Software Infrastructure for Business Value

Neil Ward-Dutton

The seven elements of Cloud Computing's value

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Back in June I was invited to speak as part of the London leg of TIBCO's NOW roadshow, which focused primarily on Cloud computing and TIBCO's new Silver offering (you can see what we think about that specifically in this report).

My job was to talk about "articulating the value of Cloud computing". This was a fun challenge: so much of the talk about Cloud today starts by arm-waving at the 30,000ft level - and then zooms right down to the level of "virtualised compute resources" and "dynamic scalability". What I hadn't seen so much of was an attempt to map out more of a big picture of the value that Cloud computing can potentially deliver in the context of other approaches to consuming IT infrastructure resources.

So after reading countless blogs, conference proceedings, customer stories and news articles, I sat and stared at a blank piece of paper for a while, thinking about how I could pull all the different perspectives together to show one picture that captures all the different ways in which Cloud computing can potentially deliver value. This is what I ended up drawing and presenting in my talk:


You can see that there are seven elements of value I've highlighted, and they fall into three "value types": economic, architectural and strategic.

  • The economic value of Cloud is largely about being able to align the timing and size of the investments you make with the value you receive - variously referred to as "pay as you go", "pay as you grow". You don't pay $millions for infrastructure that only delivers value months or years later; you pay for what you actually need, when (or soon after) you use it. And you don't purchase an asset that then depreciates (like crazy).
  • The architectural value of Cloud is about having an simple, consistent abstract environment presented to developers and operations folks that hides a lot of complexity, making it much quicker and easier to develop and deploy applications.
  • The strategic value of Cloud might be easily conflated with the economic value, but I think it's different. It's this: Cloud platforms help you focus on what makes your organisation more effective and different, and leave all the other stuff to a third party that is dedicated to doing a great job for a competitive price. This is about focus and it's also about avoiding having to train people to do things that fundamentally don't add value to your organisation (think "Lean IT" if you like.)

Have I captured all the potential elements of Cloud computing value? I'm 95% sure I have - but if I've missed something please let me know! Either way, the discussions I've had around this picture so far make me think that it's a useful model for exploring different Cloud propositions as stated today and comparing them. What do you think?

9 Comments

I like the concept!

Virtualization is not a requirement for something to be called a cloud. It is an architectural feature enabling operational efficiency for the provider. There are "clouds" that are based on real hardware, not VMs: http://newservers.com

Also, don't forget about Network resources in the center of the circle - these are also part of the Cloud's offering.

Good summary. Nice graphics. Maybe just call out innovation more explicitly under the strategic value element: Cloud Computing facilitating the unleashing/catalyzing of experimentations and prototyping. Other serendipities: fostering new business models and potential game changing transformations of the game industry; telecom and the mobile industry; technology-centric start-ups and perhaps even the VCs.

Neil,

Solid analysis. In particular, I agree that cloud offers Lean IT benefits. This argument can be further strengthened by stating that the on-demand availability of cloud resources supports Lean's requirement that resources be utilized on a Just-In-Time basis. IOW, Lean IT = JIT IT, and cloud is a JIT platform.

David Hurwitz

Neil you mentioned exactly the correct points showing advantages of cloud and SaaS in general, we're in that business already for 4 years and were first to provide system and network monitoring solutions in the cloud

Your chart highlights the key features of Cloud Computing in a way that makes this technology easy to understand even for anyone without a technical background. Great work!

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Great presentation. I am all for Cloud Computing. But as it starts to be more popular, the question to be asked is this: Are enterprises ready to make this big switch? Sure, the numbers don't lie, IT is more profitable and yields greater ROI, etc. But if I had to play the devil's advocate and take it further, are Enterprises ready to dissociate themselves with their Hardware? the Data? What about Hardware sales to provide to the enterprise..Think of it such as the switch to the Electric car and the Oil lobbyists..time will tell.

Neil -

I'm tempted to add an eighth element and that is "Consistency" across distributed operational environments.

If you consider that one of the charactoristics of "cloud computing" is the idea of a centralized structure for the distribution of applications and data, then it becomes possible to consider the potential benefit of being able to make distributed reporting and business intelligence more consistent across a given enterprise.

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Lean's requirement that resources be utilized on a Just-In-Time basis

Neil Ward-Dutton, founder and Research Director of MWD Advisors offers his perspective on key software infrastructure issues, IT-business alignment and related things.

Neil Ward-Dutton

Neil Ward-Dutton is a co-founder of and Research Director at Macehiter Ward-Dutton, View more

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