Amazons New Store And Utility Computing Information Technology Essay

Amazon.com has morphed into a virtual superstore with product offerings in 36 categories. Amazon.com committed $2 billion to refine the information technology infrastructure that was largely responsible for making it the top online retailer in the world. Amazon focused heavily on modernizing its data centers and software so that it could add new features to its product pages. March 2006, Amazon introduced the first of several new services that founder Bezos hoped would transform its future business. Amazon entered the cloud computing market with Simple Storage Service (S3) and later Elastic Compute Cloud (EC2) .The Company had realized that the benefit of its $2 billion investment in technology could also be valuable to other companies. Amazon had tremendous computing capacity. Moreover, the Amazon infrastructure was considered by many to be among the most robust in the world. Amazon began to sell its computing power on a per usage basis, just like a power company sells electricity.

S3 is a data storage services that is designed to make Web-scale computing easier and more affordable for developers. Using S3 does not require any client software, nor does it requires the user to set up any hardware. Amazon designed S3 to provide a fast, simple and inexpensive method for businesses to store data on a system that is scalable and reliable. S3 promises 99.99 % availability through a mechanism of fault tolerance that fixes failures without any downtime.

In conjunction with S3, EC2 enables businesses to utilize Amazon’s servers for computing tasks such as testing software. The service also includes 20 cents per GB of data traffic inbound and outbound per month as well as the standard S3 pricing for storing an Amazon Machine Image (AMI) , which contains the applications, libraries, data and configuration settings that a business uses to run the processes. Bezos targeted micro-sized businesses and Web startups as customers for AWS, but the service have also attracted some mid-size businesses and potential big players e-business.

Adam Selipsky, vice president of product management and developer relations for Amazon Web Services (AWS), Amazon is really a technology company that can bring wealth of engineering prowess and experience to independent developers and corporations by allowing them to run their processes on Amazon’s computer system. Selipsky also emphasizes that AWS is not simply about providing great amounts of storage capacity and server time. AWS creates the opportunity for others to work at Web scale without making the mistakes that Amazon has already made learned from. Simplicity and ease-of-use are not generally terms that go along with building a Web-scale application, but they are major selling points for AWS. Users build on the services through Applications (APIs) made available by Amazon. MileMeter Inc is a Dallas-based startup that plan to sell auto insurance by the mile It initially ran its own server in a data center but moved most of its applications onto “virtual “computers in Amazon’s EC2.

Webmail.us provides e-mail management services for thousands of companies around the world.Webmail.us sends more than a terabyte of data to Amazon to store with $3 very week. The cofounder and chief technology officers of Webmail.us was very pleased that his company was able to create a simple interface with which Amazon can accept the abundant small files that his company managers. Other backup systems have had difficulty handling the typical Webmail.us backup load and most hosting companies would require a custom application to handle such data.Webmail.us even used EC2 to develop its storage interface. According to CEO, Amazon immediately reduced his company’s data backup costs by 75%.

Powerset is an up-and-coming search engine company that wants to focus its time, and the $2.5 million it has raised, on its core businesses, natural language search technology. By using S3 and EC2, Powerset saves upfront cash expenditure and eliminates the risks that building an infrastructure will take longer than expected. Many of the traditional utility computing suppliers charge around one dollar per CPU hour or ten times what Amazon changes. Powerset’s CEO Barney says that the pay-as-you go model is very important because his company does not know how fast it will grow. With AWS in place, Powerset never has to worry about being unable to add computing power when a spike in usage occurs.

SmugMug Inc., and online photo-sharing startup, was immediately drawn to the ease with which it could back up photos in Amazon’s S3. Storing its user’s photos on Amazon’s devices prevents SmugMug from having to purchase its own additional storage and saved the company $1 million during the first years it used Amazon’s services.

There are issues for Amazon to confront before anyone can declare AWS to be a successful venture Larger businesses may be more inclined to use a more established company, especially one with more experience hosting core applications and data. Currently, Amazon’s flexible, pay-as-you go model gives the company a competitive advantage over companies that require service contract. According to Daniel Golding, vice president of Tier 1 Research, the established companies such as IBM, Hewlett-Packard and Sun Microsystems, may follow Amazon’s lead and offer utility computing without service-level agreements (SLAs). Complicating the matter is that some companies are wary of using a supplier that does not offer SLAs, which guarantee the availability of services in terms of time. Golding suggests that Amazon may have launched a major shift in the industry, but others will reap the rewards while Amazon may suffer for it.

One more challenge for Amazon is the viability of AWS itself. The company’s track record with new technology projects is mixed. Amazon launched its A9.com search site with much fanfare, but the site never really caught on with users. Moreover, the growth of AWS could be harmful to Amazon’s Web services line as well as to its retail line if Amazon does not position itself to handle a dramatic increase in demand on its infrastructure. AWS customers could drop the service, and Amazon.com could falter. In January 2007 problem was caused by faulty hardware installed during an upgrade and it was resolved quickly. July 2008, Amazon’s S3 servers experienced significant outages with service lost for 8 hours in July. The July 2008 outage was more problematic. Amazon reported that components were unable to interact properly due to a problem with “internal system communications.” Some users were critical and questioned whether Amazon was capable of being their solution for hosted storage going forward.

AWS has charmed some high- profile clients. Microsoft uses S3 to increase software download speeds for its users. Linden Lab, creator of the online virtual world Second Life, uses the service to alleviate the pounding its servers take when the company releases its frequent software upgrades. The Nasdaq stock exchange uses S3 to host data for Nasdaq Market Replay, an application that lets companies play back historical market data in real time. However, Nasdaq is reluctant to use an online service for transactional or highly secure data. To better support large accounts, Amazon started round-the-clock phone support and credits if S3 availability falls below 99.99 % in a single month. The potential of AWS is being converted into performance mostly by tech savvy developers with financial backing. More than 370,000 developers, ranging from individuals to large companies, have signed up. Amazons hopes one day to make it possible for anyone with an idea and an Internet connection to begin to put together the next Amazon.com.

CASE STUDY QUESTIONS

What technology services does Amazon provide? What are the business advantages to Amazon and to subscribers of these services? What are the disadvantages to each? What kinds of businesses are likely to benefit from these services?

The technology services does Amazon provide are Simple Storage Service (S3) and Elastic Compute Cloud (EC2). S3 is data storage service that is designed to make Web-scale computing easier and more affordable for developers. Customers pays 15 cents per gigabyte of data stored per month on Amazon’s network of disk drivers. Also, a change of 20 cents per gigabyte of data transferred. Data maybe stored as objects ranging in size from 1 byte to 5 gigabytes with an unlimited number of objects permitted. Amazon designed S3 to provide a fast, simple and inexpensive method for businesses to store data on a system that is scalable and reliable. S3 promises 99.99% availability through a mechanism of fault tolerance that fixes failures without any downtime. In conjunction with S3, EC2 enables businesses to utilize Amazon’s servers for computing tasks such as testing software. Using EC2 incurs changes of 10 cents per instance-hour consumed. The service also includes 20 cents per GB of data traffic inbound and outbound per month, as well as the standard S3 pricing for storing an Amazon Machine Image (AMI), which contains the applications, libraries, data and configuration settings that a business uses to run its processes. Amazon Web Service (AWS) create the opportunity for others to work at Web scale without making the mistakes that Amazon has already made and learned from. Simplicity and ease-of-use are not generally terms that go along with building a Web-scale application, but they are major selling points for AWS. User build on the services through Application Programming Interface (APIs) made available by Amazon. The founder, Bezos targeted micro-sized businesses and Web startups as customers for AWS, but the services have also attracted some mid-size businesses and potential big players in e-business. The kinds of businesses are likely to benefit from these service are sell auto insurance by the mile, email management services, an up-and-coming search engine, and an online photo sharing startup. The disadvantages for this service are, the growth of AWS could be harmful to Amazon’s Web service line as well, and faulty hardware and that component were unable to interact properly due to a problem “internal system communication”.

How do the concepts of capacity planning, scalability and TCO apply to this case? Apply these concepts both to Amazon and to subscribes of its services.total cost opportunities

The total cost ownerships model can be used to analyze these direct and indirect costs to help firms determine the actual cost of specific technology implementations. When all these costs components are considered, the TCO for Amazon might run up to three times the original price of the equipments. Hidden costs for support staff, downtime and additional network management can make distributed client / server architecture especially those incorporating mobile wireless devices and more expensive than centralized mainframe architecture. Amazon committed $2 billion to refine the information technology infrastructure that was largely responsible for making it the top online retailer. Amazon Web Service ( AWS) has charmed some high profile clients. Microsoft uses S3 to increases software download speed for its users and Second Life, use the service to alleviate the pounding its server take when the company releases its frequent software upgrades. Also that, Amazon started round-the-clock phone support and credits if S3 availability falls below 99.99% in a single month. More than 370,000 developers, ranging from individuals to large companies signed up. The company remains profitable: net income was $35 million in 2003, $588 million in 2004, $359 million in 2005, and $190 million (including a $662 million charge for R&D) in 2006. Retained earnings were negative $1.8 billion in 2006, negative $1.4 billion in 2007, and negative $730 million in 2008, and $172 million in 2009.Annual revenues, aided by product line expansion and rapid growth in international sales, grew from $3.9 billion in 2002 to $10.7 billion by 2006.On November 21, 2005, Amazon entered the S&P 500 index, and, on December 31, 2008, the S&P 100 index. On March 26, 2010, Amazon had a higher market cap than Target Corporation, Home Depot, Costco, Barnes and Noble, and Best Buy, only lagging that of Walmart among American brick and mortar retailers. The domain amazon.com attracted at least 615 million visitors annually by 2008, twice the numbers of walmart.com. Amazon attracts approximately 65 million customers to its U.S. website per month. Amazon derives about 40 percent of its sales from affiliate marketing called Amazon Associates and third-party sellers who sell products on Amazon[citation needed]. Associates receive a commission for referring customers to Amazon by placing links on their websites to Amazon, if the referral results in a sale. Worldwide, Amazon has “over 900,000 members” in its affiliate programs.Amazon reported over 1.3 million sellers sold products through Amazon’s World Wide Web sites in 2007. Unlike eBay, Amazon sellers do not have to maintain separate payment accounts; all payments are handled by Amazon. In September 2000, price discrimination was found on amazon.com. Amazon offered to sell a buyer a DVD for one price, but after the buyer deleted cookies that identified him as a regular Amazon customer, he was offered the same DVD for a substantially lower price. Jeffrey P. Bezos subsequently apologized for the differential pricing and vowed that Amazon “never will test prices based on customer demographics”. The company said the difference was the result of a random price test and offered to refund customers who paid the higher prices. Amazon had also experimented with random price tests in 2000 as customers comparing prices on a “bargain-hunter” Web site discovered that Amazon was randomly offering the Diamond Rio MP3 player for substantially less than its regular price. In April 2009, BusinessWeek magazine reported that Amazon.com was one of 25 US companies that paid the least US taxes. Amazon.com paid a 4.1 percent annual tax rate, far less than the standard 35 percent corporate rate, based on an analysis of the company’s financial figures for 2005-2008. According to SEC filings, this rate was caused in part by lower tax rates for Amazon.com’s international subsidiaries.

Search the Internet for companies that supply utility computing. Select two or three such as companies and compare them to Amazon. What services do these companies provide? What promises do they make about availability? What is their payment model? Who is their target client? If you were launching a Web startup business, would you choose one of these companies over Amazon for Web services? Why or why not? Would your answer change if you were working for a larger company and had to make recommendations to the CTO?

We have chosen a newScale Service Catalog and IQMS, IT can offer a Web-based self-service menu of standard service packages and options. Easy-to-use service request forms can be configured to record everything you need for the virtual machine build sheet. Once a build has been selected, an automated approval process ensures all the right policies and procedures are in place.

The approved virtual machine is then automatically deployed based on the selected build, together with other components for the service package. You can then track the entire service lifecycle, identify who’s using what, de-commission unused resources, and ensure capacity to meet demand. Moreover, by tracking consumption and costs, IT management has complete visibility into usage and a detailed bill of services. There are many virtualization solutions that focus on the back-office tasks of systems management and the machine aspects of provisioning. Some of them even cover virtual as well as physical environments. newScale integrates with the most common virtualization management systems and other data center automation systems to complement this existing infrastructure investment.

However, these tools do little to improve the front-office processes of defining standard server build configurations, providing a self-service shopping experience, linking server requests to the underlying business justification, speeding the requirements gathering and approval cycle time, and managing the lifecycle of the end-to-end service. They don’t address other silos such as network and middleware – nor do they provide governance.

Only newScale offers a Service Catalog solution to provide self-service and control in managing physical, virtual and cloud resources for today’s multi-vendor, cross-platform infrastructure spanning from the data center to the desktop. The result is reduced cost and increased agility – enforcing standards to streamline the request to delivery cycle time, and providing governance to prevent virtual sprawl.

They are three Services practice areas: Professional Services, Knowledge Services and Customer Services focus on delivering world-class resources for your Service Catalog initiative so you can deliver on time and on budget, with minimal risk, and effective knowledge transfer to achieve true self sufficiency.

  NewScale Professional Services practice is staffed with an experienced team ready to help implement and optimize newScale Service Catalog solutions. Look to Professional Services for the following services and expertise:

Process Consulting

Technology Consulting

Strategic Front Office Consulting

Process Consulting

Our project managers help you organize your implementation and upgrade projects based on our proven Universal Delivery Model (UDM) methodology. The experts in designing and configuring your newScale solutions, our service designers and application specialists coach you through important design and configuration considerations and share implementation best practices, tools and templates from our other successful deployments. Working along side your project team, our specialists will share design, configuration and testing knowledge that will allow you to manage and expand your newScale solution over time.

Technology Consulting

newScale’s technical team provides technical assistance for initial newScale solution implementations and subsequent integrations, upgrades or other customizations. Highly skilled technicians with experience in a variety of database products, web technologies and third-party application systems, the technical team provides professional services to help:

Establish the infrastructure architecture for the newScale solution environment

Create an integration roadmap and architecture

Install newScale software

Design, develop and test integrations, utilities, reports and other customizations

Provide knowledge transfer for customers’ technical resources

Strategic Front Office Consulting

newScale’s Front Office ServiceFormation Strategy practice works with our customers to formulate and execute their Service Catalog journey. Using newScale’s Front Office ServiceFormationâ„¢ Model, an ITIL-based Service Catalog transformation model for running IT like a business, our strategy consultants will guide you through the activities required to plan, source and deliver a service oriented Front Office for IT.

The Front Office ServiceFormationâ„¢ Model leverages a Business Integration approach to address the Strategy, Process, Technology and People aspects of the transformation in each phase of the Service Catalog journey. Typical activities our consultants work with you on include:

Strategy & Planning

Identify your business’ service requirements

Rationalize and standardize your service portfolio

Develop key IT business models:

service level objectives

financial models

governance models

Develop/revise key IT business processes:

service level management

budget

chargeback

reporting

MSP payment/penalty process

Create the transformation (rollout) plan

Design and Develop the organizational structure and change management plan for ongoing Service Portfolio Management

Implement the technology needed to manage and support your Service Portfolio Transformation Plan

Process

Budgeting Process

Negotiation

Agreement

Chargeback/Visibility & MSP Payment/Penalty Process

Consumption Tracking/Escalation Process

Reporting/Analytics Requirements

People

Organizational Change Plan

Organizational Design and Development:

Centralized vs. Decentralized delivery teams

Internal vs. External service providers

Shared Services function

Define key roles and responsibilities:

Relationship Manager

Service Level Manager

Service Owner

Technology

Technology Architecture

Implementation of Service Portfolio Management tool

Implementation of Service Request management tool

Integration Architecture

Service Management integration

Service Operations integration

Our Knowledge Services practice builds processes, tools, technical publications and training programs to support newScale’s Service Catalog initiatives and the successful deployment of newScale solutions. Knowledge Services delivers the following services:

Training and YES! Program

Methodology and Best Practice Development

Technical Publications

Training and YES! Program

newScale training designs and delivers experiential courses for both business and technical users. Our trainers combine deep institutionalized Service Catalog knowledge with the latest training practices to produce courses that help guide customers’ Service Catalog strategy and related processes, initiate rapid deployment of newScale solutions and form a foundation for customer self-reliance. Training courses are delivered in a classroom setting or via the web and are available in a variety of locations, including on-site at customer facilities.

The newScale YES! (Your Education Services) program provides on-demand education services and access to knowledge services for customers and partners who need to have questions answered quickly and easily as they expand their newScale IT Service Catalog solution. newScale YES! is an additional offering to help customers configure and deploy services better and faster and supplements our on-site training and consulting services.

newScale YES! program is staffed with Service Catalog and newScale solution experts and provides practical how-to advice to subscribing customers and partners. newScale YES! experts manage:

A newScale YES! Web Forum

A newScale YES! Knowledgebase

Regular newScale YES! publications and case studies illustrating Service Catalog best practices

On-demand education

Telephone, email and instant messenger consulting

Methodology and Best Practice Development

The Methodology and Best Practice Development team is chartered with the creation and maintenance of newScale’s methodologies and best practices. Our experience with hundreds of solution deployment projects has created an iterative, proven methodology for successfully deploying newScale RequestCenter and newScale AlignmentCenter as the foundation for Service Catalog initiatives.

Our methodology, the Universal Delivery Model (UDM), is based on the lessons learned and successes gained from each deployment. The Methodology and Best Practice Development team continually tunes and extends the methodology, tools, templates and best practices based on real world deployment experiences to ensure that we save customers and partners’ time, reduce costs and mitigate risk throughout the solution deployment process.

Technical Publications

newScale Technical Publications produces the technical documentation and online Help for the products released by newScale’s Product Development team. The installation guides, release notes, development kits, and user guides are published and maintained for customer use.

With more than 100 customers and over 2 million users in production worldwide, newScale is the leading provider of self-service, service catalog, and lifecycle management software for enterprise IT and private/hybrid cloud computing. Our solutions are so widely adopted that every twenty seconds another user turns to a newScale Service Catalog for their IT service delivery needs.

Many of the most well-respected Fortune 500 and Global 2000 corporations – and some of the most widely regarded public sector organizations – rely on newScale solutions for their IT Service Catalog.

In fact, 20 percent of the Fortune 50 are newScale customers – and 84 percent of newScale’s U.S.-based customers are on the Fortune magazine “Most Admired Companies List.”

With broad adoption and usage at leading IT organizations around the world, newScale customers represent many different industries including:

Automotive

Chemicals

Communications

Consumer Goods

Education

Energy

Financial Services

Healthcare

Insurance

IT Outsourcing

Manufacturing

Oil & Gas

Pharmaceuticals

Public Sector

Retail & Hospitality

Services

Technology

Transportation & Logistics

newScale has developed strategic relationships with industry leaders to provide our customers with end-to-end solutions and ensure success in their self-service, service catalog, and lifecycle management initiatives for enterprise IT and private/hybrid cloud computing.

newScale partners include:

Channel Partners – organizations supporting our clients’

Service Catalog initiatives through advisory, consulting, systems integration, and outsourcing services with specific industry expertise, and best practice process consulting

Technology Alliances – organizations providing complementary technologies that enhance and extend the range of our capabilities

“A critical and indispensible component of a private cloud is the Service Catalog, providing a menu of standard cloud service offerings and a self-service “storefront”

for IT.”

The Building Blocks for Private Cloud: Automation, Virtualization, and Cloud Service Management, Enterprise Management Associates

“Organizations considering self-service IT – for virtualization, data center automation, or a private cloud – should place newScale high on their short list of companies and products to evaluate.”

The Building Blocks for Private Cloud: Automation, Virtualization, and Cloud Service Management, Enterprise Management Associates

“newScale delivers a self-service “front-end storefront” that offers prospective consumers the IT services available to them based on pre-defined policies. Throughout the selection and provisioning process, newScale acts as an orchestration engine that sequences and tracks service workflows from start to finish.”

Cloud Coalition: rPath, newScale, and Eucalyptus Systems Partner on Self-Service Public and Private Cloud, Julie Craig, Enterprise Management Associates

Example company:

Fujitsu is a leader in information technology and communication solutions for the global marketplace, with more than 150,000 employees worldwide. Fujitsu operations in North America include ten major subsidiaries with approximately 8,000 employees.

Challenge:

As Fujitsu North America centralized its shared services operations, they found that they had many different mechanisms for employees to request IT services – whether sending emails, making phone calls, filling out forms, or inputting data into several homegrown systems – across each of its subsidiary companies.

Solution:

To bring consistent processes and procedures to all North American companies – and to improve end user satisfaction with IT services – Fujitsu selected the Web-based Service Catalog and request management solution from newScale.

Results:

A single, easy-to-use, Web-based interface for requesting services – resulting in greater customer satisfaction with IT – for Fujitsu employees throughout North America.

Standardized and repeatable request management, enabling more efficient use of existing resources and consolidation of back-end fulfillment systems.

Greater visibility and control over IT service delivery, with improved performance measurement, SLA tracking and IT billing.

Another one website, we choose are IQMS is committed to providing advanced and a feature-rich Manufacturing ERP Software System that is designed to be the last ERP software you will ever buy.

IQMS, a leader in ERP and Manufacturing Software Systems.IQMS, an innovator in Manufacturing Enterprise Resource Planning (ERP) software and creator of a truly single-source software solution, provides manufacturers with all the functionality to efficiently manage and improve business processes. The company’s flagship product, EnterpriseIQ, intuitively combines real-time manufacturing software , enterprise software, accounting software, and supply chain management into one database. IQMS provides business and plant management software that allows manufacturers to run more effectively and more profitably.

IQMS has been in the design and development of ERP software systems for repetitive, process and discrete manufacturing industries since 1989. IQMS provides complete product development, support, implementation and training without utilizing third party vendors or applications. EnterpriseIQ also offers features such as a full Quality suite, CRM, WMS and eBusiness solutions designed for manufacturing environments that include automotive, medical, appliance, construction, consumer products and other industries.

Customer Focus

The IQMS customer mission is to form partnerships with customers based on trust, support and bottom-line, measurable results. Our customers trust IQMS to develop products that meet their needs in a rapidly changing global manufacturing environment.

IQMS customers enjoy superior performance, reliability, scalability, reduced implementation times, lower maintenance fees and the ability to adapt to changing business conditions.

IQMS proudly boasts one of the highest customer retention rates of any ERP provider. Customers are supported through free software upgrades, award-winning customer support, both phone and internet support, and active users meetings. IQMS customers are among the most innovative and adaptive manufacturers in the world. With offices across North America, Europe, and Asia, IQMS serves manufacturers around the world.

Vision for the Future

As technology evolves, so does IQMS software. From wireless, mesh network capabilities to the ever increasing need for instantaneous communication, IQMS and EnterpriseIQ will continue to secure a strategic place in manufacturing as the only single-source enterprise-wide communication tools.

IQMS takes pride in the relationships that have helped EnterpriseIQ to become a leading provider of ERP and Manufacturing Software for manufacturers. Here are example for this partner:

Actify Inc. creates client-server design visualization and collaboration solutions for the high technology, automotive industrial automation and discrete manufacturing industries. Actify’s family of products enable access, communication and distribution of multiple 2D and 3D CAD formats throughout the enterprise and supply chain.

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