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.
Table of Contents
Preface xv
Acknowledgments xxi
Chapter 1 A Cloudy Forecast 1
Clouds Everywhere 2
Cashing In on the Cloud 6
Beyond Business 8
Clarifying the Cloud 11
Farther On 12
Summary 13
Notes 13
Chapter 2 Does the Cloud Matter? 17
Productivity Paradox 19
Competitiveness Confrontation 21
Summary 26
Notes 26
Chapter 3 Cloud Strategy 29
Insanity or Inevitability? 30
Democratization of IT 31
Industrialization of IT 32
Strategy 33
The Cloud: More than IT 35
The Networked Organization 38
Form Follows Function, IT Follows Form 41
Aligning Cloud with Strategy 42
Everyware, Anywhere 42
Summary 44
Notes 44
Chapter 4 Challenging Convention 49
What Is the Cloud? 50
Economies of Scale 50
Competitive Advantage and Customer Value 52
Cloud Ecosystem Dynamics 55
IT Spend 58
Issues with the Cloud 59
Summary 61
Notes 61
Chapter 5 What Is a Cloud? 63
Defining the Cloud 64
On-Demand Resources 66
Utility Pricing 67
Common Infrastructure 68
Location Independence 69
Online Accessibility 70
Difference from Traditional Purchase and Ownership 70
Cloud Criteria and Implications 72
Is the Cloud New or a New Buzzword? 73
Summary 75
Notes 76
Chapter 6 Strategy and Value 77
Access to Competencies 77
Availability 79
Capacity 79
Comparative Advantage and Core versus Context 80
Unit Cost 80
Delivered Cost 80
Total Solution Cost 82
Opportunity Cost and Cost Avoidance 83
Agility 83
Time Compression 84
Margin Expansion 85
Customer and User Experience and Loyalty 86
Employee Satisfaction 87
Revenue Growth 87
Community and Sustainability 87
Risk Reduction 88
Competitive Vitality and Survival 88
Summary 89
Notes 89
Chapter 7 When - and When Not - to Use the Cloud 91
Use Cases for the Cloud 91
Inappropriate Cloud Use Cases 101
Summary 104
Notes 104
Chapter 8 Demand Dilemma 107
A Diversity of Demands 108
Examples of Variability 109
Chase Demand or Shape It? 120
Summary 121
Notes 122
Chapter 9 Capacity Conundrum 125
Service Quality Impacts 126
Fixed Capacity versus Variable Demand 127
Splitting the Difference 129
Better Safe than Sorry 131
Capacity Inertia 134
Summary 135
Notes 135
Chapter 10 Significance of Scale 137
Is the Cloud Like Electricity? 139
Distributed Power Generation 140
Is the Cloud Like Rental Cars? 141
Capital Expenditures versus Operating Expenses 143
Benchmark Data 145
Cost Factors 147
Benchmarking the Leaders 150
Size Matters 151
Summary 155
Notes 155
Chapter 11 More Is Less 159
Is the Cloud Less Expensive? 159
Characterizing Relative Costs and Workload Variability 161
When Clouds Cost Less or the Same 163
If Clouds Are More Expensive 164
Beauty of Hybrids 164
Cost of the Network 167
Summary 169
Notes 170
Chapter 12 Hybrids 171
Users, Enterprise, and Cloud 172
Hybrid Architecture Implementations 174
Summary 180
Notes 180
Chapter 13 Fallibility of Forecasting 181
Even Stranger than Strange 182
Demand for Products and Services 183
System Dynamics 185
Whips and Chains 186
Exogenous Uncertainty 186
Behavioral Cloudonomics of Forecasting 187
Summary 190
Notes 191
Chapter 14 Money Value of Time 193
Demand and Resource Functions 193
Cost of Excess Capacity 195
Cost of Insufficient Capacity 196
Asymmetric Penalty Functions, Perfect Capacity, and On Demand 197
Flat Demand 197
Uniformly Distributed Demand 197
Better Never than Late 199
MAD about Being Normal 200
Triangular Distributions 201
Linear Growth 201
Exponential Growth 202
Random Walks 204
Variable Penalty Functions 206
Summary 207
Notes 208
Chapter 15 Peak Performance 209
Relationships between Demands 210
Lessons from Rolling Dice 212
Coefficient of Variation and Other Statistics 215
Statistical Effects in Independent Demand Aggregation 216
Significance of 1/√m 218
Issues with Perfectly Correlated Demand 220
Community Clouds 220
Simultaneous Peaks 221
Peak of the Sum Is Never Greater than the Sum of the Peaks 222
Utilization Improvements 224
Summary 225
Notes 226
Chapter 16 Million-Dollar Microsecond 227
On Time 228
Rapidity Drives Revenue 230
Built for Speed 232
Summary 233
Notes 233
Chapter 17 Parallel Universe 235
Limits to Speedup 236
Amdahl versus Google 237
Free Time 240
Summary 243
Notes 243
Chapter 18 Shortcuts to Success 245
Rapid Transit 246
Sending Letters 247
Short on Time 249
Bandwidth Isn’t Enough 252
Summary 253
Notes 253
Chapter 19 Location, Location, Location 255
Latency and Distance 255
Circle Covering and Circle Packing 257
Inverse Square Root Law 258
Spherical Caps and the Tammes Problem 260
Summary 263
Notes 263
Chapter 20 Dispersion Dilemma 265
Strategies for Response Time Reduction 266
Consolidation versus Dispersion 268
Trade-offs between Consolidation and Dispersion 269
Benefits of Consolidation 270
Benefits of Dispersion 271
The Network Is the Computer 272
Summary 274
Notes 274
Chapter 21 Platform and Software Services 277
Infrastructure as a Service Benefit 279
Paying on Actuals versus Forecasts 280
Installation 280
Investment 281
Updates 281
Service-Level Agreements 281
Continuously Earned Trust 282
Visibility and Transparency 282
Big Data and Computing Power 283
Ubiquitous Access 283
Response Time and Availability 284
Multitenancy, Shared Data 284
Cloud-Centric Applications 284
Scalability 285
Communities and Markets 285
Lock-in 285
Security and Compliance 286
PaaS: Assembly versus Fabrication 287
Innovation and Democratization 287
Deconstructing the Pure SaaS Model 288
Summary 290
Notes 291
Chapter 22 Availability 293
Uptime versus Downtime 295
Availability and Probability 296
Availability of Networked Resources 296
Availability via Redundancy and Diversity 297
On-Demand, Pay-per-Use Redundancy 300
Summary 301
Notes 301
Chapter 23 Lazy, Hazy, Crazy 303
Behavioral Economics 303
Loss and Risk Aversion 304
Flat-Rate Bias 305
Framing and Context 307
Need for Control and Autonomy 307
Fear of Change 308
Herding and Conformity 309
Endowment Effect 310
Need for Status 311
Paralysis by Analysis of Choice 311
Hyperbolic Discounts and Instant Gratification 312
Zero-Price Effect 313
Summary 313
Notes 314
Chapter 24 Cloud Patterns 317
Communications Patterns 317
Hierarchies 321
Markets 323
Repository 326
Perimeters and Checkpoints 326
Summary 327
Notes 328
Chapter 25 What’s Next for Cloud? 329
Pricing 329
Ecosystems, Intermediaries, and the Intercloud 332
Products versus Services 336
Consolidation and Concentration 336
City in the Clouds 338
Spending More while Paying Less 339
Enabling Vendor Strategies 340
Standards, APIs, Certification, and Rating Agencies 344
Commoditization or Innovation? 345
Notes 349
About the Author 353
About the Web Site 355
Index 357
