Amitive SCM in the Cloud

Characteristics of Cloud Computing

To get started, let's revisit our definition of Cloud Computing. Gartner defines it as "a style of computing where massively scalable IT-enabled capabilities are delivered as a service to external customers using Internet technologies. One IT-related function can be a software application". So let's net this out:

Applications run on a shared data center
Multi-tenancy allows for one instance of an application to be shared by all users
Services are massively scalable for any size enterprise
And since it's "pay for what you use", it provides upfront affordability and predictable cost which is attractive to every company and especially makes sense for small- and mid-sized businesses

Components of Cloud Computing

While SaaS has garnered the lion's share of attention in cloud computing discussions, the cloud is also the home for a broader range of IT services. Delivered in this style, companies can leverage a host of IT services at lower cost, with greater flexibility. These IT services are generally div ided into three buckets:

Software as a Service (SaaS)

Business and consumer software applications are shared and consumed in real-time over the internet in a one-to-many fashion. Customer Relationship Management (CRM), Enterprise Resource Planning (Accounting/ERP), and Human Capital Management (HCM) applications have seen deep penetration and broad acceptance in businesses large and small in the past decade. Complementing these apps are one-to-one and one-to-many online collaboration tools as well as IT management supporting all these application services.

Platform as a Service (PaaS)

More and more software developers are leveraging the delivery of underlying application infrastructure (including hardware and software) as a consumable service upon which they can build and deliver their IT service (usually a business or consumer application). Examples of PaaS include Salesforce.com's force.com, Amazon's EC2, and NetSuite's SuiteCloud. [Paraphrased from AMR Research]

Infrastructure as a Service (IaaS)

This is the delivery of computer infrastructure (typically a platform virtualization environment) as a service. Rather than purchasing servers, software, data center space or network equipment, clients instead buy those resources as a fully outsourced service. The service is typically billed on a utility computing basis and amount of resources consumed (and therefore the cost) will typically reflect the level of activity. It is an evolution of web hosting and virtual private server offerings. [Paraphrased from Wikipedia]

IT Benefits of Cloud Computing

What Cloud Computing does and how it does it are great, but again, is there fundamental value add being created or is this simply a different way of providing and accessing IT services? The good news is that there's significant value being created:

Cloud Computing enable services are simpler and faster to deploy. They're typically provisioned, up, and running in a few days. In contrast to upfront capital expenses based on a lifetime estimate of usage, the model here is low monthly payments (subscription) and pay only what you use. Now you can focus IT on more strategic activities as Cloud Computing doesn't eat up valuable IT resources or budget (nothing to install or maintain). The Cloud offers latest functionality, frequent upgrades and customizable use, two benefits at odds with each other in the traditional software model. The Cloud encourages more standard IT and it drastically simplifies sharing of systems and information.

Business Benefits of Cloud Computing

While the IT benefits of Cloud Computing present shear advantage, let's get back to the business evaluation of potential for improvement of business activities and financial performance.

Cloud Computing enables today's supply chain business operating model — the multi-enterprise business network - with real-time, cross-community visibility. Now processes can be conducted seamlessly and efficiently and individual and community decisions can be made faster based on a single source of truth. Add to these operating improvements the benefit of lower costs of leveraging shared services. And now a supply chain community has the flexibility to grow and contract to meet the needs of an entire business community, depending on product mix, market conditions, etc. The shape of the community can morph as well with the flexibility to frequently and easily change the shape of business processes supporting products, partners and geographies.

These operating improvements contribute to cut costs, free working capital, speed innovative products to market, and change quickly to the volatility of energy, demand, and credit complicating the already complex world of supply chain management.

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Glossary of Terms: Cloud Computing Defined

Cloud Computing Cloud computing is the style of computing where IT-enabled business products, services and solutions are delivered as a service in real-time over the internet. Cloud computing is generally comprised of Software as a Service, Platform as a Service, and Infrastructure as a Service. A user may utilize one or many services via cloud computing. (Gartner)

Software as a Service (SaaS) Software as a Service (SaaS) is software that's designed, owned, delivered and managed remotely by one or more providers. SaaS is based on a single set of common code and with one-to-many delivery, all customers are on a common release. It is multi-tenant and contracted by customers on a pay for use, or as a subscription based on a variety of use metrics. SaaS is one of the key IT services offered in cloud computing. (Gartner)

Application Service Provider (ASP) ASP is one-to-one with every account unique and on many releases. SaaS/Cloud is one-to-many from both a multi-tenant POV and with all on the same release. This improves costs efficiencies, direct access by the vendor for Support (versus indirect — arm's length — for an ASP). SaaS/Cloud vendors can upgrade and manage bug fixes directly to all accounts frequently whereas ASP would have to do that on a one-to-one basis when they get around to it. ASP isn't as timely and is more expensive from this POV.

Platform as a Service (PaaS) The delivery of the underlying application infrastructure (including hardware and software) as a consumable service, e.g. force.com or Amazon's EC2. (AMR)

Integration as a Service (IaaS) Taking the functionality of system integration and putting it into the cloud, providing for data transport between the enterprise and SaaS applications or third parties. (AMR)

Multi-tenancy Everyone's data is stored on same hardware. Co-mingled with other people's data. For example, when one updates everyone gets updated. (AMR) Principle wherein a single instance of the software runs on a software-as-a-service (SaaS) vendor's servers, serving multiple client organizations (tenants). With a multitenant architecture, a software application is designed to virtually partition its data and configuration so that each client organization works with a customized virtual application instance. (Wikipedia)

Service Oriented Clouds All computing power and storage exists somewhere else, not in the premises. Requires a browser and third party management. (AMR)

Service Oriented Architecture Products and consulting that enable the creation, execution and management of software services and the applications that consume them. (AMR)

Web Services A Standard way of integrating applications using Extensible Markup Language (XML), Simple Object Access Protocol (SOAP),Web Service Definition Language (WSDL)and Universal Description, Discovery and Integration Standards. (AMR)