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.
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/ ffiffiffiffi mp 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 Summa
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