Cloud Computing and The Software Cloud Study Guide
Cloud Computing and The Software Cloud Study Guide

Cloud Computing and The Software Cloud Study Guide

Source: University of Minnesota Libraries

Student Price: FREE

An information systems study guide from the University of Minnesota.

Cloud Computing and The Software Cloud - Study Guide

Cloud computing is difficult to define. Managers and techies use the term cloud computing to describe computing services provided over a network, most often commercial services provided over the Internet by a third party that can replace or offload tasks that would otherwise run on a user or organization’s existing hardware or software.

Software as a service (SaaS) refers to a third-party software-replacing service that is delivered online. Hardware cloud computing services replace hardware that a firm might otherwise purchase. Estimated to be a thirty-six-billion-dollar industry, cloud computing is reshaping software, hardware, and service markets, and is impacting competitive dynamics across industries.

​SaaS firms may offer their clients several benefits including the following:

  • lower costs by eliminating or reducing software, hardware, maintenance, and staff expenses
  • financial risk mitigation since start-up costs are so low
  • potentially faster deployment times compared with installed packaged software or systems developed in-house
  • costs that are a variable operating expense rather than a large, fixed capital expense
  • scalable systems that make it easier for firms to ramp up during periods of unexpectedly high system use
  • higher quality and service levels through instantly available upgrades, vendor scale economies, and expertise gained across its entire client base
  • remote access and availability—most SaaS offerings are accessed through any Web browser, and often even by phone or other mobile device

Vendors of SaaS products benefit from the following:

  • limiting development to a single platform, instead of having to create versions for different operating systems
  • tighter feedback loop with clients, helping fuel innovation and responsiveness
  • ability to instantly deploy bug fixes and product enhancements to all users
  • lower distribution costs
  • accessibility to anyone with an Internet connection
  • greatly reduced risk of software piracy

Microtransactions and ad-supported gaming present alternatives to conventional purchased video games. Firms leveraging these models potentially benefit from a host of SaaS advantages, including direct-to-consumer distribution, instant upgrades, continued revenue streams rather than one-time purchase payments, and a method for combating piracy.

Discussion Questions


​Identify and contrast the two categories of cloud computing.


Define cloud computing.


​Firms that buy conventional enterprise software spend money buying software and hardware. What additional and ongoing expenses are required as part of the “care and feeding” of enterprise applications?


In what ways can firms using SaaS products dramatically lower costs associated with their information systems?


How do SaaS vendors earn their money?


Give examples of enterprise-focused SaaS vendors and their products. Visit the Web sites of the firms that offer these services. Which firms are listed as clients? Does there appear to be a particular type of firm that uses its services, or are client firms broadly represented?


Give examples of desktop-focused SaaS vendors and their products. If some of these are free, try them out and compare them to desktop alternatives you may have used. Be prepared to share your experiences with your class.


List the cost-related benefits to users that accrue from using SaaS. List the benefits other than cost-related that accrue to users from using SaaS.


List the benefits realized by vendors that offer SaaS services instead of conventional software.


Microtransactions have been tried in many contexts, but have often failed. Can you think of contexts where microtransactions don’t work well? Are there contexts where you have paid (or would be wiling to pay) for products and services via microtransactions? What do you suppose are the major barriers to the broader acceptance of microtransactions? Do struggles have more to do with technology, consumer attitudes, or both?


Search online to find free and microtransaction-based games. What do you think of these efforts? What kind of gamers do these efforts appeal to? See if you can investigate whether there are examples of particularly successful offerings, or efforts that have failed. What’s the reason behind the success or failure of the efforts that you’ve investigated?


10.6 Cloud Computing: Hype or Hope? and 10.7 The Software Cloud: Why Buy When You Can Rent? by University of Minnesota are licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

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