Technology, Cloud

Is the cloud business model the solution to effective IT innovation?

Blog-post by,

Within the current Cloud Business Model we would find 1) hosted applications to which we outsource data ( is one example), 2) the external cloud (servers provided by a cloud provider outside the firewall) and 3) the internal cloud (servers provided inside the firewall).

We have over the last 12 months seen 2 trends for cloud deployment 1) cost (optimisation) confirmed with Total Cost of Ownership (TCO), 2) demand (to deliver to new business needs to which we are not able to cater within the existing perimeter).

To meet the emerging business needs, we can identify a hosted application provider to cater to the identified demand where, among others would be examples that could rapidly enhance the IT Value Proposition or the creation of an external cloud (applications bundled in to services with an underlying architecture) where the needs of the client can be modelled and stabilised rapidly to meet “go to market” constraints. These can then be brought to an internal cloud if desired (NASA first started to use the external cloud to model emerging demand, that was later brought on to an internal cloud).

In “The cost of innovation and outsourcing” ( Doug Goddard points out the lack of innovation within the outsourcing sector.  The reason from my point of view is the lack of incentive as none of the outsourcer that I have talked to are able to brake down their cost model TCO (total cost of ownership), and even if they could clients are not prepared to pay for improvement. With an external cloud business model, innovation* as new service models that would reply to emerging business needs can be tested and validated / discarded with a minimum amount of investment.

Innovation can be disruptive (significant) or continuous. My research show that innovative business models demonstrate continuous innovation on a constant basis. Most innovation that is seen as “disruptive” is in fact a significant impact on a business model that is generated by the sum of a number of continuous improvements.


(1) (1)

Would you like to comment on this content? Log in or Register.
Paul Calento 255 Points | Sun, 10/30/2011 - 18:26

The answer to this question is "Not for everyone", althought it could be. There are a lot of reasons folks may not be ready for the cloud. The flexibility factor is one ... particularly applying a specific, unique business case to a cloud back-end that may not have been optimized for it. There are a lot of ways to get cloud-like agility, without going cloud, including using the Instant-On framework. Innovation may be process, business model, technology or a combination. How we get there is a journey. The cloud remains, however, an increasingly viable option.

--Paul Calento

(note: I work on projects sponsored by and HP)

Pearl Zhu 90 Points | Tue, 10/11/2011 - 21:06

Hi, Martin, nice blog, I would say, when the customer select cloud service, it's more about speed, faster to market, elasticity, and standardization, then their internal IT can spend less time on operation related service, and more time on innovation oriented investment and project;  Compared to traditional outsourcing service, cloud service providers may also provide both more standadized and innovative service to the clients, since their services are more transparent, simplyfied, however, via variety of discussion forum, the Cloud SLA is as painful as tranditional SLA, cloud still takes time to get matured, thanks

Martin Palmgren
Martin Palmgren 47 Points | Mon, 10/03/2011 - 17:07

Comment by Doug @