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In light of development in the third world countries, cloud computing has become an application that could see many financial institutions well on their way to financial security. Cloud computing is defined as the provision of computing as a service rather than a product whereby software, information and shared resources are delivered as a utility over a network (the internet). In this case cloud is used as a metaphor for network or internet. The end users in spite of needing the services do not necessarily require knowing the physical location or configuration that delivers these services. An example is the electricity grid where the end users use the electricity but do not require understanding the infrastructure or component devices used to require to provide this service (Isaca, 2008).
Cloud computing involves providing access to applications via the internet. It stemmed from the ease of access by the public to the remote computing sites via the internet. This sometimes takes the web based applications where the public can access and use through a web browser in the same way they would if the programs were locally installed in their computers.
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The above information clearly indicates the reason cloud computing has become a budding success recently amongst developing countries especially in India. The leap frog effect in technology especially with regards to cloud computing in India has improved business in India almost in a revolutionary manner. The change from a manual way of carrying out activity to the technological way in light of cloud computing has taken a leap rather than take place progressively.
Cloud computing has a couple of defining characteristics five of which are the major ones and the reason why they are perfect for Small and Medium business Enterprises. The first is the self service based usage model. Not only do the services provided by cloud computing require a certain level of user self service but they are provided in an easy to use manner that allows the users to build, upload, schedule, deploy, manage and report on their business or corporate services on demand. This improves business agility significantly and also saves on administrative time and costs because it self service delegated to consumers means less administrative involvement and more time to focus on more high valued responsibilities.
The second characteristic is the IT service-centric approach. This means system users can easily access services specifically centered on a specific task or project. Cloud computing ensures a service is easily accessed and the task easily and speedily performed without the users being bogged down by in the system so that the business moves more expediently driving revenue and reducing costs.
Dynamic computing infrastructure is an important cloud computing characteristic. It involves a secure, scalable and standardized physical infrastructure as the dynamic infrastructure’s foundation. It must be easy to extend and avail upon demand without requiring architecture rework. It must also be virtualized in the sense that they need to be automatically provisioned and de-provisioned and moved from one server to another as demand decreases or increases. It is important that there be a dynamic infrastructure that supports the elastic nature of demand for services while maintaining high levels of reliability and security. Provisioning automation and virtualization creates a high level of utilization and reuse and ultimately effective usage of capital equipment.
The fourth characteristic, minimally or self-managed platform involves leveraging a self managed technology platform via software automation. This leverages management, reporting and configuration capabilities to ensure allocation and reallocation of resources to multiple groups of users. This lowers administrative costs and effort which has been a great contributor to the growing rate of small and medium enterprises in India. .
The fifth main characteristic is consumption based billing which means that consumers only pay for resources they use or are charged per consumption. Cloud computing must therefore provide mechanisms that monitor usage and measure consumption levels besides tracking usage.
Cloud computing application in Small and Medium size enterprises in India has been shown to reduce costs especially on infrastructure in addition to ensuring fair ground for competition amongst the small and medium size enterprises.
Recent studies on the impact of cloud computing in the world indicate that the demand for cloud computing is expected to grow from the current 40.7 billion dollars to about 241 billion dollars in the year 2020 hence causing a leapfrog effect on the Indian technological and corporate sector. The amazing application of cloud computing however is not devoid of challenges in spite of its pros.
The first challenge is the issue of security. The application designer of the cloud is mostly responsible for the level of security on the cloud and therefore, this problem can be prevented by the cloud application designer.
Another major problem has been the lack of comprehension by clients. There is still a lot of ignorance regarding cloud computing and how it works. A lot of misunderstanding surrounds information regarding how cloud computing applications work, their pros and cons and their availability. This too can be dealt with by providing the public with information that is comprehensive along with real examples of the applications in order to clearly understand what is possible and what is not. This is important in order to increase the pace at which developing countries like India adopt cloud computing applications.
Cloud computing also faces the risk of complacency especially due to its increasing popularity. Familiarity sometimes encourages complacency leading to stagnation in growth. It is important that cloud computing applicants stay alert since cloud computing keeps improving and evolving. Competition is also tough and it is important that one does not get too comfortable and fail to formulate a good exit strategy in case of stiff competition (Alleven, 2009).
In light of the increasing cloud computing popularity cloud providers may be tempted to over utilize capacity. This usually occurs in many industries where management promises to deliver quality then fail to deliver it due to an overestimation of whatever they thought they could deliver. It is important to test whether or not anticipated demand can be met before giving one’s word concerning the amount and time of delivery (Furht, 2010).
Another challenge that arises where cloud providers are concerned could be under utilizing capacity. Just as over utilizing capacity hurts the business so does under utilizing capacity. Paying for extra capacity that is not in use and therefore is not generating revenue could result in worse losses than actual over utilization of the same capacity. Testing in order to determine the level of demand in order to avoid excess supply leading to capacities lying idle is also important (Babin, 2011).
The leapfrog by Indian small and medium size enterprises into the cloud is a good move in that it hastens the development process while saving on massive infrastructural costs that would have been unaffordable otherwise. However the leapfrog effect could be disadvantageous in the sense that the population would be caught off guard by major changes in technology not giving them enough time to make the transition without being temporarily knocked off balance. An example is the new Ipv6 address pool. Most people are still on the Ipv4 address pool and unaware of the new Ipv6 address pool. Therefore cloud computing requires that people be flexible and stay abreast. Cloud computing is ever changing and improving and it therefore calls for flexibility and open mindedness (Molen, 2010). India intends to stay ahead of things through proper research and application of cloud computing.
The small and medium enterprises sector in India has been found to be growing at a rate of about 35 percent every year and this rate is expected to increase to 40 percent per annum in the near future. Due to their high growing rate they have become the target for foreign cloud providers and are receiving much needed help for their IT sector.
The aim of this research is to critically analyze the scope and level of small and medium eneterprises in India. The methods of data collection involved interviews conducted over the telephone and the filling of questionnaires sent to respondents via their email addresses. Sources of secondary data collected included journals, magazines, newspapers and the internet. The hypothesis being tested was that usind ERP software based on or as an application of cloud computing in small and medium enterprises would cost them less than continuing the use of traditional ERP software.
The findings of this research were in support of the hypotheis which stated that less costs were incurred in using the ERP software as an application of cloud computing rather than using traditional ERP software.
Technology is a major factor affecting the growth of a country and its development not to mention ensuring efficiency (Rogers, 1983). In India cloud computing has greatly improved the production in small and medium enterprises which in turn lead to better returns for the government. Therefore cloud computing in India is likely to greatly raise their rate of development. The demand for services related to cloud computing is pretty high in India which is an indicator of the leap frog effect.
Effort is being made to ensure the smooth adoption of cloud computing. The challenges analyzed above however if not keenly looked into may slow down this process. There however are tools put in place to monitor cloud performance or service legal agreement compliance. These tools include cloudcamp, Nimsoft’s commercial monitoring service or SLAM. There is need for tools that detect compliance or lack thereof to ensure data geo-location of data. There is pressure for most organizations, industries and the government in India to move to the cloud since most of them are considering leveraging cost and scalability amongst other benefits of cloud computing. Even those that are not considering leveraging are considering moving into the cloud if only to stay competitive, to enjoy new technologies and to remain relevant in the increasingly technical world.