Chapter 9 · Cloud computing, SaaS, AWS, and lower entry barriers
Vocabulary
Cloud Computing
Cloud computing is the delivery of computing resources such as storage, processing power, databases, and software over a network on demand instead of requiring a firm to own all of that infrastructure itself. For managers, the key appeal is flexibility: a company can scale usage up or down quickly, pay only for what it needs, and launch technology services without waiting for large hardware purchases.
Sources: MIS 301 Ch. 9 slides; professor study guide; IBM - What is cloud computing?
Software as a Service (SaaS)
Software as a Service is a model in which software is hosted by a provider and accessed over the internet, usually through a browser or lightweight app, instead of being installed and maintained locally by the customer. SaaS matters because it turns software into an ongoing service relationship with recurring payments, easier updates, and lower upfront adoption costs for customers.
Sources: MIS 301 Ch. 9 slides; professor study guide; Salesforce - What is SaaS?
Platform as a Service (PaaS) from slides
Platform as a Service provides developers with a hosted environment for building, testing, and deploying applications without forcing them to manage the underlying servers, storage, and networking directly. PaaS is most useful when a firm wants to focus on writing and improving its application while letting the provider handle the platform infrastructure beneath it.
Sources: MIS 301 Ch. 9 slides; Google Cloud - What is PaaS?
Infrastructure as a Service (IaaS) from slides
Infrastructure as a Service gives customers access to fundamental computing resources such as virtual machines, storage, and networking so they can build and control their own software environment. Compared with SaaS and PaaS, IaaS gives the customer the most flexibility, but it also requires more technical responsibility because the customer must configure and manage more of the system.
Sources: MIS 301 Ch. 9 slides; Microsoft Azure - What is IaaS?
Amazon Web Services (AWS)
Amazon Web Services is Amazon’s cloud computing division that rents out computing infrastructure and digital services such as storage, databases, virtual servers, analytics, and machine learning tools. AWS is important in this chapter because it shows how a firm can sell computing as a utility-like service and make powerful technology available even to startups that could never afford to build the same infrastructure on their own.
Sources: MIS 301 Ch. 9 slides; professor study guide; AWS - What is AWS?
Service Level Agreement (SLA)
A service level agreement is a contract that spells out what level of service a provider promises to deliver, including metrics such as uptime, support responsiveness, security responsibilities, and remedies if the provider fails to meet those standards. SLAs matter because when firms move to SaaS or cloud providers, they often give up some direct control and must rely on formal guarantees instead.
Sources: MIS 301 Ch. 9 slides; professor study guide; IBM - Service-level agreement (SLA)
Consumerization of Technology from slides
Consumerization of technology refers to the pattern where technology tools become popular in personal life first and then employees expect similar convenience, design, and accessibility at work. This matters for managers because workers may push firms to adopt easy-to-use cloud apps, collaboration platforms, or AI tools even before IT formally approves them.
Sources: MIS 301 Ch. 9 slides; Dell - consumerization of IT
Freemium Pricing Model from slides
A freemium pricing model gives users a basic version of a product for free while charging for premium features, storage, capacity, support, or enterprise controls. In SaaS markets, freemium can accelerate adoption by lowering trial friction, but the business succeeds only if enough users convert to paid tiers or if the free tier helps create strategic value such as awareness or network effects.
Sources: MIS 301 Ch. 9 slides; Investopedia - Freemium
Entry Barriers and Cloud Computing from slides
Cloud computing lowers entry barriers because firms no longer need to spend large amounts of money upfront on servers, data centers, and supporting infrastructure before they can launch a digital product. When barriers to entry fall, new competitors can enter more easily, experiment faster, and challenge incumbents that once benefited from scale advantages in infrastructure ownership.
Source: MIS 301 Ch. 9 slides; Textbook: 9.5 Understanding Cloud Computing Service and Deployment Models: SaaS, PaaS, IaaS, and Public, Private, Hybrid Clouds professor study guide
Elasticity from slides
Elasticity in cloud computing means resources can expand or contract quickly as demand changes. A company can handle spikes in traffic without permanently buying enough hardware for peak demand, which helps firms reduce waste and match costs more closely to actual usage. This is one of the biggest strategic advantages of the cloud compared with owning fixed infrastructure.
Sources: MIS 301 Ch. 9 slides; IBM - Elasticity in cloud computing
Key Questions
Practice Quiz
1. A retailer wants to start using a new customer support platform next week without buying servers or installing software on employee laptops. Which option best fits that goal?
2. A startup launches a new app by renting servers, storage, and databases from AWS instead of building a data center. Which competitive effect does this example best illustrate?
3. A software company changes from selling a $900 one-time license to charging $30 per user per month. Why might the company prefer the SaaS model?
4. A firm wants developers to build a custom app quickly, but it does not want them spending time managing operating systems, patching servers, or configuring networking. Which cloud model is the best match?
5. A company moves a critical workflow to a SaaS provider and wants written guarantees about uptime, support response, and remedies if the service fails. What should the company focus on most?