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Cloud Computing Definition Report


Cloud computing refers to a computer system in which users sign in to a service based on the web, which has all the software and storage capabilities that the user needs in order to carry out his/her job. This implies that the user does not have to install a collection of software in his/her computer. All he/she needs is to have access to the cloud computing system. Therefore, with an account in the cloud computing system, a user is able to perform all his/her computer-related tasks like e-mail, complex data analysis, word processing, etc. (Strickland 1).

In a computer system using cloud computing, the workload of running applications is shifted from the local computer to the cloud, which consists of network computers. The user therefore has less hardware and software requirements because most of the processing work is done by the cloud. The computer of the user thus only runs the interface software that links him/her to the cloud. This can be a simple application. In some cases, the interface software of the cloud computing system is a web browser (Strickland 1).

Most computer users have had a chance to use cloud computing in one of its forms. Users who have web-based email accounts with Hotmail, Gmail, and Yahoo! Mail have used cloud computing. This is because in these e-mail services, the user does not run the e-mail program on his/her computer. Instead of this, the user is required to sign in to an account remotely. Therefore, the storage and software for his/her account is not in his/her computer system, but it is on a cloud created by the service provider (Strickland 1).

With this kind of capability, it is no wonder that banks and financial institutions have been keen to use cloud computing in their work. Cloud computing comes with several advantages and disadvantages that make it suitable in certain cases, and unsuitable in others. It is therefore vital that before a business organization switches their computing operations to cloud computing, it carries out a cost-benefit and suitability analysis. This paper defines cloud computing and explores the advantages and disadvantages of cloud computing, as well as establishing the ideal environment in which cloud computing can be used.

Domain of usage of cloud computing

The use of cloud computing is only appropriate in certain environments. Therefore, businesses in these environments are likely to reap maximum benefits from using cloud-computing services than others in unfavorable environments. An example is an environment in which a business is anticipating to scale up its operations. A business that is operating in a dynamic environment that can see its operations being downscaled unpredictably can also benefit from the use of cloud computing services.

Similarly, a business that is expecting to explore new business opportunities that will be more profitable, and that will need their own IT infrastructure is likely to benefit from the implementation of a cloud computing system. This is because cloud computing will be able to provide such businesses with the opportunity to change their IT resources depending on demand.

Cloud computing is also ideal for start-ups. This is because implementing cloud computing in a business that has been running for sometime can prove to be costly at first. The reason for this is that such a business will have a fully functioning IT department, with staff, hardware, and software. Therefore, in order to implement cloud computing, such a business will have to lay off its IT specialists and dispose its equipment and software, an exercise that can prove to be costly for the business (Lithicum 1).

The use of cloud computing services is also appropriate in an environment in which a small business handles large volumes of data. This is because such a business may not be willing to increase its wage bill by recruiting data managers. Such a business will therefore benefit from choosing an appropriate package with a cloud computing service provider (Lithicum 1). This will ensure that its operational costs are minimized, and it will ensure that its data is professionally managed.

Cloud computing is also important in cases where there is need to separate the physical involvement of employees in day-to-day activities of a business with the data that they generate from these activities. In such a situation, the business may be intending to ensure that a third party handles data in order to prevent cases of data manipulation by fraudulent employees. The business may also want the data to be handled by an outsider in order to raise the confidence of shareholders, and to ensure an effective internal control system (Lithicum 1). Thus, in such an environment, a cloud computing system will come in handy for the business. This is, perhaps, the motivating factor for the use of cloud computing systems by banks and financial institutions.

Finally, cloud computing is appropriately applied in business environments where the security of data and information is not a priority. In organizations like the CIA or forensic laboratories, where the security of information and data is a priority, it will be unwise to implement cloud computing. This is due to the security threats associated with cloud computing.

Case of usage of cloud computing

BFS (Banking and Financial) institutions, perhaps, benefit the most from cloud computing. This is due to their advancement in adoption of technology and cloud computing, which have been determinants of competitive advantage. It is however important to note that these institutions have tight security concerns that have made them reluctant to fully implement cloud computing. An example of the usage of cloud computing by banks is given below.

The “Spanish BBVA Bank” (Amin 1) was persuaded by Google early this year to use Google’s enterprise software, which Google provides via the internet. The bank, however stressed that the cloud computing software would be used for internal communication, and that “all customer data will be secured in their own data center and will be separate from cloud computing” (Amin 1). Some of the applications that the bank will be using in the cloud include docs, email, chat video, calendar, etc.

This is geared towards ensuring that the bank embraces cultural change and works together as a team. In a statement, the banks management expressed its belief that the cloud would make its workers more efficient and ultimately transform the bank’s operations. The management also hinted that the cloud would improve information accessibility because employees will be able to access information at the click of a mouse button (Amin 1). This deal was sealed early this year, and the bank has been using the enterprise software since then.

Benefits of cloud computing

Cloud computing has been proven to have more benefits in comparison with traditional approaches to computing. Some of the advantages of cloud computing are listed below.

Reduced IT costs

The use of cloud computing can potentially help business organizations to scale down their Information Technology (IT) expenditure. This is due to the fact that using cloud computing ensures that all the applications that are needed by the business are availed on the internet, and thus the business does not need to purchase and install the required software in its computers. Cloud computing also gives business organizations a chance to reduce costs related to software and hardware requirements.

This is because the service provider of the cloud computing system usually carries out tasks like updates and maintenance. Cloud computing also enables a business to reduce its operational costs because the business does not have to recruit people with technical expertise in the IT field. This is because IT functions can be outsourced to the cloud computing service provider. This leads to operational cost savings, and allows the business to concentrate on its specialty (Kumar 1).


A business that uses cloud computing is able to easily upscale or downscale without much interference. For instance, when there is a business need like addition of portfolios or even changes in the conditions of the market of the business, the service provider gives the business the chance to upgrade to a more suitable package. This implies that instances of business growth will be supported without the need to make costly changes to the existing IT infrastructure (Kumar 1).

Access to new technologies

Businesses that use cloud computing are capable of accessing latest technology with relative ease. The business does not even need to concern itself with software upgrades or investment in requisite technology. This is because the service provider usually manages all these issues on the behalf of the business. Cloud computing also gives a business access to hardware, software, and IT functionality, which the business is otherwise unable to access, or which is too expensive for the business (Kumar 1).


Cloud computing gives workers more flexibility in terms of access to work-related resources. The employees can access these resources in and out of the business premises. Therefore, with the use of laptops, netbooks, and even smartphones, employees are able to access these resources. The ability to share files and other documents simultaneously over the internet is also important in supporting collaboration within and outside the business premises (Kumar 1).

The flexibility of the business is also enhanced because cloud-computing services are paid for in models that are based on demand and usage. Thus, a business only subscribes to cloud computing services when it needs them and pays only for the services it has used in a certain period. This is as opposed to having a specialized IT department in an organization that will require all the needed IT equipment, and whose workforce will be paid regardless of whether there were it functions or not in a particular month (Kumar 1).

Back up

Providers of cloud computing services assist businesses in backing up their data and resources. Although businesses have continually been concerned about data protection, service providers of cloud computing services can back-up data and information related to a certain business in a professional manner (Kumar 1).


Even though clouds are considered to lack the required security, they are far much better than traditional systems as far as security is concerned. Cloud computing systems give a business the opportunity to back-up its data in real-time. This obviously leads to a reduction in instances of data loss. In cases where a power outage occurs, customers can be able to use back-up servers, which are normally synchronized with the main ones. That is, customers use back-up servers while waiting for main servers, which pick up from the back-up servers. This implies that the business maximizes its uptime during an outage without losing data. In addition to this, clouds tend to be less prone to attacks and hacks because people may be unable to figure out your data’s whereabouts (Kumar 1).

Environmental factors

Cloud computing tends to be more friendly towards the environment than its traditional counterpart is. This is because it potentially reduces the energy consumption of a business organization. On the other hand, providers of cloud computing services invest in large-capacity data centers, which are a greener alternative for businesses as compared to more traditional IT approaches. Cloud computing can also help a business to reduce its rate of equipment wastage because the reduction of hardware needs that come with it limits future redundancy (Kumar 1).

Cloud computing risks

It is important for cloud computing users to know the risks that come with this service. In cloud computing environments, a number of serious vulnerabilities and threats should be closely monitored in order to reduce their effect on the business. Some of these vulnerabilities and risks are discussed below.

Security risks

Prevention of a system from attacks is considered as its security. There are a number of security risks that are associated with the use of cloud computing. These include the following.


Private organizations normally have authenticated users accessing their data. Thus, they usually give the privilege of accessing data to the concerned users only. However, in a cloud-computing environment, data and information must be accessed by at least one more person working with the provider of the cloud computing service. This implies that the security of sensitive data and information may be compromised due to more people accessing such data and information (Chandran and Angepat).


Availability is a key concern in cloud computing because customer needs are usually attended to as promptly as possible. However, cloud computing service providers usually have several clients. This implies that their system may at one time be overloaded, leading to programming errors, which in turn lead to system failure. When this occurs, users of cloud computing services in a business will be stranded leading to unattended customer needs (Chandran and Angepat). This will ultimately lead to loss of customers and reduced profits.

Network load

Cloud network load has also affected the performance of cloud computing systems significantly. When several clients request information from the cloud computing system through the cloud network simultaneously, the network can become unresponsive because of the high volumes of data requested. This can lead to crashing of computers and servers (Chandran and Angepat). This translates to poor service or no service at all to the users, which leads to business losses.


In a system that uses cloud computing, the quality, security, and validity of data is able to affect system outcomes and operations. This implies that wrong data or virus-infected files are likely to affect the system, and make the users of the system unable to access the system, or worse still, make users to get undesired output from the system (Chandran and Angepat).

Data security

The indiscriminate inter-system sharing of data in cloud computing is a challenge because it exposes data to vulnerabilities. It therefore becomes a daunting task to ensure proper data handling. Any data misuse may result in reduced profits, or even losses in businesses (Chandran and Angepat).

Privacy risks

Cloud computing is associated with a number of complex confidentiality and privacy issues. One such issue is the fact that there is no legislation controlling the behavior of users of the cloud computing system, and thus these users can disclose sensitive information to undesired individuals. Another issue is that in some clouds, the circumstances of data access by the data owner are not clearly defined. This has often led to misuse of access rights by employees of the data owning businesses. Lastly some clouds store information in a distributed manner, and they do not expressly inform their clients about how they will use the clients’ information (Chandran and Angepat).

Consumer risk

Consumers can potentially be put at risk by the use of cloud computing services by a business organization. The supply of products to consumers through cloud computing is governed by contacts that do not have the consumers’ input. The contract is often drafted by the business offering the products. The terms are sometimes changed without informing the consumer. This exposes the consumer to risks (Chandran and Angepat).


Cloud computing is a new technology that is expected to revolutionize business operations. With the opportunity it gives businesses to outsource their IT functions at affordable rates, cloud computing is likely to become the next frontier of cutting business costs. It is particularly advantageous because service providers are more technologically knowledgeable than IT departments in businesses and thus they are expected to give better IT solutions to business problems than their localized counterparts do. It is also associated with several other advantages that are related to the fact that technological services will be offered by knowledgeable people from a centralized location.

Banks and financial institutions have particularly been identified as the enterprises that are bound to benefit greatly from cloud computing. However, the risks that are associated with cloud computing have made the implementation of cloud computing in banks a controversial issue. The Spanish BBVA Bank, which has implemented a Google cloud, did not fully implement it, but rather, it continues to operate its IT department. The cloud is limited to communication functions while the IT department handles all the customer data. This is an indication of the fact that cloud computing service providers have much work to do in convincing businesses that their clouds are secure enough.

Despite the security issues associated with the use of cloud computing in businesses, the technology is valuable because it plays a big role in reducing the operational costs of businesses. Therefore, businesses that do not have strict security requirements should consider implementing cloud-computing systems in order to reduce costs, operate effectively and ultimately increase their profits.

Works Cited

Amin, Pratish. Spanish BBVA bank to use Google cloud computing. 13 Jan. 2012. Web. <>

Chandran, Sneha & Angepat, Mridula 2011, Cloud Computing: Analysing the risks involved in cloud computing environments. PDF file. 21 April 2012. <>

Kumar, Arun. The Advantages of Cloud Computing 2011. Web. <>

Lithicum, David. Top 10 Reasons to Use, and Not Use Cloud Computing 2010. Web. <>

Strickland, Jonathan. How Cloud Computing Works 2011. Web. <>

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