Cloud. It’s More Than Just Price

It’s not about price, as GigaOM recently posted an article that discusses shifting motivations for adopting cloud.  Sure, adopting cloud will in some cases be a smaller total cost of ownership (TCO), as well as representing a variable (OpEx) expenditure instead of one big upfront investment (CapEx). Despite cloud vendor focuses on cost, customers note that time to value is the top motivation.

everest group cloud chart Cloud. Its More Than Just Price

Barb Darrow of GigaOM notes:

What’s interesting to me is that this debate is evolving much like the discussion around Software as a Service (SaaS) did a decade or so ago. Initially, when Salesforce.com was coming into its own, most of the sales pitch was around price. Salesforce was so much cheaper than Siebel Systems.

Of course, when Microsoft started rolling out its own cloud-based CRM, that price-based argument dissipated. [...] Then Salesforce’s benefits became that it freed companies from the tedium and expense of on-site server and software upgrades. You could focus on business and leave the IT heavy lifting to your provider.

Customers want to build out applications or see a return on investment as fast as possible regardless of the project; cloud enables faster iteration and agility. No need to worry about operational headaches — particularly around complex systems like streaming data pipelines or Hadoop clusters. This is a primary reasons why Infochimps’ customers choose our managed, cloud services approach to Big Data.

An even more concrete analysis is performed by Virtual Geek, with some key quotes:

[...] it’s not about being “cheaper than IT”, it’s about:

  • Being more agile than traditional IT.
  • Being more elastic economically than traditional IT.
  • Being more more price transparent than traditional IT.
  • Being more “frictionless” than traditional IT.

[...] The place for traditional IT?   IMO – Internal IT are shifting to be more of “IT services brokers”, and less about “operators”.

[...] This isn’t about technology, and the COST is not the benefit of the IaaS model of AWS EC2, it’s that the OPERATING MODEL that is the benefit.

Business units are demanding more insights and delivery on projects that IT has never had to tackle before, such as:

  • Managing terabytes and sometimes petabytes of data
  • Capturing and analyzing social media, ad impressions, website clickstreams, stock prices, and other fast moving data
  • Producing predictive insights, machines learning, statistical modeling, and interactive visualizations and dashboards

IT organizations are discovering that these complex projects don’t have to become the bane of existence and frustrate them for the next several years. These initiatives can be de-risked by embracing “cloud” to iterate more quickly – build faster, fail faster, learn faster, win faster. Cloud empowers the IT team to focus on proving out projects, not just on herding the fundamental systems.

Tim Gasper is the Director of Product for Infochimps. He was previously co-founder and CMO at Keepstream, a social media curation and analytics company. He graduated from Case Western Reserve University with dual degrees in Economics and Management and originally from Cleveland, Ohio.




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Image Source: GigaOM – Everest Group – Cloud Connect 2012 Enterprise Cloud Adoption Survey

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