Natural Advantage Created for Service Providers by Cloud Computing

The Natural Advantage Created for the
Service Industry by Cloud Computing
NirajJuneja
Webscale Solutions
http://www.webscalesolutions.com
Consulting , IT Strategy and Research

What is Cloud Computing
Wikipedia: Cloud computing is Internet based development and use of computer technology whereby shared resources, software, and information are provided to computers and other devices on demand, as with the electricity grid.
Key Benefits of Cloud Computing:
Changes the economics of IT from being a capital investment to utility cost. Just as, you buy electricity as compared to buying generators , with cloud computing, you buy computing as compared to buying computers
Allows you to smoothly scale your business based on customer growth
Efficient use of computing power with ability to support elastic demand needs. Renting 1 Machine for 1000 hrs is nearly the same renting 1000 machines for 1 hr.
Drastically reduces complexity in Information Technology Management and administration lowering the total cost of ownership (TCO) of IT.

Cloud Types and Stages of Adoption
Starting with Infrastructure as a Service , “the Cloud” stack’s up to Platform as a service and then to Software as a Service – which offers the maximum level of Service Modularity and consequently maximum opportunity for service industrialization.
Increasing Service Orientation (Modularity and Service Industrialization)
Increasing Cost Savings

Cloud Types – Examples and Key Players
Amazon, a retail shop, started the Cloud Computing revolution by offering incremental compute and storage services to small businesses. It came from the bottom of the market , as compared to traditional top-down Enterprise focused approaches and kick started the creation of an industry
Increasing Focus
Gmail , google apps
Salesforce.com
Microsoft Live
Microsoft azure
Google App Engine , Google Predict
Amazon SDB , Beanstock
VMVare has the most significant PaaS Offering for the Enterprise
Twilio
Force.com
Google Storage
Amazon EC2 and S3
Enterprise Vendors like IBM / CSC / HP – mainly private cloud offerings
Managed Services type offerings from vendors like HP / IBM / CSC
Traditional in house
datacenters
Decreasing Flexibility (Decreasing ability to Customize)

State of Cloud Adoption
2010 has seen Cloud Computing move through the Chasm of “early adopters” to “pragmatists”
Adoption faster than generally anticipated
for a new technology
Government’s and Large Enterprise’s are
aggressively adopting this technology
Industry Adoption Examples
New York Times — Using 3000 servers for 2 days of batch processing(converting TIF to PDF)
Los Angeles County and GSA – Google Apps collaboration software(reducede mail cost by 50%)
Wendy’s — Short-term, interactive promotional site for $0.99 menu.
USA.gov and Data.gov — Govt. information web site elastically scales
NASDAQ — Market Replay service
US Army — Testing troop vulnerability application on cloud platform
Eli Lilly — drug research
Indy500.com — streams live race footage and statistics
We are here
2006-07 2008-09 2010

Opportunity for Combinatorial Innovation
Cloud Computing and its successful adoption in the life of consumers and Enterprises will enable combinatorial innovation leading to creation of a new breed of focused IT-BPO providers.
As seen in the build-out of the last big cloud – the electricity grid - in the 20th century, the real revolution was not the way it reduced the cost structure for corporations dependent on electrical power, but the way it created new businesses altogether. We saw an avalanche of new products outfitted with electric cords, many of which were inconceivable before the grid's arrival. We should expect the same with the build out of the service grid.
Cloud Computing enables sharing of data, at an unprecedented level in the terms of the breadth and depth of data. This creates a natural advantage for the service provider in providing value-added services that rely on analytics and big data.
Economics of scope and scale naturally favor the cloud provider.
Focused Service Firms

The Proliferation of Data
Cloud Computing enables the digital life like nothing before. All Data resides in the cloud , we have direct instantaneous data access on any device , we have read-write to the data access from any device.
Just like the assembly line , in 1909, optimized the assembly of mechanical parts revolutionizing the factory , the cloud has the potential to optimize the knowledge industries creating new levels of efficiency and new organization structures.
Examples.
Twilio utilizes the cloud and the economics of scale that comes along with that to provide a telephony infrastructure that is not only cost effective by several factors compared to traditional vendors but also offered on a pay as you go pricing/
GetSatisfaction.com can do a better job of improving customer satisfaction for clients by not only having a dedicated team for the job , but also , by knowing the consumers , living the digital life, much better than any other Enterprise
Open Table is best placed to underwrite restaurant insurance policies because it controls the restaurant inventory and knows the menu, the items people eat , the number of people visiting the restaurant etc , more so than the traditional insurance carriers.

Cloud Brokers - The Micro-Multinationals
“
There will be small number of big players and a large number of small players in the cloud computing space ”.
– Dr. Eric Schmidt , CEO Google
The barriers to entry for online businesses have been dramatically reduced with cloud computing.
The Cloud Computing Market is evolving into a three Tier Structure
Tier 1 – The Big Cloud Vendors :
The World only needs 5 Computers – Thomas Watson – IBM CEO (1943)
These are typically hyper-scale , pan-global , broadband service giants with massive data centers. These are like the shell’s of the Oil industry
Tier 2 – Cloud Brokers /Micro-multinationals,
Small vendors that add a specific value add(regional , domain specific , custom suitability).
They might have their own data center , but typically rely on the Tier 1 vendors for sourcing their computing power.
Tier 3 – Cloud Users – Individuals , Small businesses , Enterprises. Source their needs from Tier 1 or tier 2 based on their specific needs and scale.

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Natural Advantage Created for Service Providers by Cloud Computing

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Natural Advantage Created for Service Providers by Cloud Computing — Presentation Transcript