Senanga Perera

Aayushi Vashishtha
Kevin Nhan
BPS 4305.009
The Impact of Cloud Technology on Strategic Management
Abstract
This study examines the different types of cloud computing, and how cloud technology
has, and will continue to impact business and consumer markets. The research was conducted
through the use of scholarly peer reviewed journal articles and face to face interviews with IT
professors and students at the University of Texas at Dallas. The findings showed that cloud
computing is going to be an integral part of data storage in most companies within the next few
years. This study is original in that it examines the impact that cloud has through both the
viewpoints of business aspects and consumer aspects alike. This study contributes to the IT
industry to serve as a benchmark which demonstrates how far cloud computing has come, and
how far it can go within the distant future.
Introduction
Cloud computing is a model which is model that allows users to have unlimited network
access to many technological resources such as networks, servers, storage, applications and
services. Cloud is one of the four Nexus of Forces. It is a third platform which allows billions of
users to use millions of applications. It also allows a business to expand its influence socially
through mobile devices and big data.
Since cloud is ubiquitous and allows data access anywhere, its agent to principal model
synergizes well with the cloud concept as well as be beneficial to businesses. In a business, cloud
computing can either benefit or hurt them. There are many different types of cloud computing
and storages; however, this research article can illustrate what types of cloud computing exists
and a few examples that may be best suitable depending on the type of company.

The Impact of Cloud Technology on Strategic Management

Research
What is Cloud Technology?
The IT realm of business has been transformed by the advent of cloud computing. The
main goal that Cloud computing achieves is allowing users and businesses to take advantage of
the technology, while not needing in-depth technical IT knowledge. Cloud, in laymans terms, is
simply storing and accessing data and programs over the internet, instead of using physical hard
drives or data centers. Storing data on a hard drive is considered to be storing data on local
storage. This means that the data is accessible easily, if the physical data source is in close
proximity. Storing data on a network that resides within an office or home network is not
considered using cloud technology, simply because the data is only available within that one
network. Using a network to store and access data is only considered cloud computing when this
data is synced and able to be accessed through the internet. Cloud technology is mainly enabled
due to a process called virtualization. The software that virtualization entails allows for the
separation of a physical computer or storage device into one or many virtual devices. Cloud
computing uses virtualization to create an extensible system of independent computing sources.
This allows for idle data servers and computing systems to be allocated to some use, instead of
taking up power while not being utilized at all. With internet connectivity being as widespread as
it is today, it is no wonder why cloud computing has sky rocketed in the dot-com era of business.
Having an internet connection means that it is possible to be connected to any cloud platform.
This ubiquitous function of cloud computing is the reason why consumers and businesses alike
are abandoning their physical storage units and moving to the cloud.

The Impact of Cloud Technology on Strategic Management

The Advent of Cloud Computing

Cloud computing has only recently taken the world by storm. The evolution of cloud can
be seen step by step in the diagram below:
First. Grid computing: Using parallel computing to create solutions
Second. Utility computing: Using metered service to create solutions
Third. SaaS: Applications used through network subscriptions
Fourth. Cloud computing: Access to resources dynamically through the internet
The 1970s brought along the concept of virtual machines, which made it possible to to
run more than one operating system together synchronously inside one hardware. This
virtualization was important, because it was the catalyst that brought upon the evolution of the
transfer of information. The lower cost of using a virtual private network (VPN) enticed
companies who were looking for a service that could replace their traditional data center uses.
Using a VPN provided the ability to switch traffic to balance their server and network bandwidth
use. Of course, the applicability and usability of this service was limited, simply because the
technology at the time was much less developed than it was even in the 1990s. The 90s saw the
first real surge of cloud computing; as business were beginning to gain more knowledge about
cloud computing and how useful it could potentially be for providing services and solutions
efficiently, Salesforce.com pioneered the first commercial cloud service product in 1999. Their
application was accessible by any customer connected to the internet. Salesforces product truly
brought upon a new age of technology, further adding to the dot-com bubble that started in the
early 1980s. Amazon came along in 2002 to burst this bubble, becoming the first major business
to shift its data storage from physical data centers to the cloud. This is one of the main factors
contributing to Amazons success over the last decade-and-a-half. Amazon realized that they

The Impact of Cloud Technology on Strategic Management

were only using about 10 percent of their data centers capacity at a given time, which is why
they decided to use the new cloud technology infrastructure model. This would allow them to use
the existing capacity they were utilizing, but with much more efficiency and much less costs.
Google came into the cloud computing game in 2006, with their Google Docs service, which
provides cloud services directly to users, instead of wide-scale frameworks that are only
applicable to companies wishing to transform their infrastructure to the cloud. This makes it
possible for regular day-to-day end-user operations, such as editing a document or spreadsheet,
to be done using the cloud instead of a hard drive or memory stick.
The Concepts Within Cloud Computing
Virtualization, of course, plays a key role in cloud computing, by splitting a physical
computing device into more than one virtual devices, which allows for easy use and more
optimal and efficient allocation of resources. Another concept that makes cloud computing a
competent framework is autonomic computing. Automation allows for a user to provision
resources on-demand, minimizing user involvement. This speeds up processes, reduces labor
costs, and abjures human error. Service-Oriented Architecture is a concept that is useful with
solving difficult business issues. The idea behind Service Oriented Architecture is breaking
down problems into services that can be integrated within a cloud based system to provide a
solution, by providing resources that make use of the standards and practices set by Service
Oriented Architecture. This allows for easy and global-wide access to cloud services, creating
solutions in a much more efficient and practical manner.
Why Cloud Technology is Growing Rapidly
It is no secret that the use of cloud infrastructure has been adopted by many over the past
decade. The Journal of Supercomputing states that cloud computing within enterprises has

The Impact of Cloud Technology on Strategic Management

increased by 38% since the past year (2015). This surge of cloud technology is attributed to
many factors, including:
Cost. A main reason why the cost of adopting cloud as an infrastructure is because of the
ability to convert the capital expenditure of buying and maintaining physical data servers
and storage units for data to operational expenditure. This means that the only cost
associated with cloud is the cost of the service itself, irrespective of the costs correlating
with having a data center.
Flexibility. Cloud computing provides a framework that allows users to access the data
that needs to be accessed wherever there is an internet connection. This provides a much
greater ease of use for users, as with a physical data server, a user would either have to be
present at the location or be given access to the data center where these servers are
housed. Another aspect of cloud computing is the flexibility that cloud provides to add or
decrease the services being provided. For instance, if a company is growing rapidly, it
may need more cloud storage, which is entirely possible due to the complaisance of
cloud.
Reliability. Disaster recovery is a major aspect of data storage. If a server goes down,
there must be a fail-safe recovery option for business continuity. Cloud technology
guarantees that data is backed up at all times, and the chances of requiring disaster
recovery are slim to none, due to there being a lack of physical storage sites to be
disrupted.
Maintenance. Ease of maintenance adds to the reliability, cost-savings, and flexibility
of cloud technology. Maintenance for cloud systems is much faster, cheaper, and easier

The Impact of Cloud Technology on Strategic Management

to handle than with maintenance for traditional data centers, simply because cloud
computing applications can be accessed from anywhere.
Productivity. Cloud technology allows for multiple users to work on the same data or
applications at the same time, which allows for greater collaboration and greater
efficiency.
Security. Perhaps the most important factor, is the benefit of secure access that comes
with cloud technology. The public cloud is, surprisingly, more secure than using a
traditional data center. The most prevalent factor that contributes to cloud being more
secure than an on premise infrastructure is seen by the lack of human risk associated
with cloud infrastructure, as people with malevolent intentions will have trouble with
locating and accessing sensitive data without the correct access given to them
specifically.
These factors are all reasons why businesses are replacing their traditional data centers
with cloud technology. The benefits that switching to cloud are immeasurable, as the future of
enterprise resource management continues to grow exponentially. With cloud becoming more
widespread each year, companies are beginning to conclude their use of physical data centers.
The first impact of this is the obvious cost savings for companies that are switching to the cloud.
The rent expenses associated with hosting servers in a physical data center are essentially
cancelled out once a business switches to the cloud. In addition to this, companies gain a much
more reliable system for their data management. A big issue in todays business society is data
breaches. The past few decades have seen an advent in data breaches, but the recent
technological advances that have been incepted through cloud technology have been able to limit
and effectively halt the abilities of hackers to breach through a companys firewalls and steal or

The Impact of Cloud Technology on Strategic Management

leak valuable data. The future within cloud technology will create a new revolution in internet
security. Of course, with any advancement in technology, hackers will find a way to circumvent
the barriers that precede them; however, cloud technology has shown to impede the flow of
hackers, as the data breaches that have occurred recently have been breaches of physical data
centers.
Impact on Business
Due to the increase in cloud technology growth, the operation styles of all businesses are
slowly changing. All areas of an organization get impacted by cloud computing, whether the
impact is positive or negative.
Positive Impact of Cloud Technology:
Cloud technology can truly transform an organization. In the field of Finance, cloud
services can help with analyzing accounting and financial models. This would benefit an
organization and help it work more efficiently. For Internal Audit, application management
would be drastically affected by the use of cloud technology.
With cloud computing, you are able to do a lot more with a lot less. Companies are able
to reduce their or completely eliminate their data center footprints. This can significantly help
reduce IT costs since companies can cut down on number of servers and software costs. The
cost per head decreases since businesses arent having to pay for more workers to be in the
data centers. Cloud computing costs also tend to be more flexible than the usual methods. Since
youre always connected because of internet connection, theres also a huge benefit of 100%
availability. Team members from all around the world can meet virtually and share information
within seconds, which increases efficiency and convenience. The average down-time for cloud
users is 2.1 hours, while the average down-time for non-cloud users is 8 hours. The use of this

The Impact of Cloud Technology on Strategic Management

technology has decreased operational costs by Cloud technology can also be turned on and off
whenever necessary. Companies are able to make changes more frequently and save them all at
the same time. Since the use of this technology enables companies to lessen their data centers all
over the world, this has a positive impact on the environment as well. The money companies
would normally spend on tech support or hardware needs also goes down.
One of the biggest advantages of cloud technology is that it has almost unlimited
capacity. There is no risk of running out of space or having to keep upgrading your software to
get more space. The money a business spends on printing bills and other important documents
can also be significantly reduced.
Negative Impact of Cloud Technology:
Although cloud technology can be beneficial to businesses, there are many disadvantages
that come with it as well. Being able to always have cloud technology readily available is
beneficial at times, but not when there is no internet connection. One of the biggest drawbacks of
relying on cloud is having downtime when there is no access to internet or no internet
connection. If the internet speed is lagging, the efficiency of work decreases as well. Safety, or
the lack thereof, is also a huge disadvantage for businesses. Since all this data is accessible from
anywhere in the world (as long as there is internet connection), security breaches and hacking are
very prominent practices. People tend to think that cloud technology tends to be cheaper than a
software you install to get the same job done, but it is not able to do everything that the software
have to offer. The fact that cloud doesnt require a large capital investment for licenses often
throws people off and makes them think its the cheaper option for getting the same job done.
However, many software offer features that cloud technology cant compare to. So its crucial
that companies conduct research and look at all possible pricing plans to ensure theyre getting

The Impact of Cloud Technology on Strategic Management

the best deal. Also, since everything on the cloud is managed and controlled by the service
provider, customers have minimal control over what they can do with it. Many providers have
non-negotiable agreements that often cause a business to suffer in the long run or lose money.
Positive v. Negative:
There are questions a business should ask before choosing to go with cloud technology.
-

Will everyone that needs to access the data be able to at any given time?

Is the business getting what its paying for? Are there any features that another software
can offer for the same price?

What happens if internet connection is lost? Or the business is experiencing bandwidth

issues?

Is the data secure?

Cloud technology has a significant impact on businesses whether its a small business or a large
corporation. As listed above, there are both advantages and disadvantages of cloud technology.
However, the advantages overpower the disadvantages and companies have chosen to stick to
cloud technology. Even though companies are skeptical as of now in regards to cloud
technology, they might figure out later that its the best solution. The market for cloud
technology is expected to rise a whole 40 billion dollars in the next three years, and has grown
55 billion dollars since the beginning of 2011. Not only is cloud technology helping businesses
and the environment, its also helping the market.
Cloud Service Model Types
Software as a Service
Software as a Service (SaaS) is known to be the lightest type of cloud service because it
can be accessed through a web browser. The main reason why consumers use SaaS is because of

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the simplicity, on-demand software. Due to the cloud-like nature, users can access the service
through the internet, without the hassle of installing and maintain software. The user does not
have to manage and monitor the cloud infrastructure, which can include networks, servers, and
storage. SaaS is extremely customizable that can benefit any type of business. The downfall to
SaaS is that if a business needs real time data, SaaS may not be appropriate. As customizable as
cloud is, SaaS cannot handle a large amount of real time data and process the data extremely fast.
Platform as a Service
Platform as a Service (PaaS) is considered to be similar to SaaS; however, instead of
providing a service that delivers information over the web, PaaS is a service that is used to create
software and deliver over the web. PaaS is best suited for businesses that requires developing,
testing, executing, and hosting applications. PaaS is most effective in a business where multiple
programmers and developers work together on a project or when other parties need to view or
interact at certain times. Users has the option of choosing common applications, build their own
applications, or use a shared computing play form owned and hosted by a third party. Due to
clouds flexibility, cloud enables users to never be tied down to a decision. Plans or contracts can
be generated monthly or annually. In addition to the flexible cost, if a business requires more
space, memory, etc., then they could upgrade their plan with their service provider. This allows
businesses to be at ease when regarding their allotted amount. Growth and scalability are highly
ranked due to the customizable aspect of PaaS. PaaS also has migration capabilities that allow
companies to migrate their data from their previous software smoothly.
Infrastructure as a Service
Infrastructure as a Service (IaaS) is a cloud technology solution that allows users to
deliver servers, storage, network, and operation systems through the cloud. As an alternative to

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the physical equipment of a datacenter, users or clients are able to utilize the components with no
limitations. IaaS is a great solution for new business and organizations without the money to
fully invest in the equipment of a datacenter. Just like SaaS and PaaS, IaaS has the capability to
scale rapidly without any trouble. Developed businesses and organizations can still benefit from
IaaS. They no longer have to continue to devote their capital on maintaining and managing their
physical datacenters. IaaS can be accessed anywhere on the cloud and does not need to
maintained. A scenario where IaaS may not suitable would be if a business requires a high level
of performance. IaaS has no limitations on providing what is needed to be delivered; however, if
companies require a high level of performance, for example, a large amount of data processing at
a timely manner, then IaaS should not be suggested.
Cloud Service Model Examples
Microsoft Access and SharePoint
Microsoft Access, or MS-Access, is a tool that enables users to create a database system.
To be more precise, MS-Access allows users to connect database components together to great a
relational database. Depending on the type of organization, MS-Access can be a great technology
solution because it offers simple, yet powerful tool to manage database systems. The MS-Access
has 7 main components: tables, relationships, queries, forms, reports, macros, and modules.
Tables are the support for the entire database. Tables allows the database to know what
type of entries should or should not be required. The entries can a value or character.
Relationships are what connects table with other tables. They are connected by a joint function
that have similar elements. Queries is a component that requires more knowledge than basic
tables. Queries are functions that allows users to manipulate the data and data tables. Queries are
coded using a query language known as Structured Query Language (SQL). Due to the

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programming language, Microsoft Access may not be the suggested solution for a company with
little to no knowledge about information technology and programming. However, SQL is not
required at the beginning stages of MS-Access. One of the benefits of using Microsofts
software, is that they enable other ways to approach changing the database and will write out the
SQL code once it determines what the user wants to accomplish. The main interface of MSAccess is forms. Forms are where users input the data which are then saved. There are also
features to show the user which fields are required to submit the form. Once the forms are
submitted or when queries are changed, reports are established. The main difference is that
reports are the output of an action rather than the input and cannot be edited. Macros are what
runs the actions you want for the database in the order you select them to. Modules are for
advanced users who are able to write and store Visual Basic for Applications (VBA).
Cloud computer has increased the accessibility and possibilities MS-Access has. In
combination of Microsoft SharePoint, users can access the database on a web browser. One of
the main benefits of using SharePoint, is that the administrator can restricts or limit users access
such as: full control, contribute, or read.
Google Services
Google is more than a search engine and an electronic mail service. Google offers
services such as: Docs, Drive, Sheets, Slides, Drawings, etc. One the best benefits of utilizing
Googles services are that they are extremely affordable, if not free (depending on the size of the
company). All of Googles services update in real time, allowing other users to see what changes
other users have made from that current file. There are different options of accessibility for each
user. Theres a setting for allowing full access, only editing, or only reading. Sharing files
between employees and customers have never been easier. Customers can be sent a link through

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email to access a form and complete it online. Google is not the most sophisticated resulting in
all of the data inputted in the system being displayed to all the different users. Google offers a
variety of file types that can accommodate to a companys need. Docs are for word documents,
Drive is for storing, creating, and sharing files in one place, Sheets are Googles version of
spreadsheets, etc. The possibilities are endless with Google. However, there is a downfall to
Googles extremely simplified cloud technology solution. The fear in relying on cloud
computing makes sense because of the lack of protection behind the system. They could
potentially lose all of their work if an employee accidentally deletes it, or the system could crash
before saving. The growth and scalability is also ranked poorly because as the company grows,
the more difficult it is to manage. Google services are recommended for small business who
would prefer an affordable way to manage their data and files.
Development Models
Private Cloud
A private cloud is a type of cloud that is dedicated to a single business or organization.
Compared to other types of cloud, private clouds offer more security, control, and performance.
Private cloud offers more security because there is a limited number of users behind the firewall
to minimize security threats. Unfortunately, private cloud has some disadvantages. The business
is responsible for managing and maintaining the cloud network. Rather than relying on third
parties to maintain cloud expenses, such as virtualization, cloud software, and cloud management
tools. If an organization can successfully maintain their IT integrity, private cloud is best suited
for them.

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Public Cloud
A public cloud is considered when a service provider is relied on to provide the resources
available. Public cloud differs from private cloud because it requires less administrative controls.
Hybrid Cloud
Hybrid clouds offer a combination of both private and public cloud characteristics. Users
are able to customize the security level users have. As for storage options, users can determine
what data is accessibly to other users and store them appropriately.
Suggestions for Future Research
Analytics
What is clear, is that more research regarding analytics is required as cloud technology
continues to become wide-spread. Analyzing data is key to growth, as data can show where
things need to be changed or remain the same when it comes to creating and maintaining
technology. According to the Journal of Supercomputing, only 12% of IT companies were using
cloud computing for their data storage in 2009; the journal also states that this number has since
increased to 43% of IT companies utilizing the cloud in 2015(Lim, 3432). What this data shows,
is that cloud technology is increasing as an option of data storage for businesses. The Journal of
Supercomputing also discloses that from 2012 to 2015, consumer cloud usage rose from 32% to
55% (Lim, 3433). This may seem surprising to many that cloud usage at the consumer level is
that high; however, one must remember that cloud technology is used every day for regular
tasks, especially with the advent of applications such as iCloud and Google Drive. Analytics
shows trends that will help the companies developing cloud technology to create products and
services that will be of benefit to the consumer and business communities alike.

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Prospective Technology Within Cloud Computing

Research is required to further the technology that cloud runs on. Moores Law states that
overall processing power for computers doubles about every two years. Although cloud
technology doesnt run on physical servers, this still bodes true to cloud as well. According to the
Editorial for the Special Issue on Big Data and Cloud Technology for Manufacturing, by 2020, a
large majority of people will be doing their work with software running on the cloud instead of
on a local PC, and application developers will begin solely developing applications that will run
on the cloud instead of on local machines (Tao, 3). While the cloud seems to be the best option
in the long run for maintaining a framework that is reliable and convenient to use, the near future
is likely to see a rise in hybrid cloud platforms. The desktop computer is not ready to die yet, and
as the internet evolves, the desktop will be used in different ways in tandem with cloud
computing. One way that cloud and desktop computing can work together in the near future is
through private networking. Private networks will be able to provide many of the same
conveniences as the cloud, with the added benefits of speed and efficiency, except through a
desktop computer connected to a secured network, instead of the cloud. The distant future may
see a world where everything is run on the cloud, but that time is well ahead. Subsequent
research is paramount to achieving this goal.
Future Functions of the Cloud
The applications of cloud technology are endless; however, research must be done to find
out where cloud technology is best fit to be applied. The trend that the technology community is
seeing, is that the cloud will power a large amount of technology in the relative future. The
reason for this advancement is because the cloud provides innovative functionality, not just for
business purposes. The rise of the Internet of Things (IoT) runs hand in hand with the upbringing

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of cloud technology. For instance, a future application of cloud technology with the Internet of
Things can be seen with regular house-hold appliances. Take a fridge, for example. Future
standard fridges will come with computers built in, that allow control and monitoring of the
fridges temperature from a computer or smartphone. Cloud technology makes this possible, by
taking the data from the fridge and allowing it to be accessed anywhere in the world through the
internet. This makes it possible for someone who lives in the United States to turn off their fridge
from China, as long as that person has access to the internet. The future applications of this
technology are endless, as the technology becomes more widespread.
Conclusion
It is not hard to see that the future lies within cloud computing. Right now, business and
consumer levels of cloud usage are at an all-time high, and will only continue to increase as the
technology becomes more widespread. Security and cost benefits are factors that make
implementing cloud into a businesss framework, as traditional data centers incur rent costs,
maintenance fees, and have a much more likely chance of being breached. Switching to a cloud
based platform allows a company to have increased flexibility, less spending, and more secure
networks. The average consumer; however, also is affected by advances in cloud technology.
Commercial platforms such as Google Drive and iCloud provide average people with technology
that can help make everyday tasks easier. Google Drive and iCloud are especially useful, because
they allow for consumers to store as much data as they want, (at certain price points, of course)
and access it anywhere they have an internet connection. The applications and functions that
cloud computing has now, and will continue to have are endless.

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