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80 Chapter 3 • Enterprise Systems Architecture

testing, development, Q&A, training, and production environments. The implemention of virtu-
alized SAP solutions allows clients of VMware to reap multiple categories of cost savings; when
calculating the total cost of ownership (TCO): savings come from downtime (30 percent of
TCO), operation (40 percent of TCO), administration (10 percent of TCO), and hardware and
software (20 percent of TCO).
Similarly, Oracle is offering a CRM solution for the cloud. Oracle offers sale, service,
marketing, contact-center operations, and real-time and historical analysis and helps integrate
business processes with prebuilt Web services. Oracle calls this cloud computing service as
Oracle CRM On Demand, which offers its clients the power to break down their departmental
silos. The service is offered at a (subscription-like) per-user, per-month price. Therefore, the
companies using this service need not worry about paying maintenance and upgrade costs. 10
In general, the greatest attraction for cloud architecture is cost, particularly as the services
are free for the first 3–5 users and the cost is not very high for more users. Other benefits of
cloud computing include the ease of access, which means that all you need is a computer with
Internet access and an Internet browser and you will be able to access your cloud service. Also
the costs of money and resources related to owning those software and hardware can be saved
and spent in other areas of the business as the cloud service provider takes care of the server,
installation, security, and maintenance for the applications. CC allows IT staff and management
of companies to sleep at night knowing that your servers and applications will be working the
next day because of the provided reliability of the company hosting your applications
(Cusumano, 2010).
However, everything is not perfect in the world of cloud computing. Just like other solutions,
there are some risks that are associated with keeping your applications and data outside of the
company. As mentioned before, there is a great concern about data security and vulnerability. Not
having the physical control over who accesses the data and how well the data are protected, most
companies are not comfortable or ready to store information, especially sensitive information,
outside the company’s firewalls. Further, not knowing where the data are being stored and
processed discourages companies from accepting cloud computing as a viable business option
(Nicholson, 2009).
Sometimes there are potential conflicts of interest when the company that is hosting
your application also has its own application that is similar to yours. For example, a CC ven-
dor like Google or Amazon could decide to create an application that is similar to yours and
offer it to their clients and who could possibly be your competitors. This would create a big
conflict between Google and their customers, as well as between two competing clients that
now have access to similar technology. These issues are a big reason why many companies are
staying away from cloud computing as an answer to the traditional expensive in-house IT
solutions.
Network vendors today are realizing that most applications will be housed either internally
or externally on a CC platform. Whether they live in an organization’s data center or off site in
another vendors cloud, the network is now becoming more important than ever. Networks need
to be designed to handle larger amounts of data than ever before. They are also expected to be
highly redundant and never require any downtime. Vendors are responding to these demands
and introducing network equipment that not only fills these requirements but also scale as
requirements change while keeping costs nominal.

10 CRM on Demand, Oracle (2010).