The Economics of the Cloud – Leaving the Horse Whip Behind

4 min readReading Time: 4 minutes

The Cloud

Although it’s still early days, from a long-range historical point of view, the cloud has actually hovered above our various computer-powered preoccupations for a good few years now. Adoption rates for this game-changer motor ever forward, with bugs being identified and addressed, and capabilities being increasingly celebrated.

But it’s worth noting that we remain far from an end point in our understanding of, and appreciation for, this paradigm-shifting newcomer to our daily lives. The Microsoft-produced white paper, The Economics of the Cloud (TK), offers some insight on how this new age might evolve, and urges its proponents to take the long view and see the underlying economics as having the biggest impact on long term take-up rates.

What are the Future Prospects for the Cloud?

It’s always instructive to refer back to other examples of revolutionary design to gain a sense of the way a new advancement might unfold. The world’s first automobiles were described as “horseless carriages,” and they were designed just as their equine-powered predecessors had been—complete with whip holders—in spite of the revised absence of such requirements. “Engineers initially failed to understand the new possibilities of the new paradigm,” the paper points out, “such as building for higher speeds, or greater safety.” Just as in the early days of the car business, it’s difficult to predict where this novelty will take us, but it’s critical not to be hemmed in by restrictions that no longer apply.

Technical complexities and adoption hurdles steal most of the ink these days in literature covering the cloud, as was highlighted in our previous blog entry Calming (Mis) Conceptions about the Cloud. The Microsoft white paper points out the detriment to users’ exploitation of the technology such misinformation creates. Historically, however, it’s been underlying economics that have in fact had a much stronger impact on the direction and speed of disruptions, as technological challenges are resolved or overcome through the rapid innovation to which we‘ve become accustomed.

The cloud allows core IT infrastructure to be brought into large data centres that take advantage of significant economies of scale in three areas: supply-side savings (amortizing costs across multiple servers), demand-side aggregation (reducing variability) and multi-tenancy efficiency (amortizing costs across multiple customers).

Making the Most for your Business – Cloud Flexibility

Capitalizing on these economic benefits is the trick. Just as engineers had to fundamentally rethink design in the early days of the car so too will developers have to rethink their approach to this new era of application design. The concepts of multi-tenancy and demand-side aggregation will represent a formidable challenge for developers and IT departments after all; whatever their level of sophistication. And if you screw up, you could find yourself enjoying only some of the savings on offer, or, even paying more for application development than you currently do.

Onwards and upwards, then. And leave the whip holder in the dust.

Jason Meilleur
Jason Meilleur
As the Senior Manager of Cloud Solutions at 360 Visibility, Jason has combined his technical and business development backgrounds to expand cloud based services and the company’s infrastructure customer base. Having a long standing family history of hard working entrepreneurs, Jason has developed a strong desire for business growth.
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