In the book titled "Cloud Computing Explained," John Rhoton states that "Cloud computing can offload some risks
from the customer to the service provider. By contractually stipulating data protection and disaster recovery
provisions, and attaching them to indemnities in the case of failures, the company can mitigate its own risks."
"It also reduces the likelihood of under-provisioning."
He stresses the importance of the risk of under-provisioning and lists off several direct and indirect costs to a
company from "scalability disasters."
Please provide for me two of the direct and/or indirect costs that he mentions.
And here is the text I got it from this page http://docshare.tips/rhoton-openstack-cloud-computingebook_58a40540b6d87f0a728b464c.html
Also it the same of my book page 95 chapter 6 benefits and challenges
Cloud computing can offload some risks from the customer to the service provider. By contractually
stipulating data protection and disaster recovery provisions, and attaching them to indemnities in the
case of failures, the company can mitigate its own risks.
It also reduces the likelihood of under-provisioning. Since it is not possible to accurately predict
customer demand, there is always the possibility that there will be sudden unanticipated spikes of
resource utilization. If the company owns its own resources, then there are limits to the amount of idle
capacity that they will procure on the off-chance of a sudden increase in activity. On the other hand, the
elastic capacity of a cloud provider should not often be exceeded. It would be hard to over-emphasize
this point. Scalability disasters can cause both direct and indirect costs. Lost revenues through
unplanned downtime cost enterprises an average of over a hundred thousand dollars an hour and can
exceed a million dollars an hour4 (Forrester 2004). In addition, there are numerous other consequences.
The company may lose potential customers who are irked by the unpleasant experience of losing a
transaction. Employees cannot work which increases their hourly costs. There may be compensatory
payments. The brand damage can hurt relations with customers, suppliers, financial markets, banks,
business partners and investors.
There may even be an impact on financial performance through interruptions in billing or investment
activities. Revenue and cash flow recognition may be delayed and distort the financial picture and there
are risks of lost discounts from accounts payable, which can also damage the credit rating. If that isn’t
enough, then consider the contractual payment obligations to temporary employees, schedules for
equipment renewal, overtime costs, shipping costs and travel expenses, which can all be adversely
Rogue clouds represent another potential risk that an authorized cloud service can mitigate. Historically,
when a technology is not deployed in an organization the likelihood of an unauthorized deployment
increases. A stark example was that of WLANs (Wireless Local Area Networks). Companies that
prohibited wireless technologies often found that employees were adding personal access points to the
corporate network creating a huge attack surface. By implementing authorized WLANs, many
organizations removed the incentive for unauthorized WLANs and were thereby able to control the risks
Similarly, there is an incentive for many users or departments to leverage cloud-based services for
personal and group use. It is extremely easy for them to access these on their own since many of the
providers offer free functionality or credit-card-based payment. Their rogue use may jeopardize
sensitive company information or expose the business to severe sanctions for non-compliance with
It is impossible to completely remove the threat of departmental cloud use. However, if the
functionality is available on an authorized and supported basis, then the incentive for unauthorized and
unmonitored usage declines.
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