Friday, January 30, 2009

First posting ... on Cloud Computing

I've just started this blog, and haven't had time to write out a really useful posting. But I thought I'd start with a few comments about Cloud Computing. At this point, I think the most important issue is understanding what the value of Cloud Computing is to the end user, the person who ultimately pays for it.

My old boss, Shane Robison just said on an interview on CNBC that Cloud Computing is a new business model [for information based activities]. While is certainly true, what about cloud computing enables this new business model? I believe there are two features that are game changers.

First, cloud computing, and the whole industrial move to towards delivering services, enables business to move their overall IT expenses from the capital expense line to the operating expense line. That is, rent computing and communications, don't buy it. This is certainly the direction we should be moving and we have been doing this for many years (out sourcing of IT is just one example). This, conversion of CAPEX to OPEX is hugely important, but it is really just the tip of the iceberg.

The second value of cloud computing is that it can enable great business agility, either by allowing short, burst uses of large amounts of IT infrastructure, or by encouraging and supporting very rapid creating, modification, and deployment of new services. This agility allows companies to respond to market changes much more rapidly and deliver their information based products in ways that are more appealing to their customers.

This new found business agility, perhaps best demonstrated by Google and Facebook, is what makes competing with these companies so challenging. A major goal of wide spread cloud computing should be to make this type of business agility available to all. This is a new business model.