Way back when (over a year ago in fact) the second paper released in the CloudU series was on Cloudonomics – the study of the economic impacts and drivers for cloud computing. Having spent years watching this space, I’m continually bombarded by questions from customers, and assertions from vendors about the massive cost-savings that cloud can deliver. While I understand the drivers for this (organizations under pressure to reduce costs and vendors keen to pick off low hanging fruit) it still frustrates me. Part of the reasoning behind the Cloudonomics paper was to clearly articulate the benefits of cloud beyond cost savings.
Much of the source material and inspiration for the paper came from the work of Joe Weinman, one of the cloud inner-circle and someone who, more than anyone, has focused on the economics of the cloud. Joe wrote the book about Cloudonomics – his tome is due out in the next couple of months.
As we’ve produced content for CloudU, we’ve had a bit of fun making some videos which compress some CloudU chapters into an easily digestible (and kind of entertaining) few minutes. The first was a summary of the first CloudU chapter (you can see it here if you haven’t yet).
So it seemed only right to make the second video about Cloudonomics – in the hope that four minutes of video is easier to digest than a 20-page course booklet. In the video, we focus on a few key themes. Because cloud isn’t necessarily about cost savings, we talk about four key ways that cloud computing affects the economics of a business:
- Opportunity cost: With 80 percent of traditional IT spend just going to keeping the lights on, that means a lot of potentially valuable opportunities are lost due to lack of budget. Cloud reduces this opportunity cost and allows for investment in other areas
- A reduction of OpEx: Simply put, CapEx is hard, OpEx is easy. By moving technology from CapEx to OpEx, cloud enables more stuff to get across the line when it comes to the decision-making process
- Total Cost of Ownership: With cloud, all of the costs involved in technology are included in the ticket price – no longer do organizations need to budget lots of different and complex expenses. Instead, they have a simple bottom-line cost of their IT
- Focus: This is the big one – with cloud computing, organization get to stop focusing on technology for its own sake. They get to focus on their core business objectives, and use technology to help drive those objectives – it’s about focusing on core competencies
It’s fun making these videos. They’re a good way to take the CloudU message to a wider audience. I’d love to hear your feedback on the video!
(Cross-posted @ The Diversity Blog - SaaS, Cloud & Business Strategy)