MIS ch 11 - open source & cloud computing
Terms in this set (36)
unpredicted, but highly impactful events.
Scalable computing resources can help a firm deal with spiking impact from Black swan events.
The phrase entered the managerial lexicon from the 2007 book of the same name by Nassim Taleb
replacing computing resources-either an organization or an individual's hardware or software-with a service provided over the Internet
describes the use of cloud computing to provide excess capacity during periods of spiking demand. Cloudbursting is a scalability solution that is usually provided as an overflow service, kicking in as needed
business expenses that are not dependent on the level of goods or services produced by the business
a cloud computing model in which a service provider makes computing resources such as hardware and storage, along with infrastructure management, available to a customer on an as-needed basis.
The provider typically charges for specific resource usage rather than a flat rate.
In the past, similar efforts have been described as utility computing, hosting, or even time sharing
(Linux Apache MySQL Perl/Python/PHP)-acronym standing for Linux, the Apache Web server software, the MySQL database, and any of several programming languages that start with P (Perl, Python, or PHP)
turn on the lamp, it's free!
open source software
an open source software operating system (founded in 1991)
marginal cost (variable cost)
the cost of producing one more unit of a product
app billing or purchasing; a business model where users can purchase virtual goods via micropayments, used in games and mobile app market
open source software (OSS)
software that is free and where anyone can look at and potentially modify the code
ability to either handle increasing workloads or to be easily expanded to manage workload increases.
In a software context, systems that aren't scalable often require significant rewrites or the purchase or development of entirely new systems
a massive network of computer servers running software to coordinate their collective use.
Server farms provide the infrastructure backbone to SaaS and hardware cloud efforts, as well as many large-scale Internet services
service level agreement (SLA)
a negotiated agreement between the customer and the vendor. The SLA may specify the levels of availability, serviceability, performance, operation, or other commitment requirements
Software as a Service (SaaS)
a form of cloud computing where a firm subscribes to a third-party software and receives a service that is delivered online
Structured Query Language (SQL)
a language for creating and manipulating databases;
SQL is by far the most common database standard in use today, and is supported by many commercial and open source products
total cost of ownership (TCO)
all of the costs associated with the design, development, testing, implementation, documentation, training, and maintenance of a software system
a form of cloud computing where a firm develops its own software, and then runs it over the Internet on a service provider's computers -----renting hardware over the cloud
How have low marginal costs, network effects, and switching costs combined to help create a huge and important industry?
a. the marginal cost to produce an additional copy of a software product is effectively zero. Just duplicate, no additional input required. That quality leads to businesses that can gush cash. (Microsoft Word and Windows)
b. Network effects and switching cost can also offer a leading software firm a degree of customer preference and lock in that can establish a firm as a standard, and in many cases creates winner-take-all (or at least winner-take-most) markets.
Recognize that the software industry is undergoing significant and broadly impactful change brought about by several increasingly adopted technologies including open source software, cloud computing, and software-as-a-service.
a. Open source software (OSS) offerings—free alternatives where anyone can look at and potentially modify a program's code—pose a direct challenge to the assets and advantages cultivated by market leaders. Giants shudder—"How can we compete with free," while others wonder, "How can we make money and fuel innovation on free?"
b. The way firms and users think about software is also changing. A set of services referred to as cloud computing is making it more common for a firm to move software out of its own IS shop so that it is run on someone else's hardware.
i. Software as a service (SaaS): users access a vendor's software over the Internet, usually by simply starting up a Web browser. With SaaS, you don't need to own the program or install it on your own computer. Hardware clouds can let firms take their software and run it on someone else's hardware—freeing them from the burden of buying, managing, and maintaining the physical computing that programs need.
ii. Virtualization - can make a single computer behave like many separate machines. This function helps consolidate computing resources and creates additional savings and efficiencies.
3. How is open source software different from conventional offerings?
a. Not only is it free to download, it's freely and openly shared by everyone. Anyone can look at the source code, change it, and even redistribute it, provided the modified software continues to remain open and free. This openness is in stark contrast to the practice of conventional software firms, who treat their intellectual property as closely guarded secrets and who almost never provide the source code for their commercial software products.
4. What are some examples of open source software?
1. Firefox—a Web browser that competes with Internet Explorer
2. OpenOffice—a competitor to Microsoft Office
3. Gimp—a graphic tool with features found in Photoshop
4. Alfresco—collaboration software that competes with Microsoft Sharepoint and EMC's Documentum
5. Marketcetera—an enterprise trading platform for hedge fund managers that competes with FlexTrade and Portware
6. Zimbra—open source e-mail software that competes with Outlook server
7. MySQL, Ingres, and PostgreSQL—open source relational database software packages that each go head-to-head with commercial products from Oracle, Microsoft, Sybase, and IBM
8. HBase and Cassandra—nonrelational distributed databases used to power massive file systems (used to power key features on Facebook, Twitter, LinkedIn, and Amazon)
9. SugarCRM—customer relationship management software that competes with Salesforce.com and Siebel
10. Asterix—an open source implementation for running a PBX corporate telephony system that competes with offerings from Nortel and Cisco, among others
11. Free BSD and Sun's OpenSolaris—open source versions of the Unix operating system
13. ****There is an open source alternative for most softwares
5. How might firms leverage OSS technology?
a. For firms, OSS reduces costs and the access to intellectual property expands because several users are improving the software daily. OSS is also very scalable and can keep up with the growth of a business. Other benefits are reliability, improved security, agility, and time to market.
b. By lowering the cost of computing, open source efforts make more computing options accessible to smaller firms. More reliable, secure computing also lowers costs for all users. OSS also diverts funds that firms would otherwise spend on fixed costs, like operating systems and databases, so that these funds can be spent on innovation or other more competitive initiatives.
c. OSS providers choose open source because once they make the first copy, the rest are free to make. After that, they make purely profits from users who are paying for support, consulting, more drive space, and training.
6. Why are for-profit companies paying people to develop open source software that they give away for free?
a. They make money by selling support and consulting services. (Red Hat, the largest purely OSS firm, reported nearly a billion dollars in revenue from paying customers subscribing for access to software updates and support services.) (Oracle provides Linux for free, selling high-margin Linux support contracts for as much as five hundred thousand dollars)
b. This also allows Oracle to take customers away from Microsoft—their head-to-head competitor.
c. IBM now makes more money from services than from selling hardware and software(free software means more money IBM customers can spend on IBM computers and services
d. This can also help firms become more competitive in sales and in access to intellectual property.
8. How can OSS beneficially impact industry and government?
a. Government agencies and the military often appreciate the opportunity to scrutinize open source efforts to verify system integrity (a particularly sensitive issue among foreign governments leery of legislation like the USA PATRIOT Act of 2001
b. Security focused (sometimes called hardened) versions of OSS products can monitor the integrity of an OSS distribution, checking file size and other indicators to be sure that code has not been modified and redistributed by bad guys who've added a back door, malicious routines, or other vulnerabilities. (appealing to government)
c. Vendors who use OSS as part of product offerings may be able to skip whole segments of the software development process, allowing new products to reach the market faster than if the entire software system had to be developed from scratch, in-house
9. How do vendors of OSS make money?
They make profits though support, consulting (how to best use the software), and training
10. How does the concept of OSS relate to TCO?
a. OSS is not actually free. The TCO mostly comes from costs associated with design, development, testing, implementation, documentation, training, and maintenance of the software system. The TCO varies for different OSS products.
11. What are the legal risks of OSS?
a. Firms adopting OSS may be at risk if they distribute code and aren't aware of the licensing implications. Some commercial software firms have pressed legal action against the users of open source products when there is a perceived violation of software patents or other unauthorized use of their proprietary code.
b. Keeping legal with so many licensing standards can be a challenge, especially for firms that want to bundle open source code into their own products. An entire industry has sprouted up to help firms navigate the minefield of open source legal licenses (EX: Black Duck).
12. What is a typical business model for a SaaS vendor?
a. SaaS is remote software (Application Service Provider) that is providing a service via the Internet. You don't have to install any software, you let someone else run it for you and then the results are delivered to you via Internet. EXAMPLE: GOOGLE DOCS**
b. SaaS earns money via a usage-based pricing model similar to monthly subscription
13. What are the benefits to users that accrue from using SaaS?
a. Eliminates the need for every business to have an in-house data center
b. Users always get the most enhanced version which is a major advantage of SaaS
c. Lower costs
d. Mitigates financial risk
e. Faster deployment time (Rackspace took about 3 minutes to set up a server online)
f. Variable operating expense (only about $1 an hour, low prices)
g. Scalable systems (server automatically gives you the space you need when usage spikes and scales back when usage goes back down - "Oprah Effect")
h. High quality and service levels
i. Remote access and availability (can work on projects from anywhere on any computer)
14. What are the benefits to vendors from deploying SaaS?
a. Limits development to a single platform (simpler and more efficient?) (develops, tests, deploys, and supports just one version of the software executing on its own servers.)
b. Ability to instantly deploy bug fixes and product enhancements (keeps your product valuable and attracts customers) (instant feedback allows SaaS providers to be more attuned to customer needs)
c. Lower distribution costs (you just open the service on a browser in your own home or office - no need for shipments of physical products)
d. Reduces software piracy (Google Docs can't ever be stolen)
15. What are the risks associated with SaaS?
a. Dependent on a single vendor that may go out of business
b. Long-term viability of partner firms
c. Users may be forced to migrate which incurs unforeseen switching costs
d. SaaS might not have all the features of desktop software
e. Data assets stored off-site (potential security and legal concerns like stolen credit card info that an online store saves)
f. Reliance on a network connection - may be slow, less stable, less secure
16. What are the challenges and economics involved in shifting computer hardware to the cloud?
a. doesn't work in all situations— most large organizations run a hodgepodge of systems that include both package applications and custom code written in-house. Installing a complex set of systems on someone else's hardware can be a brutal challenge and in many cases is just about impossible.
b. Some firms face stringent regulatory compliance issues
c. Firms need to evaluate if the cost is worth switching to the cloud - costs vary based on usage and can add up significantly
17. How is cloud computing's impact across industries proving to be broad and significant?
a. In the past, firms seeking to increase computing capacity invested heavily in expensive, high margin server hardware, creating a huge market for computer manufacturers. But now hardware firms find these markets may be threatened by the cloud.
b. Major shift from hardware to services
c. The shift to cloud computing also alters the margin structure for many in the computing industry. While Moore's Law has made servers cheap, deploying SaaS and operating a commercial cloud is still very expensive
d. Cloud computing can accelerate innovation and therefore changes the desired skills mix and job outlook for IS workers. Organizations will need more business-focused technologists who intimately understand a firm's competitive environment, and can create systems that add value and differentiate the firm from its competition.
18. How can cloud computing decrease barriers to entry?
a. This trend means the potential for more new entrants across industries, and since start-ups can do more with less, it's also influencing entrepreneurship and venture capital.
b. Lowering the cost to access powerful systems and software lowers barriers to entry in an industry, making it easier for start-ups to launch and smaller firms to leverage the backing of powerful technology.
19. What factors must be considered when making the make, buy or rent decision?
a. Competitive advantage (Do we rely on unique processes, procedures, or technologies that create vital, differentiating competitive advantage?)
b. Security (Are there unacceptable risks associated with using the packaged software, OSS, cloud solution, or an outsourcing vendor?)
c. Legal and compliance issues (Are there specific legal and compliance requirements related to deploying our products or services?)
d. Organization's skill and available labor (Can we just build it ourselves or do we need someone else to do it?)
e. Cost (is it a cost effective solution?)
f. Time (Do we have time to build, test, and deploy the system?)
g. Vendor issues (Is the vendor reputable and in a sound financial position? Can the vendor guarantee the service levels and reliability we need?)
Virtualization is what allows cloud computing to happen. It splits up servers so many people can have their own space in the server (Like an apartment).
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