(Weekly Article Series): Cloud Computing – Fourth Article

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Date: 18 - 04 - 2019

Dr..Eng. Ali Mohamed El Khouri

Article No. 4

In our previous articles, we ended by identifying the concept of the network for creating economic added value and the importance of linking all aspects of economic activities to the Internet, which brings together individuals, institutions and governments. In the previous article, we talked about the importance of basic telecommunications infrastructure for high-quality and high-speed access to all residential areas, in a manner that achieves equality between residents of cities, villages and remote locations.

In this article, we will focus on a topic that is complementary to telecommunications services, and is closely related to the needs of companies and institutions, as in order to benefit from the components and advantages of the digital economy era, they must use applications and services that fit their goals and requirements for their work in a safe manner, and here companies find themselves in front of one of two options. :

The first option: to own its technological infrastructure (servers, data storage units, and protection devices and to provide communication networks for its work sites within the same building or in different places, cities and countries, and according to the nature of the company. This choice also includes investing in developing applications and programs compatible with the needs of the institution This choice is related to the need to employ technical departments for operation, maintenance, monitoring and technical support, and this requires high costs that burden medium and small enterprises, which cannot bear the high costs of operating and sustaining such systems. .

The second option: that the organization resort to renting infrastructure services, whether at the level of equipment or applications, which has come to be referred to as cloud computing services, which are technical solutions that allow individuals and organizations to store data or applications or use them on central servers or data centers. Through networks connected to the Internet and without the need to purchase or own devices, according to which the fees are according to the needs and the annual subscription system, and do not require the employment of technical service crews, which is directly reflected in the reduction of operating and maintenance expenses.

The second option may not be optimal for all types of institutions, as some of them may have legal and security requirements that are binding to own and manage their infrastructure in a comprehensive manner that includes all information and communication technology services and the employment of specialists and technical staff to manage this infrastructure.

However, as we can clearly note that most companies today have resorted to these services, especially for their multiple benefits, especially with the development of the capabilities of these services to deal with Big Data management, cybersecurity, and quality control, in addition to advanced applications of artificial intelligence techniques, which have become Services available through cloud computing.

But let us understand more about this technology, which is expanding in its spread, and has become a new turning point in the course of global economic development. We will talk about the three main services of digital computing, the main reasons why organizations are adopting them, and the four business models associated with them.

Let’s start first with the three main services provided by cloud computing:

  1. Application Services ( Software As A Service SaaS) : It is a method by which the beneficiary can use the software according to a specific licensing and subscription system. Examples of this service are e-mail services such as (GMAIL, Hotmail, Yahoo) and others, where the subscriber can access his mail through any browser, without purchasing, installing and maintaining the program, which remains the responsibility of the service provider. Not only this type of application, but also used as a marketing tool for large corporate programs that are sold through the annual subscription of enterprises, which in turn allocate them to their employees and customers, such as Enterprise Resource Planning and Management ERP software).
  2. Platforms provide service services ( Details Platform AS A Service PaaS): and is interested in this service , developers of programs and applications, as they provide enables them to use programming languages to develop their systems without the need for software or special hardware to develop, test or run new applications work environments. Among the largest companies that provide this service are Amazon, Oracle and Google.
  3. Infrastructure Services ( Infrastructure AS A Service IaaS): This service provides access to operating systems virtual over the Internet, in other words, represents the data center , ” an integrated and available service” on the 24 – round hour and specifications of standard security, enables the beneficiary of the operating systems and applications Through it. Amazon and Microsoft are the main providers of this service.

This service is seen by beneficiaries worldwide as providing four main benefits:

  1. Reducing operational cost : It allows companies and users to access their data or applications without the need to manage an IT infrastructure, and does not incur its expenses and maintenance, which are often complex and represent an additional capital cost for the company.
  2. Speed ​​and flexibility : Many corporate activities can be done via cloud computing at tremendous speed and with a click of a button, and it is designed to operate on a 24/7 system.
  3. Completion of work and focus on the main tasks : The use of this type of services may eliminate the need to rely on current programs for the development and maintenance of activities related to information technology and unnecessary supporting organizational structures, as well as the need for special buildings and equipment for rooms and data centers in institutions.
  4. The level of protection and information security : Cloud computing services can be designed to work with global standard security controls and standards.

Cloud computing systems work with different business models (Business Model), which can be summarized in four main models:

  • Public Cloud: It is one of the most prevalent models, where cloud computing services are available with a shared infrastructure that is offered to everyone without allocation.
  • Private Cloud: Organizations develop such private closed clouds to meet their computing infrastructure needs, both at the hardware level and at the software level, and these resources are not shared with third parties. Institutions resort to this model when the standards of data security and privacy and the level of control are the most important criteria, depending on the nature of these institutions, which are often governmental or banking.
  • Community Cloud: The data center and cloud computing services are shared between a group of organizations of a common nature or interest or that fit into a particular community (eg educational institutions, banks, insurance companies, etc.).
  • Hybrid Cloud: This model combines one or more of the previous models, so that the systems remain independent in the cloud computing centers, but allow the exchange of data and computing resources between them.

This was a quick overview of cloud computing. The main objective of introducing this technology, which has become imposing itself on our societies as a strategic option, is that the economic value system that institutions seek to achieve, can raise investment returns by several times what it is today, as it supports the requirements of flexibility and speed, which has become a competitive factor for institutions.

A study by the Boston Consulting Group showed that small and medium-sized companies that relied on cloud-based technologies, increased their revenues by more than 15% compared to traditional companies. The study also found a significant impact on the growth of companies dependent on this technology at twice the average rate in terms of job opportunities they created, which is directly reflected on the social and economic system in its surroundings.

According to official statistics in the European Union, more than half of large companies (56%) and a quarter of small and medium-sized companies (26%) in European countries use cloud computing. But other business statistics indicate that this number exceeds these “conservative estimates”, as according to other statistical studies, the rates reach 90% in companies such as the United Kingdom, for example.

Global statistics indicate that the global rates of using cloud computing services more than doubled in five years, and that the revenues of cloud computing companies will grow from $272.0 billion in 2018 to $623.3 billion by 2023, with the increasing demand of institutions for this type of services. Especially with the entry of major international companies such as Amazon, Microsoft, Alibaba and others to market and promote these services.

Given the potential of this technology, its contribution to accelerating the digital transformation in the Arab region is something that must be paid attention to, especially since this technology has become supporting the competitiveness and sustainability of small and medium enterprises. According to the statistics of the Organization for Economic Cooperation and Development, these companies provide jobs for nearly three quarters of the workforce in Egypt, which shows the extent of the potential contribution and its impact on economic growth rates in the Arab region, especially in light of development plans that seek to rely more on small and medium-sized companies. In support of economic development in most Arab countries.

This technology also represents an ideal opportunity to develop the public sector system, and enable the improvement and efficiency of services. It is noteworthy that governments have begun to adopt strategies and policies to transfer their systems and services to cloud computing, especially those related to the applications of providing services to citizens, which leads to huge savings in the budgets usually allocated to information technology services as a result of the application of these policies.

Many of the Gulf Cooperation Council (GCC) countries have invested in developing cloud-based systems through which they have been able to achieve high productivity gains, especially since these systems have enabled staff to communicate with the systems from anywhere and at any time, and improve communication channels with employees and customers alike.

And with him, we hope that Arab investments will enter this field to establish major Arab companies that will establish their data centers on Arab lands and run them for the benefit of the Arab world, according to international competitive standards. It is an area of ​​work that requires legislative regulation to stimulate the local economy and the existence of laws that provide for the protection of users’ rights and secure their data fully and in the Arab world, and encourage government and private agencies, local and Arab. This kind of uses.

Overall, cloud computing represents a unique solution for investors to reduce their capital expenditures related to technological infrastructure, and transform the traditional costly investment model into a rental model with very simple expenses, which is due to the productive capacity of these institutions, reduces their costs and contributes to enhancing their competitive position. economic decision in general.

With the accelerating digital transformations, there is no doubt that cloud computing represents a viable option for developing many special applications for specialized business sectors such as digital education, telemedicine and the use of artificial intelligence in medical diagnosis, which will be difficult for any single party to bear its expenses, but it will be feasible with the expansion of the base users and beneficiaries. We expect that this type of specialized clouds will have a major role in developing the reality of specialized business sectors, especially in a field such as education, which most countries have begun to adopt educational systems based on digital technology, which will reflect positively on the goals of those sectors and their development plans.

There is no doubt that organizations today face many concerns related to data security and privacy to shift from the concept of “traditional assets” to the concept of “virtual enablers”, but the traditional administrative and intellectual approach is not commensurate with the world of the digital economy, which is leading the world in one direction even if the paths differ, especially with The opportunities it provides, specifically related to creating new job opportunities, and attractive investment returns. Perhaps time will remain the essential factor that will decide the choices in favor of these technologies!

Dr..Eng. Ali Mohamed El Khouri

Advisor to the Council of Arab Economic Unity and President of the Arab Federation for Digital Economy