Cloud Computing and Virtualization as A Knowledge Economy:
ABig Industrial Chance forEmerging Economies & SMEs.
Prof.Dr.Khaled Kassem () &Dr.Mohamed Mahmoud()
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AbstractCloud computing is the new trend used for virtualizing the computer processing in new dimensions. It just gives the processing power needed any where any time. With its low cost, low risk, simplified integration and high scalability, this makes it an optimum solution for small medium enterprises (SMEs). This paper describes in detail the benefits and value added of depending on this technology in the emerging economies and SMEs.
We define cloud computing and enface on its importance for emerging economies and SMEs. Furthermore, we highlight the importance of cloud computing for business continuity plan (BCP) as virtual incubators and backup and disaster recovery (BDR). We conclude the significance of this technology to deliver our 21st century vision.
Keywords: Cloud, Computing, Grid, SMEs
1.Introduction
With the significant advances in Information and Communications Technology (ICT) over the last half century, there is an increasingly perceived vision that computing will one day be the fifth utility (after water, electricity, gas and telephony). This computing utility, like all other four existing utilities, will provide the basic level of computing service that is considered essential to meet the everyday needs of the general community [1]. To deliver this vision, a number of computing paradigms have been proposed, of which the latest and most efficient one is known as cloud computing. Hence, in this paper, we define cloud computing and enface on its importance for emerging economies and SMEs. Furthermore, we highlight the importance of cloud computing for business continuity plan (BCP) and backup and disaster recovery (BDR). Finally, we conclude the significance of this technology to deliver our 21st century vision [2].
1.1Importance of SMEs
In light of the increasingtechnological gapbetween developed anddeveloping countriesneededon developing countries andespeciallyby thetwenty-first centurythe introduction ofmechanismsdeveloped, including business incubators, which have been createdinthe last two decadesof the twentieth century, which provedtheir usefulnessand effectivenessin the implementation ofprograms ofeconomic and social developmentin manycountries, includingUnited States of Americaand manyEuropean countries.
Theindustrial projectsof SMEs inEgyptabout 90% of the totalprojects andemploys abouttwo-thirds ofthe workforce andcontribute about40% of thegross national product andin spite ofthesufferingof these projectsfrom the absence ofan integrated systemand clearto enable them toprovide productscharacterized byquality,competitive priceand withstandimportsforeign, as well asthe lack ofmarketing policyandclear, which reflected negativelyin the percentagecontribution to totalexports, whichdoes notexceed 4%, whereas it is the contributionof Chinaup to 60%, and in Taiwanto 56%, and in HongKongto 70%,and inKorea43%.
The SMEs occupy major importance in the Japanese economy, in addition to the multiplicity of activities which they operates and they provide many jobs, they have a central role in innovation and create new industries through BCP, and encourage competition in the market leading quality and competitive product in the Japanese domestic market and the world.
Besides,concerning the great importance of SMEs in Japan,theyare unique in their ability to support economic growth, and represent small and medium-sized 79% of the size of the labor force, and 99% of businesses, as are those projects to produce 51% of the manufactured products.
Italyknown by its concentration ofsmall companies, where, Italy is theEU countriesmost dependent onsmall projects, with an average number of workersin theindustrialItalianto 7workers, at approximately 98%of industrial companiesupthe number of workersto lessthan 100 workers, 90% of those companieswhereless than 20workers,notmatchedinanyone country to anotherall overEurope, only Greeceand Spain.[3]
1.2Cloud Computing
Computing is being transformed to a model consisting ofservices that are commoditized and delivered in a manner similar to traditional utilities such as water, electricity, gas, and telephony.In such a model, users access services based on their requirements without regard to where the services are hosted or how they are delivered. Several computing paradigms have promised todeliver this utility computing vision and these include clustercomputing, Grid computing, and more recently Cloud computing.The latter term denotes the infrastructure as a “Cloud”. This term is used due to the unrecognized form of a cloud, its change with time and seeing the outside (output) but not what is happening inside the cloud. Also another known descriptions “Common, Location-independent, Online Utility on Demand” [4]the “common” implies multi-tenancy, not single or isolated tenancy. The “utility” implies pay-for-use pricing and the “on Demand” implies infinite, immediate, invisible scalability
The principle behind the cloud is that any computer connected to the Internet is connected to the same pool of computing power, applications, and files. Users can play games or do word processing or make graphic rendering on a remote server rather than on their own device. This makes any small client device connected to the internet with low resources (processing, storage, etc) can work on any applications. Even those using web-based email such as Gmail, Hotmail and Yahooare making use of cloud email servers. Hence, desktop applications that connect to internet can also be considered cloud applications.
1.3 Cloud Computing Evolution
After many years of germination, the core ideas at the heart of cloud computing, pay for use, multi-tenancy, external services appear to be resonating more strongly for more people, according to Gartner, Inc.“Cloud computing heralds an evolution of business no less influential than the era of e-business in positive and negative ways,” said Stephen Prentice, vice president and Gartner fellow[5]. “Overall, there are very real trends toward cloud platforms and also toward massively scalable processing. Virtualization, service orientation and the Internet have converged to sponsor a phenomenon that enables individuals and businesses to choose how they’ll acquire or deliver IT services, with reduced emphasis on the constraints of traditional software and hardware licensing models.”
There continues to be great diversity of activity, maturity and growth among the many different elements of the overall cloud services marketplace. Gartner analysts said they are seeing an acceleration of adoption of cloud computing and cloud services among enterprises, and an explosion of supply-side activity as technology providers’ maneuver to exploit the growing commercial opportunity.
Fig. 1 Growth of cloud computing
“The potential benefits of cloud are a shift from ’capacity’ on demand to ‘capability’ on demand, a reduced cost of computing resources and a shift from technology use to ‘value’ consumption,” said Rakesh Kumar, research vice president at Gartner. [6]
1.4Knowledge Economy & Industry
Knowledge economy is a new concept emerged after the industrial and communication revolution and relies heavily on information technology. Note that there are many definitions of knowledge economy which revolves around access to knowledge; participate in, use, employment and innovation to improve the quality of life in all aspectsthrough the utilization of information services and rich applications technology advanced. Employing of scientific research to make a series of strategic changes in the nature of economic environment and organization to become more responsive and challenges of globalization, information technology, communication, global knowledge and sustainable development integrative is main enforcements for intellectual capital[7].
In other words we can say that the knowledge economy is an economy to achieve investment.Knowledge plays a key role in creating wealth. Wealth in the industrial era has been achieved using machines and energy. Many people associate the knowledge economy industries, technological services such as telecommunications, financial services,pharmaceutical industries, education and research and development.We find the knowledge economy that the information technologies are the driving force for this type of economy which makes the profession today and future.
The revitalization of the export markets for the products of knowledge-based industries need a strong base is in the presence of a vibrant domestic market for these products. We must recognize that market mechanisms alone are not sufficient as asuitable environment for knowledge industries.
Lessons learned from the experiences of countries that have preceded us in this area such as USA, Japan, United Kingdom and Sweden. In these countries the industry of information technology contributes in the range of 50% -60% of all the outputs of industrial and technological development.
These countries have increased industry based on the information weight to the entire industry, ranging from the increase of up to 37% in Japan, 39% in the United States and 43% in Ireland and 32% in the United Kingdom. The governments play a key role to adopt projects which advance technology in the local market for these products providing that they are of great value in improving the performance of state institutions as well,such project influence in the dissemination of technological awareness of the Arab community as a whole[8,9].
Arab knowledge industry through information technology is the key for achieving sustainable development for the Arab world in the 21 century.
1.5Software As A Service (SaaS)
Today, the economy is shifted to be a service oriented. After many years of agriculture economy and then industrial based economies, services appear to be this era’s driven economy. One of the important services is software or computer applications. Who doesn’t have an e-mail, which company doesn’t have a finance applications,..etc. In 2005 only 5% of new business softwaredeployed as a service. In 2011 25% of new business software deployed as a service. This makes a growth from $8B (2006) to $40B (2011). New 50 million SMEs customers are added in 5 years. Applications like CRM, web conferencing, web contentmanagement, HR, supply chain,collaboration, email, and others are rising. [10]
Fig. 2 Saas percentage of Business Software Market
- Cloud Computing Economical Advantages
Today’s IT intensive enterprise must always be on the lookout for the latest technologies that allow businesses to run with fewer resources while providing the infrastructure to meet today and future customer needs.It is not unusual to achieve 10:1 virtual to physical machine consolidation. This means that tenserver applications can be run on a single machine that had required as many physical computers to provide the unique operating system and technical specification environments in order to
operate. Server utilization is optimized and legacy software can maintain old OS configurationswhile new applications are running in virtual machines (VMs) with updated platforms.Although a server supporting many VMs will probably have more memory, CPUs, and otherhardware it will use little or no more power and occupy the same physical space reducingutilities costs and real estate expenditures.
The following are some key factors for cloud computing economical benefits.
a) Reduced Cost
Cloud technology is paid incrementally, saving organizations money through the conversion from CAPEX to OPEX model , or it may seem that it is notpaid for at all because services offered free at the point of use are funded by other sources perhaps advertising or by enhanced premium charges which are easier to justify when the user is “hooked”. Also consolidating servers using a virtualization process not only provides savings in terms of how many physical machines must be bought and maintained, but also potentially reduces the amount of physical space and power usage that a company needs for its servers or data center.
b) Increased Storage
Organizations can store more data than on private computer systems because the capacity forstorage on the web is almost unlimited. Large scale storage is much cheaper per bit and verymuch cheaper to protect in hosted data vaults.
Therefore the SMEs can allow providing many services through the globe.
c) Highly Automated
No longer do IT personnel need to worry about keeping software up to date the cloud host doesthis for you. As an SMEs you do not need to be or to employ IT experts.
d) Flexibility
Much more flexibility than past computing methods possibly limitless. The limitation is onlythe commercial viability of entrepreneurs to build new cloud services.
e) More Mobility
Information wherever you are rather than having to remain at your desk will mean that entrepreneurs can integrate their business and life better and more effectively. The need to “be inthe office” will finally disappear entirely as the world will become the office.
f) Allows IT to Shift Focus
Free to concentrate on innovation rather than software updates. The innovation will become new waysto use cloud applications to discover new cloud services to deploy.
g) Dynamic Disaster Recovery
Disaster recovery is a critical component for IT, as system crashes can create huge economiclosses. Cloud computing technology enables a virtual image on a machine to be instantly re imaged on another server if a machine failure occurs. Also, as cloud computing is a distributed system. If any component (server) fails in any location, another location; may be in another continent; will continue serving.
h) Dynamic Load Balancing
As server workloads vary, virtualization provides the ability for virtual machines that are over utilizing the resources of a server to be moved to underutilized servers. This dynamic loadbalancing creates efficient utilization of server resources.
i) Agility
Agility facilitates quick adaptation to business needs, such as when orders peak and additional computing power is needed. An enterprise may evenchoose to over commit the resources of a cloud computing and rent more resources immediately. In this way,cloud computing supports alignment with business needs
j) Sustainability
Due to consolidation and high utilization of resources, cloud computinguse less environmental resources. Energy consumption in data centers is often wasted on machines that are consistently underutilized. Since virtualization allows for many virtualmachines to run on one physical machine in cloud computing, less energy is needed to powerand cool devices.
3.Conclusion
1- Cloud computing is the next big wave in computing. It has many benefits, such as reduced cost, increase storage, high availability, flexibility, agility, etc. All these previous benefits are used in a pay as you go model.
2- Cloud computing a very good choice for SMEs to accelerate their work and increase revenue.
3-Adoptvirtual incubatorsto workon coordination betweenproduction unitsofcommodity activitiesand servicerelated orintegratedand bodiessupportdifferent, whether governmental, financial or researchin the framework ofaguarantee tothese industriescompetitive, whether in domestic or world markets.
4-Finally, we as Arab industrial development and mining organization (AIDMO) purpose to represent the physical link between SMEs in Arab world and the virtual incubators (cloud computing) through the globe.
4.References
[1] Armbrust, Fox, Griffith, Joseph, et al. “Abovetheclouds: ABerkeleyview ofcloud computing” February 10, 2009.
[2] Analysts Discuss the Cloud Computing Scenario during Gartner CIO And IT Executive Summit 2010, 23 24 November, in Mumbai STAMFORD, Conn., November24, 2010.
[3] Kh. Kassem, The role ofincubatorprojectsin the development ofthe competitiveness ofsmall and medium industries,Fourth InternationalForumfor Small and Medium Industries,Sanaa,20 to 22 November 2007
[4] Gartner Inc. (2008) URL: = 1476715last access in June. 2011.
[5] I. Foster, Y. Zhao, I. Raicu, S. Lu "Cloud Computing and Grid Computing 360-Degree Compared," , Grid Computing Environments Workshop, vol. 8, pp.1-10, 12-16 November 2008.
[6] Joe Weinman, Vice President of SolutionsSales, AT&T, 3 Nov. 2008.
[7] Kh. Kassem, "the role of strategic knowledge-based economy and nanotechnology in sustainable development the arab Industries knowledge" , Arab Conference ؿfor development and economic effects of nanotechnology, King Fahd University of Petrol& mining, Alzaran, Saudi Arabia, 27 to 29 March 2010
[8]URL: last access in June. 2011.
[9] URL: last access in June. 2011.
[10]URL: last access in June. 2011
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