The Cloud
Opportunity to Fly or Unnecessary Risk?
Aegean Distributors is a regional food products distribution company. They have two
warehouses and several trucks that deliver packaged food products to grocery stores,
restaurants, bakeries, and hotels. 62 employees work for Aegean Distributors. The
administration centre (head office) for Aegean is attached to the larger of their two
warehouses.
In recent years, attention has been put on the company's overhead – those costs that
are not directly related to the receiving, storage, or delivery of their products. And in
particular, management is focusing on information technology/information system costs.
Right now, the company has 3 people working in the Information Technology (IT)
department.

A manager who researches latest computing trends, troubleshoots big problems
in the system when they arise, makes purchase decisions, and supervises the
two other employees in the department.

Two employees who provide help to other employees, solve smaller daily
computing problems, do routine IT chores such as backups, keep the online
customer ordering system working properly, and do physical upgrades and
repairs.
The IT system of Aegean is entirely internal. It has two servers, one for "mission critical"
software like ordering, accounting, and company file storage, and the other for the
company's web site and email systems. There are 17 computers throughout the
company, networked physically to the servers (not wirelessly). The company also has
handheld wireless inventory computer (see photo at the end of this case).
The annual IT department costs:

$225,000 in salaries.

$60,000 in software licences, upgrades, and maintenance parts.

$15,000 in new computers such as desktops, laptops, smart phones, and
tablets.

$15,000 for electricity to run the whole system (estimated).
A Cloud Opportunity?
The President of Aegean Distributing has heard a lot about the term "cloud computing"
and knows enough to ask whether it is an opportunity for their company or an
unnecessary risk. He has asked several employees to work as a team to consider the
impact of moving some or all of Aegean IT systems and services onto "the cloud".
Cloud computing means the use of the internet, usually, to have data stored somewhere
else, software that runs somewhere else, and access from anywhere on the internet.
The Challenge
Working in teams of 4, take your assigned department focus and do the following
1. Diagram how this department is connected to internal and external stakeholders.
2. Determine a list of important criteria to use in deciding if the department should
move to "cloud computing". These are not technology criteria, but simple and
logical business criteria as studied in the course. Use your smart phone or laptop
to quickly find cloud computing criteria other companies find important.
3. Do a cost/benefit analysis for whether to move this department's information
system functions to "the cloud".
4. How might employees feel? IT employees and other employees?
5. What kinds of financial savings might result?
6. What kinds of risks might result?
7. How long would it take to move over to cloud computing?
8. What might be the hidden costs of moving to cloud computing for Aegean?
9. Make a decision for your assigned department, with 3 reasons why the
department you are studying should or should not move to cloud computing.
The Departments
Note: Work only on the department you are assigned to work on.
A. Marketing & Sales department. Some marketing and sales staff work in the
office and some go to meet clients.
B. Receiving department. The food products arrive, be checked against electronic
and physical paperwork, and must be unloaded from trucks and put into the right
places in the warehouses.
C. Shipping department. The team that takes products, assembles orders from
electronic and physical paperwork, and puts the orders on trucks.
D. Delivery department. The team of drivers who drive the trucks to the customers,
unload the orders, and handle the electronic and physical paperwork of the
shipment.
E. IT department. See first page of this case for details on this department.
F. Accounting department. Manages accounts payable, accounts receivable,
payroll, banking, etc.
G. Human Resources department. Manages hiring, training, payroll benefits
administration, etc.
H. Management department. The President, 3 senior managers, and 2 admin
staff.
Photo: A handheld warehouse inventory bar code scanner