CLOUDONOMICS PDF

Description Details The ultimate guide to assessing and exploiting the customer value and revenue potential of the Cloud A new business model is sweeping the world—the Cloud. And, as with any new technology, there is a great deal of fear, uncertainty, and doubt surrounding cloud computing. Cloudonomics radically upends the conventional wisdom, clearly explains the underlying principles and illustrates through understandable examples how Cloud computing can create compelling value—whether you are a customer, a provider, a strategist, or an investor. Cloudonomics covers everything you need to consider for the delivery of business solutions, opportunities, and customer satisfaction through the Cloud, so you can understand it—and put it to work for your business. Cloudonomics also delivers insight into when to avoid the cloud, and why.

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This is largely due to the position of the cloud at the nexus of macro trends such as social media, the Internet, Web 2. Cloudonomics—a term and discipline founded by the author Weinman, —seeks to provide a rigorous foundation based on calculus, statistics, trigonometry, system dynamics, economics, and computational complexity theory, which can be used to interpret empirical results.

We will provide an overview of these results together with references to more detailed analyses. Perhaps the most widely accepted is the one developed by the National Institute of Standards and Technology, now stable at version 15 Mell and Grance, : Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources e.

This cloud model promotes availability and is composed of five essential characteristics: …on-demand, self service … broad network access … resource pooling … rapid elasticity…[and] measured service. From an economic viewpoint, however, we can use a semantically equivalent mnemonic—CLOUD Chan, —which can help surface economic benefits. Online connectivity—an enabler of other attributes ensuring service access.

Costs and performance impacts of network architectures can be quantified using traditional methods. Utility pricing—i. We shall overview results concerning these benefits and additional related topics. The results are often counterintuitive. Various layers—Infrastructure as a Service, Platform as a Service, and Software as a Service—all have different benefit drivers.

Here, we shall focus on Infrastructure as a Service, which is a foundation for many other benefits. After all, a salient difference between Platform Services and Service-Oriented Architectures and Integrated Development Environments ultimately comes down to Infrastructure resources, and a salient different between licensed software and SaaS ultimately resides in infrastructure costs and flexibility, including pricing and elasticity.

Thus, we shall focus on infrastructure. The Value of Common Infrastructure What is the value of consolidating demands from independent sources into a common pool rather than partitioning them?

Overhead costs can be reduced, and buyer power enhanced through volume purchasing. Under the right conditions, multiplexing demand can generate benefits in terms of higher utilization and thus lower cost per delivered resource—with unutilized resource costs factored in—than unconsolidated workloads, for infrastructure built to peak requirements. For infrastructure built to less than peak, demand multiplexing can reduce the unserved demand, reducing a penalty function associated with that unserved demand, which may represent either loss of revenue or a Service-Level agreement violation payout.

This smoothness is important, because a facility with fixed assets servicing highly variable demand will achieve lower utilization than a similar one servicing relatively flat demand. To put it another way, one with low utilization has excess assets, whose cost—whether leasing or depreciation—must be carried by revenue-generating ones.

With that as background, the beauty of the cloud comes into focus: multiplexing demand from multiple sources reduce the coefficient of variation Weinman, d. Note that they need not have the same distribution: one may be Normal, one may be exponential, and so forth. Thus, the coefficient of variation is. It must be noted however, that the assumption of workload independence is a key one. There are two other possibilities worth considering. One is that workloads are not independent, but are negatively correlated or even complementary.

Such a scenario is not that farfetched: appropriate selection of customer segments can lead to a virtuous situation. In the early days of AC electric power, Samuel Insull targeted consumers who needed lighting in the morning and at night, trolley operators, whose peak electricity use was at rush hour, and factories, thus generating relatively flat aggregate demand [Carr, ].

The other possibility is that of perfectly correlated demand. The coefficient of variation of the aggregate is unhelpfully. In other words, the coefficient of variation of the aggregate is the same as any of its components. A weaker condition, where we merely have at least one simultaneous peak, is equally problematic from the perspective of attempting to increase utilization and thus derive favorable economics. Two lessons may be drawn from this.

The data on whether there truly are economies of scale for large cloud providers relative to large enterprises is mixed. While early entrants have advantages in automation, these differences are being eroded as 3rd parties offer management and administration, virtualization, provisioning, billing, portal, and other software on either an open source or competitive cost basis.

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Cloudnomics: The Economics of Cloud Computing

And,as with any new technology, there is a great deal of fear,uncertainty, and doubt surrounding cloud computing. Cloudonomics radically upends the conventional wisdom,clearly explains the underlying principles and illustrates throughunderstandable examples how Cloud computing can create compellingvalue--whether you are a customer, a provider, a strategist,or an investor. Cloudonomics covers everything you need toconsider for the delivery of business solutions, opportunities, andcustomer satisfaction through the Cloud, so you can understandit--and put it to work for your business. Cloudonomicsalso delivers insight into when to avoid the cloud, and why.

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Cloudonomics

This is largely due to the position of the cloud at the nexus of macro trends such as social media, the Internet, Web 2. Cloudonomics—a term and discipline founded by the author Weinman, —seeks to provide a rigorous foundation based on calculus, statistics, trigonometry, system dynamics, economics, and computational complexity theory, which can be used to interpret empirical results. We will provide an overview of these results together with references to more detailed analyses. Perhaps the most widely accepted is the one developed by the National Institute of Standards and Technology, now stable at version 15 Mell and Grance, : Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources e. This cloud model promotes availability and is composed of five essential characteristics: …on-demand, self service … broad network access … resource pooling … rapid elasticity…[and] measured service.

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