September 24
Often-times, the three words: value, cost and price, are considered somewhat interchangeable and sometimes that might be correct. However, let’s make a distinction for now and look at cloud computing.
Value is tied to the utility rendered from a product, service or technology.
Cost is tied to the consumption of resources (financial resources, man hours, energy or other) needed to perform or produce a product or service.
Price is the, by the market, agreed upon amount needed to acquire a product or service. The price determines who of the market participants that will capture the value rendered.
There are surely more precise and correct distinctions of these three concepts to be found elsewhere, but the ones above will do for this analysis.
From fundamentals to market specifics
The order by which the three concepts were mentioned above was not random. When trying to determine the possible benefits of IT as a Service for the system of industries associated with IT, the analysis should start by determining the increased value it brings. Secondly, the cost implications needs to be considere. After looking at the big picture and establishing that the increased value outweighs the increased costs (if any), the next question is how the excess value is devided among the market participants. The following paragraphs will outline the main points of the value proposition, the drivers for decreased and increased costs and how that might affect the current and future price.
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September 11
IT as a Service and cloud computing is often described as disruptive (examples here and here), a paradigm shift (examples here and here) or some other term with similarly deteriorating meaning. However, beyond the buzz words, I guess one can make out a consensus around IT as a Service potentially having an impact on how enterprises use IT and on the IT industry. At the moment, cloud computing is technologically diverse and legally uncertain, but from a strategic point of view it is quite straight forward to see the implications and broad strokes of the future trajectory.
In essence, IT as a Service boils down to :
- Commoditization
- Vertical integration and disintegration
At first, these two might seem to mean the same thing and they are surely interconnected, but it is a mistake to think they are interchangeable. In this case, the technology itself implies vertical integration and disintegration (moving computing resources into the cloud), and commoditization is in part a result of that. Nicholas Carr have very convincingly described the commoditization of computing through cloud computing and the similarities it bears to developments a century ago. However, computing resources becoming a commodity triggers further rearranging of the value chain, which makes it practical to separate commoditization and vertical integration (and disintegration).
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August 17
Despite the volumes written about cloud computing over the last couple of years, a ubiquituous topic is still defining and explaining the concept. The absence of an agreed upon definition is seen by some as a problem and an indication to not believe the hype. In late 2008 Andy Isherwood, VP of software services at HP in Europe, expressed his sceticism:
“A lot of people are jumping on the bandwagon of cloud, but I have not heard two people say the same thing about it”
Another known cloud critic is Larry Ellison (though he seems to have re-evaluated his opinion), who also uses the lack of a strict definition as an argument why there cannot be any substance in cloud computing.
“We’ve redefined ‘cloud computing’ to include everything we currently do. So it has already achieved dominance in the industry. I can’t think of anything that isn’t cloud computing. [...]
Then there is a definition: What is cloud computing? It is using a computer that is out there. That is one of the definitions: ‘That is out there.’ These people who are writing this crap are out there.”
However, as Simon Wardley illustrated at the OSCON ’09 conference, a phenomenon does not require a consensus definition in order to have great impact. There is still no definition of the Industrial revolution, despite the centuries that has passed and its indisputable importance. [Read full post]
June 18
The first question to answer is of course “what is cloud computing?” Although it might sound like a trivial question, it actually requires some thought to understand what is new and different beyond the sheer technical definition.
First off, here is a video made at the web 2.0 expo 2008.
Clay Shirky obviously gives the stickiest quote :
Thomas [...]
