January 28, 2013 | Written by: IBM Cloud Staff
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The term cloudonomics is a portmanteau of cloud and economics. Joe Weinman in his book Cloudonomics: The Business Value of Cloud Computing has explored in detail the paradigm shift in business thinking necessitated by the advent of the cloud.
The simple exchange of goods between individuals in early society has transformed into complex and intricate transactions that today have a global significance. The principles and dynamics of these transactions have been studied in detail over the millennia in the academic discipline we call economics. The quintessential demand-supply cycle forms one of the foundations for this discipline. Unlimited wants of consumers have to be satisfied with the limited resources available. The platforms where these exchanges take place are varied—ranging from the traditional marketplace to the ubiquitous virtual shopping malls. Technology has always played a transformational role in economics, but cloud computing is playing a positively disruptive role.
The change in how business is conducted in this era necessitates revisiting the very principles of economics. In Cloudonomics Joe Weinman provides a thorough evaluation of the economic drivers that have influenced the arena of cloud computing. His central message is that cloud computing is here to stay.
The book begins with an explanation of what cloud computing is and what it is not. The clarifications are at times a bit outdated, as the book was originally published in 2008, but nevertheless the context for discussing economic drivers related to cloud is set up very well. After making a case in the very first chapter for not ignoring cloud computing, the book goes on to address skeptics in the second. Interestingly the economic scenarios presented cover the developed and the developing worlds alike; they are set in places across the globe from Kenya to Japan to India.
Weinman provides special consideration of pay-per-use and on-demand models of the cloud. He analyzes the dynamics of demand variations and predictability alongside the proximity and dispersion factors. He tackles the myths that surround cloud computing with a strong voice that argues that transition to the cloud is inevitable. And he presents the benefits of lag time reduction from an operational perspective.
The author explains at length his definition of cloud computing. The continuity of the discussion and the presented arguments make great reading and are fairly convincing. Weinman follows this with a discussion of framework for strategy around cloud computing. The author argues that the cloud is more than just IT. The tangibles and intangibles such as opportunity cost, total solution cost, margin, user experience and loyalty are each given a fair chance to make a point in favor of adoption of the cloud. Revenue growth, risk reduction and even employee satisfaction benefit from moving onto the cloud.
The discussion, however, is not lopsided. The author has dedicated a complete chapter to explaining when not to use the cloud. The arguments may not always hold true given the constantly changing landscape of cloud computing, but the fact that the negative arguments are considered and presented almost without any bias lends credibility to the book’s overall message favoring the adoption of cloud computing.
Weinman brings the economic discussion full circle when he addresses demand problems, capacity planning issues and the complexity of measuring and metering cloud computing. How do you meter and charge cloud usage? Is the cloud like electricity? The author proposes benchmarking as a key parameter for costing and accounting around cloud computing.
The purely economic tone of the book gives way to behavioral economic models that consider how different psychological factors aid or prevent the adoption of cloud computing. The “more is less” argument is intriguing at its juxtaposition of contradictory arguments, with the net effect of persuading readers to think deeper. The book then makes a quick technical foray to explain hybrid models of cloud computing before touching upon forecasting and the value of time. The systemic goals of efficiency, equity and freedom receive their share of attention. The author also touches upon the underlying philosophy of his arguments, which appear to have been influenced by Gestalt—the idea that the whole is greater than the sum of its parts.
Weinman uses a techno-economic tone in arguing the theoretical limits of cloud computing. Amdahl’s law is cited as a rationalization factor to the limits of speedup. Latency and distance, along with inverse square root law, present the groundwork for discussing location-related issues. Physical separation leads the focus to the issue of dispersion. The cloud, the author argues, is one big single computer!
The author then tries to address the issues faced by technical architects designing for the cloud. The information-heavy chapter that touches upon platform and software services was probably meant to be an encyclopedic index. Whether intentional or not, it does provide a very broad, albeit short, introduction to topics related to cloud-based architecture. A quick touch-up on patterns for the cloud completes the technical discussion.
What’s next for the cloud? Well, Cloudonomics has a few points to make about this, albeit with Weinman’s perspective reflecting an apparent influence on his presentation. While the book maintains good continuity of narration, it can still be read out of order, as the chapters are quite self-contained. It assumes very little prior knowledge so as to convince the novice about the value of cloud computing while providing enough fodder for the advanced users and decision makers whether they are managers, economists, technical architects or academicians. The comprehensive nature of the topics covered makes this book a must read for almost anyone involved with cloud computing.