CLOUD COMPUTING

CLOUD COMPUTING – A New Avenue for Chartered Accountants

Information Technology has become the inevitable part of the modern economy. Bringing business applications on the web has become a key area of every business strategy today. Present global commerce seems to be impossible without complex distribution systems with the help of technology. Chartered accountants deal with data/information in numerous forms for assurance reviews, analysis and decision-making. The location of digital data can be traced to computers and servers either at identified offices of clients or vendors. However, of late, there is increasing talk of data being stored on the “Cloud” and usage of cloud computing which leads to new areas of concern from perspective of risk, security and controls. Enterprises are increasingly using cloud computing due to business benefits it offers, but chartered accountants as control specialists are called upon to provide assurance that inherent risks have been adequately redressed. As with any deployment of IT by enterprises, cloud computing offers both challenges and opportunities to chartered accountants. The challenges are in terms of the inherent risks of accessing data on the cloud and the impact on the way services are provided. The opportunities are the way in which cloud itself can be used to deliver services of assurance/consulting to clients.

According to National Institute of Standards & Technology (NIST), defines cloud computing as, “a model for enabling convenient, on demand network access to a shared pool of configurable computing resources that can be rapidly provisioned & released with minimal management effort or service provider interaction.”

Gartner defines cloud computing as: “A style of computing where massively scalable, IT-enabled capabilities are provided as a service” across the Internet to multiple external customers”. Cloud computing refers to both the applications delivered as services over the Internet and the hardware and systems software in the data centres that provide those services. It facilitates sharing of technological resources, software and digital information across multiple platforms, clients and users on Internet.

In simple terms, cloud computing refers to computing power in all its totality or specified components (infrastructure, platform or service) being offered in the cloud as a utility to users, to be paid by the meter on consumption basis, just as we pay for utilities such as electricity, gas and water based on usage. Cloud computing is an ‘on demand model’ for allocation and consumption of computing as utility which offers immediacy, elasticity and is generally multi-tenanted.

FEATURES

·      On-demand  self-service  with  the  inherent  ability to automatically provision computing  capabilities, such as server and  network  storage, as needed without   requiring   human   interaction   with   each service’s  provider,

·         Access to cloud network  through any device using broad network  access,

·         Model of pooling of resources to serve multiple customers   using   a    multi-tenant    model,    with different physical and virtual resources dynamically assigned and reassigned as per demand.

·         Capability to scale up quickly and rapidly by buying more capacity in any quantity at any time.

·         Measured   services   which   automatically   control and optimize resource use   by   leveraging   a metering capability based on storage, processing, bandwidth and active user accounts and resource usage is monitored, controlled and reported with transparency.

THE CLOUD

The “cloud” in cloud computing is defined as the set of hardware, networks, storage, services, and interfaces that combine to deliver aspects of computing as a service.

CLOUD SERVICES

Cloud services include the delivery of software, infrastructure, and storage over the Internet (either as separate components or a complete platform) based on user demand. Services can include processing, storage, access to applications and business processes. Access to the cloud is generally provided via multiple technologies (Internet or other) using multiple devices remotely on real-time basis.

CLOUD PARTICIPANTS

·         The end user, who doesn’t have to know anything about the underlying technology of the cloud just as you don’t know about the technology behind the cell phone to use it.

·          Enterprise management, who are responsible for the management of data or services living in a cloud.

·          The cloud service provider, who is responsible for IT assets and maintenance and for providing the services as per service level agreement.

WORKING OF CLOUD COMPUTING

In  cloud  computing,  multiple servers are  used as  a single platform on  a  network under   secured   environment   with   access  provided via  any  computer device to  a  range of applications and  tools,  thus reducing  the  cost of  IT  operations. Cloud computing is enabled by a number of existing technologies, such as virtualization, automation, and self-service portals. In cloud computing, services are provided over the Internet by dynamically scalable and often virtualized resources.

The cloud computing system can be conceptually divided into two sections: the front end   and   the back end, which connect to each other through a network, usually the Internet. The front end is the interface by the user for interaction with the back end. The  front  end   or  user interface  could  be  any device such as a desktop, laptop, computer terminal, mobile devices, smart phone, PDA, etc. and  this could be  located  anywhere. The back end is the "cloud" section of the system which is the collection of servers connected on a public/private network.  The front end includes the client's computer or network   and the application required to access the cloud computing system. It is not necessary that all cloud computing systems have the same user interface. Services like web-based e-mail programs use existing web browsers like Google Chrome, Internet Explorer, Firefox, Safari, etc. At the back end are various computers, servers and data storage systems that create the "cloud" of computing services.  Generally, each application is required to have its own dedicated server. A central server administers the system, monitoring traffic and user demands to ensure that all applications and the network access are running as required. The system follows a set of rules called protocols and uses a special kind of software called ‘middleware’ which allows the networked computers to communicate with each other.

DEPLOYMENT MODELS OF CLOUD

The cloud computing environment can consist of multiple types of clouds based on their deployment & usage. They are:

·         Public Clouds

The Public Cloud is made available to the general public or a large industry group. They are administrated by third parties or vendors over the Internet & services are offered on pay-per-use basis.

·         Private Clouds

This cloud computing environment resides within the boundaries of an organization and is used exclusively for the organization’s benefits. These are also called ‘Internal Clouds’. They are built primarily by IT Departments within enterprises who seek to optimize utilization of infrastructure resources.

·         Community Clouds

This is sharing of computing infrastructure in between organizations of the same community. The risk is that data may be stored in the data of the competitors.

·         Hybrid Clouds

It is maintained by both internal as well as external providers. It is a composition of two or more clouds (Private, Community or Public). They have to maintain their unique identity but are bound together by data and application portability.

SERVICE MODELS OF CLOUD COMPUTING

The Service models are dynamically changing as cloud providers come out with new offerings focused on being competitive, increase market share, each with the aim to becoming one-stop shop. Currently, there are three dominant cloud computing service models:

·         Infrastructure  as a Service (IaaS)

This model of services typically includes the core IT Infrastructure Services such as operating systems, data storage, web servers, and edge caching services. This model provides the capability to provision processing, storage, networks and other fundamental computing resources by offering the customer the ability to deploy and run arbitrary software, which can include operating systems and applications. The primary difference between this approach and traditional  outsourcing is that  with cloud  computing,  access to  the  infrastructure  is  through the public or private networks and  the assignment and  payment for resources is based on usage. IaaS by providing required technology infrastructure saves its customers the cost of buying hardware and the system software to run the hardware.

·         Platform as a Service (PaaS)

This model provides the application building blocks which may include: workflow, document management, data services, APIs, fabric, proprietary development languages. This model provides the capability to deploy onto the cloud infrastructure customer-created or acquired applications created using programming languages and tools supported by the provider. PaaS enables independent software vendors (ISVs) to develop, deploy, and manage applications without incurring upfront cost for buying the platform hardware or software. PaaS platform has evolved from software as a service (SaaS) and infrastructure as a service (IaaS).

·         Software   as   a   Service   (SaaS)

This   model provides complete applications which are sold on a subscription model for a specific period This  model  provides the  capability to use the  provider’s  applications  running  on  cloud infrastructure. The applications are accessible from various client devices through a thin client interface such as a web browser (e.g., web-based e-mail). SaaS saves customers the cost of buying licenses and running programs on their own computers.

Enterprises have to select the right service model based on their specific requirements.  The  selection has  to  be   done  considering  various   factors   such as cost benefit  analysis,  relevant  risks,  security  and  controls  and  the  criticality  of  the data   and  services. Typically, enterprises would choose the model which offers them the best savings with the required security as appropriate to the criticality of the services provided.

BENEFITS OF CLOUD COMPUTING

Some key benefits of Cloud Computing are as follows:

·         Reduced Capital Costs

By using the cloud technology, capital costs on hardware, software or licensing fees can be easily brought down.

·         Scalability & Flexibility

Cloud benefits by allowing customers to react quickly to changing IT needs, adding or subtracting capacity and users as and when required and responding to real rather than projected requirements.

·         Improved  Accessibility

Cloud offers accessibility on anytime, anywhere basis, which is the demand of the day.

·         Reduced Expenditure on Technology

Cloud Computing offers less expenditure as its fundamental principle ‘pay only for actual usage’.

·         Improved Resource Utilization

Combining resources into large clouds maximizes utilization by delivering resources only when they are needed.

CHALLENGES TO CLOUD COMPUTING

·         Technical Issues

Though it is true that information and data on the cloud can be accessed anytime and from anywhere at all, there are times when this system can have some serious malfunction. This technology is always prone to outages and other technical issues. Even the best cloud service providers run into this kind of trouble, in spite of keeping up high standards of maintenance.

·         Security in the Cloud

Before adopting cloud computing technology, you should know that you will be surrendering all your company’s sensitive information to a third-party cloud service provider. This could potentially put your company to great risk. Hence, you need to make absolutely sure that you choose the most reliable service provider, who will keep your information totally secure.

·         Prone to Attack

Storing information in the cloud could make your company vulnerable to external hack attacks and threats. As you are well aware, nothing on the Internet is completely secure and hence, there is always the lurking possibility of stealth of sensitive data.

All these challenges require serious consideration and possible mitigation mechanisms before adopting the technology.

CONCLUSION

Technology is evolving and developing day by day. Chartered Accountants  will  be  increasingly  required to  audit  or  consult  on  IT  problems  for  clients.  The cloud computing architecture will continue to evolve to permit additional layers of services to be offered. Enterprises will require advice and assurance on   business, compliance, security aspects of the cloud environment. Chartered Accountants with good  understanding  of  cloud  computing  can  play  a  more proactive role for their clients in riding the cloud wave and  also enhance the quality of their service offerings using the cloud computing model.