One of my mother’s favortite sayings is “There’s no such thing as a free lunch” Generally that’s a pretty good rule to live buy. If it looks like your being offered something for nothing then take a second look. You’ll almost always end up paying somewhere down the line. However, when it comes to cloud computing a ‘Free Lunch’ may become a very real possibility.
Amazon, Microsoft and Google are engaged in a battle for market share and customer loyalty which has seen the price of basic computing resources decline preciptously over recent years. Therein lies the free lunch. However, each of them expects to monetize this growing customers base buy charging for higher level services. There’s the rub. Maximizing the free lunch oportunity will require smart customers to figure out how to dine inexpensively while limiting consumption of that expensive bottle of wine.
Cross-posted from the Innovia Ventures Blog by Jonathan Murray & Desiree van Welsum
What impact will the increasingly widespread use of digital tools and information have on our society and economy and how will we deal with the disruptive forces brought to life and amplified by these technologies?
Understanding the nature of this emerging transformation and identifying appropriate responses to ensure we successfully navigate the challenges is critical. Without this we risk a level of social and economic dislocation unseen since our transition to an industrial economy in the 17th and 18th centuries. But whereas the transition from an agricultural to an industrial economy took over one hundred years, the transition from industrial to a cyber-economy will likely take a few decades at most — a rate of change our political and social systems are ill-prepared to deal with.
In the economics of computing the most expensive resource is still the network. In scenarios where large data-sets are being processed it is almost always cheaper to move computation to the data than the other way round. My friend and former colleague Dave McCrory nicely captured this reality in his concept of Data Gravity.Today’s cloud based computing architectures assume that all data will flow to the center to be processed. Unfortunately, this centralized data-processing model is not likely to be economically viable as we look forward to a tsunami of data being generated by trillions of connected devices and sensors.
In the brave new world of the ‘Internet of Things’ — IoT — moving every bit of generated data from edge devices to the center for processing will likely make little economic sense. A new distributed data processing architecture is going to be required.
Content Distribution Networks (CDNs) are a common way of efficiently moving data from the center to the edge of the network but a new generation of Content Aggregation Networks (CANs) may be required to make the processing of IoT data economically viable — is there a ‘CAN’ in your future?
I’m delighted to make available our new publication “The Services Dilemma” as a free eBook download.
The Services Transformation and the algorithmic revolution
A fundamental, multi-tiered transformation of services is underway. It is so pervasive and of such scope that it entails a transformation of global competitive economics. First of all, it is part of a dynamic in the global economy, which not only adds to the relative growth of services, but leads to most businesses integrating a services component into their business model. Secondly, the very nature of services is being transformed, driven by developments in Information and Communications Technology (ICT) tools, the uses to which they are being put, and the networks on which they run. Finally, there is an emerging strategic challenge for services companies that are using ICT to ad– dress the classical productivity challenge in services, concerning the need to avoid commoditization.
The consequences of this fundamental transformation of services impact the nature and the distribution of jobs globally; they change the strategic requirements for success in all kinds of businesses and they pose significant new challenges for economic policy.
In this white book, we will map the entirety of the services transformation and its implication for services innovation. We will be discussing the strategic business choices that are being posed—in some core sections and case studies with a particular focus on smaller services companies—as well as some key public policy challenges.
The business of Information Technology (IT) has a complexity problem.
As a domain IT requires deeply specialized skills, the language of IT is arcane and business needs require multiple levels of translation and interpretation before being implemented as systems. This conceptual complexity creates a significant barrier between business and IT leadership. But there’s a bigger problem: The most complex issue facing IT today is technology itself.
The IT infrastructure of most reasonably sized businesses is a horrendous cats cradle of interconnection and information flow between multiple aging systems that were never designed to work together and yet the emergence of horizontally integrated — and increasingly globally distributed - business processes demands and depends on the friction free flow of information.
Time-to-Value is perhaps the most important metric in today’s dynamic, competitive service-led economy but against this measure most corporate IT organizations fail miserably. The requirement for IT to keep pace with the speed of business has never been greater but the ugly reality for most CIOs is that the complexity of their IT infrastructures is overwhelming and an increasing percentage of IT budgets is now spent on maintaining and integrating aging legacy systems rather than delivering new value to the business.
No wonder most CEOs are skeptical about the strategic value of IT. Continue Reading
An interesting debate took place at last week’s Cloud2020 gathering regarding the viability of futures markets for cloud computing capacity. I’m firmly at the skeptical end of the spectrum as the title of this post will attest. However, I had not given enough thought as to the reasons for my skepticism. Having reflected on it a little I’m more convinced than ever that any attempt to create either primary or secondary markets in cloud commodities is doomed. In short the lack of friction and a lack of volatility in matching cloud computing supply and demand means there is likely no window for 3rd party market makers to insert themselves into this value network. Continue Reading
We have witnessed a major shift over recent decades towards a digital services based economy. Exponential growth in the power of information technology enhanced by Internet driven network effects mean that even the most mundane manufactured products are seen as just one component of a broader digital services based value chain.
The shift to digital services has transformed the global competitive landscape. Maintaining competitive differentiation requires continuous innovation – and lifecycles are contracting. In other words change is a constant.
The dynamics of a hyper-competitive global market mean that static and long-lived models of company structure, operations and information technology services are no longer fit for purpose. We need a new operating model for the enterprise.
The economic evolution of computing platforms appears to be guided by a number of ‘Laws’ that are independent of any specific underlying technology. These ‘Laws’ help explain the evolutionary trajectory of mature platforms and can act as a predictor for the trajectory of emerging platforms and behaviors of those that control them.
The first three laws of platform economics are: Value always migrates up the stack, Value gets integrated over time, Those that control platform evolution get to define how value is extracted. A definition of each of the ‘Laws’ is provided below: Continue Reading
Over the last couple of years the term cloud computing has become become public relations shorthand for “Look, look, we’re also cool.” The expression is now so overused and is applied so widely that it has become almost meaningless. That’s a problem. Senior business decision makers have been set a drift in a sea of PR and marketing confusion just at a time when they need to be making strategic technology choices that may directly impact the future of their firms. I offer this brief guide to cloud computing in an effort to help cut through the fog currently enveloping this important topic.
Part 2 of this series of articles looked at how transitioning from scarcity to an abundance of fundamental computing resources enabled the historic one-to-one relationship between operating systems, applications and underlying hardware to be broken. Part 3 will examine how the ability to decouple hardware and software evolved into a new strategy for managing IT systems — saving company’s millions of dollars in the process — and laid the foundation for today’s cloud computing architectures. Continue Reading