Cloudonomics

The Business Value of Cloud Computing

Joe Weinman

• Publisher: Wiley
• Year: 2012
• Print ISBN: 9781118229965
• eBook ISBN: 9781118282885
• Edition: 1
• Topic: Computer Science
• Subtopic: Computer Science General
• Index: Computer Science

The ultimate guide to assessing and exploiting the customer value and revenue potential of the Cloud

A new business model is sweeping the world—the Cloud. And, as with any new technology, there is a great deal of fear, uncertainty, and doubt surrounding cloud computing. Cloudonomics radically upends the conventional wisdom, clearly explains the underlying principles and illustrates through understandable examples how Cloud computing can create compelling value—whether you are a customer, a provider, a strategist, or an investor. Cloudonomics covers everything you need to consider for the delivery of business solutions, opportunities, and customer satisfaction through the Cloud, so you can understand it—and put it to work for your business. Cloudonomics also delivers insight into when to avoid the cloud, and why.

• Quantifies how customers, users, and cloud providers can collaborate to create win-wins
• Reveals how to use the Laws of Cloudonomics to define strategy and guide implementation
• Explains the probable evolution of cloud businesses and ecosystems
• Demolishes the conventional wisdom on cloud usage, IT spend, community clouds, and the enterprise-provider cloud balance

Whether you're ready for it or not, Cloud computing is here to stay. Cloudonomics provides deep insights into the business value of the Cloud for executives, practitioners, and strategists in virtually any industry—not just technology executives but also those in the marketing, operations, economics, venture capital, and financial fields.

CHAPTER 1

A Cloudy Forecast

The cloud—shorthand for “cloud computing”1—is transforming all spheres of our world: commerce, entertainment, culture, society, education, politics, and religion. Cloud start-ups are forming on a daily basis, and billions of dollars in wealth are being created as companies craft innovative strategies to exploit this opportunity. Conversely, long-standing corporate icons that have failed to do so are becoming history instead of making it.

The concept of a public cloud—shared, on-demand, pay-per-use resources, accessible over a wide-area network, available to a broad range of customers—might appear to be a recent breakthrough, but there is nothing new under the sun, not even the cloud. The ancient Romans implemented the information superhighway of their time, constructing an unprecedented wide-area network with thousands of route miles of roads, called viae, using state-of-the-art engineering, following documented standards.2 The public network, made of public roads, or viae publicae, was complemented by and interoperable with metro networks, the viae vicinales, and private networks, the viae privatae, creating an Internet of sorts. The roads of the Romans carried people, goods, and soldiers, but, perhaps most important, they also served as a communications network, enabling information, coordination, and control of the far-flung republic and then empire.

These viae were multiprotocol networks—carrying pedestrians, animals, carts, military chariots, horses, and their riders—with class of service—military and chariots in the center lane, pedestrians and slower vehicles to the side.3 Net neutrality was assumed: Any citizen could traverse the viae publicae and even had certain rights of passage on the viae privatae.4 By order of Caesar, the core of the network had congestion management: Transport carts were banned from the network core—the narrow, winding streets at the heart of Rome—from dawn until dusk.5 A complementary architecture was used for streaming content delivery: the aqueducts.

A variety of service providers—inns, taverns, posthouses, and the like—became embedded in the fabric of this network, offering value-added services. Each inn—called a caupona—offered lodging to travelers on an on-demand, pay-per-use basis: The traveler merely showed up, stayed, and paid. The inns serviced different classes of customers, from peasants to citizens and free men, and there were laws concerning security and limitations of liability. According to an edict issued by the praetor, a senior regulatory official of the time, the proprietor, or caupo—the cloud service provider of the age—was responsible for ensuring that the traveler’s belongings were neither stolen nor damaged while resident at the service provider’s facility.6 Acts of the gods, such as fires, were excluded. Authentication, via the presentation of credentials or tokens, tesserae hospitalitatis, was required before service could be rendered.7 Advertising and branding were important even then. In ancient Pompeii, the Elephant Inn had a logo: a painting of a pygmy defending an elephant entrapped by a snake. The signage also offered capacity status updates: hospitium hic locatur (i.e., “inn to let”).8

Even before Rome, the Greeks had inns, the Persians had public roads, the Assyrians had aqueducts,9 the Babylonians extended credit, and over 4,000 years ago, during the dawn of Western civilization in Sumeria, the advanced production, facilities, and power technologies of the time—farm implements, water rights, and oxen—were offered for access under a pay-per-use model: leasing. Thousands of years later, in the Middle Ages, knights’ armor—the intrusion-prevention hardware of the time—was also leased.10 It can even be argued that key elements of today’s cloud computing environments have been anticipated by early biological systems: ant colonies will determine the shortest path to “content,” such as sources of food, and exhibit behavioral plasticity, that is, will dynamically allocate resources—worker ants—to foraging, patrolling, nest maintenance, and midden work, that is, refuse pile maintenance.11

Clouds Everywhere

This proven architectural and business model, since applied to modern hotels, electricity, coffee shops, taxi fleets, rental car services, and others, has now come to computing, and in computing—as in meteorology—the cloud these days is covering a lot of ground. Now, as never before, information technology (IT) and cloud computing are having a broad impact.

The cloud is pervading the prosaic patterns of everyday existence. Teens, tweens, and even toddlers are tapping on touch screens or thumb-typing text messages. Even untethered applications, or “apps,” need to be purchased and downloaded via a cloud-based app store, but, more important, many applications require additional cloud-based services to function. Natural-language interfaces are enabled by cloud-based speech processing and semantic analysis; search requires the near-infinite processing and storage power of the cloud; social gaming is mediated via the cloud; high scores are uploaded to the cloud; apps and content are updated from the cloud; and status updates, files, photos, videos, reviews, and check-ins are shared via the cloud.

The cloud complements the consumerization of IT, and broadens and deepens its democratization. Businesses used to dictate the desktop, laptop, and software used by employees. But if applications in the cloud process data in the cloud, “bring your own device” is a viable strategy—if not without security and interoperability concerns—potentially reducing corporate expenditures while enabling consumer-employees to make fashion and status statements as well as live a blended work-family lifestyle. Democratization of IT means that not only device access but the creation and modification of applications can expand beyond the IT shop, unleashing a torrent of innovation and motivation through empowerment.

Gaming is moving to the cloud as well. Traditionally, you bought a console and cartridges or discs at a physical store. Then you could order over the Web. Then you could take delivery over the Web, via game downloads from an app store. Then you could use your console over the Internet, with up to four-fifths of gamers using connected consoles to play online, download games, or chat.12 Now, with “cloud gaming,” even high-performance games—formerly requiring advanced consoles built to exploit state-of-the-art computing engines—are being played in real time on the net over even 3G networks, with polygons and video generated remotely but displayed on relatively low-performance endpoints, such as smartphones.13 It would be a mistake to consider gaming merely to be the province of, say, 14- to 24-year-old males. Gaming is not only popular across many demographics, but represents the state of the art in everything from interfaces to performance that will trickle down into more mundane business applications. Moreover, “games” can represent a new era in collaboration: A long-standing problem in HIV research—the protein structure of the Mason-Pfizer monkey virus retroviral protease—was recently solved by global players of the online game Foldit, illustrating “the power of online games to channel human intuition and three-dimensional pattern-matching skills to solve challenging scientific problems.”14

The conduct of commerce is undergoing a revolution, with new players in online retailing, group coupons, video distribution, and blogging—to name a few—dramatically disrupting market ecosystems and driving long-established players out of business, while creating fortunes for some in the process. Behind the scenes, cloud-based collaboration, innovation markets, and contests are enabling companies to tap into the smartest and most creative minds in any field, regardless of geographic location. Procter & Gamble explained the straightforward math15: Fewer than 10,000 researchers within the firm, 1.5 million outside. Or let’s go beyond blue-chips: Sites like Mom Invented, which let moms go to market with mechanisms to prevent kids from unrolling toilet paper, are, well, on a roll.16

In short, the cloud is disrupting every dimension of business, whether it is the research, engineering, or design of new products and services; their manufacturing, operations, and delivery; or any point along the customer interface and its myriad moments of truth17—branding, awareness, catalog, trial, customization, order processing, delivery, installation, support, maintenance, or returns.

Consider the customer engage...

Table of contents

• Cover
• Contents
• Title
• Copyright
• Dedication
• Preface
• Acknowledgments
• Chapter 1: A Cloudy Forecast
• Chapter 2: Does the Cloud Matter?
• Chapter 3: Cloud Strategy
• Chapter 4: Challenging Convention
• Chapter 5: What is a Cloud?
• Chapter 6: Strategy and Value
• Chapter 7: When—and When Not—to Use the Cloud
• Chapter 8: Demand Dilemma
• Chapter 9: Capacity Conundrum
• Chapter 10: Significance of Scale
• Chapter 11: More is Less
• Chapter 12: Hybrids
• Chapter 13: Fallibility of Forecasting
• Chapter 14: Money Value of Time
• Chapter 15: Peak Performance
• Chapter 16: Million-Dollar Microsecond
• Chapter 17: Parallel Universe
• Chapter 18: Shortcuts to Success
• Chapter 19: Location, Location, Location
• Chapter 20: Dispersion Dilemma
• Chapter 21: Platform and Software Services
• Chapter 22: Availability
• Chapter 23: Lazy, Hazy, Crazy
• Chapter 24: Cloud Patterns
• Chapter 25: What’s Next for Cloud?
• About the Author
• About the Web Site
• Index