Abstract — The traditional way of IT in a company can be

very problematic. As changes in the business environment occur, so appears the need to implement more efficient enterprise systems. Cloud Computing technology represents the next enterprise computing paradigm and a solution to most current enterprise IT problems. This article examines how Cloud technology has evolved and the way it affects related performances by presenting a case study based on SlapOS open source Cloud platform.

Keywords — Cloud Computing, Public Cloud, Private Cloud, ERP, SlapOS.

I. INTRODUCTION HE level of understanding and applying Cloud technology increased during the last few years and we

are facing now a paradigm change. At the beginning, Cloud was primarily preferred because of the cost minimization feature, since it assured the minimal amount of money spent on resources as well as the scalability of adapting to changing enterprise workload demands [1]. Nowadays companies all over the world are getting more aware of this technology as a business asset. In our opinion the adoption of Cloud technology was, and still is, a complex decision even though the approach has changed. At the beginning Cloud adoption was primarily seen as an enterprise optimization through the right-sizing method: minimizing the Total Cost of Ownership (TCO), transforming capital expenses (CapEx) to operating expenses (OpEx) and no entry barrier consisting in the elimination of upfront costs.

All this features can be captured by behavioral factors relating to Cloud adoption. Joe Weinman has expressed various ideas and formulated “laws” for Cloud computing adoption based on human behavior. Two of them favor the decision of Cloud adoption with basic information about the technology. The law of the Zero-Price Effect which states that people would rather receive a free $10 gift certificate (a $10 gain) than pay $7 for a $20 one ($13 gain) demonstrates the advantage of the no upfront cost policy for Cloud adoption [2]. Also the Hyperbolic

This work was supported by a grant of the Romanian National

Authority for Scientific Research, CNDI–UEFISCDI, project number E!6021 - Cloud Consulting.

Elena-Geanina Ularu is with the Phd. Institute of Doctoral Studies Bucharest.

George Suciu and Razvan Craciunescu are with the Faculty of Electronics, Telecommunications and Information Technology, University POLITEHNICA of Bucharest, Bd. Iuliu Maniu, nr. 1-3, Romania (phone: +40-21-3323006; e mail: george@beia.ro).

Discounts and Instant Gratification law is leading the mind of the decision makers when thinking about adopting the Cloud technology. The cost reduction that a company can benefit from by adopting a Cloud solution does not take account of the future risks and the pay as you go methods focuses the clients mind only on instant gratification.

What is changed in the choice of adopting a Cloud solution nowadays compared to the beginnings of Cloud technology is the level of information that decision makers have at their disposal.

In 2009 the results of a Cloud Computing survey conducted by Kelton Research, an independent research firm, between December 15, 2008, and January 8, 2009, shows the way that Cloud adoption was perceived. The majority of companies that were surveyed (54 percent) used technology to cut costs. According to the study by a 5 to 2 ratio, respondents chose to adopt new technologies to save money versus cutting back on new technologies to save money. Also sixty percent reported that existing internal IT systems are too expensive [3].

Comparing this results to a recent Cloud Adoption Study 2012 [4] conducted by IDG Research Services enterprises we can see that companies are now recognizing more the business impact aspects, such as business agility, productivity of IT, availability as they present plans for Cloud and similar aspects are surpassing the cost reduction factor that was playing the main role three years ago.

The distribution in Fig. 1 is created based on the IDG global survey [4] for better understanding of actual Cloud Computing adoption.

Fig. 1. Top drivers of Cloud Computing- Global [4]. Cloud technology adoption level increased by the

Public versus Private Cloud Adoption – a Case Study based on Open Source Cloud Platforms George Suciu, PhD Student, Member, IEEE, Elena G. Ularu, PhD Student and Razvan Craciunescu,

Student Member, IEEE

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20th Telecommunications forum TELFOR 2012 Serbia, Belgrade, November 20-22, 2012.

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quantity and quality of information that decision makers have. Between 2009 and 2012 Cloud Computing has been developed, discussed, analyzed, and adopted, all this actions increasing the level of information on the technology [3]. Decision makers understand now better the Cloud concept and the facilities offered for their day to day activity. Some features of Cloud Computing create cognitive biases in people that are obstacles to Cloud adoption and other properties create favorable impact like the two laws mentioned above. This is applicable for users as well as organizations.

In this paper we briefly review the basic Cloud Computing deployment models and discuss the private and public model (section 2). The third part is represented by a case study on an open source Cloud platform. In the final section (section 4) we conclude by expressing our preference on Cloud deployment models and the impact of wide adoption of Cloud Computing under the preferred model.

II. PRIVATE CLOUD VS PUBLIC CLOUD A deployment model defines the purpose of the Cloud

and the nature of how the Cloud is located. The NIST definition [5] for the four deployment models is as follows:

• Public Cloud: The public Cloud infrastructure is available for public use alternatively for a large industry group and is owned by an organization selling Cloud services.

• Private Cloud: The private Cloud infrastructure is operated for the exclusive use of an organization. The Cloud may be managed by that organization or a third party. Private Clouds may be either on or off-premises.

• Hybrid Cloud: A hybrid Cloud combines multiple Clouds (private, community of public) where those Clouds retain their unique identities, but are bound together as a unit. A hybrid Cloud may offer standardized or proprietary access to data and applications, as well as application portability.

• Community Cloud: A community Cloud is one where the Cloud has been organized to serve a common function or purpose.

A. Public Cloud The public Cloud is suitable for SMBs because these

kind of companies often don’t have much capital and have less risk in losing information due to theft or security breaches. Cloud Computing represents a cost cutter for SMBs and also removes the need of a proprietary IT with all the implications, infrastructure, IT specialized personnel, rented space for storage etc.

Small businesses and startups can profit from the pay-as-you-go flexibility that public cloud offers and the cost savings associated with it. Most service providers offer a larger scalability, so businesses can scale their operations only to the needs that they have.

For example, if a company’s demand grows and more employees get hired, the public Cloud provider will allow the company to have access to more infrastructure as a service and servers hosting the data that will be needed for

the additional employees. However, questions arise when analyzing larger

companies or ones with a lot of sensitive data to keep track of, like, for instance, a bank. Is it all about trusting one service provider or is the control bigger when they are hosting their own private Cloud?

B. Private Cloud It may also be about the principles of behavioral

economics. People are both risk averse and loss adverse [6]. Thus in the case of a company with sensitive data, for example a bank, Cloud initiatives may cause the concerns of adoption to be weighed more heavily than the benefits accrued to improving total costs and achieving greater agility.

Private Cloud proves to be a benefit for these bigger companies because it is based on a model where they run their own servers and infrastructure. The idea is to control its own infrastructure and only allow workers within the same firewall to access all the content from the Cloud. The existing resources of a big company contribute to making the private Cloud adoption possible.

Another key aspect of private Cloud is that management is done within the organization itself. Being able to manage your own assets goes hand in hand with the behavioral need for status. A large IT organization with substantial assets is a visual display of status; a Cloud deployment is not. This is expressed as a pride of ownership [6].

This means that, if some IT issues occur, the company has someone to blame within its own ranks rather than has to rely on the provider of the Cloud service to fix the issue.

The private Cloud platform can also scale on demand, to the degree to which the company can purchase equipment on demand. It still makes sense from a financial perspective for any company instead of not using a Cloud at all and purchasing all software and hardware upfront.

Cisco conducted a worldwide survey on Cloud involving 1300 decision makers in 13 countries. According to this study the Cloud adoption remains strongest within the SaaS layer, Cloud infrastructure models are expected to provide the next impetus to growth; private Cloud models are expected to grow the most [7].

III. OPEN SOURCE CLOUD CASE STUDY In this chapter we present the way in which we combine

open source grid computing for decentralized Cloud computing and Enterprise Resource Modeling (ERP) to provide Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS) through a simple, unified API for E-Business Applications.

We will use our deployment platform based on SlapOS [8], the first open source operating system for Decentralized Cloud Computing and ERP5 [9], the open Source e-Business suite, hosted on several servers running Ubuntu Linux – Apache – MySQL template with current software release.

In order to have a more compact representation of the problem, we extended the layered Cloud model as

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presented in Fig. 2. IaaS offers the infrastructure of virtual machines and

storage. PaaS is built on top of IaaS and offers platform services such as operating systems, application servers and databases. SaaS is the layer that offers services to the final user in the form of various applications: Customer Relationship Management (CRM), ERP, communication systems, blogs, multimedia applications, etc.

Fig. 2. The general Cloud model.

ERP systems enable organizations to manage their

resources efficiently and effectively by providing a total and integrated solution for their information processing needs. Due to technical and economical restrictions, ERP systems traditionally have been focused on larger organizations. In recent years however, a turn of the market towards Small and Medium Enterprises (SMEs) can be observed [10]. This shows that SMEs are as likely to be interested in ERP as multinational organizations. ERP packages are being viewed as a key factor for gaining competitive advantage in the SME sector and empirical findings confirm these expectations [11].

Business models, where SMEs access ERP functionalities through the Internet instead of purchasing them could alleviate the problems of lack of human and financial resources and broaden the ERP market. Recently Software as a Service (SaaS) is associated to this kind of business model [12]. By providing applications directly through the Internet, SaaS eliminates installation and update tasks, thus saving clients from maintenance work and reducing IT expenses by on-demand pricing [13].

A recent Techsoup Romania study on Cloud Computing shows also that the Non Governmental Organizations (NGO) can benefit from the ERP functionalities. According to this study the NGOs in Romania are more opened to cloud solutions 24% versus 16% globally and 18% in the Central and East European (CEE) region [14].

Another “disruptive business model” mentioned by Hofmann [12] is that of open source companies. Free / open source ERP systems might be an alternative for SMEs as they tackle their specific problems. They not only help to save license costs, but they also prevent lock-in. As their source code is free to everyone they lower the barrier for third parties to perform modifications [15].

A recent economic study [16] shows that the gross

margin of services such as Google Apps Premier is more than 80% whereas gross margin of mobile or fiber to the home (FTTH) data providers such as Proxad is less than 50%.

The SlapOS architecture is based on two types of machine roles that can be used for building Private or Public Clouds: SlapOS Master and SlapOS Nodes, as shown in Fig. 3.

Fig. 3. SlapOS architecture and SaaS function [9].

The user connects to a SlapOS Master through a simple

web interface and selects the ERP5 software that is needed. Then the master deploys the requested software on a partition of a node that the user is entitled to access and provides the login details.

SlapOS is usually configured to use IPv6 addresses. Although use of IPv6 is not a requirement (an IPv4 only SlapOS deployment is possible) it is a strong recommendation. IPv6 simplifies greatly the deployment of SlapOS either for public Cloud applications or for private Cloud applications [17]. In the case of public Clouds, use of IPv6 helps interconnecting SlapOS Slave Nodes hosted at home without having to setup tunnels or complex port redirections. In the case of private Cloud, IPv6 replaces existing corporate tunnels with a more resilient protocol which provides also a wider and flat corporate addressing space.

After one year of experimentation with IPv6 in Romania, using IPv6 native Internet access as shown in Fig. 4 (more than 50% of worldwide IPv6 traffic), we found that IPv6 is simple to use and creates the condition for many innovations which would else be impossible.

Fig. 4. IPv6 Adoption Rate: Romania [16].

IPv6 addressing helps allocating hundreds of IPv6

addresses on a single server. Each running process can thus be attached to a different IPv6 address, without

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having to change its default port settings. Accounting network traffic per computer partition is simplified. The exhaustion of IPv4 addresses prevents in practice allocation of many public IPv4 addresses to a single computer [18], [19]. All this would of course be possible with IPv4 or through VPNs but it would be much more difficult or less resilient.

According to our research and based on an IDC study focused on Cloud market in CEE region [20] we observe in Fig. 5. that the number of local SaaS cloud providers has tripled and estimate an increase to 30 local SaaS providers for the year 2012.

Fig. 5. Cloud Providers in Romania [20].

IV. CONCLUSION A majority share of micro-enterprises now uses Cloud

services such as Google Apps, Apple iCloud, Office 365, ZOHO, Salesforce, etc. from United States.

By using Open Source Cloud products and services, companies can provide Private-Cloud services which are cheaper, more resilient and provide better privacy. They can also subsidize hardware according to innovative business models such as the "1€ tablet" concept. 1 GHz of idle computing power during one month can be subsidized about 1.4€.

Open Source Private Clouds can also be used to provide innovative services to consumers such as distributed social network. By running the server processes of a social network with the idle processing power of thousands of mobile device, it is possible to propose an alternative model to centralized approaches such as Facebook or Google+. By storing personal data on mobile phones, organizations can offer better privacy protection and retain their customers.

ACKNOWLEDGMENT This research activity was supported by UEFISCDI

Romania under the grant no. 20/2012 “SaRaT-IWSN” and by the project “Valorificarea capitalului uman din cercetare prin burse doctorale (ValueDoc)” co-financed from the European Social Fund through POSDRU, financing contract POSDRU/107/1.5/S/76909.

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