Cloud is a Business Model
In the fast paced world in which we live, I find definitions to be extremely important. Ask 10 of your colleagues what a "platform" is and you will likely get more than 10 different answers. Here is one of mine.
When I talk at industry events or with a customer I usually spend some time on definitions, ensuring that everyone is on the same page as to what it is we are discussing.
For me, "Cloud" is a lot of things, however its first and foremost a business model.
The Three Things
I very simply define "Cloud" as being anything that has the following three characteristics :
- On Demand Self Service : A consumer can procure a resource whenever they would like and that resource is made available to them through automation, without any human interaction at all from the producer.
- Pay Per Use : When the consumer is using the resource they pay for it and when they no longer want to use it they return it to the producer and they stop paying.
- Easily Accessible : As a consumer its easy and convenient to get access to and procure the resource in question
For the most part, its well understood that true public cloud services fit this model. All of "The Three Things" are taken from NISTs definition of Cloud. But what makes any of this a business model ? Lets look at some examples.
Bicycles
There has been a lot of discussion about the rise of the sharing economy and many businesses built on this model. One example of this is the rise of bike sharing programs in cities around the world. According to this research over 800 bike sharing programs now exist, and this number is constantly growing.
Looking at the model of how these operate we can see that they conform to "The Three Things" :
- On Demand Self Service : As a rider in one of these programs I can walk up to a bike station, place my credit card in the machine and pull out a bike, anytime I want, without any human interaction.
- Pay Per Use : As an occasional rider I pay for the amount time I use the bike.
- Easily Accessible : Looking at the Citi Bike program in Manhattan as an example, they are very conveniently located next to major transportation hubs, and in business and tourist destinations.
There are many other examples of business that conform to "The Three Things". UBER, Rent The Runway, LiquidSpace and many, many more...
All these businesses are very different. It's "The Three Things", the way their business model is defined that brings them together. This is why I see "Cloud" as being a business model first.
What now ?
If you agree that Cloud is a business model first then any public cloud project that you are embarking on should be done within the context of how it solves a business problem.
Its not just another place to run an application or another way of buying a server. "The Three Things" enable agility - the ability for an organization to move quickly - while minimizing risk.
CenturyLink has launched some category redefining capabilities that enable this agility while still allowing organizations to maintain visibility and governance.
Check us and out give us a spin !
This really puts things in perspective.
James Dayhoff and Avron Olshewsky thanks for your comments. the point of my post wasnt really to get into the academic definitions of what a business model is or isnt. that hbr article even says its difficult to define. the point of my post was that whether you call it a business model or a method to deliver a service or a way to consume a service or a service itself, it has to be consumed in the context of how it solves a business problem.
thanks David Iannacconi and Alberto Lozano Gómez for your comments!
Jeff, "cloud" offerings are themselves businesses with the basic business model you described. But is is misleading to say "cloud" is a business model itself.