Managing Information System Chapter 5

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TCO stands for Total Cost of Ownership and is an estimate intended to help buyers and owners determine both aspects of cost (direct and indirect)

All these 3 concepts apply to this case. To support these concepts an effective way is cloud computing. Amazon itself uses and run its 49 billion a year retail business. To make harnessing the cloud simpler, Amazon added and automated service called cloud formation that helps customers get the right amount of computing resources for their needs. Customers provide the amount of server space, bandwidth, storage and any other services they require and AWS can automatically allocate those resources.

Zynga calculates its required resource allocation for game through AWS in the initial phase when the number of users of a particular game may vary. So, concept of Capacity planning is used. Also, AWS supports scalability that means Zynga can easily pay more to buy more space on AWS for its required demand. Lastly, AWS helps its subscribers to calculate the indirect cost after the application traffic stabilizes and reaches a steady number of users hence TCO can be calculated.

Therefore, concepts of Capacity planning, Scalability and TCO all apply to Amazon and to subscribers of its services.

Q4. What kind of businesses are most likely to benefit from using cloud computing? Why?

Ans. 4. The most common types of businesses that are likely to benefit from using cloud computing are:

Application Based: The companies like Zynga, Farm Ville, Mafia Wars and many others are application based and do not have a fixed amount of users in the initial phase so cloud storage is the best type of solution to their problem as it is not sure whether the game or application might be a mild success or a smash hit that adds millions of new users. So based on their requirement later on, they can set up their own storage but cloud is the best solution for them.

Online Business: Online business is the biggest user of cloud computing. As the online business needs to process too much data online and needs to store customer information, surely cloud computing is the possible solution for this large storage space requirement which may vary with time. Using the cloud computing can help in effectively reducing the cost as a large storage space is available in cloud computing with the establishment of internet connection.