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Pre-seen Dec23
Strategic Business Leadership (SBL)
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STRATEGIC
BUSINESS LEADER
PRE-SEEN INFORMATION
Applicable for the December 2023 Exam
Contents
- Introduction
- Cloud service industry information
- Industry overview
- Key cloud service statistics 20X2
- Cloud service models
- Cloud service delivery
- Benefits of cloud services to clients
- Cloud service industry challenges and developments in Farland
- Cloud service innovation
- Operational and financial key performance indicators [KPIs]
- NCTech overview
- Background
- Ownership............................................................................................................................
- Vision, mission and corporate values
- NCTech board structure
- Risk register
- Current strategic position
- Performance dashboard
allows data to be accessed and processed by the client on the cloud server as if it were installed on a client’s own computer system. With SaaS, the cloud service provider effectively handles all components of the service, so the client does not need its own specialist IT hardware and software. As SaaS is a premium service, it is the most expensive. The range and extent of services offered under each model determines the fees chargeable to clients. The table below summarises the different cloud services provided under each service model. IaaS PaaS SaaS Provision of data servers Data storage facilities Networking resources Communications software Operating systems Data software applications
Cloud service delivery
There are three ways in which the three cloud service models can be delivered: The public cloud offers the required technological infrastructure and services over the cloud to any organisation or individual on a ‘pay as you use’ basis. The public cloud does not target particular clients or client groups, and it is hosted from the cloud service provider’s facilities. The private cloud provides computing infrastructure for the exclusive use of specific business clients. It is best suited for large businesses which demand considerable, and more complex, computer processing capability. The private cloud can either be located in a client’s facility or hosted at a designated cloud services third party commercial site. Private cloud services are charged at a premium price. The hybrid cloud is a combination of both public and private cloud models. More important aspects of the client’s operations can be hosted on a private cloud facility, with more general business functions run on the public cloud. This provides clients with greater operational flexibility and although it is more expensive than the public cloud, it is significantly cheaper than the private cloud.
Benefits of cloud services to clients
There are a number of reasons why cloud services are an attractive option to clients.
- Cloud service provision is easily scalable both up and down, reducing costly and significant changes to a client’s technology infrastructure.
- Clients can have instant access to cloud services systems, avoiding lengthy system development and implementation.
- Cloud service companies have enhanced security measures which reduce threats to client’s data and system integrity.
- Data can be accessed and processed at any time over the cloud from any remote location or using any devices, including mobile devices.
- The cloud enables clients to share data easily and it supports collaborative working over
diverse locations. 6. Cloud services are supported and maintained by the cloud service provider, reducing the need for clients to employ expensive IT specialists to maintain their in-house systems. 7. Clients do not require expensive space to accommodate hardware, as the technology is managed and accommodated by the cloud service provider.
Cloud service industry challenges and developments in Farland
There are a number of significant challenges which the Farland cloud service industry is currently facing:
- The Farland cloud service sector is growing very rapidly and is anticipated to double in size over the next five years. This means that both the nature and extent of competition within the industry is likely to change considerably over this period, with clients’ demands becoming more challenging to satisfy.
- More global competition is emerging so the industry may become dominated by a small number of large, well-established IT companies. This could have the effect of reducing the influence of smaller Farland cloud service companies and consolidating the industry.
- Clients are highly dependent on a reliable high-speed internet connection for cloud services to work effectively. Although this is currently not an issue in Farland as there are a number of different internet providers, it is critical that the Farland internet and broadband infrastructure keeps pace with demand.
- There is a constant risk from hacking, data loss, and distributed denial of service from unscrupulous external sources. A distributed denial of service attack involves excessive activity on the system from an unidentified source which significantly slows down the system and reduces its operational performance.
- The regulatory requirements associated with cloud services are evolving and may turn out to be more challenging to comply with. The regulatory demands may become more costly and onerous, particularly for smaller cloud service companies.
- There is constant demand for highly skilled and technically knowledgeable employees to work within the cloud service industry. However, the availability of suitably qualified staff for this rapidly growing sector means that they are in short supply, and very costly to employ.
Cloud service innovation
The following areas of technological development have been identified as being vital to the future success of all cloud service businesses which provide the SaaS service model within the Farland cloud service industry. Business intelligence [BI] BI systems collate, store and process data to provide clients with meaningful information in support of decision-making. If BI were offered on the cloud, it would satisfy the growing demands from clients for access to BI systems combined with the other benefits of cloud applications. Quantum computing Quantum computing performs complex data processing more efficiently than a normal computer. If quantum computing is offered on the cloud, it could dramatically increase both the processing capability and performance of clients. This could prove to be a unique selling point for a cloud service provider.
- NCTech
Background
NCTech is a well-known cloud service company operating in Farland. NCTech was established and incorporated 10 years ago by three software engineers. They recognised that the rapid growth in demand for cloud services presented them with a great opportunity to use their combined knowledge and skills to set up a business in this field. NCTech operates as a public cloud services company so that it can target a wide client base of small to medium sized companies (SMEs) throughout Farland. NCTech provides comprehensive data storage facilities, a range of servers for the storage, retrieval and sending of data, and the required networking resources necessary to provide the IaaS service model. NCTech has never offered the PaaS or SaaS service models.
Ownership
The initial shareholder investment was supported by venture capital, which was repaid when NCTech listed on the Farland stock exchange five years ago. Each of the three original shareholders still has a 10% stake in NCTech. The remaining shares are held by a number of institutional investors, such as pension funds and unit trusts, but no single shareholder holds more than 10% equity. The three founding owners remain fully committed to the business and currently hold the positions of chief executive officer, commercial director and operations director on the NCTech board. The current board membership has not changed in the last five years. Shares in NCTech have performed better than other similar technology companies on the Farland stock exchange over the last five years. However, in the last financial year there has been an unforeseen and significant fall in gross profit, which has affected the share price and unsettled some shareholders. The absence of any dominant shareholders means that the board is generally free to run the business in the best interests of the whole company, without any direct or significant interference.
Vision, mission and corporate values
The NCTech corporate vision is to be one of the leading cloud service providers in Farland The mission of NCTech is to become a world-class cloud service company by:
- Constantly achieving operational excellence.
- Differentiating ourselves by exceeding the expectations of our clients.
- Developing and maintaining a strong NCTech brand.
- Developing sustainable relationships with all key business stakeholders.
- Maintaining a profitable business model to attract further investment.
NCTech core values Energy: Grasp opportunities and make things happen. Excellence: Strive to do things better than anyone else in our industry. Excitement: Foster challenge, trust, and respect to and from colleagues through teamwork. Ethics: Promote and show integrity and openness in all areas of business.
NCTech board structure
Non-executive chair Non-executive directors x 5 Finance director Commercial director Marketing director Human resources director Operations director Chief executive officer There are four sub-committees:
- Audit committee, comprising three non-executive directors all of whom have a strong background in finance.
- Nominations committee, which is run by the non-executive chair and comprises all non-executive directors.
- Remuneration committee, comprising three non-executive directors with the human resources director providing the members with professional guidance.
- Risk committee, comprising two non-executive directors and the commercial director and operations director. NCTech is fully compliant with the Farland corporate governance code.
Risk register
NCTech maintains a register of principal risks. The risk committee determines the nature and extent of the risks NCTech is willing to accept to deliver success. The risk committee is also responsible for maintaining and monitoring the systems of internal control and risk management. Risk management activities are co-ordinated by a team led by a risk manager who reports to both the operations director and to the chair of the risk committee.
Performance dashboard
Financial performance
NCTech has a financial year ending 30 September. 20X 20X 20X 57, 58, 55, 20X 20X 20X 46·5% 48·6% 49·6% 20X 20X 20X 2, 3, 2, 20X 20X 20X 17·2% 18·2% 17·8% Revenue ($000’s) Profit before tax ($000’s) Return on capital employed Gross profit margin
Operational performance
20X1 20X2 20X 95% 94% 96% 20X1 20X2 20X 172 184 141 20X1 20X2 20X 4·5% 3·4% 3·2% 20X1 20X2 20X 87 79 85 20X1 20X2 20X 95% 94% 96% 20X1 20X2 20X 172 184 141 20X1 20X2 20X 4·5% 3·4% 3·2% 20X1 20X2 20X 87 79 85 Reported security breaches IaaS service availability to clients 20X1 20X2 20X 95% 94% 96% 20X1 20X2 20X 172 184 141 20X1 20X2 20X 4·5% 3·4% 3·2% 20X1 20X2 20X 87 79 85 20X1 20X2 20X 95% 94% 96% 20X1 20X2 20X 172 184 141 20X1 20X2 20X 4·5% 3·4% 3·2% 20X1 20X2 20X 87 79 85 Client average satisfaction rating (out of 100) Farland IaaS market share
Pre-seen Dec23
Module: Strategic Business Leadership (SBL)
University: Association of Chartered Certified Accountants
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