The Economic Gains of the Cloud

By Kevin Jackson

The Cloud’s real economic value means that individuals can design, build, deploy and globally market new and competitive products from their living room with minimal investment.

The New Revolution

During the 18th and through the 19th century, global society experienced drastic changes in agriculture, manufacturing, mining, transport and technology.

Known as the Industrial Revolution, this period was driven by the steam engine and marked a major turning point in human history. Almost every aspect of daily life was affected in some way. This period saw unprecedented sustained growth in both average income and population.

Key to this growth was the transformation from low volume, hand-made manufacturing to the mechanized assembly line.

The 21st century heralds yet another socioeconomic revolution, the Information Revolution. Just as before, this period promises to mark another major turning point in human history.

Today’s growth in information mirrors the previous growth in manufactured goods. Could Cloud computing drive this new age just as the steam engine drove the Industrial Revolution?

New Economic Value

Cloud computing has already demonstrated an ability to enhance value within many tangible domains. The valued delivered by the Cloud in infrastructure cost savings seems to be just the beginning. Business transformations and upheavals caused by Cloud computing are becoming more of a daily occurrence.

Just look at the list of new businesses and new ways of doing old businesses: EBay in the auction market; PayPal in banking; Amazon in retail and IT infrastructure sales; Animoto in video production; Blogspot, Slideshare in publication; Twitter, Google in marketing & advertising; US Government (usaspending.gov, data.gov, apps.gov) in constituent services.

Cloud increases economic opportunity while simultaneously reducing barriers to business success. Since Cloud providers actually enable this reality, could they become modern Robber Barons? Robber Barons gained enormous wealth due to their ability to corner the market on the building blocks of today’s modern society. If information is building the society of tomorrow, will the likes of Google, Amazon and EBay capture the wealth of tomorrow as well?

Cloud providers also give the enterprise options that can deliver capability faster and with much less capital investment and risk. This enables more market experimentation with shorter cycle times.

This drastic reduction in upfront investment requirements can make previously unviable business models economically feasible. Market valuations of global Cloud companies clearly demonstrate the transfer of wealth.

Less Waste, More Wealth

Cloud computing also reduces economic waste. IT resource metrics are now more easily monitored. With this capability, resource cost can be easily compared to value delivered with much less ambiguity.

Dynamic provisioning also enables faster resource reallocation. Options that deliver lower return on investment can be quickly divested. More successful options can be reinforced and expanded with much less delay.

Reduced information service response times can also spur advances in multiple unrelated domains. More capability, no matter the domain, accelerates and enhances any related business ecosystem. Acceleration and enhancement of the ecosystem inevitably leads to economic growth.

Economic growth leads to more products, more jobs and more commerce.

In this scenario, the “network affect” will accelerate Cloud adoption.

Success will drive Cloud standards and increase Cloud efficiencies, making these companies even more valuable. Global Cloud infrastructures will drive the social networking phenomenon and as social networking expands, marketplaces driven by new forms of advertisement and business models will also grow.

Since Cloud computing hastens the physical instantiation of new business ideas, market upheavals will continue.

The New World Order

The real economic value of Cloud computing lies in the fact that individuals can design, build, deploy and globally market new and competitive products from their living room with minimal investment.

Economic models tied to previous capital investments will prevent any adequate response from large, establish market players.

Since a frictionless internet-based marketplace offers minimal pain to consumers that choose to switch, established players will falter and eventually fail. The marketplace always favors the strong. n

Kevin L. Jackson is a senior information technologist and editor of Government Cloud Computing e-zine. Kevin blogs regularly at Cloud Musings. Contact Kevin at http://kevinljackson.blogspot.com.