The world's most comprehensive and broadly adopted cloud platform, offering over 200 fully featured services from data centers globally
Citation: Amazon. (2025). What Is AWS? - Amazon Web Services. Amazon Web Services, Inc. https://aws.amazon.com/what-is-aws/
Cloud Computing
The on-demand delivery of IT resources—such as storage, servers, and databases—over the internet with a pay-as-you-go model.
Citation: Gallaugher, J. (2025). Information Systems: A Manager's Guide to Harnessing Technology (with SmartGrader for Excel). (10.1.4). FlatWorld.
Consumerization of technology
The trend where new IT advancements emerge in the consumer market first, then spread to businesses, replacing top-down enterprise-driven adoption.
Citation: Gallaugher, J. (2025). Information Systems: A Manager's Guide to Harnessing Technology (with SmartGrader for Excel). (10.1.4). FlatWorld.
Service Level Agreement (SLA)
A legally binding contract between a service provider and a customer that defines the expected quality, availability, and responsibilities of a service.
Citation: Gallaugher, J. (2025). Information Systems: A Manager's Guide to Harnessing Technology (with SmartGrader for Excel). (10.1.4). FlatWorld.
Software as a Service (SaaS)
A cloud-based model delivering software applications over the internet, usually via subscription, eliminating local installation and maintenance.
Citation: Gallaugher, J. (2025). Information Systems: A Manager's Guide to Harnessing Technology (with SmartGrader for Excel). (10.1.4). FlatWorld.
Infrastructure as a Service (IaaS)
A cloud computing model providing on-demand, virtualized computing resources—servers, storage, and networking—over the interne
Citation: Gallaugher, J. (2025). Information Systems: A Manager's Guide to Harnessing Technology (with SmartGrader for Excel). (10.1.4). FlatWorld.
Platform as a Service (PaaS)
A cloud computing model that provides a ready-to-use, managed environment for developers to build, test, deploy, and manage applications over the internet
Citation: Gallaugher, J. (2025). Information Systems: A Manager's Guide to Harnessing Technology (with SmartGrader for Excel). (10.1.4). FlatWorld.
Practice Quiz
1. A student-run consulting club decides to build a custom mobile app for tracking their project hours. They do not want to buy physical servers, install operating systems, or set up database management systems themselves. Instead, they rent a cloud platform that already handles the hardware, OS, and database, leaving the club to only write and manage the custom app code.
Which cloud computing model is the club utilizing?
A fully managed Software as a Service (SaaS)
A foundational Platform as a Service (PaaS)
A hardware-only Infrastructure as a Service (IaaS)
An on-premise traditional hosting infrastructure.
Answer: B ~ Platform as a Service (PaaS) provides the hardware, operating system, and database, allowing customers to focus solely on building and managing their own applications. Option A is incorrect because with SaaS, the vendor manages everything including the application itself. Option C is incorrect because IaaS only provides the hardware, requiring the user to manage the OS and database. Option D is incorrect because the club is renting cloud infrastructure rather than maintaining physical servers
2. A recent graduate launches a small online clothing boutique. Instead of purchasing expensive server hardware and database licenses upfront to host her website, she subscribes to a cloud-hosted e-commerce platform. She pays a small monthly fee based on how many visitors she gets. This setup saves her from spending her limited startup capital on physical servers.
Which financial benefit of cloud computing is MOST clearly demonstrated in this scenario?
The complete elimination of ongoing operational support costs
The creation of increased bargaining power over technology suppliers
The reduction of large upfront capital hardware and software expenses
The decreased reliance on long-term viability from a single vendor
Answer: C ~ Cloud computing significantly lowers upfront costs because the enterprise does not need to purchase hardware, software, or database management systems before launching. Option A is incorrect because there are still ongoing operational costs, such as the monthly usage fee. Option B is incorrect as this relates to Porter's Five Forces, not the direct financial benefit of avoiding server purchases. Option D is incorrect because relying on a cloud provider often increases dependence on a single vendor, rather than decreasing it.
3. Marcus is trying to complete an MIS assignment. He edits a spreadsheet using an online version of Excel. After finishing, he attempts to upload the file directly from his cloud storage folder into his university's learning management system. He notices a significant delay, and the screen freezes for a minute before the upload completes.
What technical challenge of cloud computing is Marcus MOST likely experiencing?
High network latency due to file travel between remote servers
A complete vendor failure causing permanent data loss in the cloud
Unforeseen switching costs associated with moving to new software
Intrusive software piracy significantly slowing down application processing
Answer: A ~ Marcus is experiencing network latency, which occurs because the file must travel over high-speed networks between different servers, such as from a cloud drive to the learning management system. Option B is incorrect because the upload eventually completes, so the vendor did not fail or lose the data. Option C is incorrect because switching costs refer to the financial or operational burden of changing providers, not upload delays. Option D is incorrect as software piracy is generally less of an issue for SaaS and does not inherently cause network delays.
4. A video game company transitions from selling physical discs in stores to offering their game entirely as a cloud-based service. Players now stream the game directly through a web browser without installing anything locally. The developers notice that they no longer have to worry about players copying the game and sharing it for free with friends, because the core game code never actually downloads to the players' computers.
Which advantage of the SaaS model is the game company directly experiencing?
The elimination of ongoing operational support costs.
The ability to deploy hardware at significantly lower costs.
A massive reduction in issues related to software piracy.
A decrease in the reliance on external cloud hosting firms
Answer: C ~ For SaaS providers, software piracy is much less of an issue because the software is hosted centrally and never distributed locally to users' machines, preventing unauthorized copying. Option A is incorrect because hosting the game in the cloud actually creates ongoing operational costs to keep the servers running. Option B is incorrect because SaaS providers must still maintain or pay for physical hardware infrastructure to host their services. Option D is incorrect because moving to the cloud usually increases reliance on major cloud hosting vendors.
5. A large university decides to switch from a traditional, on-premise email system to a cloud-hosted SaaS email platform. Although they no longer have to buy email servers, the IT department spends three months configuring the new system, migrating old messages, and teaching professors how to use the new interface. During this time, staff productivity temporarily drops.
Which component of Total Cost of Ownership (TCO) is MOST clearly illustrated by this drop in productivity?
The initial efficiency reduction phase
The software purchases and license support cost
The physical hardware infrastructure deployment cost
The future strategic developments investment
Answer: A ~ An initial efficiency reduction is a component of TCO that occurs when employees are learning a new system and productivity temporarily declines during the transition. Option B is incorrect because this cost relates to the time and effort of transition, not the direct purchase of software licenses. Option C is incorrect because moving to a SaaS platform explicitly avoids the deployment of hardware infrastructure by the user. Option D is incorrect because future strategic developments refer to ongoing long-term changes to maintain a competitive advantage, not the immediate dip in productivity during rollout.