publicly for any organization. Public clouds use the basic concept of cloud computing where user can use the resources on the basis of pay-per-use or pay-per-usage model (Salesforce, 2011). Figure 5 highlights the different companies that currently deploy public cloud.

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Figure 5: Companies that currently deploy public cloud (KnowledgeBlue, 2011) Public cloud functions on the basis of the fundamental principle of cloud computing. Organizations across the globe use cloud services from other organizations, and simultaneously may offer their own service to other organizations. This aspect subsequently reduces the costs responsible for building and maintaining the IT infrastructure (European Communities, 2010). A cloud provider sells or rents the cloud services to multiple unrelated clients. The clients on the other hands do not worry about the maintenance and security of their data, since it is the vendors’ responsibility to maintain and protect the data in public clouds (Wald, 2010).

Thus, the major advantages of public clouds can be extracted and outlined as:  End user do not need to be bother about the bandwidth or hardware

resources since all of them are already being provided by the provider.  No wastage of resources, the resources which are used will only be paid. However, the major disadvantage of public clouds is security challenges which require adequate focus and research developments (Wald, 2010).

2.5.1.2 Private Cloud

Private clouds are clouds that are accessible only within a private network and are tailored in accordance with cloud computing principles. The term private cloud is used to differentiate between standard and private computing. It is a marketing name for a proprietary computing in this cloud, hosting services are provided to particular number of people behind the fire-wall (Salesforce, 2011).

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Figure 6:Companies that currently deploy Private Clouds (Knowledge Blue, 2011)

A private cloud, controlled by the client if managed properly can benefit the organization in a tremendous fashion. The principle idea of private cloud is to ensure the security of the data and allow access only to the subscribers of the cloud facilities (Wald, 2010 & Salesforce, 2011). Thus, peace of mind with data security and appropriate maintenance are the characteristic benefits of private clouds.

However, adopting the private cloud facilities requires careful analysis of the need and the current IT infrastructure of the organization; for, organizations with less sensitive data, migration to private clouds may result in high cost and redundancy (Wald, 2010).

2.5.1.3 Hybrid Cloud

This cloud is normally known as the combination of private and public cloud, where a vendor has its own private cloud and forms a connection with public cloud or vice versa. A hybrid cloud exhibits the characteristics of both public and private clouds. It achieves maximum cost reduction through outsourcing which is a feature of public clouds, and maintains high degree of control over sensitive data, which is a feature of private cloud (European Communities, 2010). Figure 7 highlights the different companies that currently deploy hybrid cloud.

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Figure 7: Companies that currently deploy Hybrid Clouds (Open Nebula, 2011)

For example, most companies are reluctant or unwilling to put customer data in the public cloud, despite enhanced security features. The hybrid cloud allows them to place that data in a private cloud. And, the same company can use the public portion of the hybrid cloud for less sensitive information, to communicate with customers and for many other purposes (apex cloud, 2011).

Thus, it can be stated that, the hybrid contains advantages of both private and public clouds and also referred as hybrid IT. The major advantage of hybrid computing is its effectiveness in meeting the business requirements of various organizations. And, for cloud users who expect security which is cost effective, hybrid cloud serves as a single sign-on system (Wald, 2010).

However, the major disadvantage of hybrid cloud is the exposure of data to security vulnerabilities. The integrated systems of hybrid clouds could result in the exposure of sensitive data to unrelated users in the system (Wald, 2010).

2.5.2 Delivery Models

Cloud computing can be delivered through three distinct service models namely, Infrastructure as a service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS). The following sections shall elaborate on the same.

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2.5.2.1 Infrastructure as a Service (IaaS)

IaaS a very unique form of service offered in the domain of cloud-computing. The characteristic feature that distinguishes this service from the other two is the control offered to the end-user. The fundamental principle of IaaS is based on the understanding that, the IT resources pertinent to storage and database, or the hosting environment of VMs is managed and controlled by the cloud provider. The end users utilize cloud services, but are unable to access the infrastructures that host the services (Cloud Computing, 2009). IaaS offers virtual machines and other related hardware and software systems through a service API. Hence, an end user can use the resources on the basis of pay-per-use and the IAAS service provider controls the maintenance and is responsible for running the system (Salesforce, 2011).

IaaS saves the costs associated with IT infrastructure since it provides enhanced virtualization capabilities via service interfaces. Services pertinent to data and storage with potentially dynamic size, and data computing are subsequently provided through IaaS (European Communities, 2010).

2.5.2.2 Platform as a Service (PaaS)

Paas provides the entire infrastructure needed to develop and run applications over the internet. Dedicated APIs are utilized by Paas that “control the

behavior of a server hosting engine which executes and replicates the execution according to user requests (e.g. access rate)” (European Communities, 2010).

In Paas, the cloud provider manages and controls the cloud platform for a particular type of application, and the users cannot access the infrastructure beneath the platform (Cloud Computing, 2009).

Thus, it can be understood that Paas is delivered in the same way as utility services like electricity or water are delivered. The end-users simply tap and extract the services without worrying the complexities behind the scene. And like a utility, Paas is based on a subscription model so user only pay for what they use (Salesforce, 2011).

The major advantage of Paas in comparison with the other services is the vast platform options it provides to the end users. End users can develop new applications using development tools, configuration management, and deployment platforms and configurable remotely. However, the major disadvantage of PaaS is the risk of ‘lock-in’ from providers for resources that require proprietary service interfaces or development languages. Another potential pitfall is that the flexibility of offerings may not meet the needs of some users whose requirements vary rapidly (Salesforce, 2011).

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2.5.2.3 Software as a Service (SaaS)

Software as a Service (SaaS) is also referred to as Service or Application Clouds that implement specific business functions processes using a cloud infrastructure or platform. This service is the most commonly used service today (Armbrust et al, 2009). “Often, kind of standard application software

functionality is offered within a cloud” (European Communities, 2010).

For SaaS, the installation, management and maintenance of software facilities are conducted by the cloud provider itself, who is either a third party service provider or a vendor. Thus, it is not necessary for the cloud provider to physically own the infrastructure that runs the software; they can either rent or lease it. In addition, even though the end users can access the applications, they do not have access to the cloud infrastructure (Cloud Computing, 2009).

The main advantage of SaaS is its ease of accessibility. SaaS is usually available on demand and via the Internet and can thus be configured remotely. Thus, this service is highly cost-effective and location independent. In addition, organizations do not have to invest in costs pertinent to maintenance or updates, since they are already covered by the provider (Armbrust et al, 2009). Table 3 highlights the different companies that currently deploy SaaS, IaaS and PaaS cloud platform services.

SaaS IaaS PaaS

Salesforce.com Amazon Azure

Office Live IBM Google App Engine

Google Apps EMC Force.com

NetSuite Microsoft NetSuite

Ultimate Software Google OpSource

Ariba Rack Space/Mosso

Concur NaviSite

Kenexa Savvis

Intacct AT&T

Salary.com/Genesys

Table 3: Companies that deploy SaaS, IaaS and PaaS cloud platform services

2.6 Cloud Mechanism

IT corporations today need to ensure the accessibility and availability of relevant hardware and software devices and applications to accomplish their goals and objectives. Apart from purchasing computing machines, they need to

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However, at this junction, the clouted shift to cloud computing, just by the installation of an application would allow the employees to log into a web-based application hosting all the programs. In addition, cloud computing systems can manage heavy workload depending on the perennial demand for hardware and software from the users’ side. The end-user has to run cloud computing interface software, which is indefinitely an uncomplicated task. Thus, as simple as running a web browser, the cloud networks take control of the subsequent tasks, making the entire process commodious and effortless. Resultantly, the company can run everything from email to complex data analysis programs, without any obvious hazards (Strickland, 2011). Figure 8 highlights the typical structure of a cloud computing system.

Figure 8:Typical structure cloud computing system (Strickland, 2011) Consequently, several fundamental components that make up cloud computing can be extracted from the above description. Primarily, cloud computing resources are located in a distinct data center managed by the respective vendors or third party enterprises. Secondly, infrastructure for cloud computing is often shared, and resources are available on demand and are usually subscription or pay-per-usage based. Thirdly, the resources leverage virtualization, provisioning multiple user interfaces that are easy to use (Coombe, 2009).

In addition, the architecture of cloud computing can be comprehended as an extension of the seven layered Open Systems Interconnection (OSI) model. The OSI model is a way of describing how different applications and protocols interact on network-aware devices (Briscoe, 2000). The first layer of the OSI model is the Physical Layer. This layer outlines the physical and electrical characteristics of the network connections. The second layer is the Data Link Layer, which outlines the strategy for sharing the physical medium; including data link and media access issues (Briscoe, 2000). The third layer is the Network Layer. This layer provides means for communicating open systems to establish, maintain and terminate network connections. Layer 4 is the Transport

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Layer 5 is the Session Layer, and it supplies medium for data exchange between two communicating presentation entities. The sixth layer is the Presentation Layer, which decides whether the application data is packed or unpacked. The final layer is the Application Layer, which contains the end-user and end-application (Briscoe, 2000). An abstract description of the same, shall provide an understanding of the actual mechanism of cloud computing. The apical layer of the cloud model consists of the client layer, which provides active interfaces between the cloud applications and end users. Subsequently, cloud applications that run the cloud de facto follow the client layer. This stratum is generally used by application developers (Coombe, 2009).

Figure 9: Different layers of cloud computing (Wolff, 2009)

Following the client layer is the infrastructure layer, which constitutes aspects pertinent to services, storage, computing and communications. Subsequent to this, software and hardware layers reside in the cloud environment. The software layer consists of the kernel that establishes active communication between the cloud applications and cloud hardware (Coombe, 2009).

Generally, this kernel includes a hypervisor that enables the virtualization discussed in 2.3. Ultimately, a hardware system with components such as processor, memory, storage, and communications, underpins the other cloud layers and enables the smooth functioning of cloud computing (Coombe, 2009). Figure 9 provides a gist of the different layers of cloud computing.

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3 Methodology

This chapter contours the research methodology. “Research methodology is a

way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them” (Kothari, 2004).

Thus, research methodology considers the logic applied in the context of the research study and explains the reason behind adopting the particular method or technique (Kothari, 2004).

Resultantly, the research framework used for this study is outlined in this section. In addition, detailed information pertinent to the research approach and design, different types of data collection methods and tools, and research credibility is bequeathed in this section.

3.1 Research Framework

Research design Literature Review Semi-Structured Interviews Preliminary Results Analysis Conclusion

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The above figure presents the diagrammatic representation of the research methodology used in this study. The research design and approach used is exploratory and qualitative. This is discussed in detail in section 3.2 and 3.3. The primary method of data collection is through semi-structured interviews, a detailed information of which is mentioned in section 3.4.1.The secondary method of data collection is through literary source analysis, which is detailed in section 3.4.2. Following the data collection, preliminary results are collected, which invariably form the basis for analysis and discussion.

3.2 Research Design

The research design is the conceptual structure within which research is conducted; “it constitutes the blueprint for the collection, measurement and

analysis of data” (Kothari, 2004). It is planning process which ensures the

effectiveness of a research.

A research can be conducted in multiple ways. Similarly, three different types of research designs namely exploratory, descriptive and hypothesis-testing are widely used. This research has used exploratory design, since the emphasis in exploratory studies is the discovery of ideas and insights (Kothari, 2004). Subsequently, this research aims to identity the benefits associated with cloud computing, the risks associated with cloud computing, and progresses towards overcoming the risks, in order to substantially identify the reasons for adopting cloud computing. Thus, this research aims to explore the underlying criticisms of cloud computing and provide necessary details to overcome the risks, and assert the future of cloud. Consequently, exploratory design is considered to be apt for this study.

3.3 Research Approach

Generally, research methods are divided into two categories, qualitative and quantitative. Quantitative research produces numerical data for appropriate analysis and interpretation. In most cases, large scale survey using techniques like questionnaires and interviews are employed to collect relevant data. In addition, statistical techniques are used to achieve the set goals and objectives, or draw inferences from the study. (Kothari, 2004)

Contrastingly, qualitative research is non-numerical research which focuses on “the subjective assessment of attitudes, opinions and behavior. Research in

IMPLICATIONS OF CLOUD COMPUTING IN IT ORGANIZATIONS