From Information Systems Outsourcing to Cloud Computing

From Information Systems Outsourcing to Cloud Computing

Mohammad Nabil Almunawar (Universiti Brunei Darussalam, Brunei) and Hasan Jawwad Almunawar (P. T. Tegar Kupas Mediatama, Indonesia)
Copyright: © 2018 |Pages: 15
DOI: 10.4018/978-1-5225-2255-3.ch095
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Abstract

We are witnessing the business prospects of cloud computing becoming apparent as many cloud computing services have been made available online. Previously, outsourcing of computing resources employs a third party to set up, develop and maintain the infrastructure within or outside the business organization. However, nowadays many business organizations all over the world see that outsourcing their computing resources through cloud computing is a highly viable option as it saves a business organization from the complicated setup and maintenance costs of computer infrastructure. There are three generally known types cloud computing, namely, public cloud, private cloud and hybrid cloud. There also three generally service models namely software as a service (SaaS), platform as a service (PaaS) and infrastructure as a service (IaaS). This paper highlights the development of cloud computing technology, benefits and issues of outsourcing an organization's computing resources through cloud computing.
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Introduction

Outsourcing is a business term to describe a mechanism in which a company utilizes services provided by another company, normally through a contract, to fulfill some of its required business resources or functions. Outsourcing is commonly practiced by business organizations, as it is believed that it can cut costs and simplify management. For service providers, outsourcing gives them a long-term source of revenue.

Nowadays most business organizations outsource some part of their business operations. One of the most common is information systems (IS) outsourcing. This may range from computer maintenance, website development and maintenance, e-Business to the whole IS function (Dibbern, Goles, Hirschheim, & Jayatilaka, 2004). Actually, IS outsourcing is an old story which started as early as 1963 when Frito-Lay and Blue Cross & Blue Shield outsourced their data processing jobs to Electronic Data Systems (Lacity & Hirschheim, 1993). In fact, Eastman Kodak outsourced the whole of its IS functions to IBM, DEC and Businessland in 1989, 25 years ago (Gupta & Gupta, 1992). In the early stages of IS outsourcing, the issue being addressed in business organizations was whether they should outsource. Over time, the issue was no longer on whether to outsource or not to outsource, but how much to outsource (Lee, Huynh, Kwok, & Pi, 2003). This indicates that IS outsourcing has been adopted by many business organizations.

The advancement of Internet technology, especially the Web as well as high-speed and broadband access to the Internet, enabled a new computing model, “cloud” computing. The new model allows organizations to outsource some components or whole of their IS in the cloud that can be controlled and utilized from anywhere with a web browser. With this model organizations do not need to purchase hardware and expensive software licenses and surely they do not need to worry about software and hardware maintenance, which is normally a large portion of the total ownership costs of an IS to estimate the overall cost (direct and indirect) of an IS in a given time frame. Cloud computing vendors normally offer a pay-per-use method for their services, making cloud computing services like paying utilities. Perhaps cloud computing is the realization of McCarthy’s dream of utility computing, a package of computing resources that can be rented or subscribed just like other utilities (Garfinkel, 2011).

What makes the cloud computing system different from conventional computing systems? In conventional computing systems (mainframe, client-server or personal computer systems), most of the computing resources owned by an organization normally reside in the organization’s premises. The organization has to manage these resources to make sure they can be utilized to support the organization in attaining its goals. The organization incurs all costs in owning these resources, which may include investment, operation and maintenance costs. In contrast, an organization does not need to own most of the computing resources in a cloud computing system. Instead, the organization utilizes computing resources offered by a provider and accesses the resources as needed. The organization only needs to own client devices (low cost terminals or thin clients) to utilize the computing resources through the Internet. Consequently, the organization does not need to bear the burden of all the costs mentioned previously. Of course, the organization needs to pay the provider for using the resources with a pay-per-use method of payment.

Key Terms in this Chapter

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.

PaaS: Is a type of cloud computing service that offer the infrastructure as well as application development platform. PaaS providers accessible through a computer network or the Internet provide all tools for development of applications. These tools may include automation in designing, deploying, testing, and administering applications to simplify application development.

Grid Computing: Is a middleware consisting of interconnected heterogeneous computer systems in a high-speed network to solve computation-intensive problems.

Outsourcing: Is a business term to describe a mechanism in which a company utilizes services provided by another company, normally through a contract, to fulfill some of its required business resources or functions.

SaaS: Is a type of cloud computing service that offer various software accessible to customers through the Internet.

IaaS: Is a type of cloud computing service that provide infrastructure, especially servers or virtual servers located in data centers to customers. The servers or virtual servers are normally accessed through a computer network such the Internet.

Virtualization: Is mechanism to create virtual version of a real thing. Virtualization of a machine normally creates virtual versions of the machine, meaning several independent virtual machines for different purposes can be generated. In cloud computing, virtualization is used to generate virtual servers or virtual resources (such as storage) dynamically.

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