Challenges for the CIO

2. SWOT Analysis

Cloud computing can both bring risks as well as opportunities depending on how it is applied and which countermeasures for those risks are taken. This chapter will present these hazards and potentials based on following SWOT analysis.

SWOT Analysis
SWOT Helpful Harmful
Internal Strength
·       Cost reduction

·       Scalable IT resources

·       Technology is up to date

·       No investment risk
* Server management is ourtsourced
·       Dependent on provider

·       Risk of renouncing own IT competence

·       Working internet connection needed
* Reliability of the cloud
External Opportuinities
·       Green IT
* Drives innovation
·       Safety and data protection

* Data protection regulations

2.1. Strength

Cloud computing has many strengths that will be presented in the following part.

2.1.1. Cost reduction

Implementing the cloud in a company can lead to the reduction of expenses. This is because if companies move their system into the cloud, they do not have to invest in their own hardware. They can just rent the needed storage space. Because the providers supply the IT environment for many companies they can offer the same storage space for a cheaper price than if companies would buy the IT infrastructure on their own. This cost reduction can be achieved through economies of scale because the IT resources are brought up like community resources and delivered “as a service” that can be used by multiple users – each one paying a part of the price (Armbrust et al, 2009).
Additionally cloud computing providers often locate their server-rooms in a regional location (Armbrust et al, 2009). Here the renting fees for a location for the data center are often lower than the costs for a company if they would store their IT resourced in the location where the own company is located - what is often in a city. Also those storing costs are aggregated and distributed over all customers and have not to be funded by one company.

2.1.2. Scalable IT resources

Cloud computing has the advantage that it is possible to scale the amount of available server space due to a dynamic load distribution. That means that only the needed IT resources can be rented, unlike as when using traditional data centers. The estimated average server utilization in data centers range from 5% to 20% (Armbrust et al, 2009). In nonpeak times the available resources are mostly not used and thereby idle.
On the one hand, if the business grows quick the scalability of cloud computing allows the renting of additional capacity without long processes of buying, receiving and adjusting the additional IT resources. On the other hand it is also quick and easy to scale down if the IT resources are not needed any longer.