More broadly, a recent study by Etro (2009) treats cloud computing as a general purpose technology and estimates a conservative 3 1% to 5% fixed cost reduction across all sectors and estimates the prospective medium-term macroeconomic impact of the rapid ( slow) adoption of cloud computing in 27 European countries to be an incremental GDP growth of an increase in . Despite the social and economic significance of cloud computing, very little has been written in the economic literature directly on the subject. 5 The complete definition of cloud computing according to NIST can be found in the appendix.
Cloud computing began to take shape in the last decade as a result of the convergence of several previous technologies and IT operating models. Previous studies in the information technology literature can inform the outlook for cloud computing use. Again, with most cloud computing offerings, the locus of adoption is organizational, aside from simple SaaS applications that individuals deploy as they move to the cloud.
An illustrative classification of cloud computing applications according to this framework can be found in Appendix 2. The first characteristic of cloud computing that distinguishes it from traditional usage models is the non-fungibility of the computing resources or software applications. Moreover, no simple mechanisms exist to support interoperability in the case of cloud computing, similar to the rotary converter technology that enabled the fungibility of electricity, or the interconnection rules that enforce the interoperability of telephony services.
Scalability, which is one of the main benefits offered by cloud computing, is neither unlimited nor error-free.
An Economic Perspective
Since many cloud service providers, especially social networking sites, have significant network externalities and inclusion effects, consumers are not in a good position to resist changes in the terms of service that effectively increase the privacy costs of using the service. Providers can try to enrich the quality of the user base by offering services that selectively appeal to valuable demographics, but we would expect to see the wealthy participating in the cloud. It is even possible for companies to further reduce capital needs by leveraging the use of employees' computers, cell phones, cars and other equipment.
These issues are primarily driven by individual interaction with SaaS and are therefore part of the retail effects of cloud computing. 16 Consider the recent sale of the Huffington Post as an example of how this free labor of bloggers is being monetized. Instead of the classic financial problem of choosing a bundle of stocks based on the price covariance matrix to maximize expected return for any given risk level, one wants to choose customers based on the capacity demand covariance to maximize revenue for any given probability to not have sufficient capacity.
The rewards for successfully deploying ESM projects in the cloud are significant, although some are difficult to document. Coupling these with legacy systems may require building applications using PaaS to focus on the direct software needs rather than worrying about the details of the infrastructure. Besides the obvious advantage that custom systems can be tailored to the exact needs of the business, there are several reasons why companies choose this route.
In a similar way, the higher the level of abstraction in the PasS platform—for example, specific APIs for interactions between components such as databases and e-mail, proprietary code libraries that users can use to build applications, the more difficult it is to switch to a new vendor . The information technology revolution of the 1980s and 1990s partially replaced workers with computers and automated systems. The cloud's democratizing effect on business means that there are more options competing for consumer interest with existing content.
The claims that piracy facilitated by P2P networks built on cloud infrastructure is the primary cause of the decline of these incumbents should therefore be taken with a grain of salt. One could argue that a large part of the reason for this is that many artists and other content creators are not primarily motivated to produce by the prospect of monetary reward. In the old days, the only way to distribute works was to publish books, records, tapes, movies, and so on.
The basic idea is to choose a customer and then consider every possible subset of the remaining customers. One of the key issues is that agents need to reveal how valuable services are and how expensive the latency is.
Conclusion
Of course, there is a large literature on auctions in economics (see Klemperer 1999 for a survey) but it does not appear to have been directly applied to cloud computing. We argue that the technology categorizations used in these domains (Software, Platform, and Infrastructure as a Service) do not correlate well with the economic impacts of cloud technologies. To the consumer, the available supply capabilities often seem limitless and can be purchased in any quantity at any time.
Cloud systems automatically monitor and optimize resource usage by leveraging metering capabilities at some level of abstraction appropriate to the type of service (eg, storage, processing, bandwidth, and active user accounts). Resource usage can be monitored, controlled and reported, providing transparency for both the provider and the user of the service used. The consumer is guaranteed the possibility of using the provider's applications that run in the cloud infrastructure.
The consumer does not manage or control the underlying cloud infrastructure, including the network, servers, operating systems, storage, or even individual application capabilities, with the possible exception of limited user-specific application configuration settings. The Consumer is provided with the ability to deploy Consumer-created or acquired applications, created using Provider-supported programming languages and tools, into the Cloud infrastructure. The consumer does not manage or control the underlying cloud infrastructure, including the network, servers, operating systems, or storage, but has control over the deployed applications and possibly the configurations of the application hosting environment.
Capacity provided to the consumer is the provision of processing, storage, networks and other underlying computing resources where the consumer can deploy and run any software, which may include operating systems and applications. The consumer does not manage or control the underlying cloud infrastructure, but has control over operating systems, storage, installed applications, and possibly limited control over selected network components (eg, host firewalls). Cloud infrastructure is shared by multiple organizations and supported by a specific community with common concerns (eg, mission, . security requirements, policy and compliance aspects).
The cloud infrastructure is made available to the general public or a large industry group and is owned by an organization that sells cloud services. The cloud infrastructure is a composition of two or more clouds (private, community or public) that remain unique entities, but are bound together by standardized or proprietary technology that enables data and application portability (eg cloud bursting for load balancing between clouds). Note: Cloud software takes full advantage of the cloud paradigm by being service-oriented with a focus on statelessness, low coupling, modularity, and semantic interoperability.
Classification of Cloud Computing Applications via Fichman’s Framework
Determinants of Adoption via Fichman’s Framework
Information Systems Research, Volume 1, 1990, pp. 2009) “Cloud Computing and Emerging IT Platforms: Vision, Hype and Reality for Delivering Computing as the Fifth Utility”, Future Generation Computer Systems, Vol. Etro, F., (2009) “The economic impact of cloud computing on business creation, employment and output in Europe”, Review of Business and Economics, Vol. 2007) “Coordination and lock-in: competition with switching costs and network effects” in The Handbook of Industrial Organization, Part 3, Chapter 31 pp. G., (1992) “Information Technology Diffusion: A Review of Empirical Research”, Proceedings of the Thirteenth International Conference on Information Systems, Dallas, pages Bargaining Theory in the Cloud”, unpublished working paper. 1989) “Technology Diffusion: An Empirical Test of Competitive Effects.”.
Better Estimation and Planning Can Help” http://www.galorath.com/wp/software-project-failure-costs-billions-better-estimation-planning-can-help.php. 1990) “Distribution in Computer Networks: The Case of BITNET.”. 1990) “An integrative model of information systems growth.”. Information Systems Research, Volume 1, 1990, pp. 2008) “Service Efficiency at Internet Scale” Proceedings of the Large-Scale Distributed Systems and Middleware (LADIS) Workshop. Journal of Information Systems Management, 1989, pp. 2010) “Preparing for the Future: Understanding the Seven Capabilities of Cloud Computing”, MIS Quarterly Executive, Vol.
Khajeh-Hosseini, A., Greenwood, D. og Sommerville, I. Cloud Migration: A Case Study of Migrating an Enterprise IT System to IaaS,” Cloud Computing, IEEE 3rd International Conference on Cloud Computing, s. 2008) “Crowdsourcing brugerstudier med Mechanical Turk”. Li, L., Mcafee, P., og Papenini, K.,(2009) "Cloud Control: Frivillig adgangskontrol til Intranet Traffic Management", Informationssystemer og e-Business Management Specialudgave: 2009 Workshop om E-Business. Journal of Management Information Systems, Vol. 1987) "The Case for Integrative Innovation: An Expert System at Digital".
