Kingfisher Decline

By R. Rijith CSE

‘The King Of Good Times’

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Vijay Mallya-the owner of Kingfisher Airlines and United Breweries. The biggest showman of India Inc.is portrayed as the villain in the Kingfisher tragedy. Vijay Mallya was only in his 20s when his father Vittal Mallya, died in 1983, leaving behind an empire of more than 20 businesses. Under him the group revenues grew from $100 million to $4 billion.

      He spent his childhood in Kolkata. Studied at La martiniere and St. Xavier’s College. Married twice, he has a son (Siddharth, with his first wife Sameera) and two daughters (Leiana and Tanya, with his second wife Rekha).

      He owns 26 properties across the world, including houses in Monaco, Scotland, New York and South Africa and the ancestral mansion in Bangalore. Mallya is religious. He does not discuss business during Rahu and gets his planes blessed at Tirupati.

      He has an enviable collection of cars, curios, art and spirits. In 2004, he acquired the sword of Tipu Sultan for175, 000 euros at an auction in London. In 2009, he bought the personal effects of Mahatma Gandhi for $1.8 million at an auction in New York. Indian Empress, the 95-metre luxury yacht Mallya owns, is one of the largest private yachts in the world. He also owns a 48-metre motor yacht called Kalizma. He owns the 400-acre Kunigal stud farm in Karnataka. Started by Tipu Sultan, it is one of the oldest in India and breeds horses mainly for races.

      With losses of about Rs5 crore a day, depts. Of around Rs6, 500 crore and its bank account frozen by the tax authorities, the airline that he founded seven years ago using his family’s liquor fortune is on the brink. To add to his woes, other parts of Mallya’s business empire are also looking shaky, loaded up with nearly Rs 15,000 crore is further dept used to fund acquisitions such as the 2007 purchase of Whyte and Mackay.

“At the end of the day challenges come everybody’s way-business challenges, personal challenges”, says Mallya. ”You just have to cope and face them.”

TROUBLED KINGDOM

AIRLINES

Mallya started Kingfisher Airlines in 2003.It was the second largest carrier in India before trouble started brewing and owns 64 aircrafts. In 2007, it bought Air Deccan a low cost operator and rebranded it as Kingfisher Red. However it shut down the low cost operations in 2011, citing profit issues.

Liquor business

  UB Groups the largest liquor company in the world by volume. The group owns some of the best selling brands, such as Bagpiper whisky and Kingfisher beer. Under Mallya the company made a number of acquisitions, such of that of Scotch whisky maker White and Mackay, Shaw Wallace and Millennium Breweries, in an effort to connect the missing link in its large portfolio.

Formula One

In 2007 Mallya and a Dutch family bought the Spyker F1 team for 88 million euros .He rechristened it Force India. Mallya is the member of FIA World Motor Sport Council and a close friend of F1 supremo Bernie Ecclestone.

FOOTBALL

Mallya has investments in the Kolkata based football clubs Mohun Bagan and East Bengal.

CRICKET

Mallya bought the Indian Premier League team Bangalore Royal Challengers for 11.6 million dollars in 2008.The team features some of the biggest names in the game.

King-size blunders

Mallya’s flamboyant business moves came at the expense of sustainability.

Vijay Mallya’s admiration for things Italian is not limited to Ferraris. The liquor baron ,politician, airline magnate, owner of Formula One, football and cricket teams and breeder of Arabian thoroughbred is a fan of the Italian political system, too. The reason: Italy allowed Silvio Berlusconi, one of the richest Italians, to be countries third- longest serving prime minister.

       A decade ago, when he took baby steps in politics, Mallya envisaged a corporate –style governance in which the political system was not just tailored to the interest of big business, but also run by corporate honchos -essentially people like him.

       It is quite another matter that he could not communicate it to the voters in the 2004 Assemble elections in Karnataka when he campaigned for his Janata Party. Nevertheless, business man doing India proud, Mallya surmounted difficulties with uncanny bravado.

       However, even his business decisions came with generous scoops of flamboyance to the detriment of sustainability and profitability. Naturally, the world he created around himself carried the seeds of its downfall. Veritas Investment Research Corporation, a Canada based market research group, in a report dated September 12,2011  UB Holdings Ltd and Kingfisher Airlines Ltd, makes a case of liquidating both UB and Kingfisher. The report titled ‘A pie in the sky’ and prepared by analysts Neeraj Monga and Varun Raj puts blame squarely on Mallya for his omissions and commissions.

       The report says Kingfisher did not remit its employees state  insurance(Rs 75,000)provident fund(Rs 43.80 lakh),tax deducted at source (Rs 42,297.52 lakh),service tax(Rs1,047 lakh)and professional tax(Rs 2.46 lakh)from 2008 to 2011.Clearly Kingfisher Airlines is funding itself at the expense of its employees and the Indian exchequer,” says report.

       Mallya’s problems started with his ventures outside his core competency, the liquor business. Many of his acquisitions, such as the Force India F1 team, football clubs, the IPL team and the Asian Age newspaper, distracted him and drained the cash flow. Kingfisher, the biggest of them all, was a loss making entity from day one. High fuel costs and falling revenue resulted in a loss of Rs444 crore in the third fiscal of the current financial year alone.

      Kingfisher’s failure to capitalize on the acquisitions of Air Deccan, which had a well defined hub-and-spoke model (connecting small towns with large metros and then connecting them to larger destinations across India and abroad) added to Mallya’s woes. The eventual decision to shut down the low cost arm, Kingfisher Red(the re-christened Air Deccan),gave many market share to competitors, though Kingfisher justified the decision citing full-service aircraft garnering higher revenues.

       Mallya smelt trouble when Rs6, 000 crore of bank loans started eating into the profits of his liquor business. It is learnt that nine out of 10 shares of United Spirits are pledged as collateral to banks. With Mallya defaulting on repayments, banks restricted his dept by converting it into equity of Rs 1,300 crore.

Operational inefficiency and dept are pulling down Mallya’s liquor business  

It is not just Kingfisher Airlines which is on a downward spiral. A flawed business model, as many analysts see it, is threatening to pull down the foundation of United Spirits Ltd (USL), the cash cow of Vijay Mallya’s UB Group.

USL’S earning history shows that the company has been facing trouble when it comes to profitability. It is facing problems in three fronts-operational inefficiency, dept issues along with group liabilities and muted investments. The earnings of USL in the quarter ended in December plunged 62 per cent to Rs 47 crore. The only thing that seems to work in USL’s favour is volume. However, high volumes are not translating into high profits.

It is the huge dept which is pulling down the company. The interest paid in the quarter ended in December stood at Rs 139.2 crore. It was driven by the high cost of interest for working capital and capital expenditure to finance growth, apart from the increase in the interest rates. 

USL attributes the loss of sales in the last quarter to the highly regulated liquor market in Tamil Nadu and West Bengal. Its product suffered as a campaign was underway to push local brands in Tamil Nadu, bringing down the sales by 15 lakh cases in the quarter. ”A sharp increase in excise duty and sales tax in West Bengal pushed up end consumer prices by 45 per cent resulting in industry volumes  dropping by 48 per cent during the quarter,” said a statement from USL.

However, an IDFC report issued in 2011 says this excuse shows an inherent weakness in USL’s model. ”Lack of pricing power in 60 per cent of the markets and 70 per cent volume contribution from regular segment brands point to the inherent drawbacks in the USL’S business model.” said the report.

Mallya’s acquisition of Scotch whisky maker WHYTE & Mackay was hyped as a strategy by the Indian liquor baron to enter the tightly controlled Scotch segment. Four years down the line, the economic benefits of the acquisitions elude USL. ”The acquisitions of W&M were entirely funded through debt. Operational performances of W&M is expected to remain muted for the next 2-3 years and debt servicing cost for the remaining $600 million of acquisition debt would continue to drain profitability,” said the IDFC report.

Disregard to early warnings hastened Kingfisher’s free fall

Vijay Mallya’s niche airline has now got down to offering free dinners, wine club memberships and screw pull wine openers to its ’King Club’ members, who were left high and dry over for two weeks with constant flight delays and cancellations across the country. Though most members are still not able to redeem points against free flights and upgrades, the airline is upping the quotient with additional points for every file that doesn’t take off.

        Built around heightened customer experience and exclusive services, Kingfisher Airlines, it seems, has turned out to be a victim of its own flamboyant branding. ”In 2005, when Mallya launched the airline, he was absolutely new to the industry. He acquired another airline to grow and ordered [Airbus] A380s to expand business. He knew how to become big, global but he didn’t take care of the revenue generation and cost control. His larger than life image became synonymous with the airline, which was capital intensive and low on revenues,” said Jitender Bhargava, former executive director, Air India.

        Though Mallya has been blaming the “sudden” freeze on Kingfisher’s bank accounts by the income tax department for the current crises, the fact is that there is nothing unanticipated about the airline’s financial problems. Kingfisher, which was India’s second largest carrier until a few months ago, has never made profit in the past seven years.             

        The magnitude of the trouble came out when a Delhi-based aircraft maintenance engineer employed with the airline till 2009 filed a complaint against it for not paying the tax deducted from his salary. ”The income tax department demanded an amount of Rs2,88,480 from me for defaulting on tax payments when the company had already deducted tax from my salary. Later, I found out that I wasn’t the only victim, my colleagues were also being cheated,” he said.

 In September 2011, when Toronto-based Veritas Investment Research published a report saying United Breweries Holdings Ltd and Kingfisher Airlines Ltd were “teetering on the verge bankruptcy”, Mallya bluntly refuted the contentions and went ahead with his business model. Two months later Kingfisher was put on cash-and-carry mode. 

Aviation experts blame Mallya’s business hubris for the downfall of Kingfisher, which was otherwise a good brand. Unlike his rivals-Jet Airways’ Naresh Goyal and Indigo’s Rahul Bhatia, who had immense experience in the aviation industry-Mallya launched an ambitious airline without taking into account wafer-thin margins that the Indian airline industry operates on. ”Mallya’s liquor business was big and well-established but he had little experience in an intensively competitive service industry. The airlines business is highly competitive and competitive and capital intensive, with fairly low margins. His overconfidence and lack of professional management team with delegated functioning has let him down,” said Bhargava.

Presents state of Kingfisher Airlines

More than 300 pilots have quit Kingfisher Airlines in the past six months and the chances of its survival depend largely on a complete overhaul-cost cutting in operations, clearance of all outstanding payment and equity infusion. With the government refusing to make any direct intervention in terms of financial bailouts for private airlines, Kingfisher has clearly gone into a free fall. ”All the airlines are playing in the same field, then why should the government help Kingfisher in particular? Also, if an airline is undergoing financial crises, there’s every possibility that it might employ shortcuts in operations. So, the elements of risk can’t be avoided. The DGCA should ensure strict vigilance in this case.” says Kanu Gohain, former DGCA.

     Flying 198 schedules with 28 aircraft, Kingfisher is now being constantly monitored by the DGCA. ”We have a special safety audit in place for Kingfisher and I get the reports on its flight operations everyday,” said E.K.Bharat Bhushan, DGCA. ”We will not allow any of the safety aspects to be compromised. We are constantly monitoring, so that the airline doesn’t stretch itself to a position which leads to unsafe operations.”

     Mallya is reportedly pinning hopes on the new FDI policy in aviation and direct import of jet fuel to revive for his strapped-for-cash airlines. According to sources, he has held discussions with IAG, the parent company of British Airways, and Eitihad Airways for a possible 26 per cent stake sale.  

Recruitment

By Somya CSE

Introduction

Recruitment refers to the process of attracting, screening, and selecting a qualified person for a job. All companies in any industry can benefit from contingency or retain professional recruiters or outsourcing the process to recruitment agencies.

The recruitment industry exists basically in four forms:

1). Employment agencies deal with clerical, trades, temporary and temporary to hire employment opportunities.

2). Recruitment websites and job search engines used to gather as many candidates as possible by advertising a position over a wide geographic area. Although thought to be a cost effective alternative, a human resource department or department manager will spend time outside their normal duties reading and screening resumes. A professional recruiter has the ability to read and screen resumes, talk to potential candidates and deliver a selective group in a timely manner.

3). "headhunters" for executive and professional positions. These firms are either contingency or retained. Although advertising is used to keep a flow of candidates these firms rely on networking as their main source of candidates.

4). Niche agencies specialize in a particular industrial area of staffing.

Some organizations prefer to utilize employer branding strategy and in-house recruitment instead of recruiting firms. The difference, a recruiting firm is always looking for talent whereas an internal department is focused on filling a single opening. The advantage associated with utilizing a third-party recruiting firm is their ability to know where to find a qualified candidate. Talent Management is a key component to the services a professional recruiting firm can provide.

The stages in recruitment include sourcing candidates by networking, advertising or other methods. Utilizing professional interviewing techniques to understand the candidate’s skills but motivations to make a move, screening potential candidates using testing (skills or personality) is also a popular part of the process. The process is meant to not only evaluate the candidate but also evaluate how the candidate will fit into the organization. The recruiter will meet with the hiring manager to obtain specific position and type information before beginning the process. After the recruiter understands the type of person the company needs, they begin the process of informing their network of the opportunity. Recruiters play an important role by preparing the candidate and company for the interview, providing feedback to both parties and handling salary/benefits negotiations.

Process

Job analysis

The proper start to a recruitment effort is to perform a job analysis, to document the actual or intended requirement of the job to be performed. This information is captured in a job description and provides the recruitment effort with the boundaries and objectives of the search. Oftentimes a company will have job descriptions that represent a historical collection of tasks performed in the past. These job descriptions need to be reviewed or updated prior to a recruitment effort to reflect present day requirements. Starting a recruitment with an accurate job analysis and job description ensures the recruitment process effort starts off on a proper track for success.

Sourcing

Sourcing involves 1) advertising, a common part of the recruiting process, often encompassing multiple media, such as the Internet, general newspapers, job ad newspapers, professional publications, window advertisements, job centers, and campus graduate recruitment programs; and 2) recruitment research, which is the proactive identification of passive candidates who are happy in their current positions and are not actively looking to move companies. This initial research for so-called passive candidates, also called name generation, results in a contact information of potential candidates who can then be contacted discreetly to be screened and approached on behalf of an executive search firm or corporate client (see below).

Screening and selection

Suitability for a job is typically assessed by looking for skills, e.g. communication, typing, and computer skills. Qualifications may be shown through résumés, job applications, interviews, educational or professional experience, the testimony of references, or in-house testing, such as for software knowledge, typing skills, numeracy, and literacy, through psychological tests or employment testing. Other resume screening criteria may include length of service, job titles and length of time at a job. In some countries, employers are legally mandated to provide equal opportunity in hiring. Business management software is used by many recruitment agencies to automate the testing process. Many recruiters and agencies are using an applicant tracking system to perform many of the filtering tasks, along with software tools for psychometric testing.

Lateral hiring

Lateral hiring" refers to a form of recruiting; the term is used with two different, almost opposite meanings. In one meaning, the hiring organization targets employees of another, similar organization, possibly luring them with a better salary and the promise of better career opportunities. An example is the recruiting of a partner of a law firm by another law firm. The new lateral hire then has specific applicable expertise and can make a running start in the new job. In some professional branches such lateral hiring was traditionally frowned upon, but the practice has become increasingly more common. An employee's contract may have a non-compete clause preventing such lateral hiring.

In another meaning, a lateral hire is a newly hired employee who has no prior specific applicable expertise for the new job, and for whom this job move is a radical change of career. An example is the recruiting of a university professor to become chairman of theboard of a company.

Onboarding

"Onboarding" is a term which describes the process of helping new employees become productive members of an organization. A well-planned introduction helps new employees become fully operational quickly and is often integrated with a new company and environment. Onboarding is included in the recruitment process for retention purposes. Many companies have onboarding campaigns in hopes to retain top talent that is new to the company; campaigns may last anywhere from 1 week to 6 months.

Relevance in today’s life

Benefits

RPO providers claim the method has lower costs because the economies of scale enables them to offer recruitment processes at lower cost while economies of scope allow them to operate as high-quality specialists. Those economies of scale and scope arise from a larger staff of recruiters, databases of candidate resumes, and investment in recruitment tools and networks. RPO solutions are also claimed to change fixed investment costs into variable costs that flex with fluctuation in recruitment activity. Companies may pay by transaction rather than by staff member, thus avoiding under-utilization or forcing costly layoffs of recruitment staff when activity is low.

They also claim higher quality, because the commercial relationship between an RPO provider and a client is likely to be based on specific performance targets. With remuneration dependent on the attainment of such targets, an RPO provider will concentrate their resources in the most effective way - at times to the exclusion of non-core activity. Traditional internal recruitment teams are less likely to have such clearly defined performance targets.

Risks

RPO can only succeed together with a well-defined corporate staffing strategy. A company must manage its RPO activities, providing initial direction and continued monitoring to assure good results. An RPO solution may not work if the company's existing recruitment processes are performing poorly, or if the service provider lacks the necessary recruitment processes or procedures to work with the client. In these situations, it is better for the company to undergo a recruitment optimisation programme.

Cost and quality can be issues, The cost of engaging an RPO provider may be more than with internal recruiting staff, as the outside provider is likely to have higher business overhead. Poorly implemented RPO could reduce the effectiveness of recruitment, if the provider does not understand the business situation. Service providers may fail to provide the quality or volume of staff required , especially in industry sectors where there are staff shortages. RPO providers do not necessarily act as custodians of their clients'employer brand in the way that a strongly aligned retained search firm or internal recruiting resource would. Many RPO organisations perform their staffing functions and service offsite or offshore, disconnecting the provider from the client company's growth and recruiting strategy, and some of the momentum and energy associated with the rapid upscaling of a workforce through recruitment may dissipate. Additionally, placing all recruitment in the hands of a single outside provider may discourage the competition that would arise if multiple recruitment providers were used.

Conclusion

According to Behling and others, an individuals decision to join a firm may depend on any of the three factors viz. objective factor, subjective factor and critical contact.

Objective Factor Theory.

It assumes that the applicants are rational. The choice, therefore, is exercised after an objective assessment of the tangible benefits of the job. The factors helping him choose may be the salary, other benefits, location, opportunities for career advancement etc.

Subjective Factor Theory

The decision making is dominated by social and psychological factors. The status of the job, reputation of the organization and other similar factors plays an important role.

Critical Contact Theory

The critical factors observed by the candidate during his interaction with the organization plays a vital role in decision making. Recruiter being in touch with the candidate, promptness of response and similar factors are important. This theory is more valid with the experienced professionals. The importance of fairness and feedback to applicants, especially in e-recruitment, is stressed in current research.

Cloud computing

By Kamal Garg CSE

Meaning

Cloud computing refers to the delivery of computing and storage capacity[citation needed] as a service to a heterogeneous community of end-recipients. The name comes from the use of clouds as an abstraction for the complex infrastructure it contains in system diagrams. Cloud computing entrusts services with a user's data, software and computation over a network. It has considerable overlap with software as a service (SaaS).

End users access cloud based applications through a web browser or a light weight desktop or mobile app while the business software and data are stored on servers at a remote location. Proponents claim that cloud computing allows enterprises to get their applications up and running faster, with improved manageability and less maintenance, and enables IT to more rapidly adjust resources to meet fluctuating and unpredictable business demand. Cloud computing relies on sharing of resources to achieve coherence and economies of scale similar to a utility (like the electricity grid) over a network (typically the Internet). At the foundation of cloud computing is the broader concept of converged infrastructure and shared services.

History

The term cloud is used as a metaphor for the Internet, based on the cloud drawing used in the past to represent the telephone network, and later to depict the Internet in computer network diagrams as an abstraction of the underlying infrastructure it represents. In the 1990s, telecommunications companies who previously offered primarily dedicated point-to-point data circuits, began offering virtual private network (VPN) services with comparable quality of service but at a much lower cost. By switching traffic to balance utilisation as they saw fit, they were able to utilise their overall network bandwidth more effectively. The cloud symbol was used to denote the demarcation point between that which was the responsibility of the provider and that which was the responsibility of the user. Cloud computing extends this boundary to cover servers as well as the network infrastructure. The underlying concept of cloud computing dates back to the 1960s, when John McCarthy opined that "computation may someday be organised as a public utility." Almost all the modern-day characteristics of cloud computing (elastic provision, provided as a utility, online, illusion of infinite supply), the comparison to the electricity industry and the use of public, private, government, and community forms, were thoroughly explored in Douglas Parkhill's 1966 book, The Challenge of the Computer Utility. Other scholars have shown that cloud computing's roots go all the way back to the 1950s when scientist Herb Grosch (the author of Grosch's law) postulated that the entire world would operate on dumb terminals powered by about 15 large data centers. An early but surprisingly complete implementation of cloud computing was implemented and patented (in Germany and England) by Hardy Schloer (which he termed the "one-page web")  with multiple user applications, multiple identification providers, cloud storage, back-end servers with plug-in applications, a multiple tiered server architecture able to handle different user devices over the internet, and built-in security features.

The ubiquitous availability of high capacity networks, low cost computers and storage devices as well as the widespread adoption ofhardware virtualization, service-oriented architecture, autonomic, and utility computing have led to a tremendous growth in cloud computing.

After the dot-com bubble, Amazon played a key role in the development of cloud computing by modernising their data centers, which, like most computer networks, were using as little as 10% of their capacity at any one time, just to leave room for occasional spikes. Having found that the new cloud architecture resulted in significant internal efficiency improvements whereby small, fast-moving "two-pizza teams" could add new features faster and more easily, Amazon initiated a new product development effort to provide cloud computing to external customers, and launched Amazon Web Service (AWS) on a utility computing basis in 2006. In early 2008, Eucalyptus became the first open-source, AWS API-compatible platform for deploying private clouds. In early 2008,OpenNebula, enhanced in the RESERVOIR European Commission-funded project, became the first open-source software for deploying private and hybrid clouds, and for the federation of clouds. In the same year, efforts were focused on providing quality of serviceguarantees (as required by real-time interactive applications) to cloud-based infrastructures, in the framework of the IRMOS European Commission-funded project, resulting to a real-time cloud environment. By mid-2008, Gartner saw an opportunity for cloud computing "to shape the relationship among consumers of IT services, those who use IT services and those who sell them" and observed that "[o]rganisations are switching from company-owned hardware and software assets to per-use service-based models" so that the "projected shift to computing... will result in dramatic growth in IT products in some areas and significant reductions in other areas." In 2012, Dr. Biju John and Dr. Souheil Khaddaj incorporated the semantic term into the cloud "Cloud computing is a universal collection of data which extends over the internet in the form of resources (such as information hardware, various platforms, services etc.) and forms individual units within the virtualization environment. Held together by infrastructure providers, service providers and the consumer, then it is semantically accessed by various users." (CLUSE 2012), Bangalore, April 2012

Characteristics

Cloud computing exhibits the following key characteristics:

         Agility improves with users' ability to re-provision technological infrastructure resources.

         Application programming interface (API) accessibility to software that enables machines to interact with cloud software in the same way the user interface facilitates interaction between humans and computers. Cloud computing systems typically use REST-based APIs.

         Cost is claimed to be reduced and in a public cloud delivery model capital expenditure is converted to operational expenditure. This is purported to lower barriers to entry, as infrastructure is typically provided by a third-party and does not need to be purchased for one-time or infrequent intensive computing tasks. Pricing on a utility computing basis is fine-grained with usage-based options and fewer IT skills are required for implementation (in-house). The e-FISCAL project's state of the art repository contains several articles looking into cost aspects in more detail, most of them concluding that costs savings depend on the type of activities supported and the type of infrastructure available in-house.

         Device and location independence enable users to access systems using a web browser regardless of their location or what device they are using (e.g., PC, mobile phone). As infrastructure is off-site (typically provided by a third-party) and accessed via the Internet, users can connect from anywhere.

         Virtualization technology allows servers and storage devices to be shared and utilization be increased. Applications can be easily migrated from one physical server to another.

         Multitenancy enables sharing of resources and costs across a large pool of users thus allowing for:

         Centralization of infrastructure in locations with lower costs (such as real estate, electricity, etc.)

         Peak-load capacity increases (users need not engineer for highest possible load-levels)

         Utilisation and efficiency improvements for systems that are often only 10–20% utilised.

         Reliability is improved if multiple redundant sites are used, which makes well-designed cloud computing suitable for business continuity and disaster recovery.

         Scalability and Elasticity via dynamic ("on-demand") provisioning of resources on a fine-grained, self-service basis near real-time, without users having to engineer for peak loads.

         Performance is monitored, and consistent and loosely coupled architectures are constructed using web services as the system interface.

         Security could improve due to centralization of data, increased security-focused resources, etc., but concerns can persist about loss of control over certain sensitive data, and the lack of security for stored kernels. Security is often as good as or better than other traditional systems, in part because providers are able to devote resources to solving security issues that many customers cannot afford. However, the complexity of security is greatly increased when data is distributed over a wider area or greater number of devices and in multi-tenant systems that are being shared by unrelated users. In addition, user access to security audit logs may be difficult or impossible. Private cloud installations are in part motivated by users' desire to retain control over the infrastructure and avoid losing control of information security.

         Maintenance of cloud computing applications is easier, because they do not need to be installed on each user's computer and can be accessed from different places.

Relevance in today’s life

Many universities, vendors and government organizations are investing in research around the topic of cloud computing:

         In October 2007, the Academic Cloud Computing Initiative (ACCI) was announced as a multi-university project designed to enhance students' technical knowledge to address the challenges of cloud computing. In April 2009, UC Santa Barbara released the first open source platform-as-a-service, AppScale, which is capable of running Google App Engine applications at scale on a multitude of infrastructures.

         In April 2009, the St Andrews Cloud Computing Co-laboratory was launched, focusing on research in the important new area of cloud computing. Unique in the UK, StACC aims to become an international centre of excellence for research and teaching in cloud computing and will provide advice and information to businesses interested in using cloud-based services

         In October 2010, the TClouds (Trustworthy Clouds) project was started, funded by the European Commission's 7th Framework Programme. The project's goal is to research and inspect the legal foundation and architectural design to build a resilient and trustworthy cloud-of-cloud infrastructure on top of that. The project also develops a prototype to demonstrate its results.

         In December 2010, the TrustCloud research project  was started by HP Labs Singapore to address transparency and accountability of cloud computing via detective, data-centric approaches  encapsulated in a five-layer TrustCloud Framework. The team identified the need for monitoring data life cycles and transfers in the cloud, leading to the tackling of key cloud computing security issues such as cloud data leakages, cloud accountability and cross-national data transfers in transnational clouds.

         In July 2011, the High Performance Computing Cloud (HPCCLoud) project was kicked-off aiming at finding out the possibilities of enhancing performance on cloud environments while running the scientific applications - development of HPCCLoud Performance Analysis Toolkit which was funded by CIM-Returning Experts Programme - under the coordination of Prof. Dr. Shajulin Benedict.

         In June 2011, the Telecommunications Industry Association developed a Cloud Computing White Paper, to analyze the integration challenges and opportunities between cloud services and traditional U.S. telecommunications standards.

Advantages

There are many possible advantages of cloud computing, but they may not apply to all consumers.

Reduced costs

Cloud services paid for on a usage basis can be financially advantageous for a consumer when compared to the outright purchase, or long-term rental, of what would be a big-budget item. Also, there are reduced operating costs, because a cloud consumer does not need to house, staff and maintain their own equipment.

Up-to-date software

SaaS consumers can always have the most up-to-date software, because versioning is controlled centrally by the cloud provider, and when they make a new release it is automatically available to every user.

This is particularly advantageous for cloud desktops, because deployment of new software versions can be very costly and time consuming for a large organisation with many PCs, and because it can therefore be difficult to ensure that everyone has the same version of the organisation's PC software applications at any one time.

Improved access

Cloud computing involves using the Internet, and this can provide access from multiple locations and many different types of user device.

Sharing and co-operation

Cloud services are advantageous, when compared to PCs and local servers, for activities that require co-operation among distributed groups.

Flexible and infinite scaling

Flexible and infinite scaling can be an advantageous feature of cloud-computing services, for example to allow for a sudden increase in demand by the users. This has traditionally been a difficulty for fully owned and self-managed IT resources, where there can be, for example, one server with a given, fixed size, and where some of its capacity may be wasted when demand is low, but where it may be overloaded, resulting in slow response times, when demand is high.

Simpler capacity planning

Cloud computing moves the IT capacity-planning role from the consumer to the cloud provider, and they can be in a better position to optimize the cloud resources used by their consumers than the consumers themselves would be for their own resources.

For example, the provider may be able to supply better demand smoothing, because they can perform capacity planning over a much larger pool of resources, and for a large group of consumers, whose peak loads will probably not occur all at the same time.

Risks

Besides the advantages of cloud computing, there are also risks, at least for some consumers.