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Chapter 5 IT Infrastructure and Emerging Technologies 215

of its IT infrastructure to provide a broadly based cloud environment sell-
ing IT infrastructure services. These include its Simple Storage Service (S3)
for storing customers’ data and its Elastic Compute Cloud (EC2) service for
running their applications. Users pay only for the amount of computing and
storage capacity they actually use. (See the chapter-ending case study.)
• Cloud platform as a service: Customers use infrastructure and programming
tools supported by the cloud service provider to develop their own applica-
tions. For example, IBM offers a Smart Business Application Development &
Test service for software development and testing on the IBM Cloud. Another
example is Salesforce.com’s Force.com, which allows developers to build
applications that are hosted on its servers as a service.
• Cloud software as a service: Customers use software hosted by the vendor
on the vendor’s cloud infrastructure and delivered over a network. Leading
examples are Google Apps, which provides common business applications
online and Salesforce.com, which also leases customer relationship manage-
ment and related software services over the Internet. Both charge users an
annual subscription fee, although Google Apps also has a pared-down free
version. Users access these applications from a Web browser, and the data
and software are maintained on the providers’ remote servers.

A cloud can be private or public. A public cloud is owned and maintained by
a cloud service provider, such as Amazon Web Services, and made available to the
general public or industry group. A private cloud is operated solely for an orga-
nization. It may be managed by the organization or a third party and may exist
on premise or off premise. Like public clouds, private clouds are able to allocate
storage, computing power, or other resources seamlessly to provide computing
resources on an as-needed basis. Companies that want flexible IT resources and
a cloud service model while retaining control over their own IT infrastructure
are gravitating toward these private clouds. (See the chapter-ending case study.)
Since organizations using public clouds do not own the infrastructure,
they do not have to make large investments in their own hardware and soft-
ware. Instead, they purchase their computing services from remote providers
and pay only for the amount of computing power they actually use (utility
computing) or are billed on a monthly or annual subscription basis. The
term on-demand computing has also been used to describe such services.
Cloud computing has some drawbacks. Unless users make provisions for
storing their data locally, the responsibility for data storage and control is in
the hands of the provider. Some companies worry about the security risks
related to entrusting their critical data and systems to an outside vendor
that also works with other companies. Companies expect their systems to
be available 24/7 and do not want to suffer any loss of business capability
if cloud infrastructures malfunction. Another limitation of cloud computing
is that users become dependent on the cloud computing provider, and this
may not necessarily be desirable, as discussed in the chapter-ending case.
Nevertheless, the trend is for companies to shift more of their computer
processing and storage to some form of cloud infrastructure.
Cloud computing is more immediately appealing to small and medium-
sized businesses that lack resources to purchase and own their own hardware
and software. However, large corporations have huge investments in complex
proprietary systems supporting unique business processes, some of which give
them strategic advantages. The cost savings from switching to cloud services
are not always easy to determine for large companies that already have their
own IT infrastructures in place. Corporate data centers typically work with an
IT budget that accounts for a mix of operational and capital expenses. Pricing

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