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15.4 Computer Networks and Cloud Compu ng

LEARNING OBJECTIVES

1. Describe the main systems for sharing informa on through networked computers.
2. Define cloud compu ng and iden fy its advantages and disadvantages.

Once it’s grown beyond just a handful of employees, an organization needs a way of sharing
information. Imagine a flower shop with twenty employees. The person who takes phone orders needs
access to the store’s customer list, as do the delivery person and the bookkeeper. Now, the store may
have one computer and everyone could share it. It’s more likely, however, that there are a number of
computers (several for salespeople, one for delivery, and one for bookkeeping). In this case, everyone
needs to be sure that customer records have been updated on all computers every time that a change
is required.

Networks

Likewise, many companies want their personal computers to run their own software and process data
independently. But they also want people to share databases, files, and printers, and they want them
to share applications software that performs particular tasks, including word processing, creating
and managing spreadsheets, designing graphical presentations, and producing high-quality printed
documents (desktop publishing).

The solution in both cases is networking—linking computers to one another. The two major types of
networks are distinguished according to geographical coverage:

A local area network (LAN) links computers that are in close proximity—in the same building
or office complex. They can be connected by cables or by wireless technology. Your university
might have a LAN system that gives you access to resources, such as registration information,
software packages, and printers. Figure 15.7 "Local Area Network (LAN)" illustrates a LAN that’s
connected to another network by means of a gateway—a processor that allows dissimilar
networks to communicate with one another.

Figure 15.7 Local Area Network (LAN)

Because a wide area network (WAN) covers a relatively large geographical area, its computers
are connected by telephone lines, wireless technology, or even satellite.

Like the one in Figure 15.7 "Local Area Network (LAN)", some networks are client-server systems,
which include a number of client machines (the ones used by employees for data input and retrieval)
and a server (which stores the database and the programs used to process the data). Such a setup
saves time and money and circulates more-accurate information.

Cloud Compu ng

A cloud is a “visible mass of condensed water vapor floating in the atmosphere, typically high above
the ground.”“Cloud,” Dictionary.com, http://dictionary.reference.com/browse/cloud (accessed
November 15, 2011). The term “cloud computing” means performing computer tasks using services
provided over the Internet.Melanie Pinola, “What Is Cloud Computing?,” About.com,
http://mobileoffice.about.com/od/workingontheroad/f/cloudcomputing.htm (accessed November
15, 2011). So how do you connect the two definitions? When IT professionals diagrammed computer
systems, they used a cloud symbol to represent the Internet. So when you hear or read that an
individual or company is using the “cloud” or technology firms, such as IBM, Hewlett-Packard, and
Salesforce.com, are offering cloud services, just substitute the word “Internet” for “cloud” and things
will make sense.

You might be surprised to learn that you’re already using the cloud—that is if you use Facebook
(which is very likely—in fact, just mentioning Facebook here might prompt you to stop studying and
check out your friends’ pages). How do you know that Facebook is a cloud application? Remember the
trick: just substitute the word “Internet” for “cloud.” The Facebook computer application lets you
store information about yourself and share it with others using the Internet.

Business Applica ons

Think about the functional areas of business you’ve explored in this text: accounting, finance, human
resources, management, marketing, operations, and product design. Now imagine you’re Katrina
Lane, senior vice president and chief technology officer for Caesars Entertainment, who is responsible
for the information technology needed to handle multiple tasks in all these functional areas. You’re
sitting at your desk when Gary Loveman, chief executive officer of Caesars, walks in and gives you the
news. Caesars just purchased the Planet Hollywood Casino and Resort in Las Vegas and will open up
two new casinos in Ohio in 2012. This is good news for the company, but it means a lot of work for
you and your staff.

You wonder whether this might be the time to outsource some of your computing tasks to a
technology firm specializing in cloud computing. You remember an example that really makes
sense:Paul Gil, “What Is Cloud Computing?,” About.com,
http://netforbeginners.about.com/od/c/f/cloudcomputing.htm (accessed November 15, 2011). Right
now, whenever Microsoft comes out with a new version of Word, Caesars has to pay $350 per PC for
the latest version. Wouldn’t it make more sense to rent the use of the Microsoft Word program from a
cloud vendor for say $5 a month (or $60 a year)? Given that the average time between new releases of
Word is two years, your total cost per PC would be $120 (2 × $60)—a savings of about $230 per PC
($350 − $120). Your employees wouldn’t mind; instead of working offline, they would just login to the
Internet and work with their online version using the files that were saved for them. And the
members of your IT staff would be pleased that they wouldn’t need to install the new version of Word
on all your PCs.

The As-A-Service Group

Companies can contract for various cloud computing services. The Microsoft Word example discussed
previously is classified as software as a service (SaaS). This type of service gives companies access
to a large assortment of software packages without having to invest in hardware or install and
maintain software on its own computers. The available software, which includes e-mail and
collaboration systems and customer relationship management programs, can be customized and used
by an individual client or shared among several clients. A second type of service is called
infrastructure as a service (IaaS). Instead of providing users with software, a technology firm
offering infrastructure as a service provides hardware, including servers, central processing units,
network equipment, and disk space.“Software as a Service/ Infrastructure as a Service,” Thrive
Networks, March 2009, http://www.thrivenetworks.com/resources/march-2009-software-as-a-
service.html (accessed November 15, 2001). The most successful IaaS provider is Amazon Web
Services.“Infrastructure as a Service,” Best Price Computers,
http://www.bestpricecomputers.co.uk/glossary/infrastructure-as-a-service.htm (accessed November
15, 2011). The company rents computer power and storage to users who access their data via the
Internet. The last as-a-service model is called platform as a service (PaaS). Those offering
platform as a service provide services that enable users to develop customized web applications.
Because they don’t have to start from scratch but rather build on existing platforms made available by
the service provider, the web applications can be developed quickly.

Video Clip

"Traditional business applications and platforms are too complicated and expensive. They need a data
center, a complex software stack, and a team of experts to run them."

Advantages and Disadvantages of Cloud Compu ng

In making your final decision (as the pretend chief technology officer for Caesars) you should
consider these advantages and disadvantages of cloud computing:

Advantages

Shifting some of Caesars’s IT functions to the cloud would produce a number of advantages:

1. Cost Savings—By “renting” software rather than buying it, Caesars can reduce its costs. The
monthly fee to “use” the software is generally less than the combined cost of buying, installing,
and maintaining the software internally. On the hardware site, housing Caesars’s data in a service
provider’s facilities, rather than in-house, reduces the large outlay of cash needed to build and
maintain data centers.
2. Speed of Delivery—Purchasing and installing software and data processing equipment can be
time consuming. A cloud computing service provider could get Caesars’s applications up and
running in only a few weeks.
3. Scalable—Caesars is constantly expanding both in the number of casinos it owns and
geographically. In this ever-changing environment, it’s difficult to gauge the level of our
technology needs. If we overestimate our requirements, we end up paying for technology we don’t
need. If we underestimate, efficiency goes down, and the experience for our customers
diminishes. By using cloud computing we are able to have exactly what we need at our disposal at
any point in time.
4. Employees Can Be Mobile—The use of cloud computing will free workers from their desks and
allow them to work wherever they are. As applications move to the cloud, all that is needed for
our employees to connect to their “offices” is the Internet. This mobility benefit also makes it
easier for employees to collaborate on projects and connect with others in the company.
5. Information Technology Staff—Although our current staff is extremely qualified and dedicated,
finding experienced and knowledgeable staff is a continuing problem particularly in the casino
industry which suffers from historically high turnover. By using cloud computing, we reduce our
human resource needs by shifting some of our work to outside vendors who are able to hire and
keep well qualified individuals (in part because IT professionals enjoy working for technology
companies).

Disadvantages

Although the advantages of moving to a cloud environment outnumber the disadvantages, the
following disadvantages are cause for concern:

1. Disruption in Internet Service—If Caesars moves some of its applications to the cloud, its
employees can work on these applications on any device and in any location as long as they have
an Internet connection. But what if the Internet is unavailable because of a disruption?
Depending on the length of the disruption, this could create serious problems for Caesars.
2. Security—Many companies are reluctant to trust cloud service providers with their data because
they’re afraid it might become available to unauthorized individuals or criminals. This is a
particular problem for Caesars, which collects and stores sensitive client information and has to
constantly be on the lookout for fraudulent activity of staff and customers.Joseph Eve, “Cloud
Computing as a Security Asset,” Indian Gaming,
www.indiangaming.com/istore/Apr11_JosephEve.pdf (accessed November 16, 2011), 60-61.
3. Service Provider System Crash—Organizations considering moving to the cloud are justifiably
concerned about the possibility of a computer service crash at their service providers’ facilities. It
looks like this concern was warranted. In April of 2011, Amazon Web Service (a leading cloud
services provider) experienced an outage in one of its large web-connected data centers. The
outage crashed its system and brought down the Web sites of a number of companies, including
the location-based social network, Foursquare.Steve Lohr, “Amazon’s Trouble Raises Cloud
Computing Doubts,” The New York Times, April 22, 2011,
http://www.nytimes.com/2011/04/23/technology/23cloud.html?_r=1 (accessed November 16,
2011). It took more than thirty-six hours to get all seventy or so of the crashed sites up and
running.

Go or No Go?

So, pretend chief technology officer for Caesars, what’s your decision: will you get on the cloud or stay
on the ground? If you are curious about what the real chief technology officer did, she took the high
road and transferred a number of applications to Salesforce.com’s Web-based Force.com’s cloud
applications service.“Caesars Entertainment Hits the Efficiency Jackpot with Force.com,”
Salesforce.com, http://www.salesforce.com/showcase/stories/caesars.jsp (accessed November 16,
2011).

K E Y TA K E AWAY S

Once an organiza on has grown to more than a few employees, it needs to network individual
computers to allow them to share informa on and technologies.
A client-server system links a number of client machines (for data input and retrieval) with a
server (for storing the database and the programs that process data).
Many companies want personal computers to run their own so ware and process data
independently.
But they also want individuals to share databases, files, printers, and applica ons so ware that
perform par cular types of work (word processing, crea ng and managing spreadsheets, and so
forth).

There are two systems that can sa sfy both needs.

1. A local area network (LAN) links computers in close proximity, connec ng them by
cables or by wireless technology.
2. A wide area network (WAN) covers a rela vely large geographical area and connects
computers by telephone lines, wireless technology, or satellite.

The term “cloud compu ng” means performing computer tasks using services provided over the
Internet.
The so ware as a service (SaaS) category of cloud compu ng gives companies access to a large
assortment of so ware packages without having to invest in hardware or install and maintain
so ware on its own computers.
A technology firm offering infrastructure as a service provides users with hardware, including
servers, central processing units, network equipment, and disk space.
Those offering the pla orm as a service category of cloud compu ng provide services that enable
users to develop customized web applica ons.
Shi ing IT func ons to the cloud produces a number of advantages, including cost savings, speedy
delivery of so ware, scalability (you pay for only what you need), employee mobility, and a
reduc on in informa on technology staff.
The following disadvantages of cloud compu ng are cause for concern: disrup on in internet
service, security issues, and unreliability of service provider systems.

EXERCISES

1. What’s the difference between a LAN and a WAN? Give an example of the use to which each type
of system can be put. Does your college maintain either type of computer network?
2. In what ways could your college benefit from cloud compu ng? In responding, consider the three
types of services offered by cloud service providers: so ware as a service, infrastructure as a
service, and pla orm as a service. What type of security issues might your college administrators
be concerned with?

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