Implementation, Usage and Advantages of Cloud Computing within Project Management using the example of an Offshore Wind Farm Project

I. Table of Content

II. List of Abbreviation

III. List of Figures
1. Introduction
1.1. Problem and Thesis Definition
1.2. Structure
2. Executive Summary
3. Theoretical Background
3.1. Cloud Computing
3.1.1. Introduction
3.1.2. Definition
3.1.3. Virtualization
3.1.4. Service-oriented Architectures
3.1.5. Cloud Deployment Models
3.1.6. Monetary & Business Aspects of Cloud Computing
3.1.7. Information security
3.1.8. Requirements of Cloud Computing
3.2. Project Management
3.2.1. Introduction
3.2.2. Project Definition
3.2.3. Project Management Definition
3.2.4. Work Breakdown Structure
3.2.5. Project Phases
3.2.6. Project Life Cycle
3.2.7. Organizational Influences on Projects
3.2.8. Megaproject
4. Private Cloud Companies & Market Offer
4.1. Introduction
4.2. Current Situation in Germany
4.3. Stakeholders in Cloud Computing Environment
4.4. Standardization Requirements for Cloud Computing
4.5. Companies
4.5.1. Company Overview
4.5.2. Microsoft SharePoint
5. Offshore Wind Farm Projects
5.1. Introduction
5.2. Project Specifics
5.3. Project Cloud Usages
6. Hypothesis
6.1. Introduction
6.2. Project specific Requirements on Cloud Computing
6.3. Commercial Aspects of Cloud Computing in Projects
6.4. Success Factors
6.5. Cloud Advantages
6.6. Cloud Disadvantages
6.7. Comparison of Usage
7. Conculsion and Summary
8. Future Research & Outlook

IV. List of Literature

II. List of Abbreviation

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III. List of Figures

Table 1: Essential Characteristics of Cloud Computing

Table 2: Cloud Computing Service Models,

Table 3: Cloud Computing Deployment Models

Table 4: Project Phases

Table 5: Overview of Online Data Storage Services

Table 6 Annual Installed Offshore Wind Capacity in Europe (MW) H1 2012

Table 7: Comparison of PM theory to PM praxis concerning Project Phases

Table 8: Project Phases required Staff

Table 9: Cloud Services in relation to organizational structure

Diagram 1: Usage of Cloud compared to company size

Diagram 2: Businesses Usage & Planning to use of CC

Diagram 3: Business attitude towards Cloud in Germany

Diagram 4: Business attitude towards Cloud Computing

Figure 1: Typical Cloud Computing Diagram

Figure 2: Service models of Cloud Computing

Figure 3: Deployment Models Cloud Computing

Figure 4: Triple Constraint in Project Management

Figure 5 Example of a Work Breakdown Structure

Figure 6: Typical Cost and Staffing Level Across the Project Life Cycle

Figure 7: Impact of Variable Based on Project Time

Figure 8: Organizational Influences on Projects

Figure 9: Players in Cloud Computing

Figure 10: Examples of relationship for Provider and Consumer

Figure 11: Cloud Computing Industry Ecosystem Analysis

Figure 12: MS SharePoint Example

Figure 13: Example Work Breakdown Structure – Offshore Wind Projects

Figure 14 : Risk Management Process

Figure 15: Distribution of Usage of project SharePoint

Figure 16: Example of Primavera P6 Project Scheduling Work Environment

Figure 17: Comparison of On-Premise, Managed Services and Cloud Computing

1. Introduction

One can claim well-founded, that the field of Cloud Computing (CC) has been and will be gaining interest, usage and importance. This is reflected by this and last year’s CeBIT, the national as well as the international press coverage and the accelerating change of opinion in companies.

The CeBit^[1] is one of the world’s largest computer exhibition^[2] held in Hannover/Germany. The CeBIT’s main topic 2011 was “Work & Life with the Cloud “and the main topic 2012 was a further development of the 2011 main topic and named: “Managing Trust” in respect to the usage and trust in cloud computing.^[3]

The German press reporting about the CeBIT in 2012 as being “under the sign of cloud computing”^[4] and Federation of Information Technology, Telecommunications and New Media names cloud computing as the number one high tech trend in 2012^[5]

“The interest in Cloud Computing rises in companies. According to a world-wide survey by IBM in 2012, asking 3000 CIOs (Chief Information Officer), 60% showed interest in respective cloud solutions. In the previous year it was only half of them.”^[6]

This new field of technology opens room for practical applications in all business areas and industries. This master thesis will analyze the possible usage, impact, advantages and disadvantages of CC in Project Management (PM) theory and along the applied PM along an example project in the German Offshore Wind Industry.

As Büst puts it: “Cloud Computing was just seen as a hype in the last year, but meanwhile it has started to sink into the IT-strategies of businesses“^[7]

This thesis wants to analyze the influences of Cloud Computing on project management and does so by dismantling another current uprising, project focused, industry: offshore wind.

1.1. Problem and Thesis Definition

This thesis is analyzing the Implementation, Usage and Advantages of Cloud Computing within Project Management using the example of an Offshore Wind Farm Project.

The term “Cloud Computing” is currently resounding throughout the country. The IT departments of big companies are talking and thinking about the cloud and more and more small and medium sized businesses are too. The market for private cloud usage is growing (see chapter 4.2). At the same time companies and other user are somewhat ambiguous to what CC really is, how it can be used efficiently, which traditional processes can be substituted and which advantages it can bring to the endeavor.

This thesis focuses on the usage of CC in Project Management (PM) and how projects and their very specific requirements can be met with CC. (See chapter 5.2) An open project environment can be found in the offshore wind industry and an offshore wind farm project (OWF) makes great demands on Project Management concerning complexity, communication, stakeholder management and the speed of executing a project.

This creates an ideal environment to analyze the usage and advantages of CC. The problem is to define project specific requirements, compare alternatives, show advantages, disadvantages and risks and conclude on how CC can be used to its full potential in PM and OWF projects (or in that regard comparable mega projects)

1.2. Structure

The thesis is divided in five main parts; 1) Theoretical Background of Cloud Computing and Project Management, 2) Current Market overview of Cloud Computing 3) Project Management Approaches in Offshore Wind 4) Conceptual Framework & Hypothesis and 5) Conclusion & Results.

The chapter of Theoretical Background leads into Cloud Computing, its definition, architecture, safety, business aspects and development. Project Management; relevant definitions, characteristics, project phases and aspects of mega projects.

The next chapter shows the current situation of CC in Germany and its market. As there constant changes to be observed, this chapter also show the present cloud environment and stakeholders. Subsequent to this the next chapter focuses on the practical usage of project management in the offshore wind industry as to be found in presently in Germany.

The chapter of the Conceptual Framework & Hypothesis investigates the usage, advantages and disadvantages of CC in PM. These findings are then extracted and analyzed in the third chapter Conclusions & Results. Moreover the thesis closes with an outlook and recommends further research fields of interest.

2. Executive Summary

Cloud Computing is resounding throughout the land; the market of commercial and private cloud services providers is growing fast. The IT-departments of big companies are currently reacting and even small and medium sized businesses are gaining in their positive attitude towards Cloud Computing. The opportunities differ naturally between an established company or corporation and in a project environment. The goal of this thesis it to investigate the usages and advantages of Cloud Computing in Project Management using the example of the offshore wind farm project.

In theory, Project Management shows very specific project requirements which can be met with Cloud Computing. Project financing and project lifecycle shows the fluctuating demand for hardware and software and IT services in general.

The commercial aspect is largely depending on the organizational form of the projects; one can distinguish between a one-time project, (with an organization purely dedicated on this single project), and an organization, which develops, planes and executes several projects (either in sequence or simultaneously)

Cloud Computing has the power to influence the potential of a project or business endeavour in a positive way. In a cost efficient and flexible way it supplies users (commercial or private) with self-updating technology which was previously not available to them (or only at a unjustified high cost)

Concluding, the advantages of Cloud Computing lie in Cost optimization, technical advantage (i.e., scalability, flexibility, global usage) and focus on core competencies. However, the boundary conditions and risks, such as server location, safety and security standards, legal system and data retention must be mitigated.

3. Theoretical Background

This chapter is on the theoretical background of Cloud Computing and Project Management. In the first step Cloud Computing is introduced, defined and the different deployment and service models are explained. The chapter than focuses on the monetary aspects of cloud usage, the issue of data security and Cloud computing requirements.

The second part revolves around Project Management, its definitions, processes, project phases and lifecycle and defines the mega project which will be analyzed.

3.1. Cloud Computing

3.1.1. Introduction

Cloud Computing is an enormous topic; typing “Cloud” in the Google search bar delivers 1.190.000.000 results^[8]. There are numerous books, magazines, articles, blogs etc. about Cloud Computing. This chapter will show the common definitions and scope of Cloud Computing. Despite the huge amount of data, the current literature shows a similar key tone which are represented in the following quotes.

“The first industrial revolution was the series production with steam machines, which based on the replaceability of components. The second revolution was Taylorism with assembly lines. The third revolution was the automation or rather ‘informatisation’. What comes after that is; networking and interlinking and Cyber Physical Systems are helping us to develop these systematically.”^[9]

“More and more CEOs and managers see the benefits in outsourcing or buying services in a cloud structure. Companies can rent can rent internet-based services from a technology partner by subscription. The advantage: Instead of waiting for the full write-off period of this investment (CAPEX), the CFO can claim these costs as current operating expenditures (OPEX) in the current fiscal year tax ”^[10]

“This small change has significant consequences: fewer and fewer companies invest capital in software license because it is dependent CAPEX spending. As the demand for OPEX-based delivery models - ie public, private or hybrid cloud has grown so strong software vendors provide their programs and related services in the cloud.”^[11]

“For all service models (IaaS, PaaS or SaaS) there is a catch: The core application of medium-sized company is usually so individually adapted, that renting or leasing it as a service is not a standard solution. Here stand in need of solution partners; he must be competent to adjust or retrain personnel to deploy to the cloud technology safe and high quality of service, and maintenance.”^[12]

3.1.2. Definition

“Cloud computing is a model for enabling ubiquitous^[13], convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.”^[14]

The actual word “Cloud” has its origins in the general display the internet as a „cloud“ in network diagrams .In the cloud computing concept, the IT infrastructure, platforms and applications are being offered as electronic web services.^[15]

This is typical diagram depicting the “Cloud”:

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Figure 1: Typical Cloud Computing Diagram^[16]

3.1.3. Virtualization

„An elementary concept of CC is virtualization. The user of the respective service as an individual and scalable view of the infrastructure, die platform and the applications. There are no system inherent dependencies or restraining conditions for the applications of the user.“^[17]

This cloud model is composed of five essential characteristics, four service models, and five deployment models:

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Table 1: Essential Characteristics of Cloud Computing^[18]

3.1.4. Service-oriented Architectures

Besides virtualization, the service-oriented architectures (SOA) are generating another important requirement for Cloud Computing. The SOA provide independent services, which can be combined and orchestrated together on a very flexible basis. The user of has access of all services provided in the SOA. The services are independent from language and user platform.^[19]

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Table 2: Cloud Computing Service Models^[20],^[21]

The abstraction of the above “Table 2: Cloud Computing Service Models,” can be seen in the following figure “Figure 2: Service models of Cloud Computing”

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Figure 2: Service models of Cloud Computing^[22]

3.1.5. Cloud Deployment Models

Clouds can be organized in different forms, the main forms however are: Private, Public and Hybrid Cloud.^[23] The Cloud deployment models do not differ much concerning their technical aspects and thus will not be examined.

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Figure 3: Deployment Models Cloud Computing^[24]

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Table 3: Cloud Computing Deployment Models^[25]

3.1.6. Monetary & Business Aspects of Cloud Computing

This sub chapter focuses on the monetary impacts of Cloud Computing. What is the impact on CAPEX and OPEX and which advantages arise from it. As Carslon2011 states it: “Cloud Computing represents a significant evolution in the practices of buying, selling, developing, delivering, and using software and IT services.”^[26] So it is worthwhile to investigate this topic farther.

CAPEX and OPEX

CAPEX stands for: “Capital expenditures for long-term assets, such as machinery, buildings, as well as original equipment, spare parts, computer systems etc. CAPEX is an important KPI of the balance sheet. With the CAPEX costs, increase the balance sheet assets that are depreciated in the long term.”^[27] OPEX is defined as: „Operating expenses to recurring expenditure for the operation of business operations. Subsumed under the OPEX is therefore the cost of raw materials, supplies, personnel, leasing, energy, etc. They are accounted for in full.”^[28]

Impact

Cloud Computing hast “the potential to boost the European Union's gross domestic product by €160 billion ($205.94 billion) annually by 2020”^[29] These numbers are based on the presumption, that businesses can save about 10-20% of their IT cost.^[30] These numbers are backed by the EU research project “EuroCloud”.

"EuroCloud is an independent non-profit organization and consists of a two-tier setup where every European country can apply to participate in as long as they respect the EuroCloud Statutes. In less than two years’ time 27 countries have a EuroCloud presence and in 17 European countries a local EuroCloud is formally established” The main goal of EuroCloud is “To create awareness of Cloud Computing throughout the society and take an active role in the design of cloud industry processes and standards”^[31]

Fort the year 2010, Gartner predicted a world-wide revenues of US$ 68,3 Billion in Cloud Services. And until 2014 revenues of US$ 148,8 Billion.^[32]

Amongst other things, this shows the huge expectations that are linked with the Cloud Services; Reduction of cost, no fix cost, flexibility and concentration on core competencies.

[...]

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^[1] Center for Office Automation, Information Technology and Telecommunication

^[2] (Deutsche Messe AG, 2012)

^[3] (Deutsche Messe AG, 2012)e

^[4] (Heise Verlag, 2012)

^[5] (Bundesverband für Informationswirtschaft, Telekommunikation und neue Medien e.V., 2012)

^[6] (Wirtschaftsblatt, 2012)

^[7] (Büst, Einfluss des Cloud Computing auf Unternehmen, 2012)

^[8] Search: 01.06.2012 (www.google.com)

^[9] (Ciupek, 2012)

^[10] (Michel Matzer, 2012)

^[11] (Michel Matzer, 2012)

^[12] (Michel Matzer, 2012)

^[13] universal, omni-present, ever-present

^[14] (Mell & Grance, 2011)

^[15] (Baun, Kunze, Nimis, & Tai, 2012)

^[16] (EU Information Commissioner & Cloud Security Alliance Slovenia, 2012)

^[17] (Baun, Kunze, Nimis, & Tai, 2012)

^[18] (Mell & Grance, 2011)

^[19] Compare (Baun, Kunze, Nimis, & Tai, 2012)

^[20] (Mell & Grance, 2011)

^[21] (Baun, Kunze, Nimis, & Tai, 2012)

^[22] (Carlson, 2011)

^[23] (Baun, Kunze, Nimis, & Tai, 2012)

^[24] Source: Author

^[25] (Mell & Grance, 2011)

^[26] (Carlson, 2011)

^[27] (Wirtschaftslexikon, http://wirtschaftslexikon.gabler.de/, 2012)

^[28] (Wirtschaftslexikon, Gabler Wirtschaftslexikon, 2012)

^[29] (Robinson, 2012)

^[30] (Friedrich, 2012 No. 40)

^[31] (EuroCloud, 2012)

^[32] (Gartner, 2012)