I have no doubt in my mind that Thomas Edison, were he alive today, would instantly spot the real value of cloud computing. Most people think it’s the economics. To one of history’s most prolific inventors, cloud computing would mean innovation.
You see, cloud isn’t just about how cheap you can make a VM, or how much less money Amazon costs than your internal infrastructure, even though it’s absolutely critical to the success of cloud computing that this is the case. Instead, the real value being created is how cloud computing dramatically lowers the barriers to experimentation and new models of delivering capability, thus increasing the chance that true innovation can occur.
Consider the following. Cloud computing is still way more prevelant in the U.S. than elsewhere in the world. There are relatively few non-U.S. clouds, even in Western Europe, though the pace of new cloud investments there appears to be increasing. All VCs now tell their Web-based portfolio companies to save their capital and use cloud computing to launch their service. Why? Because it reduces the amount of capital required to get to market. If the U.S. has a more vibrant cloud ecosystem, it has a positive impact on the level of start-up activity driving new innovations to market. Cloud computing, therefore, increases start-up activity.
Here’s another example. There’s a new pre-market company in the complex event processing (CEP) market called Cloud Event Processing (disclaimer – I am an advisor) using cloud instances, Map/Reduce for massively parallel computation, and a lot of other techniques that are becoming more prevelent in a cloud environment (e.g. no SQL databases). This is a new model that promises to dramatically change the face of the CEP market. Founder Colin Clark’s blog is incredibly open and forthcoming about why he feels that cloud-based CEP is a great and disruptive innovation. His post on Why CEP in the Cloud Makes Sense lays it out for all to see.
When Eli Lilly needed lots of processing power to drive drug discovery, they too turned to the cloud to generate a large map/reduce cluster in a matter of hours vs. the hundreds of days it would have taken through traditional provisioning. As pointed out in this Information Week article on Eli Lilly’s cloud success, the key value is the enabling effect that this cloud project has had on innovation (a word used 5 times in this article).
Have you ever had to go in front of your company’s capital committee to ask for money? This is one of the more painful things most companies put people through. Sometimes it takes months of analysis, justification, and back room lobbying to get a capex request approved. What do you think that does to innovation?? Imagine that tomorrow, instead of asking for $1m for your new speculative project’s infrastructure, you ask your boss for a few thousand dollars of expense budget to try out this new idea. If it takes off, you’re a hero. If it’s a dud, at least the company is not out $1m. That’s how cloud lowers the barriers to innovation and encourages experimentation.
While cost does matter, the cloud is about eliminating the opportunity cost, and the opportunity lost, by discouraging innovation. Next time someone argues with you over “cloudonomics,” change the discussion. To borrow from a famous campaign office sign from Bill Clinton’s 1992 presidential campaign – “It’s the Innovation, stupid!”
Follow me on twitter for more cloud conversations: http://twitter.com/cloudbzz
Notice: This article was originally posted at http://CloudBzz.com by John Treadway.
(c) CloudBzz / John Treadway
John Treadway 
Great Geek vs Biz analogy.