1. Chapter 6
The Cloud

2. “How About $10 Per Terabyte.”
Lease storage capacity from third party.
All incoming data from drones automatically uploaded.
Average monthly storage costs cut at least 50%.
Power savings, backup time saved, no new hardware configuration.
One-time set up and development costs.
Use scenario to:
Illustrate importance (and promise) of the cloud.
See firsthand the benefits of the cloud to business.
Set up a skeptical view of cloud benefits and use that skepticism to motivate the learning of this chapter’s contents.
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Study Questions
Q1: Why is the cloud the future for most organizations? Q2: What network technology supports the cloud? Q3: How does the cloud work? Q4: How do organizations use the cloud? Q5: How can Falcon Security use the cloud? Q6: How can organizations use cloud services securely? Q7: 2026?
Business people need the knowledge in this chapter to answer questions like these. In the 21st century, many of your competitors will be able to answer these questions without hiring outside consultants.
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4. Q1: Why Is the Cloud the Future for Most Organizations?
Elastic leasing of pooled computer resources via Internet.
Elastic
Automatically adjusts for unpredictable demand,
Limits financial risks.
Pooled
Same physical hardware
Economies of scale
Organizations are moving their computing infrastructure to the cloud. Leasing computing infrastructure from the cloud will become common practice.
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5. Example of a Video Banner Ad Customer
Figure based on real case supported by Amazon.com’s CloudFront
Without increase in servers, response time 3 or 5 seconds or more, far too long to maintain attention of viewer.
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Pooled
Economies of scale
Average cost decreases as size of operation increases.
Major cloud vendors operate enormous data centers (Web farms).
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Apple Data Center in Maiden, NC Billion-dollar facility contains more than 500,000 sq. ft.
Constructed in 2011 to support its iCloud.
Amazon.com, IBM, Google, Microsoft, Oracle, and other large companies operate several similar farms worldwide.
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8. Why Is the Cloud Preferred to In-House Hosting?
Comparison of cloud and in-house alternatives.
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9. Why Is the Cloud Preferred to In-House Hosting? (cont'd)
Continuation of Figure 6-3.
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Why Now?
Cheap processors, essentially free data communication and storage.
Virtualization technology.
Internet-based standards enable flexible, standardized processing capabilities.
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11. When Does the Cloud Not Make Sense?
When law or standard industry practice require physical control or possession of the data.
Financial institutions legally required to maintain physical control over its data.
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12. Ethics Guide: Cloudy Profit?
Data broker (or data aggregator).
Acquiring and analyzing market, buyer, and seller data for real estate agents.
Alliance transitioned data storage and processing from own Web farm to the cloud.
Improved speed and quality of data services at fraction of prior costs, cut in-house hardware support staff by 65%.
Plowing money back into R&D.
Goals
Alert students to:
Incredible profits can result from using the cloud.
Extreme profits for successful businesses.
Ethical issues of success and ethical considerations of wealthy.
What goes up can come down; level of profitability is probably not sustainable.
Discuss why cloud is a game changer (cheap communications, cheap servers, virtualization, sharing of hardware, Web standards).
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13. Q2: What Network Technology Supports the Cloud?
Basic types of computer networks.
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14. Typical Small Office/Home Office (SOHO) LAN
Most personal computers today support 10/100/1000 Ethernet.
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LAN Protocol
IEEE 802.3
Wired LAN
10/100/1000 Mbps
Ethernet
IEEE
Wireless LAN
802.11ac
Speeds up to 1.3 Gbps
Bluetooth
Transmits data short distances.
Connect computer, keyboard, mouse, printer, smartphones, smartwatches, automobiles, sports equipment, clothing.
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16. Abbreviations Used for Communications and Computer Memory Speeds
Communications equipment,
K(ilo) = 1,000, not 1,024 (as for memory);
M(ega) = 1,000,000, not 1,024 × 1,024;
G(iga) = 1,000,000,000, not 1,024 × 1,024 × 1,024.
100 Mbps =100,000,000 bits per second.
Communications speeds expressed in bits, memory sizes in bytes.
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17. Connecting Your LAN to the Internet
Important ISP functions:
Provide legitimate Internet address.
Provide gateway to Internet.
Pay access fees and other charges to telecoms.
WAN wireless average performance 1 Mbps, with peaks of up to 3.0 Mbps.
Typical wireless LAN 50 Mbps.
Gateway function – ISP receives the communications from your computer and passes them on to the Internet, and receives communications from the Internet and passes them to you.
4G LTE speeds 5-12 mbps download, 2-5 mpbs upload. (
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18. Summary of LAN Networks
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19. Q3: How Does the Cloud Work?
The cloud resides in the Internet
Using Internet for Hotel Reservation
Assume you send a message to a server in New Zealand hotel. Message is too big to travel in one piece, so it’s broken into packets and each packet passes along from WAN to WAN until it reaches destination. Once all packets arrive, message reconstructed, delivered to server for processing. All accomplished by computers and data communications devices that most likely have not interacted before.
Hop is movement from one network to another.
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20. Carriers and Net Neutrality
Messages, broken into packets.
Packets move across Internet, passing through networks owned by telecom carriers.
Peering agreements - Carriers freely exchange traffic amongst themselves without paying access fees.
Net neutrality principle
All data treated equally.
Problem: some people use more bandwidth than others.
Should carriers be allowed to decide which sites load quickly, which apps are allowed on a network, which content is acceptable, and charge varying access rates?
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Internet Addressing
Public IP addresses
Identifies a unique device on Internet.
Assigned by ICANN (Internet Corporation for Assigned Names and Numbers.
Private IP addresses
Identifies a device on a private network, usually a LAN.
Assignment LAN controlled.
What is purpose of the transport and internet layers?
These protocols manage traffic as it passes across an internet /Internet. Most important protocol in transport layer is TCP.
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22. IP Addressing: Major Benefits
Public IP addresses conserved
One public IP address per LAN.
Using private IP addresses
Eliminates registering public IP address with ICANN- approved agencies.
Protects against direct attack.
Private/public IP address scheme two major benefits.
Attackers cannot send attack packets to private IP addresses.
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23. Public IP Addresses and Domain Names
IPv4
Domain name
Unique name affiliated with a public IP address.
Dynamic affiliation of domain names with IP addresses.
Multiple domain names for same IP address.
URL (Uniform Resource Locator
Internet address protocol, such as or ftp://.
Most common IP addresses format is IPv4.
ICANN administers system for assigning names to IP addresses. Domain name a worldwide-unique name affiliated with a public IP address. Affiliation of domain names with IP addresses is dynamic. Owner of domain name can change affiliated IP addresses at its discretion.
URL consists of a protocol (like or ftp://) followed by a domain name or public IP address.
What advantage does point one provide?
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24. Domain Registry Company
Go Daddy, or a similar agency, will first determine if desired name is unique worldwide. If so, it will apply to register that name.
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25. Processing on a Web Server
What happens when you visit a Web site and order something, and pay for it?
Sample of Commerce Server Pages; Product Offer Pages.
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26. Three-tier Architecture
Almost all e-commerce applications use a three-tier architecture.
User tier consists of computers, phones, other devices with browsers that request and process Web pages.
Server tier consists of computers running Web servers and application programs.
Database tier consists of computers running a DBMS that processes SQL requests to retrieve and store data.
Commerce server — application program that runs on server-tier computer. Receives requests from users via Web server, takes some action, and returns a response to users. Typical commerce server functions are to obtain product data from a database, manage items in a shopping cart, and coordinate checkout process.
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27. Watch the Three Tiers in Action! Sample of Commerce Server Page
Commerce server requests shoe data from DBMS.
DBMS reads from database, returns data to commerce server.
Commerce server formats Web page with data and sends html version of page to user’s computer.
Customer places items in shopping cart.
Customer checks out, commerce server program processes payment, schedules inventory processing, arranges shipping, receipt to customer.
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28. SOA Analogy: Approval Request Interactions Among Three Departments
CheckCustomerCredit
• ApproveCustomerCredit
• VerifyInventoryAmount
• AllocateInventory
• ReleaseAllocatedInventory
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29. Using SOA Principles, Each Department Defines:
CheckCustomerCredit
ApproveCustomerCredit
Inventory Department
VerifyInventoryAmount
AllocateInventory
ReleaseAllocatedInventory
Each department formally states data to receive with request and data promised to return in response.
Every interaction done exactly same way.
Using SOA principles, each department formally defines it provides.
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30. Using SOA Principles: Encapsulation
No department needs to know who works in another department, or how dept. accomplishes work.
Each department free to change personnel task assignments, change processes for performing services.
Falcon Security could dynamically create 1,000 Inventory Departments and Sales Department with no need to change anything it does.
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31. SOA Principles Applied to Three-tier Architecture
Services
ObtainPartData
ObtainPartImages
ObtainPartQuantityOnHand
OrderPart
JavaScript written to invoke these services correctly.
Commerce server application formally defines services browsers can request, data they must provide with the request, and data each will receive in response to request.
Organization must agree on standard ways of formatting and processing service requests and data.
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32. Protocols Supporting Web Services
Only Internet protocols a business professional likely to encounter are at application layer.
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WSDL, SOAP, XML, and JSON
WSDL (Web Services
Description Language)
Standard for describing services, inputs, outputs, other data supported by a Web service. Documents coded machine readable and used by developer tools for creating programs to access the service.
SOAP
(no longer an acronym)
Protocol for requesting Web services and for sending responses to Web service requests.
XML
(eXtensible Markup Language)
Used for transmitting documents. Contains metadata to validate format and completeness of a document, includes considerable overhead (see Figure 6-15a).
JSON
(JavaScript Object Notation)
Markup language used for transmitting documents. Contains little metadata. Preferred for transmitting volumes of data between servers and browsers. While notation in format of JavaScript objects, JSON documents can be processed by any language (see Figure 6-15b).
These are four standards that are used extensively for Web services and the cloud.
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34. Example XML and JSON Documents
XML and JSON are ways of marking up documents so that both the service requestor and the service provider know what data they’re processing. This slide shows a simple example of both. XML documents contain as much metadata as they do application data. These metadata are used to ensure the document is complete and properly formatted.
XML is used when relatively few messages are being transmitted and when ensuring a complete and correct document is crucial. Both WSDLs and SOAP messages are coded in XML.
JSON uses the notation for JavaScript objects to format data. It has much less metadata and is preferred for the transmission of voluminous application data. Web servers use JSON as their primary way of sending application data to browsers.
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35. Q4: How Do Organizations Use the Cloud?
Three Fundamental Cloud Types
Cloud Services from Cloud Vendors
Organizations can use the cloud in several different ways. By far most popular, is to obtain cloud services from cloud service vendors.
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36. Content Delivery Networks from Cloud Vendors
Content delivery network (CDN)
Stores user data in many different geographical locations and makes data available on demand.
Specialized type of PaaS, but usually considered in its own category.
Minimizes latency.
Used to store and deliver content seldom changed.
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CDN Benefits
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38. Servers Used in a Typical CDN Service
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39. Using Web Services Internally
Private Internet Infrastructure
This figure shows a Web services inventory application at a hypothetical online bicycle part retailer named Best Bikes.
In this example, Best Bikes is running its own servers on its own infrastructure. To do so, Best Bikes sets up a private internet within the company, an internet that is generally not reachable from outside the company.
Best Bikes writes the applications for processing inventory using Web services standards; applications publish a WSDL; the Web services are accessed by other applications within the company using SOAP; and data are delivered using JSON.
Application users access the inventory Web services using JavaScript that is sent down to the users' browsers.
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40. Q5: How Can Falcon Security Use the Cloud?
SaaS products Falcon Security could use.
Google Mail
Google Drive
Office 365
Salesforce.com
Microsoft CRM OnLine
many others . . .
Falcon Security is a small company with a very small IT Department, and unlikely to have resources necessary to develop its own server infrastructure.
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41. PaaS Services from Amazon DBMS Products with Elastic Cloud 2 (EC2)
Falcon Security lease hardware and operating systems from cloud vendor.
Falcon Security could use CDN to distribute content worldwide and respond to leads generated from advertising.
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42. IaaS Services at Falcon Security
Provides basic hardware in the cloud.
May acquire servers to load operating systems.
Considerable technical expertise and management.
Alternative: Use elastic data storage services.
SaaS and PaaS provide more added value to Falcon Security.
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43. Q6: How Can Organizations Use Cloud Services Securely?
Remote Access Using VPN: Actual Connections
Internet is a jungle of threats to data and computing infrastructure, as discussed in Chapter 10.
How can organizations realize the benefits of cloud technology without succumbing to those threats?
VPN technology uses public Internet to create appearance of a private connection on secure network.
Virtual means something that appears to exist but, in fact, does not.
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44. Remote Access Using VPN: Apparent Connection
Figure 6-21 illustrates the connection as it appears to the remote user.
VPN client software encrypts messages so their contents are protected from snooping.
Then the VPN client appends the Internet address of the VPN server to the message and sends that package over the Internet to the VPN server.
When the VPN server receives the message, it strips its address off the front of the message, decrypts the coded message, and sends the plain text message to the original address inside the LAN.
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45. Private Cloud for Inventory and Other Applications
To create a private cloud, the organization creates a private internet and designs applications using Web services standards just as shown in Figure 6-19.
In a server farm, the servers are managed by elastic load balancer devices.
Most organizations do not replicate database servers.
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46. Accessing Private Cloud over a Virtual Private Network
Private clouds provide security within the organizational infrastructure but do not provide secure access from outside that infrastructure.
To provide such access, organizations set up a VPN and users employ it to securely access the private cloud.
Private clouds provide the advantages of elasticity, but to questionable benefit. What can organizations do with their idle servers?
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47. Using A Virtual Private Cloud
Subset of a Public Cloud With Highly Restricted, Secure Access
Organization can store most sensitive data on own infrastructure, and store less sensitive data on VPC. Thus, organizations required to have physical control over some of their data can place it on own servers and locate rest on VPC.
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Q7: 2026
Cloud services faster, more secure, easier to use, cheaper.
Fewer organizations own their computing infrastructure.
More pooling of servers across organizations.
Overall size of the cloud gets bigger.
Individuals, small businesses, large organizations obtain elastic resources at very low cost.
Cloud fosters new categories of work.
Absent some unknown factor such as a federal tax on Internet traffic.
Individuals on iCloud or Google Grid, to small groups using Office 365, to Small companies like Falcon Security Parts using PaaS, to huge organizations using IaaS.
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Q7: 2026 (cont’d)
Remote action systems
Telediagnosis
Telesurgery
Telelaw enforcement
Provide services in dangerous locations.
Watch top-notch performers and performances.
Reduces value of local mediocrity.
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50. So What? "Net Neutrality Enabled"
ISPs little control over amount, type, or origin of content.
30% of U.S. Internet traffic during peak hours associated with using Netflix.
Net neutrality
All users and content providers treated equally.
No “fast” or “slow” lanes.
ISPs not allowed to block, or slow, content associated with competitors.
ISPs can’t charge heavy Internet users additional fees or taxes.
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51. FCC Approved New Regulations (2015)
Renders Internet a utility.
Complaint: Interfering with free markets.
ISPs argue loss of potential revenue stream inhibits infrastructure development, limits growth, and stifles innovation.
Larger war on net neutrality may have only just begun!
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52. Security Guide: From Anthem to Anathema
Greater accessibility  data more accessible to hackers. 80 million customers affected.
Stole names, addresses, Social Security numbers, and salaries.
Stored in plain text.
Lawsuits filed.
Premera Blue Cross
Bank-account and medical data of 11 million customers.
Goals
Alert students to:
An example of a large-scale data breach of a cloud-based service provider.
Security issues related to cloud-based services.
The trade-offs associated with implementing cloud-based services.
Security practices could evolve from being a necessary evil to becoming a competitive advantage.
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53. Guide: Is It Spying or Just Good Management?
92% of employers monitor employees’ , telephone, and Internet use.
Key loggers
Log files
Packet sniffers
Text mining
First Amendment
Preserves free speech regarding laws Congress may enact, limited protection for federal employees.
Does not protect you at work.
Goals
Alert students to the reality that:
Employers will monitor their use of employer-managed computers.
Will monitor their use of their own equipment if employee uses any employer-managed network.
If they surrender their own mobile devices for management by their employer, employer may install software for monitoring their use of that equipment.
Right to say what they want is protected by First Amendment, but doesn’t mean can’t be fired for what they (legally) say.
Employees at will can be terminated for almost any reason.
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Active Review
Q1: Why is the cloud the future for most organizations? Q2: What network technology supports the cloud? Q3: How does the cloud work? Q4: How do organizations use the cloud? Q5: How can Falcon Security use the cloud? Q6: How can organizations use cloud services securely? Q7: 2026?
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Case Study 6: FinQloud Forever … Well, At Least For The Required Interval …
Securities and Exchange Commission (1937).
Securities brokers' records must be stored on media that cannot be altered.
Interpreted to enable storage of records on read-write medium, provided it includes software to prohibit data alteration (2003).
Explain how technology advancement affects legal requirements for preservation of financial data.
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56. Components of the FinQloud System
This is the fundamental structure of the FinQloud system.
Amazon S3 provides scalable, elastic storage.
FinQloud processes the data in such a way that it cannot be updated, encrypts the data, and transmits the processed, encrypted data to AWS, where it is encrypted yet again and stored on S3 devices.
Data is indexed on S3 and can be readily read by authorized users.
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57. FinQloud Forever … (cont'd)
Creates “finger print” based on content of record.
SEC specifically excludes extrinsic controls:
Authentication, passwords, and manual procedures,
Believes such systems to could be readily misused to overwrite records.
When properly configured, meets requirements of SEC’s Rule17a-3) and similar rules of Commodities Futures Trading Commission.
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