Chapter 1 Silver Linings: The Fourth Industrial Revolution and the Utopian Promises of Cloud Computing

Every Cloud Has a Silver Lining.1

– Attributed to John Milton, poet

Key Terms

1. Artificial Intelligence (AI) – “A machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations or decisions influencing real or virtual environments.”2

2. Cloud-Washing – “The purposeful and sometimes deceptive attempt by a vendor to rebrand an old product or service by associating the buzzword cloud with it.”3

3. Internet of Things (IoT) – “The network of devices that contain the hardware, software, firmware, and actuators which allow the devices to connect, interact, and freely exchange data and information.”4

4. Machine Learning – “A branch of AI and computer science which focuses on the use of data and algorithms to imitate the way that humans learn, gradually improving its accuracy.”5

1.1 Introduction

Cloud computing (the cloud) is in the vanguard of the global digital transformation; the reimagination of business in the digital age. The reason for this ascribed digital-leadership role is the promise of the cloud. That is, the promise of a diversity of unique and compelling benefits potentially available from the use of cloud computing capabilities. As a result, the cloud is ubiquitous, emerging as a mandate of sorts for organizations spanning size, sectors, and geographies.

At the same time, the cloud is an enigma that creates confusing jargon, organizational disruption, and in some cases fuels chaos and thorny problems. For instance, the cloud requires new and reimagined organizational skills, strategies, and processes, while exacerbating existing organizational risks and creating new risks. Cloud governance, the topic of this book, is designed to address this dichotomy.

This reference book brings to life the diverse range of opportunities and challenges associated with governing the enterprise-wide use of cloud computing from a practitioner perspective. It is designed to be a basic and practical reference guide with chapter-based self-assessment questions written in a user-friendly manner that should appeal to diversified cohorts of international students, operational and risk managers, boards, auditors, advisors, educators, advisors, and learning and development professionals.

As a starting point, this chapter defines cloud computing and explores the silver linings of the cloud. That is, the utopian promises fueling the international proliferation of cloud computing.

1.2 The Fourth Industrial Revolution and Cloud Computing

A Fourth Industrial Revolution is underway globally: a digital revolution that followed the revolutions in water and steam power, electrical power, and electronics and information technology. According to Salesforce, This digital revolution is characterized as follows.

Digital transformation is the process of using digital technologies to create new – or modify existing – business processes, culture, and customer experiences to meet changing business and market requirements. This reimagining of business in the digital age is digital transformation.6

The digital revolution is driven by the rapid, wide-scale deployment of digital technologies, such as in high-speed mobile Internet capabilities, artificial intelligence (AI), and machine learning.

In a 2016 address, Microsoft CEO Satya Nadella advanced the following enduring description of this digital transformation.

Becoming more engaged with their customers, empowering their employees, optimizing how they run their business operations and transforming the products and services they offer using digital content. The dimensions aren’t new, but what has changed is the role that systems of intelligence now play, providing better insight from data and converting that into intelligent action.7

Cloud computing is at the vanguard of this digital transformation. As a result, organizations of all sizes, industries, and geographies have substantially and rapidly increased their adoption and use of cloud computing, including reliance on third-party cloud service providers (CSPs).

One driver in this proliferation of cloud computing is the promise of the cloud; the promise of a wide range of unparalleled opportunities provided by the cloud. Such opportunities include streamlining and scaling storage, software, and application support; increasing the speed of data access processing and decision analytics; more productive customer engagement and empowered employees; reducing costs, such as outsourcing costly and difficult-to-update and -manage in-house IT infrastructure. As a result, organizations of all sizes, geographies, and industries are developing their own private cloud or purchasing public cloud services from cloud service providers.

While such potential benefits are compelling, cloud computing disrupts corporate governance. For example, market intelligence reveals critical data, applications and some important roles and responsibilities for IT policies, compliance, risk management, security and IT infrastructure are moving from traditional in-house IT departments to third-party CSPs.

As a result, cloud computing is stressing corporate governance in a number of ways, including further extending the organization’s reliance on third-party service providers, exacerbating existing risks, creating new and unexpected operational, cybersecurity, and regulatory risks, and fueling an urgent need for more responsive and resilient enterprise risk management strategies and new skills. This disruptive paradigm is raising concerns and thorny questions from corporate boards, trustees, advisors, managers, regulators, and assurance providers about cloud governance, including strategy, performance, risks, controls, and skills.

1.3 Defining Cloud Computing

The term cloud computing, and the more commonly used term, the cloud is ubiquitous. Yet, for some, the cloud is an enigma. What is cloud computing?

Cloud computing is a simple characterization of a highly complex internet/web-based computer model. A range of definitions of cloud computing appears in the public domain. Table 1.1 presents examples of these definitions.