The Natural Fit of Cloud Computing and Service Industry.

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

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What is Cloud Computing
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.
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.

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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

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SaaS
Software As a
Service
PaaS
Platform as a
Service
IaaS
Infrastructure as a
Service
Traditional
Traditional Bare
Metal Custom
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
IncreasingFocus
Decreasing Flexibility (Decreasing ability to Customize)
Traditional
$2-$5 per server
per hr
CSC/IBM
Private
$1 per server per hr
.GOV
oslv
Community
50 cents per
server hr
AWS/
Google
Public
1.5 to 5 cents per
hour
Traditional in house
datacenters
Managed Services type
offerings from vendors like
HP / IBM / CSC
Enterprise Vendors like IBM / CSC /
HP – mainly private cloud offerings
Amazon EC2
and S3
Google
Storage
Google App
Engine ,
Google Predict
Amazon SDB ,
BeanstockTwilio
Gmail , google
apps
Force.com
Salesforce.com
Microsoft
azure
Microsoft
Live
VMVare has the most significant
PaaS Offering for the Enterprise

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State of Cloud Adoption
 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 here2006-07 2008-09 2010
2010 has seen Cloud Computing move through the Chasm of “early adopters” to
“pragmatists”

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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

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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.

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© Webscale Solutions - 2010
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.