What Business Benefits Do Cloud Computing Services Provide? ✓ Solved

What business benefits do cloud computing services provide?

What business benefits do cloud computing services provide? What problems do they solve? 2. What are the disadvantages of cloud computing? 3. How do the concepts of capacity planning, scalability, and TCO apply to this case? Apply these concepts both to Amazon and to subscribers of its services. 4. What kinds of businesses are most likely to benefit from using cloud computing? Why?

Paper For Above Instructions

Executive Summary

This paper summarizes the business benefits and drawbacks of cloud computing, explains the problems it solves, and applies capacity planning, scalability, and total cost of ownership (TCO) concepts to both a major provider (Amazon Web Services) and its subscribers. It concludes by identifying business types that gain the most from cloud adoption and why.

1. Business Benefits and Problems Solved

Cloud computing delivers measurable business benefits: cost efficiency through pay-as-you-go pricing, faster time-to-market, operational agility, global reach, and access to managed services (Armbrust et al., 2010; Marston et al., 2011). By shifting capital expenditures (CapEx) for servers, data centers, and networking into operational expenditures (OpEx), companies reduce upfront investment and convert fixed costs into variable costs tied to actual usage (Mell & Grance, 2011).

Cloud services solve several practical problems: overprovisioning and idle capacity are minimized via on-demand provisioning; long procurement and deployment cycles are shortened through API-driven infrastructure; and smaller teams can leverage enterprise-grade services (storage, databases, analytics, machine learning) that would be prohibitively costly to build in-house (Buyya et al., 2009; Marinescu, 2017). Additionally, cloud providers offer built-in redundancy, managed security controls, and compliance tooling that reduce the operational burden on subscribers (AWS, 2023).

2. Disadvantages and Risks

Despite benefits, cloud computing has disadvantages. Vendor lock-in can arise from proprietary APIs and migration complexity, making switching costly (Zhang et al., 2010). Security and privacy concerns remain, especially for sensitive data and regulated industries; while providers invest heavily in security, shared-responsibility models require customers to configure controls correctly (Mell & Grance, 2011; ISACA, 2020). Other drawbacks include potential cost unpredictability with variable workloads, network latency for latency-sensitive applications, and loss of direct control over infrastructure (Weinhardt et al., 2009; Linthicum, 2017).

3. Capacity Planning, Scalability, and TCO — Provider vs. Subscriber

Capacity Planning

For Amazon (as a cloud provider), capacity planning focuses on aggregate demand forecasting, data-center footprint optimization, and multi-region redundancy. AWS uses large-scale telemetry, predictive modeling, and flexible resource pools to smooth peaks and sustain SLAs (AWS, 2023). Economies of scale let Amazon amortize infrastructure costs across many tenants.

For subscribers, capacity planning shifts from hardware procurement cycles to demand forecasting for cloud instances, storage, and services. Subscribers must plan rightsizing strategies, reserve vs. on-demand mixes, and identify seasonality to control costs (Marinescu, 2017). Proper capacity planning in the cloud reduces waste and prevents performance bottlenecks.

Scalability

Scalability is a core differentiator: providers design horizontally scalable platforms that allow rapid allocation of resources. AWS exposes auto-scaling, serverless compute, and managed database scaling to enable elastic scaling under load (AWS, 2023). This design reduces the marginal cost of adding capacity.

Subscribers benefit by matching resources to real-time demand: web applications can auto-scale during traffic spikes, and batch workloads can scale out for processing then scale back to zero. Scalability reduces time-to-market and supports business continuity (Armbrust et al., 2010; Buyya et al., 2009).

TCO (Total Cost of Ownership)

From Amazon's perspective, TCO is about maximizing utilization of global assets, reducing per-unit costs through volume, and offering differentiated services that justify price tiers (Weinhardt et al., 2009). For customers, TCO analysis must include direct cloud fees, data transfer costs, personnel costs for cloud operations, potential migration costs, and costs avoided (data center maintenance, depreciation). Studies show that for many workloads — especially variable or bursty ones — cloud TCO is lower than on-premises solutions, but for very steady, predictable workloads, long-term dedicated infrastructure can sometimes be cheaper (Low, Chen, & Wu, 2011; Marston et al., 2011).

Effective TCO management requires combining capacity planning, selecting appropriate pricing models (reserved instances, savings plans), and leveraging managed services to reduce operational headcount. Monitoring and governance tooling are essential to avoid runaway costs (AWS Well-Architected Framework, 2023).

4. Which Businesses Benefit Most and Why

Several business types gain disproportionate advantages from cloud adoption:

  • Startups and SMBs: Low upfront costs, rapid provisioning, and access to enterprise-grade services remove barriers to entry and support fast iteration (Marston et al., 2011).
  • SaaS providers and digital-native companies: Need scalable, multi-tenant platforms that can grow with user bases and benefit from global distribution and pay-as-you-go economics (Armbrust et al., 2010).
  • E-commerce and retail: Seasonal spikes and unpredictable demand make elasticity valuable for handling high-traffic events without permanent overprovisioning (Buyya et al., 2009).
  • Data analytics and machine learning firms: On-demand high-performance compute, managed big data services, and specialized accelerators (GPUs/TPUs) minimize capital investment and speed model training (Marinescu, 2017).
  • Enterprises pursuing digital transformation: Migrating legacy workloads, adopting microservices, and modernizing operations benefit from cloud-managed services and global platform capabilities (Linthicum, 2017).

Businesses that typically benefit less are those with strict data-sovereignty/latency needs that cannot be met by cloud regions, or those with extremely predictable, low-variability workloads where owning infrastructure may yield lower long-term costs if utilization is near 100% (Zhang et al., 2010; Low et al., 2011).

Practical Recommendations

  1. Perform workload classification to decide which apps should migrate to cloud, remain on-premises, or adopt hybrid models (Mell & Grance, 2011).
  2. Implement governance and cost visibility tools to monitor usage, enforce tagging, and allocate costs (AWS, 2023).
  3. Use auto-scaling and serverless where appropriate to minimize idle capacity; reserve capacity strategically when workloads are predictable (Marinescu, 2017).
  4. Plan for portability by favoring open standards and containerization to reduce vendor-lock-in risk (Zhang et al., 2010).

In summary, cloud computing provides agility, cost flexibility, and access to advanced services that solve procurement and capacity problems. The trade-offs include potential lock-in, security responsibilities, and cost-management challenges. Applying disciplined capacity planning, exploiting scalability features, and performing careful TCO modeling helps both providers like Amazon and subscribers realize the economic and operational benefits of the cloud.

References

  • Armbrust, M., Fox, A., Griffith, R., Joseph, A. D., Katz, R., Konwinski, A., ... & Zaharia, M. (2010). A view of cloud computing. Communications of the ACM, 53(4), 50–58.
  • Mell, P., & Grance, T. (2011). The NIST definition of cloud computing (NIST SP 800-145). National Institute of Standards and Technology.
  • Buyya, R., Yeo, C. S., & Venugopal, S. (2009). Market-oriented cloud computing: Vision, hype, and reality for delivering IT services as computing utilities. In 2008 10th IEEE International Conference on High Performance Computing and Communications.
  • Marinescu, D. C. (2017). Cloud Computing: Theory and Practice (2nd ed.). Morgan Kaufmann.
  • AWS. (2023). AWS Well-Architected Framework and AWS documentation. Amazon Web Services. https://aws.amazon.com/architecture/well-architected/
  • Zhang, Q., Cheng, L., & Boutaba, R. (2010). Cloud computing: state-of-the-art and research challenges. Journal of Internet Services and Applications, 1(1), 7–18.
  • Weinhardt, C., Anandasivam, A., Blau, B., & Stößer, J. (2009). Cloud computing—A classification, business models, and research directions. Business & Information Systems Engineering, 1(5), 391–399.
  • Linthicum, D. (2017). Cloud Computing and SOA Convergence in Your Enterprise. Addison-Wesley.
  • Low, C., Chen, Y., & Wu, M. (2011). Understanding the determinants of cloud computing adoption. Industrial Management & Data Systems, 111(7), 1006–1023.
  • Marston, S., Li, Z., Bandyopadhyay, S., Zhang, J., & Ghalsasi, A. (2011). Cloud computing — The business perspective. Decision Support Systems, 51(1), 176–189.

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