Learning Objectives
By the end of this section, you will be able to:
- Discuss how cloud services are delivered and priced
- Identify major cloud service providers and their delivery models
Delivery models that service providers use to support the cloud consumer vary based on the needs of the cloud consumer. Advances in technology and the growth of the cloud environment have led to the development of new service models. Each evolution in technology offers advancements in service deliverables that the cloud provider can offer cloud consumers. Today’s cloud environment is much different from the earliest version when operations began to move to the cloud.
Cloud consumers now have many options for choosing a hosting platform when pursuing a move, transformation, or implementation of a cloud platform for their organization. The cost for the platform is one of the factors that an organization will consider when determining whether the cloud solution is the technology the organization needs to gain a competitive advantage. Each organization has different technology requirements, and the cloud provides an opportunity for the organizations to challenge themselves to move with innovation.
Deployment and Pricing of Cloud Services
Cloud services are provided using a delivery model, which includes the resources offered by the cloud provider, and a deployment model, which includes the location, the method, and the entity responsible for controlling the infrastructure. The primary delivery models are broken down into Infrastructure as a Service, Platform as a Service, and Software as a Service. The Infrastructure as a Service (IaaS) model involves the provision of infrastructure resources, such as networking and storage. The Platform as a Service (PaaS) model manages the software and hardware resources for the purpose of development. Software as a Service (SaaS) is the delivery of applications in the cloud. Each of the delivery models has a specific function when it comes to building cloud services, but they are all subscription-based processes of delivering infrastructure, network, and applications, which is why they are all considered “as a Service.” All three delivery models are scalable up or down, and are available on-demand to the cloud consumer. The delivery models are built on top of each other in a layered approach to building the cloud environment. The other factors in a cloud environment that are customizable for cloud consumers are the specifications, such as processing power, RAM, storage, and applications.
Infrastructure as a Service is the first level of the cloud environment that must be designed based on the requirements of the cloud consumer. This service can include, but is not limited to, raw IT resources, such as compute resources, which include the specific operating systems, the hardware components, and the network systems, such as connectivity. The functionality of the IaaS environment provides the needed control over the cloud structure while also providing the cloud consumer the ability to configure and utilize the IaaS functionality to its fullest. The IaaS environment consists of the virtual server, which is leased through the cloud provider based on memory, the CPU, and storage.
Platform as a Service is typically the second level of the cloud environment and is built in relation to the IaaS component. This service is a preconfigured environment that supports a cloud consumer’s operational needs. The PaaS delivery model can be as simple as file services, such as storage of data files on a file server, or as complex as database services with business intelligence used for business analysis. This portion of the delivery model requires the cloud consumer to identify specific tasks that are associated with their operational requirements, such as extending an existing on-premise resource by creating a secondary backup system in the cloud, or replacing an existing IS. The PaaS offers the cloud consumer the opportunity to configure the prebuilt environments and removes some of the complexity involved in configuring an IaaS environment with a bare metal server, which is a physical server deployed for a single customer that provides the customer full access to the server resources.
Software as a Service offers a wide range of available products to cloud consumers, which embodies the essence of cloud computing: to make as many services as possible available to as many consumers as possible. A wide range of products exist in the cloud computing environment. Depending on the product, cloud providers can offer leases for the use of different services on different terms based on the needs of the cloud consumer. Figure 7.6 shows all three levels of delivery models.
As the availability of newer technologies has grown and evolved (processors with more cores, faster GPUs), cloud providers have gained access to many new offerings. These offerings have changed the possibilities for the cloud consumer when it comes to adding their cloud environment. Some of these new offerings are Database as a Service (DBaaS), which is a service that gives cloud consumers the ability to manage and maintain relational and nonrelational databases; Communication as a Service (CaaS), which is a service that allows for the cloud-based delivery of services such as Voice over Internet Protocol, videoconferencing, and internet-based telecommunication services; and Testing as a Service (TaaS), which is a service that cloud providers have built to outsource testing of software, applications, and other components that would normally be performed within the organization.
Each of the delivery models has components that are subject to a contract requirement that is supported with a service-level agreement (SLA), a document that outlines the levels of service that a cloud provider assures the cloud consumer they will receive. The SLA is used as a point of reference for the daily operation of a cloud consumer’s environment. Each cloud provider has a monitoring tool in place to determine the level of service provided, and there are often penalties listed in the SLA that can apply if the cloud provider fails to meet the required levels of service.
The cloud provider will establish the usage parameters in the contract for billing purposes. The usage parameters are needed to determine the cost of the cloud-based services. The services range in cost based on the usage by the cloud consumer as they pertain to the infrastructure, platform, and software requirements. A usage charge is usually calculated per hour based on the service, and the cloud consumer will incur additional charges if the usage level is exceeded. An example of this would be a per-hour charge for the service with a set number of transactions. Once the number of transactions is reached, there will be an additional transaction charge, which may be per transaction or may be a tiered amount for a certain number of additional transactions.
Each service that is offered has a predetermined rate, which is calculated based on the cloud consumer’s location. The rates are charged on a 24/7 basis as outlined in the cloud consumer’s contract. The rates may change based on the locations of the cloud-based environment and which location or locations the consumer uses. For example, the IaaS may be located in San Antonio, Texas, and the PaaS is located in Seattle, Washington, and the SaaS is located in Boston, Massachusetts. Cloud-based services may also be located globally, so the cloud consumer can use all the U.S.-based sites for their basic delivery models and have their backup run to Singapore.
There are four major cloud deployment models: community cloud, an infrastructure shared by multiple organizations with a common interest; private cloud, an infrastructure dedicated to a single organization; public cloud, an infrastructure that provides services in an on-demand environment; and hybrid cloud, a combination of the public and private models that can be combined with on-premise infrastructure. Each of the models is deployed based on the access needs, who is to be the owner of the environment, and the size of the environment.
A community cloud environment is one that is owned by a specific community or a cloud provider that is offering services to that community (Figure 7.7). Access to the community cloud is limited to the community that built and manages the cloud environment, such as a university with multiple campuses or a firm with multiple office locations. Membership is granted to those outside the community at the discretion of the community, and access is controlled by the community. Since community clouds are shared by organizations in the same industry, those that do business in a certain sector, such as education, must adhere to certain sector-specific regulations for their entire cloud.
A public cloud environment is designed by a provider that wants to offer services to consumers (Figure 7.8). Based on the provisioning of the cloud environment, the cloud provider can offer access at a cost to consumers or as a service through other avenues, such as a search engine offering an analytics service to cloud consumers who want to leverage their offering. Google Cloud’s search engine is an example of a public cloud. It is open access, but users can access additional features by signing in. The cloud provider that develops the public cloud environment is responsible for ongoing maintenance, operations, customer support, and availability. Depending on the offering, the provider will design and implement an architecture to support the consumer’s needs.
Global Connections
Global Use of Search Engines
The public cloud provides access to information throughout the world. Each public cloud provider has domain locations that allow for global access. For example, Google hosts its own search engines in its cloud infrastructure. Because the company is based in the United States, the domain name for the Google search engine is google.com, but when users access Google in another country, the domain name has a country code appended to it. For example, in Mexico, the domain is google.com.mx. Using country-specific domains allows Google to tailor the search engine to adhere to laws and regulations in that country and to offer results in the country’s language or languages, while ensuring all of their global users have access to a similar search engine.
A private cloud environment is designed by an organization based on its need for its own cloud environment (Figure 7.9). The private cloud provides access to resources that can be used and previsioned by the level, locations, and needs of the different parts of the organization. Whether its IS resources are internal or external, the management of the private cloud is the responsibility of the organization. What distinguishes this cloud environment is that the organization is both the provider and consumer of the environment.
Hybrid cloud environments are designed through the use of several deployment models (Figure 7.10). The most common hybrid cloud environment combines the deployment of a private cloud with controlled access with a public cloud without access requirements. This provides the organization with one environment for sensitive or confidential information and one for general use. The hybrid cloud can be a challenge to create because it requires the integration of two independent environments, which can be a website in the public cloud and a database service in the private cloud, that may be spread across different cloud providers.
When a cloud consumer is determining the value of employing a cloud environment, there are several factors they must consider, such as cost, services, and networking. The cost factors will require the involvement of senior management and finance because the organization will need to determine the different types of cloud environments, the different requirements of the environments, the level of support needed internally and externally, and the differences between the cloud provider’s offerings.
An organization may choose a hybrid cloud environment so that it can control access to its information based on customer profiles. For example, if a retailer sells TVs, it might list models that are priced similarly to its competitors on its public website as part of the public portion of its hybrid cloud. The retailer might not advertise some other models that are at a special price that is only accessible to customers after they sign in to the private portion of the hybrid cloud. Similarly, a company may have a public site for direct sales to consumers, and a private site for retail merchants purchasing their goods wholesale.
Link to Learning
Hybrid cloud environments can be especially beneficial for organizations that have sensitive data and also want to increase sales to their customers. Read this article describing the ways banks can leverage AI and machine learning in a hybrid cloud to improve fraud detection and customer experience overall, while protecting their sensitive data and adhering to industry regulations.
Organizations will need to determine the need to move to a cloud-based environment or maintain an on-premise IT environment by conducting a feasibility study. This study should include but is not limited to considering up-front and ongoing costs as well as capital expenditures. An up-front cost is one that must be expended for services before delivery. Up-front costs are analyzed for both the on-premise and cloud environments, as they pertain to startup, hardware, integration, and implementation, among other expenses. An ongoing cost is one that must be expended for day-to-day operations. Ongoing costs are associated with software licensing, hardware maintenance, utilities, and labor. A capital expenditure is the cost for the acquisition of assets. Capital expenditures are those funds that are used to acquire value for the organization. Each organization sets the number of purchases to determine as such. Since each IT environment and cloud environment varies, the total cost of ownership, which is the investment in a product for the lifetime of the product, and the return on investment (ROI), which is a metric that determines the value of an investment, will vary because of the differences in the cloud-based environment developed by the cloud consumer.
Major Cloud Service Providers and Their Delivery Models
The growth of cloud environments has been spurred by consumers wanting access to services that could provide more connections, such as a mobile app that searches the local eateries and then gives them access to the restaurant’s menu. Organizations such as Amazon, Google, and Microsoft started small and have developed their own cloud-based environments that have changed the way organizations do business, moved the e-commerce space forward in time, and provided access to the world around us.
Amazon Web Services grew out of an internal need for Amazon to have the IT resources to manage and maintain its own IS environment. Amazon has taken its proprietary technology and grown the company into a cloud provider that offers services for other organizations to use so that they do not need to manage or maintain any on-premise systems. Amazon Web Services provides services such as computing, network service, databases, and storage; computing tools for organizations for analytics and machine learning; and services to help organizations with security, identity protection, and compliance.
Google evolved from a search engine to another cloud provider. Just like AWS, Google provides computing, storage, database, and networking services. Google Cloud provides its consumers with operations, development, and analytics tools. Google has also developed AI to simulate human intelligence and has created solutions using generative AI offerings. Google’s offerings are built around its own cloud environment.
Just like AWS and Google, Microsoft Azure offers computing, databases, networking, and storage. Microsoft Azure made progress in the AI realm with services that combine it with other technology. Each offering by Microsoft Azure is built on Microsoft’s foundation.
Amazon Web Services, Google, and Microsoft Azure all offer certifications in their respective platforms. Amazon Web Services offers multiple certification levels: foundation, professional, associate, and specialty. Each of the certificates is knowledge and role based, depending on the goal of the certification. Google offers foundational, associate, and professional certifications as well. Google structures its certifications around knowledge, fundamental skills, and technical skills. Microsoft also offers certification tracks in other areas of its products, such as AI, to support its cloud environment.
Careers in IS
What Are Information Systems Certifications?
When looking at a career in IS, check out certification expectations with companies such as AWS and Google. These sites show some of the certifications that the industry often requires for a person to work in a cloud-based environment. There are certificates that are offered by the cloud-based providers, such as AWS and Google. There are also certifications that are designed around industry-based knowledge, like the Cloud+ certification offered by CompTIA. It is common for organizations in the industry to identify specific certifications in their job listings so that they can hire people who already have cloud, security, or project management certifications. Obtaining certifications appropriate for your preferred role before seeking employment can make you a more viable candidate for an open position.
The big cloud providers such as AWS, Google, and Microsoft offer a wide range of services to cloud consumers. However, there are smaller cloud providers that specialize in specific services. These smaller companies offer the cloud consumer an alternative to using mainstream providers. For example, DigitalOcean offers development environments that are focused on only development, and Wasabi only offers cloud-based storage. These specialized services provide more options to the cloud consumer, so they may need to do additional research to determine whether their needs are best met by a provider that can offer a variety of services or one that specializes in one service.
Organizations in today’s business environment have to stay competitive in order to continue to grow and operate. This is sometimes identified as a competitive advantage, the factor that allows one company to make products or offer services more efficiently and effectively than its competitors. One advantage an organization might investigate is how it deploys IT resources over its competitors. Information technology resources are a cost factor that must be considered when determining the advantage one company might have over another.
An organization may choose to add to their competitive advantage by moving into a new area of its market share, which is the sales that a company has in its industry, usually calculated as a percentage. This move will require additional IT resources to support the initiative.
The organization can follow two courses of action to select their service provider: issue a request for quote, which is the process for determining the pricing of IT resources based on the organization’s understanding of what is needed, or a request for proposal, which is documentation of the details of a project, including the IT resources that might be needed, in order to support the bidding process to get a fair and competitive price. Both processes will provide the organization with information about the possible up-front cost to start the project and the ongoing cost of maintenance for the IT resources.
The benefit of going through the bidding process is that it will help the organization identify the capital expenditures that are needed to accomplish the project. This step is needed to determine if sufficient funds are available. The next step, confirming the total cost of ownership of the IT resources, is needed to validate the availability of funds in the projected budgets for subsequent fiscal years. Once the total cost of ownership is determined, then the organization can evaluate the return on the investment of the IT resources that are purchased. The return on investment will influence the total cost of producing a product, entering a market, or introducing a new service.